Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 23, 2018 | Jun. 30, 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 | DRNE | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 5,416,311 | ||
Entity Common Stock, Shares Outstanding | 9,182,470 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 615,375 | $ 2,015,214 |
Accounts receivable - trade | 110,065 | 394,000 |
Inventory, net | 991,697 | 459,885 |
Prepaid expenses and deposits | 103,008 | 120,614 |
Total current assets | 1,820,145 | 2,989,713 |
PROPERTY AND EQUIPMENT, at cost: | 253,444 | 179,627 |
Less - accumulated depreciation | (97,507) | (60,784) |
Net property and equipment | 155,937 | 118,843 |
OTHER ASSETS: | ||
Goodwill | 99,799 | 99,799 |
Intangible assets, net | 997,667 | 1,289,667 |
Total other assets | 1,097,466 | 1,389,466 |
TOTAL ASSETS | 3,073,548 | 4,498,022 |
CURRENT LIABILITIES: | ||
Accounts payable - trade and accrued liabilities | 205,359 | 293,922 |
Accounts payable due to related party | 171,981 | 46,849 |
Bank Line of Credit | 1,000,000 | |
Related party convertible note payable, net of discount of $0 and $2,092,156, respectively | 1,000,000 | 907,844 |
Derivative liability | 1,832,013 | |
Total current liabilities | 2,377,340 | 3,080,628 |
LONG TERM LIABILITIES: | ||
Related party convertible note payable | 3,000,000 | |
TOTAL LIABILITIES | 5,377,340 | 3,080,628 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Common stock, $.0001 par value; authorized 300,000,000 shares; 9,182,470 and 8,682,220 shares issued and outstanding, at December, 2017 and December 31, 2016 | 918 | 868 |
Additional paid-in capital | 27,692,067 | 21,089,301 |
Accumulated Deficit | (29,996,777) | (19,672,785) |
Total stockholders' equity (deficit) | (2,303,792) | 1,417,394 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 3,073,548 | 4,498,022 |
Convertible Preferred stock, Series A | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | 10 | |
Total stockholders' equity (deficit) | 10 | |
Convertible Preferred stock, Series B | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series B-1 | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series C | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Total stockholders' equity (deficit) | ||
Convertible Preferred stock, Series D | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Total stockholders' equity (deficit) | ||
Convertible Preferred stock, Series E | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series F | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Total stockholders' equity (deficit) | ||
Convertible Preferred stock, Series G | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Total stockholders' equity (deficit) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Related party convertible note payable current, net of discount | $ 0 | $ 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 | 9,182,470 | 8,682,220 |
Common stock, shares outstanding | 9,182,470 | 8,682,220 |
Convertible Preferred stock, Series A | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 595,000 | 595,000 |
Preferred stock, shares issued | 0 | 100,100 |
Preferred stock, shares outstanding | 0 | 100,100 |
Convertible 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 |
Convertible Preferred stock, Series B-1 | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares 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, shares authorized | 355,000 | 355,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible 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 |
Convertible 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 |
Convertible 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 |
Convertible 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 - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 562,078 | $ 1,468,462 |
Cost of good sold | 338,579 | 557,725 |
Gross profit | 223,499 | 910,737 |
General and administrative expense | 10,069,841 | 9,732,219 |
Loss from operations | (9,846,342) | (8,821,482) |
Other income (expense) | ||
Debt forgiveness | 75,000 | |
Loss on debt extinguishment | (681,988) | |
Derivative Gain | 1,831,635 | 562,961 |
Interest expense | (1,627,297) | (349,994) |
Total other income (expense) | (477,650) | 287,967 |
NET LOSS | (10,323,992) | (8,533,515) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (10,323,992) | $ (8,533,515) |
Weighted average number of common shares outstanding - basic and diluted | 8,956,365 | 6,919,510 |
Basic and diluted net loss per share | $ (1.15) | $ (1.23) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series D | Preferred Stock Series F | Preferred Stock Series G | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2015 | $ 4,247,383 | $ 10 | $ 7 | $ 200 | $ 200 | $ 200 | $ 513 | $ 15,385,523 | $ (11,139,270) |
Beginning balance, Shares at Dec. 31, 2015 | 101,100 | 73,387 | 2,000,000 | 1,999,998 | 2,000,000 | 5,125,585 | |||
Net loss | (8,533,515) | (8,533,515) | |||||||
Stock Based Comp. - Employee Shares - Vesting for PY share issuance | 874,440 | 874,440 | |||||||
Stock Based Compensation - Non-employee Shares | 377,787 | $ 21 | 377,766 | ||||||
Stock Based Compensation - Non-employee Shares, Shares | 210,000 | ||||||||
Stock Based Compensation - options and warrants | 348,244 | 348,244 | |||||||
Conversion of Series A preferred stock to common stock | |||||||||
Conversion of Series A preferred stock to common stock, Shares | (1,000) | 2,500 | |||||||
Conversion of Series C preferred stock to common stock | $ (7) | $ 18 | (11) | ||||||
Conversion of Series C preferred stock to common stock, Shares | (73,387) | 183,468 | |||||||
Conversion of Series D preferred stock to common stock | $ (200) | $ 5 | 195 | ||||||
Conversion of Series D preferred stock to common stock, Shares | (2,000,000) | 50,000 | |||||||
Conversion of Series F preferred stock to common stock | $ (200) | $ 5 | 195 | ||||||
Conversion of Series F preferred stock to common stock, Shares | (1,999,998) | 50,000 | |||||||
Conversion of Series G preferred stock to common stock | $ (200) | $ 5 | 195 | ||||||
Conversion of Series G preferred stock to common stock, Shares | (2,000,000) | 50,000 | |||||||
Adaptive Flight Asset Made Whole Stock | 150,500 | $ 5 | 150,495 | ||||||
Adaptive Flight Asset Made Whole Stock, Shares | 50,000 | ||||||||
Stock Based Comp. - Employee Shares - Vesting for CY share issuance | 3,952,555 | $ 246 | 3,952,309 | ||||||
Stock Based Comp. - Employee Shares - Vesting for CY share issuance, Shares | 2,464,000 | ||||||||
Deemed Dividend | 1,641,484 | $ 50 | 1,641,434 | ||||||
Deemed Dividend, Shares | 496,667 | ||||||||
Deemed Dividend One | (1,641,484) | (1,641,484) | |||||||
Ending balance at Dec. 31, 2016 | 1,417,394 | $ 10 | $ 868 | 21,089,301 | (19,672,785) | ||||
Ending balance, Shares at Dec. 31, 2016 | 100,100 | 8,682,220 | |||||||
Net loss | (10,323,992) | (10,323,992) | |||||||
Stock Based Comp. - Employee Shares - Vesting for PY share issuance | 1,071,323 | 1,071,323 | |||||||
Stock Based Compensation - Non-employee Shares | 195,745 | $ 25 | 195,720 | ||||||
Stock Based Compensation - Non-employee Shares, Shares | 250,000 | ||||||||
Stock Based Compensation - options and warrants | 6,824,334 | 6,824,334 | |||||||
Conversion of Series A preferred stock to common stock | $ (10) | $ 25 | (15) | ||||||
Conversion of Series A preferred stock to common stock, Shares | (100,100) | 250,250 | |||||||
Stock Based Compensation - reverse amortization, vesting deemed improbable | (1,488,596) | (1,488,596) | |||||||
Ending balance at Dec. 31, 2017 | $ (2,303,792) | $ 918 | $ 27,692,067 | $ (29,996,777) | |||||
Ending balance, Shares at Dec. 31, 2017 | 9,182,470 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (10,323,992) | $ (8,533,515) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on derivative liability | (1,831,635) | (562,961) |
Amortization expense of debt discount | 1,409,790 | 302,818 |
Loss on debt extinquishment | 681,988 | |
Depreciation expense | 36,723 | 33,789 |
Amortization expense of intangible assets | 292,000 | 170,333 |
Gain on settlement of make whole provision | (11,000) | |
Gain on settlement of debt | (75,000) | |
Stock based compensation | 6,602,806 | 5,553,026 |
Changes in current assets and liabilities: | ||
Accounts receivable | 283,935 | (310,712) |
Inventory | (531,812) | (341,090) |
Prepaid expenses and other current assets | 17,606 | (64,990) |
Accounts payable and accrued expense | (88,563) | 213,165 |
Due to related party | 125,132 | 40,849 |
Deferred revenue | (7,896) | |
Net cash used in operating activities | (3,326,022) | (3,593,184) |
INVESTING ACTIVITIES: | ||
Cash paid for purchase of fixed assets | (73,817) | (16,336) |
Net cash used in investing activities | (73,817) | (16,336) |
FINANCING ACTIVITIES: | ||
Proceeds from related party convertible note payable | 1,000,000 | |
Proceeds from bank line of credit | 1,000,000 | |
Cash repayment on OTCC loan | (35,000) | |
Proceeds from convertible Note Payable Series 2016 | 3,000,000 | |
Net cash provided by financing activities | 2,000,000 | 2,965,000 |
NET INCREASE (DECREASE) IN CASH | (1,399,839) | (644,520) |
CASH, beginning of period | 2,015,214 | 2,659,734 |
CASH, end of period | 615,375 | 2,015,214 |
Cash paid during the year ended December 31: | ||
Interest | 86,750 | 327 |
Noncash investing and financing activities for the year ended December 31: | ||
Common Stock issued for Adaptive Flight asset purchase make whole provision | 150,500 | |
Conversion of Series A preferred stock to common stock | 25 | |
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 | |
Derivative liability on reset provision of Convertible Notes Payable Series 2016 | 2,394,974 | |
Stock Issued for November 2015 PIPE Investors as consent shares | $ 50 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business: Drone Aviation Holding Corp. (“Drone” or “Company”) develops and manufactures cost-effective, compact and rapidly deployable aerial platforms including lighter-than-air aerostats and electric-powered drones designed to provide government and commercial customers with enhanced surveillance and communication capabilities. Utilizing a proprietary tether system, the Company's products are designed to provide prolonged operational duration capabilities combined with improved reliability, uniquely fulfilling critical requirements in military, law enforcement and commercial and industrial applications. Basis of Presentation: The accompanying financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principle of Consolidation: Our consolidated financial statements as of December 31, 2017 and 2016 include the accounts of Drone Aviation Holding Corp. and its subsidiaries: Drone AFS Corp. and Lighter Than Air Systems Corp (“LTAS”). Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times such cash may be in excess of the FDIC limit of $250,000 per depositor. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited. Cash Equivalents: Cash equivalents are represented by operating accounts or money market accounts maintained with insured financial institutions, including all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2017 and 2016. Accounts Receivable and Credit Policies: Accounts receivable-trade consists of amounts due from the sale of tethered aerostats, accessories, spare parts customization and refurbishment of aerostats. Such accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. At December 31, 2017 and 2016, the Company characterized $0 and $0 as uncollectible, respectively. There is a balance of $110,065 in accounts receivable-trade at December 31, 2017 for sales on account. Inventories 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. 