Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 30, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Rightscorp, Inc. | ||
Entity Central Index Key | 1,506,270 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 9,700,000 | ||
Entity Common Stock, Shares Outstanding | 117,215,314 | ||
Document Fiscal Period Focus | FY | ||
Trading symbol | RIHT | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Cash | $ 193,014 | $ 1,666,914 |
Prepaid expenses | 100,230 | 190,346 |
Total current assets | 293,244 | 1,857,260 |
Other assets | ||
Fixed assets, net | $ 142,520 | 240,272 |
Intangible assets, net | 16,900 | |
Total assets | $ 435,764 | 2,114,432 |
Current liabilities | ||
Accounts payable and accrued liabilities | 1,407,864 | 608,567 |
Derivative liabilities | $ 1,210,430 | 2,419,087 |
Convertible note payable | 10,000 | |
Total current liabilities | $ 2,618,294 | $ 3,037,654 |
Stockholders’ deficiency | ||
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; 107,215,314 and 89,896,421shares issued and outstanding, respectively | $ 107,215 | $ 89,896 |
Common stock to be issued | 50,000 | |
Additional paid in capital | $ 8,238,199 | 6,030,259 |
Accumulated deficit | (10,527,944) | (7,093,377) |
Total stockholders’ deficiency | (2,182,530) | (923,222) |
Total liabilities and stockholders’ deficiency | $ 435,764 | $ 2,114,432 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 107,215,314 | 89,896,421 |
Common stock, shares outstanding | 107,215,314 | 89,896,421 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenue | $ 832,215 | $ 930,729 |
Operating expenses: | ||
Copyright holder fees | 439,724 | 465,364 |
Sales and marketing | 216,274 | 139,175 |
General and administrative | 4,498,519 | $ 3,661,575 |
Loss on settlement | 200,000 | |
Depreciation and amortization | 114,652 | $ 63,488 |
Total operating expenses | 5,469,169 | 4,329,602 |
Loss from operations | 4,636,954 | (3,398,873) |
Other income (expenses): | ||
Interest expense | (6,270) | (26,600) |
Change in fair value of derivative liabilities | $ 1,208,657 | 550,985 |
Gain on extinguishment of debt | 21,783 | |
Total other income (expenses) | $ 1,202,387 | 546,168 |
Net loss | $ (3,434,567) | $ (2,852,705) |
Net loss per share – basic and diluted | $ (0.04) | $ (0.04) |
Weighted average common shares – basic and diluted | 94,120,902 | 72,928,764 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Deficiency - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Common Stock [Member] | ||
Balance | $ 89,896 | $ 68,797 |
Balance,Shares | 89,896,421 | 68,797,102 |
Common stock issued for services | $ 2,251 | |
Common stock issued for services,shares | 2,251,287 | |
Common stock issued for cash | $ 17,041 | |
Common stock issued for cash, shares | $ 17,041,270 | |
Stock offering cost | ||
Loss on derivative liabilities | ||
Warrants Conversion | $ 951 | |
Warrants Conversion, shares | 950,720 | |
Note Conversion | $ 856 | |
Note Conversion,shares | 856,042 | |
Warrants and options granted for services | ||
Related party contribution of accrued salaries | ||
Fair value of stock-based compensation | ||
Fair value of shares issued for services | $ 6,450 | |
Fair value of shares issued for services,shares | $ 6,450,000 | |
Cancellation of common stock to be issued | ||
Shares and warrants issued for cash | $ 10,320 | |
Shares and warrants issued for cash,shares | 10,320,000 | |
Shares issued upon exercise of warrant | 549 | |
Shares issued upon exercise of warrant,shares | $ 548,893 | |
Net loss | ||
Balance | $ 107,215 | $ 89,896 |
Balance,Shares | 107,215,314 | 89,896,421 |
Stock to be Issued [Member] | ||
Balance | $ 50,000 | $ 380,000 |
Common stock issued for services | 50,000 | |
Common stock issued for cash | $ (380,000) | |
Stock offering cost | ||
Loss on derivative liabilities | ||
Warrants Conversion | ||
Note Conversion | ||
Warrants and options granted for services | ||
Related party contribution of accrued salaries | ||
Fair value of stock-based compensation | ||
Fair value of shares issued for services | ||
Cancellation of common stock to be issued | $ (50,000) | |
Net loss | ||
Balance | $ 50,000 | |
Additional Paid-In Capital [Member] | ||
Balance | $ 6,030,259 | 2,807,185 |
Common stock issued for services | 854,854 | |
Common stock issued for cash | 5,044,082 | |
Stock offering cost | (60,050) | |
Loss on derivative liabilities | (2,970,072) | |
Warrants Conversion | 52,198 | |
Note Conversion | 108,372 | |
Warrants and options granted for services | 44,289 | |
Related party contribution of accrued salaries | $ 149,401 | |
Fair value of stock-based compensation | 433,699 | |
Fair value of shares issued for services | $ 753,110 | |
Cancellation of common stock to be issued | ||
Shares and warrants issued for cash | $ 1,021,680 | |
Shares issued upon exercise of warrant | $ (549) | |
Net loss | ||
Balance | $ 8,238,199 | $ 6,030,259 |
Accumulated Deficit [Member] | ||
Balance | $ (7,093,377) | $ (4,240,672) |
Common stock issued for services | ||
Common stock issued for cash | ||
Stock offering cost | ||
Loss on derivative liabilities | ||
Warrants Conversion | ||
Note Conversion | ||
Warrants and options granted for services | ||
Related party contribution of accrued salaries | ||
Fair value of stock-based compensation | ||
Fair value of shares issued for services | ||
Cancellation of common stock to be issued | ||
Shares and warrants issued for cash | ||
Shares issued upon exercise of warrant | ||
Net loss | $ (3,434,567) | $ (2,852,705) |
Balance | (10,527,944) | (7,093,377) |
Balance | (923,222) | (984,690) |
Common stock issued for services | 907,105 | |
Common stock issued for cash | 4,681,123 | |
Stock offering cost | (60,050) | |
Loss on derivative liabilities | (2,970,072) | |
Warrants Conversion | 53,149 | |
Note Conversion | 109,228 | |
Warrants and options granted for services | 44,289 | |
Related party contribution of accrued salaries | 149,401 | |
Fair value of stock-based compensation | 433,699 | |
Fair value of shares issued for services | 759,560 | |
Cancellation of common stock to be issued | (50,000) | |
Shares and warrants issued for cash | $ 1,032,000 | |
Shares issued upon exercise of warrant | ||
