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 March 31, 2011
 
 OR
 
 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. 333-125314





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.)





23300 Ventura Boulevard 2nd Floor, Woodland Hills, CA 91364


(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                     oNon-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  o No  þ





The number of shares of Common Stock, $0.001 par value, of the registrant outstanding at May 23, 2011 was 2,283,718.








TABLE OF CONTENTS





PART I.


3Item 1. Financial Statements.


3CONDENSED CONSOLIDATED BALANCE SHEETS


3CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


4CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)


5CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


6NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


7Item 2. Management’s Discussion and Analysis or Plan of Operation


15Item 3. Quantitative and Qualitative Disclosures About Market Risks.


17Item 4T. Controls and Procedures


17PART II.


17Item 1. Legal Proceedings.


17Item 1A. Risk Factors.


17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


17Item 3. Defaults Upon Senior Securities.


17Item 4. Submission of Matter to Vote of Security Holders.


18Item 5. Other Information.


18Item 6. Exhibits.


18SIGNATURES


18EXHIBIT INDEX


19Certification of CEO Pursuant to Rule 15d-14(a)Certification of CFO Pursuant to Rule 15d-14(a)Certification of CEO and CFO Pursuant to Section 1350




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.


2





PART I.


Item 1. Financial Statements.





ROKWADER, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED


(A DEVELOPMENT STAGE COMPANY)




MARCH 31,


DECEMBER 31,2011


2010ASSETSCURRENT ASSETS:Cash (Note 1)

$
2,203


$
10,871Prepaid Insurance


2,833



7,083TOTAL CURRENT ASSETS


5,036



17,954OTHER ASSETSIntangible Assets, Net of Accumulated Amortizationof $433 and $0, respectively (Note 4)


14,567



15,000TOTAL OTHER ASSETS


14,567



15,000TOTAL ASSETS

$
19,603


$
32,954LIABILITIES AND STOCKHOLDERS’ DEFICITCURRENT LIABILITIES:Accounts Payable

$
9,476


$
21,931Accrued Expenses


17,114



15,239Related Party Convertible Note Payable (Note 3)


125,000



125,000TOTAL CURRENT LIABILITIES


151,590



162,170TOTAL LIABILITIES


151,590



162,170STOCKHOLDERS’ (DEFICIT):Preferred Stock, $.001 par value, 10,000,000 sharesauthorized, none issued and outstanding


-



-Common Stock, $.001 par value, 100,000,000 sharesauthorized, 2,283,718 and 2,213,718 shares issued andoutstanding as of March 31, 2011 and December 31, 2010


2,284



2,214Additional Paid-In Capital


715,043



680,113(Deficit) Accumulated During Development Stage


(849,314
)


(811,543
)TOTAL STOCKHOLDERS' (DEFICIT) (Note 2)


(131,987
)


(129,216
)TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)

$
19,603


$
32,954





SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


3




ROKWADER, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED


(A DEVELOPMENT STAGE COMPANY)




FOR THE PERIODFROM MARCH 18, 2005THREE MONTHS ENDED


THREE MONTHS ENDED


(INCEPTION)MARCH 31, 2011


MARCH 31, 2010


TO MARCH 31, 2011REVENUE

$
251


$
-


$
7,404EXPENSESGeneral and Administrative


38,022



28,782



777,997Impairment Losses (Note 4)


-



-



79,548TOTAL EXPENSES


38,022



28,782



857,545OTHER INCOME/ (EXPENSES)Interest Income


-



4



827NET LOSS

$
(37,771
)

$
(28,778
)

$
(849,314
)NET LOSS PER COMMON SHARE - BASIC & DILUTED

$
(0.02
)

$
(0.01
)

$
(0.47
)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING


2,281,385



2,213,718



1,789,219





SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4


ROKWADER, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - UNAUDITED


(A DEVELOPMENT STAGE COMPANY)





