COMSovereign Holding (COMS) 10-Q 12 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 12, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	DRONE AVIATION HOLDING CORP.
Entity Central Index Key	1,178,727
Amendment Flag	false
Trading Symbol	MCVE
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		8,932,470

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Mar. 31, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash	$ 1,454,482	$ 2,015,214
Accounts receivable - trade	157,850	394,000
Inventory, net	482,932	459,885
Prepaid expenses and deposits	90,373	120,614
Total current assets	2,185,637	2,989,713
PROPERTY AND EQUIPMENT, at cost:	180,302	179,627
Less - accumulated depreciation	(69,556)	(60,784)
Net property and equipment	110,746	118,843
OTHER ASSETS:
Goodwill	99,799	99,799
Intangible assets, net	1,216,667	1,289,667
Total other assets	1,316,466	1,389,466
TOTAL ASSETS	3,612,849	4,498,022
CURRENT LIABILITIES:
Accounts payable - trade and accrued liabilities	170,986	293,922
Accounts payable due to related party	91,233	46,849
Related party convertible note payable - Series 2017, net of discount of $1,655,194 and $2,092,156, respectively	1,344,806	907,844
Derivative liability	1,078,215	1,832,013
Total current liabilities	2,685,240	3,080,628
TOTAL LIABILITIES	2,685,240	3,080,628
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.0001 par value; authorized 300,000,000 shares; 8,682,220 shares issued and outstanding, at March 31, 2017 and December 31, 2016	868	868
Additional paid-in capital	21,722,910	21,089,301
Accumulated deficit	(20,796,179)	(19,672,785)
Total stockholders' equity	927,609	1,417,394
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	3,612,849	4,498,022
Preferred stock, Series A
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value	10	10
Preferred stock, Series B
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value
Preferred stock, Series C
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value
Preferred stock, Series D
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value
Preferred stock, Series E
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value
Preferred stock, Series F
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value
Preferred stock, Series G
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock value

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Convertible notes payable, net of discount	$ 1,655,194	$ 2,092,156
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	8,682,220	8,682,220
Common stock, shares outstanding	8,682,220	8,682,220
Preferred stock, Series A
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	595,000	595,000
Preferred stock, shares issued	100,100	100,100
Preferred stock, shares outstanding	100,100	100,100
Preferred stock, Series B
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	324,671	324,671
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, Series C
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	355,000	355,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, Series D
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	36,050,000	36,050,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, Series E
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,400,000	5,400,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, Series F
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	3,300,999	3,300,999
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, Series G
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	8,000,000	8,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenues	$ 367,653	$ 443,450
Cost of goods sold	243,530	133,886
Gross profit	124,123	309,564
General and administrative expense	1,519,969	1,549,940
Loss from operations	(1,395,846)	(1,240,376)
Other income (expense)
Derivative Gain	753,798
Interest expense	(481,346)	(140)
Total other income (expense)	272,452	(140)
NET LOSS	(1,123,394)	(1,240,516)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (1,123,394)	$ (1,240,516)
Weighted average number of common shares outstanding - basic and diluted	8,682,220	5,417,250
Basic and diluted net loss per share	$ (0.13)	$ (0.23)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATING ACTIVITIES:
Net loss	$ (1,123,394)	$ (1,240,516)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on derivative liability	(753,798)
Depreciation	8,772	8,127
Amortization expense of intangible assets	73,000
Amortization expense of debt discount	436,962
Stock based compensation	633,609	717,217
Changes in current assets and liabilities:
Accounts receivable	236,150	(386,645)
Inventory	(23,047)	(27,722)
Prepaid expenses and other current assets	30,241	1,031
Accounts payable and accrued expense	(122,936)	30,254
Due from related party	44,384	(6,000)
Deferred revenue		(7,896)
Net cash used in operating activities	(560,057)	(912,150)
INVESTING ACTIVITIES:
Cash paid on furniture and equipment	(675)	(5,641)
Net cash used in investing activities	(675)	(5,641)
FINANCING ACTIVITIES:
Net cash provided by financing activities
NET DECREASE IN CASH	(560,732)	(917,791)
CASH, beginning of period	2,015,214	2,659,734
CASH, end of period	1,454,482	1,741,943
Cash paid during the quarters ended March 31:
Interest		140
Noncash investing and financing activities for the quarters ended March 31:
Conversion of Series C preferred stock to common stock		18
Conversion of Series D preferred stock to common stock		5
Conversion of Series F preferred stock to common stock		5
Conversion of Series G preferred stock to common stock		$ 5

