Rightscorp (RIHT) 10-Q 14 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 14, 2017
Document And Entity Information
Entity Registrant Name	Rightscorp, Inc.
Entity Central Index Key	1,506,270
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		147,403,398
Document Fiscal Period Focus	Q3
Trading symbol	RIHT
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash	$ 3,147	$ 5,047
Accounts receivable	222	0
Prepaid expenses	19,867	65,073
Total Current Assets	23,236	70,120
Other Assets
Fixed assets, net	3,003	54,113
Total Assets	26,239	124,233
Current Liabilities
Accounts payable and accrued liabilities	2,188,439	1,885,977
Notes payable	50,000	50,000
Derivative liabilities	187,502	280,316
Total Current Liabilities	2,425,941	2,216,293
Stockholders' Deficit
Preferred stock, $.001 par value; 10,000,000 shares authorized; null shares issued and outstanding	0	0
Common stock, $.001 par value; 250,000,000 shares authorized; 160,920,065 and 127,463,171 shares issued and outstanding, respectively	160,920	127,463
Additional paid in capital	10,771,968	9,664,168
Accumulated deficit	(13,332,590)	(11,883,691)
Total stockholders' deficit	(2,399,702)	(2,092,060)
Total Liabilities and Stockholders' Deficit	$ 26,239	$ 124,233

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
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	160,920,065	127,463,171
Common stock, shares outstanding	160,920,065	127,463,171

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenue
Copyright settlement revenue	$ 45,848	$ 139,834	$ 184,362	$ 354,160
Consulting revenue	76,666	0	224,998	0
Total revenue	122,514	139,834	409,360	354,160
Operating expenses:
Copyright holder fees	22,924	69,143	92,181	174,878
Sales and marketing	1,357	337	2,704	2,371
General and administrative	561,028	386,865	1,751,724	1,939,982
Depreciation and amortization	16,284	22,337	51,110	67,643
Total operating expenses	601,593	478,682	1,897,720	2,184,874
Loss from operations	(479,079)	(338,848)	(1,488,360)	(1,830,714)
Other expenses:
Interest expense	(779)	(17,789)	(1,863)	(17,789)
Change in fair value of derivative liabilities	99,381	(28,796)	41,324	467,805
Total other income ( expenses)	98,602	(46,585)	39,461	450,016
Net loss	$ (380,477)	$ (385,433)	$ (1,448,899)	$ (1,380,698)
Net loss per share - basic and diluted	$ 0	$ 0	$ (0.01)	$ (0.01)
Weighted average common shares - basic	157,978,036	123,034,444	140,521,602	118,761,080

Condensed Consolidated Stateme5

Condensed Consolidated Statement of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Beginning Balance, shares at Dec. 31, 2016	127,463,171
Beginning Balance, value at Dec. 31, 2016	$ 127,463	$ 9,664,168	$ (11,883,691)	$ (2,092,060)
Fair value of shares issued for services, shares	15,940,227
Fair value of shares issued for services, value	$ 15,940	426,745		442,685
Fair value of stock-based compensation		213,582		213,582
Shares issued for cash, shares	15,666,667
Shares issued for cash, value	$ 15,667	399,333		415,000
Shares issued upon exercise of warrants, shares	1,850,000
Shares issued upon exercise of warrants, value	$ 1,850	16,650		18,500
Extinguishment of derivative liability		51,490		51,490
Net loss			(1,448,899)	(1,448,899)
Ending Balance, shares at Sep. 30, 2017	160,920,065
Ending Balance, value at Sep. 30, 2017	$ 160,920	$ 10,771,968	$ (13,332,590)	$ (2,399,702)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows from Operating Activities
Net loss	$ (1,448,899)	$ (1,380,698)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and Amortization	51,110	67,643
Fair value of shares issued for services	442,685	429,255
Fair value of stock-based compensation	213,582
Fair value of warrants issued with note payable	0	16,691
Change in fair value of derivative liabilities	(41,324)	(467,805)
Prepaid expense	45,206	64,165
Accounts receivable	(222)	0
Accounts payable and accrued liabilities	302,462	468,589
Net cash used in operating activities	(435,400)	(802,161)
Cash Flows from Financing Activities
Proceeds from issuance of common stock	415,000	500,000
Proceeds from issuance of notes payable	0	50,000
Proceeds from the exercise of warrants	18,500	65,800
Net cash provided by financing activities	433,500	615,800
Net decrease in cash	(1,900)	(186,361)
Cash, beginning of period	5,047	193,014
Cash, end of period	3,147	6,653
Supplemental disclosure of cash flow information:
Extinguishment of derivative liability recorded as capital contribution	51,940	0
Advances applied to accrued settlement	$ 200,000	$ 0