Net loss | $ (3,434,567) | (2,852,705) |
Balance | $ (2,182,530) | $ (923,222) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash Flows from Operating Activities | ||
Net loss | $ (3,434,567) | $ (2,852,705) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 114,652 | 63,488 |
Fair value of stock-based compensation | 433,699 | 44,289 |
Fair value of shares issued for services | 759,560 | $ 785,341 |
Cancellation of common stock to be issued | $ (50,000) | |
Gain on settlement | $ (21,783) | |
Change in fair value of derivative liabilities | $ (1,208,657) | (550,985) |
Amortization of discount on convertible debt | 10,891 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | $ 90,116 | (48,941) |
Accounts payable and accrued liabilities | 799,297 | (142,826) |
Net cash used in operating activities | $ (2,495,900) | (2,713,231) |
Cash Flows from Investing Activities: | ||
Purchases of equipment and furniture | (230,407) | |
Net cash used in investing activities | (230,407) | |
Cash Flows from Financing Activities | ||
Repayment of convertible notes | $ (10,000) | (100,000) |
Proceeds from issuance of common stock and warrants | $ 1,032,000 | 4,681,573 |
Stock offering cost | (60,500) | |
Proceeds from the exercise of warrants | 53,148 | |
Net cash provided by financing activities | $ 1,022,000 | 4,574,221 |
Net increase (decrease) in cash | (1,473,900) | 1,630,583 |
Cash, beginning of period | 1,666,914 | 36,331 |
Cash, end of period | $ 193,014 | 1,666,914 |
Non-Cash Investing & Financing Disclosure | ||
Stock issued for convertible debt | 103,500 | |
Stock issued for convertible debt: accrued interest | 5,728 | |
Cashless exercise of warrant | $ 549 | 335 |
Stock issued for prepaid expenses | 121,765 | |
Extinguishment of debt | 149,401 | |
Stock issued for common stock payable | $ 380,000 |
Nature of the Business
Nature of the Business | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Note 1 Nature of the Business Rightscorp, Inc., a Nevada corporation (the Company) was organized under the laws of the State of Nevada on April 9, 2010, and its fiscal year end is December 31. The Company is the parent company of Rightscorp, Inc., a Delaware corporation formed on January 20, 2011 (Rightscorp Delaware). On October 25, 2013, the Company acquired Rightscorp Delaware in a transaction treated as a reverse acquisition, and the business of Rightscorp Delaware became the business of the Company. The Company has developed products and intellectual property rights relating to providing data and analytics regarding copyright infringement on the Internet. The Company is dedicated to the vision that digital creative works should be protected economically so that the next generation of great music, movies, video games and software can be made and their creators can prosper. The Company has a patent-pending, proprietary method for gathering and analyzing infringement data and for solving copyright infringement by collecting payments from illegal downloaders via notifications sent to their ISPs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 Summary of Significant Accounting Policies Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2015, the Company incurred a net loss of $3,434,567, used cash in operations of $2,495,900, and at December 31, 2015, the Company had a stockholders deficiency of $2,182,530. These factors raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. At December 31, 2015, the Company had cash on hand in the amount of $193,014. On February 22, 2016, the Company sold to accredited investors an aggregate of 10,000,000 shares of its common stock and warrants to purchase 10,000,000 shares of common stock for total proceeds of $500,000 (See Note 11). Management believes that our existing cash on hand will be sufficient to fund our operations into the second quarter of 2016. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Managements plans to continue as a going concern include raising additional capital through borrowings and the sale of common stock. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stock holders, in case of an equity financing. Principles of Consolidation The financial statements include the accounts of Rightscorp Inc., and its wholly-owned subsidiary Rightscorp Delaware. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services and derivative liabilities. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all cash, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. As of December 31, 2015 and 2014 the Company had no cash equivalents. Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of three years. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the consolidated statements of operations. Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2015 and 2014, the Company did not recognize any impairments for its property and equipment. Revenue Recognition The Company provides a service to copyright owners under which copyright owners retain the Company to identify and collect settlement payments from Internet users who have infringed on their copyrights. Revenue is recognized when the Company collects a settlement fee which acts as a wavier to the infringement against the copyright owner. Generally, the Company has agreed to remit 50% of such collections to the copyright holder. Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Stock-Based Compensation The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Companys common stock option and warrant grants are estimated using a Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. Basic and diluted loss per share Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. For the years ended December 31, 2015 and 2014, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. At December 31, 2015 and 2014, the dilutive impact of outstanding stock options for 970,000 and 360,000 shares, respectively, and outstanding warrants for 35,310,140 and 22,450,140 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Fair Value of Financial Instruments Under current accounting guidance, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, are observable either directly or indirectly. Level 3 Unobservable inputs based on the Companys assumptions. The Company is required to use observable market data if such data is available without undue cost and effort. As of December 31, 2015, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short-term maturities. Derivative liabilities of $1,210,430 and $2,419,087 were valued using Level 2 inputs as of December 31, 2015 and 2014, respectively. Concentrations of Risk For the year ended December 31, 2015, we derived approximately 58% and 14%, respectively, of our sales from contracts with two customers. For the year ended December 31, 2014, we derived approximately 76% and 13%, respectively, of our revenues from contracts with two customers. Our standard contract with customers are for initial terms which vary in length, typically between three months and one year, and renewals are at the discretion of the parties, or in some cases renew automatically in one month increments, subject to the right of either party to terminate upon 30 days notice. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Companys present or future consolidated financial statements. |
Fixed Assets and Intangible Ass
Fixed Assets and Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets and Intangible Assets | Note 3 Fixed Assets and Intangible Assets As of December 31, 2015 and 2014, fixed assets and intangible assets consisted of the following: December 31, 2015 December 31, 2014 Computer equipment and fixtures $ 312,756 $ 312,756 Accumulated depreciation (170,236 ) (72,484 ) Fixed assets, net $ 142,520 $ 240,272 December 31, 2015 December 31, 2014 Intangible assets $ 84,500 $ 84,500 Accumulated depreciation (84,500 ) (67,600 ) Intangible assets, net $ - $ 16,900 Depreciation and amortization expense for the years ended December 31, 2015 and 2014 was $114,652 and $63,488, respectively. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 4 Accounts Payable and Accrued Liabilities As of December 31, 2015 and 2014, accounts payable and accrued liabilities consisted of the following: December 31, 2015 December 31, 2014 Accounts payable $ 683,488 $ 315,920 Due to copyright holders 414,688 156,986 Accrued settlement 200,000 - Accrued payroll 62,908 91,673 Insurance premium financing payable 46,780 43,988 Total $ 1,407,864 $ 608,567 In November 2014, the Company was named as defendant in a class action complaint (see John Blaha v. Rightscorp, Inc . |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | Note 5 Convertible Notes Payable During 2013, the Company issued various convertible notes with external parties for use as operating capital. During the year ended 2014, most of the notes were paid off or converted into shares of the Company common stock, and at December 31, 2014, the balance of one outstanding convertible note was $10,000. During the first quarter of 2015, this note was paid off. |
Derivative Liability
Derivative Liability | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | Note 6 Derivative Liabilities In September 2014, the Company issued warrants exercisable into 17,892,000 shares in relation to the sale of 11,928,000 shares of its common stock. The warrants had a term of five years and an exercise price of $0.25 per share, subject to adjustment, as defined, if the Company issues securities at a price lower than the exercise price of these warrants in the future (see Note 8). 1,500,000 of these warrants were cancelled in 2014 and 600,000 of these warrants were exercised in 2015, and at December 31, 2015, 15,792,000 of these warrants were outstanding. Pursuant to FASB authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entitys own stock, instruments, which do not have fixed settlement provisions, are deemed to be derivative instruments. The exercise price of the warrants issued in September 2014 did not have fixed settlement provisions because their exercise prices could be lowered if the Company issues securities at lower prices in the future. In accordance with the FASB authoritative guidance, the Company determined that the exercise feature of the warrants was not considered to be indexed to the Companys own stock, and bifurcated the exercise feature of the warrants and recorded a derivative liability. The derivative liability is re-measured at the end of every reporting period with the change in fair value reported in the statement of operations. At December 31, 2014, the fair value of the derivative liabilities was $2,419,087. During the year ended December 31, 2015, the fair value of the derivative liabilities decreased by $1,208,657, and at December 31, 2015, the fair value of the derivative liabilities was $1,210,430. At December 31, 2015, the fair value of the derivative liabilities was determined through use of a probability-weighted Black-Scholes-Merton valuation model, based on the following assumptions: (i) volatility rate of 124%, (ii) discount rate of 1.5% (iii) zero expected dividend yield, and (iv) expected life of 3.75 years. The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected life of the exercise feature of the warrants was based on the remaining term of the warrants. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future. |
Common Stock Transactions
Common Stock Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Common Stock Transactions | Note 7 Common stock transactions During the year ended December 31, 2015, the Company issued an aggregate of 16,770,000 shares of its common stock as follows: ● Between September 9, 2015 and September 30, 2015, the Company entered into securities purchase agreements with 11 accredited investors pursuant to which the Company sold an aggregate of 10,320,000 shares of common stock for $0.10 per share and warrants to purchase 10,320,000 shares of common stock for total proceeds of $1,032,000. The warrants have an exercise price of $0.15 per share and have a term of three years. ● The Company issued 6,450,000 shares of its common stock with a fair value of $759,560 to employees and consultants for services rendered. The shares were valued at market prices, which ranged from $0.09 per share to $0.15 per share, on the date the shares were granted. ● In 2014, the Company recorded shares to