UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Commission File Number:    333-178738

ROCAP MARKETING INC.

 (Exact name of Registrant as specified in its charter)

7211 East Southern Ave., Suite 106, Mesa, Arizona, 85209

 (Address of principal executive offices, Zip Code)

(213) 489-1377

 (Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 x   No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x   No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 12, 2013, the Registrant had 20,630,667 shares of its no par value Common Stock outstanding.

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TABLE OF CONTENTS

 Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed consolidated Balance Sheets as of September 30, 2013 and December 31, 2012

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Condensed consolidated Statements of Operations for the three months and nine months ended

September 30, 2013 and September 30, 2012

4

Condensed consolidated Statements of Cash Flows for the nine months ended

September 30, 2013 and September 30, 2012

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Notes to the condensed consolidated Financial Statements

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Item 2.

Management’s Discussion and Analysis of the Financial Condition and Results of Operations

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Item 3.

Quantitative and Qualitative Disclosures about Market Risk

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Item 4.

Controls and Procedures

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PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

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Item 1A.

Risk Factors

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

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Item 3.

Defaults Upon Senior Securities

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Item 5.

Other Information

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Item 6.

Exhibits

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PART I

FINANCIAL INFORMATION

ITEM 1.    

FINANCIAL STATEMENTS

ROCAP MARKETING, INC.

Condensed Consolidated Balance Sheets

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

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ROCAP MARKETING, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

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

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ROCAP MARKETING, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

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

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ROCAP MARKETING, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

September 30, 2013 and December 31, 2012

(Unaudited)

NOTE 1 – ORGANIZATION AND OPERATIONS

Rocap Marketing Inc.

Rocap Marketing Inc, (“Rocap” or the “Company”) was incorporated under the laws of the State of Nevada on September 2, 2010.

Lexi-Luu Designs, Inc.

Lexi-Luu Designs, Inc. (Lexi-Luu) was incorporated under the laws of the State of Nevada on September 3, 2010. Lexi-Luu manufactures and markets exclusive dancewear for youth.  The dance wear is sold through retailers throughout the country and may be purchased directly from the Company on-line at its website, www.lexiluu.com.  

Acquisition of Lexi-Luu Designs Inc.

On September 15, 2010, the Company entered into a Stock Purchase and Share Exchange Agreement with the sole stockholder of Lexi-Luu Designs Inc.  The acquisition of 100% of Lexi-Luu has been recorded on the purchase method of accounting in accordance with section 805-10-05 of the FASB Accounting Standards Codification.  The Company allocated the purchase price of Lexi-Luu to the tangible assets acquired and liabilities assumed based on their estimated fair values.

Basis of Presentation – Unaudited Interim Financial Information

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.  Unaudited interim results are not necessarily indicative of the results for the full year.  These financial statements should be read in conjunction with the financial statements of the Company for the Year Ended December 31, 2012 and for the Period from September 2, 2010 (inception) through December 31, 2012 and notes thereto contained in the information filed as part of the Company’s Registration Statement on Form S-1/A.

NOTE 2 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at September 30, 2013, a net loss and net cash used in operating activities for the interim period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

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While the Company is attempting to establish an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern, the Company’s cash position may not be significant enough to support the Company’s daily operations.  Management intends to raise additional funds by seeking equity and/or debt financing.  Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – NOTES PAYABLE – RELATED PARTIES

Notes payable at September 30, 2013 and December 31, 2012 consisted of the following:

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The Company has recognized interest expense of $16,362 and $13,421 for the interim periods ended September 30, 2013 and 2012, respectively.

NOTE 4 – MANAGEMENT AGREEMENTS

On September 1, 2010, the Company entered into a management agreement (“Management Agreement”) with Peter Henricsson for consulting services to be provided by him (“Consultant”) in the capacity of President of the Company which requires that the Consultant to be paid $3,250 per month for three (3) years from date of signing. The Company also issued the Consultant a total of 960,000 shares of its common stock. These shares were valued at $0.002 per share or $1,920 on the date of issue.

On September 1, 2010, the Company entered into a management agreement (“Management Agreement”) with Tezi Advisory Inc. for consulting services to be provided by Gordon C. McDougall (“Consultant”) in the capacity of Vice President Finance of the Company which requires that the Consultant to be paid $3,250 per month for three (3) years from date of signing. The Company also issued the Consultant a total of 960,000 shares of its common stock. These shares were valued at $0.002 per share or $1,920 on the date of issue.