1. Nature of the Business and S

1. Nature of the Business and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of the Business and Summary of Significant Accounting Policies	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”). The Company has developed products and intellectual property relating to providing data and analytics regarding copyright infringement via the Internet. The Company provides services and data to help protect the rights of holders of copyrighted digital creative works. The Company has a patent-pending, proprietary method for gathering and analyzing infringement data and for reducing copyright infringement and collecting damages from infringers by notifying illegal downloaders via notifications sent to their Internet Service Providers. 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 nine months ended September 30, 2017, the Company incurred a net loss of $1,448,899, used cash in operating activities of $435,400, and at September 30, 2017, the Company had a stockholders’ deficit of $2,399,702. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2016 financial statements, has raised 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. At September 30, 2017, the Company had cash of $3,147. On October 10, 2017, the Company issued an aggregate of 2,500,000 shares of common stock to an investor for a purchase price of $50,000. Management believes that the Company will need an additional $250,000 to $500,000 in 2017 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 they 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. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. 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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The condensed consolidated balance sheet at December 31, 2016, has been derived from the audited consolidated financial statements at such date. 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, 2016, as filed with the SEC on April 14, 2017. 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, derivative liabilities, and the valuation allowance for deferred income taxes. Actual results could differ from those estimates. Concentrations For the nine months ended September 30, 2017, two customers accounted for approximately 56% of our revenue. No other customers accounted for 10% or more of our revenue during the nine months ended September 30, 2017 or 2016. 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-Merton 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-Merton option pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton 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 September 30, 2017, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short-term maturities. At September 30, 2017 and December 31, 2016, derivative liabilities of $187,502 and $280,316, respectively, were valued using Level 2 inputs. 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 September 30, 2017 and September 30, 2016, the dilutive impact of outstanding stock options for 10,600,000 and 906,666 shares, respectively, and outstanding warrants for 44,069,821 and 47,048,890 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. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, ASU 2016-20, and ASU 2017-05, all of which clarify certain implementation guidance within ASU 2014-09. 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. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. This update will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements and related disclosures. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. 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.

2. Fixed Assets

2. Fixed Assets	9 Months Ended
	Sep. 30, 2017
Property, Plant and Equipment [Abstract]
Fixed Assets	As of September 30, 2017 and December 31, 2016, fixed assets consisted of the following: September 30, 2017 December 31, 2016 (Unaudited) Computer equipment and fixtures $ 312,756 $ 312,756 Accumulated depreciation (309,753 ) (258,643 ) Fixed assets, net $ 3,003 $ 54,113 Depreciation and amortization expense for the three months ended September 30, 2017 and September 30, 2016 was $16,284 and $22,337, respectively. Depreciation and amortization expense for the nine months ended September 30, 2017 and September 30, 2016 was $51,110 and $67,643, respectively.

3. Accounts Payable and Accrued

3. Accounts Payable and Accrued Liabilities	9 Months Ended
	Sep. 30, 2017
Payables and Accruals [Abstract]
Accounts Payable and Accrued Liabilities	As of September 30, 2017 and December 31, 2016, accounts payable and accrued liabilities consisted of the following: September 30, 2017 December 31, 2016 (Unaudited) Accounts payable $ 1,058,406 $ 862,860 Due to copyright holders 686,867 601,421 Accrued payroll 243,166 180,894 Insurance premium financing payable – 40,802 Advance from BMG Rights Management 200,000 – Accrued settlement – 200,000 Total $ 2,188,439 $ 1,885,977 At December 31, 2016, the Company had accrued $200,000 related to the settlement of class action complaint. On January 7, 2017, BMG Rights Management (US) LLC (“BMG”) advanced the Company $200,000, which was used to pay off the settlement. The advance from BMG is to be applied to future billings from the Company to BMG for consulting services.