be issued valued at $50,000 as a fee for potential introductions to potential foreign customers. During 2015, the transaction was cancelled and the Company reversed the shares to be issued and offset stock-compensation expense for $50,000 During the year ended December 31, 2014, the Company issued an aggregate of 21,099,319 shares of its common stock as follows: ● The Company issued 17,041,270 to various investors at $0.25 to $0.374 per share for total proceeds of $4,681,123. ● The Company issued 2,251,287 shares of its common stock with a fair value of $907,105 to employees and consultants for services rendered and prepaid expenses. The shares were valued at market prices, which ranged from $0.35 per share to $0.73 per share, on the date the shares were granted. ● The Company issued 950,720 shares of common stock upon exercise of warrants at an exercise price of $0.086 per share for total proceeds of $53,148. ● The Company issued 856,042 shares of common stock to note holders in note conversions at $0.127 per share. At the time of conversion, the notes were valued at $109,228 for outstanding principal and interest owed. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Warrants | Note 8 Stock Options and Warrants Options During the year ended December 31, 2015, the Company granted options to purchase 970,000 shares of common stock with exercise prices ranging from $0.15 to $0.25 per share to employees of the Company. The stock options generally vest between two and three years. The fair value of these options was determined to be $194,201 using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate ranging from 180% to 207%, (ii) discount rate ranging from 1.5% to 1.71%, (iii) zero expected dividend yield, and (iv) expected life of 5 to 10 years. In August 2014, the Company issued options to purchase 290,000 shares of its common stock to employees with an exercise price of $0.38 per share that vest over 3 years and have a term of 10 years. In June 2015, the exercise price was changed to $0.25 and the Company recorded a nominal cost of modification as determined by the difference in fair value of the options immediately before and after the modification. During the years ended December 31, 2015 and 2014, the Company recorded compensation costs of $84,589 and $28,451, respectively, relating to the vesting of stock options. As of December 31, 2015, the aggregate value of unvested options was $121,690, which will continue to be amortized as compensation cost as the options vest over terms ranging from one to three years, as applicable. The stock option activity for the year ended December 31, 2015 and 2014 is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, January 1, 2014 - $ - - Granted 360,000 0.38 9.64 Exercised - - - Forfeited/expired - - - Balance outstanding, December 31, 2014 360,000 0.38 9.64 Granted 970,000 0.17 5,99 Exercised - - - Forfeited/expired (360,000 ) 0.28 8.88 Balance outstanding, December 31, 2015 970,000 $ 0.17 6.71 Exercisable, December 31, 2015 83,330 $ 0.18 6.00 At December 31, 2015, the Companys outstanding and exercisable options had no intrinsic value. Warrants During the year ended December 31, 2015, the Company granted warrants to purchase 4,850,000 shares of common stock with exercise prices ranging from $0.15 to $0.25 per share to employees of the Company and consultants. The warrants generally vest between one and three years. The fair value of these warrants was determined to be $434,501 using the Black-Scholes-Merton option-pricing model based on the following assumptions: (i) volatility rate ranging from 134% to 144%, (ii) discount rate ranging from 1.2% to 1.55%, (iii) zero expected dividend yield, and (iv) expected life of 3 to 5 years. In September 2015, in conjunction with the issuance of shares of the Companys common stock to accredited investors, the Company issued warrants exercisable into 10,320,000 shares of common stock (see Note 7). The warrants have a term of three years and an exercise price of $0.15 per share. In September 2014, the Company issued warrants exercisable into 17,892,000 shares of common stock with an exercise price of $0.25 per share subject to adjustment, as defined, based on subsequent financings at a price lower than $0.25 per share. 1,500,000 of these warrants were cancelled in 2014. In September 2015, the Company issued shares of common stock for $0.10 per share and the exercise price of 16,392,000 warrants was changed from $0.25 to $0.01. In November 2015, the Company issued 548,893 shares of its common stock upon the cashless exercise of 600,000 of these warrants at an exercise price of $0.01 per share. In January, 2014, the Company issued warrants to purchase 50,000 shares of its common stock to an employee with an exercise price of $0.61 per share that vested immediately and has a term of 5 years. In June 2015, the exercise price was changed to $0.25 and the Company recorded a nominal cost of modification as determined by the difference in fair value of the warrants immediately before and after the modification. During the years ended December 31, 2015 and 2014, the Company recorded compensation costs of $349,110 and $2,419,087, respectively, relating to the vesting of stock warrants. As of December 31, 2015, the aggregate value of unvested warrants was $85,212, which will continue to be amortized as compensation cost as the warrants vest over two years. A summary of the Companys warrant activity during the year ended December 31, 2015 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, January 1, 2014 7,022,703 $ 0.65 4.80 Granted 17,942,000 0.25 Exercised (1,014,563 ) 0.09 Expired (1,500,000 ) 0.25 Balance outstanding, December 31, 2014 22,450,140 0.26 4.03 Granted 15,170,000 0.17 3.07 Exercised (600,000 ) 0.01 - Expired (1,710,000 ) 0.75 - Balance outstanding, December 31, 2015 35,310,140 (1) $ 0.09 3.21 Exercisable, December 31, 2015 33,810,140 $ 0.08 3.16 At December 31, 2015, the Companys outstanding and exercisable warrants had an intrinsic value of $1,088,000. (1) At December 31, 2015, 15,792,000 warrants have an exercise of $0.01 per share that is subject to be adjusted if the Company issues securities at a price lower than exercise price of these warrants in the future. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9 - Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Companys deferred tax assets as of December 31, 2015 and 2014 are summarized below. 2015 2014 Net operating loss carryforward $ 3,300,000 $ 2,290,800 Stock-based compensation 417,000 - Accrued expense and other - 121,100 Total deferred tax assets 3,717,000 2,411,900 Valuation allowance (3,717,000 ) (2,411,900 ) Net deferred tax asset $ - $ - In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2015 and 2014, management was unable to determine if it is more likely than not that the Companys deferred tax assets will be realized, and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates. No federal tax provision has been provided for the years ended December 31, 2015 and 2014 due to the losses incurred during such periods. Reconciled below is the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rate for the years ended December 31, 2015 and 2014. 2015 2014 U.S federal statutory income tax (34.00 )% (34.00 )% State tax, net of federal tax benefit (5.80 )% (5.80 )% Stock-based compensation 12.5 % - Change in valuation allowance 27.3 % 39.8 % Effective tax rate % % At December 31, 2015, the Company has available net operating loss carryforwards for federal and state income tax purposes of approximately $8.3 million and $5.1 million, respectively, which, if not utilized earlier, expire through 2035. |
Commitments & Contingencies
Commitments & Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments & Contingencies | Note 10 Commitments & Contingencies At December 31, 2015, the Company is in the following legal proceedings. John Blaha v. Rightscorp, Inc Nature of Matter: This matter seeks relief for alleged violations of the Telephone Consumer Protection Act (47 U.S.C. § 227). The action is brought on behalf of the individual named plaintiff as well as on behalf of a putative nationwide classes. Progress of Matter to Date: This matter was previously captioned with Karen J. Reif and Isaac Nesmith as lead plaintiffs. On March 9, 2015, plaintiff filed a First Amended Complaint replacing the lead plaintiffs, dropping their second and third causes of action for Violations of the Fair Debt Collection Practices Act (15 U.S.C. § 1692, et seq.) and Violations of the Rosenthal Fair Debt Collection Practices Act (Cal. Civ. Code § 1788 et seq.) (and dropping associated putative class claims), and naming BMG Rights Management (US) LLC and Warner Bros. Entertainment Inc. as additional defendants. The First Amended Complaint also contained a cause of action for Abuse of Process. In response to the Abuse of Process claim, defendants brought a special motion to strike the claim under Californias anti-SLAPP statute. Defendants anti-SLAPP motion was granted on May 8, 2015. Pursuant to the Courts May 8, 2015 Order, the Abuse of Process claim (and associated putative class claim) was stricken from the case and plaintiff was ordered to pay defendants attorneys fees incurred in bringing the anti-SLAPP motion. Following the dismissal of Plaintiffs Abuse of Process claim, the parties agreed to mediate the dispute and reached a settlement in principal. Plaintiffs Motion for Preliminary Approval of Class Action Settlement was heard on February 8, 2016, before the Hon. Dale S. Fischer. The Court reviewed the proposed settlement and offered the parties its comments regarding the submitted documents. The Parties are now in the process of meeting and conferring to implement the Courts suggested revisions and will notify the Court when the materials are ready to be resubmitted. Once the motion is resubmitted, a new hearing date convenient for the Court will be selected, at which time Rightscorp anticipates the Court will rule on the motion. Melissa Brown and Ben Jenkins v. Rightscorp, Inc., Nature of Matter: In this case the plaintiffs asserted claims for (1) Violations of the Telephone Consumer Protection Act (47 U.S.C. § 227, et seq.) and (2) Knowing and Willful Violations of the Telephone Consumer Protection Act (47 U.S.C. § 227, et seq.). Defendant Rightscorp, Inc. disputed the plaintiffs claims and denied any violation of the Telephone Consumer Protection Act (47 U.S.C. § 227, et seq.) or any other right of plaintiffs. Progress of Matter to Date: After discovery, the parties agreed to settle the case in December 2015 and formally entered into a written settlement agreement on January 28, 2016 that fully resolved all claims in the case, with prejudice. Defendants paid the settlement amount and on February 29, 2016 a Stipulation of Dismissal was filed with the court and the matter was closed. Evaluation: The case has been settled. Lease The Company leases its office space on a month-to-month basis at a fixed rent of $2,600 per month. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 Subsequent Event On February 22, 2016, the Company sold to accredited investors an aggregate of 10,000,000 shares of its common stock at $0.05 per share and warrants to purchase 10,000,000 shares of its common stock for total proceeds of $500,000. The warrants have a term of three years and an exercise price of $0.10. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2015, the Company incurred a net loss of $3,434,567, used cash in operations of $2,495,900, and at December 31, 2015, the Company had a stockholders deficiency of $2,182,530. These factors raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. At December 31, 2015, the Company had cash on hand in the amount of $193,014. On February 22, 2016, the Company sold to accredited investors an aggregate of 10,000,000 shares of its common stock and warrants to purchase 10,000,000 shares of common stock for total proceeds of $500,000 (See Note 11). Management believes that our existing cash on hand will be sufficient to fund our operations into the second quarter of 2016. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Managements plans to continue as a going concern include raising additional capital through borrowings and the sale of common stock. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stock holders, in case of an equity financing. |
