COMSovereign Holding (COMS) 10-Q 14 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	DRONE AVIATION HOLDING CORP.
Entity Central Index Key	1,178,727
Trading Symbol	drne
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		81,901,034

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash	$ 1,112,412	$ 1,369,896
Accounts receivable - trade	18,260	30,170
Inventory	132,372	39,404
Prepaid expenses and deposits	85,441	50,169
Total current assets	1,348,485	1,489,639
PROPERTY AND EQUIPMENT, at cost:	98,106	34,064
Less - accumulated depreciation	(12,200)	(7,040)
Net property and equipment	85,906	27,024
OTHER ASSETS:
Goodwill	99,799	99,799
Intangible assets, net	82,147	103,609
Total other assets	181,946	203,408
TOTAL ASSETS	1,616,337	1,720,071
CURRENT LIABILITIES:
Accounts payable - trade and accrued liabilities	44,181	64,383
Accounts payable due to related party	1,442	$ 2,181
Deferred revenue	129,575
Note Payable - Oklahoma Technology Commercialization Center- Current	110,000	$ 110,000
Total current liabilities	285,198	176,564
TOTAL LIABILITIES	$ 285,198	$ 176,564
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.0001 par value; authorized 300,000,000 shares; 66,131,014 and 37,078,114 shares issued and outstanding, at June 30, 2015 and December 31, 2014, respectively	$ 6,613	$ 3,708
Additional paid-in capital	7,304,528	3,698,618
Retained Earnings (Deficit)	(5,984,132)	(2,163,408)
Total stockholders' equity	1,331,139	1,543,507
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,616,337	1,720,071
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	23	40
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	32	32
Series B-1 Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	7	7
Series C Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	33	35
Series D Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	2,765	3,605
Series E Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	540	540
Series F Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	330	$ 330
Series G Preferred Stock [Member]
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	$ 400

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	66,131,014	37,078,114
Common stock, shares outstanding	66,131,014	37,078,114
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	595,000	595,000
Preferred stock, shares issued	230,221	396,750
Preferred stock, shares outstanding	230,221	396,750
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	324,671	324,671
Preferred stock, shares issued	324,671	324,671
Preferred stock, shares outstanding	324,671	324,671
Series B-1 Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	156,231	156,231
Preferred stock, shares issued	68,731	68,731
Preferred stock, shares outstanding	68,731	68,731
Series C Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	355,000	355,000
Preferred stock, shares issued	325,400	345,400
Preferred stock, shares outstanding	325,400	345,400
Series D Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	36,050,000	36,050,000
Preferred stock, shares issued	27,650,000	36,050,000
Preferred stock, shares outstanding	27,650,000	36,050,000
Series E Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	5,400,000	5,400,000
Preferred stock, shares issued	5,400,000	5,400,000
Preferred stock, shares outstanding	5,400,000	5,400,000
Series F Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	3,300,999	3,300,999
Preferred stock, shares issued	3,300,999	3,300,999
Preferred stock, shares outstanding	3,300,999	3,300,999
Series G Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	8,000,000	8,000,000
Preferred stock, shares issued	4,000,000	0
Preferred stock, shares outstanding	4,000,000	0

