Warrants will be outstanding a little longer...They are playing them for all that they are worth. Since their shorts are in the money from $2.50, they will cover on the open market and hold onto their warrants. If the S/P had ran they would have covered with the $1.60 warrant. So more rinse and repeat to come.
The good thing is, the share price will pop when they cover thier shorts on the open market but they created a buying opportunity in the meantime.