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. Property and equipment consists of the following at December 31, 2017 and 2016: 2017 2016 Shop Machinery and equipment $ 87,704 $ 87,029 Computers and electronics 35,270 35,270 Office furniture and fixtures 37,814 37,814 Vehicle 73,142 - Leasehold improvements 19,514 19,514 253,444 179,627 Less - accumulated depreciation (97,507 ) (60,784 ) $ 155,937 $ 118,843 Expenditures for maintenance and repairs are charged to expense as incurred, whereas expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. During the year ended December 31, 2017, the Company purchased a vehicle for $73,142 and shop equipment for $675. During 2016, the Company purchased $16,336 of furniture and equipment. The Company recognized $36,723 and $33,789 of depreciation expense for the year ended December 31, 2017 and 2016, respectively. Long-Lived Assets & Goodwill: The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-35, “Impairment or Disposal of Long-lived Assets.” This accounting standard requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company accounts for goodwill and intangible assets in accordance with ASC 350 "Intangibles Goodwill and Other". ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. The Company performed impairment analysis using the qualitative analysis under ASC 350-20 and noted no impairment issues for 2017 and 2016. Derivative Financial Instruments: The Company evaluates the embedded conversion feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition of a liability and, if so, whether to bifurcate the conversion feature and account for it as a separate derivative liability. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a lattice model, in accordance with ASC 815-15 “Derivative and Hedging” to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months after the balance sheet date. Beneficial Conversion Features: The Company evaluates the conversion feature for whether it was beneficial as described in ASC 470-30. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion. Fair Value of Financial Instruments: The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. As defined in FASB ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement) as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Revenue Recognition and Unearned Revenue: The Company recognizes revenue when all four of the following criteria are met: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred and title has transferred or services have been rendered; 3) our price to the buyer is fixed or determinable; and 4) collectability is reasonably assured. We record unearned revenue as a liability and the associated costs of sales as work in process inventory. Income Taxes: The Company accounts for income taxes utilizing ASC 740, “Income Taxes” (SFAS No. 109). ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred tax liabilities for taxable temporary differences. Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not included in the measurement. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company also follows the guidance for accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2017 and 2016. Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. The Company has elected to adopt ASU 2016-09 and has a policy to account for forfeitures as they occur. Non-Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with the provision of ASC 505-50, “Equity Based Payments to Non-Employees,” which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. Related Parties: 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. On November 10, 2017, the Company and Global Security Innovative Strategies, LLC (“GSIS”), a related party, entered in an agreement whereby GSIS will provide business development support and general consulting services for sales opportunities with U.S. government agencies and other identified prospects and consulting support services for the Company’s role and activities as part of the Security Center of Excellence in Orlando, Florida. The agreement is for a period of six months beginning on November 1, 2017. The Company agreed to pay GSIS a fee of $10,000 per month and will evaluate the fee after 90 days. The Company agreed to pay the expenses of GSIS incurred in connection with the performance of its duties under the agreement. Either party may terminate or renew the agreement at any time, for any reason or no reason, upon at least 30 days’ notice to the other party. David Aguilar, a member of the Company’s board of directors, is a principal at GSIS. As of December 31, 2017 and 2016, there was $171,981 and $46,849 accrued interest payable, respectively, to related parties on convertible notes payable. See Note 6 – Related Party Convertible Notes Payable and Derivative Liability and Note 8 – Series 2017 Secured Convertible Note – Related Party for further information. Earnings or Loss per Share: The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As further described in Footnote #6 – Related Party Convertible Notes Payable and Derivative Liability, $3,000,000 in convertible debt could be converted into 3,000,000 shares of common stock. As further described in Footnote #8 – Series 2017 Secured Convertible Note – Related Party, $1,000,000 in convertible debt could be converted into 1,000,000 shares of common stock. As further described in Footnote #12 – Employee Stock Options, 7,627,500 options are exercisable. As further described in Footnote #13 – Warrants, 2,232,500 warrants are exercisable. As there was a net loss for the years ended December 31, 2017 and 2016, basic and diluted losses per share in each such year are the same. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Tope 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Upon adoption, we will recognize the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods will not be retrospectively adjusted. We expect the adoption of Topic 606 will not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the least term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations cash flows or financial condition. Other than those pronouncements, management does not believe that there are any other recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company's financial statements. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Going Concern [Abstract] | |
GOING CONCERN | 2 GOING CONCERN The accompanying consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For the year ended December 31, 2017, the Company incurred a net loss of $10,323,992, generated negative cash flow from operations, has an accumulated deficit of $29,996,777 and working capital deficit of $557,195. These circumstances raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to create and market innovative products, raise capital, reduce debt or renegotiate terms, and to sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows or obtain additional funding would be detrimental to the Company. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventories [Abstract] | |
INVENTORIES | 3. INVENTORIES Inventories consisted of the following: 2017 2016 Raw Materials $ 114,119 $ 48,014 Work in progress 482,770 254,258 Finished Goods 398,912 160,819 In Transit 5,468 - Less valuation allowance (9,572 ) (3,206 ) Total $ 991,697 $ 459,885 |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses [Abstract] | |
PREPAID EXPENSES | 4. PREPAID EXPENSES Prepaid expenses consisted of the following: 2017 2016 Prepaid insurance $ 30,847 $ 29,911 Prepaid products and services 66,246 83,515 Prepaid rent and security deposit 5,915 7,188 $ 103,008 $ 120,614 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 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 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 a post-October 29, 2015 reverse stock split basis, on the date of agreement, to be 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. 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 years ended December 31, 2017 and 2016 was $292,000 and $170,333, respectively. The remaining unamortized balance of $997,667 is estimated be amortized in the estimated amounts of $292,000 per year for 2018 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 | 12 Months Ended |
Dec. 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. On August 3, 2017 (the “Effective Date”), the Company entered into amendments (the “Convertible Note Amendments”) with the owners and holders of the following convertible promissory notes issued by the Company (the “Series 2016 Convertible Notes”): ● Convertible Promissory Note in the original principal amount of $1,500,000 issued by the Company on September 29, 2016 to Frost Gamma Investments Trust (“Frost Gamma”). Frost Gamma is a trust that is controlled by Dr. Phillip Frost, a substantial shareholder of the Company; and ● Convertible Promissory Note in the original principal amount of $1,500,000 issued by the Company on September 29, 2016 to Jay H. Nussbaum, the Company’s Chief Executive Officer and Chairman of the Board of Directors. The Convertible Note Amendments extend the maturity date for each of the Series 2016 Convertible Notes to April 1, 2019 (the “Maturity Date”) and revise the conversion price to mean $1.00 per share subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. Accordingly, the notes have been reclassified as long-term debt. Consistent with the original terms of the Series 2016 Convertible Notes, interest accrues at the rate of 6% interest per annum and is payable on the Maturity Date. The accrued interest is payable at the holders’ option in cash or shares of our common stock valued at the $1.00 per share conversion price. The Convertible Note Amendments provide that an event of default in the City National Bank Loan will be treated as an event of default under the Series 2016 Convertible Notes. On November 9, 2017, the Company entered into amendments (the “November 2017 Convertible Note Amendments”) with the owners and holders of the Series 2016 Convertible Notes to permit the payment of, at the holders’ election, accrued and unpaid interest either in monthly or quarterly payments at any time after the Effective Date. Both the principal amount and accrued interest may be paid with: (i) cash; (ii) the issuance and delivery to the holder of shares of common stock of the Company at the conversion price provided for in the Series 2016 Convertible Note; or (iii) any combination of cash and shares of Common Stock, as determined by the holder in its sole discretion. The Company evaluated the modification under ASC 470-50 and determined that is qualified as an extinguishment of debt. The aggregate loss on extinguishment of debt in 2017 is $681,988, including ($378) on derivative liabilities, and $682,366 on unamortized debt discount. The embedded conversion feature of the notes pre-modification required liability classification. The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does not have a beneficial conversion feature. 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 December 31, 2017 and December 31, 2016: Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities as of December 31, 2017 $ 0 $ 0 $ 0 $ 0 Derivative liabilities as of December 31, 2016 $ 0 $ 0 $ 1,832,013 $ 1,832,013 The Company used the lattice model for valuation of derivative liabilities at December 31, 2016. The following table represents the change in the fair value of the derivative liabilities during the years ended December 31, 2017 and 2016: Fair value of derivative liabilities as of December 31, 2015 $ 0 Fair value of derivative liability at September 30, 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 (1,831,635 ) Gain on extinguishment of debt (378 ) Fair value of derivative liabilities as of December 31, 2017 $ 0 The amortization of the debt discount is $1,409,790 and $302,818 for the years ended December 31, 2017 and 2016, respectively. The $3,000,000 payable associated with the Convertible Promissory Notes Series 2016 due October 1, 2017 is $907,844 as of December 31, 2016, net of a $2,092,156 debt discount which is being amortized over the life of the loan using the effective interest method. |
