UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): November 14, 2014
RIGHTSCORP,
INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
000-55097 |
|
33-1219445 |
(State
or other jurisdiction |
|
(Commission |
|
(I.R.S.
Employer |
of incorporation) |
|
File Number) |
|
Identification
Number) |
3100
Donald Douglas Loop North
Santa
Monica, CA 90405
(Address
of principal executive offices) (zip code)
310-751-7510
(Registrant’s
telephone number, including area code)
Copies
to:
Gregory
Sichenzia, Esq.
Jeff
Cahlon, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway
New
York, New York 10006
Phone:
(212) 930-9700
Fax:
(212) 930-9725
(Former
address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition.
On November
14, 2014, Rightscorp, Inc. issued a press release announcing its financial results for the period ended September 30, 2014. The
press release is attached hereto as Exhibit 99.1.
In accordance
with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not
be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly
set forth by specific reference in such filing.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1
Press Release
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
RIGHTSCORP,
INC. |
|
|
Dated:
November 17, 2014 |
By: |
/s/
Christopher Sabec |
|
Name: |
Christopher
Sabec |
|
Title: |
Chief
Executive Officer |
Exhibit
99.1
Rightscorp
Announces Third Quarter 2014 Results
Company
Delivers 282% Growth in Year-Over-Year Revenues Based on Increases in Copyrights,
ISP Participation, and Settlements Closed
Santa Monica,
Calif. – November 14, 2014 – Rightscorp (OTCQB: RIHT), the leading provider of monetization services for artists and
holders of copyrighted Intellectual Property (IP), today announced financial results for the third quarter of 2014 ended September
30, 2014.
Financial
Highlights:
|
● |
Company
increased revenues due to growth in copyrights, ISP participation, and settlements closed; |
|
|
|
|
● |
282%
increase in revenues to $248,387 for the third quarter ended September 30, 2014, from $64,949 for the same period in 2013; |
|
|
|
|
● |
313%
increase in revenues to $688,801 for the nine months ended September 30, 2014 from $166,875 for the same period of 2013. Revenues
for first nine months 2014 have already significantly exceeded full year 2013; and |
|
|
|
|
● |
Balance
sheet improvements include a material increase in cash and cash equivalents of $2,646,388 on September 30, 2014 from $36,331
on December 31, 2013. The increases in cash and other fixed assets resulted in growth of total assets of $3,129,154 on September
30, 2014 from $146,223 on December 31, 2013. |
Operational
Highlights:
|
● |
Closed
$2.65 million in private equity financing led by institutional investors to accelerate expansion in automation, increase ingestion
of content, propel growth trend, and bring Company towards profitability; |
|
|
|
|
● |
Increased
Internet Service Providers (ISPs) participation to over 140, covering an estimated 15% of homes in the U.S.; |
|
|
|
|
● |
Reported
130,000 copyright infringement cases closed as of September 30, 2014, up from 75,000 for Q2 representing an approximate 73%
increase; |
|
|
|
|
● |
Expanded
representation into the music market, secured representation agreement with Bicycle Music Company, and open discussions with
other companies in different sectors; and |
|
|
|
|
● |
Appointed
Chief Operating Officer Robert Steele as President and named Brett M. Johnson as Chairman of the Board. |
Robert Steele,
Rightscorp President and COO commented, “We generated an impressive 282% increase in revenues this quarter. This was driven
by an increase in the number of copyrights ingested into our system from approximately 21,000 on September 30, 2013 to approximately
160,000 on September 30, 2014. Quarter over quarter growth was relatively flat due to the demands on our computer systems as the
increase in copyrights ingested exceeded their capacity. The additional financing we recently closed will provide additional equipment
and bandwidth to meet these demands.”
Rightscorp
CEO Christopher Sabec, added, “In the third quarter, we grew our operational metrics and expanded our representation of
copyrights. Our proprietary technology has only begun impacting the industry and we have secured deals with The Royalty Network
and the Bicycle Company. Our year-over-year growth figures are indicative of the strength in our business and we are proud to
report that in the nine months ended September 30, 2014, we have already exceeded what we generated for the full year in 2013
by more than 100%. Also, during the quarter, we reported having thirty patents pending worldwide to identify, monitor, and monetize
peer-to-peer copyright infringement and believe we have the strongest and most effective solution in combating illegal file sharing.
We are very encouraged by the opportunities we’ve generated thus far and believe we offer a very compelling investment proposition
to our investors.”
Third
Quarter 2014 Financial Summary
For the
third quarter of 2014 ended September 30, 2014, the Company generated total revenues of $248,387, an increase of $183,438 or 282%
from $64,949 in the same period in 2013.
