ROKWADER, INC. - FORM 10-Q - November 19, 2014

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - ROKWADER, INC.	Financial_Report.xls
EX-31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER - ROKWADER, INC.	exhibit_31-2.htm
EX-32.1 - SECTION 1350 CERTIFICATION OF PRESIDENT AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER - ROKWADER, INC.	exhibit_32-1.htm
EX-10.1 - CONVERTIBLE PROMISSORY NOTE IN THE AMOUNT OF $35,000 DATED JULY 29, 2014 IN FAVOR OF BROOKTIDE, LLC. - ROKWADER, INC.	exhibit_10-1.htm
EX-31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF PRESIDENT - ROKWADER, INC.	exhibit_31-1.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2014

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File No. 000-51867

ROKWADER, INC.

(Exact name of small business issuer as specified in its charter)

DELAWARE

(State or other jurisdiction of

incorporation or organization)

7929

(Primary Standard Industrial

Classification Code Number)

73-1731755

(I.R.S. Employer

Identification No.)

21900 Burbank Blvd., 3^rd Floor, Woodland Hills, CA 91367

(Address of principal executive offices)

(818) 224-3675

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No þ

The number of shares of Common Stock, $0.001 par value, of the registrant outstanding at November __, 2014 was 2,558,718.

TABLE OF CONTENTS

	Page
PART I.

Item 1. Financial Statements.	4

Condensed Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013	4

Condensed Consolidated Statements of Operations for the Three Months and Nine Months ended September 30, 2014 and 2013 (Unaudited)	5

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2014 (Unaudited)	6

Notes to the Condensed Consolidated Financial Statements (Unaudited)	7

Item 2. Management’s Discussion and Analysis or Plan of Operation	15

Item 3. Quantitative and Qualitative Disclosures About Market Risks.	17

Item 4. Controls and Procedures	17

PART II.	18

Item 1. Legal Proceedings.	18

Item 1A. Risk Factors.	18

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	18

Item 3. Defaults Upon Senior Securities.	18

Item 4. Mine Safety Disclosures	18

Item 5. Other Information.	18

Item 6. Exhibits.	18

SIGNATURES	19

EXHIBIT INDEX	20

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “desire,” “goal,” “should,” “objective,” “seek,” “plan,” “strive” or “anticipate,” as well as variations of such words or similar expressions, or the negatives of these words. These forward-looking statements present our estimates and assumptions only as of the date of this Form 10-Q. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. We caution readers not to place undue reliance on any such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes will likely vary materially from those indicated.

PART I.

Item 1. Financial Statements.

ROKWADER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
	SEPTEMBER 30,			DECEMBER 31,
	2014			2013
	(UNAUDITED)
CURRENT ASSETS:
Cash (Note 1)	$	2,441		$	27,142
TOTAL CURRENT ASSETS		2,441			27,142
OTHER ASSETS
Intangible Assets, Net of Accumulated Amortization
of $8,474 and $5,603, respectively (Note 4)		46,527			49,397
TOTAL OTHER ASSETS		46,527			49,397
TOTAL ASSETS	$	48,968		$	76,539

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts Payable	$	500		$	—
Accrued Interest Payable - Related Party		55,435			41,621
Credit Card Payable		18,971			2,803
Related Party Convertible Note Payable (Note 3)		355,000			260,000
TOTAL CURRENT LIABILITIES		429,906			304,424
TOTAL LIABILITIES		429,906			304,424

STOCKHOLDERS’ DEFICIT:
Preferred Stock, $.001 par value, 10,000,000 shares were authorized as of September 30, 2014 and December 31, 2013, none issued and outstanding.		—			—
Common Stock, $.001 par value, 50,000,000 shares authorized, 2,558,718 shares issued and outstanding as of September 30, 2014. 50,000,000 shares authorized, 2,548,718 shares issued and outstanding as of December 31, 2013.		2,559			2,549
Additional Paid-In Capital		879,318			874,028
Additional Paid-In Capital - Stock Options		312,400			121,077
Accumulated Deficit		(1,575,215	)		(1,225,539	)
TOTAL STOCKHOLDERS' DEFICIT (Note 2)		(380,938	)		(227,885	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	48,968		$	76,539

