Rightscorp (RIHT) 10-Q 15 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 11, 2016
Document And Entity Information
Entity Registrant Name	Rightscorp, Inc.
Entity Central Index Key	1,506,270
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		122,795,314
Document Fiscal Period Focus	Q2
Trading symbol	RIHT
Document Fiscal Year Focus	2,016

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets
Cash	$ 18,019	$ 193,014
Prepaid expenses	50,558	100,230
Total Current Assets	68,577	293,244
Other Assets
Fixed assets, net	97,214	142,520
Total Assets	165,791	435,764
Current Liabilities
Accounts payable and accrued liabilities	1,643,475	1,407,864
Derivative liabilities	353,860	1,210,430
Total Current Liabilities	1,997,335	2,618,294
Stockholders' Deficit
Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued and outstanding
Common stock, $.001 par value; 250,000,000 shares authorized; 122,795,314 and 107,215,314 shares issued and outstanding, respectively	122,795	107,215
Additional paid in capital	9,568,870	8,238,199
Accumulated deficit	(11,523,209)	(10,527,944)
Total stockholders' deficit	(1,831,544)	(2,182,530)
Total Liabilities and Stockholders' Deficit	$ 165,791	$ 435,764

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value	$ .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	122,795,314	107,215,314
Common stock, shares outstanding	122,795,314	107,215,314

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Revenue	$ 146,043	$ 233,816	$ 214,326	$ 541,720
Operating expenses:
Copyright holder fees	56,593	116,908	105,735	270,860
Sales and marketing	687	12,747	2,035	14,244
General and administrative	592,011	1,798,071	1,553,116	2,850,938
Depreciation and amortization	22,490	28,597	45,305	57,953
Total operating expenses	671,781	1,956,323	1,706,191	3,193,995
Loss from operations	(525,738)	(1,722,507)	(1,491,865)	(2,652,275)
Other income (expense):
Interest expense		(244)		(542)
Change in fair value of derivative liabilities	314,653	(1,095,269)	496,600	(43,212)
Total other income (expense)	314,653	(1,095,513)	496,600	(43,754)
Net loss	$ (211,085)	$ (2,818,020)	$ (995,265)	$ (2,696,029)
Net loss per share – basic and diluted	$ 0	$ (0.03)	$ (0.01)	$ (0.03)
Weighted average common shares – basic	119,393,116	90,753,564	116,600,918	90,327,360

Condensed Consolidated Stateme5

Condensed Consolidated Statement of Stockholders' Deficit (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2015	$ 107,215	$ 8,238,199	$ (10,527,944)	$ (2,182,530)
Balance, shares at Dec. 31, 2015	107,215,314
Shares issued for cash	$ 10,000	490,000		500,000
Shares issued for cash, shares	10,000,000
Shares issued for exercise of warrant	$ 5,580	$ 50,220		$ 55,800
Shares issued for exercise of warrant, shares	5,580,000
Extinguishment of derivative liability		$ 359,969		$ 359,969
Fair value of stock-based compensation		430,482		430,482
Net loss			(995,265)	(995,265)
Balance at Jun. 30, 2016	$ 122,795	$ 9,568,870	$ (11,523,209)	$ (1,831,544)
Balance, shares at Jun. 30, 2016	122,795,314

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Flows from Operating Activities
Net loss	$ (995,265)	$ (2,696,029)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	45,305	57,953
Fair value of stock-based compensation	430,482	559,195
Change in fair value of derivative liabilities	(496,600)	43,212
Prepaid expense	49,672	89,285
Accounts payable and accrued liabilities	235,611	585,666
Net cash used in operating activities	(730,795)	(1,360,718)
Cash Flows from Financing Activities
Repayment of convertible notes		(10,000)
Payments on note payable		(29,325)
Proceeds from issuance of common stock	500,000
Exercise of warrant	55,800
Net cash provided by financing activities	555,800	(39,325)
Net increase (decrease) in cash	(174,995)	(1,400,043)
Cash, beginning of period	193,014	1,666,914
Cash, end of period	18,019	266,871
Supplemental disclosures of cash flow information:
Cash paid during the period for interest
Cash paid during the period for taxes
Non-cash investing and financing activities:
Extinguishment of derivative liabilities	$ 359,969

