The increase was to ensure that there would be enough shares for YA to be able to convert all of the Series C and exercise all the warrants issued to Cornell on February 17, 2006.
From the Series C transaction documents:
"The Company shall, on or before July 1, 2006, effectuate an increase its authorized capital stock to a sufficient number of shares of Common Stock to satisfy the reservation requirements of this Agreement."
Obviously, Fritz, Copus and Dodge wanted to make sure the AS was increased by a large enough number to be able to cover the Series C and the warrants under all foreseeable circumstances. That way they would not have to call another shareholder meeting for another increase. So I think that they believed they overshot what would really be needed when they went for 5 billion shares. Turns out, with the PPS down where it is (and most of the decline can be attributed to what they did in 2006), they missed their guess.
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