What changed in this filing

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Item 1. Business

2022-03-07 compared with 2021-03-30 · 304 added, 318 removed, 58 unchanged (91% of the section changed)

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of the weapons platform or the target.

were founded in 2014 as Unlimited Aerial Systems, LLP (“UAS LLP”), and until the consummation of the Share Exchange

Agreement (as hereinafter defined), we were a developer and manufacturer of commercial unmanned aerial systems, or drones, with

the goal of providing a superior Quadrotor aerial platform at an affordable price point in the law enforcement and first responder

March 9, 2020, we closed on the Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which Duke

Robotics, Inc., a Delaware corporation (“Duke”) became our majority-owned subsidiary (the “Share Exchange”).

Such closing date is referred to as the “Effective Time.”

As a result of the Share Exchange, the Company adopted the

business plan of Duke.

April 29, 2020, we, Duke, and UAS Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“UAS Sub”),

executed an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which UAS Sub was to merge, upon the

satisfaction of customary closing conditions, with and into Duke, with Duke surviving as our wholly-owned subsidiary (the “Short-Form

Merger”).

Pursuant to the Merger Agreement, we intended to acquire the remaining outstanding shares of Duke held by those

certain Duke shareholders that did not participate in the Share Exchange.

On June 25, 2020, Duke filed a Certificate of Merger

with the State of Delaware, and consequently, Duke became our wholly-owned subsidiary and the Short-Form Merger was consummated.

were founded in 2014 as Unlimited Aerial Systems, LLP (“UAS LLP”), and until the consummation of the Share Exchange Agreement

(as hereinafter defined), we were a developer and manufacturer of commercial unmanned aerial systems, or drones, with the goal of providing

a superior Quadrotor aerial platform at an affordable price point in the law enforcement and first responder markets.

March 9, 2020, we closed on the Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which Duke Robotics,

Inc., a Delaware corporation (“Duke”) became our majority-owned subsidiary (the “Share Exchange”).

date is referred to as the “Effective Time.” As a result of the Share Exchange, the Company adopted the business plan of

April 29, 2020, we, Duke, and UAS Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“UAS Sub”),

executed an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which UAS Sub was to merge, upon the satisfaction

of customary closing conditions, with and into Duke, with Duke surviving as our wholly-owned subsidiary (the “Short-Form Merger”).

Pursuant to the Merger Agreement, we intended to acquire the remaining outstanding shares of Duke held by those certain Duke shareholders

that did not participate in the Share Exchange.

On June 25, 2020, Duke filed a Certificate of Merger with the State of Delaware, and

consequently, Duke became our wholly-owned subsidiary and the Short-Form Merger was consummated.

has a wholly-owned subsidiary, Duke Airborne Systems Ltd.

(“Duke Israel”), which was formed under the laws of the

State of Israel in March 2014 and became the sole subsidiary of Duke after its incorporation.

Our mailing address is 1 Etgar Street

(1st Floor), Tirat-Carmel, Israel 3903212, and our telephone number is 011-972-4-8124101.

(“Duke Israel”), which was formed under the laws of the State of

Israel in March 2014 and became the sole subsidiary of Duke after its incorporation.

Our mailing address is 1 Etgar Street (1st Floor),

Tirat-Carmel, Israel 3903212, and our telephone number is 011-972-4-8124101.

Our web site address is https://dukeroboticsys.com/.

the consummation of the Share Exchange, we were a developer and manufacturer of commercial unmanned aerial systems, or drones,

with the goal of providing a superior Quadrotor aerial platform at an affordable price point in the law enforcement and first

responder markets.

the consummation of the Share Exchange, we were a developer and manufacturer of commercial unmanned aerial systems, or drones, with the

goal of providing a superior Quadrotor aerial platform at an affordable price point in the law enforcement and first responder markets.

Following the Share Exchange, we adopted the business plan of Duke.

Duke is a robotics company dedicated to

the development of an advanced robotics stabilization system that enables remote, real-time, pinpoint accurate firing of small

arms and light weapons.

Our advanced robotics system is able to achieve pinpoint accuracy regardless of the movement of the weapons

platform or the target.

late 2016, we began working with a flight training company in the western U.S.

We sent one of our inventory Quadrotors to them

with the intention of:

(1) allowing them to use our drone in their training courses, specifically with law enforcement and first

responder professionals;

(2) obtaining feedback on performance and operating characteristics of our drone with the intention of

improving the product for future generations;

Duke is a robotics company dedicated to the development of an advanced

robotics stabilization system that enables remote, real-time, pinpoint accurate firing of small arms and light weapons.

robotics system is able to achieve pinpoint accuracy regardless of the movement of the weapons platform or the target.

In late 2016, we began

working with a flight training company in the western U.S.

We sent one of our inventory Quadrotors to them with the intention of:

(1) allowing them to use our drone in their training courses, specifically with law enforcement and first responder professionals;

(2) obtaining feedback on performance and operating characteristics of our drone with the intention of improving the product for

future generations;

and (3) seeking sales of additional Quadrotors to this company or its clients.