Organization, Basis of Presenta

Organization, Basis of Presentation	3 Months Ended
	Mar. 31, 2017
Organization, Basis of Presentation [Abstract]
ORGANIZATION, BASIS OF PRESENTATION	1. ORGANIZATION, BASIS OF PRESENTATION Drone Aviation Holding Corp. has two wholly-owned subsidiaries: Lighter Than Air Systems Corp. (“LTAS”) and Drone AFS Corp. (“AFS”). Drone Aviation Holding Corp. was incorporated in Nevada on April 17, 2014 and effective April 30, 2014, merged with another company to consolidate our operations into an entity incorporated in Nevada. On June 3, 2014, we acquired Drone Aviation Corp. through a share exchange transaction, and on March 26, 2015, Drone Aviation Corp. merged with and into us. As a result of the share exchange and merger with Drone Aviation Corp., we acquired Drone Aviation Corp.’s subsidiary, LTAS. AFS became our subsidiary upon its formation on July 9, 2015. Unless the context otherwise requires, the terms “we,” “our,” “us,” “Company,” “Drone Aviation” and “DAC” as used in this Quarterly Report refer to Drone Aviation Holding Corp. and its subsidiaries. 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, 2016 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, 2016. Uses and Sources of Liquidity At March 31, 2017, the Company had cash of $1,454,482, a working capital deficit of $499,603, and an accumulated deficit of $20,796,179. Furthermore, the Company has a history of negative cash flow from operations, primarily due to heavy investment in research and development and costs associated with maintaining a public entity. In October 2016, the company issued $3,000,000 in Convertible Notes Payable with a maturity date of October, 2017. As further discussed in Note 6 – Related Party Convertible Notes Payable and Derivative Liability, the Company does not currently have the cash resources to repay the notes. Since the maturity date is less than twelve months from the date of this report, the debt is classified as short-term and therefore affects the working capital calculation. Management anticipates that the notes will either be extended until April 1, 2019 or converted to common stock prior to maturity which will alleviate the going concern issue and will mitigate the issue of substantial doubt. The Company expects that it will need to raise substantial additional capital to accomplish its business plan over the next several years. In addition, the Company may wish to selectively pursue possible acquisitions of businesses, technologies, or products complementary to those of the Company in the future in order to expand its presence in the marketplace and achieve operating efficiencies. The Company expects to seek to obtain additional funding through a bank credit facility or private equity. There can be no assurance as to the availability or terms upon which such financing and capital might be available.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2017
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	2. RELATED PARTY TRANSACTIONS The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). 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. As of March 31, 2017 and December 31, 2016, there was $91,233 and $46,849 accrued interest payable, respectively, to related parties on convertible notes payable.

Inventory

Inventory	3 Months Ended
	Mar. 31, 2017
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. We regularly review inventory quantities on hand, future purchase commitments with our supplies, and the estimated utility of our inventory. If the review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of goods sold. Allowance for slow moving items increased $6,366 due to a type of aerostat material which was custom ordered. Inventory consists of the following at March 31, 2017 and December 31, 2016: March 31, December 31, Raw Materials $ 52,935 $ 48,014 Work in Progress 165,587 254,258 Finished Goods 273,982 160,819 Less valuation allowance (9,572 ) (3,206 ) Total $ 482,932 $ 459,885

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2017
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 three months ended March 31, 2017, the Company invested $675 in shop machinery and equipment. Depreciation expense was $8,772 and $8,127 for the three months ended March 31, 2017 and 2016, respectively. Property and equipment consists of the following at March 31, 2017 and December 31, 2016: March 31, December 31, Shop machinery and equipment $ 87,704 $ 87,029 Computers and electronics 35,270 35,270 Office furniture and fixtures 37,814 37,814 Leasehold improvements 19,514 19,514 180,302 179,627 Less - accumulated depreciation (69,556 ) (60,784 ) $ 110,746 $ 118,843

