What changed in this filing

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Item 9A. Controls and Procedures

2022-03-07 compared with 2021-03-30 · 1227 added, 1515 removed, 250 unchanged (92% of the section changed)

Controls and Procedures

of Disclosure Controls and Procedures

maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in the reports

that we file or submit under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within

the time periods specified by SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and

procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange

Act is accumulated and communicated to our management, including the Chief Executive Officer (“CEO”) and the Chief

Financial Officer (“CFO”), to allow timely decisions regarding required disclosure.

management, with the participation of our then CEO and CFO, as in place as of December 31, 2020, evaluated, the effectiveness

of our disclosure controls and procedures as of December 31, 2020, pursuant to paragraph (b) of Rules 13a-15 and 15d-15 under

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls

and procedures that are designed to ensure that information we are required to disclose in the reports that we file or submit under the

Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified by SEC rules

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information

we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management,

including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), to allow timely decisions

regarding required disclosure.

Our management, with the participation

of our then CEO and CFO, as in place as of December 31, 2021, evaluated, the effectiveness of our disclosure controls and procedures as

of December 31, 2021, pursuant to paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act.

This evaluation included a review of

the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented

in this Annual Report.

Our management, including the then CEO and CFO, do not expect that disclosure controls can or will prevent or detect

all errors and all fraud, if any.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute,

assurance that the objectives of the control system are met.

Our disclosure controls and procedures are designed to provide such reasonable

assurance of achieving their objectives.

Also, the projection of any evaluation of the disclosure controls and procedures to future periods

is subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the

degree of compliance with the policies or procedures may deteriorate.

Based on their review and

evaluation, and subject to the inherent limitations described above, our then CEO and CFO concluded that our disclosure controls and procedures

(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2021, at the above-described

reasonable assurance level.

During the year ended December

31, 2021, management identified the following weaknesses, which were deemed to be material weaknesses in internal controls:

Due to the size of the Company and available resources, there are limited personnel to assist with the accounting and financial reporting function, which results in a lack of segregation of duties.

The Company does not have a full time Chief Executive Officer nor Chief Financial Officer that can oversee day to day operations and the financial reporting function.

The Company does not have an Independent Audit Committee that can provide management oversight.

Internal Control over Financial Reporting

Management is responsible

for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under

the Exchange Act.

This evaluation included a review of the controls’

objectives and design, the operation of the controls,

and the effect of the controls on the information presented in this Annual Report.

Our management, including the then CEO and

CFO, do not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any.

A control system,

no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control

system are met.

Our disclosure controls and procedures are designed to provide such reasonable assurance of achieving their objectives.

Also, the projection of any evaluation of the disclosure controls and procedures to future periods is subject to the risk that

the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

on their review and evaluation, and subject to the inherent limitations described above, our then CEO and CFO concluded that our

disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as

of December 31, 2020, at the above-described reasonable assurance level.

the year ended December 31, 2020, management identified the following weaknesses, which were deemed to be material weaknesses

in internal controls:

Due to the size

of the Company and available resources, there are limited personnel to assist with the accounting and financial reporting

function, which results in a lack of segregation of duties.

The Company does

not have a full time Chief Executive Officer nor Chief Financial Officer that can oversee day to day operations and the financial

reporting function.

The Company does

not have an Independent Audit Committee that can provide management oversight.

Control over Financial Reporting

is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f)

and 15d-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance

with accounting principles generally accepted in the United States of America.

of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Therefore, even internal

controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and

presentation.

The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including

cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human

error, and the risk of fraud.

The projection of any evaluation of effectiveness to future periods is subject to the risk that

controls may become inadequate because of changes in conditions, or that the degree of compliance with policies may deteriorate.

Because of these limitations, there can be no assurance that any system of internal control over financial reporting will be successful

in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of

Annual Report does not include an attestation report of the company’s registered public accounting firm regarding internal

control over financial reporting.

Management’s report was not subject to attestation by the company’s registered public

accounting firm pursuant to rules of the Commission that exempt from this requirement issuers that are neither accelerated filers

nor large accelerated filers.

in Internal Control over Financial Reporting

has been no change in our internal control over financial reporting during the quarter ended December 31, 2020, that has materially

affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s

Report on Internal Control over Financial Reporting

the supervision and with the participation of the Company’s management, including our principal executive officer and principal

financial officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2020.

making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission

(COSO) in Internal Control —

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally

accepted in the United States of America.

Because of inherent limitations,

internal control over financial reporting may not prevent or detect misstatements.

Therefore, even internal controls determined to be

effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The effectiveness of

our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in

decision making, assumptions about the likelihood of future events, the possibility of human error, and the risk of fraud.

The projection

of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with policies may deteriorate.

Because of these limitations, there can be no assurance that

any system of internal control over financial reporting will be successful in preventing all errors or fraud or in making all material

information known in a timely manner to the appropriate levels of management.

This Annual Report does not

include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of

the Commission that exempt from this requirement issuers that are neither accelerated filers nor large accelerated filers.

Changes in Internal Control over Financial

There has been no change in

our internal control over financial reporting during the quarter ended December 31, 2021, that has materially affected, or is reasonably

likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control

over Financial Reporting

Under the supervision and

with the participation of the Company’s management, including our principal executive officer and principal financial officer, we

assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

In making this assessment, management

used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —

Integrated Framework.

Based on this assessment, management, as in place as of December 31,

2020, determined that the Company’s internal control over financial reporting as of December 31, 2020, was not effective.

Based on this assessment, management, as in place as of December 31, 2021, determined that the Company’s internal

control over financial reporting as of December 31, 2021, was not effective.

Other Information

Directors, Executive Officers, and Corporate Governance.

directors and executive officer and their ages as of March 30, 2021, are as follows:

Chief Executive

Officer and President

Chief Technology

Officer and Director

Disclosure Regarding Foreign Jurisdictions

that Prevent Inspections

Directors, Executive Officers, and

Corporate Governance.

