COMSovereign Holding (COMS) 10-Q 29 Jul 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 29, 2016
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, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,911,553

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash	$ 1,112,336	$ 2,659,734
Accounts receivable - trade	479,850	83,288
Inventory, net	147,121	118,795
Prepaid expenses and deposits	62,845	55,624
Total current assets	1,802,152	2,917,441
PROPERTY AND EQUIPMENT, at cost:	174,074	163,291
Less - accumulated depreciation	(43,567)	(26,995)
Net property and equipment	130,507	136,296
OTHER ASSETS:
Goodwill	99,799	99,799
Intangible assets, net	1,435,667	1,460,000
Total other assets	1,535,466	1,559,799
TOTAL ASSETS	3,468,125	4,613,536
CURRENT LIABILITIES:
Accounts payable - trade and accrued liabilities	90,758	242,257
Accounts payable due to related party		6,000
Deferred revenue		7,896
Note Payable - Oklahoma Technology Commercialization Center - Current	110,000	110,000
Total current liabilities	200,758	366,153
TOTAL LIABILITIES	200,758	366,153
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.0001 par value; authorized 300,000,000 shares; 6,911,553 and 5,125,585 shares issued and outstanding, at June 30, 2016 and December 31, 2015, respectively	691	513
Additional paid-in capital	17,786,291	15,385,523
Accumulated Deficit	(14,519,625)	(11,139,270)
Total stockholders' equity	3,267,367	4,247,383
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	3,468,125	4,613,536
Convertible Preferred stock, Series A
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value	10	10
Convertible Preferred stock, Series B
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value
Convertible Preferred stock, Series B-1
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value
Convertible Preferred stock, Series C
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value		7
Convertible Preferred stock, Series D
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value		200
Convertible Preferred stock, Series E
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value
Convertible Preferred stock, Series F
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value		200
Convertible Preferred stock, Series G
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible Preferred stock, value		$ 200

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	6,911,553	5,125,585
Common stock, shares outstanding	6,911,553	5,125,585
Convertible Preferred stock, Series A
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	595,000	595,000
Preferred stock, shares issued	100,100	101,100
Preferred stock, shares outstanding	100,100	101,100
Convertible Preferred stock, Series B
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	324,671	324,671
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Convertible Preferred stock, Series B-1
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	156,231	156,231
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Convertible Preferred stock, Series C
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	355,000	355,000
Preferred stock, shares issued	0	73,387
Preferred stock, shares outstanding	0	73,387
Convertible Preferred stock, Series D
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	36,050,000	36,050,000
Preferred stock, shares issued	0	2,000,000
Preferred stock, shares outstanding	0	2,000,000
Convertible Preferred stock, Series E
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	5,400,000	5,400,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Convertible Preferred stock, Series F
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	3,300,999	3,300,999
Preferred stock, shares issued	0	1,999,998
Preferred stock, shares outstanding	0	1,999,998
Convertible Preferred stock, Series G
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	8,000,000	8,000,000
Preferred stock, shares issued	0	2,000,000
Preferred stock, shares outstanding	0	2,000,000

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Revenues	$ 484,014	$ 67,602	$ 927,464	$ 82,808
Cost of good sold	175,575	26,428	309,461	34,545
Gross profit	308,439	41,174	618,003	48,263
General and administrative expense	2,459,138	2,927,614	4,009,078	3,868,721
Loss from operations	(2,150,699)	(2,886,440)	(3,391,075)	(3,820,458)
Other income (expense)
Gain on settlement of make whole provision	11,000		11,000
Interest expense	(140)	(133)	(280)	(266)
Total other income (expense)	10,860	(133)	10,720	(266)
NET LOSS	(2,139,839)	(2,886,573)	(3,380,355)	(3,820,724)
Deemed dividend on Series G convertible preferred stock		80,000		80,000
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (2,139,839)	$ (2,966,573)	$ (3,380,355)	$ (3,900,724)
Weighted average number of common shares outstanding - basic and diluted	6,452,762	52,566,198	5,935,006	46,518,311
Basic and diluted net loss per share	$ (0.33)	$ (0.06)	$ (0.57)	$ (0.08)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES:
Net loss	$ (3,380,355)	$ (3,820,724)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	16,572	5,160
Amortization	24,333	21,462
Gain on settlement of make whole provision	(11,000)
Stock based compensation	2,249,839	2,608,356
Changes in current assets and liabilities:
Accounts receivable	(396,562)	11,910
Inventory	(28,326)	(92,968)
Prepaid expenses and other current assets	(7,221)	(35,272)
Accounts payable and accrued expense	10,001	(5,927)
Due from related party	(6,000)	(739)
Deferred revenue	(7,896)	129,575
Net cash used in operating activities	(1,536,615)	(1,179,167)
INVESTING ACTIVITIES:
Cash paid on furniture and equipment	(10,783)	(64,042)
Net cash used in investing activities	(10,783)	(64,042)
FINANCING ACTIVITIES:
Series G preferred stock issued for cash		985,725
Net cash provided by financing activities		985,725
NET DECREASE IN CASH	(1,547,398)	(257,484)
CASH, beginning of period	2,659,734	1,369,896
CASH, end of period	1,112,336	1,112,412
Cash paid during the six months ended June 30:
Interest	280	266
Noncash investing and financing activities for the six months ended June 30:
Common Stock issued for Adaptive Flight asset purchase make whole provision	150,500
Conversion of Series A preferred stock to common stock		1,665
Conversion of Series C preferred stock to common stock	18	200
Conversion of Series D preferred stock to common stock	5	840
Conversion of Series F preferred stock to common stock	5
Conversion of Series G preferred stock to common stock	$ 5