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2017
Intangible Assets [Abstract]
INTANGIBLE ASSETS	5. INTANGIBLE ASSETS On July 20, 2015, the Company, through its wholly-owned subsidiary Drone AFS Corp., purchased substantially all the assets of Adaptive Flight, Inc. (“AFI”), a Georgia corporation. The Company purchased assets, including, but not limited to, intellectual property, licenses and permits, including commercial software licenses for the “GUST” (Georgia Tech UAV Simulation Tool) autopilot system and other transferable licenses which include flight simulation and fault tolerant flight control algorithms. The Company paid $100,000 in cash at closing and $100,000 was held in escrow. In addition, the Company issued 150,000 shares of its unregistered common stock valued at $8.40 per share on the date of agreement that was held in escrow. The Company had a milestone of twelve months to complete a technology integration plan, the non-completion of which could result in the return of the purchased assets and termination of the Company’s obligations to release the escrow cash and shares. Additional milestones included exclusive, no-cost and perpetual licenses to all contributing intellectual property included or related to the purchased assets. As such time as all milestones were met, one-half of the escrow shares were to 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 had been met, the remaining escrow shares would be released to AFI; but if all milestones have not been met, the escrow cash and escrow shares would be released to the Company and the purchased assets would be returned to AFI. According to the terms of the Escrow Agreement, if the escrow share value was 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 and subsequently, the Company released the cash and stock. 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 three months ended March 31, 2017 was $73,000. The remaining unamortized balance of $1,216,667 is estimated be amortized in the estimated amounts of $292,000 per year for 2017 through 2020 and $121,667 in 2021. The asset acquisition did not qualify as a business combination under ASC 805-10 and has been accounted for as a regular asset purchase.

Related Party Convertible Notes

Related Party Convertible Notes Payable and Derivative Liability	3 Months Ended
	Mar. 31, 2017
Related Party Convertible Notes Payable and Derivative Liability [Abstract]
RELATED PARTY CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY	6. RELATED PARTY CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY On September 29, 2016, the Company issued Convertible Promissory Notes Series 2016 due October 1, 2017 in the aggregate principal amount of $3,000,000 in a private placement to the Chairman of the Board and the Chairman of the Strategic Advisory Board of the Company, both of whom are greater than 10% shareholders of the Company. The notes bear interest at a rate of six percent (6%) per annum. The Company may prepay the notes at any time without penalty. If the Company does not prepay a note in full or the holder does not convert the note before the maturity date, the Company may pay the outstanding principal amount and any accrued and unpaid interest on the maturity date with cash or with common stock or through a combination of cash and stock at the Company’s discretion. The conversion price of the notes is the lesser of $3.00 per share or eight-five percent (85%) of the lowest per share purchase price of common stock in the next sale of common stock in which the Company receives gross proceeds of an amount greater than or equal to $3,000,000. The Company does not currently have the liquid funds necessary to repay these notes at maturity; however, management believes it is probable that the notes will be refinanced or converted to equity prior to maturity. Under ASC 815, these notes require liability classification and must be measured at fair value at the end of each reporting period. The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value as of March 31, 2017 and December 31, 2016: Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities as of March 31, 2017 $ 0 $ 0 $ 1,078,215 $ 1,078,215 Derivative liabilities as of December 31, 2016 $ 0 $ 0 $ 1,832,013 $ 1,832,013 The following table represents the change in the fair value of the derivative liabilities during the three months ended March 31, 2017 and the year ended December 31, 2016: Fair value of derivative liabilities as of December 31, 2015 $ 0 Fair value of derivative liability at December 31, 2016 recorded as debt discount 2,394,974 Change in fair value of derivative liabilities (562,961 ) Fair value of derivative liabilities as of December 31, 2016 $ 1,832,013 Change in fair value of derivative liabilities (753,798 ) Fair value of derivative liabilities as of March 31, 2017 $ 1,078,215 The amortization of the debt discount is $436,962 and $302,818 for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively. The $3,000,000 payable associated with the Convertible Promissory Notes Series 2016 due October 1, 2017 is $1,344,806 as of March 31, 2017, net of a $1,655,194 debt discount which is being amortized over the life of the loan using the effective interest method.

Shareholders' Equity

Shareholders' Equity	3 Months Ended
	Mar. 31, 2017
Shareholders' Equity [Abstract]
SHAREHOLDERS' EQUITY	7. SHAREHOLDERS’ EQUITY In September 2016, the Company issued an aggregate of 1,349,000 shares of restricted common stock outside of the 2015 Equity Plan to Jay Nussbaum, Felicia Hess, Daniyel Erdberg, Kendall Carpenter, Mike Silverman and Reginald Brown pursuant to Stock Award Agreements. The shares will vest upon consummation of a significant equity and/or debt financing of at least $5,000,000 provided that the holder remains engaged by the Company through the vesting date. Stock based compensation of $485,862 was recognized during the three months ended March 31, 2017. In May 2016, the Company issued 150,000 shares of common stock with monthly vesting provisions to Strategic Advisory Board members, Dr. Philip Frost and Steven Rubin, for 12 months of 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 $25,375 expense for the pro rata portion of shares earned by the two members during the three months ended March 31, 2017. 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 vested on February 4, 2016. Stock based compensation of $604,440 was recognized during the three months ended March 31, 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 month’s 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 $67,500 expense for the portion of such shares earned by the Chairman during the three months ended March 31, 2017 and 2016, respectively. During the three months ended March 31, 2017, there were no issuances of common stock.