Our directors and executive

officer and their ages as of March 7, 2022, are as follows:

Yossef Balucka

Chief Executive Officer and President

Chief Technology Officer and Director

Erez Nachtomy

Vice Chairman

Chief Financial

Alroy , Director and Chairman.

Yariv Alroy is the Managing Director of T.N.S.A Consulting and Management LTD., a private

consulting services and investments firm.

Chief Financial Officer

Yariv Alroy , Director

and Chairman.

Yariv Alroy is the Managing Director of T.N.S.A Consulting and Management LTD., a private consulting services and investments

From 1989 to 1993 Mr.

Alroy worked for an Israeli law firm, with his last position as

Alroy worked for an Israeli law firm, with his last position as a partner.

From 1993 to 1997, Mr.

Alroy served as COO of SHAHAL Medical Services, and from 1997 to 2000 as Managing Director of

SHL International Ltd.

as COO of SHAHAL Medical Services, and from 1997 to 2000 as Managing Director of SHL International Ltd.

From 2000 until January 2016 Mr.

Alroy served as Co-CEO of SHL Telemedicine LTD a company in the field

of medical technology development and provision of global telemedicine services, including in the United States, Germany, India,

Japan and Israel, traded in the Swiss Stock exchange (SWX:SHLTN).

In December 2018 Mr.

Alroy was nominated as member of the board

of directors and Chairman of SHL Telemedicine.

Yariv Alroy holds an LL.B from Tel Aviv University.

Balucka , CEO and President.

Yossef Balucka has been serving as CEO and President of our Company, Duke and Duke Israel since

Prior to entering the private sector, Mr.

Balucka served for twenty-five years in various field and headquarters positions

in the Israeli Navy and retired as Colonel.

Alroy served as Co-CEO of SHL Telemedicine LTD a company in the field of medical technology development and provision of global telemedicine

services, including in the United States, Germany, India, Japan and Israel, traded in the Swiss Stock exchange (SWX:SHLTN).

Alroy was nominated as member of the board of directors and Chairman of SHL Telemedicine.

Yariv Alroy holds an LL.B from Tel

Aviv University.

Yossef Balucka , CEO

and President.

Yossef Balucka has been serving as CEO and President of our Company, Duke and Duke Israel since March 2021.

entering the private sector, Mr.

Balucka served for twenty-five years in various field and headquarters positions in the Israeli Navy

and retired as Colonel.

Following his retirement from the Israeli Navy, between 2014 to 2016, Mr.

served as a senior executive and management member for retail and customer service at Partner Communications Ltd.

one of the leading mobile telecommunications companies in Israel.

Balucka served as a senior executive

and management member for retail and customer service at Partner Communications Ltd.

(TASE:PTNR), one of the leading mobile telecommunications

companies in Israel.

From 2017 to 2019 Mr.

Balucka served as the CEO of Electra Technologies

Ltd., a division of Electra Ltd.

(TASE:ELTR), which is active in the fields of integrated electro-mechanical and construction.

Balucka served as the CEO of Electra Technologies Ltd., a division of Electra Ltd.

which is active in the fields of integrated electro-mechanical and construction.

Since 2019 Mr.

Balucka is the owner of T.R.

Eshkolot Com Services Ltd., providing global strategic consulting services.

holds a BA in Economics and Business Administration and an MA in Social Sciences from the Haifa University, and MA in Public Administration

from the Bar Ilan University.

Sagiv Aharon ,

CTO and Director.

Sagiv Aharon co-founded Duke Israel and served as the Company’s CEO from March 2020 until March 2021.

From 2008 to 2010, Mr.

Aharon worked at the Israeli Aerospace Industry as a structural design engineer on a classified hybrid structure

(composite/metal) air vehicle.

Com Services Ltd., providing global strategic consulting services.

Balucka holds a BA in Economics and Business Administration and

an MA in Social Sciences from the Haifa University, and MA in Public Administration from the Bar Ilan University.

Sagiv Aharon , CTO and

Sagiv Aharon co-founded Duke Israel and served as the Company’s CEO from March 2020 until March 2021.

Aharon worked at the Israeli Aerospace Industry as a structural design engineer on a classified hybrid structure (composite/metal)

From 2010 to 2011, Mr.

Aharon worked at Rafael Advanced Weapon Systems Ltd.

as a mechanical design

engineer for complex active/reactive armor solutions for land vehicles.

as a mechanical design engineer for complex active/reactive

armor solutions for land vehicles.

From 2011 to 2012, Mr.

Aharon worked for Elbit Systems

(NASDAQ:ESLT) as a mechanical design engineer and a system integrator at several remotely operated weapon systems upon land

Aharon also serves as the CEO of Axis Aerospace Mechanical Design Ltd., a company working in the field of airborne

structural projects and flight experiments, following strict aerospace level quality standards (AS9100).

Aharon worked for Elbit Systems Ltd.

(NASDAQ:ESLT) as a mechanical design engineer

and a system integrator at several remotely operated weapon systems upon land vehicles.

Aharon also serves as the CEO of Axis Aerospace

Mechanical Design Ltd., a company working in the field of airborne structural projects and flight experiments, following strict aerospace

level quality standards (AS9100).

Aharon holds a B.Sc.

in mechanical engineering with specialty in control and robotics from the Technion –

in mechanical engineering with specialty in control and robotics from the Technion

– Israel Institute of Technology.

Nachtomy , Director, Vice Chairman of the Board.

Erez Nachtomy is the Managing Director of Ermi Nachtomy Assets Ltd., a

private consulting services and investments firm.

Erez Nachtomy , Director,

Vice Chairman of the Board.

Erez Nachtomy is the Managing Director of Ermi Nachtomy Assets Ltd., a private consulting services and

investments firm.

Since May 2020 Mr.