Principles of Consolidation | Principles of Consolidation The financial statements include the accounts of Rightscorp Inc., and its wholly-owned subsidiary Rightscorp Delaware. Intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services and derivative liabilities. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all cash, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. As of December 31, 2015 and 2014 the Company had no cash equivalents. |
Property and equipment | Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of three years. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the consolidated statements of operations. Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2015 and 2014, the Company did not recognize any impairments for its property and equipment. |
Revenue Recognition | Revenue Recognition The Company provides a service to copyright owners under which copyright owners retain the Company to identify and collect settlement payments from Internet users who have infringed on their copyrights. Revenue is recognized when the Company collects a settlement fee which acts as a wavier to the infringement against the copyright owner. Generally, the Company has agreed to remit 50% of such collections to the copyright holder. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
Stock-Based Compensation | Stock-Based Compensation The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Companys common stock option and warrant grants are estimated using a Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. |
Basic and diluted loss per share | Basic and diluted loss per share Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. For the years ended December 31, 2015 and 2014, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. At December 31, 2015 and 2014, the dilutive impact of outstanding stock options for 970,000 and 360,000 shares, respectively, and outstanding warrants for 35,310,140 and 22,450,140 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Under current accounting guidance, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, are observable either directly or indirectly. Level 3 Unobservable inputs based on the Companys assumptions. The Company is required to use observable market data if such data is available without undue cost and effort. As of December 31, 2015, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short-term maturities. Derivative liabilities of $1,210,430 and $2,419,087 were valued using Level 2 inputs as of December 31, 2015 and 2014, respectively. |
Concentrations of Risk | Concentrations of Risk For the year ended December 31, 2015, we derived approximately 58% and 14%, respectively, of our sales from contracts with two customers. For the year ended December 31, 2014, we derived approximately 76% and 13%, respectively, of our revenues from contracts with two customers. Our standard contract with customers are for initial terms which vary in length, typically between three months and one year, and renewals are at the discretion of the parties, or in some cases renew automatically in one month increments, subject to the right of either party to terminate upon 30 days notice. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Companys present or future consolidated financial statements. |
Fixed Assets and Intangible A19
Fixed Assets and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | December 31, 2015 December 31, 2014 Computer equipment and fixtures $ 312,756 $ 312,756 Accumulated depreciation (170,236 ) (72,484 ) Fixed assets, net $ 142,520 $ 240,272 |
Schedule of Intangible Assets | December 31, 2015 December 31, 2014 Intangible assets $ 84,500 $ 84,500 Accumulated depreciation (84,500 ) (67,600 ) Intangible assets, net $ - $ 16,900 |
Accounts Payable and Accrued 20
Accounts Payable and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | As of December 31, 2015 and 2014, accounts payable and accrued liabilities consisted of the following: December 31, 2015 December 31, 2014 Accounts payable $ 683,488 $ 315,920 Due to copyright holders 414,688 156,986 Accrued settlement 200,000 - Accrued payroll 62,908 91,673 Insurance premium financing payable 46,780 43,988 Total $ 1,407,864 $ 608,567 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Options | The stock option activity for the year ended December 31, 2015 and 2014 is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, January 1, 2014 - $ - - Granted 360,000 0.38 9.64 Exercised - - - Forfeited/expired - - - Balance outstanding, December 31, 2014 360,000 0.38 9.64 Granted 970,000 0.17 5,99 Exercised - - - Forfeited/expired (360,000 ) 0.28 8.88 Balance outstanding, December 31, 2015 970,000 $ 0.17 6.71 Exercisable, December 31, 2015 83,330 $ 0.18 6.00 |
Schedule of Warrant Activity | A summary of the Companys warrant activity during the year ended December 31, 2015 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, January 1, 2014 7,022,703 $ 0.65 4.80 Granted 17,942,000 0.25 Exercised (1,014,563 ) 0.09 Expired (1,500,000 ) 0.25 Balance outstanding, December 31, 2014 22,450,140 0.26 4.03 Granted 15,170,000 0.17 3.07 Exercised (600,000 ) 0.01 - Expired (1,710,000 ) 0.75 - Balance outstanding, December 31, 2015 35,310,140 (1) $ 0.09 3.21 Exercisable, December 31, 2015 33,810,140 $ 0.08 3.16 (1) At December 31, 2015, 15,792,000 warrants have an exercise of $0.01 per share that is subject to be adjusted if the Company issues securities at a price lower than exercise price of these warrants in the future. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Summary of Components of Net Deferred Tax Liabilities | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Companys deferred tax assets as of December 31, 2015 and 2014 are summarized below. 2015 2014 Net operating loss carryforward $ 3,300,000 $ 2,290,800 Stock-based compensation 417,000 - Accrued expense and other - 121,100 Total deferred tax assets 3,717,000 2,411,900 Valuation allowance (3,717,000 ) (2,411,900 ) Net deferred tax asset $ - $ - |