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statements of Income [Abstract]
Revenues	$ 67,602	$ 124,976	$ 82,808	$ 354,326
Cost of good sold	26,428	104,339	34,545	243,577
Gross profit	41,174	20,637	48,263	110,749
General and administrative expense	2,927,614	97,682	3,868,721	187,382
Loss from operations	$ (2,886,440)	(77,045)	$ (3,820,458)	(76,633)
Other income (expense)
Loss on sale and impairment of securities held for resale		(42,821)		(42,821)
Loss on derivative liability		(269,981)		(269,981)
Interest income		67		67
Interest expense	$ (133)	(1,439)	$ (266)	(1,940)
Total other expense	(133)	(314,174)	(266)	(314,675)
NET LOSS	(2,886,573)	$ (391,219)	(3,820,724)	$ (391,308)
Deemed dividend on Series G convertible preferred stock	80,000		80,000
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (2,966,573)	$ (391,219)	$ (3,900,724)	$ (391,308)
Weighted average number of common shares outstanding - basic and diluted	52,566,198	8,019,384	46,518,311	4,031,845
Basic and diluted net loss per share	$ (0.06)	$ (0.05)	$ (0.08)	$ (0.1)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
OPERATING ACTIVITIES:
Net loss	$ (3,820,724)	$ (391,308)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal and impairment of available-for-sale securities		42,821
Loss on derivative liability		269,981
Depreciation	$ 5,160	$ 181
Amortization	21,462
Stock based compensation	2,608,356
Changes in current assets and liabilities:
Accounts receivable	11,910	$ (98,760)
Inventory	(92,968)	20,215
Prepaid expenses and other current assets	(35,272)	(21,819)
Accounts payable and accrued expense	(5,927)	(169,040)
Due from related party	(739)	20,216
Deferred revenue	129,575	258,968
Net cash used in operating activities	$ (1,179,167)	(68,545)
INVESTING ACTIVITIES:
Cash paid on business combination, net		(304,639)
Cash from reverse merger		1,629,263
Cash from sales of available-for-sale securities		$ 168,704
Purchase of furniture and equipment	$ (64,042)
Net cash (used in) provided by investing activities	$ (64,042)	$ 1,493,328
FINANCING ACTIVITIES:
Proceeds from common stock issued for cash		653,327
Redemption of Series B-1 preferred stock		$ (350,000)
Series G preferred stock issued for cash	$ 985,725
Net cash provided by financing activities	985,725	$ 303,327
NET (DECREASE) INCREASE IN CASH	(257,484)	$ 1,728,110
CASH, beginning of period	1,369,896
CASH, end of period	1,112,412	$ 1,728,110
Cash paid during the quarters ended June 30:
Interest	266	1,429
Noncash investing and financing activities for the quarters ended June 30:
Conversion of Series A preferred stock to common stock	1,665	$ 381
Conversion of Series C preferred stock to common stock	200
Conversion of Series D preferred stock to common stock	$ 840
Reverse merger adjustment		$ (2,116,221)
Business combination adjustment		$ 79,000

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Basis of Presentation [Abstract]
BASIS OF PRESENTATION	1. BASIS OF PRESENTATION The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The financial statements as of December 31, 2014 have been audited by an independent registered public accounting firm. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s 10K for the calendar year ended December 31, 2014.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2015
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	2. RELATED PARTY TRANSACTIONS A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. Aerial Products Corp (“APC”) is a related party, controlled by a current employee of the Company. APC shared the manufacturing facilities with LTAS and provided aerostat envelopes and manufacturing labor to Lighter Than Air Systems (LTAS) until June 30, 2014 when the APC labor pool transitioned to the Company. The accounts payable due to related party at December 31, 2014 included allocated rent and utility charges, aerostat envelopes, truck expenses and labor charges due of $2,181. An additional $2,876 in similar expenses was incurred in the first two quarters of 2015. A total of $3,615 was paid to APC in the first quarter. The amount payable to APC at June 30, 2015 is $1,442. Additionally during the first quarter of 2015, the Company acquired used industrial sewing machines and used furniture and fixtures from APC for $6,500.

Property and Equipment

Property and Equipment	6 Months Ended
	Jun. 30, 2015
Property and Equipment [Abstract]
PROPERTY AND EQUIPMENT	3. PROPERTY AND EQUIPMENT Property and equipment is recorded at cost when acquired. Depreciation is provided principally on the straight-line method over the estimated useful lives of the related assets, which is 3-7 years for equipment, furniture and fixtures, hardware and software and leasehold improvements. During the six months ended June 30, 2015, the Company invested $20,950 in shop machinery and equipment, $8,931 in computers and electronics, $19,392 office furniture and fixtures and additional $14,769 in leasehold improvements. Depreciation expense was $5,160 and $181 for the six months ended June 30, 2015 and 2014, respectively. Property and equipment consists of the following at June 30, 2015 and December 31, 2014: June 30, December 31, Shop Machinery and equipment $ 40,904 $ 19,954 Computers and electronics 21,006 12,075 Office furniture and fixtures 21,427 2,035 Leasehold improvements 14,769 - 98,106 34,064 Less - accumulated depreciation (12,200 ) (7,040 ) $ 85,906 $ 27,024

Intangible Assets

Intangible Assets	6 Months Ended
	Jun. 30, 2015
Intangible Assets [Abstract]
INTANGIBLE ASSETS	4. INTANGIBLE ASSETS On May 5, 2014, the Company acquired Lighter Than Air Systems (LTAS). In accordance with ASC 805-10 Business Combination and purchase acquisition accounting, the Company initially allocated the consideration to the net tangible and identifiable intangible assets, based on their estimated fair values as of the date of acquisition. The fair value of the LTAS customer list was determined by using a discounted cash flow model and $135,550 was recorded on the date of the business combination. The Company recorded $31,941 of amortization expense for the year ended December 31, 2014 and an additional amortization expense of $21,462 in the first half of 2015.