Nature of the Business

Nature of the Business	6 Months Ended
	Jun. 30, 2016
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 ISP’s.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. The condensed consolidated balance sheet at December 31, 2015, has been derived from the audited consolidated financial statements of that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Rightscorp, Inc.’s annual report on Form 10-K for the year ended December 31, 2015. 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 six months ended June 30, 2016, the Company incurred a net loss of $995,265, used cash in operations of $730,795, and at June 30, 2016, the Company had a stockholders’ deficiency of $1,831,544. These factors raise substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2015 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. 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 6). At June 30, 2016, the Company had cash of $18,019. Management believes that our existing cash on hand will not be sufficient to fund our operations through December 2016. Management believes that the Company will need at least another $500,000 in 2016 to fund operations based on our current operating plans. Management’s plans to continue as a going concern include raising additional capital through borrowings and/or 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 share-based instruments issued for services, and derivative liabilities. Actual results could differ from those estimates. Revenue 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 waiver of the infringement. Generally, the Company has agreed to remit 50% of such collections to the copyright holder. The Company also provides services to copyright holders. Service fee revenue is recognized when the service has been provided. 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 Company’s common stock option and warrant grants is 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. 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 statements of operations. The Company uses a probability weighted average Black-Scholes-Merton model to value the derivative instruments. 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 Company’s assumptions. The Company is required to use observable market data if such data is available without undue cost and effort. As of June 30, 2016, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short-term maturities. Derivative liabilities of $353,860 and $1,210,430 were valued using Level 2 inputs as of June 30, 2016 and December 31, 2015, respectively. 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. Potential common shares are excluded from the computation when their effect is anti-dilutive. At June 30, 2016 and 2015, the dilutive impact of outstanding stock options for 970,000 and 579,990 shares, respectively, and outstanding warrants for 47,657,640 and 23,890,140 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive. 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. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. 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 Company’s present or future consolidated financial statements.

Fixed Assets

Fixed Assets	6 Months Ended
	Jun. 30, 2016
Property, Plant and Equipment [Abstract]
Fixed Assets	Note 3 – Fixed Assets As of June 30, 2016 and December 31, 2015, fixed assets consisted of the following: June 30, 2016 December 31, 2015 (Unaudited) Computer equipment and fixtures $ 312,756 $ 312,756 Accumulated depreciation (215,542 ) (170,236 ) Fixed assets, net $ 97,214 $ 142,520 Depreciation and amortization expense for the six months ended June 30, 2016 and June 30, 2015 was $45,305 and $57,853, respectively.

Accounts Payable and Accrued Li

Accounts Payable and Accrued Liabilities	6 Months Ended
	Jun. 30, 2016
Payables and Accruals [Abstract]
Accounts Payable and Accrued Liabilities	Note 4 – Accounts Payable and Accrued Liabilities As of June 30, 2016 and December 31, 2015, accounts payable and accrued liabilities consisted of the following: June 30, 2016 December 31, 2015 (Unaudited) Accounts payable $ 798,893 $ 683,488 Due to copyright holders 494,947 414,688 Accrued settlement 200,000 200,000 Accrued payroll 139,499 62,908 Insurance premium financing payable 10,136 46,780 Total $ 1,643,475 $ 1,407,864 In November 2014, the Company was named as defendant in a class action complaint (see John Blaha v. Rightscorp, Inc

Derivative Liabilities

Derivative Liabilities	6 Months Ended
	Jun. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Liabilities	Note 5 – Derivative Liabilities In September 2014, the Company issued warrants exercisable into 17,892,000 shares of common stock 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). At December 31, 2015, 15,792,000 of these warrants were outstanding. During the six months ended June 30, 2016, 5,580,000 of these warrants were exercised, and at June 30, 2016, 10,212,000 of these warrants were outstanding. Pursuant to FASB authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s 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 Company’s 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, 2015, the fair value of the derivative liabilities was $1,210,430. During the six months ended June 30, 2016, 5,580,000 warrants accounted for as derivative liabilities were exercised and as such their corresponding fair value at the exercise date of $359,970 was extinguished from the derivative liabilities balance. During the six months ended June 30, 2016, the fair value of the derivative liabilities decreased by $496,600, and at June 30, 2016, the fair value of the derivative liabilities was $353,860. At June 30, 2016, the fair value of the derivative liabilities was determined through use of a probability-weighted Black-Scholes-Merton valuation model. At June 30, 2015, the fair value of the derivative liabilities was determined through use of a Black-Scholes-Merton option pricing model. At June 30, 2016 and December 31, 2015, fair values were based on the following assumptions: June 30, 2016 December 31, 2015 Expected volatility 170 % 274 % Risk-free interest rate 1.5 % 1.0 % Expected dividend yield 0 % 0 % Expected life 3.2 years 4.5 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