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROKWADER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	THREE			THREE			NINE			NINE
	MONTHS			MONTHS			MONTHS			MONTHS
	ENDED			ENDED			ENDED			ENDED
	SEPTEMBER 30, 2014			SEPTEMBER 30, 2013			SEPTEMBER 30, 2014			SEPTEMBER 30, 2013

REVENUE	$	197		$	214		$	538		$	5,487


EXPENSES
General and Administrative		239,542			42,394			350,214			79,366
Impairment Losses (Note 1)		—			—			—			—
TOTAL EXPENSES		239,542			42,394			350,214			79,366

NET LOSS	$	(239,345	)	$	(42,180	)	$	(349,676	)	$	(73,879	)

NET LOSS PER COMMON SHARE – BASIC & DILUTED	$	(0.09	)	$	(0.02	)	$	(0.14	)	$	(0.03	)


WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING		2,558,718			2,504,261			2,553,517			2,490,641

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ROKWADER, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	NINE			NINE
	MONTHS			MONTHS
	ENDED			ENDED
	SEPTEMBER 30, 2014			SEPTEMBER 30, 2013
OPERATING ACTIVITIES:
Net loss	$	(349,676	)	$	(73,879	)
Adjustments for non-cash items:
Amortization expense		2,870			1,838
Issuance of stock for services rendered		5,300			22,500
Non-cash stock compensation expense		191,323			—

Changes in assets and liabilities:
Accounts payable		500			(250	)

Net Cash Used in Operating Activities		(149,683	)		(49,791	)

INVESTING ACTIVITY:
Acquisition of Dorff Writers Share		—			(40,000	)

Net Cash Used in Investing Activities		—			(40,000	)

FINANCING ACTIVITIES:
Accrued Interest, related party		13,814			9,062
Proceeds from issuance of related party note payable		95,000			85,000
Credit card payable		16,168			(1,803	)

Net Cash Provided by Financing Activities		124,982			92,259

NET (DECREASE)/ INCREASE IN CASH		(24,701	)		2,468

CASH AT BEGINNING OF PERIOD		27,142			3,566

CASH AT END OF PERIOD	$	2,441		$	6,034

Cash Paid During the Period for:
Interest	$	16,003		$	10,513
Income taxes	$	4,675		$	4,398

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

HISTORY

ROKWADER, INC. (the Company), was organized under the laws of the State of Delaware on March 18, 2005.

BASIS OF CONSOLIDATION

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is December 31. The condensed consolidated financial statements include the accounts of Rokwader, Inc. and subsidiary. Inter-company accounts and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2014, and for all periods presented herein, have been made.

It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's December 31, 2013 audited consolidated financial statements.

GOING CONCERN AND PLAN OF OPERATION

The Company’s financial statements have been presented on the basis that it will continue as a going concern. Although the Company has commenced operations, it has not generated significant revenues from operations to date, and still meets the requirements of a development stage company. The Company has an accumulated deficit of $1,383,892 as of September 30, 2014.

To the extent that the Company’s capital resources are insufficient to meet current or planned operating requirements, the Company will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will provide any portion of the Company’s future financing requirements.

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company and raises substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.

INCOME TAXES

The Company follows the guidance of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 740 related to Income Taxes. According to Topic 740, deferred income taxes are recorded to reflect the tax consequences in future years of temporary differences between the tax basis of the assets and liabilities and their financial amounts at year-end.