4. Derivative Liabilities

4. Derivative Liabilities	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Liabilities	In September 2014, the Company issued certain warrants which included an anti-dilution provision that allows for the exercise price of the warrants to be adjusted if the Company issues securities at a price lower than the current exercise price of these warrants. Pursuant to current 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 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, 2016, the fair value of the derivative liabilities was $280,316. During the nine months ended September 30, 2017, the fair value of the derivative liabilities decreased by $41,324. At September 30, 2017, the fair value of the derivative liabilities was $187,502. At September 30, 2017 and December 31, 2016, 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: September 30, 2017 December 31, 2016 Expected volatility 181% 172% Expected life 1.98 years 2.7 years Risk-free interest rate 1.47% 1.5% Expected dividend yield 0% 0% The expected volatilities are based on historical volatility of the Company’s stock. The expected life of the warrants was based on the remaining term of the warrants. The risk-free interest rates were based on rates established by the Federal Reserve Bank. 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.

5. Common Stock

5. Common Stock	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
Common stock	During the nine months ended September 30, 2017, the Company issued an aggregate of 15,666,667 shares of common stock to investors for a purchase price of $415,000. During the nine months ended September 30, 2017, the Company issued 1,850,000 shares of its common stock upon exercise of warrants at an exercise price of $0.01 per share for total proceeds of $18,500.

6. Stock Compensation

6. Stock Compensation	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Compensation	Common stock issued for services During the nine months ended September 30, 2017, the Company issued a total of 15,940,227 shares of common stock for services valued at $442,865, including 5,000,000 shares of common stock issued to the Company’s CEO as part of an employment agreement, 3,000,000 shares of common stock issued to a consultant, and 7,940,227 shares of common stock issued to employees. The fair value of the shares was based on the closing price of the Company’s common stock on the date the shares were granted, which ranged from $0.022 per share to $0.0355 per share. For the three and nine months ended September 30, 2017, total fair value of shares granted of $0 and $442,685, respectively, is included in general and administrative expense. During the nine months ended September 30, 2016, the Company did not issue any shares of common stock for services. Options On February 14, 2017, the Company granted options to purchase 5,000,000 shares of common stock with an exercise price of $0.05 to the Company’s CEO as part of an employment agreement. Options exercisable into 1,000,000 shares of common stock vested immediately and the options exercisable into 4,000,000 shares of common stock will vest monthly over 48 months beginning on February 14, 2018. The fair value of these options was determined to be $160,416. On May 8, 2017, the Company granted options to purchase 450,000 shares of common stock with an exercise price of $0.05 to the Company’s employees. The options vested immediately. The fair value of these options was determined to be $18,861. On August 8, 2017, the Company granted options to purchase 5,000,000 shares of common stock with an exercise price of $0.05 to the Company’s President as part of an employment agreement. Options exercisable into 1,500,000 shares of common stock vested immediately and the options exercisable into 3,500,000 shares of common stock will vest in 48 equal monthly installments thereafter. The Company used the Black-Scholes-Merton option-pricing models with the following assumptions to calculate fair value : February 14, 2017 May 8, 2017 August 8, 2017 Expected volatility 173% 194% 180% Risk-free interest rate 2.47% 2.39% 2.29% Expected dividend yield 0% 0% 0% Expected life 10 years 10 years 10 years The expected volatility is based on historical volatility of the Company’s stock. The expected life of the options was based on the term of the options. The risk-free interest rate was based on rates established by the Federal Reserve Bank. 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. For the nine months ending September 30, 2016, the Company had no stock options requiring an assessment of value. During the three months ended September 30, 2017 and 2016, the Company recorded compensation costs of $88,166 and $11,894, respectively, relating to the vesting of stock options. During the nine months ended September 30, 2017 and 2016, the Company recorded compensation costs of $154,360 and $35,777, respectively, relating to the vesting of stock options. As of September 30, 2017, the aggregate value of unvested options was $252,276, which will continue to be amortized as compensation cost as the options vest over terms ranging from one to four years, as applicable. The stock option activity for the nine months ended September 30, 2017 is as follows: Number of Weighted Weighted Balance outstanding, December 31, 2016 900,000 $ 0.17 4.67 Granted 10,450,000 0.05 9.62 Exercised – – – Forfeited/expired (750,000 ) 0.15 – Balance outstanding, September 30, 2017 10,600,000 $ 0.05 9.60 Exercisable, September 30, 2017 3,756,248 $ 0.06 9.53 At September 30, 2017, the Company’s outstanding and exercisable options had no intrinsic value. Warrants On February 14, 2017, pursuant to the employment agreement with the Company CEO, warrants exercisable into 3,000,000 shares of common stock issued to the Company’s CEO in 2015 were deemed fully vested and the exercise price of the warrants was reduced from $0.25 per share to $0.05 per share. The Company determined the expense related to this modification was $13,023 and is included in general and administrative expense. On January 20, 2017, the Company issued warrants exercisable into 350,000 shares of common stock for services. The fair value of warrants issued for services was determined to be $9,378. The Company recorded the full $9,378 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. For the nine months ending September 30, 2017 and 2016, the fair value of warrant awards was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions: September 30, 2017 September 30, 2016 Expected volatility 171% 121% Risk-free interest rate 1.5% 1.08% Expected dividend yield 0% 0% Expected life 2.5 years 3 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. During the three months ended September 30, 2017 and 2016, the Company recorded compensation costs of $0 and $14,381, respectively, relating to the vesting of stock warrants. During the nine months ended September 30, 2017 and 2016, the Company recorded compensation costs of $19,569 and $90,769, respectively, relating to the vesting of stock warrants. As of September 30, 2017, the aggregate value of unvested warrants was $0. A summary of the Company’s warrant activity during the nine months ended September 30, 2017 is presented below: Number of Weighted Weighted Balance outstanding, December 31, 2016 46,958,072 $ 0.11 2.13 Granted 350,000 0.01 2.31 Exercised (1,850,000 ) 0.01 2.04 Forfeited/expired (1,388,251 ) 0.09 – Balance outstanding, September 30, 2017 44,069,821 0.10 1.43 Exercisable, September 30, 2017 44,069,821 $ 0.10 1.43 At September 30, 2017, the Company’s outstanding warrants had an intrinsic value of $348,480.