Shareholders' Equity

Shareholders' Equity	6 Months Ended
	Jun. 30, 2015
Shareholders' Equity and Preferred Stock [Abstract]
SHAREHOLDERS' EQUITY	5. SHAREHOLDERS’ EQUITY The Company issued a total of 29,052,900 common shares during the first half of 2015, described further as follows: The Company issued 8,630,000 shares of common stock between January 1 and March 31, 2015 pursuant to conversions of an aggregate of 86,300 shares of Series A preferred stock. The Company issued 8,022,900 shares of common stock between April 1 and June 30, 2015 pursuant to conversions of an aggregate of 80,229 shares of Series A preferred stock. The Company issued 2,000,000 shares of common stock between April 1 and June 30, 2015 pursuant to conversions of an aggregate of 20,000 shares of Series C preferred stock. The Company issued 8,400,000 shares of common stock between April 1 and June 30, 2015 pursuant to conversions of an aggregate of 8,400,000 shares of Series D preferred stock. On June 1, 2015, the Company issued 2,000,000 shares of restricted common stock with monthly vesting provisions to the Chairman of the Board for twenty-four months services pursuant to a Director Agreement. The Chairman can earn a pro rata portion of the shares, calculated on a twenty-four month vesting period, in the event the Chairman relinquishes his position and board seat prior to the expiration date of the Director Agreement. The Company recognized a total of $22,500 expense for the pro rata portion of shares earned by the Chairman by June 30, 2015. On August 27, 2014, the Company issued 2,000,000 shares of restricted common stock with monthly vesting provisions to two members of its Strategic Advisory Board for twelve months services. The advisors can earn a pro rata portion of the shares, calculated based on the twelve-month vesting period, in the event the service agreements are terminated prior to the expiration date as described in the agreements. The Company recognized a total of $323,333 expense for the pro rata portion of shares earned by the two advisors during the six months ended June 30, 2015 and has recognized a total of $450,000 since August 27, 2014.