1 unchanged sentence

From 1989 until 2001, Mr.

Nachtomy practiced law as an associate in one of the leading law firms in Israel, becoming a partner

in the firm in 1994 and later on promoted to a senior partner.

practiced law as an associate in one of the leading law firms in Israel, becoming a partner in the firm in 1994 and later on promoted

to a senior partner.

In March 2001, Mr.

Nachtomy joined the executive team of SHL Telemedicine

(SWX:SHLTN), as Vice President, and from January 2005 to December 2016 he served as Executive Vice President.

SHL Telemedicine

is active in the field of medical technology development and provision of global telemedicine services, including in the

United States, Germany, India and Japan.

In December 2018 Mr.

Nachtomy was nominated as Member of the Board of SHL Telemedicine,

and since May 2021 Mr.

Nachtomy has been serving as the acting CEO of SHL Telemedicine Ltd.

Nachtomy joined the executive team of SHL Telemedicine Ltd.

(SWX:SHLTN), as Vice President, and

from January 2005 to December 2016 he served as Executive Vice President.

SHL Telemedicine Ltd.

is active in the field of medical technology

development and provision of global telemedicine services, including in the United States, Germany, India and Japan.

In December 2018

Nachtomy was nominated as Member of the Board of SHL Telemedicine, and since May 2021 Mr.

Nachtomy has been serving as the acting

CEO of SHL Telemedicine Ltd.

Nachtomy holds an LL.B.

Aviv University, Israel.

Antebi , Director.

from Tel Aviv University, Israel.

Eran Antebi , Director.

Antebi is the Finance Director Omrix Biopharmaceuticals Ltd.

(a Johnson & Johnson company) since

February 2017.

Prior to that he was CFO of SHL Telemedicine Ltd.

(a Johnson & Johnson company) since February 2017.

Prior to that

he was CFO of SHL Telemedicine Ltd.

(SWX:SHLTN) since 2008.

Antebi joined SHL in May 2004 as

CFO of Shahal Israel.

Prior to joining SHL, from 2000 to 2004, Mr.

Antebi joined SHL in May 2004 as CFO of Shahal Israel.

Prior to joining

SHL, from 2000 to 2004, Mr.

Antebi was a manager with Ernst & Young in Israel.

Antebi is a certified public accountant (CPA) in Israel and holds a B.A.

in Accounting and Economics from Tel Aviv University,

Zakai , Chief Financial Officer.

Zakai brings extensive and proven experience in similar positions with companies operating

in international markets and related industries.

Antebi is a certified public accountant (CPA) in

Israel and holds a B.A.

in Accounting and Economics from Tel Aviv University, Israel.

Shlomo Zakai , Chief

Financial Officer.

Zakai brings extensive and proven experience in similar positions with companies operating in international markets

and related industries.

Prior to joining the Company Mr.

Zakai served as the Chief Financial Officer

of Save Foods, Inc.

(SAFO:OTC) (August 2017 to date), Sonovia Ltd.

(NNTTF:OTC) (October 2014 to August 2020), Blue Sphere Corp.

(BLSP:OTC) (January 2012 till May 2016) and of Todos Medical Ltd.

(TOMDF:OTC) (February 2017 till January 2018).

Prior to that,

Mr Zakai worked as an accountant for nine years at Kost, Forer, Gabbay & Kasierer, an independent registered public accounting

firm and a member firm of Ernst & Young Global, where he last served as a Senior Manager and worked with technology companies

publicly traded on the Nasdaq Stock Market and on the Tel Aviv Stock Exchange.

Zakai served as the Chief Financial Officer of Save Foods, Inc.

(SAFO:OTC) (August

2017 to December 2021), Sonovia Ltd.

(NNTTF:OTC) (October 2014 to August 2020) and of Todos Medical Ltd.

(TOMDF:OTC) (February 2017 till

January 2018).

Prior to that, Mr Zakai worked as an accountant for nine years at Kost, Forer, Gabbay & Kasierer, an independent registered

public accounting firm and a member firm of Ernst & Young Global, where he last served as a Senior Manager and worked with technology

companies publicly traded on the Nasdaq Stock Market and on the Tel Aviv Stock Exchange.

Zakai holds a B.A.

in accounting from the College

of Management in Rishon Le’Zion, Israel.

is no family relationship among the directors and officers of the Company.

in Certain Legal Proceedings

the past ten (10) years, none of our directors or our executive officer have been (i) involved in any petition under Federal bankruptcy

laws or any state insolvency law, (ii) convicted in a criminal proceeding or is a named subject of a pending criminal proceeding

(excluding traffic violations and other minor offenses), (iii) subject of any order, judgment, or decree, not subsequently reversed,

suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from (a) acting as a future’s

commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction

merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing,

or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of

any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice

in connection with such activity, (b) engaging in any type of business practice, or (c) engaging in any activity in connection

with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws

or Federal commodities laws, or (d) subject of any order, judgment or decree, not subsequently reversed, suspended or vacated,

of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right to engage in any activity

described in (iii)(a), (iv) found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal

or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended,

or vacated, (v) found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to

have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission

has not been subsequently reversed, suspended or vacated.

(vi) subject of, or a party to, any Federal or State judicial or administrative

order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a)

any Federal or State securities or commodities law or regulation, (b) any law or regulation respecting financial institutions

or insurance companies, or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity,

or (vii) the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory

organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.

78c(a)(26))), any registered entity (as defined in

Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.

1(a)(29))), or any equivalent exchange, association, entity or organization

that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below

in “Transactions with Related Persons;

in accounting from the

College of Management in Rishon Le’Zion, Israel.

Family Relationship

There is no family relationship

among the directors and officers of the Company.