Revolving Line of Credit
Revolving Line of Credit | 12 Months Ended |
Dec. 31, 2017 | |
Revolving Line of Credit [Abstract] | |
REVOLVING LINE OF CREDIT | 7. REVOLVING LINE OF CREDIT On August 2, 2017, the Company issued a promissory note to City National Bank of Florida (“CNB”) in the principal amount of $2,000,000, the CNB Note. The note evidences a revolving line of credit with advances that may be requested by the Company until the maturity date of August 2, 2018 so long as no event of default exists under the note, the Company or Mr. Nussbaum does not cease doing business, Mr. Nussbaum does not seek to revoke or modify his guarantee of the Note, the Company does not misapply the proceeds of this loan or CNB in good faith does not believe itself secure. The CNB Note bears interest at a variable rate equal to 0.250 percentage points over the Wall Street Journal Prime Rate payable monthly. The Company will pay to CNB a late charge of 5.0% of any monthly payment not received by Lender within 10 calendar days after its due date. The Company may prepay the note at any time without penalty. In the event of a default, the interest rate will increase to the highest lawful rate. The Company is obligated to maintain depository accounts with CNB with a minimum average annual balance of $600,000. In the event the Company does not maintain this account balance, CNB may charge the Company a fee equal to 2% of the deficiency as additional interest under the note. The CNB Note is personally guaranteed by Mr. Nussbaum, the Company’s Chief Executive Officer pursuant to written guarantee in favor of CNB (the “CNB Guarantee”). Mr. Nussbaum and the Company are obligated to maintain an unencumbered liquidity of no less than $6,000,000 in the form of cash, repurchase agreements, certificates of deposit or marketable securities acceptable to CNB. In addition, to secure our obligations under the note, we entered into a security agreement in favor of CNB (the “Security Agreement”) encumbering all of our accounts, inventory and equipment along with an assignment of a bank account we maintain at CNB with an approximate balance of $90,000. As of December 31, 2017, $1,000,000 has been drawn against the line of credit. Accrued interest of $5,625 has been recognized as of December 31, 2017. Indemnification Agreement On August 3, 2017, the Company entered into an Indemnification Agreement with Mr. Nussbaum in order to indemnify and defend him to the fullest extent permitted by law for any claim, expense or obligation which might arise as a result of his guarantee of the CNB Note. |
Series 2017 Secured Convertible
Series 2017 Secured Convertible Note - Related Party | 12 Months Ended |
Dec. 31, 2017 | |
Series 2017 Secured Convertible Note - Related Party [Abstract] | |
SERIES 2017 SECURED CONVERTIBLE NOTE - RELATED PARTY | 8. SERIES 2017 SECURED CONVERTIBLE NOTE – RELATED PARTY On August 3, 2017, the Company issued a Secured Convertible Promissory Note Series 2017 due August 2, 2018 in the aggregate principal amount of $2,000,000 (the “Series 2017 Convertible Note”) in a private placement to Frost Nevada Investments Trust (“Frost Nevada”). Frost Nevada is a trust that is controlled by Dr. Frost, a substantial shareholder of the Company. The note evidences a revolving line of credit with advances that may be requested by the Company until the maturity date of August 2, 2018 so long as no event of default exists under the loan. The Company may request advances of principal under this note equal to and at the same time as it requests advances, if any, pursuant to the CNB Note. The note bears interest at a variable rate equal to 0.250 percentage points over the Wall Street Journal Prime Rate. The Company may prepay the notes at any time without penalty. If the Company does not prepay the 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 Frost Nevada’s discretion. The conversion price under the note is $1.00 per share subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. The Series 2017 Convertible Note is secured by a security interest in all the Company’s assets. This security interest is subordinate to the security interest of CNB discussed in Footnote #7 above. As of December 31, 2017, $1,000,000 has been drawn against the line of credit. Accrued interest of $5,625 has been recognized as of December 31, 2017. The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does not have a beneficial conversion feature. |
Oklahoma Technology Commerciali
Oklahoma Technology Commercialization Center | 12 Months Ended |
Dec. 31, 2017 | |
Oklahoma Technology Commercialization Center [Abstract] | |
OKLAHOMA TECHNOLOGY COMMERCIALIZATION CENTER | 9. OKLAHOMA TECHNOLOGY COMMERCIALIZATION CENTER At the time of the April 30, 2014 merger between MacroSolve, Inc. (“MacroSolve”) and the Company, MacroSolve had a $110,000 balance on its refundable award from the State of Oklahoma Technology Business Finance Program. On September 23, 2016, the parties agreed to settle the obligation for $35,000 with the balance of $75,000 written off and recorded as debt forgiveness. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Shareholders' Equity [Abstract] | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY For the year ended December 31, 2017 The Company issued a total of 500,250 shares of common stock during the year ended December 31, 2017, as described below: 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 blocker with respect to individual ownership percentages. On August 3, 2017, the Company entered into an amendment to the August 24, 2014 Independent Contractor Agreements it entered into with Dr. Philip Frost and Steven Rubin who serve as members of the Company’s Strategic Advisory Board (the “SAB Amendments”). The SAB Amendments extend the term of the agreements from May 1, 2017 until April 30, 2018 and provide for the following equity based compensation: (a) for Dr. Frost, a warrant to purchase 2,000,000 shares of the Company’s Common Stock (the “Frost Warrant”) and an award of 150,000 shares of the Company’s unregistered restricted Common Stock and (b) for Mr. Rubin, an award of 100,000 shares of the Company’s unregistered restricted Common Stock. The restricted stock vests upon the occurrence of a change of control (as defined in the SAB Amendments). The Warrant has a term of five years and exercise price of $1.00 per share subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. The Company recognized $155,001 expense for the pro rata portion of shares earned by the two members during the twelve months ended December 31, 2017, amortizing the expense over the 12 months of the service agreement regardless of the vesting condition. As of December 31, 2017, the Company had unamortized stock compensation of $77,500 for non-employees. For the year ended December 31, 2016 The Company issued a total of 3,556,635 shares of common stock during the year ended December 31, 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 common stock to AFI, as discussed above in Note 5 – Intangible Assets, 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. A gain of $11,000 was recognized since the fair value of $150,500 on the date of issuance was less than the original accrual. The Company issued 100,000 shares of common stock with monthly vesting provisions to a newly-appointed director, Lt. Gen. Michael T. Flynn, for 24 months of services. Lt. Gen. Flynn could earn a pro rata portion of the shares, calculated based on the twenty-four-month vesting schedule. Lt. General Flynn resigned as a director on December 31, 2016 due to his appointment as National Security Advisor to President Donald Trump. Lt. General Flynn forfeited 66,667 unvested shares and disclaimed 33,333 vested shares. The Company recorded $97,000 in stock based compensation related to General Flynn’s board service which could not be reversed upon his disclaimer due to ASC 718-20-35-3 which stipulated that once an award vested, the compensation cost could not be reversed. The Company issued an aggregate of 1,150,000 shares of common stock outside of the 2015 Equity Plan to Jay Nussbaum, Felicia Hess, Daniyel Erdberg, Kendall Carpenter, and Kevin Hess pursuant to Stock Award Agreements. The shares will vest upon consummation of a significant equity and/or debt financing at least equal to the November 2015 financing which raised $3,725,000 provided that the holder remains engaged by the Company through the vesting date. Stock based compensation of $3,346,615 was recognized during the year ended December 31, 2016 as the shares became fully vested on September 29, 2016 by resolution of the Board of Directors that the issuance of the Convertible Promissory Notes Series 2016 due October 1, 2017 qualified as such a significant financing. In September 2016, the Company issued 1,339,000 shares of restricted common stock outside of the 2015 Equity Plan to employees Jay Nussbaum, Felicia Hess, Daniyel Erdberg, Kendall Carpenter, Mike Silverman and Lt. Gen. Michael Flynn 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. Lt. Gen. Flynn resigned as a director on December 31, 2016 due to his appointment as National Security Advisor to President Donald Trump. Lt. Gen. Flynn forfeited 25,000 unvested shares. The Company did not recognize any expense for the 25,000 cancelled Flynn shares for the year ended December 31, 2016. The Company recognized $970,067 stock based compensation during the six months ended June 30, 2017 and $508,940 in stock based compensation during the twelve months ended December 31, 2016. On that same date, the Company issued 35,000 shares of common stock outside the 2015 Equity Plan with the same conditions to Reginald Brown pursuant to Stock Aware Agreement for consulting services. The Company recognized $11,065 stock based compensation during the twelve months ended December 31, 2016. As of August 3, 2017, the Company does not believe the vesting conditions are probable of being achieved, and as such, no stock-based compensation expense is expected to be recognized in connection with the September 2016 shares. Consequently, previously recorded stock based compensation of $1,488,596 was reversed during the nine months ended September 30, 2017. On August 3, 2017, these awards were modified so that the restrictions set forth in the RSA lapse upon the earlier of (i) consummation of a significant equity and/or debt financing from which the Company receives gross proceeds of at least $7,000,000 or (ii) a change in control (as defined in the RSA Amendment), provided that, in either case, the holder remains engaged by the Company through the date of such event. The Company does not believe the modified vesting conditions are probably of being achieved, and as such, no stock-based compensation expense has been recorded. The Company will reassess whether achievement of the vesting conditions is probable at each reporting date. If it is probable, stock-based compensation will be recognized. 