Preferred Stock

Preferred Stock	6 Months Ended
	Jun. 30, 2015
Shareholders' Equity and Preferred Stock [Abstract]
PREFERRED STOCK	6. PREFERRED STOCK All of the preferred stock of the Company is convertible into common shares. The Series A and Series C stock conversion ratio is 1 to 100 common shares. The Series B, B-1, D, E, F and G stock conversion ratio is 1 to 1 common share. The conversion price of Series B stock may be adjusted if a ‘dilutive triggering event’ occurs which could happen if the Company were to sell or issue common stock, warrants or convertible securities without consideration or for a consideration per share less than the conversion price in effect immediately prior to such sale or issue (dilutive triggering price). In such case, the Series B conversion price would be reduced to a price equal to the dilutive triggering price. All preferred stock has voting rights equal to the number of shares it would have on an ‘as if converted’ basis subject to any ownership limitations governing such preferred shares. All preferred stock is entitled to dividends rights equal to the number of shares it would have on an ‘as if converted’ basis. None of the preferred stock is redeemable, participating nor callable. The Company analyzed the embedded conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option should be classified as equity. The Company analyzed the conversion option for beneficial conversion features consideration under ASC 470-20 “Convertible Securities with Beneficial Conversion Features” and noted Series F stock contained a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was determined to be $192,558. The beneficial conversion feature was fully amortized and recorded as a deemed dividend during the year ended December 31, 2014. The Series G stock issued during current quarter also contained a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was determined to be $80,000. The beneficial conversion feature was fully amortized and recorded as a deemed dividend during the six months ended June 30, 2015. Between January 1 and June 30, 2015, seven investors in Series A preferred stock converted a total of 166,529 shares of Series A for an aggregate of 16,652,900 shares of restricted common stock in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. During the same period, one investor in Series C preferred stock converted a total of 20,000 shares of Series C for an aggregate of 2,000,000 shares of restricted common stock and six investors in Series D preferred stock converted a total of 8,400,000 shares of Series D for an aggregate of 8,400,000 shares of restricted common stock, all in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. The Series B-1 preferred stock contains a liquidation provision whereas in the event of a fundamental transaction (such as the merger which occurred on June 3, 2014), the shareholder has the option to receive a preferential amount of cash equal to 400% of the stated value per share. Series G Preferred Private Placement On June 2, 2015, the Company sold an aggregate of 4,000,000 units in a private placement of its securities to certain investors at a purchase price of $0.25 per unit pursuant to subscription for an aggregate purchase price of $985,725, net of $14,275 financing fees. Each unit consists of one share of the Company’s Series G Convertible Preferred Stock, par value $0.0001 per share, each of which is convertible into one share of Common Stock, with such rights and designations as set forth in the Certificate of Designation. On June 2, 2015, as a result of the sale of the Series G Preferred Stock, the Company issued 2,700,000 shares of Series E Convertible Preferred Stock, which are convertible into an aggregate of 2,700,000 shares of Common Stock, to existing holders of Series E Preferred Stock, in connection with certain anti-dilution rights associated with their purchase of such shares. The additional share issuance was treated as a ‘stock split’ and was retrospectively reflected as of December 31, 2014. On June 2, 2015, the Company received the consent of at least a majority of its holders of Series F Convertible Preferred Stock to consummate the Series G Private Placement, as required under the terms of that investment. In consideration for the foregoing consent, the Company issued all holders of its Series F Preferred Stock an aggregate of an additional 2,200,666 shares of Series F Preferred Stock, which are convertible into an aggregate of 2,200,666 shares of common stock. The additional share issuance was treated as a ‘stock split’ and was retrospectively reflected as of December 31, 2014.

Employee Stock Options

Employee Stock Options	6 Months Ended
	Jun. 30, 2015
Employee Stock Options [Abstract]
EMPLOYEE STOCK OPTIONS	7. EMPLOYEE STOCK OPTIONS During the six months ended June 30, 2015, 29,500,000 options were granted to employees and a director for service provided. Of these, 10,000,000 options were immediately vested and were granted with an exercise price of $0.15 and the expiration date is May 18, 2018. Another 10,000,000 options vest over two years or upon the up listing of the Company’s stock and were granted with an exercise price of $0.15 and the expiration date is June 1, 2018. Another option for 1,500,000 shares vesting over three years was granted with an exercise price of $0.27 and the expiration date is May 4, 2019. A director received two options. The first was for 3,000,000 shares vesting over two years and was granted with an exercise price of $0.25 and the expiration date is June 1, 2018. The second was for 5,000,000 shares with vesting tied to performance and was granted with an exercise price of $0.25 and the expiration date is June 1, 2018. Based on management’s estimate, only 1,000,000 options will eventually vest while the remaining 4,000,000 would be forfeited. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant. The following table summarizes the assumptions used to estimate the fair value of stock options granted during the six months ended June 30, 2015: 2015 Expected dividend yield 0 % Expected volatility 128 % Risk-free interest rate 0.40 - 0.99 % Expected life of options 1.50 – 3.42 years Under the Black-Scholes option price model, fair value of the warrants granted is estimated at $5,142,284. During the six months ended June 30, 2015, $2,252,552 compensation expense was recognized and the remaining $2,889,732 will be recognized over the next three years. The following table represents stock option activity as of and for the period ended June 30, 2015: Number of Options Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding – December 31, 2014 - $ 0.00 Exercisable – December 31, 2014 - $ 0.00 Granted 29,500,000 $ 0.18 Exercised or Vested - $ 0.00 Forfeited or Expired - $ 0.00 Outstanding – June 30, 2015 29,500,000 $ 0.18 2.96 Exercisable – June 30, 2015 10,000,000 $ 0.15 2.88 $ 1,150,000