Preferred Stock

Preferred Stock	3 Months Ended
	Mar. 31, 2017
Preferred Stock [Abstract]
PREFERRED STOCK	8. PREFERRED STOCK All of the preferred stock of the Company is convertible into common shares. The Series A stock conversion ratio is 1 to 2.5 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. As of March 31, 2017, there were 100,100 shares of the Series A stock issued and outstanding. 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 three months ended March 31, 2017, there were no issuances or conversions of preferred stock.

Employee Stock Options

Employee Stock Options	3 Months Ended
	Mar. 31, 2017
Employee Stock Options [Abstract]
EMPLOYEE STOCK OPTIONS	9. EMPLOYEE STOCK OPTIONS On June 1, 2015, the Company issued an option award to an employee for 37,500 shares vesting over three years with an exercise price of $10.80 and expiration date of May 4, 2019. Compensation expense of $20,916 and $43,952 was recognized during the three months ended March 31, 2017 and 2016, respectively. On January 9, 2017, the Company issued an option to purchase 100,000 shares of common stock with an exercise price of $2.90 per share to a director. The option vests 50,000 after one year from grant date and another 50,000 two years from grant date with an expiration date of four years from grant date provided that the Director is still providing service to the Company. The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 100,000 options granted during the three months ended March 31, 2017. The following table summarizes the assumptions used to estimate the fair value of the 100,000 stock options granted during the three months ended March 31, 2017 on the date of grant. 2017 Expected dividend yield 0 % Expected volatility 100 % Risk-free interest rate 1.50 % Expected life of options 2.50-3.00 years Under the Black-Scholes option pricing model, the fair value of the 100,000 options granted during the three months ended March 31, 2017 is estimated at $174,173 on the date of grant. During the three months ended March 31, 2017, $32,265 compensation expense was recognized on these 100,000 options. During 2016, the Company granted 65,000 common stock options to employees for service provided. Of these, 50,000 options were granted to two employees and were immediately vested with an exercise price of $2.91 and the expiration date is April 27, 2019. One of these employees terminated and did not exercise her 10,000 options resulting in the expiration of the option. Another 5,000 options were immediately vested and were granted with an exercise price of $3.77 and the expiration date is July 29, 2019. Another employee received 10,000 options with two-year vesting and an exercise price of $3.00 and an expiration date of December 6, 2019. The employee who received 5,000 options in July 2016 was terminated and did not exercise his options resulting in the expiration of a total of 5,000 options. The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 10,000 stock-based awards that continue to vest during the three months ended March 31, 2017. The following table summarizes the assumptions used to estimate the fair value of the 10,000 outstanding stock options granted during 2016 on the date of grant: 2016 Expected dividend yield 0 % Expected volatility 102 % Risk-free interest rate 1.24-1.38 % Expected life of options 2.00-2.50 years Under the Black-Scholes option price model, fair value of the 10,000 outstanding options granted during 2016 is estimated at $16,889 on the date of grant. During the three months ended March 31, 2017, $3,118 compensation expense was recognized on these 10,000 options. The following table represents stock option activity as of and for the three months ended March 31, 2017: Number of Options Weighted Weighted Average Contractual Life in Years Aggregate Intrinsic Outstanding – December 31, 2016 442,500 $ 5.81 $ 1.72 Exercisable – December 31, 2016 407,500 $ 5.57 $ 1.65 $ 0 Granted 100,000 $ 2.90 Exercised or Vested 0 $ 0.00 Cancelled or Expired (5,000 ) $ 3.77 Outstanding – March 31, 2017 537,500 $ 5.29 1.43 $ 0 Exercisable – March 31, 2017 412,500 $ 5.53 1.43 $ 0