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 $29,500 and $284,000 expense for the pro rata portion of shares earned by the two members during the years ended December 31, 2017 and 2016, respectively. The Company issued 25,000 shares of common stock to a member of the Strategic Advisory Board for services which were immediately vested and recorded at the fair market value of $82,722. On September 29, 2016, the Company issued 496,667 shares of common stock to twelve investors, including 406,666 shares to four affiliate investors that were party to the November 2015 private placement, pursuant to the purchase agreement for such private placement. These investors purchased stock at $5.00 per share and under the purchase agreement received twelve months of price protection. The Convertible Promissory Notes Series 2016 due October 1, 2017 included a $3.00 per share conversion factor, thereby triggering the price protection feature. The value of the shares that were issued, based upon the closing stock price on the date of issuance, was $1,641,484 and was treated as a deemed dividend. On June 1, 2015, the Company issued 50,000 shares of 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 $112,500 and $270,000 expense for the pro rata portion of shares earned by the Chairman during 2017 and 2016, respectively. On September 4, 2015, the Company issued 450,000 shares of common stock to four management employees and one director pursuant to stock award agreements. The vesting condition of the shares was for consummation of a $4,000,000 equity or debt financing provided that the holder remains engaged by the Company through the vesting date. On February 4, 2016, the Board deemed that vesting had occurred. Stock based compensation of $604,440 was recognized in 2016. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2017 | |
Preferred Stock [Abstract] | |
PREFERRED STOCK | 11. PREFERRED STOCK For the year ended December 31, 2017 All 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. 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. 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 blocker with respect to individual ownership percentages. For the year ended December 31, 2016 During the year ended December 31, 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 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 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 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 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 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 | 12 Months Ended |
Dec. 31, 2017 | |
Employee Stock Options [Abstract] | |
EMPLOYEE STOCK OPTIONS | 12. EMPLOYEE STOCK OPTIONS For the year ended December 31, 2017 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. During the twelve months ended December 31, 2017, $129,059 compensation expense was recognized on these 100,000 options. On August 3, 2017, upon approval of the Company’s board of directors, the Company issued outside its 2015 Equity Plan, 5,210,000 options to purchase the Company’s common stock to officers, directors and employees for services provided. Jay Nussbaum was issued 2,000,000 options, Felicia Hess was issued 1,200,000 options, Dan Erdberg was issued 1,140,000 options, Kendall Carpenter was issued 275,000 options, Directors David Aguilar, Mike Haas and General Wayne Jackson were issued 100,000, 10,000 and 10,000 options, respectively. The remaining 475,000 options were issued to employees and consultants. These stock options immediately vested, are exercisable at an exercise price of $1.00 per share and expire on August 3, 2021. During the twelve months ended December 31, 2017, $3,354,097 compensation expense was recognized on these 5,210,000 options. On November 9, 2017, upon approval of the Company’s board of directors, the Company issued outside its 2015 Equity Plan, 2,000,000 options to purchase the Company’s common stock to officers, directors, and for services provided. Jay Nussbaum was issued 900,000 options, Felicia Hess was issued 300,000 options, Dan Erdberg was issued 200,000 options, Kendall Carpenter was issued 170,000 options, Directors David Aguilar, Mike Haas and General Wayne Jackson were issued 10,000, 10,000 and 10,000 options, respectively. Reginald Brown, Jr. was issued 400,000 options. These stock options immediately vested, are exercisable at an exercise price of $1.35 per share and expire on November 9, 2021. During the twelve months ended December 31, 2017, $1,846,075 compensation expense was recognized on these 2,000,000 options On December 13, 2017, upon approval of the Company’s board of directors the Company issued outside its 2015 Equity Plan, 100,000 options each to two newly-appointed directors, or a total of 200,000 options. These options vest 50% after one year and the remaining 50% after two years provided the director is still actively involved with the Company. The options are exercisable at an exercise price of $1.00 per share and expire on December 13, 2021. During the twelve months ended December 31, 2017, $3,593 compensation expense was recognized on these 200,000 options with a remaining balance of $96,196 to be recognized over the vesting period. One 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. During the twelve months ended December 31, 2017 and 2016, $54,943 and $122,058 compensation expense was recognized on these 37,500 options, respectively. The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 7,510,000 options granted during the twelve months ended December 31, 2017. The following table summarizes the assumptions used to estimate the fair value of stock options granted during 2017 and 2016: 2017 2016 Expected dividend yield 0 % 0 % Expected volatility 82-100 % 102-108 % Risk-free interest rate 1.50-2.01 % 0.79 – 1.38 % Expected life of options 2.5-4.0 years 2.0 – 3.0 years Under the Black-Scholes option pricing model, the fair value of the 7,510,000 options granted during the twelve months ended December 31, 2017 is estimated at $5,474,133 on the date of grant. During the twelve months ended December 31, 2017, $5,332,824 compensation expense was recognized on these 7,510,000 options. During 2017, the Company cancelled 2,500 options issued December 10, 2015 with a strike price of $5.00 and cancelled 5,000 options issued July 28, 2016 with a strike price of $3.77 that had been issued to two employees who left the Company without exercising their options. The following table represents stock option activity as of and for the period ended December 31, 2017: Number of Options Weighted Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Outstanding – December 31, 2015 392,500 $ 6.19 2.62 $ 0.00 Exercisable – December 31, 2015 355,000 $ 5.70 2.55 $ 0.00 Granted 65,000 $ 2.99 Exercised or Vested - $ 0.00 Cancelled or Expired (15,000 ) $ 3.61 Outstanding – December 31, 2016 442,500 $ 5.81 1.72 Exercisable – December 31, 2016 407,500 $ 5.57 1.65 $ 0.00 Granted 7,510,000 $ 1.12 Cancelled or Expired (7,500 ) $ 4.18 Outstanding – December 31, 2017 7,945,000 $ 1.38 3.50 Exercisable – December 31, 2017 7,627,500 $ 1.35 3.50 $ 0.00 For the year ended December 31, 2016 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 Company recognized $10,516 expense in 2017 relative to that option. Two employees who received 2,500 options each in December 2015 terminated their employment and did not exercise their options resulting in the expiration of a total of 5,000 options. During 2016, $229,563 compensation expense was recognized. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 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 September 30, 2017 and December 31, 2016, there was $188,217 and $46,849 accrued interest payable, respectively, to related parties on convertible notes payable. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Abstract] | |
WARRANTS | 13. WARRANTS For the year ended December 31, 2017 On August 3, 2017, upon approval of the Company’s board of directors, the Company issued outside its 2015 Equity Plan, 30,000 warrants to purchase the Company’s common stock to consultants for services provided. These warrants are immediately vested, are exercisable at an exercise price of $1.00 per share and expire on August 3, 2021. The Company recognized $19,269 in compensation cost during the twelve months ended December 31, 2017. On August 3, 2017, the Company issued a warrant to purchase 2,000,000 shares of the Company’s common stock to Dr. Philip Frost for services to be provided under the terms of his service to the Strategic Advisory Board through April 2018. These warrants immediately vested, are exercisable at an exercise price of $1.00 per shares and expire on August 3, 2022. The Company recognized $1,391,793 in compensation cost during the twelve months ended December 31, 2017. On November 9, 2017, upon approval of the Company’s board of directors, the Company issued outside its 2015 Equity Plan, 20,000 warrants to purchase the Company’s common stock to consultants for services provided. These warrants are immediately vested, are exercisable at an exercise price of $1.35 per share and expire on November 9, 2021. The Company recognized $18,456 in compensation cost during the twelve months ended December 31, 2017. The following table summarizes the assumptions used to estimate the fair value of the 2,050,000 warrants granted during 2017 as of re-measurement dates: 2017 Expected dividend yield 0 % Expected volatility 190-212 % Risk-free interest rate 1.52-1.88 % Expected life of warrants 4-5 years For the year ended December 31, 2016 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 MacroSolve 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 vested on June 10, 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 107 % Risk-free interest rate 1.53 % Expected life of warrants 1 year Under the Black-Scholes warrant pricing model, fair value of the 12,500 warrants granted during 2015 is estimated at $0 as of re-measurement dates. During the twelve months ended December 31, 2017, $(3,467) compensation expense was recognized on these 12,500 warrants. During 2016, $118,681 compensation expense was recognized. The following table represents warrant activity as of and for the period ended December 31, 2017 and 2016: Number of Warrants Weighted Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Outstanding – December 31, 2015 134,209 $ 23.87 3.66 Exercisable – December 31, 2015 104,209 $ 27.87 4.01 $ 0.00 Granted 60,000 $ 2.91 Forfeited or Expired (10,472 ) $ 193.72 Outstanding – December 31, 2016 183,737 $ 7.35 2.70 Exercisable – December 31, 2016 171,237 $ 7.15 2.79 $ 0.00 Granted 2,050,000 $ 1.00 Forfeited or Expired (1,237 ) $ 303.37 Outstanding – December 31, 2017 2,232,500 $ 1.36 4.34 Exercisable – December 31, 2017 2,232,500 $ 1.36 4.34 $ 0.00 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 14. INCOME TAXES The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. On December 22, 2017, H.R. 1, formally known as the Tax Cut and Jobs Act (the "Act") was enacted into law. The Act provides for significant tax law changes and modifications with varying effective dates. The major change that affects the Company is reducing the corporate income tax rate from 35% to 21%. The net deferred asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $10,718,755 for 2017 and $7,573,280 for 2016 and will begin expiring in 2034. Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. The $10,718,755 estimate of net operating loss carry-forward is calculated after we consider the effect of Section 382. Deferred tax assets consist of the tax effect of net operating loss carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. Deferred tax assets consist of the following: December 31, December 31, Net operating loss carry-forwards $ 2,250,939 $ 2,574,915 Valuation allowance (2,250,939 ) (2,574,915 ) $ 0 $ 0 The Company’s tax expense does not reflect the statutory rate since the Company’s deferred tax asset is fully offset by a valuation allowance. The statute of limitations is open for the tax years ending December 31, 2014 and thereafter. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES On November 17, 2014, the Company entered into a 60-month lease for 5,533 square feet of office and manufacturing space at 11651 Central Parkway Suite 118, Jacksonville, Florida, with an anticipated lease commencement date of February 1, 2015. The actual commencement date was July 1, 2015 and the lease was amended to 61 months expiring July 31, 2020. The monthly rent, including operating expenses and sales tax, for each year of the initial lease term is estimated to be $5,915. Anticipated total rent during the term of the lease is as follows: Year 2018 - $ 75,437 Year 2019 - $ 77,309 Year 2020 - $ 45,651 Rent expense in 2017 and 2016 was $131,710, and $108,600, respectively. The Company acquired licenses to certain technology of Georgia Tech Research Corporation (GTRC) through its purchase of Adaptive Flight, Inc.’s assets on July 20, 2015 and through direct license from GTRC. The licenses are perpetual and if the technology is patented, are protected through the expiration date of the patented know-how. Two of the licenses require a minimum royalty of $1,500 per year. Royalties are based on vehicle weight and range from $12.50 to $75.00 per vehicle on one license and $25.00 to $150.00 per vehicle on another license. As of December 31, 2015, the Company was a party in a pending motion by Newegg Inc. for recovery of defendant legal fees of approximately $400,000 from the Company in the matter of MacroSolve, Inc. v Newegg Inc. (U.S.D.C.E.D. TX) case No 6:12-cv-46-MSS-KNM. On April 24, 2015, Newegg filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit, which issued an opinion on February 9, 2016, affirming the district court’s denial of Newegg’s motion to recover its legal fees. On May 9, 2016, Newegg filed a Petition for a Writ of Certiorari with the United States Supreme Court. On June 13, 2016, the United States Supreme Court issued an order denying that petition. Consequently, MacroSolve prevailed in the matter. 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. The lawsuit is active and discovery is ongoing. 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 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. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2017 | |
Concentrations [Abstract] | |
CONCENTRATIONS | 16. CONCENTRATIONS Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of trade accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral related to its trade accounts receivable. At December 31, 2017, accounts receivable from two customers comprised 100% of the Company’s total accounts receivable-trade. Revenues from four customers approximated 85% of total revenues for 2017. At December 31, 2016, accounts receivable from one customer comprised 100% of the Company’s total accounts receivable-trade. Revenues from one customer approximated 87% of total revenues for 2016. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS On February 22, 2018, the Company drew down on the Revolving Line of Credit described in Footnote #7 in the amount of $250,000. On the same day, the Company drew down on the Series 2017 Secured Convertible Note described in Footnote #8 in the amount of $250,000. On March 23, 2018, the Company entered into amendments (the “March 2018 Convertible Note Amendments”) with the owners and holders of the Series 2016 Convertible Notes described in Footnote #6 to extend the maturity date from April 1, 2019 until October 1, 2020. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Description of Business: | Description of Business: Drone Aviation Holding Corp. (“Drone” or “Company”) develops and manufactures cost-effective, compact and rapidly deployable aerial platforms including lighter-than-air aerostats and electric-powered drones designed to provide government and commercial customers with enhanced surveillance and communication capabilities. Utilizing a proprietary tether system, the Company's products are designed to provide prolonged operational duration capabilities combined with improved reliability, uniquely fulfilling critical requirements in military, law enforcement and commercial and industrial applications. |
Basis of Presentation: | Basis of Presentation: The accompanying financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Principle of Consolidation: | Principle of Consolidation: Our consolidated financial statements as of December 31, 2017 and 2016 include the accounts of Drone Aviation Holding Corp. and its subsidiaries: Drone AFS Corp. and Lighter Than Air Systems Corp (“LTAS”). |
Use of Estimates: | Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Concentration of Credit Risk: | Concentration of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times such cash may be in excess of the FDIC limit of $250,000 per depositor. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited. |
Cash Equivalents: | Cash Equivalents: Cash equivalents are represented by operating accounts or money market accounts maintained with insured financial institutions, including all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2017 and 2016. |
Accounts Receivable and Credit Policies: | Accounts Receivable and Credit Policies: Accounts receivable-trade consists of amounts due from the sale of tethered aerostats, accessories, spare parts customization and refurbishment of aerostats. Such accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. At December 31, 2017 and 2016, the Company characterized $0 and $0 as uncollectible, respectively. There is a balance of $110,065 in accounts receivable-trade at December 31, 2017 for sales on account. |
Inventories | Inventories 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. |
Property and Equipment: | 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. Property and equipment consists of the following at December 31, 2017 and 2016: 2017 2016 Shop Machinery and equipment $ 87,704 $ 87,029 Computers and electronics 35,270 35,270 Office furniture and fixtures 37,814 37,814 Vehicle 73,142 - Leasehold improvements 19,514 19,514 253,444 179,627 Less - accumulated depreciation (97,507 ) (60,784 ) $ 155,937 $ 118,843 Expenditures for maintenance and repairs are charged to expense as incurred, whereas expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. During the year ended December 31, 2017, the Company purchased a vehicle for $73,142 and shop equipment for $675. During 2016, the Company purchased $16,336 of furniture and equipment. The Company recognized $36,723 and $33,789 of depreciation expense for the year ended December 31, 2017 and 2016, respectively. |
Long-Lived Assets & Goodwill: | Long-Lived Assets & Goodwill: The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-35, “Impairment or Disposal of Long-lived Assets.” This accounting standard requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company accounts for goodwill and intangible assets in accordance with ASC 350 "Intangibles Goodwill and Other". ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. The Company performed impairment analysis using the qualitative analysis under ASC 350-20 and noted no impairment issues for 2017 and 2016. |
Derivative Financial Instruments: | Derivative Financial Instruments: The Company evaluates the embedded conversion feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition of a liability and, if so, whether to bifurcate the conversion feature and account for it as a separate derivative liability. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a lattice model, in accordance with ASC 815-15 “Derivative and Hedging” to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months after the balance sheet date. |
Beneficial Conversion Features: | Beneficial Conversion Features: The Company evaluates the conversion feature for whether it was beneficial as described in ASC 470-30. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion. |
Fair Value of Financial Instruments: | Fair Value of Financial Instruments: The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. As defined in FASB ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement) as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
Revenue Recognition and Unearned Revenue: | Revenue Recognition and Unearned Revenue: The Company recognizes revenue when all four of the following criteria are met: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred and title has transferred or services have been rendered; 3) our price to the buyer is fixed or determinable; and 4) collectability is reasonably assured. We record unearned revenue as a liability and the associated costs of sales as work in process inventory. |
Income Taxes: | Income Taxes: The Company accounts for income taxes utilizing ASC 740, “Income Taxes” (SFAS No. 109). ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred tax liabilities for taxable temporary differences. Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not included in the measurement. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company also follows the guidance for accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2017 and 2016. |
Employee Stock-Based Compensation: | Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. The Company has elected to adopt ASU 2016-09 and has a policy to account for forfeitures as they occur. |
Non-Employee Stock-Based Compensation: | Non-Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with the provision of ASC 505-50, “Equity Based Payments to Non-Employees,” which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. |
Related Parties: | Related Parties: 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. On November 10, 2017, the Company and Global Security Innovative Strategies, LLC (“GSIS”), a related party, entered in an agreement whereby GSIS will provide business development support and general consulting services for sales opportunities with U.S. government agencies and other identified prospects and consulting support services for the Company’s role and activities as part of the Security Center of Excellence in Orlando, Florida. The agreement is for a period of six months beginning on November 1, 2017. The Company agreed to pay GSIS a fee of $10,000 per month and will evaluate the fee after 90 days. The Company agreed to pay the expenses of GSIS incurred in connection with the performance of its duties under the agreement. Either party may terminate or renew the agreement at any time, for any reason or no reason, upon at least 30 days’ notice to the other party. David Aguilar, a member of the Company’s board of directors, is a principal at GSIS. As of December 31, 2017 and 2016, there was $171,981 and $46,849 accrued interest payable, respectively, to related parties on convertible notes payable. See Note 6 – Related Party Convertible Notes Payable and Derivative Liability and Note 8 – Series 2017 Secured Convertible Note – Related Party for further information. |