Common Stock	6 Months Ended
	Jun. 30, 2016
Equity [Abstract]
Common stock	Note 6 – Common Stock During the six months ended June 30, 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 gross proceeds of $500,000. The warrants have a term of three years and an exercise price of $0.10 per share. During the six months ended June 30, 2016, the Company issued 5,580,000 shares of its common stock upon the exercise of 5,580,000 warrants valued at $55,800.

Stock Options and Warrants

Stock Options and Warrants	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Options and Warrants	Note 7 – Stock Options and Warrants Options During the six months ended June 30, 2016 and 2015, the Company recorded compensation costs of $23,884 and $25,571 in general and administrative expense, respectively, relating to the vesting of stock options. As of June 30, 2016, the aggregate value of unvested options was $65,833, 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 six months ended June 30, 2016 is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2015 970,000 $ 0.17 6.71 Granted - - - Exercised - - - Forfeited/expired - - - Balance outstanding, June 30, 2016 970,000 $ 0.17 5.40 Exercisable, June 30, 2016 146,662 $ 0.25 8.54 At June 30, 2016, the Company’s outstanding and exercisable options had no intrinsic value. Warrants During the six months ended June 30, 2016, the Company issued warrants exercisable into 10,000,000 shares of common stock to accredited investors (see Note 6). In addition, the Company issued warrants to purchase 8,000,000 shares of common stock with an exercise price of $0.15 per share for services. The fair value of the 8,000,000 warrants issued for services was determined to be $330,210. The Company recorded $330,210 in general and administrative expense since it determined that the award is a certainty and the service performance and its future benefit are not assured in this arrangement. In addition, during the six months ended June 30, 2016 and 2015, the Company recorded compensation costs of $76,388 and $138,624 in general and administrative expense, respectively, relating to the vesting of other stock warrants. For the six months ending June 30, 2016 and 2015, the fair value of warrant awards was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions: June 30, 2016 June 30, 2015 Expected volatility 121 % 254 % Risk-free interest rate 1.08 % 1.5 % Expected dividend yield 0 % 0 % Expected life 3 years 5 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. As of June 30, 2016, the aggregate value of unvested warrants was $336,583, which will continue to be amortized as compensation cost as the warrants vest over two years. A summary of the Company’s warrant activity during the six months ended June 30, 2016 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2015 35,310,140 $ 0.09 3.21 Granted 18,000,000 0.12 2.65 Exercised (5,580,000 ) 0.01 3.24 Forfeited/expired (72,500 ) 0.09 - Balance outstanding, June 30, 2016 47,657,640 $ 0.11 2.63 Exercisable, June 30, 2016 46,657,640 $ 0.11 5.24 At June 30, 2016, the Company’s outstanding and exercisable warrants had an intrinsic value of $357,420.

Commitments & Contingencies

Commitments & Contingencies	6 Months Ended
	Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments & Contingencies	Note 8 – Commitments & Contingencies Legal proceeding 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 California’s anti-SLAPP statute. Defendants’ anti-SLAPP motion was granted on May 8, 2015. Pursuant to the Court’s 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’ attorney’s fees incurred in bringing the anti-SLAPP motion. Following the dismissal of Plaintiff’s Abuse of Process claim, the parties agreed to mediate the dispute and reached a settlement in principal. On June 24, 2016, the Court issued an order granting plaintiff’s motion for preliminary approval of class action settlement. On August 1, 2016, notice was sent to the class. A hearing regarding final approval of the settlement is set for November 14, 2016. The Company has recorded a reserve for the estimated settlement of $200,000 related to this, which is net of expected insurance proceeds of $250,000. WINDSTREAM SERVICES, LLC Plaintiff V. BMG RIGHTS MANAGEMENT (US) LLC, et al. Defendant, S.D. NY. (Original Complaint Filed June 27, 2016). Nature of Matter: Progress of Matter to Date:

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. The condensed consolidated balance sheet at December 31, 2015, has been derived from the audited consolidated financial statements of that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Rightscorp, Inc.’s annual report on Form 10-K for the year ended December 31, 2015.
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 six months ended June 30, 2016, the Company incurred a net loss of $995,265, used cash in operations of $730,795, and at June 30, 2016, the Company had a stockholders’ deficiency of $1,831,544. These factors raise substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2015 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. 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 6). At June 30, 2016, the Company had cash of $18,019. Management believes that our existing cash on hand will not be sufficient to fund our operations through December 2016. Management believes that the Company will need at least another $500,000 in 2016 to fund operations based on our current operating plans. Management’s plans to continue as a going concern include raising additional capital through borrowings and/or 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 share-based instruments issued for services, and derivative liabilities. Actual results could differ from those estimates.
Revenue	Revenue 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 waiver of the infringement. Generally, the Company has agreed to remit 50% of such collections to the copyright holder. The Company also provides services to copyright holders. Service fee revenue is recognized when the service has been provided.
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 Company’s common stock option and warrant grants is 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.
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 statements of operations. The Company uses a probability weighted average Black-Scholes-Merton model to value the derivative instruments. 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 Company’s assumptions. The Company is required to use observable market data if such data is available without undue cost and effort. As of June 30, 2016, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short-term maturities. Derivative liabilities of $353,860 and $1,210,430 were valued using Level 2 inputs as of June 30, 2016 and December 31, 2015, respectively.
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. Potential common shares are excluded from the computation when their effect is anti-dilutive. At June 30, 2016 and 2015, the dilutive impact of outstanding stock options for 970,000 and 579,990 shares, respectively, and outstanding warrants for 47,657,640 and 23,890,140 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive.
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. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. 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 Company’s present or future consolidated financial statements.

Fixed Assets (Tables)

Fixed Assets (Tables)	6 Months Ended
	Jun. 30, 2016
Property, Plant and Equipment [Abstract]
Schedule of Fixed Assets	As of June 30, 2016 and December 31, 2015, fixed assets consisted of the following: June 30, 2016 December 31, 2015 (Unaudited) Computer equipment and fixtures $ 312,756 $ 312,756 Accumulated depreciation (215,542 ) (170,236 ) Fixed assets, net $ 97,214 $ 142,520

Accounts Payable and Accrued 17

Accounts Payable and Accrued Liabilities (Tables)	6 Months Ended
	Jun. 30, 2016
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Liabilities	As of June 30, 2016 and December 31, 2015, accounts payable and accrued liabilities consisted of the following: June 30, 2016 December 31, 2015 (Unaudited) Accounts payable $ 798,893 $ 683,488 Due to copyright holders 494,947 414,688 Accrued settlement 200,000 200,000 Accrued payroll 139,499 62,908 Insurance premium financing payable 10,136 46,780 Total $ 1,643,475 $ 1,407,864

Derivative Liabilities (Tables)

Derivative Liabilities (Tables)	6 Months Ended
	Jun. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of Derivative Liabilities at Fair Value	At June 30, 2016 and December 31, 2015, fair values were based on the following assumptions: June 30, 2016 December 31, 2015 Expected volatility 170 % 274 % Risk-free interest rate 1.5 % 1.0 % Expected dividend yield 0 % 0 % Expected life 3.2 years 4.5 years

Stock Options and Warrants (Tab

Stock Options and Warrants (Tables)	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock Options Activity	The stock option activity for the six months ended June 30, 2016 is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2015 970,000 $ 0.17 6.71 Granted - - - Exercised - - - Forfeited/expired - - - Balance outstanding, June 30, 2016 970,000 $ 0.17 5.40 Exercisable, June 30, 2016 146,662 $ 0.25 8.54
Schedule of Warrants Assumptions	For the six months ending June 30, 2016 and 2015, the fair value of warrant awards was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions: June 30, 2016 June 30, 2015 Expected volatility 121 % 254 % Risk-free interest rate 1.08 % 1.5 % Expected dividend yield 0 % 0 % Expected life 3 years 5 years
Schedule of Warrant Activity	A summary of the Company’s warrant activity during the six months ended June 30, 2016 is presented below: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2015 35,310,140 $ 0.09 3.21 Granted 18,000,000 0.12 2.65 Exercised (5,580,000 ) 0.01 3.24 Forfeited/expired (72,500 ) 0.09 - Balance outstanding, June 30, 2016 47,657,640 $ 0.11 2.63 Exercisable, June 30, 2016 46,657,640 $ 0.11 5.24