Warrants

Warrants	3 Months Ended
	Mar. 31, 2017
Warrants [Abstract]
WARRANTS	10. WARRANTS The Company did not issue any warrants during the three months ended March 31, 2017. For the year 2016, 60,000 common stock purchase warrants were granted to four consultants for services provided. Each warrant was granted with the exercise price of $2.91, which immediately vested, and the expiration date is April 27, 2019. During 2016, 10,472 warrants expired that were issued in 2011 with exercise prices ranging between $141.00 and $404.50 on a post-reverse split basis. The Company used the Black-Scholes warrant pricing model to estimate the fair value on the re-measurement dates of the 12,500 warrants that continue to vest during the three months ended March 31, 2017. The following table summarizes the assumptions used to estimate the fair value of the 12,500 warrants granted during 2015 as of re-measurement dates: 2017 Expected dividend yield 0 % Expected volatility 97 % Risk-free interest rate 0.73 % Expected life of warrants 1.25 years Under the Black-Scholes warrant pricing model, fair value of the 12,500 warrants granted during 2015 is estimated at $3,467 as of re-measurement dates. Compensation expense of $(1,427) and $1,325 was recognized during the three months ended March 31, 2017 and 2016, respectively. The following table represents warrant activity as of and for the period ended March 31, 2017: Number of Warrants Weighted Average Exercise Price per Share Weighted Average Contractual Life in Years Aggregate Intrinsic Value Outstanding – December 31, 2016 183,737 $ 7.35 2.70 Exercisable – December 31, 2016 171,237 $ 7.15 2.79 $ 0 Granted 0 $ 0 Forfeited or Expired 0 $ 0 Outstanding – March 31, 2017 183,737 $ 7.35 2.46 $ 0 Exercisable – March 31, 2017 171,237 $ 7.15 2.55 $ 0

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	11. COMMITMENTS AND CONTINGENCIES 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 and Responses to Interrogatories on December 16, 2016 and we are now in the discovery phase of litigation. 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 is vigorously defending itself. The Company has evaluated the probability of loss as possible but the range of loss is unable to be estimated. Other than the Banco matter, there are no material claims, actions, suits, proceedings inquiries, labor disputes or investigations pending.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	12. SUBSEQUENT EVENTS On April 24, 2017, the holder of Series A preferred stock converted a total of 100,100 shares of Series A for an aggregate of 250,250 shares of restricted common stock in accordance with their conversion rights which includes a restriction on the number of shares of the Company’s common stock that may be beneficially owned by the holders.

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2017
Inventory [Abstract]
Schedule of Inventory	March 31, December 31, Raw Materials $ 52,935 $ 48,014 Work in Progress 165,587 254,258 Finished Goods 273,982 160,819 Less valuation allowance (9,572 ) (3,206 ) Total $ 482,932 $ 459,885

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2017
Property and Equipment [Abstract]
Schedule of property and equipment	March 31, December 31, Shop machinery and equipment $ 87,704 $ 87,029 Computers and electronics 35,270 35,270 Office furniture and fixtures 37,814 37,814 Leasehold improvements 19,514 19,514 180,302 179,627 Less - accumulated depreciation (69,556 ) (60,784 ) $ 110,746 $ 118,843

Related Party Convertible Not20

Related Party Convertible Notes Payable and Derivative Liability (Tables)	3 Months Ended
	Mar. 31, 2017
Related Party Convertible Notes Payable and Derivative Liability [Abstract]
Schedule of fair value hierarchy	Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities as of March 31, 2017 $ 0 $ 0 $ 1,078,215 $ 1,078,215 Derivative liabilities as of December 31, 2016 $ 0 $ 0 $ 1,832,013 $ 1,832,013
Schedule of change in fair value of derivative liabilities	Fair value of derivative liabilities as of December 31, 2015 $ 0 Fair value of derivative liability at December 31, 2016 recorded as debt discount 2,394,974 Change in fair value of derivative liabilities (562,961 ) Fair value of derivative liabilities as of December 31, 2016 $ 1,832,013 Change in fair value of derivative liabilities (753,798 ) Fair value of derivative liabilities as of March 31, 2017 $ 1,078,215

Employee Stock Options (Tables)

Employee Stock Options (Tables) - Employee Stock Option [Member]	3 Months Ended
	Mar. 31, 2017
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Summary of assumptions used to estimate fair value stock options granted	2017 Expected dividend yield 0 % Expected volatility 100 % Risk-free interest rate 1.50 % Expected life of options 2.50-3.00 years 2016 Expected dividend yield 0 % Expected volatility 102 % Risk-free interest rate 1.24-1.38 % Expected life of options 2.00-2.50 years
Summary of stock option activity	Number of Options Weighted Weighted Average Contractual Life in Years Aggregate Intrinsic Outstanding – December 31, 2016 442,500 $ 5.81 $ 1.72 Exercisable – December 31, 2016 407,500 $ 5.57 $ 1.65 $ 0 Granted 100,000 $ 2.90 Exercised or Vested 0 $ 0.00 Cancelled or Expired (5,000 ) $ 3.77 Outstanding – March 31, 2017 537,500 $ 5.29 1.43 $ 0 Exercisable – March 31, 2017 412,500 $ 5.53 1.43 $ 0

Warrants (Tables)

