Note 8. Series D 8% Cumulative, Compounding Exchangeable Preferred Stock

As of March 31, 2012 and December 31, 2011, the Company has authorized 5,000,000 shares of preferred stock, of which 2,200,000 are designated as its $0.01 par value Series D 8% Cumulative, Compounding Exchangeable Preferred Stock (the “Series D Preferred Stock”). As of December 31, 2011 and March 31, 2012, the Company has outstanding 1,331,814 shares of Series C Preferred Stock which is exchangeable for 24,830,431shares of common stock

Dividends on the Series D Preferred Stock shall be payable in additional shares of Series D Preferred Stock, rather than cash, in an amount per share equal to 0.08 shares of Series D Preferred Stock per annum compounded annually.

The holders of the Series D Preferred Stock will vote with the holders of the Series C Preferred Stock, as single class, with respect to the appointment of four of the seven directors of the Company until the earliest date on which either (i) less than an aggregate of 500,000 shares of Series C Preferred Stock and Series D Preferred Stock remain outstanding or (ii) the holders of record of a majority of the outstanding shares of Series C Preferred Stock and Series D Preferred Stock, voting as a single class, elect to eliminate their right to appoint such directors.  

The Series D Preferred Stock ranks on parity with the Series C Preferred Stock, but will rank senior to all other series of preferred stock and to the common stock as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up.

As of March 31, 2012 the Company had accrued $882,961 in Series D Preferred Stock dividends, $292,180 of which was accrued during the three months ended March 31, 2012.