Annual report pursuant to section 13 and 15(d)

7. Accrued Liabilities

7. Accrued Liabilities
12 Months Ended
Dec. 31, 2013
Payables and Accruals [Abstract]  
Accrued Liabilities


As of December 31, 2013 and 2012, the Company has the following accrued liabilities:


    12/31/2013     12/31/2012  
Accrued Salaries and Wages                
Accrued Salaries and Wages (a)   $ 59,958     $ 516,083  
Disputed Trade Payables                
Disputed Trade Payables (b)     925,000        
Accrued Expenses                
Allowance for Sales Returns     43,000       53,000  
Distribution Arrangements Payable     13,905       217,858  
Deferred Revenue           110,177  
Royalties Payable     9,638       59,033  
Music Advances (c)     450,000        
Other Accrued Expenses     187,996       56,594  
Total Accrued Expenses     704,539       496,662  
Total Accrued Liabilities   $ 1,689,497     $ 1,012,745  


(a) Accrued but unpaid salaries and vacation benefits total $59,958 and $516,083 as of December 31, 2013 and 2012, respectively. On August 30, 2013, the Company issued 12% convertible notes to several parties with a maturity date of October 21, 2013 for an aggregate of $530,000 (“Bridge Notes”). Cash was received in the aggregate of $309,000. Four officers and directors of the Company converted outstanding salaries payable to the new notes in the aggregate of $221,000.


On November 15, 2013, in association with the Merger, the Company issued 124,146 shares of common stock were to members of the Pre-Merger management team as well as the Company’s Chief Financial Officer as consideration for the cancellation of accrued, but unpaid, salary and benefits in the amount of $612,443. The Company recognized a gain on the settlement of debt in the amount of $190,349.


(b) As part of the Merger, the Company assumed certain liabilities from a previous member of A Squared Entertainment, LLC which has claimed certain liabilities totaling $925,000. The Company disputes the basis for this liability and has not heard from the claimant for two years.


(c) The Company assumed these accrued expenses in association with the Merger.