2018 and 2019, the Company did not sell any drones.

the first product has been designed to be used by an unmanned aerial system (a “UAS”), the robotic solutions are also

adaptable to other military vehicles, boats and stationary environments, as well as civilian purposes, such as, high definition,

high-end stabilized cameras.

We believe that the system is to small arms and light weapons (e.g., weapons weighing less than 9

kilograms, or kg, or approximately 19.9 pounds) as drones are to air-to-ground missiles.

During 2020 and 2021, following

the execution of the Collaboration Agreement with Elbit as detailed below, the Company did not sell any drones.

the first product has been designed to be used by an unmanned aerial system (a “UAS”), the robotic solutions are also adaptable

to other military vehicles, boats and stationary environments, as well as civilian purposes, such as, high definition, high-end stabilized

We believe that the system is to small arms and light weapons (e.g., weapons weighing less than 9 kilograms, or kg, or approximately

19.9 pounds) as drones are to air-to-ground missiles.

have completed our first generation of our robotic systems.

Prior to marketing our systems to potential customers, for security

reasons, we are required to obtain various governmental approvals for each sale.

We have filed marketing applications with the

Israeli Ministry of Defense (“IMOD”) and as a result thereof, currently hold marketing approvals for about 50 countries,

including the United States.

Prior to marketing our systems to potential customers, for security reasons,

we are required to obtain various governmental approvals for each sale.

We have filed marketing applications with the Israeli Ministry

of Defense (“IMOD”) and as a result thereof, currently hold marketing approvals for about 50 countries, including the United

Currently, our commercialization efforts are primarily focused on the U.S.

market, with secondary

efforts outside of the United States focused primarily on Western Europe.

January 29, 2021, we, through Duke Israel, and Elbit Systems Land Ltd., an Israeli corporation (“Elbit”), entered

into a collaboration agreement (the “Collaboration Agreement”) for the global marketing and sales, and the production

and further development of our developed advanced robotic system mounted on an UAS, armed with lightweight firearms, which we

market under the commercial name “TIKAD.”

market, with secondary efforts outside of the United

States focused primarily on Western Europe.

January 29, 2021, we, through Duke Israel, and Elbit Systems Land Ltd., an Israeli corporation (“Elbit”), entered into a

collaboration agreement (the “Collaboration Agreement”) for the global marketing and sales, and the production and further

development of our developed advanced robotic system mounted on an UAS, armed with lightweight firearms, which we market under the commercial

name “TIKAD.” Following the Collaboration Agreement, we are in the process of evaluating additional different applications

for use of our technology and know-how including for its use in the civilian market.

May 11, 2021, we entered into Securities Purchase Agreements with eight non-U.S.

investors in a private placement offering in which we

agreed to issue and sell an aggregate of:

(i) 12,500,000 shares of common stock, par value $0.0001 per share at a price of $0.40 per

and (ii) warrants to purchase 12,500,000 Company’s Common Stock.

The Warrants were exercisable immediately and for a term

of 18 months and have an exercise price of $0.40 per share.

The aggregate gross proceeds from the Offering are approximately $5,000,000

and the Offering closed on May 11, 2021.

May 27, 2021, our board of directors (the “Board”) approved the 2021 Equity Incentive Plan (the “2021 Plan”)

pursuant to which the Company may issue awards, from time to time, consisting of non-qualified stock options, restricted stock grants

and restricted stock units (“RSUs”).

In addition, stock option awards that qualify under Section 102 of the Israeli Tax Ordinance

(New Version) 1961 (the “ITO”), and/or under Section 3(i) of the ITO, may be granted.

June 15, 2021, we announced that our wholly owned Israeli subsidiary, Duke Airborne Systems

Ltd., received a notice of allowance from the U.S.

Patent and Trademark Office for a patent titled “Stabilization System”

regarding its stabilization technology incorporated in its advanced robotic system.

classic confrontation of army against army has become rare, while guerilla (or asymmetric) warfare has unfortunately become commonplace.

Further, the foreign policy of the United States and other countries is increasingly designed around the parameter of not employing

“boots on the ground”

while at the same time minimizing collateral damage.

The United States and other countries around

the world have significantly increased their use of UASs for intelligence gathering, surveillance and tactical applications, such

as delivery of heavy ordnance bombs and missiles.

The use of UASs to fire small arms and light weapons from the air, however,

has not yet become a viable option.

Our technology thus addresses a crucial need of modern warfare to bring a wide range of weapons

other than bombs and missiles to bear on remote hostile targets without risk to the military personnel deploying the weapons,

while at the same time minimizing collateral damage.

In addition, the rapid evolution of small unmanned air systems (“sUAS”)

technologies, along with their size and low cost, enables novel concepts of employment that present challenges to current defense

systems, creating new asymmetric threats for warfighters.

