Note 3: Accrued Liabilities

Accrued Salaries and Wages as of June 30, 2012 total $493,277 and $193,519 as of December 31, 2011. Debenture Interest accrued and unpaid for the 2006 issuance of $2.5 million is $19,049 as of June 30, 2012 and December 31, 2011. Interest on this series of debentures was terminated effective July 24, 2009 in accordance with the conversion agreement upon establishment of a secondary trading market for our common stock. Other Accrued Liabilities, totaling $377,082 as of June 30, 2012 and $408,684 as of December 31, 2011, include a reserve for product returns, music royalty payments, financed insurance costs, commissions to outside representatives on net sales and royalty income, and amounts accrued but not yet due to studios for distributed products. The reserve for returned product represents an estimate of potential product returns in future periods and is evaluated for reasonableness each reporting period. Unearned revenue was recognized in the amounts of $482,746 as of June 30, 2012 and $0 as of December 31, 2011, representing prepayment by a customer of sales not recorded until shipment was made in July 2012.