For the
third quarter of 2014, operating expenses totaled $1,052,115, compared to $525,545 for prior-year quarter. The increase in fees
was due to payroll expenses and fees paid to copyright holders in the period. General and administrative expenses were $896,098
for the quarter ended September 30, 2014 compared to $459,821 for the year-ago quarter, due to increased wages, professional and
investment banking fees, and travel and other expenses related to securing financing.
Sales and
marketing costs were $16,872 for the third quarter of 2014, from $25,242 for the third quarter of 2013, a decrease of $8,370.
Depreciation and amortization expenses were $14,951 during the quarter ended September 30, 2014, an increase of $6,941 as compared
to $8,010 in the year-ago quarter.
Other
expense totaled $150,328 during the three months ended September 30, 2014, a decrease from $72,519 from the three months ended
September 30, 2013, due to decreased interest owed on convertible notes used to finance operations.
During the
three months ended September 30, 2014, the Company recorded a net loss of $653,400 or $(0.01) compared to $533,115, or $(0.01)
for the three months ended September 30, 2013.
Nine
Months ended September 30, 2014
For the
nine months ended September 30, 2014, Rightscorp reported $688,801 in revenues, an increase of $521,926 or 313% over revenues
from $166,875 for the same period in 2013. This increase in revenue was driven by an increase in the number of copyrights ingested
into the system for which the Company has contracts to monitor for infringements, from approximately 21,000 on September 30, 2013
to approximately 160,000 on September 30, 2014.
Rightscorp
incurred operating expenses of $2,876,584 during the nine months ended September 30, 2014, as compared to $1,282,629 for the nine
months ended September 30, 2013. This increase was due to increased payroll expenses and fees paid to copyright holders in the
period. General and administrative expenses were $2,420,447 for the period ended September 30, 2014, compared to $1,107,682 for
the nine months ended September 30, 2013, due to increased wages expenses, professional and investment banking fees, and travel
and other expenses related to securing financing.
Sales
and marketing costs were $72,428 for the period ended September 30, 2014 compared to $67,960 for the nine months ended September
30, 2013, an increase of $4,468 due to increased presence at industry conferences to meet potential clients.
Depreciation
and amortization expenses were $39,308 during the nine months ended September 30, 2014, an increase of $15,756 as compared to
$23,552 for the nine months ended September 30, 2013. Other expenses totaled $129,102 during the nine months ended September 30,
2014.
Net
loss attributable to common shareholders was $2,058,681, or $(0.03) compared to $1,328,410 or $(0.02) for the nine months ended
September 30, 2013.
At September 30, 2014, the Company had cash and cash equivalents of $2,646,388.
Conference
call information:
Date:
Friday, November 14, 2014
Time:
4:15 P.M. Eastern Time (ET)
Dial
in Number for U.S. & Canadian Callers: 877-407-9129
Dial in
Number for International Callers (Outside of the U.S. & Canada): 201-493-6753
Participating
on the call will be Rightscorp Chief Executive Officer Christopher Sabec and Chief Operating Officer Robert Steele, who
will discuss operational and financial highlights for the third quarter of 2014.
To
join the live conference call, please dial into the above referenced telephone numbers five to ten minutes prior to the scheduled
conference call time. A live webcast and archive of the call will also be available on Rightscorp’s website at:. http://rightscorp.equisolvewebcast.com/q3-2014.
A replay
will be available for 14 days starting on November 14, 2014 at approximately 8:00 P.M. (ET). To access the replay, please dial
1-877-660-6853 in the U.S. and 1-201-612-7415 for international callers. The conference ID# is 418309.
About
Rightscorp, Inc.
Rightscorp
(OTCQB: RIHT) is a leading provider of monetization services for artists and holders of copyrighted Intellectual Property (IP).
The Company’s patent pending digital loss prevention technology focuses on the infringement of digital content such as music,
movies, software, books, and games and ensures that owners and creators are rightfully paid for their IP. Rightscorp implements
existing laws to solve copyright infringements by collecting payments from illegal file sharing activities via notifications sent
through Internet Service Providers (ISPs). The Company’s technology identifies copyright infringers, who are offered a reasonable
settlement option when compared to the legal liability defined in the Digital Millennium Copyrights Act (DMCA). Based on the fact
that 22% of all Internet traffic is used to distribute copyrighted content without permission or compensation to the creators,
Rightscorp is pursuing an estimated $2.3 billion opportunity and has monetized major media titles through relationships with industry
leaders. http://www.rightscorp.com/
Safe
Harbor Statement
This press
release may include forward-looking statements. All statements other than statements of historical fact included in this press
release, including, without limitation, statements regarding the Company’s anticipated financial position, business strategy
and plans and objectives of management of the Company for future operations, are forward-looking statements. When used in this
press release, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,”
and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently
available to the Company’s management. Actual results could differ materially from those contemplated by the forward-looking
statements as a result of certain factors not limited to, general economic and business conditions, competitive factors, changes
in business strategy or development plans, the ability to attract and retain qualified personnel, and changes in legal and regulatory
requirements. Such forward-looking statements reflect the current views of the Company with respect to future events and are subject
to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and
liquidity of the Company. All subsequent written and oral forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified in their entirety by this paragraph.
