Nevada
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46-5538504
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company)
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INDEX
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||||||
PART I.
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FINANCIAL INFORMATION
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|||||
ITEM 1
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Financial Statements
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|||||
3 | ||||||
4 | ||||||
5 | ||||||
6-9 | ||||||
10-15 | ||||||
16 | ||||||
16 | ||||||
PART II.
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OTHER INFORMATION
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|||||
17 | ||||||
17 | ||||||
17 | ||||||
17 | ||||||
17 | ||||||
17 | ||||||
17 | ||||||
18 |
DRONE AVIATION HOLDING CORP. | ( | |||||||
(FKA MACROSOLVE, INC.)
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||||||||
3/31/2014
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12/31/2013
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|||||||
(Unaudited) | ||||||||
ASSETS
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||||||||
CURRENT ASSETS:
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||||||||
Cash
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$ | 572,041 | $ | 706,211 | ||||
Accounts receivable - trade
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20,442 | 38,791 | ||||||
Prepaid expenses and notes receivable
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18,440 | 32,594 | ||||||
Total current assets
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610,923 | 777,596 | ||||||
PROPERTY AND EQUIPMENT, at cost:
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4,237 | 4,237 | ||||||
Less - accumulated depreciation and amortization
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(1,767 | ) | (1,586 | ) | ||||
Net property and equipment
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2,470 | 2,651 | ||||||
OTHER ASSETS:
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||||||||
Available-for-sale investment - DecisionPoint Systems, Inc.
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253,086 | 324,190 | ||||||
Available-for-sale investment - MEDL Mobile Holdings, Inc.
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31,017 | 39,537 | ||||||
Available-for-sale Investment - Endexx Corporation
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31,250 | 7,675 | ||||||
Intangible assets, net of amortization
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69,520 | 70,223 | ||||||
Total other assets
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384,873 | 441,625 | ||||||
TOTAL ASSETS
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$ | 998,266 | $ | 1,221,872 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
CURRENT LIABILITIES:
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||||||||
Note Payable - Oklahoma Technology Commercialization Center- Current
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$ | 110,000 | $ | 112,500 | ||||
Accounts payable - trade and accrued liabilities
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157,908 | 181,172 | ||||||
Note payable - Related party
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22,500 | 22,500 | ||||||
Total current liabilities
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290,408 | 316,172 | ||||||
LONG-TERM DEBT, less current maturities
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||||||||
Note Payable - Shareholders
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533,681 | 533,681 | ||||||
Note Payable - Oklahoma Technology Commercialization Center
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- | 20,000 | ||||||
Convertible debentures, net of discount of $50,000 and $54,545 respectively
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100,000 | 95,455 | ||||||
Total long-term debt, less current maturities
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633,681 | 649,136 | ||||||
TOTAL LIABILITIES
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$ | 924,089 | $ | 965,308 | ||||
COMMITMENTS AND CONTINGENCIES
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- | - | ||||||
STOCKHOLDERS' EQUITY:
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||||||||
Preferred stock, $.01 par value; authorized 10,000,000 shares;
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||||||||
0 shares issued and outstanding, at
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||||||||
March 31, 2014 and December 31, 2013, respectively
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- | - | ||||||
Common stock, $.01 par value; authorized 500,000,000 shares;
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||||||||
issued and outstanding 198,219,132 and 190,764,586 shares, at
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||||||||
March 31, 2014 and December 31, 2013, respectively
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1,982,191 | 1,907,645 | ||||||
Additional paid-in capital
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19,946,750 | 19,922,670 | ||||||
Accumulated other comprehensive income
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(455,985 | ) | (399,936 | ) | ||||
Accumulated deficit
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(21,398,779 | ) | (21,173,815 | ) | ||||
Total stockholders' equity
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74,177 | 256,564 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 998,266 | $ | 1,221,872 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
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DRONE AVIATION HOLDING CORP. | ||||||||
(FKA MACROSOLVE, INC.)
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||||||||
For the Quarters Ended
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||||||||
For the Quarters Ended March 31,
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3/31/2014
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3/31/2013
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(Restated)
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||||||||
Revenues
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$ | 134,808 | $ | 666,098 | ||||
Cost of revenues
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99,557 | 279,047 | ||||||
Gross profit
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35,251 | 387,051 | ||||||
General and administrative expense
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244,660 | 182,043 | ||||||
Income (loss) from operations
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(209,409 | ) | 205,008 | |||||
Other income (expense)
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||||||||
Interest income
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1,929 | 212 | ||||||
Interest expense
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(17,484 | ) | (17,096 | ) | ||||
Total other expense
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(15,555 | ) | (16,884 | ) | ||||
NET INCOME (LOSS)
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(224,964 | ) | 188,124 | |||||
OTHER COMPREHENSIVE INCOME, net of tax
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||||||||
Unrealized holding gain (loss) arising during the period
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(56,049 | ) | 244,699 | |||||
COMPREHENSIVE INCOME (LOSS)
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$ | (281,013 | ) | $ | 432,823 | |||
INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS:
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||||||||
Net income (loss)
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$ | (224,964 | ) | $ | 188,124 | |||
Income (loss) allocable to common stockholders
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$ | (224,964 | ) | $ | 188,124 | |||
Weighted average number of common shares outstanding - basic and diluted
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190,764,586 | 182,802,785 | ||||||
Basic and diluted net income (loss) per share
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$ | (0.00 | ) | $ | 0.00 | |||
The accompanying notes are an integral part of these unaudited financial statements.
