IMHO - Prospect did not cover in the sense of covering their shorts.
I belive that the price was manipulated thru a dealer where the dealer borrowed the shares from somewhere, induced the drop (as far down as they possibly could thru stop losses, bid jumping, overstating lots, perfectly placed sells at key intervals). Maybe the dealer sold all the borrowed shares or maybe he only short sold half. No one knows.
At a pre-agreed price the dealer then swaps shares with Prospect (possibly from inventory acquired) therefore allowing Prospect to excerise their warrants at much lower prices and immediately (without the price rising) - hence the 500K & 2.1M Blocks.
Now, here is the kicker. Those shares are still short. Were they shorted at $1.20, $1, .75? No one knows. Expect the dealer to cover asap (in an orderly fashion). Which dealer exactly? - Hard to tell, as order can be routed through several other dealers.
Maybe the short will be covered in an orderly fashion or maybe we will see the tsunami finally coming (earnings?).
This is all of course in my own opinion! But you have to question the fact that the 2 huge blocks hit the tape at the lows and the price really didn't move much which gives me reason to think that this drop was orchestrated.
Ahhh, such is life on the OTCBB!
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