Involvement in Certain Legal Proceedings

Over the past ten (10) years,

none of our directors or our executive officer have been (i) involved in any petition under Federal bankruptcy laws or any state insolvency

law, (ii) convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and

other minor offenses), (iii) subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court

of competent jurisdiction, permanently or temporarily enjoining him from (a) acting as a future’s commission merchant, introducing

broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by

the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker

or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association

or insurance company, or engaging in or continuing any conduct or practice in connection with such activity, (b) engaging in any type

of business practice, or (c) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection

with any violation of Federal or State securities laws or Federal commodities laws, or (d) subject of any order, judgment or decree, not

subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than

60 days the right to engage in any activity described in (iii)(a), (iv) found by a court of competent jurisdiction in a civil action or

by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been

subsequently reversed, suspended, or vacated, (v) found by a court of competent jurisdiction in a civil action or by the Commodity Futures

Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures

Trading Commission has not been subsequently reversed, suspended or vacated.

(vi) subject of, or a party to, any Federal or State judicial

or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation

of (a) any Federal or State securities or commodities law or regulation, (b) any law or regulation respecting financial institutions or

insurance companies, or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity, or (vii)

the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization

(as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.

78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of

the Commodity Exchange Act (7 U.S.C.

1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary

authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Transactions with

Related Persons;

Promoters and Certain Control Persons;

Director Independence,”

directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive

officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

uphold a set of basic values to guide our actions and are committed to maintaining the highest standards of business conduct and

Director Independence,” none of our directors, director nominees or executive

officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are

required to be disclosed pursuant to the rules and regulations of the SEC.

CORPORATE GOVERNANCE

Effective March 9, 2020, we adopted an Amended and Restated Code of Business Conduct and Ethics for directors,

officers (including our principal executive officer and principal financial officer) and employees, which, in conjunction with

our Certificate of Incorporation, and Bylaws, as amended (the “Bylaws”) form the framework for governance of UAS.

The Code of Ethics and Business Conduct, Bylaws and Article of Incorporation are available at our corporate offices.

may request free printed copies of these documents from:

Carmel, Israel, 3903212

Code of Ethics

We uphold a set of basic values

to guide our actions and are committed to maintaining the highest standards of business conduct and corporate governance.

Effective March

9, 2020, we adopted an Amended and Restated Code of Business Conduct and Ethics for directors, officers (including our principal executive

officer and principal financial officer) and employees, which, in conjunction with our Certificate of Incorporation, and Bylaws, as amended

(the “Bylaws”) form the framework for governance of UAS.

The Code of Ethics and Business Conduct, Bylaws and Article of Incorporation

are available at our corporate offices.

Stockholders may request free printed copies of these documents from:

UAS Drone Corp.

Tirat Carmel, Israel, 3903212

Delinquent Section 16(a) Reports

16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file

reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings.

Section 16(a) of the Exchange

Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership

of, and transactions in, our securities with the SEC and to provide us with copies of those filings.

have reviewed all forms provided to us or filed with the SEC.

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officers and directors, we believe that all Section 16(a) filings during the past fiscal year were filed on a timely basis and that all

directors, executive officers and 10% beneficial owners have fully complied with such requirements during the past fiscal year, except

Afek Trading –

Kadosh and Razi Ltd.

did not file a Form 3 as required due to their acquisition of shares on or about March 10, 2020.

of the Board of Directors

do not have an audit or compensation committee and have no independent directors that examines transactions of the nature described

herein this item.

We do not have any audit or compensation committee.

directors, executive officers and 10% beneficial owners have fully complied with such requirements during the past fiscal year.

Committees of the Board of Directors

We do not have an audit or

compensation committee and have no independent directors that examines transactions of the nature described herein this item.

have any audit or compensation committee.

the board of directors performs these functions as a whole.

Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning

management compensation and audit issues that may affect management decisions.

To the extent possible, a majority of the disinterested

members of our board of directors will approve future affiliated transactions.

Additionally, because the Company’s Common

Stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees.

to the Board of Directors

the Company’s 2020 fiscal year, there were no material changes to the procedures by which security holders may recommend

Thus, there is a potential conflict

in that board members who are also part of management will participate in discussions concerning management compensation and audit issues

that may affect management decisions.

To the extent possible, a majority of the disinterested members of our board of directors will approve

future affiliated transactions.

Additionally, because the Company’s Common Stock is not listed for trading or quotation on a national

securities exchange, we are not required to have such committees.

Nominees to the Board of Directors

During the Company’s

2021 fiscal year, there were no material changes to the procedures by which security holders may recommend nominees to the board of directors.

Executive Compensation.

Compensation Table

following sets forth the compensation of UAS’s Chief Executive Officer during fiscal 2020, and the other persons who served

as executive officers during the Company’s fiscal year ended December 31, 2020.

Unless otherwise noted, the amounts shown

represent what was earned in the Company’s fiscal year ended December 31, 2020.

COMPENSATION TABLE –

Summary Compensation Table

The following sets forth the

compensation of UAS’s Chief Executive Officer during fiscal 2021, and the other persons who served as executive officers during

the Company’s fiscal year ended December 31, 2021.

Unless otherwise noted, the amounts shown represent what was earned in the Company’s

fiscal year ended December 31, 2021.

SUMMARY COMPENSATION TABLE – FISCAL YEAR

ENDED DECEMBER 31, 2021

Name and principal position

Option awards

Non-equity incentive plan compensation

Change in Pension Value and Nonqualified deferred compensation earnings

All other compensation

Begley –

Chris Leith –

Sagiv Aharon –

Former CEO and current CTO and Director*

Shlomo Zakai –

and Chris Leith are no longer executive officers.

Aharon and Zakai became members of our executive officers, as the

case may be, following the Share Exchange.

During the years

ended December 31, 2020 and December 31, 2019, the Company accrued pay in the amount of $200 and $7,500, respectively, to

its Chief Executive Officer and Chairman of the Board for his services.