For federal income tax purposes, substantially all expenses incurred prior to the commencement of operations must be deferred and then they may be written off over a 180-month period. Tax deductible losses can be carried forward for 20 years until utilized for federal tax purposes. The Company will provide a valuation allowance in the full amount of the deferred tax assets since there is no assurance of future taxable income.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

The Company utilizes the Financial Accounting Standards Board’s Accounting Standards Codification Topic 740 related to Income Taxes to account for the uncertainty in income taxes. Topic 740 for Income Taxes clarifies the accounting for uncertainty in income taxes by prescribing rules for recognition, measurement and classification in financial statements of tax positions taken or expected to be in a tax return. Further, it prescribes a two-step process for the financial statement measurement and recognition of a tax position. The first step involves the determination of whether it is more likely than not (greater than 50 percent likelihood) that a tax position will be sustained upon examination, based on the technical merits of the position. The second step requires that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon ultimate settlement. This topic also provides guidance on the accounting for related interest and penalties, financial statement classification and disclosure. The Company’s policy is that any interest or penalties related to uncertain tax positions are recognized in income tax expense when incurred. The Company has no uncertain tax positions or related interest or penalties requiring accrual at September 30, 2014 and December 31, 2013.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist primarily of cash in banks and highly liquid investments with original maturities of 90 days or less.

CONCENTRATIONS OF CREDIT RISK

The Company maintains all cash in deposit accounts, which at times may exceed federally insured limits. The Company has not experienced a loss in such accounts.

EARNINGS PER COMMON SHARE

Basic earnings per common share are computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share consists of the weighted average number of common shares outstanding plus the dilutive effects of options and warrants calculated using the treasury stock method. In loss periods, dilutive common equivalent shares are excluded as the effect would be anti-dilutive.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

LONG-LIVED ASSETS

The realizability of long-lived assets is evaluated periodically as events or circumstances indicate a possible inability to recover the carrying amount. Long-lived assets that will no longer be used in our business are written-off in the period identified since they are no longer expected to generate any positive cash flows for us. Long-lived assets that continue to be used by us are periodically evaluated for recoverability. Such evaluation is based on various analyses, including cash flow and profitability projections. The analyses necessarily involve significant management judgment. In the event the projected undiscounted cash flows are less than net book value of the assets, the carrying value of the assets is written down to its estimated fair value.

During 2010, the Company determined that, based on estimated future cash flows, the carrying amount of the intangible assets acquired in the purchase of Latigo Shore Music, Inc., including the Music Copyright Costs and Master Compact Disks exceed their fair value by $18,942 each. Accordingly, an impairment loss of $37,884 was recognized for the year ended December 31, 2010 related to these intangibles. No impairment loss was recognized for the nine month period ended September 30, 2014. Additionally, during 2010, the Company determined that the carrying amount of goodwill exceeded its fair value. Accordingly, a goodwill impairment loss of $41,664 was recognized for the year ended December 31, 2010. No goodwill loss was recognized for the nine month period ended September 30, 2014.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

As required by FASB ASC Topic 605, Revenue Recognition (“ASC 605”), the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable.

Revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions. The receipt of royalties principally relates to amounts earned from the public performance of copyrighted material, the mechanical reproduction of copyrighted material on recorded media including digital formats, and the use of copyrighted material in synchronization with visual images. Consistent with industry practice, music publishing royalties generally are recognized as revenue when cash is received. Revenue generally is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended September 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

NOTE 2 – STOCKHOLDERS DEFICIT

On March 8, 2012, the Company issued 40,000 shares of common stock to Brooktide, LLC (a company controlled by Mr. Yale Farar) in full satisfaction of $30,000 owed to Brooktide, LLC. The shares of common stock are restricted shares and the share certificates contain a legend restricting sales and transfers.

On April 2, 2012, the Company sold 53,500 shares of the Company’s common stock at a price of $0.75 per share. The proceeds from this sale will be used to pay fees and expenses; to the extent such expenses are not deferred, arising from the Company’s compliance with its public reporting requirements and to continue to create viable entertainment assets in the music recording industry.