Warrants (Tables) - Warrant [Member]	3 Months Ended
	Mar. 31, 2017
Class of Warrant or Right [Line Items]
Summarizes of the assumptions of estimate the fair value warrants granted	2017 Expected dividend yield 0 % Expected volatility 97 % Risk-free interest rate 0.73 % Expected life of warrants 1.25 years
Schedule of warrant activity	Number of Warrants Weighted Average Exercise Price per Share Weighted Average Contractual Life in Years Aggregate Intrinsic Value Outstanding – December 31, 2016 183,737 $ 7.35 2.70 Exercisable – December 31, 2016 171,237 $ 7.15 2.79 $ 0 Granted 0 $ 0 Forfeited or Expired 0 $ 0 Outstanding – March 31, 2017 183,737 $ 7.35 2.46 $ 0 Exercisable – March 31, 2017 171,237 $ 7.15 2.55 $ 0

Organization, Basis of Presen23

Organization, Basis of Presentation (Details) - USD ($)	1 Months Ended
	Oct. 31, 2016	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Basis of Presentation (Textual)
Cash		$ 1,454,482	$ 2,015,214	$ 1,741,943	$ 2,659,734
Working capital deficit		499,603
Accumulated deficit		$ (20,796,179)	$ (19,672,785)
Convertible notes payable	$ 3,000,000
Convertible notes payable, maturity date	Oct. 31, 2017

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Related Party Transactions (Textual)
Accrued interest payable to related parties	$ 91,233	$ 46,849

Inventory (Details)

Inventory (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Inventory [Abstract]
Raw Materials	$ 52,935	$ 48,014
Work in Progress	165,587	254,258
Finished Goods	273,982	160,819
Less valuation allowance	(9,572)	(3,206)
Total	$ 482,932	$ 459,885

Inventory (Details Textual)

Inventory (Details Textual)	3 Months Ended
	Mar. 31, 2017USD ($)
Inventory (Textual)
Allowance for slow moving items increased	$ 6,366

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment,gross	$ 180,302	$ 179,627
Less - accumulated depreciation	(69,556)	(60,784)
Net property and equipment	110,746	118,843
Shop machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment,gross	87,704	87,029
Computers and electronics [Member]
Property, Plant and Equipment [Line Items]
Property and equipment,gross	35,270	35,270
Office furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment,gross	37,814	37,814
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment,gross	$ 19,514	$ 19,514

Property and Equipment (Detai28

Property and Equipment (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 8,772	$ 8,127
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Furniture and fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Furniture and fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Hardware and software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Hardware and software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Leasehold improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Leasehold improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years
Shop machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Amount invested in shop machinery and equipment	$ 675

Intangible Assets (Details)

Intangible Assets (Details) - USD ($)	Jun. 03, 2016	Jul. 20, 2015	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2016
Intangible Assets (Textual)
Additional liability and expense	$ 11,000
Amortizing of purchased assets	1,460,000
Payments to acquire assets	$ 24,333
Amortization expense			73,000
Unamortized balance amount			1,216,667			$ 1,289,667
Amortization estimated amounts year for 2017			292,000
Amortization estimated amounts year for 2018			292,000
Amortization estimated amounts year for 2019			292,000
Amortization estimated amounts year for 2020			292,000
Amortization estimated amounts year for 2021			121,667
Integration Plan [Member]
Intangible Assets (Textual)
Issued unregistered common stock, shares	150,000
Unregistered common stock per share	$ 3.01
Escrow share value	$ 451,150
Additional liability and expense	$ 150,500
Cost of shares	50,000
Cost of shares price per share	$ 3.01
Adaptive Flight, Inc. [Member]
Intangible Assets (Textual)
Escrow value			$ 1,400,000		$ 484,500
Issued unregistered common stock, shares			50,000		150,000
Unregistered common stock per share					$ 3.23
Additional liability and expense					$ 161,500
Cost of shares					50,000
Cost of shares price per share					$ 3.23
Georgia Tech UAV Simulation Tool [Member]
Intangible Assets (Textual)
Amount paid for cash at closing		$ 100,000
Escrow value		$ 100,000
Issued unregistered common stock, shares		150,000
Unregistered common stock per share		$ 8.40

Related Party Convertible Not30

Related Party Convertible Notes Payable and Derivative Liability (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 1,078,215	$ 1,832,013	$ 0
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	0	0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	0	0
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 1,078,215	$ 1,832,013

