Quarterly report pursuant to Section 13 or 15(d)

Drone Aviation Corp Aquisition of Lighter Than Air Systems

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Drone Aviation Corp Aquisition of Lighter Than Air Systems
6 Months Ended
Jun. 30, 2014
Merger between macrosolve, inc. And drone aviation holding corp / Drone Aviation Corp Acquisition of Lighter Than Air Systems [Abstract]  
DRONE AVIATION CORP AQUISITION OF LIGHTER THAN AIR SYSTEMS
3. 
DRONE AVIATION CORP AQUISITION OF LIGHTER THAN AIR SYSTEMS
 
On March 31, 2014, Drone Aviation Corp. (DAC) was incorporated in the state of Nevada.  During April and May 2014, investors purchased 34,100,000 common shares of stock for $653,327. On May 5, 2014, DAC entered into an agreement with World Surveillance Group, Inc. (WSGI) to purchase 100% of WSGI’s interest in its subsidiary, Lighter Than Air Systems (LTAS), of Jacksonville, Florida. LTAS provides critical aerial and land-based surveillance and communications solutions to government and commercial customers. DAC paid $335,000 and issued 10,000,000 shares of common stock valued at the market price on the respective dates of issuance, and the fair value of the shares was determined to be $79,000, or a total of $414,000, to WSGI as consideration for LTAS.
 
In accordance with ASC 805-10 Business Combination and purchase acquisition accounting, DAC initially allocated the consideration to the net tangible and identifiable intangible assets, based on their estimated fair values as of the date of acquisition. Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The following preliminary table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.
 
Property and equipment   $ 1,638  
Accounts receivable     135,050  
Cash in bank     30,361  
Due from related party     20,650  
Prepaid expenses     1,382  
Inventory     72,974  
Intangible asset     135,550  
Current liabilities     (120,010 )
Goodwill     136,406  
Total purchase price   $ 414,000  
 
Intangible asset is in relation to the acquired customer list with a useful life of five years.
 
The consolidated financial statements included herein are presented for the fiscal year ended December 31, 2013 and the period from January 1, 2013 to May 5, 2014 since LTAS is considered DAC’s predecessor.