Drone Aviation Holding Corp and Drone Aviation Corp Securities Exchange, Reverse Merger and Recapitalization

12 Months Ended

Dec. 31, 2015

Drone Aviation Holding Corp and Drone Aviation Corp Securities Exchange, Reverse Merger and Recapitalization [Abstract]

DRONE AVIATION HOLDING CORP. AND DRONE AVIATION CORP. SECURITIES EXCHANGE, REVERSE MERGER AND RECAPITALIZATION

4. DRONE AVIATION HOLDING CORP. AND DRONE AVIATION CORP. SECURITIES EXCHANGE, REVERSE MERGER AND RECAPITALIZATION

On June 3, 2014, the Company entered into a Securities Exchange Agreement with Drone Aviation Corp. (DAC).  Upon closing of the transaction, the holders of 100% of DAC’s outstanding common stock transferred such 44,100,000 outstanding shares to the Company in exchange for an aggregate of 8,050,000 [201,250 post-reverse] shares of the Company’s common stock and 36,050,000 shares of the Company’s Series D Preferred Stock, or a total of 44,100,000 [1,102,500 post-reverse] shares of common stock and common stock equivalents of the Company. Pursuant to the terms of the Securities Exchange Agreement, certain shareholders of DAC who, as a result of receiving the shares of common stock would hold in excess of 3.33% of the Company’s issued and outstanding common stock on a post-closing basis, elected to receive shares of the Company’s Series D Preferred Stock. At the closing of the transaction, the Company had 3,920,700 [98,017 post-reverse] shares of common stock outstanding, 595,000 shares of Series A Preferred Stock outstanding, 324,671 shares of Series B Preferred Stock outstanding, 156,231 shares of Series B-1 Preferred Stock outstanding and 355,000 shares of Series C Preferred Stock outstanding.

As a result of the Securities Exchange described above, DAC and its subsidiary, LTAS, became our wholly owned subsidiaries.

For accounting purposes, this transaction is being accounted for as a reverse merger and has been treated as a recapitalization of Drone Aviation Holding Corp. with Drone Aviation Corp. considered the accounting acquirer, and the financial statements of the accounting acquirer became the financial statements of the registrant. The 44,100,000 [1,102,500 post-reverse] shares issued to shareholders of DAC and its designees in conjunction with the securities exchange transaction have been presented as outstanding for all periods. The historical consolidated financial statements include the operations of the accounting acquirer for all periods presented.

On June 3, 2014, the assets and liabilities of Drone Aviation Holding Corp. carried onto the books were:

Cash in bank	$	1,692,896
Available-for-sale securities		211,525
Prepaid expenses		37,403
Current liabilities		(39,622	)
Derivative liabilities		(2,159,824	)
Note payable		(110,000	)
Total	$	367,622

On March 26, 2015 Drone Aviation Corp. merged into Drone Aviation Holding Corp.

Series E Preferred Private Placement

On June 3, 2014, prior to the reverse merger, the Company sold an aggregate of 2,700,000 units in a private placement of its securities to certain investors at a purchase price of $0.50 per unit pursuant to subscription for an aggregate purchase price of $1,350,000. Each unit consists of one share of the Company’s Series E Convertible Preferred Stock, par value $0.0001 per share, each of which is convertible into one-fortieth share, on a post-reverse split basis, of Common Stock, with such rights and designations as set forth in the Certificate of Designation; and a three year warrant to purchase one share of Common Stock at an exercise price of $40.00 per share. All the warrants were exercised on August 26, 2014. On June 2, 2015, the holders of Series E received an additional 2,700,000 units due to the Most Favored Nations provision associated with their initial investment.