DEFICITACCUMULATEDADDITIONAL


DURINGCOMMON STOCK


PAID-IN


DEVELOPMENTSHARES


AMOUNT


CAPITAL


STAGE


TOTALBALANCE, MARCH 18, 2005


-


$
-


$
-


$
-


$
-Sale of Common Stock on March 30, 2005


1,250,000



1,250



99,990



-



101,240Net Loss


-



-



-



(28,230
)


(28,230
)BALANCE, DECEMBER 31, 2005


1,250,000



1,250



99,990



(28,230
)


73,010Net Loss


-



-



-



(85,220
)


(85,220
)BALANCE, DECEMBER 31, 2006


1,250,000


$
1,250


$
99,990


$
(113,450
)

$
(12,210
)Issuance of Common Stock on April 23, 2007


70,000



70



69,930



-



70,000Issuance of Common Stock on August 16, 2007 (Note 2)


104,500



105



29,155



-



29,260Issuance of Common Stock on August 16, 2007 (Note 2 & 3)


1,000,000



1,000



281,823



-



282,823Contribution to Capital of Corporation September 26, 2007 (Note 2)


(544,286
)


(544
)


544



-



-Net Loss


-



-



-



(286,207
)


(286,207
)BALANCE, DECEMBER 31, 2007


1,880,214


$
1,881


$
481,442


$
(399,657
)

$
83,666Issuance of Common Stock on August 5, 2008, net of costs of  offering of $66,127 (Note 2)


318,504



318



172,433



-



172,751Stock compensation expense (Note 2)


-



-



7,566



-



7,566Net Loss


-



-



-



(135,324
)


(135,324
)BALANCE, DECEMBER 31, 2008


2,198,718


$
2,199


$
661,441


$
(534,981
)

$
128,659Common Stock issued on February 12, 2009 for services performed (Note 2)


15,000



15



11,235



-



11,250Net Loss


-



-



-



(112,940
)


(112,940
)BALANCE, DECEMBER 31, 2009


2,213,718


$
2,214


$
672,676


$
(647,921
)

$
26,969Stock compensation expense (Note 2)


-



-



7,437



-



7,437Net Loss


-



-



-



(163,622
)


(163,622
)BALANCE, DECEMBER 31, 2010


2,213,718


$
2,214


$
680,113


$
(811,543
)

$
(129,216
)Issuance of Common Stock on January 3, 2011 (Note 2)


70,000



70



34,930



-



35,000Net Loss


-



-



-



(37,771
)


(37,771
)BALANCE, MARCH 31, 2011


2,283,718


$
2,284


$
715,043


$
(849,314
)

$
(131,987
)





SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


5





ROKWADER, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED


(A DEVELOPMENT STAGE COMPANY)




FOR THE PERIODFROM MARCH 18, 2005THREE MONTHS ENDED


THREE MONTHS ENDED


(INCEPTION)MARCH 31, 2011


MARCH 31, 2010


TO MARCH 31, 2011CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(37,771
)

$
(28,778
)

$
(849,314
)Adjustments for non-cash items:Amortization expense


433



1,500



54,849Impairment Losses (Note 4)


-



-



79,548Issuance of stock for interest payable


-



-



2,823Issuance of stock for services rendered


-



-



40,510Non-cash stock compensation expense


-



-



15,003Changes in assets and liabilities:Prepaid insurance


4,250



4,250



(2,833
)Accounts payable


(12,455
)


10,288



9,476Accrued expenses


1,875



1,125



17,114Insurance payable


-



-



-Net Cash Used for Operating Activities


(43,668
)


(11,615
)


(632,824
)CASH FLOWS FROM INVESTING ACTIVITY:Acquisition of Latigo Shore Music, Inc.