Our system also addresses this crucial need for counter sUAS solutions

and offers a kinetic interception, or “drone kill drone,”

Further, the foreign policy of the United States and other countries is increasingly designed around the parameter of not employing “boots

on the ground” while at the same time minimizing collateral damage.

The United States and other countries around the world have

significantly increased their use of UASs for intelligence gathering, surveillance and tactical applications, such as delivery of heavy

ordnance bombs and missiles.

The use of UASs to fire small arms and light weapons from the air, however, has not yet become a viable

Our technology thus addresses a crucial need of modern warfare to bring a wide range of weapons other than bombs and missiles

to bear on remote hostile targets without risk to the military personnel deploying the weapons, while at the same time minimizing collateral

In addition, the rapid evolution of small unmanned air systems (“sUAS”) technologies, along with their size and low

cost, enables novel concepts of employment that present challenges to current defense systems, creating new asymmetric threats for warfighters.

Our system also addresses this crucial need for counter sUAS solutions and offers a kinetic interception, or “drone kill drone,”

capability for defeating enemy sUAS.

system was designed with input from veterans of Israel’s elite special mission units.

It is operated intuitively via a touch-based

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Minimal prior training is required in order to operate the robot.

In June 2016, our

robot mounted on our UAS Octocopter platform was awarded the top prize at the Combating Terrorism Technology Conference sponsored

by the United States Defense Department’s Combating Terrorism Technical Support Office, Israel’s Ministry of Defense

Directorate of Defense Research and Development and the MIT Enterprise Forum of Israel.

Octocopter Integrated with Six Degrees of Freedom (“6 DOF”) Robotic Gimbal

special purpose UAS Octocopter (DK-HIPPOGRIFF) integrates for operational usage with our 6 DOF robot and is intended primarily

for Military and homeland security purposes.

Our lightweight robot allows accurate firing from various configurations consisting

of UAS-mounted, land-mounted on light all-terrain vehicles and sea-mounted on boats.

The robot is mounted on our UAS Octocopter

platform, a combined system which we market under the commercial name “TIKAD.”

addition to the various configurations and mounting options, the robots also permit the utilization of a wide range of small arms,

light weapons and shotguns, with lethal and less lethal ammunition, with a maximum weight of nine (9) kilograms (approximately

twenty (20) pounds).

The combination of our robot, along with our stabilization platform and software, provides a unique firing

platform that permits precision firing regardless of weather conditions or other variables.

In June 2016, our robot mounted

on our UAS Octocopter platform was awarded the top prize at the Combating Terrorism Technology Conference sponsored by the United States

Defense Department’s Combating Terrorism Technical Support Office, Israel’s Ministry of Defense Directorate of Defense Research

and Development and the MIT Enterprise Forum of Israel.

Octocopter Integrated with Six Degrees of Freedom (“6 DOF”) Robotic Gimbal

special purpose UAS Octocopter (DK-HIPPOGRIFF) integrates for operational usage with our 6 DOF robot and is intended primarily for Military

and homeland security purposes.

Our lightweight robot allows accurate firing from various configurations consisting of UAS-mounted, land-mounted

on light all-terrain vehicles and sea-mounted on boats.

The robot is mounted on our UAS Octocopter platform, a combined system which

we market under the commercial name “TIKAD.”

addition to the various configurations and mounting options, the robots also permit the utilization of a wide range of small arms, light

weapons and shotguns, with lethal and less lethal ammunition, with a maximum weight of nine (9) kilograms (approximately twenty (20)

The combination of our robot, along with our stabilization platform and software, provides a unique firing platform that permits

precision firing regardless of weather conditions or other variables.

Additionally,

our robot may also be utilized as a ground sniper platform.

Since the robot is a standalone unit, it can be mounted on a patrol

or attack vehicle or be positioned at a strategic location.

The capability of remote operation without the need to expose the

operator to tactical danger can replace troops in different settings.

This capability may reduce the number of casualties due

to “friendly fire”

Since the robot is a standalone unit, it can be mounted on a patrol or attack

vehicle or be positioned at a strategic location.

The capability of remote operation without the need to expose the operator to tactical

danger can replace troops in different settings.

This capability may reduce the number of casualties due to “friendly fire”

incidents and may also significantly reduce exposure and risk to combat troops.

Our robot is controlled

by a remote-control device that permits the user to exert full control over its functions, including arming the robot as well

as control the firing mechanism.

lightweight robot can also be used for civilian purposes and bring solutions that do not yet exist for different tasks that require

high-end stabilization, such as:

vertical takeoff and landing (“VTOL”) robotic landing gear for drones, VTOL aircrafts

and medical aid robotic uses.

We do not initially intend to focus on the sale of the robot for civilian purposes but expect our

sales of the robot to increase as additional product options expand.

