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): August 13, 2014
RIGHTSCORP,
INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
000-55097 |
|
33-1219445 |
(State
or Other Jurisdiction of
Incorporation) |
|
(Commission
File Number) |
|
(I.R.S. Employer
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
August 13, 2014, Rightscorp, Inc. issued a press release announcing its financial results for the period ended June 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: August
18, 2014 |
By: |
/s/
Christopher Sabec |
|
|
Name:
Christopher Sabec |
|
|
Title: Chief Executive
Officer |
Rightscorp
Reports Second Quarter 2014 Financial Results
Reaffirms
Increase of 377% in Year-Over-Year Revenue Growth and Reports Increase in Copyrights, ISP Participation, and Settlements Closed
Santa
Monica, Calif. – August 13, 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 second quarter of 2014 ended
June 30, 2014.
Financial
Highlights:
|
● |
Company increased revenues
due to growth in copyrights, ISP participation, and settlements closed; |
|
|
|
|
● |
377% increase in revenues to $251,481
for the second quarter ended June 30, 2014, from $52,670 for the same period in 2013 |
|
|
|
|
● |
34% sequential increase in revenues
from $188,215 in the first quarter of 2014; |
|
|
|
|
● |
332% increase in revenues to $440,414
for the six months ended June 30, 2014 from $101,926 for the same period of 2013. Revenues for first six months 2014 have
already exceeded full year 2013; |
|
|
|
|
● |
Balance sheet improvements include
a material increase in cash and cash equivalents of $767,581 on June 31, 2014 from $36,331 on December 31, 2013. The increases
in cash and other fixed assets resulted in growth of total assets of $876,292 on June 31, 2014 from $146,223 on December 31,
2013. |
Operational
Highlights:
|
● |
Authorized copyright catalog
increased to over 1.5 million, including many award-winning films, a best-selling author, and up to 16 songs on a recent Billboard
Hot 100; |
|
|
|
|
● |
Participation from Internet Service
Providers (ISPs) increased by over 100%, where the Company reported receiving payments from over 70 ISPs to now over 140,
covering an estimated 15% of homes in the U.S.; |
|
● |
Closed more than 75,000
cases of copyright infringements as of June 30, 2014; and |
|
|
|
|
● |
Expanded representation into the film
and video market, secured representation agreements with Rotten Records and The Royalty Network, and pursued mature discussions
with other companies |
Robert
Steele, Rightscorp COO commented, “Our model is proving to be very successful for our Company and clients. We are increasing
internal metrics by improving our ability to ingest copyrights at a more rapid pace and growing the number of ISPs that forward
our notices. This then increases our ability to close more cases of online P2P copyright infringement on behalf of the owners
of copyrighted intellectual property.”
Rightscorp
CEO Christopher Sabec, added, “We’ve just closed our strongest quarter to date and are pleased with the results.
Our way is clear: adding copyrights, increasing ISP participation, and continuing to close settlements. This has been an outstanding
quarter and I expect to see continued growth.”
Second
Quarter 2014 Financial Summary
For
the second quarter of 2014 ended June 30, 2014, the Company generated total revenues of $251,481, up 377% from $52,670 in the
same period in 2013. Sequentially, revenues rose 34% from $188,215 in the first quarter of 2014. The growth in revenues were driven
by an increase in the number of copyrights under contract, an increase in active copyrights uploaded into Rightscorp’s automated
system and by the growing number of ISPs participating in the Company’s service, creating a multiplier effect.
For
the second quarter of 2014, operating expenses totaled $995,080, compared to $452,812 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 $821,474
for the quarter ended June 30, 2014 compared to $390,260 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 $35,108 for the second quarter of 2014, from $28,084 for the second quarter of 2013, due to an increased
presence at industry conferences to meet potential clients. Depreciation and amortization expenses were $12,758 during quarter
ended June 30, 2014, an increase of $4,625 compared to $8,133 in the year-ago quarter.
Other
expense totaled $10,640 during the three months ended June 30, 2014, a decrease of $77,149 from the three months ended June 30,
2013, due to decreased interest owed on convertible notes used to finance operations.
During
the three months ended June 30, 2014, the Company recorded a net loss of $754,239, or $(0.01) compared to $487,930, or $(0.02)
for the three months ended June 30, 2013.
Six Months
ended June 30, 2014
For
the six months ended June 30, 2014, Rightscorp reported $440,414 in revenues, a 332% increase over revenues from $101,926 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 June 30, 2013 to approximately
80,000 on June 30, 2014.