Related Party Convertible Not31

Related Party Convertible Notes Payable and Derivative Liability (Details1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Related Party Convertible Notes Payable and Derivative Liability [Abstract]
Fair value of derivative liabilities	$ 1,832,013	$ 0
Fair value of derivative liability at December 31, 2016 recorded as debt discount		2,394,974
Change in fair value of derivative liabilities	(753,798)	(562,961)
Fair value of derivative liabilities	$ 1,078,215	$ 1,832,013

Related Party Convertible Not32

Related Party Convertible Notes Payable and Derivative Liability (Details Textual) - USD ($)	Sep. 29, 2016	Mar. 31, 2017	Dec. 31, 2016
Related Party Convertible Notes Payable and Derivative Liability (Textual)
Aggregate principal amount	$ 3,000,000
Promissory note series due date	Oct. 1, 2017
Shareholders percentage	10.00%
Interest rate	6.00%
Gross proceeds from convertible promissory notes	$ 3,000,000
Convertible note payable and derivative liability, description	The conversion price of the notes is the lesser of $3.00 per share or eight-five percent (85%) of the lowest per share purchase price of common stock in the next sale of common stock in which the Company receives gross proceeds of an amount greater than or equal to $3,000,000.
Convertible note payable		$ 1,344,806	$ 907,844
Convertible notes payable, net of discount		1,655,194	2,092,156
Amortization of debt discount		$ 436,962	$ 302,818

Shareholders' Equity (Details)

Shareholders' Equity (Details)	Sep. 04, 2015EmployeesDirectorshares	Jun. 01, 2015shares	Sep. 30, 2016USD ($)shares	May 31, 2016shares	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)
Shareholders' Equity (Textual)
Stock based compensation					$ 633,609	$ 717,217
Board of Directors Chairman [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued | shares		50,000
Recognized total expense					67,500	67,500
Dr. Philip Frost and Steven Rubin [Member]
Shareholders' Equity (Textual)
Common stock issued, shares | shares				150,000
Recognized total expense					25,375
2015 Equity Plan [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued | shares			1,349,000
Shares vest upon consummation of equity and/or debt financing			$ 5,000,000
Stock based compensation					$ 485,862
Stock award agreements [Member]
Shareholders' Equity (Textual)
Shares of restricted common stock issued | shares	450,000
Stock based compensation						$ 604,440
Number of management employees | Employees	4
Number of director | Director	1

Preferred Stock (Details)

Preferred Stock (Details) - Series A stock preferred stock [Member] - shares	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Preferred Stock (Textual)
Preferred Stock, Shares Issued	100,100	100,100
Preferred Stock, Shares Outstanding	100,100	100,100
Common shares [Member]
Preferred Stock (Textual)
Stock conversion, description	The Series A stock conversion ratio is 1 to 2.5 common shares.

Employee Stock Options (Details

Employee Stock Options (Details) - Employee Stock Option [Member]	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Summary of assumptions used to estimate fair value of stock options granted
Expected dividend yield	0.00%	0.00%
Expected volatility	100.00%	102.00%
Risk-free interest rate	1.50%
Minimum [Member]
Summary of assumptions used to estimate fair value of stock options granted
Risk-free interest rate		1.24%
Expected life of options	2 years 6 months	2 years
Maximum [Member]
Summary of assumptions used to estimate fair value of stock options granted
Risk-free interest rate		1.38%
Expected life of options	3 years	2 years 6 months

Employee Stock Options (Detai36

Employee Stock Options (Details 1) - Employee Stock Option [Member] - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Number of Options
Outstanding - Beginning Balance	442,500
Exercisable - Beginning Balance	407,500
Granted	100,000
Exercised or Vested	0
Forfeited or Expired	(5,000)
Outstanding - Ending Balance	537,500	442,500
Exercisable - Ending Balance	412,500	407,500
Weighted Average Exercise Price per Share
Outstanding - Begining Balance	$ 5.81
Exercisable - Begining Balance	5.57
Granted	2.90
Exercised or Vested	0
Cancelled or Expired	3.77
Outstanding - Endining Balance	5.29	$ 5.81
Exercisable - Endining Balance	$ 5.53	$ 5.57
Weighted Average Contractual Life in Years
Outstanding	1 year 5 months 5 days	1 year 8 months 19 days
Exercisable	1 year 5 months 5 days	1 year 7 months 24 days
Aggregate Intrinsic Value
Exercisable - Begining Balance	$ 0	$ 0
Exercisable - Ending Balance	0	$ 0
Outstanding	$ 0