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2016
Basis of Presentation [Abstract]
BASIS OF PRESENTATION	1. BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements. Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete annual 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 balance sheet as of December 31, 2015 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does not include all of the information and footnotes required for complete annual financial statements. The consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2016
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. The accounts payable due to a related party at December 31, 2015 was comprised of $6,000 of director fees which were paid in January 2016.

Inventory

Inventory	6 Months Ended
	Jun. 30, 2016
Inventory [Abstract]
INVENTORY	3. INVENTORY Inventories are stated at the lower of cost or market using the first-in, first-out method. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. The Company regularly reviews inventory quantities on hand, future purchase commitments with its suppliers, and the estimated utility of its inventory. If the review indicates a reduction in utility below carrying value, inventory is reduced to a new cost basis through a charge to cost of goods sold. Allowance for slow moving items decreased $15,383 due to the sale of an aerostat launcher. Inventory consists of the following at June 30, 2016 and December 31, 2015: June 30, December 31, Raw materials inventory $ 23,173 $ 26,358 Work in process inventory 26,745 3,817 Finished goods inventory 100,409 107,209 Less valuation allowance (3,206 ) (18,589 ) Total $ 147,121 $ 118,795

Property and Equipment

Property and Equipment	6 Months Ended
	Jun. 30, 2016
Property and Equipment [Abstract]
PROPERTY AND EQUIPMENT	4. 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, 2016, the Company invested $5,142 in shop machinery and equipment, $3,719 in computers and electronics and $1,922 in office furniture and fixtures. Depreciation expense was $16,572 and $5,160 for the six months ended June 30, 2016 and 2015, respectively. Property and equipment consists of the following at June 30, 2016 and December 31, 2015: June 30, December 31, Shop machinery and equipment $ 86,031 $ 80,889 Computers and electronics 32,630 28,911 Office furniture and fixtures 35,899 33,977 Leasehold improvements 19,514 19,514 174,074 163,291 Less - accumulated depreciation (43,567 ) (26,995 ) $ 130,507 $ 136,296

Intangible Assets

Intangible Assets	6 Months Ended
	Jun. 30, 2016
Intangible Assets [Abstract]
INTANGIBLE ASSETS	5. INTANGIBLE ASSETS On July 20, 2015, the Company entered into an asset purchase agreement to acquire exclusive commercial software licenses for the “GUST” (Georgia Tech UAV Simulation Tool) autopilot system from Adaptive Flight, Inc. (“AFI”). Through the purchase of the assets of privately held AFI, the Company assumed the transferable licenses from the Georgia Tech Research Corporation, which included 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 150,000 shares of unregistered common stock valued at $8.40 per share on the date of agreement, to be held in escrow. The Company had a milestone of twelve months from July 20, 2015 to complete a technology Integration Plan, the non-completion of which may result in the return of the purchased assets and termination of the Company’s obligations to release the escrow cash and shares. Additional milestones include exclusive, no-cost and perpetual licenses to all contributing intellectual property included or related to the purchased assets. As such time as all milestones are met, one-half of the escrow shares will be released to AFI. Upon termination of the Escrow Agreement, anticipated to be twelve months from the closing of the asset purchase, if all milestones have been met, the remaining escrowed shares will be released to AFI, but if all milestones have not been met, the escrowed cash and escrowed shares will be released to the Company and the purchased assets will be returned to AFI. According to the terms of the Escrow Agreement, if the escrow share value is less than $1,400,000, the Company must issue an additional number of unregistered shares, not to exceed 50,000 shares. At December 31, 2015, the value of the 150,000 shares was $3.23 per share, or $484,500. The Company recorded $161,500 as an additional liability and expense at December 31, 2015 for the cost of 50,000 shares at $3.23 per share. On June 3, 2016, the Integration Plan was deemed to be completed. At June 3, 2016, the value of the 150,000 shares was $3.01 per share, or $451,150. The additional liability was reduced to $150,500 for the cost of 50,000 shares at $3.01 per share. The Company recorded the $11,000 reduction in the additional liability through the statement of operations at June 3, 2016. The Company began amortizing the $1,460,000 of purchased assets over a sixty month period on June 3, 2016 in the amount of $24,333 per month. Total amortization expense for the six months ended June 30, 2016 is $24,333. The Company and AFI instructed the Escrow Agent to disburse the cash and 150,000 shares of stock. The Company issued an additional 50,000 shares valued at $150,500 as described above. The asset acquisition did not qualify as a business combination under ASC 805-10 and has been accounted for as a regular asset purchase.

