Why would a creditor agree to "pay" or "issue" 800,000 "share" or "notes" at a premium you ask? Well, the creditor will be repaid in 12 months they have an option to exchange the notes for shares in the future, at a discounted rate to what the share price will at that time.
The fact that there are creditors willing to exchange $ for convertible notes is a good sign, it shows that there is money to be made in this company and that they see low risk of default.
Keep in mind, this company has been around for almost 10 years, and has a rapidly growing income stream, hence the confidence of loaning it $1,000,000, at a price per "note" of 20 times the market price.
The notes issues form a small part of the overall number of shares.