We will also address, as needed, evolving regulation of civilian

Our robot is controlled by a remote-control device that

permits the user to exert full control over its functions, including arming the robot as well as control the firing mechanism.

lightweight robot can also be used for civilian purposes and bring solutions that do not yet exist for different tasks that require high-end

stabilization, such as:

vertical takeoff and landing (“VTOL”) robotic landing gear for drones, VTOL aircrafts and medical

aid robotic uses.

We do not initially intend to focus on the sale of the robot for civilian purposes but expect our sales of the robot

to increase as additional product options expand.

We will also address, as needed, evolving regulation of civilian UASs.

mounted with M4 5.56mm Assault Rifle and the Control Unit

we assemble both our robots and UAS Octocopter at our facilities in Israel.

We outsource the production of certain components

to third-party manufacturers, from which we purchase supplies and custom-made machined parts required for the production of our

robots and UAS Octocopter, all of which we assemble with the final product in our facilities.

We currently source our parts and

materials from approximately twenty (20) suppliers located primarily in the United States, Europe, Israel and China.

however, dependent on any single manufacturer.

In addition, while the components we purchase are built according to our specific

designs and requests, we believe the components and materials we purchase are common in nature and can easily be obtained from

alternative suppliers, if necessary.

Components are tested and approved against the expected points of failure during extended

and aggressive operations.

For example, we test items such as the load carrying capacity of our products as well as various software

After the lab testing phase, the robot and UASs undergoes a series of field tests which examine the operation of each

We outsource the production of certain components to third-party

manufacturers, from which we purchase supplies and custom-made machined parts required for the production of our robots and UAS Octocopter,

all of which we assemble with the final product in our facilities.

We currently source our parts and materials from approximately twenty

(20) suppliers located primarily in the United States, Europe, Israel and China.

We are not, however, dependent on any single manufacturer.

In addition, while the components we purchase are built according to our specific designs and requests, we believe the components and

materials we purchase are common in nature and can easily be obtained from alternative suppliers, if necessary.

Components are tested

and approved against the expected points of failure during extended and aggressive operations.

For example, we test items such as the

load carrying capacity of our products as well as various software components.

After the lab testing phase, the robot and UASs undergoes

a series of field tests which examine the operation of each function.

Results are combined with multi-phased airborne testing.

addition, we have not executed supply agreements with our third-party suppliers.

More importantly, our proprietary and confidential

complex kinematic algorithms and control software is our most valuable intellectual property.

We have built an in-house laboratory

to support the assembly and commercialization of our products.

We believe that the current size and capacity of our in-house laboratory,

located at our facilities in Israel, will be sufficient to support all of our commercialization activities in the near future.

expect that our growth will initially derive from sales of TIKAD (our robot mounted on UAS Octocopter platform), and later from

sales of our robot mounted on other platforms, such as light all-terrain vehicles and sea-mounted on boats.

Focus on sales

in the United States .

More importantly, our proprietary and confidential complex

kinematic algorithms and control software is our most valuable intellectual property.

We have built an in-house laboratory to support

the assembly and commercialization of our products.

We believe that the current size and capacity of our in-house laboratory, located

at our facilities in Israel, will be sufficient to support all of our commercialization activities in the near future.

expect that our growth will initially derive from sales of TIKAD (our robot mounted on UAS Octocopter platform), and later from sales

of our robot mounted on other platforms, such as light all-terrain vehicles and sea-mounted on boats.

on sales in the United States .

We believe that the United States military will be our lead and reference customer.

States alone presents a significant and diverse market opportunity –

special operation forces units, various counter-terrorism

States alone presents a significant and diverse market opportunity – special operation forces units, various counter-terrorism

(federal, state and city) units, regular local police forces (the use of less-lethal weapons), U.S.

Army, National Guard,

Navy, Coast Guard and the Border Police.

Sales to NATO.

We believe adoption of our products in the United States will open the markets in countries that are U.S.

as the NATO countries.

Civilian Market .

We believe that our robot, due to its novel and unique capabilities, including stabilization of six degrees of freedom in

real-time, can bring solutions that do not yet exists for different tasks that require high end stabilization, such as VTOL

robotic landing gear for drones and aircraft that enables take-offs and landings on uneven terrain and on steep slopes and

medical uses for robotic procedures which need high accuracy.

success depends, at least in part, on our ability to protect our proprietary technology and intellectual property, and to operate

without infringing or violating the proprietary rights of others.

We rely on a combination of trade-secrets, know-how, and other

contractual rights (including confidentiality and invention assignment agreements) to protect our intellectual property rights.

We also restrict access to our sensitive intellectual property information to our most senior management.

Army, National Guard, U.S.

Coast Guard and the Border Police.

believe adoption of our products in the United States will open the markets in countries that are U.S.

allies such as the NATO countries.