Warrants

Warrants	6 Months Ended
	Jun. 30, 2015
Warrants [Abstract]
WARRANTS	8. WARRANTS For the six month period ended June 30, 2015, 1,500,000 warrants were granted to two consultants for service provided. One consultant was granted 1,000,000 warrants with exercise price of $0.25, vesting over two years and the expiration date is June 16, 2018. The other consultant was granted 500,000 warrants with exercise price of $0.25, vesting over one year and the expiration date is June 25, 2018. The Company uses the Black-Scholes warrant pricing model to estimate the fair value of warrants as of June 30, 2015. The following table summarizes the assumptions used to estimate the fair value of warrants granted during the six months ended June 30, 2015: Expected life of warrants 2015 Expected dividend yield 0 % Expected volatility 128 % Risk-free interest rate 0.46 - 0.83 % 1.6 – 2.45 years Under the Black-Scholes warrant price model, fair value of the warrants granted is estimated at $261,834. During the six months ended June 30, 2015, $9,971 compensation expense was recognized. The following table represents warrant activity as of and for the period ended June 30, 2015: Number of Warrants Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding – December 31, 2014 485,007 $ 5.17 2.04 Exercisable – December 31, 2014 485,007 $ 5.17 2.04 $ 0.00 Granted 1,500,000 $ 0.25 Exercised or Vested - $ 0.00 Forfeited or Expired (7,914 ) $ 2.53 Outstanding – June 30, 2015 1,977,093 $ 1.45 2.63 Exercisable – June 30, 2015 477,093 $ 5.21 1.58 $ 0.00

Oklahoma Technology Commerciali

Oklahoma Technology Commercialization Center	6 Months Ended
	Jun. 30, 2015
Oklahoma Technology Commercialization Center [Abstract]
OKLAHOMA TECHNOLOGY COMMERCIALIZATION CENTER	9. OKLAHOMA TECHNOLOGY COMMERCIALIZATION CENTER At the time of the April 30, 2014 merger between MacroSolve, Inc. and Drone Aviation Holding Corp., MacroSolve had an $110,000 balance on its refundable award from the State of Oklahoma Technology Business Finance Program. The parties are currently discussing a release from the debt that is unrelated to the current operations.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2015
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	10. SUBSEQUENT EVENTS Between July 1 and August 14, 2015, 2 investors in Series A preferred stock converted a total of 10,200 shares of Series A for 1,020,000 shares of restricted common stock in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. Between July 1 and August 14, 2015, 1 investor in Series B preferred stock converted a total of 20 shares of Series B for 20 shares of restricted common stock in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. Between July 1 and August 14, 2015, 2 investors in Series C preferred stock converted a total of 30,000 shares of Series C for 3,000,000 shares of restricted common stock in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. Between July 1 and August 14, 2015, 4 investors in Series D preferred stock converted a total of 4,750,000 shares of Series D for 4,750,000 shares of restricted common stock in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. Between July 1 and August 14, 2015, 1 investor in Series E preferred stock converted a total of 1,000,000 shares of Series E for 1,000,000 shares of restricted common stock in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages. On July 20, 2015, the Company entered into an agreement to acquire exclusive commercial software licenses for the “GUST” (Georgia Tech UAV Simulation Tool) autopilot system from Adaptive Flight, Inc. Through the purchase of the assets of privately held Adaptive Flight Inc. (AFI), the Company is assuming the transferable licenses from the Georgia Tech Research Corporation which include flight simulation tools and fault tolerant flight control algorithms. In addition, the company acquired AFI’s dedicated flight computer and additional related hardware and airframes. The Company paid $100,000 in immediately available funds and $100,000 to be held in escrow. In addition, the Company issued 6,000,000 shares of unregistered common stock to be held in escrow.

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Jun. 30, 2015
Property and Equipment [Abstract]
Schedule of property plant and equipment	June 30, December 31, Shop Machinery and equipment $ 40,904 $ 19,954 Computers and electronics 21,006 12,075 Office furniture and fixtures 21,427 2,035 Leasehold improvements 14,769 - 98,106 34,064 Less - accumulated depreciation (12,200 ) (7,040 ) $ 85,906 $ 27,024

Employee Stock Options (Tables)

Employee Stock Options (Tables) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Schedule of estimate the fair value of stock options granted	2015 Expected dividend yield 0 % Expected volatility 128 % Risk-free interest rate 0.40 - 0.99 % Expected life of options 1.50 – 3.42 years
Schedule of stock option activity	Number of Options Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding – December 31, 2014 - $ 0.00 Exercisable – December 31, 2014 - $ 0.00 Granted 29,500,000 $ 0.18 Exercised or Vested - $ 0.00 Forfeited or Expired - $ 0.00 Outstanding – June 30, 2015 29,500,000 $ 0.18 2.96 Exercisable – June 30, 2015 10,000,000 $ 0.15 2.88 $ 1,150,000