On August 3, 2012, the Company’s board of directors agreed to issue 25,000 stock options to Mr. William Barnett, 25,000 stock options to Mr. Mitchell Turk, 25,000 stock options to Mr. Gary Saderup, 25,000 stock options to Mr. Steve Dorff, and 250,000 stock options to Brooktide, LLC for the purchase of the Company’s shares of common stock. The stock options are exercisable at $0.75 per share and expire 2 years from the date of grant. As a result of the issuance of these stock options, the Company recognized $121,077 in stock-based compensation in the 2012 consolidated statement of operations.

The Company applied the Financial Accounting Standards Board’s Accounting Standards Codification Topic 505 related to Equity Based Payments to Non-Employees to account for these options and warrants issued. According to Topic 505, all transactions in which goods or services are the consideration received for the issuance of equity instruments shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The Company believes that fair value of these options and warrants is a more reliable measure of the consideration received for services performed for the Company. We determined the fair value of these equity instruments using the Black-Scholes option-pricing model. Factors used in the determination of the fair value of these equity instruments include, the stock price at the grant date, the exercise price, the expected life of the equity instrument, the volatility of the underlying stock, the expected dividends on it, and the risk-free interest rate over the expected life of the equity instrument. The initial fair value of these options and warrants granted was $121,077 which was calculated using the Black-Scholes option-pricing model.

The stock option expense included in general and administrative expense for the nine month period ended September 30, 2014 and the year ended December 31, 2012 is $191,323 and $0, respectively. FASB ASC 505 “Equity Based Payments to Non-Employees” requires that only the compensation expense expected to vest be recognized.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2 – STOCKHOLDERS DEFICIT (CONTINUED)

25,000 of the stock options issued expired as of June 30, 2014 while the remaining 325,000 stock options were extended through December 31, 2015. As a result of this extension, the Company recognized an additional $191,323 in stock-based compensation expense in the 2014 unaudited condensed consolidated statement of operations. The Black-Scholes option-pricing model was used to calculate this compensation expense.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Due to the Company’s limited stock activity, the expected volatility is based on the daily historical volatility of comparative companies, measured over the expected term of the option. The risk-free rate is based on the implied yield on U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option.

The dividend yield reflects that the Company has not paid any cash dividends since inception and does not intend to pay any cash dividends in the foreseeable future.

The following assumptions were used to determine the fair value of the options as of September 30, 2014:

	September 30, 2014
Dividend Yield		0
Expected Volatility		278%
Risk-Free Interest Rate		0.47
Term in Years		1.5
Stock Price		0.65
Option Exercise Price		0.75

The following assumptions were used to determine the fair value of the options at date of original issuance on August 3, 2012:

	August 3, 2012
Dividend Yield		0
Expected Volatility		100%
Risk-Free Interest Rate		0.38
Term in Years		1.58
Stock Price		0.75
Option Exercise Price		0.75

A summary of option activity as is presented below:

	Options		Weighted Average Exercise Price		Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012		350,000	$	0.75		1.58	$	121,077

Exercisable at December 31, 2012		—		—		—		—

Options forfeited or expired		—		—		—		—
Outstanding at December 31, 2013		350,000	$	0.75		1.58	$	121,077

Exercisable at December 31, 2013		—		—		—		—

Options forfeited or expired		25,000	$	0.75		1.58	$	8,648
Outstanding at September 30, 2014		325,000	$	0.65		1.50	$	191,323

Exercisable at September 30, 2014		—		—		—		—

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2 – STOCKHOLDERS DEFICIT (CONTINUED)

On August 20, 2013, the Company issued 45,000 shares of common stock, at the price of $0.50, for services rendered. 10,000 shares of common stock were issued to Mr. Gary Saderup, 20,000 shares of common stock were issued to Mr. Steve Dorff, and 15,000 shares of common stock were issued to Mr. William Barnett. The shares of common stock are restricted shares and the share certificates contain a legend restricting sales and transfers. The Company determined that the price of $0.50 per share was a fair value for the shares issued for services rendered based on its most recent securities sale transaction.