We believe that our robot, due to its novel and unique capabilities, including stabilization of six degrees of freedom

in real-time, can bring solutions that do not yet exists for different tasks that require high end stabilization, such as VTOL robotic

landing gear for drones and aircraft that enables take-offs and landings on uneven terrain and on steep slopes and medical uses for

robotic procedures which need high accuracy.

success depends, at least in part, on our ability to protect our proprietary technology and intellectual property, and to operate without

infringing or violating the proprietary rights of others.

We rely on a combination of trade-secrets, know-how, and other contractual

rights (including confidentiality and invention assignment agreements) to protect our intellectual property rights.

We also restrict

access to our sensitive intellectual property information to our most senior management.

protect certain key technologies, we have submitted a U.S.

patent Application for stabilization system patents, which is pending.

We do not know whether any of our current or future patent applications will result in the issuance of any patents.

do not know whether any of our current or future patent applications will result in the issuance of any patents.

and Marketing

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official approval as the sole supplier of this solution to the IMOD.

The IMOD has also publicly endorsed our combined robotic

and UAS system, which we market under the commercial name TIKAD, as an innovative future battlefield technology that may be implemented

by the Israeli Defense Forces (the “IDF”).

The IMOD has also publicly endorsed our combined robotic and UAS

system, which we market under the commercial name TIKAD, as an innovative future battlefield technology that may be implemented by the

Israeli Defense Forces (the “IDF”).

are currently in the process of building up our sales and marketing infrastructure primarily in the United States.

This includes

cooperation with agents, distributors and resellers of products that are experienced in our market.

We have engaged an experienced

U.S.-based strategic consultant for U.S.

This includes cooperation

with agents, distributors and resellers of products that are experienced in our market.

We have engaged an experienced U.S.-based strategic

consultant for U.S.

Government and Customer relations with a proven track record in the Defense market.

intend to focus our sales efforts in the United States because the U.S.

military in general and special operation forces units

in particular are expected to be our largest customers, both in our early commercialization stage and for the foreseeable future.

We intend to focus our sales

efforts in the United States because the U.S.

military in general and special operation forces units in particular are expected to be

our largest customers, both in our early commercialization stage and for the foreseeable future.

January 29, 2021 we, through Duke Israel, and Elbit entered in the Collaboration Agreement.

Pursuant to the Collaboration Agreement,

Duke Israel has granted Elbit a worldwide exclusive license for the use of Duke Israel’s know-how and intellectual property

and the marketing, sales, production, and further development of the TIKAD for military, defense, homeland security, and para-military

As consideration for granting the worldwide exclusive license, Elbit will pay Duke Israel royalties from revenues received

from worldwide sales of TIKAD, with royalty rates ranging from low to mid-double-figure percentages, depending on the tiers of

the selling price of TIKAD, for a period starting from the date of the Collaboration Agreement until 15 years following receipt

of $50 million in cumulative revenues from sales of TIKAD units.

In addition, Duke Israel agreed to pay Elbit similar rates of

royalties for revenues received by Duke from sales of its advanced robotic system for civil use, if such systems will include

new know-how developed by Elbit.

we believe that our products are novel, and that we have unique knowledge of military operational demands and challenges and years

of developing complex military airborne systems and advanced robotics, the defense industry is a competitive environment.

is based on product and program performance, price, reputation, reliability, life cycle costs, overall value to the customer and

responsiveness to customer requirements.

Duke Israel has granted Elbit a worldwide exclusive license for the use of Duke Israel’s know-how and intellectual property and

the marketing, sales, production, and further development of the TIKAD for military, defense, homeland security, and para-military uses.

As consideration for granting the worldwide exclusive license, Elbit will pay Duke Israel royalties from revenues received from worldwide

sales of TIKAD, with royalty rates ranging from low to mid-double-figure percentages, depending on the tiers of the selling price of

TIKAD, for a period starting from the date of the Collaboration Agreement until 15 years following receipt of $50 million in cumulative

revenues from sales of TIKAD units.

In addition, Duke Israel agreed to pay Elbit similar rates of royalties for revenues received by

Duke from sales of its advanced robotic system for civil use, if such systems will include new know-how developed by Elbit.

June 15, 2021, we announced that our wholly owned Israeli subsidiary, Duke Airborne Systems

Ltd., received a notice of allowance from the U.S.

Patent and Trademark Office for a patent titled “Stabilization System”

regarding its stabilization technology incorporated in its advanced robotic system.

we believe that our products are novel, and that we have unique knowledge of military operational demands and challenges and years of

developing complex military airborne systems and advanced robotics, the defense industry is a competitive environment.

Competition is

based on product and program performance, price, reputation, reliability, life cycle costs, overall value to the customer and responsiveness

to customer requirements.

This includes the ability to respond to rapid changes in technology.

In addition, our

competitive position sometimes may be affected by specific requirements in particular geographic and product markets.

In addition, our competitive position

sometimes may be affected by specific requirements in particular geographic and product markets.

consolidation in the defense industry has affected competition.

In addition, many major prime contractors are increasing their

in-house capabilities.