The total accounts payable of the Company to its former

Chief Executive Officer and Chairman of the Board for his services is $32,500 as of December 31, 2020.

The account payable

was compromised and converted to shares of the Company post-Share Exchange in conjunction with the Share Exchange.

were no shares of restricted stock awarded during the Company’s fiscal year ended December 31, 2020.

Equity Awards at Fiscal Year End

following table sets forth information concerning outstanding equity awards for the named executives as of December 31, 2020.

Note that the 5,000 shares expiring on December 31, 2019 were granted prior to expiration in conjunction with the Share Exchange.

EQUITY AWARDS AT DECEMBER 31, 2020

Equity Awards at Fiscal Year End

are no outstanding equity awards for the year ended December 31, 2020.

of Plan-Based Awards for 2020

were no plan-based equity awards made to our executive officers during fiscal 2020.

Exercises and Stock Vested

are no option exercises and restricted stock that vested during fiscal 2020 for our named executives.

Company does not have any plans that provide for payments or other benefits at, following, or in connection with retirement.

Deferred Compensation

Company does not have a Deferred Compensation Plan for its executive officers.

Potential Post-Employment Payments

of December 31, 2020, there were no named executives with employment contracts that require or required severance or other

post-employment payments.

Information about Equity Compensation Plans

of December 31, 2020, we had no stock option plans.

Loans for Option Exercises.

It is our policy to not make loans to employees or officers for the purpose

of paying for the exercise of stock options.

reimburse directors for out-of-pocket expenses they incur when attending meetings of the board of directors.

On April 12, 2020,

effective as of March 1, 2020, our board of directors approved payment of certain fees to our directors in the amounts of $4,980,

$4,980 and $6,950 per month to our directors, Yariv Alroy, Sagiv Aharon and Erez Nachtomy (each, an “Active Director”),

respectively.

On April 12, 2020, we also enacted a policy to pay each director (that is not otherwise an Active Director) an amount

of $1,500 for each calendar quarter and $400 for attendance of each meeting of the board of directors.

These amounts are exclusive

of Israeli VAT, if applicable.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Ownership of Certain Beneficial Owners

following table sets forth certain information as of March 30, 2021 regarding the beneficial ownership of our common stock, for:

person (or group of affiliated persons) who, insofar as we have been able to ascertain, beneficially owned more than 5% of

the outstanding shares of our common stock;

named executive officer;

directors and executive officers as a group.

ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.

Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all

shares of our capital shown as beneficially owned, subject to applicable community property laws.

computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person within

60 days of the date of this prospectus are counted as outstanding, while these shares are not counted as outstanding for computing

the percentage ownership of any other person.

Unless otherwise indicated, the address of each person listed below is c/o Duke

Robotics, 1 Etgar Street (1st Floor), Tirat-Carmel, Israel 3903212.

relied on information received from each stockholder as to beneficial ownership, including information contained on Schedules

13D and 13G and Forms 3, 4 and 5.

As of March 30, 2021, there were 41,169,035 shares of common stock issued and outstanding.

Address of Beneficial Owner

and Nature of

incentive plan

Yossef Bakula –CEO

Shlomo Zakai – CFO

Restricted Stock Awards

There were no shares of restricted

stock awarded during the Company’s fiscal year ended December 31, 2021.

Outstanding Equity Awards at Fiscal Year

The following table sets forth

information concerning outstanding equity awards for the named executives as of December 31, 2021.

Note that the 5,000 shares expiring

on December 31, 2019 were granted prior to expiration in conjunction with the Share Exchange.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2021

Outstanding Equity Awards at Fiscal Year

There are no outstanding equity

awards for the year ended December 31, 2021 except as disclosed below.

Grants of Plan-Based Awards for 2021

following table presents the outstanding equity awards held as of December 31, 2021 by our named executive officers, all of which have

been issued pursuant to our 2021 Equity Compensation Plan, or the 2021 Plan:

Number of shares that have not vested

Market value of shares that have not vested

Number of shares that have not vested

Market value of shares that have not vested

Yossef Bakula

Erez Nachtomy

Pension Benefits

We have no arrangements or

plans, except for those we are obligated to maintain pursuant to the Israeli law, under which we provide pension, retirement or similar

benefits for directors or executive officers.

Our directors and executive officers may receive share options or restricted shares at the

discretion of our Board in the future.

Nonqualified Deferred Compensation

The Company does not have

a Deferred Compensation Plan for its executive officers.

Other Potential Post-Employment Payments

As of December 31, 2021,

there were no named executives with employment contracts that require or required severance or other post-employment payments.

Summary Information about Equity Compensation

Equity Compensation Plan Information

On May 27, 2021, our Board of Directors approved

the 2021 Plan, pursuant to which we 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.

A summary of the 2021

Plan is found below.

the 2021 Plan, options, restricted share and RSUs may be granted to our officers, directors, employees and consultants or the officers,

directors, employees and consultants of our subsidiary.

The total number of awards to acquire shares

of the Company’s common stock may not exceed 4,800,000 shares.

To the extent that an award lapses or is forfeited, the shares subject

to such Award will again become available for grant under the terms of the 2021 Plan.

following table summarizes certain information regarding our equity compensation plans as of December 31, 2021:

Plan Category

securities to be

Weighted-average

securities remaining

available for

future issuance under equity

compensation plans

Equity compensation plan not approved by security holders

No Loans for Option Exercises.

It is our policy to not make loans to employees or officers for the purpose of paying for the exercise of stock options.

Director Compensation

We reimburse directors for

out-of-pocket expenses they incur when attending meetings of the board of directors.

On April 12, 2020, effective as of March 1, 2020,

our board of directors approved payment of certain fees to our directors in the amounts of $4,980, $4,980 and $6,950 per month to our

directors, Yariv Alroy, Sagiv Aharon and Erez Nachtomy (each, an “Active Director”), respectively.