Shareholders' Equity

Shareholders' Equity	6 Months Ended
	Jun. 30, 2016
Shareholders' Equity and Preferred Stock [Abstract]
SHAREHOLDERS' EQUITY	6. SHAREHOLDERS’ EQUITY On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes. The Company issued a total of 1,785,968 shares of common stock during the six months ended June 30, 2016, as described below: The Company issued 2,500 shares of common stock pursuant to conversions of an aggregate of 1,000 shares of Series A preferred stock. The Company issued 183,468 shares of common stock pursuant to conversions of an aggregate of 73,387 shares of Series C preferred stock. The Company issued 50,000 shares of common stock pursuant to conversions of an aggregate of 2,000,000 shares of Series D preferred stock. The Company issued 50,000 shares of common stock pursuant to conversions of an aggregate of 1,999,998 shares of Series F preferred stock. The Company issued 50,000 shares of common stock pursuant to conversions of an aggregate of 2,000,000 shares of Series G preferred stock. The Company issued 50,000 shares of restricted common stock to AFI, as discussed above in Note 5, after all milestones had been met as a requirement of the terms of the Escrow Agreement because the value of the escrowed shares fell below $1,400,000 and triggered a ‘make whole’ provision. The Company issued 100,000 shares of restricted common stock with monthly vesting provisions to a newly-appointed director, Lt. Gen. Michael T. Flynn, for 24 months of services. Lt. Gen. Flynn can earn a pro rata portion of the shares, calculated based on the twenty four-month vesting schedule. The Company recognized a total of $24,250 expense for the pro rata portion of shares earned by Lt. Gen. Flynn during the six months ended June 30, 2016. The Company issued 150,000 shares of restricted common stock with monthly vesting provisions to Strategic Advisory Board members, Dr. Philip Frost and Steven Rubin, for 12 month’s 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 $75,000 expense for the pro rata portion of shares earned by the two members during the six months ended June 30, 2016. On June 1, 2015, the Company issued 50,000 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 $135,000 expense for the portion of such shares earned by the Chairman during the six months ended June 30, 2016. On September 4, 2015, the Company issued 450,000 shares of restricted common stock to four management employees and one director pursuant to stock award agreements. The shares will vest upon consummation of a $4,000,000 equity or debt financing provided that the holder remains engaged by the Company through the vesting date. Stock based compensation of $604,440 was recognized during the six months ended June 30, 2016 based on management’s estimate that the shares would be fully vested by February 4, 2016, when the Board deemed vesting occurred with the issuance of $4,000,000 in common stock on November 20, 2015.

Preferred Stock

Preferred Stock	6 Months Ended
	Jun. 30, 2016
Shareholders' Equity and Preferred Stock [Abstract]
PREFERRED STOCK	7. PREFERRED STOCK On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes. 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 2.5 common shares. The Series B, B-1, D, E, F and G stock conversion ratio is 1 to 0.025 common shares. 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. During the six months ended June 30, 2016, one investor who held Series A preferred stock converted a total of 1,000 shares of Series A preferred stock for an aggregate of 2,500 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, two investors who held Series C preferred stock converted a total of 73,387 shares of Series C for an aggregate of 183,468 shares of restricted common stock, one investor who held Series D preferred stock converted a total of 2,000,000 shares of Series D for an aggregate of 50,000 shares of restricted common stock, one investor who held Series F preferred stock converted a total of 1,999,998 shares of Series F for an aggregate of 50,000 shares of restricted common stock, and two investors who held Series G preferred stock converted a total of 2,000,000 shares of Series G for an aggregate of 50,000 shares of restricted common stock, all in accordance with their conversion rights which includes a blocker with respect to individual ownership percentages.