On November 1, 2013, the Company issued 20,000 shares of common stock at the price of $0.40, for services rendered to Mr. Andrew Dorff. The shares of common stock are restricted shares and the share certificates contain a legend restricting sales and transfers. The Company determined that the price of $0.40 per share was a fair value for the shares issued for services rendered based on its most recent securities sale transaction.

On May 22, 2014, the Company issued 10,000 shares of common stock at the price of $0.53, for services rendered to Beth Brinker and Jess William Boeschen at 5,000 shares per person. The shares of common stock are restricted shares and were valued at the price of $0.53 through the average of “bid” and “ask” price of the Company’s common stock on the OTC:OB market as of the date hereof.

NOTE 3 – RELATED PARTY TRANSACTIONS

On August 16, 2007, the Company issued 1,000,000 shares of common stock to Mr. Yale Farar in full satisfaction of $280,000 plus interest owed to him. The shares of common stock are restricted shares and the share certificates contain a legend restricting sales and transfers. The $280,000 owed to Mr. Farar was comprised of the $170,000 loan to the Company, including $50,000 on March 30, 2007, pursuant to the Agreement to Advance Funds dated September 21, 2005 and the $110,000 loan to the Company in accordance with the 6% Subordinated Convertible Promissory Note on April 26, 2007.

On November 13, 2007, Brooktide, LLC loaned the Company $75,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.375 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.”

The proceeds of the Note were used to pay fees and expenses arising from the Company’s compliance with its public reporting requirements and to continue to create viable entertainment assets in the music recording industry. Additionally, the proceeds of the Note were used to pay for costs relating to its registration statement with the SEC, which was declared effective May 13, 2008 and finalized on August 5, 2008.

Based on a conversion price of $.375, the convertibility does not result in a beneficial conversion feature as defined in the Financial Accounting Standards Board’s Accounting Standards Codification Topic 470 related to Debt with Conversion and Other Options. Further, per the Financial Accounting Standards Board’s Accounting Standards Codification Topic 815 related to Contracts in Entity’s Own Equity, the debt meets the definition of conventional convertible debt and bifurcation of the embedded derivative is not necessary.

Additionally, Brooktide, LLC owns a controlling interest in the Company’s common stock. Mr. Farar, the President of Rokwader, is the sole manager of Brooktide, LLC. As a sole manager, Mr. Farar, has voting and investment power over the shares owned by Brooktide, LLC.

The Company neither owns nor leases any real or personal property. Most office services are provided without charge by the president. In addition, Mr. Dorff, director and President of Latigo provides music studio facilities to us at no cost. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein.

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities, such that they may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3 – RELATED PARTY TRANSACTIONS (CONTINUED)

On February 12, 2009, the Company issued 15,000 shares of its common stock at a price of $0.75 per share to Mr. Steve Dorff for services performed. Using the results of its initial public offering performed on August, 5, 2008, the Company determined that the price of $0.75 per share was a fair value for the shares issued to Mr. Steve Dorff.

On April 14, 2010, Mr. Yale Farar, the President of Rokwader, loaned the Company $25,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.75 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses arising from the Company’s compliance with its public reporting requirements.

On December 17, 2010, Brooktide, LLC loaned Latigo Shore Music, Inc. (“Latigo”), a wholly owned subsidiary of the Company, $16,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by Latigo. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.75 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.”

The proceeds of the Note were used to purchase musical compositions from the Gary Harju music catalog to the extent of his writer’s and publisher’s share (“Harju Catalog”). The Harju Catalog consists of 50 original songs written in whole or in part by Gary Harju.

On December 17, 2010 Brooktide, LLC loaned the Company $9,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.75 per share. The Note is a demand note and may be paid at anytime without premium or penalty.

