I am not sure how you can couple together the warrants with shorting, at the current prices.

Someone shorts the shares at $0.80, with a view to covering via warrants converted into common shares. To convert the warrant, however, it would cost $0.95 (the excercise price of the warrant), and covering the short sale at say $0.50. Or am I missing something?

Spending $0.95 to get $0.50 back is not a very good return these days (although quite common, LOL).