Annual report pursuant to Section 13 and 15(d)

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

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Drone Aviation Holding Corp and Drone Aviation Corp Securities Exchange, Reverse Merger and Recapitalization
12 Months Ended
Dec. 31, 2014
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 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 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 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 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 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., leaving Lighter Than Air Systems Corp. as the only wholly owned subsidiary of the Company.

 

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 share 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 $1.00 per share.