Earnings or Loss per Share: | Earnings or Loss per Share: The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As further described in Footnote #6 – Related Party Convertible Notes Payable and Derivative Liability, $3,000,000 in convertible debt could be converted into 3,000,000 shares of common stock. As further described in Footnote #8 – Series 2017 Secured Convertible Note – Related Party, $1,000,000 in convertible debt could be converted into 1,000,000 shares of common stock. As further described in Footnote #12 – Employee Stock Options, 7,627,500 options are exercisable. As further described in Footnote #13 – Warrants, 2,232,500 warrants are exercisable. As there was a net loss for the years ended December 31, 2017 and 2016, basic and diluted losses per share in each such year are the same. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Tope 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Upon adoption, we will recognize the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods will not be retrospectively adjusted. We expect the adoption of Topic 606 will not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the least term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations cash flows or financial condition. Other than those pronouncements, management does not believe that there are any other recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company's financial statements. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of property and equipment | 2017 2016 Shop Machinery and equipment $ 87,704 $ 87,029 Computers and electronics 35,270 35,270 Office furniture and fixtures 37,814 37,814 Vehicle 73,142 - Leasehold improvements 19,514 19,514 253,444 179,627 Less - accumulated depreciation (97,507 ) (60,784 ) $ 155,937 $ 118,843 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventories [Abstract] | |
Schedule of inventories | 2017 2016 Raw Materials $ 114,119 $ 48,014 Work in progress 482,770 254,258 Finished Goods 398,912 160,819 In Transit 5,468 - Less valuation allowance (9,572 ) (3,206 ) Total $ 991,697 $ 459,885 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses [Abstract] | |
Schedule of prepaid expenses | 2017 2016 Prepaid insurance $ 30,847 $ 29,911 Prepaid products and services 66,246 83,515 Prepaid rent and security deposit 5,915 7,188 $ 103,008 $ 120,614 |
Related Party Convertible Not29
Related Party Convertible Notes Payable and Derivative Liability (Tables) | 12 Months Ended |
Dec. 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 December 31, 2017 $ 0 $ 0 $ 0 $ 0 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 September 30, 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 (1,831,635 ) Gain on extinguishment of debt (378 ) Fair value of derivative liabilities as of December 31, 2017 $ 0 |
Employee Stock Options (Tables)
Employee Stock Options (Tables) - Employee Stock Option [Member] | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Summary of assumptions used to estimate fair value stock options granted | 2017 2016 Expected dividend yield 0 % 0 % Expected volatility 82-100 % 102-108 % Risk-free interest rate 1.50-2.01 % 0.79 – 1.38 % Expected life of options 2.5-4.0 years 2.0 – 3.0 years |
Summary of stock option activity | Number of Options Weighted Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Outstanding – December 31, 2015 392,500 $ 6.19 2.62 $ 0.00 Exercisable – December 31, 2015 355,000 $ 5.70 2.55 $ 0.00 Granted 65,000 $ 2.99 Exercised or Vested - $ 0.00 Cancelled or Expired (15,000 ) $ 3.61 Outstanding – December 31, 2016 442,500 $ 5.81 1.72 Exercisable – December 31, 2016 407,500 $ 5.57 1.65 $ 0.00 Granted 7,510,000 $ 1.12 Cancelled or Expired (7,500 ) $ 4.18 Outstanding – December 31, 2017 7,945,000 $ 1.38 3.50 Exercisable – December 31, 2017 7,627,500 $ 1.35 3.50 $ 0.00 |
Warrants (Tables)
Warrants (Tables) - Warrant [Member] | 12 Months Ended |
Dec. 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 190-212 % Risk-free interest rate 1.52-1.88 % Expected life of warrants 4-5 years 2017 Expected dividend yield 0 % Expected volatility 107 % Risk-free interest rate 1.53 % Expected life of warrants 1 year |
Schedule of warrant activity | Number of Warrants Weighted Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Outstanding – December 31, 2015 134,209 $ 23.87 3.66 Exercisable – December 31, 2015 104,209 $ 27.87 4.01 $ 0.00 Granted 60,000 $ 2.91 Forfeited or Expired (10,472 ) $ 193.72 Outstanding – December 31, 2016 183,737 $ 7.35 2.70 Exercisable – December 31, 2016 171,237 $ 7.15 2.79 $ 0.00 Granted 2,050,000 $ 1.00 Forfeited or Expired (1,237 ) $ 303.37 Outstanding – December 31, 2017 2,232,500 $ 1.36 4.34 Exercisable – December 31, 2017 2,232,500 $ 1.36 4.34 $ 0.00 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of operating lease | Year 2018 - $ 75,437 Year 2019 - $ 77,309 Year 2020 - $ 45,651 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
Schedule of deferred tax assets | December 31, December 31, Net operating loss carry-forwards $ 2,250,939 $ 2,574,915 Valuation allowance (2,250,939 ) (2,574,915 ) $ 0 $ 0 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | ||
Shop Machinery and equipment | $ 87,704 | $ 87,029 |
Computers and electronics | 35,270 | 35,270 |
Office furniture and fixtures | 37,814 | 37,814 |
Vehicle | 73,142 | |
Leasehold improvements | 19,514 | 19,514 |
Property and equipment, gross | 253,444 | 179,627 |
Less - accumulated depreciation | (97,507) | (60,784) |
Net property and equipment | $ 155,937 | $ 118,843 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details Textual) - USD ($) | Nov. 10, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||||
Uncollectible receivables | $ 0 | $ 0 | ||
Trade accounts receivable period | 30 days | |||
Accounts receivable-trade | $ 110,065 | 394,000 | ||
FDIC limit of depositor | 250,000 | |||
Purchased a shop equipment | 87,704 | 87,029 | ||
Purchased a vehicle | (73,142) | |||
Purchased a furniture and equipment | 37,814 | 37,814 | ||
Depreciation | $ 36,723 | 33,789 | ||
Valuation allowance against net deferred tax assets percentage | 100.00% | |||
Description of income taxes | For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. | |||
Related parties, description | The Company agreed to pay GSIS a fee of $10,000 per month and will evaluate the fee after 90 days. | |||
Accounts payable due to related party | $ 171,981 | $ 46,849 | ||
Property, Plant and Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Purchased a shop equipment | 675 | |||
Purchased a furniture and equipment | $ 16,336 | |||
Employee Stock Option [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Option and warrants exercisable | 7,627,500 | 407,500 | 355,000 | |
Warrant [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Option and warrants exercisable | 2,232,500 | |||
Convertible Notes Payable [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Convertible debt converted shares of common stock | 3,000,000 | |||
Convertible debt | $ 3,000,000 | |||
Series 2017 Secured Convertible Note [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Convertible debt converted shares of common stock | 1,000,000 | |||
Convertible debt | $ 1,000,000 | |||
Minimum [Member] | Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life | 3 years | |||
Minimum [Member] | Furniture and Fixtures [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life | 3 years | |||
Minimum [Member] | Hardware and software [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life | 3 years | |||
Maximum [Member] | Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life | 7 years | |||
Maximum [Member] | Furniture and Fixtures [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life | 7 years | |||
Maximum [Member] | Hardware and software [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life | 7 years |
Going Concern (Details)
Going Concern (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Going Concern [Abstract] | ||
Net loss | $ (10,323,992) | $ (8,533,515) |
Accumulated deficit | (29,996,777) | $ (19,672,785) |
Working capital deficit | $ 557,195 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories [Abstract] | ||
Raw Materials | $ 114,119 | $ 48,014 |
Work in progress | 482,770 | 254,258 |
Finished Goods | 398,912 | 160,819 |
In Transit | 5,468 | |
Less valuation allowance | (9,572) | (3,206) |
Total | $ 991,697 | $ 459,885 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid Expenses [Abstract] | ||
Prepaid insurance | $ 30,847 | $ 29,911 |
Prepaid products and services | 66,246 | 83,515 |
Prepaid rent and security deposit | 5,915 | 7,188 |
Prepaid expenses, Net | $ 103,008 | $ 120,614 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Jun. 03, 2016 | Jul. 20, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Intangible Assets (Textual) | |||||
Additional liability and expense | $ 11,000 | ||||
Amortizing of purchased assets | 1,460,000 | ||||
Payments to acquire assets | $ 24,333 | ||||
Amortization expense | 292,000 | $ 170,333 | |||
Unamortized balance amount | 997,667 | 1,289,667 | |||
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 | ||||
Escrow share value | $ 1,400,000 | ||||
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 Not40
Related Party Convertible Notes Payable and Derivative Liability (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liabilities | $ 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 | $ 0 | $ 1,832,013 |
Related Party Convertible Not41
Related Party Convertible Notes Payable and Derivative Liability (Details1) - USD ($) | 12 Months Ended | |
Dec. 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 September 30, 2016 recorded as debt discount | 2,394,974 | |
Change in fair value of derivative liabilities | (1,831,635) | (562,961) |
Gain on extinguishment of debt | (378) | |
Fair value of derivative liabilities | $ 1,832,013 |
Related Party Convertible Not42
Related Party Convertible Notes Payable and Derivative Liability (Details Textual) - USD ($) | Sep. 29, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Related Party Convertible Notes Payable and Derivative Liability (Textual) | |||
Principal amount | $ 1,000,000 | ||
Unamortized debt discount | 682,366 | ||
Loss on extinguishment of debt | (681,988) | ||
Derivative liabilities | $ 378 | ||
Interest rate accrues | 6.00% | ||
Amortization of debt discount | $ 1,409,790 | 302,818 | |
Convertible promissory notes series 2016 | 3,000,000 | ||
Convertible note payable | 1,000,000 | 907,844 | |
Debt discount | $ 0 | $ 2,092,156 | |
Convertible Promissory Notes [Member] | |||
Related Party Convertible Notes Payable and Derivative Liability (Textual) | |||
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. | ||
Conversion price per share | $ 1 | ||
Notes, maturity date | Apr. 1, 2019 | ||
Jay H. Nussbaum [Member] | Convertible Promissory Notes [Member] | |||
Related Party Convertible Notes Payable and Derivative Liability (Textual) | |||
Principal amount | $ 1,500,000 | ||
Frost Gamma [Member] | Convertible Promissory Notes [Member] | |||
Related Party Convertible Notes Payable and Derivative Liability (Textual) | |||
Principal amount | $ 1,500,000 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details) - USD ($) | Aug. 02, 2017 | Dec. 31, 2017 |
Revolving Line of Credit (Textual) | ||
Aggregate principal amount | $ 1,000,000 | |
CNB Note [Member] | ||
Revolving Line of Credit (Textual) | ||
Aggregate principal amount | $ 2,000,000 | |
Maturity date | Aug. 2, 2018 | |
Percentage of interest bears variable rate | 0.25% | |
Monthly payment, description | Monthly payment. | |
Line of credit drawn | 1,000,000 | |
Accrued interest | $ 5,625 | |
Percentage of late charges | 5.00% | |
Minimum average annual balance | $ 600,000 | |
Additional interest rate on fee | 2.00% | |
Security Agreement [Member] | ||
Revolving Line of Credit (Textual) | ||
Minimum average annual balance | $ 90,000 | |
Mr. Nussbaum [Member] | CNB Note [Member] | ||