Employee Stock Options (Detai37

Employee Stock Options (Details Textual) - USD ($)	Jan. 09, 2017	Jun. 01, 2015	Sep. 30, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Employee Stock Options (Textual)
Estimate fair value of stock options granted, Shares						10,000
Estimate fair value of options and warrants granted						$ 16,889
Compensation expense recognigation				$ 3,118
Employee Stock Option Two [Member]
Employee Stock Options (Textual)
Experation date						Dec. 6, 2016
Compensation expenses				$ 16,889		$ 174,173
Stock options granted				100,000		10,000
Estimate fair value of stock options granted, Shares				100,000
Exercise price, granted						$ 3
Option expired						5,000
Common Stock [Member]
Employee Stock Options (Textual)
Exercise price	$ 2.90
Common stock shares issued an option to purchase	100,000
Option vests	The option vests 50,000 after one year from grant date and another 50,000 two years from grant date with an expiration date of four years from grant date provided that the Director is still providing service to the Company.
Employee Stock Option [Member]
Employee Stock Options (Textual)
Stock options granted						65,000
Vested options			1,349,000
Fair value of stock-based awards that continue to vest				10,000
Option vests						Options with two-year vesting
Employee Stock Option One [Member]
Employee Stock Options (Textual)
Compensation expenses				$ 32,265
Estimate fair value of stock options granted, Shares				10,000
Vesting One [Member] | Employee Stock Option Two [Member]
Employee Stock Options (Textual)
Stock options granted						50,000
Exercise price, granted						$ 2.91
Vested options						5,000
Option vests						Another 5,000 options were immediately vested and were granted with an exercise price of $3.77 and the expiration date is July 29, 2019.
Employee [Member] | Vesting Three [Member]
Employee Stock Options (Textual)
Experation date		May 4, 2019
Exercise price, granted		$ 10.80
Compensation expense recognigation				$ 20,916	$ 43,952
Vested options		37,500
Option vests		Vesting over three years

Warrants (Details)

Warrants (Details) - Warrant [Member]	3 Months Ended
	Mar. 31, 2017
Class of Warrant or Right [Line Items]
Expected dividend yield	0.00%
Expected volatility	97.00%
Risk-free interest rate	0.73%
Expected life of warrants	1 year 3 months

Warrants (Details 1)

Warrants (Details 1) - Warrant [Member]	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Number of Warrants
Outstanding - Beginning Balance | shares	183,737
Exercisable - Beginning Balance | shares	171,237
Granted | shares	0
Forfeited or Expired | shares	0
Outstanding - Ending Balance | shares	183,737
Exercisable - Ending Balance | shares	171,237
Weighted Average Exercise Price per Share
Outstanding - Begining Balance | $ / shares	$ 7.35
Exercisable - Begining Balance | $ / shares	7.15
Granted | $ / shares	0
Weighted Average Exercise Price, Forfeited or Expired | $ / shares	0
Outstanding - Endining Balance | $ / shares	7.35
Exercisable - Endining Balance | $ / shares	$ 7.15
Weighted Average Remaining Contractual Life in Years, Outstanding - Beginning Balance	2 years 8 months 12 days
Weighted Average Remaining Contractual Life in Years, Exercisable - Beginning Balance	2 years 9 months 15 days
Weighted Average Remaining Contractual Life in Years Outstanding - Ending Balance	2 years 5 months 16 days
Weighted Average Contractual Life in Years, Exercisable-Ending balance	2 years 6 months 18 days
Exercisable - Begining Balance | $	$ 0
Aggregate Intrinsic Value, Outstanding-Ending Balance | $	0
Exercisable - Ending Balance | $	$ 0

Warrants (Details Textual)

Warrants (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Warrants (Textual)
Stock based compensation	$ 633,609	$ 717,217
Warrant [Member]
Warrants (Textual)
Warrants issued to purchase common stock			60,000
Exercise price of warrants			$ 2.91
Warrants expiration date			Apr. 27, 2019
Stock based compensation	$ (1,427)	$ 1,325
Estimate fair value warrant, Shares				12,500
Fair value of warrants				$ 3,467
Warrant [Member] | 2011 [Member]
Warrants (Textual)
Warrants expired that were issued			10,472
Warrant [Member] | Maximum [Member] | 2011 [Member]
Warrants (Textual)
Exercise price of warrants			$ 404.50
Warrant [Member] | Minimum [Member] | 2011 [Member]
Warrants (Textual)
Exercise price of warrants			$ 141

Subsequent Events (Details)

Subsequent Events (Details) - Series A Preferred Stock [Member] - Subsequent Event [Member]	1 Months Ended
	Apr. 24, 2017shares
Subsequent Event [Line Items]
Preferred stock converted shares	100,100
Aggregate shares of restricted common stock	250,250