For further
investor and media information contact:
Andrew Haag
Managing
Partner
IRTH Communications
rightscorp@irthcommunications.com
1-866-976-4784
[Financial
Tables to Follow]
Rightscorp,
Inc.
Consolidated
Statements of Operations
(Unaudited)
| |
Three Months Ended | | |
Three Months Ended | | |
Nine Months Ended | | |
Nine Months Ended | |
| |
September 30, 2014 | | |
September 30, 2013 | | |
September 30, 2014 | | |
September 30, 2013 | |
Revenue | |
$ | 248,387 | | |
$ | 64,949 | | |
$ | 688,801 | | |
$ | 166,875 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Copyright holder fees | |
| 124,194 | | |
| 32,472 | | |
| 344,401 | | |
| 83,435 | |
General and administrative | |
| 896,098 | | |
| 459,821 | | |
| 2,420,447 | | |
| 1,107,682 | |
Sales and marketing | |
| 16,872 | | |
| 25,242 | | |
| 72,428 | | |
| 67,960 | |
Depreciation and amortization | |
| 14,951 | | |
| 8,010 | | |
| 39,308 | | |
| 23,552 | |
Total operating expenses | |
| 1,052,115 | | |
| 525,545 | | |
| 2,876,584 | | |
| 1,282,629 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (803,728 | ) | |
| (460,596 | ) | |
| (2,187,783 | ) | |
| (1,115,754 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other expenses: | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (5,009 | ) | |
| (72,519 | ) | |
| (26,235 | ) | |
| (212,656 | ) |
Gain on Settlements | |
| 169,950 | | |
| - | | |
| 169,950 | | |
| - | |
Loss on derivative liability | |
| (14,613 | ) | |
| - | | |
| (14,613 | ) | |
| - | |
Total other expenses | |
| 150,328 | | |
| (72,519 | ) | |
| 129,102 | | |
| (212,656 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations before income
taxes | |
| (653,400 | ) | |
| (533,115 | ) | |
| (2,058,681 | ) | |
| (1,328,410 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (653,400 | ) | |
$ | (533,115 | ) | |
$ | (2,058,681 | ) | |
$ | (1,328,410 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share – basic and diluted | |
| (0.01 | ) | |
$ | (0.01 | ) | |
| (0.03 | ) | |
| (0.02 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares – basic and diluted | |
| 77,246,760 | | |
| 60,513,010 | | |
| 72,792,882 | | |
| 60,284,914 | |
Rightscorp,
Inc.
Consolidated
Balance Sheets
(Unaudited)
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
(Unaudited) | | |
| |
Assets | |
| | | |
| | |
Assets
| |
| | | |
| | |
Cash | |
$ | 2,646,388 | | |
$ | 36,331 | |
Prepaid expenses | |
| 355,316 | | |
| 19,639 | |
Total Current Assets | |
| 3,001,704 | | |
| 55,970 | |
Other Assets | |
| | | |
| | |
Fixed assets, net | |
| 106,325 | | |
| 56,453 | |
Intangible assets, net | |
| 21,125 | | |
| 33,800 | |
Total Assets | |
$ | 3,129,154 | | |
$ | 146,223 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Deficit | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 455,058 | | |
$ | 928,304 | |
Convertible notes payable, net of discount of $100 and $10,891 | |
| 60,000 | | |
| 202,609 | |
Derivative liability | |
| 3,698,197 | | |
| - | |
Total Current Liabilities | |
| 4,213,255 | | |
| 1,130,913 | |
Total Liabilities | |
| 4,213,255 | | |
| 1,130,913 | |
| |
| | | |
| | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $.001 par value; 10,000,000 shares authorized; null shares issued and outstanding | |
| - | | |
| - | |
Common stock, $.001 par value; 250,000,000 shares authorized; 90,171,469 and 68,797,102 shares issued and outstanding, respectively | |
| 90,171 | | |
| 68,797 | |
Common stock to be issued | |
| - | | |
| 380,000 | |
Stock subscription payable | |
| (250,000 | ) | |
| - | |
Additional paid in capital | |
| 5,375,081 | | |
| 2,807,185 | |
Accumulated deficit | |
| (6,299,353 | ) | |
| (4,240,672 | ) |
Total stockholders’ deficit | |
| 1,084,101 | | |
| (984,690 | ) |
Total Liabilities and Stockholders’ Deficit | |
$ | 3,129,154 | | |
$ | 146,223 | |
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