In addition, many major prime contractors are increasing their in-house

capabilities.

These factors have decreased the number but increased the relative size and resources of our competitors.

We plan to continually adapt to market conditions by adjusting our business strategy to changing market conditions.

we plan to seek to enter into strategic partnership and cooperation agreements that we believe can assist us in overcoming the

challenges of competing in our industry.

We also anticipate continued competition in defense markets due to declining defense

budgets in many countries.

competitors, either alone or through their strategic partners, might have substantially greater name recognition and financial,

technical, manufacturing, marketing and human resources than we do.

These entities may also have significantly greater experience

and infrastructure in commercializing defense products, obtaining regulatory approval for those products and commercializing those

products around the world.

We plan to continually

adapt to market conditions by adjusting our business strategy to changing market conditions.

In addition, we plan to seek to enter into

strategic partnership and cooperation agreements that we believe can assist us in overcoming the challenges of competing in our industry.

We also anticipate continued competition in defense markets due to declining defense budgets in many countries.

competitors, either alone or through their strategic partners, might have substantially greater name recognition and financial, technical,

manufacturing, marketing and human resources than we do.

These entities may also have significantly greater experience and infrastructure

in commercializing defense products, obtaining regulatory approval for those products and commercializing those products around the world.

Contracting Regulations.

We operate under laws, regulations and administrative rules governing defense and other

government contracts, mainly in Israel and the United States.

Some of these carry major penalty provisions for non-compliance,

including disqualification from participating in future contracts.

In addition, our participation in governmental procurement

processes in Israel, the United States and other countries is subject to specific regulations governing the conduct of the process

of procuring defense and homeland security contracts.

We operate under laws, regulations and administrative rules governing defense and other government

contracts, mainly in Israel and the United States.

Some of these carry major penalty provisions for non-compliance, including disqualification

from participating in future contracts.

In addition, our participation in governmental procurement processes in Israel, the United States

and other countries is subject to specific regulations governing the conduct of the process of procuring defense and homeland security

Export Regulations.

Israel’s defense export policy regulates the sale of a number of our systems and products.

Current Israeli policy encourages exports to approved customers of defense systems and products such as ours, as long as the export

is consistent with Israeli government policy.

Israel’s defense export policy regulates the sale of a number of our systems and products.

Israeli policy encourages exports to approved customers of defense systems and products such as ours, as long as the export is consistent

with Israeli government policy.

Subject to certain exemptions, a license is required to initiate marketing activities.

We also must receive a specific export license for defense related hardware, software and technology exported from Israel.

law also regulates export of “dual use”

items (items that are typically sold in the commercial market but that also

may be used in the defense market).

We have filed marketing applications with the IMOD and have already received marketing approvals

for about fifty (50) countries including the U.S.

It is expected that in the mid-term more than seventy-five (75%) of our revenue

will be derived from exports subject to Israeli export regulations.

We also must receive

a specific export license for defense related hardware, software and technology exported from Israel.

Israeli law also regulates export

of “dual use” items (items that are typically sold in the commercial market but that also may be used in the defense market).

We have filed marketing applications with the IMOD and have already received marketing approvals for about fifty (50) countries including

It is expected that in the mid-term more than seventy-five (75%) of our revenue will be derived from exports subject to Israeli

export regulations.

of Israeli Defense Acquisition.

The Israeli Defense Entities Law (Protection of Defense Interests) establishes conditions

for the approval of an acquisition or transfer of control of an entity that is determined to be an Israeli “defense entity”

under the terms of the law.

Designation as a “defense entity”

is to occur through an order to be issued jointly by

the Israeli Prime Minister, Defense Minister and Economy Minister.

Although no such orders relating to us have been issued as

of the date hereof, it is possible that our Israeli subsidiary may be designated as a “defense entity”

under the law.

An order (pursuant to the law) would establish conditions and restrictions regarding non-Israeli control of our Israeli subsidiary.

For example, Israeli government approval might be required for acquisition of twenty-five percent (25%) or more of the voting

securities or a smaller percentage of shares of common stock that grant “means of control”

in the Company, if such

were to directly affect the control of our Israeli subsidiary.

Means of Control for the purposes of the law includes the right

to control the vote at a shareholders’

meeting or to appoint a director.

The Israeli Defense Entities Law (Protection of Defense Interests) establishes conditions for

the approval of an acquisition or transfer of control of an entity that is determined to be an Israeli “defense entity” under

the terms of the law.

Designation as a “defense entity” is to occur through an order to be issued jointly by the Israeli

Prime Minister, Defense Minister and Economy Minister.

Although no such orders relating to us have been issued as of the date hereof,

it is possible that our Israeli subsidiary may be designated as a “defense entity” under the law.

An order (pursuant to the

law) would establish conditions and restrictions regarding non-Israeli control of our Israeli subsidiary.