On April 12, 2020, we also

enacted a policy to pay each director (that is not otherwise an Active Director) an amount of $1,500 for each calendar quarter and $400

for attendance of each meeting of the board of directors.

These amounts are exclusive of Israeli VAT, if applicable.

Director Compensation

following table provides information regarding compensation earned by, awarded or paid to each person for serving as a director who is

not an executive officer during the fiscal year ended December 31, 2021:

Erez Nachtomy

Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners

The following table sets forth

certain information as of March 7, 2022 regarding the beneficial ownership of our common stock, for:

each person (or group of affiliated persons) who, insofar as we have been able to ascertain, beneficially owned more than 5% of the outstanding shares of our common stock;

each director;

each named executive officer;

all directors and executive officers as a group.

Beneficial ownership is determined

in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.

Except as otherwise indicated,

each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially

owned, subject to applicable community property laws.

In computing the number and

percentage of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of the date of this prospectus

are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person.

Unless otherwise indicated, the address of each person listed below is c/o Duke Robotics, 1 Etgar Street (1st Floor), Tirat-Carmel,

Israel 3903212.

We relied on information received

from each stockholder as to beneficial ownership, including information contained on Schedules 13D and 13G and Forms 3, 4 and 5.

of March 7, 2022, there were 54,018,813 shares of common stock issued and outstanding.

Name and Address of Beneficial Owner

Ownership (1)

5% Stockholders:

Afek Trading –

Kadosh and Razi Ltd.

Elisheva Ansbacher (3)

Ximena Benitez Garcia (4)

Moshe Zuk (5)

Eran Meytal (6)

Afek Trading – Kadosh and Razi Ltd.

More Provident Fund Ltd (3)

Named Executive Officers:

Christopher Leith**

Christopher M.

Yossef Balucka

1 unchanged sentence

All directors and executive officers as a group (6 Persons)**

Christopher Leith and Christopher M.

Nelson are no longer members of our board of directors or executive officers, as the

Aharon, Alroy, Nachtomy, Antebi and Zakai became members of our board of directors and executive officers,

as the case may be, following the Share Exchange.

The persons named

in this table have sole voting and investment power with respect to all shares of common stock reflected as beneficially owned

A person is deemed to be the beneficial owner of securities that can be acquired by such person within sixty

(60) days from March 30, 2021, and the total outstanding shares used to calculate each beneficial owner’s percentage

includes such shares, although such shares are not taken into account in the calculations of the total number of shares or

percentage of outstanding shares.

Beneficial ownership as reported does not include shares subject to option or conversion

that are not exercisable within 60 days of March 30, 2021.

The persons named in this table have sole voting and investment power with respect to all shares of common stock reflected as beneficially owned by them.

A person is deemed to be the beneficial owner of securities that can be acquired by such person within sixty (60) days from March 7, 2022, and the total outstanding shares used to calculate each beneficial owner’s percentage includes such shares, although such shares are not taken into account in the calculations of the total number of shares or percentage of outstanding shares.

Beneficial ownership as reported does not include shares subject to option or conversion that are not exercisable within 60 days of March 7, 2022.

Amir Kadosh, Zabotinsky 50, Givat Shmuel, Israel.

Includes 645,053

shares of common stock issuable upon full conversion of the currently outstanding principal amount of the Convertible Loan

Agreement entered into by the shareholder at the conversion price in effect as of the date of this Current Report Address:

5201 Pine Tree Dr., Miami Beach, FL,33140, USA.

Includes 645,053

shares of common stock issuable upon full conversion of the currently outstanding principal amount of the Convertible Loan

Agreement entered into by the shareholder at the conversion price in effect as of the date of this Current Report.

Protasio Tagle 59, San Miguel Chapultepec, 11850, Miguel Hidalgo, CDMX, Mexico.

Includes 512,476

shares of common stock issuable upon full conversion of the currently outstanding principal amount of the Convertible Loan

Agreement entered into by an affiliate of the shareholder at the conversion price in effect as of the date of this Current

Zuk Marble Products 1998 Ltd.

is the lender under the Convertible Loan Agreement, and to the Company’s knowledge,

this is a company held and controlled by Moshe Zuk and as a result thereof, Mr.

Zuk may be deemed to be the beneficial owner

of such shares.

22 Hataas Street, Kfar Saba, Israel.

Includes 430,037

shares of common stock issuable upon full conversion of the currently outstanding principal amount of the Convertible Loan

Agreement entered into by an affiliate of the shareholder at the conversion price in effect as of the date of this Current

Alonim Marketing and Sales Promotion Ltd.

is the lender under the Convertible Loan Agreement, and to the Company’s

knowledge, this is a company held and controlled by Eran Meytal and as a result thereof, Mr.

Meytal may be deemed to be the

beneficial owner of such shares.

31 Mordekhai Elkakhi Street, Tel Aviv, Israel.

are no arrangements known to the Company, including any pledge by any person of securities of the Company, the operation of which

may at a subsequent date result in a change in control of the Company.

Compensation Plan Information

there is no equity compensation plan in place.

Certain Relationships and Related Transactions, and Director Independence.

with Related Persons

January 1, 2015 the Duke executed a Loan Agreement with Aphek, whereby Aphek agreed to provide a loan up to an amount of approximately

$132,000 (the “Aphek Loan”).

On January 1, 2015 Duke executed a Loan Agreement with Sagiv Aharon whereby he agreed

to provide a loan of approximately $55,000 (the “Sagiv Loan”).

The Aphek Loan and Sagiv Loan bear interest rates as

defined in Section 3(j) of the Israeli tax ordinance (the interest rate for 2015 is 3.05% and 2.56% for 2016).

On June 5, 2016,

Duke executed a Loan Agreement with Iki Alroy Investment Ltd., Erez Alroy Investment Ltd.

Based solely on information contained in Form 13D filed with the SEC

on July 6, 2021.