Revolving Line of Credit (Textual) | ||
Revolving line of credit, description | The CNB Note is personally guaranteed by Mr. Nussbaum, the Company's Chief Executive Officer pursuant to written guarantee in favor of CNB (the "CNB Guarantee"). Mr. Nussbaum and the Company are obligated to maintain an unencumbered liquidity of no less than $6,000,000 in the form of cash, repurchase agreements, certificates of deposit or marketable securities acceptable to CNB. |
Series 2017 Secured Convertib44
Series 2017 Secured Convertible Note - Related Party (Details) - Series 2017 Convertible Note [Member] | Aug. 03, 2017USD ($)$ / shares |
Series 2017 Secured Convertible Note (Textual) | |
Aggregate principal amount | $ 2,000,000 |
Maturity date | Aug. 2, 2018 |
Percentage of interest bears variable rate | 0.25% |
Conversion price per share | $ / shares | $ 1 |
Drawn against the line of credit | $ 1,000,000 |
Accrued interest | $ 5,625 |
Oklahoma Technology Commercia45
Oklahoma Technology Commercialization Center (Details) - Macrosolve, Inc [Member] - USD ($) | 1 Months Ended | |
Sep. 23, 2016 | Apr. 30, 2014 | |
Oklahoma Technology Commercialization Center [Line Items] | ||
Refundable award | $ 110,000 | |
Settlement obligation | $ 35,000 | |
Debt written off | $ 75,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | Aug. 03, 2017USD ($)$ / shares | Jan. 09, 2017shares | Sep. 29, 2016USD ($)InvestorAffiliateinvestors$ / sharesshares | Feb. 04, 2016USD ($) | Sep. 04, 2015USD ($)EmployeesDirectorshares | Jun. 01, 2015shares | Apr. 24, 2017shares | Sep. 30, 2016USD ($)shares | May 31, 2016 | Feb. 04, 2016shares | Nov. 30, 2015shares | Jun. 30, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015$ / shares |
Shareholders' Equity (Textual) | ||||||||||||||||
Stock based compensation | $ | $ 1,488,596 | $ 6,602,806 | $ 5,553,026 | |||||||||||||
Gross proceeds from equity | $ | $ 7,000,000 | |||||||||||||||
Common stock, shares issued | 9,182,470 | 8,682,220 | ||||||||||||||
Gain on settlement of make whole provision | $ | $ (681,988) | |||||||||||||||
Unamortized stock compensation for non-employees | $ | $ 77,500 | |||||||||||||||
Private Placement [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued, shares | 496,667 | 406,666 | ||||||||||||||
Securities sold to investors price per share | $ / shares | $ 5 | |||||||||||||||
Common stock conversion price | $ / shares | $ 3 | |||||||||||||||
Issuance of deemed dividend | $ | $ 1,641,484 | |||||||||||||||
Number of investors | Investor | 12 | |||||||||||||||
Number of affiliate investors | Affiliateinvestors | 4 | |||||||||||||||
Stock award agreements [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Shares of restricted common stock issued | 450,000 | |||||||||||||||
Stock based compensation | $ | $ 604,440 | $ 508,940 | ||||||||||||||
Number of management employees | Employees | 4 | |||||||||||||||
Number of director | Director | 1 | |||||||||||||||
Adaptive Flight, Inc. [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock, shares issued | 50,000 | |||||||||||||||
Escrow share value | $ | $ 1,400,000 | |||||||||||||||
Gain on settlement of make whole provision | $ | 11,000 | |||||||||||||||
Fair value of assets | $ | 150,500 | |||||||||||||||
Securities sold to investors price per share | $ / shares | $ 3.23 | |||||||||||||||
Chairman of the Board [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Shares of restricted common stock issued | 50,000 | |||||||||||||||
Common stock issued, shares | 150,000 | |||||||||||||||
Recognized total expense | $ | $ 112,500 | 270,000 | ||||||||||||||
Vesting period term | 24 months | |||||||||||||||
Dr. Philip Frost and Steven Rubin [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued, shares | 150,000 | |||||||||||||||
Recognized total expense | $ | $ 29,500 | 284,000 | ||||||||||||||
Vesting period term | 12 months | |||||||||||||||
Fair value of assets | $ | $ 82,722 | |||||||||||||||
Lt. Gen. Michael T. Flynn [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Stock based compensation | $ | $ 97,000 | |||||||||||||||
Aggregate shares of restricted common stock | 33,333 | |||||||||||||||
Common stock, shares issued | 100,000 | |||||||||||||||
Forfeited unvested shares | 66,667 | |||||||||||||||
Four management employees and one director [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued, shares | 450,000 | 604,440 | ||||||||||||||
Payments of financing costs | $ | $ 4,000,000 | |||||||||||||||
Common Stock [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Shares of restricted common stock issued | 50,000 | |||||||||||||||
Common stock, shares issued | 500,250 | 3,556,635 | ||||||||||||||
2015 Equity Plan [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Shares of restricted common stock issued | 5,210,000 | |||||||||||||||
Shares vest upon consummation of equity and/or debt financing | $ | $ 5,000,000 | $ 3,725,000 | ||||||||||||||
Stock based compensation | $ | $ 970,067 | $ 1,488,596 | ||||||||||||||
Common stock issued, shares | 1,339,000 | 1,150,000 | ||||||||||||||
2015 Equity Plan [Member] | Stock award agreements [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Stock based compensation | $ | $ 3,346,615 | |||||||||||||||
2015 Equity Plan [Member] | Lt. Gen. Michael T. Flynn [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Aggregate shares of restricted common stock | 25,000 | |||||||||||||||
Cancelled shares | 25,000 | |||||||||||||||
2015 Equity Plan [Member] | Reginald Brown, Jr. [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Shares vest upon consummation of equity and/or debt financing | $ | $ 11,065 | |||||||||||||||
Common stock issued, shares | 35,000 | |||||||||||||||
SAB Amendments [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Restricted common stock, description | The SAB Amendments extend the term of the agreements from May 1, 2017 until April 30, 2018 and provide for the following equity based compensation: (a) for Dr. Frost, a warrant to purchase 2,000,000 shares of the Company's Common Stock (the "Frost Warrant") and an award of 150,000 shares of the Company's unregistered restricted Common Stock and (b) for Mr. Rubin, an award of 100,000 shares of the Company's unregistered restricted Common Stock. The restricted stock vests upon the occurrence of a change of control (as defined in the SAB Amendments). | |||||||||||||||
Warrant Term | 5 years | |||||||||||||||
Warrant exercise price | $ / shares | $ 1 | |||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Preferred stock converted shares | 100,100 | |||||||||||||||
Aggregate shares of restricted common stock | 250,250 | |||||||||||||||
Common stock issued for conversion | 2,500 | |||||||||||||||
Series A Preferred Stock [Member] | Investors [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 1,000 | |||||||||||||||
Series C Preferred Stock [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 183,468 | |||||||||||||||
Series C Preferred Stock [Member] | Investors [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 73,387 | |||||||||||||||
Series D Preferred Stock [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 50,000 | |||||||||||||||
Series D Preferred Stock [Member] | Investors [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 2,000,000 | |||||||||||||||
Series F Preferred Stock [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 50,000 | |||||||||||||||
Series F Preferred Stock [Member] | Investors [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 1,999,998 | |||||||||||||||
Series G Preferred Stock [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 50,000 | |||||||||||||||
Series G Preferred Stock [Member] | Investors [Member] | ||||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||||
Common stock issued for conversion | 2,000,000 |
Preferred Stock (Details)
Preferred Stock (Details) - shares | 1 Months Ended | 12 Months Ended | |
Apr. 24, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Series A stock preferred stock [Member] | |||
Preferred Stock (Textual) | |||
Stock conversion, description | The Series A stock conversion ratio is 1 to 2.5 common shares. | ||
Shares of series preferred stock converted | 100,100 | ||
Aggregate shares of restricted common stock | 250,250 | ||
Series A stock preferred stock [Member] | Investor One [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 1,000 | ||
Series A stock preferred stock [Member] | Common shares [Member] | Investor One [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 2,500 | ||
Series C Preferred Stock [Member] | Investor Two [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 73,387 | ||
Series C Preferred Stock [Member] | Common shares [Member] | Investor Two [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 183,468 | ||
Series D Preferred Stock [Member] | Investor One [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 2,000,000 | ||
Series D Preferred Stock [Member] | Common shares [Member] | Investor One [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 50,000 | ||
Series F Preferred Stock [Member] | Investor One [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 1,999,998 | ||
Series F Preferred Stock [Member] | Common shares [Member] | Investor One [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 50,000 | ||
Series G Preferred Stock [Member] | Investor Two [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 2,000,000 | ||
Series G Preferred Stock [Member] | Common shares [Member] | Investor Two [Member] | |||
Preferred Stock (Textual) | |||
Shares of series preferred stock converted | 50,000 |
Employee Stock Options (Details
Employee Stock Options (Details) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of assumptions used to estimate fair value of stock options granted | ||
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Summary of assumptions used to estimate fair value of stock options granted | ||
Expected volatility | 82.00% | 102.00% |
Risk-free interest rate | 1.50% | 0.79% |
Expected life of options | 2 years 6 months | 2 years |
Maximum [Member] | ||
Summary of assumptions used to estimate fair value of stock options granted | ||
Expected volatility | 100.00% | 108.00% |
Risk-free interest rate | 2.01% | 1.38% |
Expected life of options | 4 years | 3 years |
Employee Stock Options (Detai49
Employee Stock Options (Details 1) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Options | |||
Outstanding - Beginning Balance | 442,500 | 392,500 | |
Granted | 7,510,000 | 65,000 | |
Exercised or Vested | |||
Cancelled or Expired | (7,500) | (15,000) | |
Outstanding - Ending Balance | 7,945,000 | 442,500 | 392,500 |
Number of Options, Exercisable | 7,627,500 | 407,500 | 355,000 |
Weighted Average Exercise Price per Share | |||
Outstanding - Beginning Balance | $ 5.81 | $ 6.19 | |
Granted | 1.12 | 2.99 | |
Exercised or Vested | 0 | ||
Cancelled or Expired | 4.18 | 3.61 | |
Outstanding - Ending Balance | 1.38 | 5.81 | $ 6.19 |
Weighted Average Exercise Price, Exercisable | $ 1.35 | $ 5.57 | $ 5.70 |
Weighted Average Contractual Life in Years | |||
Outstanding | 3 years 6 months | 1 year 8 months 19 days | 2 years 7 months 13 days |
Exercisable | 3 years 6 months | 1 year 7 months 24 days | 2 years 6 months 18 days |
Aggregate Intrinsic Value | |||
Outstanding | $ 0 | $ 0 | $ 0 |
Aggregate Intrinsic Value Exercisable | $ 0 | $ 0 | $ 0 |
Employee Stock Options (Detai50
Employee Stock Options (Details Textual) - USD ($) | Dec. 13, 2017 | Aug. 03, 2017 | Jan. 09, 2017 | Jun. 01, 2015 | Nov. 09, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Employee Stock Options (Textual) | |||||||
Compensation expense recognized | $ 18,456 | ||||||