-



-



(29,964
)Acquisition of Music Catalog (Note 4)


-



-



(15,000
)Net Cash Used for Investing Activities


-



-



(44,964
)CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of common stock


35,000



-



308,991Repayment of loan payable


-



-



(34,000
)Proceeds from issuance of loan payable to officer


-



-



280,000Proceeds from issuance of note payable


-



-



125,000Net Cash Provided by Financing Activities


35,000



-



679,991NET INCREASE (DECREASE) IN CASH


(8,668
)


(11,615
)


2,203CASH AT BEGINNING OF PERIOD


10,871



20,192



-CASH AT END OF PERIOD

$
2,203


$
8,577


$
2,203Cash Paid During the Period for:Interest

$
2,292


$
1,125


$
27,933Income taxes

$
551


$
-


$
9,300Non-Cash Investing and Financing activitiesIn addition to paying $30,000 in cash for the purchase of Latigo Shore Music, Inc., the Company issued 70,000 shares of common stock valued at

$
-


$
-


$
70,000The Company issued 104,500 shares of common stock for services rendered. (Note 2)

$
-


$
-


$
29,260The Company issued 1,000,000 shares of common stock to Mr. Yale Farar in full satisfaction of $280,000 plus interest owed to Mr. Farar. (Note 2 & 3)

$
-


$
-


$
282,823The Company issued 15,000 shares of common stock for services rendered. (Note 2)

$
-


$
11,250


$
11,250





SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


6





ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





HISTORY





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





INTERIM RESULTS




The accompanying consolidated financial statements at March 31, 2011 and for the three months ended March 31, 2010 and for the period from March  18, 2005 (inception) to March 31, 2011 are unaudited, but include all adjustments, consisting of normal recurring entries, which the Company’s management believes to be necessary for a fair presentation of the periods presented.  Interim results are not necessarily indicative of results for a full year.  Balance sheet amounts as of December 31, 2010 have been derived from our audited financial statements as of that date.




The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted pursuant to such rules and regulations.  The financial statements should be read in conjunction with the Company’s audited financial statements in its Form 10-K for the year ended December 31, 2010.  The Company’s operating results will fluctuate for the foreseeable future.  Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.




DEVELOPMENT STAGE ENTERPRISE





The Company is a development stage company as defined by the Financial Accounting Standards Board’s Accounting Standards Codification Topic 915 related to Development Stage Entities.With the acquisition of Latigo Shore Music, Inc. (Latigo) as a subsidiary, the Company has commenced operations and has become operational.  The Company qualifies as a development stage company as it has not generated significant revenues.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.





BASIS OF CONSOLIDATION


The consolidated financial statements include the accounts of Rokwader, Inc. and subsidiary. Inter-company accounts and transactions have been eliminated.





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 $849,314 as of March 31, 2011.





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.


7




ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





INCOME TAXES (CONTINUED)





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 infinancial 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 March 31, 2011 and December 31, 2010.





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.





COMPREHENSIVE INCOME (LOSS)





The Company has not presented a separate statement of other comprehensive income (loss) as there are no such items.





EARNINGS PER COMMON SHARE





Basic earnings per common share is 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.


8




ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





LONG-LIVED ASSETS (CONTINUED)





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 three months ended March 31, 2011.  Additionally, during 2010, the Company determined that the carrying amount of goodwill exceeded its fair value.  Accordingly, a full goodwill impairment loss of $41,664 was recognized for the year ended December 31, 2010.





RECENT ACCOUNTING PRONOUNCEMENTS





In December 2010, the FASB issued an update to its Accounting Standards Codification Topic 350 related to Goodwill and Other Intangible Assets.  When a goodwill impairment test is performed (either on an annual or interim basis), an entity must assess whether the carrying amount of a reporting unit exceeds its fair value (Step 1).  If it does, an entity must perform and additional test to determine whether goodwill has been impaired and to calculate the amount of that impairment (Step 2).  This update deals with questions about entities with reporting units with zero or negative carrying amounts because some entities concluded that Step 1 of the test is passed in those circumstances because the fair value of their reporting unit will generally be greater than zero.  As a result of that conclusion, some constituents raised concerns that Step 2 of the test is not performed despite factors indicating that goodwill may be impaired.  This update is effective, for public entities, for fiscal years, and interim periods within those years, beginning after December 15, 2010.  Early adoption is not permitted.  Implementation of this update will not have a material impact on our consolidated position or results of operations.





