"First, ES deemed his ability to short sell valuable to him despite his large holdings."

OK, assuming what you've stated is correct, don't you think ES would have demanded that right? Should PTSC have just closed shop instead?

"Second, short selling creates the ability to apply additional downward pressure which exceeds the number of shares issued. He can sell shares he doesn't own. "

You are right in certain instances. However, he wasn't selling shares was he. More like he was accumulating shares. I know he acquired a lot of shares through warrant conversion but I don't believe it was totaly through that means. So again, my point is that he could have driven the price down simply by selling shares. He didn't need to short them.

So first, PTSC probably didn't have a choice if they wanted to stay in business, and second, the end results probably would have been the same anyway.