Employee Stock Option Two [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Stock options granted | 7,510,000 | ||||||
Common Stock [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Vested options | 50,000 | ||||||
Compensation expense recognized | $ 129,059 | ||||||
Common stock shares issued an option to purchase | 100,000 | 100,000 | |||||
Exercise price | $ 2.90 | ||||||
Stock options granted | 50,000 | ||||||
Employee Stock Option [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Expiration date | Apr. 27, 2019 | ||||||
Compensation expense recognized | $ 10,516 | $ 229,563 | |||||
Stock options granted | 65,000 | ||||||
Description of option | The Company cancelled 2,500 options issued December 10, 2015 with a strike price of $5.00 and cancelled 5,000 options issued July 28, 2016 with a strike price of $3.77 that had been issued to two employees who left the Company without exercising their options. | ||||||
Employee Stock Option [Member] | Employee Stock Option Two [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Stock options granted | 50,000 | ||||||
Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Estimate fair value of stock options granted, Shares | 10,000 | ||||||
2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Vested options | 5,210,000 | ||||||
Expiration date | Aug. 3, 2021 | ||||||
Compensation expense recognized | $ 3,354,097 | ||||||
Common stock shares issued an option to purchase | 5,210,000 | ||||||
Weighted Average Exercise Price, Exercisable | $ 1 | ||||||
2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Expiration date | Nov. 9, 2021 | ||||||
Compensation expense recognized | 2,000,000 | ||||||
Common stock shares issued an option to purchase | 2,000,000 | ||||||
Exercise price | $ 1.35 | ||||||
Compensation expenses | 1,846,075 | ||||||
2015 Equity Plan [Member] | Employee Stock Option Two [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Exercise price, granted | $ 1 | ||||||
Expiration date | Dec. 13, 2021 | ||||||
Options issued | 100,000 | ||||||
Compensation expense recognized | 3,593 | ||||||
Description of option | These options vest 50% after one year and the remaining 50% after two years provided the director is still actively involved with the Company. | ||||||
Remaining balance options recognized | 96,196 | ||||||
Black Scholes Option [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Compensation expense recognized | $ 7,510,000 | ||||||
Estimate fair value of stock options granted, Shares | 5,474,133 | ||||||
Stock options granted | 7,510,000 | ||||||
Compensation expenses | $ 5,332,824 | ||||||
Vesting Three [Member] | Employee Stock Option [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Exercise price, granted | $ 3 | ||||||
Stock options granted | 10,000 | ||||||
Stock option expiration date | Dec. 6, 2019 | ||||||
Option expired | 5,000 | ||||||
Vesting One [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Exercise price, granted | $ 2.91 | ||||||
Stock options granted | 50,000 | ||||||
Stock option expiration date | Apr. 27, 2019 | ||||||
Option expired | 10,000 | ||||||
Vesting One [Member] | Employee Stock Option Two [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Vested options | 50,000 | ||||||
Vesting Two [Member] | Employee Stock Option Two [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Vested options | 5,000 | ||||||
Exercise price, granted | $ 3.77 | ||||||
Stock options granted | 5,000 | ||||||
Stock option expiration date | Jul. 29, 2019 | ||||||
Employee [Member] | Vesting One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Exercise price, granted | $ 10.80 | ||||||
Expiration date | May 4, 2019 | ||||||
Options issued | 37,500 | ||||||
Compensation expenses | $ 54,943 | $ 122,058 | |||||
Jay Nussbaum [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 2,000,000 | ||||||
Jay Nussbaum [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 900,000 | ||||||
Felicia Hess [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 1,200,000 | ||||||
Felicia Hess [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 300,000 | ||||||
Dan Erdberg [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 1,140,000 | ||||||
Dan Erdberg [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 200,000 | ||||||
Kendall Carpenter [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 275,000 | ||||||
Kendall Carpenter [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 170,000 | ||||||
David Aguilar [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 100,000 | ||||||
David Aguilar [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 10,000 | ||||||
Mike Haas [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 10,000 | ||||||
Mike Haas [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 10,000 | ||||||
General Wayne Jackson [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 10,000 | ||||||
General Wayne Jackson [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 10,000 | ||||||
Reginald Brown [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 400,000 | ||||||
Employees and consultants [Member] | 2015 Equity Plan [Member] | |||||||
Employee Stock Options (Textual) | |||||||
Options issued | 475,000 |
Warrants (Details)
Warrants (Details) - Warrant [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2015 | |
Class of Warrant or Right [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 107.00% | |
Risk-free interest rate | 1.53% | |
Expected life of warrants | 1 year | |
Minimum [Member] | ||
Class of Warrant or Right [Line Items] | ||
Expected volatility | 190.00% | |
Risk-free interest rate | 1.52% | |
Expected life of warrants | 4 years | |
Maximum [Member] | ||
Class of Warrant or Right [Line Items] | ||
Expected volatility | 212.00% | |
Risk-free interest rate | 1.88% | |
Expected life of warrants | 5 years |
Warrants (Details 1)
Warrants (Details 1) - Warrant [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Warrants | |||
Outstanding - Beginning Balance | 183,737 | 134,209 | |
Exercisable - Beginning Balance | 171,237 | 104,209 | |
Granted | 2,050,000 | 60,000 | |
Forfeited or Expired | (1,237) | (10,472) | |
Outstanding - Ending Balance | 2,232,500 | 183,737 | 134,209 |
Exercisable - Ending Balance | 2,232,500 | 171,237 | 104,209 |
Weighted Average Exercise Price per Share | |||
Outstanding - Beginning Balance | $ 7.35 | $ 23.87 | |
Exercisable - Beginning Balance | 7.15 | 27.87 | |
Granted | 1 | 2.91 | |
Forfeited or Expired | 303.37 | 193.72 | |
Outstanding - Ending Balance | 1.36 | 7.35 | $ 23.87 |
Exercisable- Ending Balance | $ 1.36 | $ 7.15 | $ 27.87 |
Weighted Average Remaining Contractual Life in Years, Outstanding | 4 years 4 months 2 days | 2 years 8 months 12 days | 3 years 7 months 28 days |
Weighted Average Remaining Contractual Life in Years, Exercisable | 4 years 4 months 2 days | 2 years 9 months 14 days | 4 years 4 days |
Aggregate Intrinsic Value Exercisable | $ 0 | $ 0 | $ 0 |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) | Aug. 03, 2017 | Jun. 10, 2017 | Nov. 09, 2017 | Jun. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Warrants (Textual) | ||||||||
Compensation expense recognized | $ 18,456 | |||||||
Stock based compensation | $ 1,488,596 | 6,602,806 | $ 5,553,026 | |||||
2015 Equity Plan [Member] | ||||||||
Warrants (Textual) | ||||||||
Compensation expense recognized | 3,354,097 | |||||||
Stock based compensation | $ 970,067 | $ 1,488,596 | ||||||
Warrant exercise price | $ 1 | |||||||
Warrant [Member] | ||||||||
Warrants (Textual) | ||||||||
Warrants issued to purchase common stock | 2,000,000 | 60,000 | ||||||
Exercise price of warrant | $ 2.91 | |||||||
Warrants expiration date | Aug. 3, 2022 | Apr. 27, 2019 | ||||||
Compensation expense recognized | $ 1,391,793 | $ 118,681 | ||||||
Estimate fair value warrant, shares | 2,050,000 | 12,500 | ||||||
Warrants expired that were issued | 12,500 | |||||||
Fair value of warrants | $ 0 | |||||||
Fair value warrants vested | 12,500 | |||||||
Stock based compensation | $ (3,467) | $ 118,681 | ||||||
Warrant exercise price | $ 1 | |||||||
Warrant [Member] | 2011 [Member] | ||||||||
Warrants (Textual) | ||||||||
Warrants expired that were issued | 10,472 | |||||||
Warrant [Member] | 2015 Equity Plan [Member] | ||||||||
Warrants (Textual) | ||||||||
Warrants issued to purchase common stock | 30,000 | 20,000 | ||||||
Exercise price of warrant | $ 1.35 | |||||||
Warrants expiration date | Aug. 3, 2021 | Nov. 9, 2021 | ||||||
Compensation expense recognized | $ 19,269 | |||||||
Warrant exercise price | $ 1 | |||||||
Warrant [Member] | Maximum [Member] | 2011 [Member] | ||||||||
Warrants (Textual) | ||||||||
Exercise price of warrant | $ 404.50 | |||||||
Warrant [Member] | Minimum [Member] | 2011 [Member] | ||||||||
Warrants (Textual) | ||||||||
Exercise price of warrant | $ 141 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes [Abstract] | ||
Net operating loss carry-forwards | $ 2,250,939 | $ 2,574,915 |
Valuation allowance | (2,250,939) | (2,574,915) |
Deferred tax assets, net | $ 0 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes (Textual) | ||
Net operating loss carry-forward | $ 10,718,755 | $ 7,573,280 |
Expiration date of net operating loss carry-forward | Dec. 31, 2034 | |
Corporate income tax rate, description | The major change that affects the Company is reducing the corporate income tax rate from 35% to 21%. |
Commitments and Contingencies56
Commitments and Contingencies (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies [Abstract] | |
Year 2,018 | $ 75,437 |
Year 2,019 | 77,309 |
Year 2,020 | $ 45,651 |
Commitments and Contingencies57
Commitments and Contingencies (Details Textual) | 1 Months Ended | 12 Months Ended | ||
Nov. 17, 2014USD ($)ft² | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Commitments and Contingencies (Textual) | ||||
Term of lease | 60 months | |||
Area of office and manufacturing | ft² | 5,533 | |||
Operating lease description | The actual commencement date was July 1, 2015 and the lease was amended to 61 months expiring July 31, 2020. | |||
Operating expenses and sales tax | $ | $ 5,915 | |||
Rent expense | $ | $ 131,710 | $ 108,600 | ||
Minimum royalty | $ | $ 1,500 | |||
Recovery of defendant legal fees | $ | $ 400,000 | |||
Minimum [Member] | License One [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Royalty price per share | $ / shares | $ 12.50 | |||
Minimum [Member] | License Two [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Royalty price per share | $ / shares | 25 | |||
Maximum [Member] | License One [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Royalty price per share | $ / shares | 75 | |||
Maximum [Member] | License Two [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Royalty price per share | $ / shares | $ 150 |
Concentrations (Details)
Concentrations (Details) - Customers | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Number of customers | 2 | 1 |
Percentage of concentrations of credit risk | 100.00% | 100.00% |
Revenues [Member] | ||
Concentrations (Textual) | ||
Number of customers | 4 | 1 |
Percentage of concentrations of credit risk | 85.00% | 87.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | 1 Months Ended | |
Mar. 23, 2018 | Feb. 22, 2018 | |
Subsequent Event (Textual) | ||
Revolving line of credit | $ 250,000 | |
Secured convertible note | $ 250,000 | |
Subsequent event, description | The Company entered into amendments (the "March 2018 Convertible Note Amendments") with the owners and holders of the Series 2016 Convertible Notes described in Footnote #6 to extend the maturity date from April 1, 2019 until October 1, 2020. |