Employee Stock Options

Employee Stock Options	6 Months Ended
	Jun. 30, 2016
Employee Stock Options [Abstract]
EMPLOYEE STOCK OPTIONS	8. EMPLOYEE STOCK OPTIONS On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes. On April 27, 2016, the Company issued 50,000 options from the 2015 Equity Plan to two employees for services provided. These options immediately vested and were granted with an exercise price of $2.91 and expiration date of April 27, 2019. The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 50,000 options granted during the six months ended June 30, 2016. The following table summarizes the assumptions used to estimate the fair value of the 50,000 stock options granted during the six month ended June 30, 2016 on the date of grant. 2016 Expected dividend yield 0 % Expected volatility 108 % Risk-free interest rate 0.99 % Expected life of options 3 years Under the Black-Scholes option pricing model, the fair value of the 50,000 options granted during the six months ended June 30, 2016 is estimated at $95,649 on the date of grant. During the six months ended June 30, 2016, $95,649 compensation expense was recognized on these 50,000 options. During 2015, the Company granted 842,500 common stock options to employees and a director for service provided. Of those 842,500 options, 250,000 options immediately vested and were granted with an exercise price of $6.00 and expiration date of May 18, 2018. Another 105,000 options immediately vested and were granted with an exercise price of $5.00 and expiration date of December 10, 2018. Another 250,000 options vest over two years or upon the up-listing of the Company’s common stock and were granted with an exercise price of $6.00 and expiration date of June 1, 2018. These 250,000 options were surrendered and cancelled on September 4, 2015. A director received two option awards. The first was for 75,000 shares vesting over two years and was granted with an exercise price of $10.00 and expiration date of June 1, 2018. The second was for 125,000 shares with vesting tied to performance and was granted with an exercise price of $10.00 and expiration date of June 1, 2018. These two director option awards were surrendered and cancelled on September 4, 2015. The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 37,500 stock-based awards that continue to vest during the six months ended June 30, 2016. The following table summarizes the assumptions used to estimate the fair value of the 37,500 stock options granted during 2015 on the date of grant: 2015 Expected dividend yield 0 % Expected volatility 129 % Risk-free interest rate 0.79 – 1.05 % Expected life of options 2.43 – 3.43 years Under the Black-Scholes option price model, fair value of the 37,500 options granted during 2015 is estimated at $293,954 on the date of grant. During the six months ended June 30, 2016, $80,226 compensation expense was recognized on these 37,500 options. The following table represents stock option activity as of and for the period ended June 30, 2016: Number of Options Weighted Weighted Aggregate Outstanding – December 31, 2015 392,500 $ 6.19 $ 2.62 Exercisable – December 31, 2015 355,000 $ 5.70 $ 2.55 $ 0 Granted 50,000 $ 2.91 Exercised or Vested – $ 0.00 Cancelled or Expired – $ 0.00 Outstanding – June 30, 2016 442,500 $ 5.82 2.20 Exercisable – June 30, 2016 417,500 $ 5.52 2.17 $ 9,500

Warrants

Warrants	6 Months Ended
	Jun. 30, 2016
Warrants [Abstract]
WARRANTS	9. WARRANTS On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes. On April 27, 2016, under the 2015 Equity Plan, the Company issued warrants to purchase 60,000 shares of the Company's common stock to four consultants for services provided. These warrants immediately vested and were granted with an exercise price of $2.91 and expiration date of April 27, 2019. The Company used the Black-Scholes warrant pricing model to estimate the fair value on the vesting date of the 60,000 warrants granted during the six months ended June 30, 2016. The following table summarizes the assumptions used to estimate the fair value of the 60,000 warrants granted during the six month ended June 30, 2016 on the date of vesting. 2016 Expected dividend yield 0 % Expected volatility 108 % Risk-free interest rate 0.99 % Expected life of warrants 3.0 years Under the Black-Scholes warrant pricing model, fair value of the 60,000 warrants granted during the six months ended June 30, 2016 is estimated at $114,779 on the date of vesting. During the six months ended June 30, 2016, $114,779 compensation expense was recognized on these 60,000 warrants. For the year 2015, 52,500 common stock purchase warrants were granted to two consultants and a vendor for service provided. One consultant was granted 25,000 warrants with exercise price of $10.00, vesting over two years and the expiration date is June 16, 2018. The other consultant was granted 12,500 warrants with exercise price of $10.00, vesting over one year and the expiration date is June 25, 2018. These same two consultants and the vendor each received 5,000 warrants with an exercise price of $5.00, immediately vested and an expiration date of December 10, 2018. The Company used the Black-Scholes warrant pricing model to estimate the fair value on the re-measurement dates of the 30,000 warrants that continue to vest during the six months ended June 30, 2016. The following table summarizes the assumptions used to estimate the fair value of the 30,000 warrants granted during 2015 as of re-measurement dates: 2016 Expected dividend yield 0 % Expected volatility 108 % Risk-free interest rate 0.73 % Expected life of warrants 1.95 – 1.99 years Under the Black-Scholes warrant pricing model, fair value of the 30,000 warrants granted during 2015 is estimated at $27,303 as of re-measurement dates. During the six months ended June 30, 2016, $4,995 compensation expense was recognized on these 30,000 warrants. The following table represents warrant activity as of and for the period ended June 30, 2016: Number of Warrants Weighted Average Exercise Price per Weighted Aggregate Outstanding – December 31, 2015 134,209 $ 23.87 3.66 Exercisable – December 31, 2015 104,209 $ 27.87 4.01 $ 0 Granted 60,000 $ 2.91 Forfeited or Expired (80 ) $ 404.49 Outstanding – June 30, 2016 194,129 $ 17.24 3.06 Exercisable – June 30, 2016 181,629 $ 17.73 3.14 $ 11,400