In December 2010, the FASB issued an update to its Accounting Standards Codification Topic 805 related to Business Combinations.  The objective of this update is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations.  It specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  This update also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  This update is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted.  Implementation of this update will not have a material impact on our consolidated financial position or results of operations.





NOTE 2 – STOCKHOLDERS’ EQUITY





On February 1, 2006, the Company completed an initial registered public offering of its common stock pursuant to the Company's registration statement on Form SB−2 (File No. 333−125314) that the Securities and Exchange Commission declared effective on November 2, 2005 (the “Registration Statement”). The Company offered and sold 125,000 registered shares of the Company's common stock, at a price of $1.00 per share. Pursuant to Rule 419 of Regulation C, promulgated under the Securities Act of 1933, as amended, the Company deposited all proceeds of the offering and the shares sold into an escrow account. The offering was conducted by the Company's management without the use of an underwriter or securities dealer and the Company has not paid and will not pay commissions in connection with the sale of the shares. The shares sold and the proceeds of the offering were held in escrow pending completion of a business combination. The Company had until May 2, 2007 to consummate a qualifying business combination with another entity.


9




ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 2 – STOCKHOLDERS’ EQUITY (CONTINUED)





Accordingly, the $125,000 subject to the withdrawal restrictions had been classified as restricted cash, and in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 480 related to Financial Instruments with Characteristics of Both Liabilities and Equity, a liability was recorded for the obligation to repay these amounts to the investors if an acquisition is not consummated.  On April 10, 2007, the Company returned these funds to the investors including interest as management determined that a qualifying business combination would not occur by May 2, 2007.





On August 16, 2007, the Company issued shares of its common stock for services rendered.  As a result, Mitchell W. Turk received 32,000 shares of common stock, Gary Saderup received 17,500 shares of common stock, Steve Dorff received 30,000 shares of common stock, and William B. Barnett received 25,000 shares of common stock.  The shares of common stock issued are restricted shares and each share certificate contains a legend restricting sales and transfers.





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 shares issued.  According to Topic 505, issuance of equity instruments for services received are based on the fair value of the equity instruments issued or on the fair value of the services received, whichever is a more reliable measure.  The Company used the value of its common stock shares to account for this transaction.  The value of its shares is deemed more reliable as it was obtained from the valuation of an unrelated valuation specialist.





On August 16, 2007, the Company issued 1,000,000 shares of common stock to Brooktide, LLC (a company controlled by Mr. Yale Farar) in full satisfaction of $280,000 plus interest owed to Mr. Farar.  The shares of common stock are restricted shares and the share certificates contain a legend restricting sales and transfers.





On September 26, 2007, in order to provide a fair and reasonable percentage in ownership of the Company and a fair and reasonable share price for potential future investors, the Company adjusted its capitalization.  The Company received, from Brooktide, LLC (a company controlled by Mr. Yale Farar), 544,286 shares of common stock for cancellation.  The Company cancelled and returned the shares of common stock to authorized but unissued status.





The Company, in its development stage, does not have a history of operations, and there is no liquid market for trading the Company’s stock. Subsequently, determining the fair value of our common stock requires making complex and subjective judgements.  The valuation of the per share value of the Company’s common stock was determined contemporaneously by the Board of Directors, in its best judgment. Over the past year, the Company’s share valuation has fluctuated in response to the Company’s varying business condition.





Significant Factors, Assumptions, and Methodologies Used in Determining Fair Value


Significant factors and assumptions used in determining the Company’s fair value of its common stock include, future prospects for business, economic conditions of the music industry, debt restructuring, availability of capital resources, and cancellation of outstanding shares of common stock.