For example, Israeli government

approval might be required for acquisition of twenty-five percent (25%) or more of the voting securities or a smaller percentage of shares

of common stock that grant “means of control” in the Company, if such were to directly affect the control of our Israeli

Means of Control for the purposes of the law includes the right to control the vote at a shareholders’ meeting or to

appoint a director.

and Other Defense Acquisitions.

Many countries in addition to Israel also require governmental approval of

acquisitions of local defense companies or assets by foreign entities.

Mergers and acquisitions of certain types of defense related

businesses in the U.S.

are subject to the Foreign Investment and National Security Act (“FINSA”).

Under FINSA, foreign

acquisitions of certain types of defense related businesses in the U.S.

require review, and in some cases approval, by the Committee

on Foreign Investment in the United States (“CFIUS”).

In that regard, if a foreign entity attempts to acquire us or

all of our domestic assets, such transactions may be subject to FINSA, and in certain instances CFIUS has the authority to order

divestment and cancellation of the transaction.

American”

“Buy American”

laws impose price differentials or prohibitions on procurement

Many countries in addition to Israel also require governmental approval of acquisitions

of local defense companies or assets by foreign entities.

Mergers and acquisitions of certain types of defense related businesses in

are subject to the Foreign Investment and National Security Act (“FINSA”).

Under FINSA, foreign acquisitions of

certain types of defense related businesses in the U.S.

require review, and in some cases approval, by the Committee on Foreign Investment

in the United States (“CFIUS”).

In that regard, if a foreign entity attempts to acquire us or all of our domestic assets,

such transactions may be subject to FINSA, and in certain instances CFIUS has the authority to order divestment and cancellation of the

American” Laws.

“Buy American” laws impose price differentials or prohibitions on procurement

of products purchased under U.S.

government programs.

The price differentials or prohibitions apply to products that are not made

in the United States or that do not contain U.S.

components making up at least fifty percent (50%) of the total cost of all components

in the product.

However, a Memorandum of Agreement between the United States and Israeli governments waives the “Buy American”

The price differentials or prohibitions apply to products that are not made in

the United States or that do not contain U.S.

components making up at least fifty percent (50%) of the total cost of all components in

However, a Memorandum of Agreement between the United States and Israeli governments waives the “Buy American”

laws for specified products, including most of the products we are currently selling in the United States.

Solicitations for procurements by governmental purchasing agencies in Israel, the United States and

other countries are governed by laws, regulations and procedures relating to procurement integrity, including avoiding conflicts

of interest, corruption, human trafficking and conflict minerals in the procurement process.

Such regulations also include provisions

relating to information assurance and for the avoidance of counterfeit parts in the supply chain.

Solicitations for procurements by governmental purchasing agencies in Israel, the United States and other countries

are governed by laws, regulations and procedures relating to procurement integrity, including avoiding conflicts of interest, corruption,

human trafficking and conflict minerals in the procurement process.

Such regulations also include provisions relating to information

assurance and for the avoidance of counterfeit parts in the supply chain.

We conduct operations in a number of markets that are considered high risk from an anti-bribery compliance

Laws and regulations such as the Israel Penal Code, the Organization for Economic Cooperation and Development (“OECD”)

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the U.S.

1 unchanged sentence

Act, the U.K.

Bribery Act and corresponding legislation in other countries, prohibit providing personal benefits or bribes to

government officials in connection with the governmental procurement process.

Israeli defense exporters, like ourselves, are required

to maintain an anti-bribery compliance program, including specific procedures, record keeping and training.

Bribery Act and corresponding legislation in other countries, prohibit providing personal benefits or bribes to government

officials in connection with the governmental procurement process.

Israeli defense exporters, like ourselves, are required to maintain

an anti-bribery compliance program, including specific procedures, record keeping and training.

The IMOD may audit our books and records relating to its contracts with us.

Our books and records and

other aspects of projects that will be related to the U.S.

Our books and records and other

aspects of projects that will be related to the U.S.

defense contracts will be subject to audit by U.S.

government audit

Such audits review compliance with government contracting cost accounting and other applicable standards.

If discrepancies

are found this could result in a downward adjustment of the applicable contract’s price.

Some other customers have similar

rights under specific contract provisions.

government audit agencies.

audits review compliance with government contracting cost accounting and other applicable standards.

If discrepancies are found this

could result in a downward adjustment of the applicable contract’s price.

Some other customers have similar rights under specific

contract provisions.

Aviation Regulations.

Several of our products for commercial aviation applications are subject to flight safety and

airworthiness standards of the U.S.

Federal Aviation Administration and similar civil aviation authorities in Israel, Europe and

other countries.

Several of our products for commercial aviation applications are subject to flight safety and airworthiness

standards of the U.S.

Federal Aviation Administration and similar civil aviation authorities in Israel, Europe and other countries.

Environmental,

Health and Safety Regulations.

We are subject to a variety of environmental, health and safety laws and regulations

in the jurisdictions in which we have operations.