Oklahoma Technology Commerciali

Oklahoma Technology Commercialization Center	6 Months Ended
	Jun. 30, 2016
Oklahoma Technology Commercialization Center [Abstract]
OKLAHOMA TECHNOLOGY COMMERCIALIZATION CENTER	10. OKLAHOMA TECHNOLOGY COMMERCIALIZATION CENTER At the time of the April 30, 2014 merger between MacroSolve, Inc. (“MacroSolve”) and the Company, MacroSolve had a $110,000 balance on its refundable award from the State of Oklahoma Technology Business Finance Program. The Company has not made any reductions in the award, so the Company is in default. The parties are discussing a release from the debt that is unrelated to the current operations.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2016
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	11. COMMITMENTS AND CONTINGENCIES ex parte On May 16, 2016, Banco Popular North America (“Banco”) filed a lawsuit in Duval County, Florida in the Circuit Court of the Fourth Judicial Circuit against Aerial Products Corporation d/b/a Southern Balloon Works (“Aerial Products”), Kevin M. Hess, LTAS, and the Company to collect on a delinquent Small Business Administration loan that Banco made in 2007 to Aerial Products with Mr. Hess as the personal guarantor. LTAS and the Company filed an Answer on June 30, 2016. It is our position that neither LTAS nor the Company are continuations of Aerial Products, and LTAS and the Company have denied all allegations made by Banco and will vigorously defend that position. The Company has not recorded any contingent liability expense because the incurrence of loss is considered remote. Settlement discussions between Mr. Hess and Banco are ongoing.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	12. SUBSEQUENT EVENTS On July 28, 2016, the Company issued 5,000 options from the 2015 Equity Plan to one employee as an employment bonus. These options were immediately vested and were granted with an exercise price of $3.77 and the expiration date of July 28, 2019.

Inventory (Tables)

Inventory (Tables)	6 Months Ended
	Jun. 30, 2016
Inventory [Abstract]
Schedule of inventory	June 30, December 31, Raw materials inventory $ 23,173 $ 26,358 Work in process inventory 26,745 3,817 Finished goods inventory 100,409 107,209 Less valuation allowance (3,206 ) (18,589 ) Total $ 147,121 $ 118,795

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Jun. 30, 2016
Property and Equipment [Abstract]
Schedule of property and equipment	June 30, December 31, Shop machinery and equipment $ 86,031 $ 80,889 Computers and electronics 32,630 28,911 Office furniture and fixtures 35,899 33,977 Leasehold improvements 19,514 19,514 174,074 163,291 Less - accumulated depreciation (43,567 ) (26,995 ) $ 130,507 $ 136,296

Employee Stock Options (Tables)

Employee Stock Options (Tables) - Employee Stock Option [Member]	6 Months Ended
	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Schedule of estimate the fair value of stock options granted	2016 Expected dividend yield 0 % Expected volatility 108 % Risk-free interest rate 0.99 % Expected life of options 3 years 2015 Expected dividend yield 0 % Expected volatility 129 % Risk-free interest rate 0.79 – 1.05 % Expected life of options 2.43 – 3.43 years
Schedule of stock option activity	Number of Options Weighted Weighted Aggregate Outstanding – December 31, 2015 392,500 $ 6.19 $ 2.62 Exercisable – December 31, 2015 355,000 $ 5.70 $ 2.55 $ 0 Granted 50,000 $ 2.91 Exercised or Vested – $ 0.00 Cancelled or Expired – $ 0.00 Outstanding – June 30, 2016 442,500 $ 5.82 2.20 Exercisable – June 30, 2016 417,500 $ 5.52 2.17 $ 9,500

Warrants (Tables)

Warrants (Tables) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016
Class of Warrant or Right [Line Items]
Summarizes of the assumptions of estimate the fair value warrants granted	2016 Expected dividend yield 0 % Expected volatility 108 % Risk-free interest rate 0.99 % Expected life of warrants 3.0 years 2016 Expected dividend yield 0 % Expected volatility 108 % Risk-free interest rate 0.73 % Expected life of warrants 1.95 – 1.99 years
Schedule of warrant activity	Number of Warrants Weighted Average Exercise Price per Weighted Aggregate Outstanding – December 31, 2015 134,209 $ 23.87 3.66 Exercisable – December 31, 2015 104,209 $ 27.87 4.01 $ 0 Granted 60,000 $ 2.91 Forfeited or Expired (80 ) $ 404.49 Outstanding – June 30, 2016 194,129 $ 17.24 3.06 Exercisable – June 30, 2016 181,629 $ 17.73 3.14 $ 11,400

Related Party Transactions (Det

Related Party Transactions (Details)	Dec. 31, 2015USD ($)
Related Party Transactions (Textual)
Accounts payable due to related party	$ 6,000

Inventory (Details)

Inventory (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Schedule of inventory
Raw materials inventory	$ 23,173	$ 26,358
Work in process inventory	26,745	3,817
Finished goods inventory	100,409	107,209
Less valuation allowance	(3,206)	(18,589)
Total	$ 147,121	$ 118,795

Inventory (Details Textual)

Inventory (Details Textual)	6 Months Ended
	Jun. 30, 2016USD ($)
Inventory (Textual)
Inventory decreases due to sale of aerostat launcher	$ 15,383