Summary of Significant Accoun20

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	Feb. 22, 2016	Sep. 30, 2014	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Net loss			$ 211,085	$ 2,818,020	$ 995,265	$ 2,696,029
Net cash used in operating activities					730,795	1,360,718
Stockholders' deficiency			1,831,544		1,831,544		$ 2,182,530
Cash on hand amount			18,019	$ 266,871	18,019	266,871	193,014	$ 1,666,914
Common stock shares sold		11,928,000
Warrants to purchase of common stock shares		17,892,000
Proceeds from issuance of warrants					55,800
Raise of Capital					$ 500,000
Revenue recognition percentage					50.00%
Derivative liabilities			$ 353,860		$ 353,860		$ 1,210,430
Stock Option [Member]
Dilutive impact of outstanding stock					970,000	579,990
Warrant [Member]
Warrants to purchase of common stock shares			8,000,000		8,000,000
Dilutive impact of outstanding stock					47,657,640	23,890,140
June 30, 2016 [Member]
Raise of Capital					$ 1,000,000
Investor [Member]
Common stock shares sold	10,000,000
Warrants to purchase of common stock shares	10,000,000
Proceeds from issuance of warrants	$ 500,000

Fixed Assets and Intangible Ass

Fixed Assets and Intangible Assets (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 22,490	$ 28,597	$ 45,305	$ 57,953

Fixed Assets and Intangible A22

Fixed Assets and Intangible Assets - Schedule of Fixed Assets (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Computer equipment and fixtures	$ 312,756	$ 312,756
Accumulated depreciation	(215,542)	(170,236)
Fixed assets, net	$ 97,214	$ 142,520

Accounts Payable and Accrued 23

Accounts Payable and Accrued Liabilities (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Name of defendant	John Blaha v. Rightscorp, Inc
Accrued settlement	$ 200,000	$ 200,000
Insurance proceeds	$ 250,000

Accounts Payable and Accrued 24

Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Accounts payable	$ 798,893	$ 683,488
Due to copyright holders	494,947	414,688
Accrued settlement	200,000	200,000
Accrued payroll	139,499	62,908
Insurance premium financing payable	10,136	46,780
Total	$ 1,643,475	$ 1,407,864

Derivative Liability (Details N

Derivative Liability (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Sep. 30, 2014	Jun. 30, 2016	Dec. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Number of warrants exercisable into shares of common stock	17,892,000
Number of common stock shares sold during the period	11,928,000
Warrants term	5 years
Warrants exercise price per share	$ 0.25
Warrant outstanding		10,212,000	15,792,000
Number of warrants exercised		5,580,000
Derivative liability		$ 353,860	$ 1,210,430
Fair value of derivative liabilities		359,970
Derivative liability decreased during period		$ 496,600

Derivative Liability - Schedule

Derivative Liability - Schedule of Derivative Liabilities at Fair Value (Details)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Derivative Liability - Schedule Of Derivative Liabilities At Fair Value Details
Expected volatility	170.00%	274.00%
Risk-free interest rate	1.50%	1.00%
Expected dividend yield	0.00%	0.00%
Expected life	3 years 2 months 12 days	4 years 6 months

Common Stock (Details Narrative

Common Stock (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Sep. 30, 2014	Jun. 30, 2016	Jun. 30, 2015
Common stock shares sold	11,928,000
Warrants to purchase of common stock shares	17,892,000
Proceeds from issuance of warrants		$ 55,800
Warrants term	5 years
Warrants exercise price per share	$ 0.25
Number of common stock exercise
Accredited Investors [Member]
Common stock shares sold		10,000,000
Common stock price per share		$ 0.05
Warrants to purchase of common stock shares		10,000,000
Proceeds from issuance of warrants		$ 500,000
Warrants term		3 years
Warrants exercise price per share		$ 0.10
Number of common stock exercise		5,580,000
Number common stock upon exercise of warrants		5,580,000
Number common stock upon exercise of warrants, value		$ 55,800