1. Nature of the Business and13

1. Nature of the Business and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
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 nine months ended September 30, 2017, the Company incurred a net loss of $1,448,899, used cash in operating activities of $435,400, and at September 30, 2017, the Company had a stockholders’ deficit of $2,399,702. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2016 financial statements, has raised 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. At September 30, 2017, the Company had cash of $3,147. On October 10, 2017, the Company issued an aggregate of 2,500,000 shares of common stock to an investor for a purchase price of $50,000. Management believes that the Company will need an additional $250,000 to $500,000 in 2017 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 they 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.
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. 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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The condensed consolidated balance sheet at December 31, 2016, has been derived from the audited consolidated financial statements at such date. 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, 2016, as filed with the SEC on April 14, 2017.
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, derivative liabilities, and the valuation allowance for deferred income taxes. Actual results could differ from those estimates.
Concentrations	Concentrations For the nine months ended September 30, 2017, two customers accounted for approximately 56% of our revenue. No other customers accounted for 10% or more of our revenue during the nine months ended September 30, 2017 or 2016.
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-Merton 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-Merton option pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton 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 September 30, 2017, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short-term maturities. At September 30, 2017 and December 31, 2016, derivative liabilities of $187,502 and $280,316, respectively, were valued using Level 2 inputs.
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 September 30, 2017 and September 30, 2016, the dilutive impact of outstanding stock options for 10,600,000 and 906,666 shares, respectively, and outstanding warrants for 44,069,821 and 47,048,890 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. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, ASU 2016-20, and ASU 2017-05, all of which clarify certain implementation guidance within ASU 2014-09. 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. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. This update will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements and related disclosures. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. 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.

2. Fixed Assets (Tables)

2. Fixed Assets (Tables)	9 Months Ended
	Sep. 30, 2017
Property, Plant and Equipment [Abstract]
Schedule of Fixed Assets	September 30, 2017 December 31, 2016 (Unaudited) Computer equipment and fixtures $ 312,756 $ 312,756 Accumulated depreciation (309,753 ) (258,643 ) Fixed assets, net $ 3,003 $ 54,113

3. Accounts Payable and Accru15

3. Accounts Payable and Accrued Liabilities (Tables)	9 Months Ended
	Sep. 30, 2017
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Liabilities	September 30, 2017 December 31, 2016 (Unaudited) Accounts payable $ 1,058,406 $ 862,860 Due to copyright holders 686,867 601,421 Accrued payroll 243,166 180,894 Insurance premium financing payable – 40,802 Advance from BMG Rights Management 200,000 – Accrued settlement – 200,000 Total $ 2,188,439 $ 1,885,977

4. Derivative Liabilities (Tabl

4. Derivative Liabilities (Tables)	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Assumptions used for valuing derivatives	September 30, 2017 December 31, 2016 Expected volatility 181% 172% Expected life 1.98 years 2.7 years Risk-free interest rate 1.47% 1.5% Expected dividend yield 0% 0%