Warrants (Tables)

Warrants (Tables) - Warrant [Member]	6 Months Ended
	Jun. 30, 2015
Class of Warrant or Right [Line Items]
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]	2015 Expected dividend yield 0 % Expected volatility 128 % Risk-free interest rate 0.46 - 0.83 % Expected life of warrants 1.6 – 2.45 years
Schedule of employee stock plans	Number of Warrants Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding – December 31, 2014 485,007 $ 5.17 2.04 Exercisable – December 31, 2014 485,007 $ 5.17 2.04 $ 0.00 Granted 1,500,000 $ 0.25 Exercised or Vested - $ 0.00 Forfeited or Expired (7,914 ) $ 2.53 Outstanding – June 30, 2015 1,977,093 $ 1.45 2.63 Exercisable – June 30, 2015 477,093 $ 5.21 1.58 $ 0.00

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2015	Dec. 31, 2014
Related Party Transactions Textual [Abstract]
Accounts payable due to related party	$ 1,442			$ 2,181
Payment to acquire machinery and fixtures	64,042
Aerial Products Corp [Member]
Related Party Transactions Textual [Abstract]
Accounts payable due to related party	2,876		$ 2,876
Amount paid to APC			$ 3,615
Payment to acquire machinery and fixtures	$ 6,500

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 98,106	$ 34,064
Less - accumulated depreciation	(12,200)	(7,040)
Property plant and equipment net	85,906	27,024
Shop Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	40,904	19,954
Computer and electronics [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	21,006	12,075
Office furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	21,427	$ 2,035
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 14,769

Property and Equipment (Detai21

Property and Equipment (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Property and Equipment (Textual)
Depreciation expense	$ 5,160	$ 181
Shop Machinery and equipment [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	20,950
Computer and electronics [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	8,931
Office furniture and fixtures [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	19,392
Leasehold improvements [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	$ 14,769
Maximum [Member]
Property and Equipment (Textual)
Property, plant and equipment, useful life	7 years
Minimum [Member]
Property and Equipment (Textual)
Property, plant and equipment, useful life	3 years

Intangible Assets (Details)

Intangible Assets (Details) - USD ($)	1 Months Ended	6 Months Ended
	Dec. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	May. 05, 2014
Intangible Assets (Textual)
Additional amortization expense		$ 21,462
Lighter Than Air Systems [Member]
Intangible Assets (Textual)
Fair value of LTAS on date of business combination				$ 135,550
Amortization expense	$ 31,941

Shareholders' Equity (Details)

Shareholders' Equity (Details) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended
	Jun. 01, 2015	Aug. 27, 2014	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2015
Class of Stock [Line Items]
Shares of restricted common stock issued	2,000,000	2,000,000
Expense for the pro rata portion of shares	$ 22,500	$ 450,000			$ 323,333
Common Stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares issued upon conversion			29,052,900		29,052,900
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares issued upon conversion			8,022,900	8,630,000	8,022,900
Shares of series preferred stock converted			80,229	86,300
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares issued upon conversion			2,000,000		2,000,000
Shares of series preferred stock converted			20,000
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares issued upon conversion			8,400,000		8,400,000
Shares of series preferred stock converted			8,400,000

Preferred Stock (Details)