Stock Options and Warrants (Det

Stock Options and Warrants (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Sep. 30, 2014
Warrants to purchase of common stock shares			17,892,000
Warrant exercise price, per share			$ 0.25
General and Administrative Expense [Member]
Compensation costs	$ 76,388	$ 138,624
Accredited Investors [Member]
Warrants to purchase of common stock shares	10,000,000
Warrant exercise price, per share	$ 0.10
Stock Option [Member]
Compensation costs	$ 23,884	$ 25,571
Aggregate value of unvested options	$ 65,833
Stock Option [Member] | Minimum [Member]
Stock option vesting period	1 year
Stock Option [Member] | Maximum [Member]
Stock option vesting period	3 years
Warrant [Member]
Aggregate value of unvested options	$ 336,583
Stock option vesting period	2 years
Warrants to purchase of common stock shares	8,000,000
Warrant exercise price, per share	$ 0.15
Fair value of warrants issued for services, shares	8,000,000
Fair value of warrants	$ 330,210
Outstanding warrants intrinsic value	$ 357,420
Warrant [Member] | Accredited Investors [Member]
Number of warrants exercisable issued into shares of common stock	10,000,000

Stock Options and Warrants - Su

Stock Options and Warrants - Summary of Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2016$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Options Outstanding, Beginning balance | shares	970,000
Number of Options Granted | shares
Number of Options Exercised | shares
Number of Options Forfeited/expired | shares
Number of Options Outstanding, Ending balance | shares	970,000
Number of Options Exercisable, Ending balance | shares	146,662
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares	$ 0.17
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised/expired | $ / shares
Weighted Average Exercise Price, Forfeited | $ / shares
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares	0.17
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares	$ 0.25
Weighted Average Remaining Contractual Beginning Term	6 years 8 months 16 days
Weighted Average Remaining Contractual Term, Granted	0 years
Weighted Average Remaining Contractual Term, Expired	0 years
Weighted Average Remaining Contractual Ending Term	5 years 4 months 24 days
Weighted Average Remaining Contractual Exercisable Term	8 years 6 months 15 days

Stock Options and Warrants - Sc

Stock Options and Warrants - Schedule of Fair Value Assumption Using Black-Scholes-Merton Option-Pricing Model (Details) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Expected volatility	121.00%	254.00%
Risk-free interest rate	1.08%	1.50%
Expected dividend yield	0.00%	0.00%
Expected life	3 years	5 years

Stock Options and Warrants - 31

Stock Options and Warrants - Schedule of Warrant Activity (Details) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016$ / sharesshares
Number of Warrants, Beginning balance | shares	35,310,140	[1]
Number of Warrants, Granted | shares	18,000,000
Number of Warrants, Exercised | shares	(5,580,000)
Number of Warrants, Forfeited/expired | shares	(72,500)
Number of Warrants, Ending balance | shares	47,657,640
Number of Warrants, Exercisable | shares	46,657,640
Weighted Average Exercise Price, Beginning balance | $ / shares	$ 0.09
Weighted Average Exercise Price, Granted | $ / shares	0.12
Weighted Average Exercise Price, Exercised | $ / shares	0.01
Weighted Average Exercise Price, Expired | $ / shares	0.09
Weighted Average Exercise Price, Ending balance | $ / shares	0.11
Weighted Average Exercise Price, Exercisable | $ / shares	$ 0.11
Weighted Average Remaining Contractual Beginning Term	3 years 2 months 16 days
Weighted Average Remaining Contractual Term, Granted	2 years 7 months 24 days
Weighted Average Remaining Contractual Term, Exercised	3 years 2 months 27 days
Weighted Average Remaining Contractual Term, Forfeited/expired	0 years
Weighted Average Remaining Contractual Ending term	2 years 7 months 17 days
Weighted Average Remaining Contractual Term, Exercisable	5 years 2 months 27 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.

Commitments & Contingencies (De

Commitments & Contingencies (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Accrued settlement	$ 200,000	$ 200,000
Insurance proceeds	$ 250,000