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Schedule of property and equipment
Property and equipment, gross	$ 174,074	$ 163,291
Less - accumulated depreciation	(43,567)	(26,995)
Property and equipment, net	130,507	136,296
Shop machinery and equipment [Member]
Schedule of property and equipment
Property and equipment, gross	86,031	80,889
Computers and electronics [Member]
Schedule of property and equipment
Property and equipment, gross	32,630	28,911
Office furniture and fixtures [Member]
Schedule of property and equipment
Property and equipment, gross	35,899	33,977
Leasehold improvements [Member]
Schedule of property and equipment
Property and equipment, gross	$ 19,514	$ 19,514

Property and Equipment (Detai26

Property and Equipment (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Property and Equipment (Textual)
Depreciation expense	$ 16,572	$ 5,160
Equipment [Member] | Minimum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	3 years
Equipment [Member] | Maximum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	7 years
Furniture and fixtures [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	$ 1,922
Furniture and fixtures [Member] | Minimum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	3 years
Furniture and fixtures [Member] | Maximum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	7 years
Hardware and software [Member] | Minimum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	3 years
Hardware and software [Member] | Maximum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	7 years
Leasehold improvements [Member] | Minimum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	3 years
Leasehold improvements [Member] | Maximum [Member]
Property and Equipment (Textual)
Straight-line method over estimated useful lives	7 years
Shop machinery and equipment [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	$ 5,142
Computers and electronics [Member]
Property and Equipment (Textual)
Amount invested in property plant and equipment	$ 3,719

Intangible Assets (Details)

Intangible Assets (Details) - USD ($)	Jun. 03, 2016	Jul. 20, 2015	Jun. 30, 2016	Dec. 31, 2015
Intangible Assets (Textual)
Amortization expense			$ 24,333
Cash paid		$ 100,000
Funds held in escrow		$ 100,000
Unregistered common stock shares issued		150,000	50,000
Share price	$ 3.01	$ 8.40	$ 3.01	$ 3.23
Escrow share value			$ 1,400,000
Common stock share	150,000		150,000	150,000
Common stock value	$ 451,150			$ 484,500
Additional liability and expense	11,000		$ 150,500	$ 161,500
Cost of shares			50,000	50,000
Amortizing of purchased assets	1,460,000
Payments to acquire assets	$ 24,333

Shareholders' Equity (Details)

Shareholders' Equity (Details)	Nov. 20, 2015USD ($)	Oct. 29, 2015	Sep. 04, 2015USD ($)shares	Jul. 20, 2015shares	Jun. 01, 2015shares	Jun. 30, 2016USD ($)Membershares	Jun. 30, 2015USD ($)
Shareholders' Equity (Textual)
Reverse stock split		1:40
Stock based compensation | $						$ 2,249,839	$ 2,608,356
Shares of restricted common stock				150,000		50,000
Escrow share value | $						$ 1,400,000
2015 Equity Plan [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued						1,150,000
Stock based compensation | $						$ 1,115,500
Vesting occurred with the issuance of common stock | $						3,725,000
Four management employees and one director [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued			450,000
Stock based compensation | $						604,440
Debt financing | $			$ 4,000,000
Vesting occurred with the issuance of common stock | $	$ 4,000,000
Board of Directors Chairman [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued					50,000
Expense for the pro rata portion of shares | $						$ 135,000
Lt. Gen. Michael T. Flynn [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued						100,000
Expense for the pro rata portion of shares | $						$ 24,250
Dr. Philip Frost and Steven Rubin [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued						150,000
Expense for the pro rata portion of shares | $						$ 75,000
Number of member | Member						2
Common Stock [Member]
Shareholders' Equity (Textual)
Convertible preferred stock, shares issued upon conversion						1,785,968
Series A preferred stock [Member]
Shareholders' Equity (Textual)
Convertible preferred stock, shares issued upon conversion						2,500
Shares of series preferred stock converted						1,000
Series C preferred stock [Member]
Shareholders' Equity (Textual)
Convertible preferred stock, shares issued upon conversion						183,468
Shares of series preferred stock converted						73,387
Series D preferred stock [Member]
Shareholders' Equity (Textual)
Convertible preferred stock, shares issued upon conversion						50,000
Shares of series preferred stock converted						2,000,000
Series F preferred stock [Member]
Shareholders' Equity (Textual)
Convertible preferred stock, shares issued upon conversion						50,000
Shares of series preferred stock converted						1,999,998
Series G preferred stock [Member]
Shareholders' Equity (Textual)
Convertible preferred stock, shares issued upon conversion						50,000
Shares of series preferred stock converted						2,000,000

Preferred Stock (Details)