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DRONE AVIATION HOLDING CORP. | ||||||||
( FKA MACROSOLVE, INC.)
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For the Quarters Ended March 31,
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3/31/2014
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3/31/2013
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OPERATING ACTIVITIES:
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(Restated)
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Net (loss) income
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$ | (224,964 | ) | $ | 188,124 | |||
Adjustments to reconcile net loss to net cash
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||||||||
provided by (used in) operating activities:
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Depreciation and amortization
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884 | 841 | ||||||
Stock issued for services
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38,500 | - | ||||||
Amortization of debt discount
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4,545 | 4,545 | ||||||
Equity based compensation
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43,500 | 26,501 | ||||||
Option expense
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16,626 | - | ||||||
Changes in current assets and liabilities:
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Decrease (increase) in accounts receivable - trade
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18,349 | (267,743 | ) | |||||
Decrease in prepaid expenses and other
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14,154 | 7,726 | ||||||
(Decrease) increase in accounts payable - trade and
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||||||||
accrued liabilities
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(23,264 | ) | 113,101 | |||||
Net cash provided by (used in) operating activities
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(111,670 | ) | 73,095 | |||||
INVESTING ACTIVITIES:
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||||||||
Purchase of equipment
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- | (1,467 | ) | |||||
Disposal of equipment
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- | 435 | ||||||
Patent application fees
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- | (6,134 | ) | |||||
Net cash used in investing activities
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- | (7,166 | ) | |||||
FINANCING ACTIVITIES:
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||||||||
Repayments of notes payable
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(22,500 | ) | (22,500 | ) | ||||
Net cash (used in) provided by financing activities
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(22,500 | ) | (22,500 | ) | ||||
NET (DECREASE) INCREASE IN CASH
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(134,170 | ) | 43,429 | |||||
CASH, beginning of period
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706,211 | 659,204 | ||||||
CASH, end of period
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$ | 572,041 | $ | 702,633 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
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Cash paid during the quarters ended March 31:
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||||||||
Interest
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$ | - | $ | - | ||||
Income taxes
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$ | - | $ | - | ||||
Noncash investing and financing activities for the quarters ended March 31:
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||||||||
Stock issued in exchange for available-for-sale securities
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$ | - | $ | 58,338 | ||||
Change in fair value for available-for-sale securities | $ | (56,049) | $ | 244,699 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
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Three Months Ended
March 31,
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||||||||
2014
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2013
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|||||||
(restated)
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||||||||
Cash flows (used in) provided by operating activities
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$
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(111,670
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)
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$
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73,095
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|||
Cash flows (used in) investing activities
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-
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(7,166
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)
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|||||
Cash flows (used in) provided by financing activities
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(22,500
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)
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(22,500
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)
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||||
Net (decrease) increase in cash and cash equivalents
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$
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(134,170
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)
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$
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43,429
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a)
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Financial Reporting Systems: We did not maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, extensive manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes; and
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b)
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Segregation of Duties: We do not currently have a sufficient complement of technical accounting and external reporting personnel commensurate to support standalone external financial reporting under public company or SEC requirements. Specifically, the Company did not effective segregate certain accounting duties due to the small size of its accounting staff, and maintain a sufficient number of adequately trained personnel necessary to anticipate and identify risks critical to financial reporting and the closing process. In addition, there were inadequate reviews and approvals by the Company’s personnel of certain reconciliations and other processes in day-to-day operations due to the lack of a full complement of accounting staff.
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31.01
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Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.02
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Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.01
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Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101 INS
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XBRL Instance Document
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101 SCH
|
XBRL Taxonomy Extension Schema Document
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101 CAL
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XBRL Taxonomy Calculation Linkbase Document
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101 LAB
|
XBRL Taxonomy Labels Linkbase Document
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101 PRE
|
XBRL Taxonomy Presentation Linkbase Document
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101 DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
DRONE AVIATION HOLDING CORP.
|
|||
Date: May 8, 2014
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By:
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/s/ MICHAEL HAAS
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Michael Haas
|
|||
Interim President (Principal Executive Officer)
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|||
Date: May 8, 2014
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By:
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/s/ KENDALL CARPENTER
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Kendall Carpenter
|
|||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of Drone Aviation Holding Corp.;
|
2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
1.
|
I have reviewed this quarterly report on Form 10-Q of Drone Aviation Holding Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
By:
|
/s/ MICHAEL HAAS
|
|||
Date: May 8, 2014
|
Name:
|
Michael Haas
|
||
Title:
|
Interim President
|
By:
|
/s/ KENDALL CARPENTER
|
|||
Date: May 8, 2014
|
Name:
|
Kendall Carpenter
|
||
Title:
|
Chief Financial Officer
|
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