Summary of Income Rate | . Reconciled below is the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rate for the years ended December 31, 2015 and 2014. 2015 2014 U.S federal statutory income tax (34.00 )% (34.00 )% State tax, net of federal tax benefit (5.80 )% (5.80 )% Stock-based compensation 12.5 % - Change in valuation allowance 27.3 % 39.8 % Effective tax rate % % |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Dec. 31, 2013 | |
Net loss | $ (3,434,567) | $ (2,852,705) | ||
Net cash used in operating activities | (2,495,900) | (2,713,231) | ||
Total stockholders' deficit | (2,182,530) | (923,222) | $ (984,690) | |
Cash, end of period | $ 193,014 | $ 1,666,914 | $ 36,331 | |
Common stock shares sold | 107,215,314 | 89,896,421 | ||
Property and equipment estimated useful lives | 3 years | |||
Revenue recognition percentage | 50.00% | |||
Derivative liabilities | $ 1,210,430 | $ 2,419,087 | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer One [Member] | ||||
Concentrations of risk percentage | 58.00% | 76.00% | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer Two [Member] | ||||
Concentrations of risk percentage | 14.00% | 13.00% | ||
Level 2 [Member] | ||||
Derivative liabilities | $ 1,210,430 | $ 2,419,087 | ||
Option [Member] | ||||
Dilutive impact of outstanding stock | 970,000 | 360,000 | ||
Warrant [Member] | ||||
Common stock shares sold | 950,720 | |||
Dilutive impact of outstanding stock | 35,310,140 | 22,450,140 | ||
Investor [Member] | ||||
Common stock shares sold | 17,041,270 | 10,320,000 | ||
Investor [Member] | February 22, 2016 [Member] | ||||
Common stock shares sold | 10,000,000 | |||
Proceeds from issuance of warrants | $ 500,000 |
Fixed Assets and Intangible A24
Fixed Assets and Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 114,652 | $ 63,488 |
Fixed Assets and Intangible A25
Fixed Assets and Intangible Assets - Schedule of Fixed Assets (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Computer equipment and fixtures | $ 312,756 | $ 312,756 |
Accumulated depreciation | (170,236) | (72,484) |
Fixed assets, net | $ 142,520 | $ 240,272 |
Fixed Assets and Intangible A26
Fixed Assets and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Intangible assets | $ 84,500 | $ 84,500 |
Accumulated depreciation | $ (84,500) | (67,600) |
Intangible assets, net | $ 16,900 |
Accounts Payable and Accrued 27
Accounts Payable and Accrued Liabilities (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Payables and Accruals [Abstract] | |
Name of the defendant | John Blaha v. Rightscorp, Inc |
Class action settlement | $ 200,000 |
Insurance proceeds | $ 250,000 |
Accounts Payable and Accrued 28
Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 683,488 | $ 315,920 |
Due to copyright holders | 414,688 | $ 156,986 |
Accrued settlement | 200,000 | |
Accrued payroll | 62,908 | $ 91,673 |
Insurance premium financing payable | 46,780 | 43,988 |
Total | $ 1,407,864 | $ 608,567 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Convertible notes payable | $ 10,000 |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Warrants issued | 17,892,000 | ||
Commn stock issued to warrants | 11,928,000 | ||
Stock price per share | $ 0.25 | ||
Number of warrants cancelled | 1,500,000 | ||
Number of warrants exercised | 600,000 | ||
Derivative liability | $ 1,210,430 | $ 2,419,087 | |
Derivative liability decreased during period | $ 1,208,657 | ||
Expected volatility | 124.00% | ||
Discount rate | 1.50% | ||
Expected dividend yield | 0.00% | ||
Expected life | 3 years 9 months |
Common Stock Transactions (Deta
Common Stock Transactions (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Aggregate number of shares issued | 16,770,000 | 21,099,319 | ||
Common stock, shares issued | 107,215,314 | 89,896,421 | ||
Common stock purchase price, per shars | $ 0.25 | |||
Number of common stock value issued for services | $ 907,105 | |||
Stock-compensation expense | $ 433,699 | $ 44,289 | ||
Warrant [Member] | ||||
Common stock, shares issued | 950,720 | |||
Proceeds from issuance | $ 53,148 | |||
Exercise price per share | $ 0.086 | |||
Investor [Member] | ||||
Common stock, shares issued | 10,320,000 | 17,041,270 | ||
Common stock purchase price, per shars | $ 0.10 | |||
Proceeds from issuance | $ 1,032,000 | $ 4,681,123 | ||
Exercise price per share | $ 0.15 | |||
Investor [Member] | Minimum [Member] | ||||
Common stock purchase price, per shars | $ 0.25 | |||
Investor [Member] | Maximum [Member] | ||||
Common stock purchase price, per shars | $ 0.374 | |||
Employees and Consultants [Member] | ||||
Number of common stock shares issued for services | 6,450,000 | 2,251,287 | ||
Number of common stock value issued for services | $ 759,560 | $ 907,105 | ||
Employees and Consultants [Member] | Minimum [Member] | ||||
Exercise price per share | $ 0.09 | $ 0.35 | ||
Employees and Consultants [Member] | Maximum [Member] | ||||
Exercise price per share | $ 0.15 | $ 0.73 | ||
Note Holders [Member] | ||||
Common stock, shares issued | 856,042 | |||
Notes conversion price per share | $ 0.127 | |||
Notes outstanding principal | $ 109,228 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Nov. 30, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Aug. 31, 2014 | Jan. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Options Granted | 970,000 | 360,000 | ||||||
Exercise price per share | ||||||||
Number of warrants cancelled | 1,500,000 | |||||||
Exercise of warrants | 17,892,000 | |||||||
Option [Member] | ||||||||
Options Granted | 970,000 | |||||||
Exercise price per share | $ 0.25 | |||||||
Fair value of options | $ 194,201 | |||||||
Expected dividend yield | 0.00% | |||||||
Compensation costs | $ 84,589 | $ 28,451 | ||||||
Aggregate value of unvested options | $ 121,690 | |||||||
Option [Member] | Employee [Member] | ||||||||
Options Granted | 290,000 | |||||||
Exercise price per share | $ 0.38 | |||||||
Option [Member] | Minimum [Member] | ||||||||
Exercise price per share | $ 0.15 | |||||||
Expected volatility | 180.00% | |||||||
Discount rate | 1.50% | |||||||
Expected life | 5 years | |||||||
Option [Member] | Minimum [Member] | Employee [Member] | ||||||||
Stock option vesting period | 3 years | |||||||
Option [Member] | Maximum [Member] | ||||||||
Exercise price per share | $ 0.25 | |||||||