Preferred Stock (Details)	Oct. 29, 2015	Jun. 30, 2016Investorshares
Preferred Stock (Textual)
Reverse stock split	1:40
Conversion of stock, description	The Series A and Series C stock conversion ratio is 1 to 2.5 common shares. The Series B, B-1, D, E, F and G stock conversion ratio is 1 to 0.025 common shares.
Series A preferred stock [Member]
Preferred Stock (Textual)
Number of investors | Investor		1
Shares of series preferred stock converted		1,000
Number of restricted common stock shares issued upon conversion		2,500
Series C preferred stock [Member]
Preferred Stock (Textual)
Number of investors | Investor		2
Shares of series preferred stock converted		73,387
Number of restricted common stock shares issued upon conversion		183,468
Series D preferred stock [Member]
Preferred Stock (Textual)
Number of investors | Investor		1
Shares of series preferred stock converted		2,000,000
Number of restricted common stock shares issued upon conversion		50,000
Series F preferred stock [Member]
Preferred Stock (Textual)
Number of investors | Investor		1
Shares of series preferred stock converted		1,999,998
Number of restricted common stock shares issued upon conversion		50,000
Series G preferred stock [Member]
Preferred Stock (Textual)
Number of investors | Investor		2
Shares of series preferred stock converted		2,000,000
Number of restricted common stock shares issued upon conversion		50,000

Employee Stock Options (Details

Employee Stock Options (Details) - Employee Stock Option [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Expected volatility	108.00%	129.00%
Risk-free interest rate	0.99%
Expected life of options	3 years
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		0.79%
Expected life of options		2 years 5 months 5 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		1.05%
Expected life of options		3 years 5 months 5 days

Employee Stock Options (Detai31

Employee Stock Options (Details 1) - Employee Stock Option [Member]	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Options
Outstanding - December 31, 2015 | shares	392,500
Exercisable - December 31, 2015 | shares	355,000
Granted | shares	50,000
Number of Options, Exercised or Vested | shares
Number of Options, Cancelled or Expired | shares
Outstanding - June 30, 2016 | shares	442,500
Exercisable - June 30, 2016 | shares	417,500
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding - December 31, 2015 | $ / shares	$ 6.19
Weighted Average Exercise Price, Exercisable - December 31, 2015 | $ / shares	5.70
Weighted Average Exercise Price, Granted | $ / shares	2.91
Weighted Average Exercise Price, Exercised or Vested | $ / shares	0
Weighted Average Exercise Price, Cancelled or Expired | $ / shares	0
Weighted Average Exercise Price, Outstanding - June 30, 2016 | $ / shares	5.82
Weighted Average Exercise Price, Exercisable - June 30, 2016 | $ / shares	$ 5.52
Contractual Life in Years, Outstanding - December 31, 2015	2 years 7 months 13 days
Contractual Life in Years, Exercisable - December 31, 2015	2 years 6 months 18 days
Contractual Life in Years, Outstanding - June 30, 2016	2 years 2 months 12 days
Contractual Life in Years, Exercisable - June 30, 2016	2 years 2 months 1 day
Intrinsic Value, Exercisable - December 31, 2015 | $	$ 0
Intrinsic Value, Exercisable - June 30, 2016 | $	$ 9,500

Employee Stock Options (Detai32

Employee Stock Options (Details Textual)	Oct. 29, 2015	Sep. 04, 2015shares	Apr. 27, 2016employees$ / sharesshares	Jun. 30, 2016USD ($)$ / sharesshares	Jun. 30, 2015	Dec. 31, 2015$ / sharesshares
Employee Stock Options (Textual)
Reverse stock split	1:40
Compensation expense | $				$ 80,226
Compensation expense recognized				37,500
Estimate fair value of options and warrants granted | $				$ 293,954
Estimate fair value of stock options and warrants granted, Shares				37,500
2015 Equity Plan [Member]
Employee Stock Options (Textual)
Exercise price, granted | $ / shares			$ 2.91
Expiration date			Apr. 27, 2019
Options issued			50,000
Entity Number of Employees | employees			2
Employee Stock Option [Member]
Employee Stock Options (Textual)
Stock options granted				50,000
Exercise price, granted | $ / shares				$ 2.91
Stock option, surrendered and cancelled
Stock option unvested, surrendered and cancelled		450,000
Compensation expense | $				$ 95,649
Share-based compensation arrangement by share-based payment award fair value assumptions method used				Black-Scholes option pricing model	Black-Scholes option pricing model
Fair value of stock-based awards that continue to vest				37,500
Compensation expense recognized				50,000
Estimate fair value of options and warrants granted | $				$ 95,649
Estimate fair value of stock options and warrants granted, Shares				50,000
Employees and Director [Member]
Employee Stock Options (Textual)
Stock options granted						842,500
Stock option, surrendered and cancelled		250,000
Vesting One [Member] | Employees and Director [Member]
Employee Stock Options (Textual)
Number of options vested						250,000
Exercise price, granted | $ / shares						$ 6
Expiration date						May 18, 2018
Vesting One [Member] | Director [Member]
Employee Stock Options (Textual)
Number of options vested						75,000
Exercise price, granted | $ / shares						$ 10
Expiration date						Jun. 1, 2018
Vesting period						2 years
Vesting Two [Member] | Employees and Director [Member]
Employee Stock Options (Textual)
Number of options vested						105,000
Exercise price, granted | $ / shares						$ 5
Expiration date						Dec. 10, 2018
Vesting Two [Member] | Director [Member]
Employee Stock Options (Textual)
Number of options vested						125,000
Exercise price, granted | $ / shares						$ 10
Expiration date						Jun. 1, 2018
Vesting Three [Member] | Employee Stock Option [Member]
Employee Stock Options (Textual)
Number of options vested						250,000
Exercise price, granted | $ / shares						$ 6
Expiration date						Jun. 1, 2018
Vesting period						2 years
Vesting Three [Member] | Director [Member]
Employee Stock Options (Textual)
Number of options vested						37,500
Exercise price, granted | $ / shares						$ 10.80
Expiration date						May 4, 2019
Vesting period						3 years