Includes warrants to purchase 10,000,000 shares of common stock, subject to a contractual beneficial ownership limitation

Including securities held by Y.D More Investments Ltd., B.Y.M.

Mor Investments Ltd., Eli Levy and Yosef Levy.

Changes in Control

There are no arrangements

known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date

result in a change in control of the Company.

Equity Compensation Plan Information

Currently, there is no equity

compensation plan in place.

Certain Relationships and Related

Transactions, and Director Independence.

Transactions with Related Persons

Loan Agreements

On January 1, 2015 the Duke

executed a Loan Agreement with Aphek, whereby Aphek agreed to provide a loan up to an amount of approximately $132,000 (the “Aphek

On January 1, 2015 Duke executed a Loan Agreement with Sagiv Aharon whereby he agreed to provide a loan of approximately

$55,000 (the “Sagiv Loan”).

The Aphek Loan and Sagiv Loan bear interest rates as defined in Section 3(j) of the Israeli tax

ordinance (the interest rate for 2015 is 3.05% and 2.56% for 2016).

On June 5, 2016, Duke executed a Loan Agreement with Iki Alroy Investment

Ltd., Erez Alroy Investment Ltd.

and Ermi Nachtomy Assets Ltd.

(collectively,

the “Lenders”), whereby the Lenders agreed to provide a loan in an aggregate amount of $100,000 to $500,000 in the

aggregate (the “Group Loan”).

Pursuant to the terms of the Group Loan, the Lenders were scheduled to provide monthly

installments of between $20,000 and $40,000, subject to the Lender’s discretion.

The Group Loan bears an annual fixed interest

Any additional amounts lent to Duke in 2017 by Aphek, Sagiv or the Lenders, over the amounts stated in the Aphek Loan

and Sagiv Loan agreements or the Group Loan agreement, were made available to Duke on the same terms as stated in the respective

November 20, 2017, Duke Israel made available to Mr.

Sagiv Aharon, Duke’s CEO and CTO and Director, a loan in the amount

This loan shall bear interest rates as defined in the Israeli tax ordinance.

The Loan, including the accumulated interest

amount, shall be repaid at the earlier of the following dates:

(collectively, the “Lenders”), whereby the Lenders agreed to

provide a loan in an aggregate amount of $100,000 to $500,000 in the aggregate (the “Group Loan”).

Pursuant to the terms of

the Group Loan, the Lenders were scheduled to provide monthly installments of between $20,000 and $40,000, subject to the Lender’s

The Group Loan bears an annual fixed interest rate of 3%.

Any additional amounts lent to Duke in 2017 by Aphek, Sagiv or the

Lenders, over the amounts stated in the Aphek Loan and Sagiv Loan agreements or the Group Loan agreement, were made available to Duke

on the same terms as stated in the respective agreements.

On November 20, 2017, Duke

Israel made available to Mr.

Sagiv Aharon, Duke’s CEO and CTO and Director, a loan in the amount of $10,000.

This loan shall bear

interest rates as defined in the Israeli tax ordinance.

The Loan, including the accumulated interest amount, shall be repaid at the earlier

of the following dates:

(i) December 31, 2019;

or (ii) at the date of repayment of the

loan made available by Mr.

Aharon to Duke according to a loan agreement dated January 1, 2015;

or (iii) from any dividend or other

distribution to be made by Duke to its shareholders.

Aharon is entitled to repay the outstanding amount of the loan at any

November 20, 2017, Duke made available to Mr.

Raziel Atuar, then Duke’s CEO, a loan in the amount of $10,000.

The loan shall

bear an annual fixed interest of 3.25%.

This loan, including the accumulated interest, shall be repaid at the earlier of the following

or (ii) at the date of repayment of the loan made available by Mr.

Aharon to Duke according

to a loan agreement dated January 1, 2015;

or (iii) from any dividend or other distribution to be made by Duke to its shareholders.

Aharon is entitled to repay the outstanding amount of the loan at any time.

On November 20, 2017, Duke

made available to Mr.

Raziel Atuar, then Duke’s CEO, a loan in the amount of $10,000.

The loan shall bear an annual fixed interest

This loan, including the accumulated interest, shall be repaid at the earlier of the following dates:

(i) December 31, 2019;

or (ii) at the date of repayment of the loan made available by Aphek to Duke Israel, according to

a loan agreement dated January 1, 2015;

or (ii) at the date of repayment of the loan made available by Aphek to Duke Israel, according to a loan agreement dated January 1, 2015;

(iii) from any dividend or other distribution to be made by Duke to its shareholders.

Atuar is entitled to prepay the outstanding amount of the loan at any time.

loans made from Duke to each of Messrs.

Aharon and Atuar were extinguished in connection with the Debt Cancellation Letters (as

defined below) and are referred to as the Personal Loans.

entering into the Share Exchange Agreement, Duke entered into debt cancellation letters (the “Debt Cancellation Letters”)

with each of the Lenders who are parties to the Group Loan and with each of Aphek and Sagiv Aharon under each of the Aphek and

Sagiv Loans and their respective Personal Loans.

Pursuant to the Debt Cancellation Letters, (i) 166,602 shares of Duke common

stock were issued in exchange for the cancellation of $123,286 in debt, leaving $55,394 outstanding under the Aphek Loan, (i)

75,059 shares of Duke common stock were issued in exchange for the cancellation of $55,544 in debt, leaving $24,956 outstanding

under the Sagiv Loan and (i) 600,474 shares of Duke common stock were issued in exchange for the cancellation of $444,350 in debt,

leaving $199,650 outstanding under the Group Loan (collectively, the “Outstanding Duke Debt”).

Outstanding Duke Debt, including interest (which shall bear an annual fixed interest rate of 3% as of January 1, 2020), shall

be repaid at the date upon which Duke or the Company raises at least $15 million and has achieved earnings before interest, tax,

depreciation and amortization of $3 million, but not before the three year anniversary of the Effective Time and the full repayment

of the amounts outstanding under the Convertible Loan Agreements, unless such repayment is otherwise waived by the parties to

the Convertible Loan Agreements.