Significant Factors contributing to the Difference between Fair Value as of the Date of Each Grant and Estimated IPO Price


In April 2007 the Company acquired Latigo Shore Music, Inc. which business had been valued at $100,000 by an independent business appraisal firm. In light of the perceived future potential of Latigo’s music inventory and industry experience of Latigo’s President, the Company and Latigo’s President agreed on a per share valuation of $1.00 per share of the Company’s common stock. This valuation was determined after arms-length negotiations between the Company and Latigo and was accepted as a fair valuation by the parties to this transaction.





In August 2007, the Company’s ability to continue operations was in question and a restructuring of debt was deemed imperative.  The Board considered the then net worth of the Company, the reduced prospects for business at the time, the general economic conditions in the music industry and the subjective value related to development stage companies.  Faced with these circumstances, the Board determined a significantly reduced value of $0.28 per share was justified.  In October 2007, the Company obtained a retrospective independent valuation of the Company’s stock as of August 16, 2007 of $0.28 per share thus supporting the Board’s valuation.  An unrelated valuation specialist performed this independent valuation.


10





ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 2 – STOCKHOLDERS’ EQUITY (CONTINUED)





In October 2007, when the public offering price was being considered, the Company had recently significantly restructured its debt, had reduced the number of outstanding shares and had received additional loans from its President. In addition, by late 2007, the Company was seeing increased interest in Latigo’s business and music catalog thus enhancing the prospects for business. These internal and external factors, along with the fact that shares offered in the proposed initial public offering (“IPO”) would be freely tradable, convinced the Board that the fair valuation of the Company’s stock in the public offering should be $0.75 per share.





The Company’s business prospects and capitalization have been fluid from month to month and period to period. The Board of Directors, in setting fair values on stock issuances, uses its best judgment to evaluate the then current business condition and prospects for the Company and its industry and determines stock valuation to reflect current business conditions and prospects. Consequently, as business conditions have fluctuated over the past 12 months, so has the Company’s stock valuation as determined by the Board.  Future variations in the Company’s stock price should be anticipated.





The Company filed a registration statement, Form S-1, with the SEC on December 6, 2007. The SEC declared the registration statement effective on May 13, 2008. On August 5, 2008, the Company closed its initial public offering after selling 318,504 shares of its common stock at a price of $0.75 per share for gross proceeds of $238,878. After $66,127 of offering costs, the net proceeds totaled $172,751.  Net proceeds will be used to acquire music catalogues, for music production and promotion and for general working capital.





On August 29, 2008, the Company’s board of directors agreed to issue 9,000 stock options to Mr. Gary Saderup 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.  On August 26, 2010, the Company and Mr. Saderup mutually agreed to extend the exercise date of these options to August 28, 2012.





On August 31, 2008, the Company additionally agreed to enter into a consulting agreement with Mr. Stephen Horwitz.  According to the agreement, Mr. Horwitz would act as a consultant to the Company for 18 months.  The Company will grant Mr. Horwitz warrants to purchase 25,000 shares of its common stock at an exercise price of $0.75 per share. Warrants to purchase 12,500 shares will be granted upon execution of the consulting agreement.  The warrants to purchase the remaining 12,500 shares were to be granted in 90 days, subject to approval by the President of the Company as to the quality of the work performed by Mr. Horwitz.  On November 26, 2008, the Board of Directors denied the grant of the remaining 12,500 shares.  Additionally, the consulting agreement expired on June 1, 2009, a total of nine months.  The 12,500 warrants issued expire 2 years from the date of grant.  On August 26, 2010, the Company and Mr. Horwitz mutually agreed to extend the exercise date of these warrants to August 28, 2012.  As a result of this modification, and the modification described above, the Company recognized $7,437 in stock-based compensation in the 2010 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 $7,566 which was calculated using the Black-Scholes option-pricing model.