Rightscorp
incurred operating expenses of $1,824,469 during the six months ended June 30, 2014, as compared to $771,766 for the six months
ended June 30, 2013. This increase was due to increased payroll expenses and fees paid to copyright holders in the period. General
and administrative expenses were $1,513,489 for the period ended June 30, 2014, compared to $662,542 for the six months ended
June 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 $66,416 for the period ended June 30, 2014 compared to $42,719 for the six months ended June 30, 2013, an
increase of $23,697 due to increased presence at industry conferences to meet potential clients.
Depreciation
and amortization expenses were $24,357 during the six months ended June 30, 2014, an increase of $8,815 as compared to $15,542
for the six months ended June 30, 2013. Other expenses totaled $21,226 during the six months ended June 30, 2014, a decrease of
$118,912 from the six months ended June 30, 2013, due to decreased interest owed on convertible notes used to finance operations.
Net loss
attributable to common shareholders was $1,405,281, or $(0.02) compared to $809,977, or $(0.03) for the six months ended June
30, 2013.
At June
30, 2014, the Company had cash and cash equivalents of $767,581.
Conference
call information:
Date:
Wednesday, August 13, 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 second 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/q2-2014.
A
replay will be available for 14 days starting on August 13, 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 | | |
Six Months
Ended | | |
Six Months
Ended | |
| |
June 30, 2014 | | |
June 30, 2013 | | |
June 30, 2014 | | |
June 30, 2013 | |
Revenue | |
$ | 251,481 | | |
$ | 52,670 | | |
$ | 440,414 | | |
$ | 101,926 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Copyright holder fees | |
| 125,740 | | |
| 26,335 | | |
| 220,207 | | |
| 50,963 | |
General and administrative | |
| 821,474 | | |
| 390,260 | | |
| 1,513,489 | | |
| 662,542 | |
Sales and marketing | |
| 35,108 | | |
| 28,084 | | |
| 66,416 | | |
| 42,719 | |
Depreciation and amortization | |
| 12,758 | | |
| 8,133 | | |
| 24,357 | | |
| 15,542 | |
Total operating expenses | |
| 995,080 | | |
| 452,812 | | |
| 1,824,469 | | |
| 771,766 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (743,599 | ) | |
| (400,142 | ) | |
| (1,384,055 | ) | |
| (669,840 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other expenses: | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (10,640 | ) | |
| (87,788 | ) | |
| (21,226 | ) | |
| (140,137 | ) |
Total other expenses | |
| (10,640 | ) | |
| (87,788 | ) | |
| (21,226 | ) | |
| (140,137 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations before income taxes | |
| (754,239 | ) | |
| (487,930 | ) | |
| (1,405,281 | ) | |
| (809,977 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (754,239 | ) | |
$ | (487,930 | ) | |
$ | (1,405,281 | ) | |
$ | (809,977 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share – basic and diluted | |
| (0.01 | ) | |
$ | (0.02 | ) | |
| (0.02 | ) | |
| (0.03 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares – basic and diluted | |
| 71,921,185 | | |
| 28,641,418 | | |
| 70,504,426 | | |
| 29,192,679 | |
Rightscorp,
Inc.
Consolidated
Balance Sheets
(Unaudited)
| |
June 30, 2014 | | |
December 31, 2013 | |
| |
(Unaudited) | | |
| |
Assets | |
| | | |
| | |
Assets | |
| | | |
| | |
Cash | |
$ | 767,581 | | |
$ | 36,331 | |
Prepaid expenses | |
| 9,504 | | |
| 19,639 | |
Total Current Assets | |
| 777,085 | | |
| 55,970 | |
Other Assets | |
| | | |
| | |
Fixed assets, net | |
| 73,857 | | |
| 56,453 | |
Intangible assets, net | |
| 25,350 | | |
| 33,800 | |
Total Assets | |
$ | 876,292 | | |
$ | 146,223 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Deficit | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 900,846 | | |
$ | 928,304 | |
Convertible notes payable, net of discount of $100 and $10,891 | |
| 209,900 | | |
| 202,609 | |
Total Current Liabilities | |
| 1,110,746 | | |
| 1,130,913 | |
Total Liabilities | |
| 1,110,746 | | |
| 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; 75,117,358 and 68,797,102 shares issued and outstanding, respectively | |
| 75,118 | | |
| 68,797 | |
Common stock to be issued | |
| 380,000 | | |
| 380,000 | |
Stock subscription payable | |
| (5,000 | ) | |
| - | |
Additional paid in capital | |
| 4,961,382 | | |
| 2,807,185 | |
Accumulated deficit | |
| (5,645,954 | ) | |
| (4,240,672 | ) |
Total stockholders’ deficit | |
| (234,453 | ) | |
| (984,690 | ) |
Total Liabilities and Stockholders’ Deficit | |
$ | 876,292 | | |
$ | 146,223 | |
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