Preferred Stock (Details)	1 Months Ended	3 Months Ended			6 Months Ended
	Jun. 02, 2015USD ($)$ / sharesshares	Jun. 30, 2015USD ($)shares	Mar. 31, 2015shares	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)Investorshares	Jun. 30, 2014USD ($)
Preferred Stock (Textual)
Conversion of stock, Description					The Series A and Series C stock conversion ratio is 1 to 100 common shares. The Series B, B-1, D, E, F and G stock conversion ratio is 1 to 1 common share.
Beneficial conversion feature on convertible preferred stock | $					$ 192,558
Deemed dividend on Series G convertible preferred stock | $		$ 80,000			$ 80,000
Series G Preferred Private Placement [Member]
Preferred Stock (Textual)
Aggregate of unit in private placement, Shares	4,000,000
Aggregate of unit in private placement, Value | $	$ 985,725
Purchase price, per unit | $ / shares	$ 0.25
Financing fees | $	$ 14,275
Series A Preferred Stock [Member]
Preferred Stock (Textual)
Shares of series preferred stock converted		80,229	86,300
Number of restricted common stock shares issued upon conversion		8,022,900	8,630,000		8,022,900
Number of investors | Investor					7
Series B-1 Preferred Stock [Member]
Preferred Stock (Textual)
Preferred stock liquidation, Description					The Series B-1 preferred stock contains a liquidation provision whereas in the event of a fundamental transaction (such as the merger which occurred on June 3, 2014), the shareholder has the option to receive a preferential amount of cash equal to 400% of the stated value per share.
Series C Preferred Stock [Member]
Preferred Stock (Textual)
Shares of series preferred stock converted		20,000
Number of restricted common stock shares issued upon conversion		2,000,000			2,000,000
Number of investors | Investor					1
Series D Preferred Stock [Member]
Preferred Stock (Textual)
Shares of series preferred stock converted		8,400,000
Number of restricted common stock shares issued upon conversion		8,400,000			8,400,000
Number of investors | Investor					6
Series G Preferred Stock [Member]
Preferred Stock (Textual)
Shares of series preferred stock converted	2,700,000
Shares issued	2,700,000
Series F Preferred Stock [Member]
Preferred Stock (Textual)
Shares of series preferred stock converted	2,200,666
Additional shares issued	2,200,666

Employee Stock Options (Details

Employee Stock Options (Details) - 6 months ended Jun. 30, 2015 - Stock Options [Member]	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%
Expected volatility	128.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.40%
Expected life of warrants	1 year 6 months
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.99%
Expected life of warrants	3 years 5 months 1 day

Employee Stock Options (Detai26

Employee Stock Options (Details 1) - Jun. 30, 2015 - Stock Options [Member] - USD ($)	Total
Options
Outstanding - December 31, 2014
Exercisable - December 31, 2014
Granted	29,500,000
Exercised or Vested
Forfeited or expired
Outstanding - June 30, 2015	29,500,000
Exercisable - June 30, 2015	10,000,000
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding - December 31, 2014	$ 0
Weighted Average Exercise Price, Exercisable - December 31, 2014	0
Weighted Average Exercise Price, Granted	0.18
Weighted Average Exercise Price, Exercised or Vested	0
Weighted Average Exercise Price, Forfeited or Expired	0
Weighted Average Exercise Price, Outstanding - June 30, 2015	0.18
Weighted Average Exercise Price, Exercisable - June 30, 2015	$ 0.15
Contractual Life in Years, Outstanding - June 30, 2015	2 years 11 months 16 days
Contractual Life in Years, Exercisable - June 30, 2015	2 years 10 months 17 days
Intrinsic Value, Exercisable - June 30, 2015	$ 1,150,000

Employee Stock Options (Detai27

Employee Stock Options (Details Textual) - Jun. 30, 2015 - USD ($)	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Vested	1,000,000
Expiration date	Jun. 1, 2018
Fair value of stock options granted	$ 5,142,284
Compensation expense	$ 2,252,552
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options were granted to employees	29,500,000
Number of Shares, Vested	10,000,000
Granted exercise price	$ 0.15
Expiration date	May 18, 2018
Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares vesting	3,000,000
Exercise price	$ 0.25
Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Vested	1,000,000
Granted exercise price	$ 0.15
Expiration date	Jun. 1, 2018
Shares vesting	5,000,000
Exercise price	$ 0.25
Shares forfeited	4,000,000
Share-based Compensation Award, Tranche Two [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Vested	3,000,000
Granted exercise price	$ 0.25
Expiration date	Jun. 1, 2018
Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Vested	1,500,000
Granted exercise price	$ 0.27
Expiration date	May 4, 2019
Compensation expense	$ 2,889,732

Warrants (Details)

