Rightscorp reported an operating loss of $930,000 in the first quarter, a 45-percent increase from the $641,000 operating loss a year earlier. The company's revenue of $308,000 was a 63-percent improvement from $189,000 in the prior-year period.
A first-quarter net profit of $122,000 was the result of $1.05-million gain on the valuation of a derivative liability associated with stock warrants. (Similar to stock options, stock warrants are rights to purchase a company's stock at a set price. Unlike stock options, stock warrants are issued directly by the company.)
Intellectual property rights holders hire Rightscorp to help combat online copyright infringement. The company's technology monitors and tracks the activity of IP addresses and targets repeat infringers. It then attempts to collect payments from these repeat infringers by sending notifications to their Internet service providers. Rightscorp has stated its believes the value of this opportunity is $2.3 billion.
Although many ISPs provide the names of repeat infringers, Rightscorp ran into a roadblock last week when a U.S. District Court for the Northern District of Georgia ruled against the company and the way it identifies infringers. The court said Rightscorp could not use DMCA subpoenas to obtain subscriber information from Birch Communications, which had refused efforts to hand over its customers' information and after the ruling called Rightscorp's efforts "a piracy fishing expedition."