6. Stock Compensation (Tables)

6. Stock Compensation (Tables)	9 Months Ended
	Sep. 30, 2017
Warrants [Member]
Schedule of Fair Value Assumptions	September 30, 2017 September 30, 2016 Expected volatility 171% 121% Risk-free interest rate 1.5% 1.08% Expected dividend yield 0% 0% Expected life 2.5 years 3 years
Schedule of Warrant Activity	Number of Weighted Weighted Balance outstanding, December 31, 2016 46,958,072 $ 0.11 2.13 Granted 350,000 0.01 2.31 Exercised (1,850,000 ) 0.01 2.04 Forfeited/expired (1,388,251 ) 0.09 – Balance outstanding, September 30, 2017 44,069,821 0.10 1.43 Exercisable, September 30, 2017 44,069,821 $ 0.10 1.43
Options [Member]
Schedule of Fair Value Assumptions	February 14, 2017 May 8, 2017 August 8, 2017 Expected volatility 173% 194% 180% Risk-free interest rate 2.47% 2.39% 2.29% Expected dividend yield 0% 0% 0% Expected life 10 years 10 years 10 years
Summary of Stock Options Activity	Number of Weighted Weighted Balance outstanding, December 31, 2016 900,000 $ 0.17 4.67 Granted 10,450,000 0.05 9.62 Exercised – – – Forfeited/expired (750,000 ) 0.15 – Balance outstanding, September 30, 2017 10,600,000 $ 0.05 9.60 Exercisable, September 30, 2017 3,756,248 $ 0.06 9.53

1. Nature of the Business and18

1. Nature of the Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Net loss	$ (380,477)	$ (385,433)	$ (1,448,899)	$ (1,380,698)
Cash used in operating activities			(435,400)	(802,161)
Stockholders' deficit	(2,399,702)		(2,399,702)		$ (2,092,060)
Cash on hand amount	3,147	$ 6,653	3,147	$ 6,653	5,047	$ 193,014
Derivative liabilities	$ 187,502		$ 187,502		$ 280,316
Warrants [Member]
Antidilutive shares outstanding			44,069,821	47,048,890
Options [Member]
Antidilutive shares outstanding			10,600,000	906,666
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Two Customers [Member]
Concentrations of risk percentage			56.00%

2. Fixed Assets (Details - Sche

2. Fixed Assets (Details - Schedule of Fixed Assets) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Computer equipment and fixtures	$ 312,756	$ 312,756
Accumulated depreciation	(309,753)	(258,643)
Fixed assets, net	$ 3,003	$ 54,113

2. Fixed Assets (Details Narrat

2. Fixed Assets (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 16,284	$ 22,337	$ 51,110	$ 67,643

3. Accounts Payable and Accru21

3. Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Accounts payable	$ 1,058,406	$ 862,860
Due to copyright holders	686,867	601,421
Accrued payroll	243,166	180,894
Insurance premium financing payable	0	40,802
Advance from BMG Rights Management	200,000	0
Accrued settlement	0	200,000
Total	$ 2,188,439	$ 1,885,977

3. Accounts Payable and Accru22

3. Accounts Payable and Accrued Liabilities (Details Narrative)	9 Months Ended
	Sep. 30, 2017USD ($)
Payables and Accruals [Abstract]
Settlement expenses	$ 200,000
Proceeds from related party	$ 200,000

4. Derivative Liabilities (Deta

4. Derivative Liabilities (Details - Assumptions)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Expected volatility	181.00%	172.00%
Expected life	1 year 11 months 23 days	2 years 8 months 12 days
Risk-free interest rate	1.47%	1.50%
Expected dividend yield	0.00%	0.00%

4. Derivative Liabilities (De24

4. Derivative Liabilities (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative liability	$ 187,502	$ 280,316
Derivative liability decreased during period	$ 41,324

5. Common Stock (Details Narrat

5. Common Stock (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Shares issued for cash, value	$ 415,000
Proceeds from exercise of warrants	$ 18,500	$ 65,800
Exercise of Warrants [Member]
Shares issued upon exercise of warrants, shares	1,850,000
Proceeds from exercise of warrants	$ 18,500
Investors [Member]
Shares issued for cash, shares	15,666,667
Shares issued for cash, value	$ 415,000