Warrants (Details) - 6 months ended Jun. 30, 2015 - Warrant [Member]	Total
Class of Warrant or Right [Line Items]
Expected dividend yield	0.00%
Expected volatility	128.00%
Risk-free interest rate, Minimum	0.46%
Risk-free interest rate, Maximum	0.83%
Minimum [Member]
Class of Warrant or Right [Line Items]
Expected life of warrants	1 year 7 months 6 days
Maximum [Member]
Class of Warrant or Right [Line Items]
Expected life of warrants	2 years 5 months 12 days

Warrants (Details 1)

Warrants (Details 1) - 6 months ended Jun. 30, 2015 - Warrant [Member] - USD ($)	Total
Number of Warrants
Outstanding - December 31, 2014	485,007
Exercisable - December 31, 2014	485,007
Granted	1,500,000
Exercised or Vested
Forfeited or expired	(7,914)
Outstanding - June 30, 2015	1,977,093
Exercisable - June 30, 2015	477,093
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Price, Outstanding - December 31, 2014	$ 5.17
Weighted Average Exercise Price, Exercisable - December 31, 2014	5.17
Weighted Average Exercise Price, Granted	0.25
Weighted Average Exercise Price, Exercised or Vested	0
Weighted Average Exercise Price, Forfeited or Expired	2.53
Weighted Average Exercise Price, Outstanding - June 30, 2015	1.45
Weighted Average Exercise Price, Exercisable - June 30, 2015	$ 5.21
Contractual Life in Years, Outstanding - December 31, 2014	2 years 15 days
Contractual Life in Years, Exercisable - June 30, 2015	2 years 15 days
Contractual Life in Years, Outstanding - June 30, 2015	2 years 7 months 17 days
Contractual Life in Years, Exercisable - June 30, 2015	1 year 6 months 29 days
Intrinsic Value, Exercisable - December 31, 2014	$ 0
Intrinsic Value, Exercisable - June 30, 2015	$ 0

Warrants (Details Textual)

Warrants (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Warrants (Textual)
Warrants granted for services provided	$ 1,500,000
Fair value of the warrants	5,142,284
Stock based compensation	2,608,356
Warrant [Member]
Warrants (Textual)
Fair value of the warrants	261,834
Stock based compensation	9,971
Consultants [Member]
Warrants (Textual)
Warrants granted for services provided	$ 1,000,000
Exercise price	$ 0.25
Warrants vesting period	2 years
Warrants expiration date	Jun. 16, 2018
Consultants One [Member]
Warrants (Textual)
Warrants granted for services provided	$ 500,000
Exercise price	$ 0.25
Warrants vesting period	1 year
Warrants expiration date	Jun. 25, 2018

Oklahoma Technology Commercia31

Oklahoma Technology Commercialization Center (Details)	Apr. 30, 2014USD ($)
Oklahoma Technology Commercialization (Textual)
Refundable award	$ 110,000

Subsequent Events (Details)

Subsequent Events (Details)	1 Months Ended		6 Months Ended
	Aug. 14, 2015Investorshares	Jul. 20, 2015USD ($)shares	Jun. 30, 2015Investorshares	Mar. 31, 2015shares
Series A Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock			8,022,900	8,630,000
Number of investors | Investor			7
Series C Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock			2,000,000
Number of investors | Investor			1
Series D Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock			8,400,000
Number of investors | Investor			6
Subsequent Event [Member]
Subsequent Event [Line Items]
Cash paid | $		$ 100,000
Funds held in escrow | $		$ 100,000
Unregistered common stock shares issued		6,000,000
Subsequent Event [Member] | Series A Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	10,200
Number of investors | Investor	2
Subsequent Event [Member] | Series B Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	20
Number of investors | Investor	1
Subsequent Event [Member] | Series C Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	30,000
Number of investors | Investor	2
Subsequent Event [Member] | Series D Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	4,750,000
Number of investors | Investor	4
Subsequent Event [Member] | Series E Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	1,000,000
Number of investors | Investor	1
Subsequent Event [Member] | Restricted Stock [Member] | Series A Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	1,020,000
Subsequent Event [Member] | Restricted Stock [Member] | Series B Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	20
Subsequent Event [Member] | Restricted Stock [Member] | Series C Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	3,000,000
Subsequent Event [Member] | Restricted Stock [Member] | Series D Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	4,750,000
Subsequent Event [Member] | Restricted Stock [Member] | Series E Preferred Stock [Member]
Subsequent Event [Line Items]
Number of Preferred stock converted into restricted common stock	1,000,000