NOTE 5 – CONCENTRATIONS

During the interim period ended September 30, 2013, the Company derived 43 percent of its revenue from one company. During the interim period ended September 30, 2012, the Company derived 84 percent of its revenue from one company.

NOTE 6 – SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC Topic 855, and has  determined that there were no reportable subsequent events to be disclosed.

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ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

  RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this periodic report.  Some of the statements under “Management’s Discussion and Analysis,” “Description of Business” and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the alternative fuels engines industry in general. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. The safe harbor provisions of the federal securities laws do not apply to any forward-looking statements contained in this registration statement.

All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.

A.

Results of Operations

For the three months ended September 30, 2013 compared the three months ended September 30, 2012

During the three months ended September 30, 2013 we had revenues from merchandise sales of $195,961 and cost of sales of $102,500 resulting in a gross profit of $93,461, or 48% of sales. In comparison, our revenues were $142,063 with a cost of sales of $75,071 and a gross profit of $66,992 or 47%. As our sales volumes grow we are able to purchase our materials in bulk thus increasing our gross margin. We expect our sales to continue to grow through the remainder of 2013 and into 2014 as we add more distributors and our website becomes better known.

During the three months ended September 30, 2013 we incurred operating expenses of $149,556.  Operating expenses included salaries and wages of $54,011, which represented approximately 36% of those operating expenses; general and administrative expenses of $75,543, which represented 51% of operating expenses; legal and professional fees of $23,834, which represented 16% of operating expenses; bad debt recovery of $(4,102), which represented (3%) of operating expenses, and depreciation expense of $270, which represented less than 1% of operating expense. By way of comparison, our operating expenses for the same period of 2012 totaled $93,065. A total of $24,228 or 26% of our 2012 operating expenses were made up of legal and professional fees; general and administrative expenses of $37,229 which represented 40% of operating expenses; $31,108 or 33% was salaries and wages, and $500 was depreciation, which represented less than 1% of our operating expenses. We expect our general and administrative expenses to continue to grow proportionate to our revenues during the remainder of the 2013 fiscal year and into 2014.

Professional fees were primarily legal and accounting fees.  General and administrative expenses included primarily building and office related expenses and travel expenses.  We had an operating loss for the three month period ended September 30, 2013 of $56,095, interest expense of $6,236, and gains on settlement of debt totaling $13,118, resulting in a net loss of $49,213. Of this amount, $1,576 was attributable to non-controlling shareholders, resulting in a total net loss to the Company’s common shareholders of $47,637. Our net loss in 2012 was $29,441, included in that loss was $4,484 of interest expense which was partially offset by interest income of $1,116.  Our 2012 net loss of $29,441 included a loss of $748 that was attributable to non-controlling shareholders, resulting in a net loss of $28,693 attributable to our common shareholders.

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For the nine months ended September 30, 2013 compared the nine months ended September 30, 2012

During the nine months ended September 30, 2013 we had revenues from merchandise sales of $447,215 and cost of sales of $201,753 resulting in a gross profit of $245,562, or 55% of sales. In comparison, our revenues were $331,410 with a cost of sales of $168,355 and a gross profit of $163,055 or 49%. As our sales volumes grow we are able to purchase our materials in bulk thus increasing our gross margin. We expect our sales to continue to grow through the remainder of 2013 and into 2014 as we add more distributors and our website becomes better known.

During the nine months ended September 30, 2013 we incurred operating expenses of $455,407.  Operating expenses included salaries and wages of $186,269, which represented approximately 41% of those operating expenses; general and administrative expenses of $191,285, which represented 42% of operating expenses; legal and professional fees of $78,932, which represented 17% of operating expenses; bad debt recovery of $(1,855), which represented less than one percent of operating expenses, and depreciation expense of $776, which represented less than 1% of operating expense. By way of comparison, our operating expenses for the same period of 2012 totaled $265,557. A total of $95,865 or 36% of our 2012 operating expenses were made up of legal and professional fees; general and administrative expenses of $107,206 which represented 40% of operating expenses; $61,747 or 23% was salaries and wages, and $739 was depreciation, which represented less than one percent of our operating expenses. We expect our general and administrative expenses to continue to grow proportionate to our revenues during the remainder of the 2013 fiscal year and into 2014.