11





ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 2 – STOCKHOLDERS’ EQUITY (CONTINUED)





At December 31, 2010, the 21,500 vested options are outstanding at an exercise price of $0.75 per share and there is no intrinsic value.  Compensation cost charged to operations was $7,437 for the year ended December 31, 2010.  Compensation cost charged to operations was $11,250 for the year ended December 31, 2009.





On January 3, 2011, the Company entered into a Securities Purchase Agreement (“Agreement”) with CSB IV US Holdings, LLC (“Purchaser”) to sell 70,000 shares of the Company’s common stock at a price of $.50 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.





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.





Mr. Yale Farar, President, had loaned the Company $170,000, including $50,000 on March 30, 2007, pursuant to the terms of the Agreement to Advance Funds dated September 21, 2005, as amended.  The Company used these funds to make payments for its general and administrative expenses and deferred offering costs.  Pursuant to the terms of the Agreements to Advance Funds dated September 21, 2005, as amended, the loans were on an interest-free basis, documented by promissory notes and payable only upon consummation of a merger transaction or Event of Default, as defined by the promissory notes.





On April 26, 2007, Mr. Farar, the President of Rokwader, loaned the Company $110,000 in accordance with a 6% Subordinated Convertible Promissory Note (“Note”) executed by the Company.  Pursuant to the terms of the Note, the loan bears interest at 6% per annum and absent an “Event of Default,” was payable on demand or upon receipt by the Company of not less than $500,000 in capital or sale of substantially all of the Company’s assets or 80% of the Company’s capital stock.  The proceeds of the Note were used to complete the acquisition of Latigo and to pay fees and expenses, to the extent such expenses were not deferred, arising from the Company’s compliance with its public reporting requirements.





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 any time into common stock of the Company at $.375 per share.  The Note is a demand note and may be paid at any time 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 expensesarising 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.





12





ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 3 – RELATED PARTY TRANSACTIONS (CONTINUED)





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.





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.





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 shares 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 reliable measure.  The Company believes that the fair value of these shares is a more reliable measure of the consideration received for services performed for the Company.





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 any time into common stock of the Company at $.75 per share.  The Note is a demand note and may be paid at any time 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 expensesarising 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 any time into common stock of the Company at $.75 per share.  The Note is a demand note and may be paid at any time 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 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 any time into common stock of the Company at $.75 per share.  The Note is a demand note and may be paid at any time 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, 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, 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.





13





ROKWADER, INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(A DEVELOPMENT STAGE COMPANY)


(UNAUDITED)





NOTE 3 – RELATED PARTY TRANSACTIONS (CONTINUED)





Based on a conversion price of $.75, 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 debts meet the definition of conventional convertible debts and bifurcation of the embedded derivatives is not necessary.





NOTE 4 – INTANGIBLES





On December 17, 2010, Latigo Shore Music, Inc. (“Latigo”), a wholly owned subsidiary of the Company, acquired all right, title and interest in 50 musical compositions from the Gary Harju music catalog (the “Harju 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 12 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 12 years.





Additionally, in the acquisition of Latigo on April 23, 2007, the total purchase price paid for the acquisition was allocated to the fair value of the assets acquired, net of liabilities assumed, resulting in goodwill of $41,664.





Following is a summary of the intangibles at the end of the years ending:





March 31, 2011


December 31, 2010Gross


Accumulated


Gross


AccumulatedAmount


Amortization


Amount


AmortizationIntangibles subject to amortization:Harju Music Catalog


14,567



433



15,000



-$
14,567


$
433


$
15,000


$
-





For the three months ended March 31, 2011 and the year ended December 31, 2010, amortization expense was $433 and $0, respectively.





Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.  During 2010, the Company determined that, based on estimated future cash flows, the carrying amount of 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 three months ended March 31, 2011.





Amortization of the remaining intangible asset is expected to be $1,250 per year in 2011 through 2015, and $8,750 in aggregate for years thereafter through 2015.





