Thanks LO_L8_NC. I think you've helped me sort through this.

First off, shorts don't appear to be an issue for ELVA whatsoever as per the TSX Short Position post last week and I'd agree, this is a very risky situation to short ELVA for anyone due to points you've discussed. But, having warrants would be protective for someone that did. 

Very desperate companies are most likely the victims of these death spirals as the financing warrants are used to protect the shorts. The shorts always have the warrant to cover should something go wrong and force a short squeeze. The fact many of these desperate companies need to finance in the first place indicates a poor financial position that makes them vulnerable and that's why the brokers were already most likely shorting them. The warrants make it risk free I guess you could say.

Interesting point about a PIPE deal. Some Yahoo's (shrimpy) keep pounding on the 100mil shelf prospectus and how Sankar was going to pull a fast one to unload some shs. I call BS on that assessment. Sankar could have sold shs numerous times along the way but never did. Instead, he supported the company with his own money a number of times. A PIPE deal as you describe would be non-dilutive, hopefully pay Sankar a reasonable price for his shs, boost the price much higher than it is now and pave the way with less concentrated ownership for future institutions worried about that. Although for now, anyone can try to buy at the market but I think we all see how fast the price moves on as little as a 500 - 1000 shs trade. Good luck trying to get anything of size. Should be more difficult if they come out with anymore good news.