The proceeds of the Note were used to pay fees and expenses; to the extent such expenses are not deferred, arising from the Company’s compliance with its public reporting requirements and to continue to create viable entertainment assets in the music recording industry.

On April 1, 2013 Brooktide, LLC loaned the Company $35,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.50 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3 – RELATED PARTY TRANSACTIONS (CONTINUED)

On May 24, 2013 Brooktide, LLC loaned the Company $50,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.50 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

On October 28, 2013 Brooktide, LLC loaned the Company $50,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.50 per share. The Note is a demand note and may be paid at anytime without premium or penalty.

The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

On January 31, 2014 Brooktide, LLC loaned the Company $25,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.50 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at any time after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

On May 22, 2014 Brooktide, LLC loaned the Company $35,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.53 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at any time after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

On July 29, 2014 Brooktide, LLC loaned the Company $35,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $.53 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at any time after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

NOTE 4 – INTANGIBLES

On December 17, 2010, Latigo, a wholly owned subsidiary of the Company, acquired all right, title and interest in 50 musical compositions from the Gary Harju music catalog to the extent of his writer’s and publisher’s share for a cost of $15,000 paid in cash on the closing date of December 17, 2010. The Harju Catalog (including copyrights and publishing rights) consists of 50 original songs written in whole or in part by Mr. Gary Harju. Some of the songs are owned outright by Latigo as a result of the acquisition, and others are and will continue to be subject to publishing agreements with various music publishers, who will continue to collect the publisher’s share of royalties. The other parties who have partial interests in the catalog will continue to receive their share of royalties and other income. The Company will amortize the costs of the Harju Catalog over its estimated useful life based on projected net revenues. The Company projects to generate revenues from the Harju Catalog for an estimate of 20 years based on Mr. Harju’s past accomplishments and the ability of the recorded music to generate revenues for long periods of time. Therefore, the Company estimated the useful life of the Harju Catalog to be 20 years.

ROKWADER, INC. AND SUBSIDIARY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 4 – INTANGIBLES (CONTINUED)

On June 1, 2013, Latigo, a wholly owned subsidiary of the Company, acquired all right, title and interest in Andrew Dorff’s “writer’s share” of certain musical compositions written and/or co-written by him for a cost of $40,000 paid in cash. The musical compositions include 106 songs total. The Company currently owns the publishing rights from these musical compositions. Some of the songs are owned outright by Latigo as a result of the acquisition, and others are and will continue to be subject to publishing agreements with various music publishers, who will continue to collect the publisher’s share of royalties and other income. The Company will amortize the costs of Andrew Dorff’s “writer’s share” over its estimated useful life based on projected net revenues. The Company projects to generate revenues from Andrew Dorff’s “writer’s share” for an estimate of 20 years based on Andrew Dorff’s past accomplishments and the ability of the recorded music to generate revenues for long periods of time.

	September 30, 2014				December 31, 2013
	Gross		Accumulated		Gross		Accumulated
	Amount		Amortization		Amount		Amortization
Intangibles subject to amortization:
Harju Music Catalog		15,000		4,993		15,000		4,080
Dorff's Writer's Share		40,000		3,481		40,000		1,523
	$	55,000	$	8,474	$	55,000	$	5,603

For the nine months ended September 30, 2014 and the year ended December 31, 2013, amortization expense was $2,870 and $2,811, respectively.

Amortization of the remaining intangible assets is expected to be $12,982 from 2014 through 2018, and $31,630 in aggregate for years thereafter through 2032.

NOTE 5 – SUBSEQUENT EVENTS

On October 30, 2014 Brooktide, LLC loaned the Company $30,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $0.45 per share. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at any time after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

Management has evaluated subsequent events through the date of the accountant’s compilation report.

Item 2. Management’s Discussion and Analysis or Plan of Operation.