This includes regulations relating to air, water and ground contamination, hazardous

waste disposal and other areas with a potential environmental or safety impact.

currently have one full-time employees and have three (3) executive officers, our Chief Executive Officer, our Chief Technology

Officer and our Chief Financial Officer.

We hire freelance contractors and consultants in order to limit our operating expenses

and therefore allowing us to scale as necessary.

We are subject to a variety of environmental, health and safety laws and regulations in the

jurisdictions in which we have operations.

This includes regulations relating to air, water and ground contamination, hazardous waste

disposal and other areas with a potential environmental or safety impact.

currently have one full-time employee, our Chief Executive Officer, and two (2) executive officers, our Chief Technology Officer and

our Chief Financial Officer.

We hire freelance contractors and consultants in order to limit our operating expenses and therefore allowing

us to scale as necessary.

We maintain long-term relationships with these freelance contractors and consultants.

of our consulting agreements include undertakings with respect to non-competition and assignment to us of intellectual property

rights developed in the course of employment and confidentiality.

The enforceability of such provisions is limited for some employees

by Israeli law.

of our consulting agreements include undertakings with respect to non-competition and assignment to us of intellectual property rights

developed in the course of employment and confidentiality.

The enforceability of such provisions is limited for some employees by Israeli

Growth Company

are and we will remain an “emerging growth company”

as defined in the Jumpstart Our Business Startups Act of 2012

(the “JOBS Act”), until the earliest to occur of (i) the last day of the fiscal year during which our total annual

revenues equal or exceed $1.07 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the

fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued

more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a “large accelerated filer”

(with at least $700 million in public float) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

an “emerging growth company,”

we may take advantage of specified reduced disclosure and other requirements that are

otherwise applicable generally to public companies.

are and we will remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS

Act”), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed

$1.07 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial

public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible

debt securities, or (iv) the date on which we are deemed a “large accelerated filer” (with at least $700 million in public

float) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

an “emerging growth company,” we may take advantage of specified reduced disclosure and other requirements that are otherwise

applicable generally to public companies.

These provisions include:

only two years of

audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced

“Management’s Discussion and Analysis”

reduced disclosure

about our executive compensation arrangements;

no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements;

exemption from the

auditor attestation requirement in the assessment of our internal control over financial reporting.

have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from

what you might receive from other public companies in which you hold shares.

addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition

period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying

with new or revised accounting standards.

In other words, an emerging growth company can delay the adoption of certain accounting

standards until those standards would otherwise apply to private companies.

However, we are choosing to “opt out”

of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates

on which adoption of such standards is required for non-emerging growth companies.

Section 107 of the JOBS Act provides that our

decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly

reduced “Management’s Discussion and Analysis” disclosure;

disclosure about our executive compensation arrangements;

requirement that we hold non-binding advisory votes on executive compensation or golden parachute

arrangements;

from the auditor attestation requirement in the assessment of our internal control over financial reporting.

have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you

might receive from other public companies in which you hold shares.

addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period

provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or

revised accounting standards.

In other words, an emerging growth company can delay the adoption of certain accounting standards until

those standards would otherwise apply to private companies.

However, we are choosing to “opt out” of such extended transition

period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards

is required for non-emerging growth companies.

Section 107 of the JOBS Act provides that our decision to opt out of the extended transition

period for complying with new or revised accounting standards is irrevocable.

Notwithstanding

the above, we are also currently a “smaller reporting company,”

meaning that we are not an investment company, an

asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public

float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year.

the event that we are still considered a “smaller reporting company”, at such time as we cease being an “emerging

growth company”, the disclosure we will be required to provide in our filings with the U.S.

Securities and Exchange Commission

(the “SEC”) will increase, but will still be less than it would be if we were not considered either an “emerging

growth company”

or a “smaller reporting company.”

Specifically, similar to “emerging growth

companies,”

“smaller reporting companies”

are able to provide simplified executive compensation disclosures

in their filings;

are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley

Act”) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of

internal control over financial reporting;

and have certain other decreased disclosure obligations in their SEC filings, including,

among other things, only being required to provide two years of audited financial statements in annual reports.

the above, we are also currently a “smaller reporting company,” meaning that we are not an investment company, an asset-backed

issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than

$75 million and annual revenues of less than $50 million during the most recently completed fiscal year.

In the event that we are still

considered a “smaller reporting company”, at such time as we cease being an “emerging growth company”, the disclosure

we will be required to provide in our filings with the U.S.

Securities and Exchange Commission (the “SEC”) will increase,

but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller

reporting company.” Specifically, similar to “emerging growth companies,” “smaller reporting companies”

are able to provide simplified executive compensation disclosures in their filings;

are exempt from the provisions of Section 404(b)

of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requiring that independent registered public accounting firms

provide an attestation report on the effectiveness of internal control over financial reporting;

and have certain other decreased disclosure

obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements

in annual reports.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business