Professional fees were primarily legal and accounting fees.  General and administrative expenses included primarily building and office related expenses and travel expenses.  We had an operating loss for the nine month period ended September 30, 2013 of $209,945, interest expense of $18,086, and gains on settlement of debt totaling $13,118, resulting in a net loss of $214,913. Of this amount, $20,474 was attributable to non-controlling shareholders, resulting in a total net loss to the Company’s common shareholders of $194,439. Our net loss in 2012 was $112,196, included in that loss was $13,421 of interest expense which was partially offset by interest income of $3,727.  Our 2012 net loss of $112,196 included a loss of $3,629 that was attributable to non-controlling shareholders, resulting in a net loss of $108,567 attributable to our common shareholders.

We are a relatively new business with limited resources. Our ability to increase public awareness of our products is limited because we do not have the resources to create a large marketing program. Therefore we do not foresee a major increase in sales over the next 12 months. We expect our consulting expense will continue to be high over the next 6 to 12 months as we complete a registration of common stock. We estimate approximately $25,000 in extra costs connected with the registration. We expect our other operating expenses to remain constant for the next 12 months.

B. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity and Capital Resources

As of December 31, 2012

At December 31, 2012, we had current assets of $46,116 and current liabilities of $477,339, resulting in working capital deficit of $431,223 and a current ratio of 0.1:1. Current assets comprised primarily cash of $7,788, inventory of $36,737 and accounts receivable of $1,501.  Current liabilities comprised primarily salaries payable of $222,994, current maturities of notes payable of $135,386 and accounts payable of $66,238.  

For the year ended December 31, 2012, our financing activities raised $2,059 from cash advances and $27,886 from related party loans. This cash was used to cover the negative cash flow from operating activities of $19,550 and to and negative cash flow from financing activities of $882.

In the year ended December 31, 2011, our financing activities raised $109,601. This cash was used to partially cover the negative cash flow from operating activities of $152,729.

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As of September 30, 2013

At September 30, 2013, we had current assets of $60,045 and current liabilities of $757,390, resulting in working capital deficit of $697,345 and a current ratio of 0.08:1.  Current assets comprised primarily cash of $13,705, inventory of $33,486 and net accounts receivable of $12,854. Current liabilities comprised primarily salaries payable of $323,648, current maturities of notes payable of $257,560 and accounts payable of $66,414.

For the nine months ended September 30, 2013, our financing activities raised $90,064, which was used to cover our $83,394 negative cash flows from operations.

In the nine months ended September 30, 2012, our financing activities raised $18,847, which was used to cover our $4,902 negative cash flows from operations.

Our cash at September 30, 2013 is insufficient to meet our operating requirements for the next twelve months. We anticipate that we will require approximately $150,000 of operating capital over the next twelve months. We expect to use debt and equity financing to raise that capital.  However, we have no agreements to issue any debt or equity securities and cannot predict whether equity or debt financing will become available at acceptable terms, if at all.  As of September 30, 2013 we owed $323,648 in salaries payable and an aggregate of $311,932 in notes payable to related and unrelated parties. We owed $35,222 of accrued interest on these notes. The notes bear interest at 8% to 12%, with interest only payments beginning February, 2011 through March 2014, at which time all outstanding interest and principle is due and payable.   

Recently Issued Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures as of September 30, 2013, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of September 30, 2013, our disclosure controls and procedures were effective.

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Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2013  that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

To the best of our knowledge, we are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

ITEM 1A.

RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2.

UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.

 DEFAULTS UPON SENIOR SECURITIES

None

ITEM 5.

OTHER INFORMATION

None

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ITEM 6.

EXHIBITS

(a)

Documents filed as part of this Report.

1.

Financial Statements.  The condensed unaudited Balance Sheet of Rocap Marketing Corp. as of September 30, 2013 and the audited balance sheet as of December 31, 2012, the condensed unaudited Statements of Operations for the three and nine month periods ended September 30, 2013 and 2012, and the condensed unaudited Statements of Cash Flows for the nine month periods ended September 30, 2013 and 2012, together with the notes thereto, are included in this Quarterly Report on Form 10-Q.

3.

Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.

⁽¹⁾

Incorporated by reference to our Registration Statement on Form S-1 filed on December 23, 2011

⁽²⁾

Incorporated by reference to our Registration Statement on Form S-1/A-1 filed on February 28, 2012

⁽³⁾

Filed herewith

⁽⁴⁾

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted under Exhibit 101 are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

            Rocap Marketing Corp.

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