This 10-Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

Plan of Operations

Our principal business objective for the next 12 months will be to achieve long-term growth through Latigo, our wholly-owned subsidiary. In this regard, we are putting extensive effort into marketing the songs in our catalogs, by introducing them to recording artists, producers and singers in order to try and get them recorded. When they are recorded and if successfully released they will generate royalties. We currently have retained two music industry consultants who are bringing to the attention of active music industry parties the songs in our catalogs. The consultants, pursuant to a month to month letter agreement, are paid minimal consultant fees and commissions. We cannot at this time predict future results of our operations, as it is very difficult to predict success of released and marketed recordings. In the end, the public makes the final judgment by their purchases. Furthermore, the Company continues to review other business opportunities which include strategic relationships or mergers and acquisitions. Latigo is also interested in acquiring additional music catalogs. Latigo hopes to be able to receive publishing fees on the copyrights as other singers, movies, television, or other theatrical outlets utilize the songs in the catalog.

Latigo’s expenses associated with its business for the quarter ended September 30, 2014, were $14,135.

On January 24, 2013, the Company, which already owned a 50% interest of the Andrew Dorff Catalog (the “Catalog”), acquired the remaining 50 % interest of the catalog from Dillonpark, LLC, an entity of which Mr. Farar, the president and principal shareholder of the Company, is a member and manager. The purchase price for the additional 50% of the Catalog was $22,000, which is the same amount that Dillonpark paid to acquire the Catalog. Furthermore, the purchase price of $22,000 is only required to be paid if and when the Catalog produces cash through royalties or sales. There is no level of cash production required to trigger the commencement of repayment of the $22,000. To date the Catalog has not produced any revenue.

Results of Operation for the nine months ended September 30, 2014 and 2013

During the nine months ended September 30, 2014, the Company generated $538 of revenues compared to $5,487 revenues for the nine months ended September 30, 2013. During the nine months ended September 30, 2014 and 2013, the Company incurred general and administrative expenses of $350,214 and $79,366, respectively. The 100% increase over 2013 was primarily due to increased marketing, advertising and operational expenses of Latigo and professional fees related to preparation of the Company’s Form 10 and other SEC reporting obligations.

Equity and Capital Resources

We have incurred losses since inception of our business (March 18, 2005) and, as of September 30, 2014, we had an accumulated deficit of $1,575,215. As of September 30, 2014, we had cash of $2,441 and a working capital deficit of $427,465, compared to cash of $6,034 and a working capital deficit of $254,470 at September 30, 2013. The increase in the working capital deficit was primarily due to the elimination of derivative liabilities pursuant to amendments deleting reset provisions in previously issued and outstanding convertible promissory notes.

To the extent that the Company's capital resources are insufficient to meet current or planned operating requirements, the Company will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will provide any portion of the Company's future financing requirements. Although there is no contractual relationship between the Company and Mr. Farar, the President and principal shareholder, he has indicated that, if the Company continues to grow, he would favorably entertain funding corporate expenses for approximately another 12 months. Any additional capital advanced by Mr. Farar would most likely be in the form of a convertible promissory note at 6% interest (the “Note”) and convertible into common stock of the Company at a price equal to the closing bid price on the OTCQB on the date of the Note. There is no assurance that Mr. Farar will continue to support the Company. Without a further influx of monies, either from revenues or from outside investors, the Company will run out of funds within approximately six months.

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company. These factors raise substantial doubt about the ability of the Company to continue as a going concern.

12 month Plan

Our plan of operation for the next 12 months will be to continue implementing Phase 1 in which we are using different strategies to gain market awareness of our catalog songs. Most of this involves our music consultants pitching our songs to producers, artists, music executives, and film & TV music supervisors with the intention of getting songs in our catalogs produced and released. Assuming some success with Phase 1, we will move into Phase 2 which will include marketing activities in Europe and Asia and seeking acquisitions of additional music catalogs. Phase 2 would also include hiring songwriters to write songs for the Company to distribute and write songs for a particular artist or medium, whether TV or movies. We anticipate that the total cost of these two Phases will be approximately $405,000.