6. Stock Options and Warrants (

6. Stock Options and Warrants (Details - Assumptions)	2 Months Ended	4 Months Ended	7 Months Ended	9 Months Ended
	Feb. 14, 2017	May 08, 2017	Aug. 08, 2017	Sep. 30, 2017	Sep. 30, 2016
Options [Member]
Expected volatility	173.00%	194.00%	180.00%
Risk-free interest rate	2.47%	2.39%	2.29%
Expected dividend yield	0.00%	0.00%	0.00%
Expected life	10 years	10 years	10 years
Warrants [Member]
Expected volatility				171.00%	121.00%
Risk-free interest rate				1.50%	1.08%
Expected dividend yield				0.00%	0.00%
Expected life				2 years 6 months	3 years

6. Stock Options and Warrants27

6. Stock Options and Warrants (Details - Option activity) - Options [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Number of Options
Number of Options Outstanding, Beginning balance	900,000
Number of Options Granted	10,450,000
Number of Options Exercised	0
Number of Options Forfeited/expired	(750,000)
Number of Options Outstanding, Ending balance	10,600,000	900,000
Number of Options Exercisable, Ending balance	3,756,248
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding, Beginning balance	$ 0.17
Weighted Average Exercise Price, Granted	0.05
Weighted Average Exercise Price, Forfeited	0.15
Weighted Average Exercise Price, Outstanding, Ending balance	.05	$ 0.17
Weighted Average Exercise Price, Exercisable, Ending balance	$ .06
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term	9 years 7 months 6 days	4 years 8 months 2 days
Weighted Average Remaining Contractual Term, Granted	9 years 7 months 13 days
Weighted Average Remaining Contractual Exercisable Term	9 years 6 months 10 days

6. Stock Options and Warrants28

6. Stock Options and Warrants (Details - Warrant activity) - Warrants [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Number of Warrants
Number of Warrants, Beginning balance	46,958,072
Number of Warrants, Granted	350,000
Number of Warrants, Exercised	(1,850,000)
Number of Warrants, Forfeited/expired	(1,388,251)
Number of Warrants, Ending balance	44,069,821	46,958,072
Number of Warrants, Exercisable	44,069,821
Warrants Weighted Average Exercise Price
Weighted Average Exercise Price, Beginning balance	$ .11
Weighted Average Exercise Price, Granted	.01
Weighted Average Exercise Price, Exercised	.01
Weighted Average Exercise Price, Forfeited/Expired	0.09
Weighted Average Exercise Price, Ending balance	.10	$ .11
Weighted Average Exercise Price, Exercisable	$ .10
custom:WarrantsWeightedAverageRemainingContractualTermAbstract
Weighted Average Remaining Contractual Term	2 years 3 months 22 days	2 years 1 month 16 days
Weighted Average Remaining Contractual Term, Granted	2 years 15 days
Weighted Average Remaining Contractual Term, Exercised	1 year 5 months 5 days
Weighted Average Remaining Contractual Term, Exercisable	1 year 5 months 5 days

6. Stock Options and Warrants29

6. Stock Options and Warrants (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock issued for services, shares issued			$ 442,685
Options [Member]
Options granted, shares			10,450,000
Unrecognized compensation cost	$ 252,276		$ 252,276
Intrinsic value, options outstanding	0		0
Intrinsic value, options exercisable	0		0
Options [Member] | Vesting of Stock Options [Member]
Share based compensation	88,166	$ 11,894	154,360	$ 35,777
Warrants [Member]
Unrecognized compensation cost other than options	0		0
Intrinsic value of warrants	348,480		$ 348,480
Chief Executive Officer [Member] | Options [Member]
Options granted, shares			5,000,000
Fair value of options granted			$ 160,416
Employees [Member] | Options [Member]
Options granted, shares			450,000
Fair value of options granted			$ 18,861
President [Member] | Options [Member]
Options granted, shares			5,000,000
Stock issued for services [Member]
Stock issued for services, shares issued			$ 15,940,227
Stock issued for services, value			442,865	0
Share based compensation	0		$ 442,685
Stock issued for services [Member] | Consultant [Member]
Stock issued for services, shares issued			3,000,000
Stock issued for services [Member] | Chief Executive Officer [Member]
Stock issued for services, shares issued			5,000,000
Stock issued for services [Member] | Employee [Member]
Stock issued for services, shares issued			7,940,227
Vesting of Warrants [Member] | Warrants [Member]
Share based compensation	$ 0	$ 14,381	19,569	$ 90,769
Employment Agreement [Member] | Warrants Vested [Member]
Fair value adjustment of warrants			$ 13,023
Warrants vested			3,000,000
Stock Issued For Services [Member] | Warrants Vested [Member]
Fair value adjustment of warrants			$ 9,378
Warrants vested			350,000