14




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





On August 5, 2008, Rokwader completed an initial registered public offering of its common stock pursuant to Rokwader's registration statement on Form SB−2 that the Securities and Exchange Commission declared effective on May 13, 2008 (the “Registration Statement”). Rokwader sold 318,504 shares of its common stock, at a price of $.75 per share for gross proceeds of $238,878.





Rokwader completed the acquisition of all of the issued and outstanding capital stock of Latigo on April 23, 2007. Latigo’s primary activity is the development of a production company for the purpose of creating viable entertainment assets. One of Latigo’s major functions will be to discover new musical talent. With the new talent, Latigo can make Master quality recordings and function as a conduit either selling or leasing such recordings to major record companies and distributors. Latigo would pay the costs of producing three or four songs per artist, garnering enough interest to then have a major label pick up the remaining costs to finish the project. Latigo has recently signed its first artist, a singer/songwriter, for which it has already completed demos and has begun presenting the demos to interested record companies.





Latigo is also interested in acquiring music catalogues. Latigo acquired a 50% interest in its first music catalogue consisting of 107 songs. 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 catalogue.





Latigo owns two Master Recordings from its founder, Mr. Dorff, and a 50% interest in a 107 song music catalogue, respectively. Two of the titles from the Latigo catalog, “When The Hero Dies” and “The Best Things In Life”, have been recorded by legacy artist BJ Thomas for inclusion in the film “Jake’s Corner”. The movie was released in the latter part of 2008.  A soundtrack CD was released in conjunction with the release of the movie ‘Jake’s Corner’ which contained two of the Company’s songs.  The film ‘Pure Country II’ came out in the first quarter of 2011. Latigo has one song in that film called ‘Love You Never Forget’. Mr. Steve Dorff has agreed to perform his services non-exclusively as a producer for Latigo's music production business and has given Latigo a right of first refusal to any future productions he may undertake.





Latigo believes emerging technologies and the introduction of innovative business relationships in the current market allow for a unique opportunity for business expansion. We intend to act as a conduit through selling or leasing recordings of any artists that we may exclusively sign to record companies and distributors. In rare cases, should market conditions and emerging technologies warrant, Latigo would distribute music material for signed artists themselves, at their sole discretion. Should the artist also be a songwriter, Latigo will acquire a percentage of these copyright interests, provided the publishing interests are available.





Latigo’s business plan provides for Latigo to produce three or four songs (known as a demo) for each of its artists, to be paid for by Latigo. This is intended to create enough interest that a major music label would pick up the remaining costs and finish the project. Revenues for Latigo would initially be realized in the following ways:





·              Negotiated royalties for actual sales of the recordings.





·              Publishing income on copyrights that we acquire.





Costs and Resources





During the remainder of 2011, we anticipate incurring costs of approximately $25,000 related to filing of Exchange Act reports.





We believe we will be able to meet these costs through current monies in our treasury ($2,203 as of March 31, 2011), additional amounts loaned to us by our President, Mr. Yale Farar and amounts loaned to us by Brooktide, LLC., a company controlled by Mr. Farar, deferral of fees by certain service providers, if necessary, and revenues from operations.  On April 14, 2010, Mr. Farar, the President of Rokwader, loaned the Company $25,000. Also, on December 17, 2011, Brooktide loaned $16,000 to Latigo and $9,000 to the Company.  All of the loans are evidenced by Subordinated Convertible Promissory Notes (“Notes”) executed by the Company and/or Latigo..  Pursuant to the terms of the Notes, the loans bear interest at a rate equal to 6% per annum and are convertible at the option of the holder at any time into common stock of the Company at $.75 per share.  The Notes are demand notes and may be paid at any time without premium or penalty.  The outstanding balance on the Notes 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 Notes to the Company were used to pay fees and expenses arising from the Company’s compliance with its public reporting requirements and the proceeds from the Note to Latigo was used to acquire a music portfolio.  Based on a presumed share value of $.75 per share and a conversion price of $.75, the convertibility is not 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.