Warrants (Details)

Warrants (Details) - Warrant [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Class of Warrant or Right [Line Items]
Expected dividend yield	0.00%	0.00%
Expected volatility	108.00%	108.00%
Risk-free interest rate	0.99%	0.73%
Expected life of warrants	3 years
Minimum [Member]
Class of Warrant or Right [Line Items]
Expected life of warrants		1 year 11 months 12 days
Maximum [Member]
Class of Warrant or Right [Line Items]
Expected life of warrants		1 year 11 months 27 days

Warrants (Details 1)

Warrants (Details 1) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Number of Warrants
Outstanding - December 31, 2015 | shares	134,209
Exercisable - December 31, 2015 | shares	104,209
Granted | shares	60,000
Forfeited or Expired | shares	(80)
Outstanding - June 30, 2016 | shares	194,129
Exercisable - June 30, 2016 | shares	181,629
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding - December 31, 2015 | $ / shares	$ 23.87
Weighted Average Exercise Price, Exercisable - December 31, 2015 | $ / shares	27.87
Weighted Average Exercise Price, Granted | $ / shares	2.91
Weighted Average Exercise Price, Forfeited or Expired | $ / shares	404.49
Weighted Average Exercise Price, Outstanding - June 30, 2016 | $ / shares	17.24
Weighted Average Exercise Price, Exercisable - June 30, 2016 | $ / shares	$ 17.73
Contractual Life in Years, Outstanding - December 31, 2015	3 years 7 months 28 days
Contractual Life in Years, Exercisable - December 31, 2015	4 years 4 days
Contractual Life in Years, Outstanding - June 30, 2016	3 years 22 days
Contractual Life in Years, Exercisable - June 30, 2016	3 years 1 month 21 days
Intrinsic Value, Exercisable - December 31, 2015 | $	$ 0
Intrinsic Value, Exercisable - June 30, 2016 | $	$ 11,400

Warrants (Details Textual)

Warrants (Details Textual)	Oct. 29, 2015	Apr. 27, 2016consultants$ / sharesshares	Jun. 30, 2016USD ($)shares	Jun. 30, 2015USD ($)	Dec. 31, 2015USD ($)$ / sharesshares
Warrants (Textual)
Reverse stock split	1:40
Warrants granted for services provided					52,500
Stock based compensation | $			$ 2,249,839	$ 2,608,356
2015 Equity Plan [Member]
Warrants (Textual)
Exercise price | $ / shares		$ 2.91
Warrants expiration date		Apr. 27, 2019
Stock based compensation | $			$ 1,115,500
Number of consultants | consultants		4
Warrants to purchase common stock		60,000
Warrant [Member]
Warrants (Textual)
Warrants granted for services provided			60,000		30,000
Fair value of warrants | $			$ 114,779		$ 27,303
Stock based compensation | $			$ 114,779		$ 4,995
Share-based compensation arrangement by share-based payment award fair value assumptions method used			Black-Scholes warrant pricing model		Black-Scholes warrant pricing model
Fair value of warrant, shares			60,000		30,000
Consultants [Member]
Warrants (Textual)
Warrants granted for services provided					25,000
Exercise price | $ / shares					$ 10
Warrants vesting period					2 years
Warrants expiration date					Jun. 16, 2018
Consultants One [Member]
Warrants (Textual)
Warrants granted for services provided					12,500
Exercise price | $ / shares					$ 10
Warrants vesting period					1 year
Warrants expiration date					Jun. 25, 2018
Vendor [Member]
Warrants (Textual)
Warrants granted for services provided					5,000
Exercise price | $ / shares					$ 5
Warrants expiration date					Dec. 10, 2018
Consultant Two [Member]
Warrants (Textual)
Warrants granted for services provided					5,000
Exercise price | $ / shares					$ 5
Warrants expiration date					Dec. 10, 2018

Oklahoma Technology Commercia36

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

Commitments and Contingencies (

Commitments and Contingencies (Details)	Apr. 06, 2015USD ($)
Commitments and Contingencies (Textual)
Recovery of legal fees	$ 400,000

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event [Member] - 2015 Equity Plan [Member]	Jul. 28, 2016$ / pure
Subsequent Event [Line Items]
Issuance of option description	5,000 options from the 2015 Equity Plan to one employee as an employment bonus.
Option exercise price	3.77
Options expiration date	July 28, 2019