We have already begun Phase 1 with the hiring of two music consultants. Phase 1will also include attendance at music award ceremonies and music songwriter’s conventions. The estimate cost of the work for Phase 1 is $80,000, plus an estimated $25,000 for general and administrative costs and $55,000 for costs associated with being a public company.

Upon completion of Phase 1, we will begin Phase 2 which we estimate the cost to be $245,000. We believe that Phase 1 will continue until the summer of 2015. Phase 2 is estimated to cost $165,000 for the creative expense plus $80,000 for general, administrative, legal, accounting and associated fees to remain a public company.

We do not have enough funds to cover the cost of Phase 1. We will require additional funding in order to cover administrative expenses and to proceed with the recommended Phase 2 programs that may be needed as a result of the success of the Phase 1 work.

Specifically, over the next 12 months, the Company anticipates the following $160,000 of expenses:

Music Consultants	$	60,000
Attendance at Music Conventions and Awards		20,000
General & Administrative		25,000
Accounting fees		20,000
Edgar fees		5,000
Legal fees		25,000
Transfer Agent		5,000
TOTAL	$	160,000

In addition, creative costs will increase in coming years, and there will be continuing general and administrative costs, including costs of maintaining current reporting status under the Securities Exchange Act of 1934.

We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or from related party loans. We do not have any arrangements in place for any future equity financing or loans. There are no agreements for future loans and contribution with any of the Directors and officers.

Although the Company has no written agreenments, to acquire or combine with another entity, we continue to seek business opportunities including strategic relationships and mergers and acquisitions with other companies.

Critical Accounting Policies

From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the Codification are communicated through issuance of an Accounting Standards Update (“ASU”).

We have adopted all applicable recently issued accounting pronouncements. The adoption of the accounting pronouncements did not have a material effect on our operations.

Off-balance Sheet Arrangements

Since our inception through June 30, 2014, we have not engaged in any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risks.

As a “small reporting company” we are not required to provide this information pursuant to Regulation S-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls are also designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer, in order to allow timely consideration regarding required disclosures.

The evaluation of our disclosure controls by our principal executive officer included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Quarterly Report. Our management, including our chief executive officer, does not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, our Principle Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as of September 30, 2014 and 2013, were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2011, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

As a “small reporting company” we are not required to provide this information pursuant to regulation S-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information.

On October 30, 2014 Brooktide, LLC, a limited liability company principally owned by the President, Director and principal stockholder of the Company, loaned the Company $30,000 in accordance with a Subordinated Convertible Promissory Note (“Note”) executed by the Company. Pursuant to the terms of the Note, this loan bears an interest rate equal to 6% per annum and is convertible at the option of the holder at anytime into common stock of the Company at $0.45 per share, which was the average trading price of the Company’s common stock over the previous 10 trading days. The Note is a demand note and may be paid at anytime without premium or penalty. The outstanding balance on the Note is immediately due and payable without notice or demand, upon or at anytime after the occurrence or existence of any one or more of the listed “Events of Default.” The proceeds of the Note were used to pay fees and expenses, to the extent such expenses are not deferred, and to continue to create viable entertainment assets in the music recording industry.

Item 6. Exhibits.

(a) Exhibits.

Exhibit		Item
10.1		Convertible Promissory Note in the amount of $30,000 dated October 30, 2014 in favor of Brooktide, LLC.

31.1		Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ROKWADER, INC.

Date: November 19, 2014	/s/ Yale Farar
	Yale Farar, President (Principal Executive Officer)

Date: November 19, 2014	/s/ Yale Farar
	Yale Farar, Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit		Item
10.1		Convertible Promissory Note in the amount of $30,000 dated October 30, 2014 in favor of Brooktide, LLC

31.1		Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

ROKWADER, INC. - FORM 10-Q - November 19, 2014

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ROKWADER, INC. Reports