15




The Company believes that its current capital resources and current funding will enable it to maintain its current and planned operations through the next 9 to 12 months. The Company anticipates, however, that it will need to raise additional capital in order to sustain and grow its operations over the next few years.





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.





Results of Operation for the three months ended March 31, 2011 and 2010





During the three months ended March 31, 2011, the Company generated $251 of revenues compared to no revenues for the three months ended March 31, 2010.  During the three months ended March 31, 2011 and 2010, the Company incurred general and administrative expenses of $38,022 and $28,782, respectively, consisting primarily of operational expenses of Latigo and professional fees related to preparation of the Company’s 10-K and other SEC reporting obligations. These operating expenses combined with limited or no revenues resulted in net losses of $(37,771) and $(28,778) for the periods ended March 31, 2011 and 2010, respectively.  As of March 31, 2011 and 2010, the Company had stockholders’ deficits of $131,987 and $1,809, respectively.





Equity and Capital Resources





We have incurred losses since inception of our business (March 18, 2005) and, as of March 31, 2011, we had an accumulated deficit of $849,314.  As of March 31, 2011, we had cash of $2,203 and a working capital deficit of $131,987.





To date, we have funded our operations through short-term debt. From inception, we have borrowed $405,000 as an advance from our largest stockholder. On August 16, 2007, we issued 1,000,000 shares of common stock to Brooktide, LLC (a company controlled by Mr. Yale Farar, our largest stockholder) in full satisfaction of $280,000, which was the total owed to Mr. Farar as of that date.  Since November 2007, Mr. Farar and Brooktide, LLC, a limited liability company controlled by Mr. Farar has loaned to the Company and to Latigo, its wholloy –owned subsidiary, pursuant to  convertible promissory notes, an aggregate of $125,000. The convertibility of these notes are not considered to be a beneficial conversion feature, accordingly, if the debt is converted, the liability will be decreased and capital will increase. The proceeds of the Notes were used to pay fees and expenses, to the extent that 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.





We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of our talent base. However, we do not expect to start generating revenues from our operations for another 9 to 12 months. Consequently, we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse affect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this Report we did not have any commitments from any source to provide additional capital. Even if we are able to secure outside financing, it may not be available in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases or debt would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms. These factors and the Company's ability to meet its expense obligations from current operations, and the need to raise additional capital to accomplish its objectives raises substantial doubt about the Company's ability to continue as a going concern.





Off-balance Sheet Arrangements





Since our inception through March 31, 2011, we have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC's Regulation S-B.





16




Recent Accounting Pronouncements





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





Item 3.            Quantitative and Qualitative Disclosures About Market Risks.





Not Applicable.


Item 4.T.        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 March 31, 2011 and 2010, 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 March 31, 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.





Not Applicable





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





On January 3, 2011, the Company sold 70,000 shares of its common stock (the “Shares”) to one non affiliated third party at a price of $0.05 per share. The shares are “restricted” shares and the purchaser was an “accredited investor” as defined by the Securities Act of 1933, as amended ( the “Act”).





The Shares were sold pursuant to an exemption from registration in accordance with Section 4(2) and/or Regulation D under the Act.





Item 3.            Defaults Upon Senior Securities.





None


17





Item 4.              Removed and Reserved





None





Item 5.              Other Information.





None





Item 6.              Exhibits.





(a) Exhibits.





Exhibit

Item31.1

Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 200231.2

Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 200232.1

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





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: May 23, 2011
/s/ Yale FararYale Farar, President

(Principal Executive Officer)Date: May 23, 2011
/s/ Mitchell W. TurkMitchell W. Turk, Chief Financial Officer

(Principal Financial and Accounting Officer)




18




EXHIBIT INDEX





Exhibit

Item31.1

Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 200231.2

Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 200232.1

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


19