Expected volatility | 207.00% | |||||||
Discount rate | 1.71% | |||||||
Expected life | 10 years | |||||||
Option [Member] | Maximum [Member] | Employee [Member] | ||||||||
Stock option vesting period | 10 years | |||||||
Warrant [Member] | ||||||||
Expected dividend yield | 0.00% | |||||||
Expected life | 5 years | |||||||
Compensation costs | $ 349,110 | $ 2,419,087 | ||||||
Aggregate value of unvested options | $ 85,212 | |||||||
Warrants issued to purchase number of stock | 548,893 | 16,392,000 | 17,892,000 | 50,000 | 4,850,000 | |||
Warrant exercise price, per share | $ 0.01 | $ 0.10 | $ 0.25 | $ 0.25 | $ 0.61 | |||
Fair value of warrants | $ 434,501 | |||||||
Number of warrants cancelled | 1,500,000 | |||||||
Exercise of warrants | 600,000 | |||||||
Outstanding and exercisable warrants intrinsic value | $ 1,088,000 | |||||||
Warrant [Member] | Investor [Member] | ||||||||
Warrants issued to purchase number of stock | 10,320,000 | |||||||
Warrant exercise price, per share | $ 0.15 | |||||||
Warrant [Member] | Minimum [Member] | ||||||||
Expected volatility | 134.00% | |||||||
Discount rate | 1.20% | |||||||
Expected life | 3 years | |||||||
Stock option vesting period | 1 year | |||||||
Warrant exercise price, per share | 0.25 | $ 0.15 | ||||||
Warrant [Member] | Maximum [Member] | ||||||||
Expected volatility | 144.00% | |||||||
Discount rate | 1.55% | |||||||
Expected life | 5 years | |||||||
Stock option vesting period | 3 years | |||||||
Warrant exercise price, per share | $ 0.01 | $ 0.25 |
Stock Options and Warrants - Su
Stock Options and Warrants - Summary of Stock Options (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Options Outstanding, Beginning balance | 360,000 | |
Options Granted | 970,000 | 360,000 |
Options Exercised | ||
Options Forfeited/expired | (360,000) | |
Options Outstanding, Ending balance | 970,000 | 360,000 |
Options Exercisable, Ending balance | 83,330 | |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 0.38 | |
Weighted Average Exercise Price, Granted | $ 0.17 | $ 0.38 |
Weighted Average Exercise Price, Exercised/expired | ||
Weighted Average Exercise Price, Forfeited | $ (0.28) | |
Weighted Average Exercise Price, Outstanding, Ending balance | 0.17 | $ 0.38 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ 0.18 | |
Weighted Average Remaining Contractual Beginning Term | 9 years 7 months 21 days | 0 years |
Weighted Average Remaining Contractual Term, Granted | 5 years 11 months 27 days | 9 years 7 months 21 days |
Weighted Average Remaining Contractual Term, Expired | 8 years 10 months 17 days | 3 months 11 days |
Weighted Average Remaining Contractual Ending Term | 6 years 8 months 16 days | 9 years 7 months 21 days |
Weighted Average Remaining Contractual Exercisable Term | 6 years | 0 years |
Stock Options and Warrants - Sc
Stock Options and Warrants - Schedule of Warrant Activity (Details) - Warrant [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Number of Warrants, Beginning balance | 22,450,140 | 7,022,703 | |
Number of Warrants, Granted | 15,170,000 | 17,942,000 | |
Number of Warrants, Exercised | (600,000) | (1,014,563) | |
Number of Warrants, Expired | (1,710,000) | (1,500,000) | |
Number of Warrants, Ending balance | 35,310,140 | [1] | 22,450,140 |
Number of Warrants, Exercisable | 33,810,140 | ||
Weighted Average Exercise Price, Beginning balance | $ 0.26 | $ 0.65 | |
Weighted Average Exercise Price, Granted | 0.17 | 0.25 | |
Weighted Average Exercise Price, Exercised | 0.01 | 0.09 | |
Weighted Average Exercise Price, Expired | 0.75 | 0.25 | |
Weighted Average Exercise Price, Ending balance | 0.75 | $ 0.26 | |
Weighted Average Exercise Price, Exercisable | $ 0.08 | ||
Weighted Average Remaining Contractual Beginning Term | 4 years 9 months 18 days | ||
Weighted Average Remaining Contractual Term, Granted | 3 years 26 days | ||
Weighted Average Remaining Contractual Ending term | 3 years 2 months 16 days | 4 years 11 days | |
Weighted Average Remaining Contractual Term, Exercisable | 3 years 1 month 28 days | ||
[1] | At December 31, 2015, 15,792,000 warrants have an exercise of $0.01 per share that is subject to be adjusted if the Company issues securities at a price lower than exercise price of these warrants in the future. |
Stock Options and Warrants - 35
Stock Options and Warrants - Schedule of Warrant Activity (Details) (Parenthetical) - $ / shares | Dec. 31, 2015 | Sep. 30, 2014 |
Exercise of warrants | 17,892,000 | |
Warrant [Member] | ||
Exercise of warrants | 15,792,000 | |
Warrant exercise price, per share | $ 0.01 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforwards federal | $ 8,300,000 |
Net operating loss carryforwards state | $ 5,100,000 |
Net operating loss carryforwards expiration year | Expire through 2035. |
Income Taxes - Summary of Compo
Income Taxes - Summary of Components of Net Deferred Tax Liabilities (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 3,300,000 | $ 2,290,800 |
Stock-based compensation | $ 417,000 | |
Accrued expense and other | $ 121,100 | |
Total deferred tax assets | $ 3,717,000 | 2,411,900 |
Valuation allowance | $ (3,717,000) | $ (2,411,900) |
Net deferred tax asset |
Income Taxs - Summary of Income
Income Taxs - Summary of Income Rate (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
U.S federal statutory income tax | (34.00%) | (34.00%) |
State tax, net of federal tax benefit | (5.80%) | (5.80%) |
Stock-based compensation | 12.50% | 0.00% |
Change in valuation allowance | 27.30% | 39.80% |
Effective tax rate | 0.00% | 0.00% |
Commitments & Contingencies (De
Commitments & Contingencies (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Fixed rent for lease per month | $ 2,600 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Feb. 22, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Common stock shares sold | 107,215,314 | 89,896,421 | ||
Common stock purchase price, per shars | $ 0.25 | |||
Subsequent Event [Member] | ||||
Common stock shares sold | 10,000,000 | |||
Common stock purchase price, per shars | $ 0.05 | |||
Proceeds from issuance of warrants | $ 500,000 | |||
Warrant expiration term | 3 years | |||
Warrant exercise price, per share | $ 0.10 |