Atuar is entitled to prepay the outstanding

amount of the loan at any time.

The loans made from Duke to

each of Messrs.

Aharon and Atuar were extinguished in connection with the Debt Cancellation Letters (as defined below) and are referred

to as the Personal Loans.

Before entering into the Share

Exchange Agreement, Duke entered into debt cancellation letters (the “Debt Cancellation Letters”) with each of the Lenders

who are parties to the Group Loan and with each of Aphek and Sagiv Aharon under each of the Aphek and Sagiv Loans and their respective

Personal Loans.

Pursuant to the Debt Cancellation Letters, (i) 166,602 shares of Duke common stock were issued in exchange for the cancellation

of $123,286 in debt, leaving $55,394 outstanding under the Aphek Loan, (i) 75,059 shares of Duke common stock were issued in exchange

for the cancellation of $55,544 in debt, leaving $24,956 outstanding under the Sagiv Loan and (i) 600,474 shares of Duke common stock

were issued in exchange for the cancellation of $444,350 in debt, leaving $199,650 outstanding under the Group Loan (collectively, the

“Outstanding Duke Debt”).

The Outstanding Duke Debt,

including interest (which shall bear an annual fixed interest rate of 3% as of January 1, 2020), shall be repaid at the date upon which

Duke or the Company raises at least $15 million and has achieved earnings before interest, tax, depreciation and amortization of $3 million,

but not before the three year anniversary of the Effective Time and the full repayment of the amounts outstanding under the Convertible

Loan Agreements, unless such repayment is otherwise waived by the parties to the Convertible Loan Agreements.

Registration Rights Agreement

The Company entered into the

Registration Rights Agreement with, among others, Alpha, GBC, the Primary Lenders, to permit them to have their securities in the Company

included in a registration statement for resale by the holder when filed by the Company on a piggyback basis and one demand registration

The Company is responsible for bearing the costs of any of these acts of registration of the securities.

The Company filed a Registration

Statement on Form S-1 with the SEC, which was declared effective on June 19, 2020, in compliance with the requirements of the Registration

Rights Agreement.

Company entered into the Registration Rights Agreement with, among others, Alpha, GBC, the Primary Lenders, to permit them to

have their securities in the Company included in a registration statement for resale by the holder when filed by the Company on

a piggyback basis and one demand registration right.

The Company is responsible for bearing the costs of any of these acts of

registration of the securities.

The Company filed a Registration Statement on Form S-1 with the SEC, which was declared effective

on June 19, 2020, in compliance with the requirements of the Registration Rights Agreement.

board of directors has not determined that we have any independent directors.

for the arrangements described in Item 11, or as described above, during fiscal years 2021 and 2020, we did not participate in any transaction,

and we are not currently participating in any proposed transaction, or series of transactions, in which the amount involved exceeded the

lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which,

to our knowledge, any of our directors, officers, five percent beneficial security holders, or any member of the immediate family of the

foregoing persons had, or will have, a direct or indirect material interest.

Director Independence

The board of directors has

not determined that we have any independent directors.

Principal Accounting Fees and Services.

following is a summary of the fees billed by our principal auditor during the calendar years ended December 31, 2020 and 2019:

The following is a summary

of the fees billed by our principal auditor during the calendar years ended December 31, 2021 and 2020:

Audit Fees (1)

Audit –

Audit – related fees

All other fees

Consists of fees

for audit of the Company’s annual financial statements, audit of the financial statements of acquired subsidiaries,

the review of interim financial statements included in the Company’s quarterly reports, consents, and the review of

other documents filed with the Commission.

fees - Consists of fees for professional services rendered by our principal auditor for the audit of our annual financial statements

and the review of financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants

in connection with statutory and regulatory filings or engagements.

Audit-related

fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance

of the audit or review of UAS’s financial statements and are not reported under “Audit fees.”

fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax

other fees - Consists of fees for products and services provided by our principal accountants, other than the services reported

under “Audit fees,”

“Audit-related fees”

and “Tax fees”

Consists of fees for audit of the Company’s annual financial statements, audit of the financial statements of acquired subsidiaries, the review of interim financial statements included in the Company’s quarterly reports, consents, and the review of other documents filed with the Commission.

Audit fees - Consists of fees

for professional services rendered by our principal auditor for the audit of our annual financial statements and the review of financial

statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory

and regulatory filings or engagements.

Audit-related fees - Consists

of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or

review of UAS’s financial statements and are not reported under “Audit fees.”

Tax fees - Consists of fees

for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

All other fees - Consists

of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,”

“Audit-related fees” and “Tax fees” above.

Exhibits, Financial Statement Schedules.

Financial Statements .

(a) Financial Statements .

Balance Sheets of UAS Drone Corp.

2 unchanged sentences

for the years ended December 31, 2021and 2020

Statements of Stockholders’

Equity of UAS Drone Corp.

Statements of Stockholders’ Equity of UAS Drone Corp.

for the years ended December 31, 2021 and 2020

2 unchanged sentences

Notes to Financial Statements

(b) Exhibits .

Exhibit Number

Share Exchange Agreement dated March 4, 2020, by and among UAS Drone Corp., Duke Robotics, Inc., and the shareholders of Duke Robotics, Inc.

1 unchanged sentence

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020).

and Plan of Merger, dated April 29, 2020, by and among UAS Drone Corp., Duke Robotics, Inc., and UAS Acquisition Corp.

(incorporated

by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 29,

Agreement and Plan of Merger, dated April 29, 2020, by and among UAS Drone Corp., Duke Robotics, Inc., and UAS Acquisition Corp.

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 29, 2020).

Articles of Incorporation as filed on February 4, 2015 (incorporated by reference to our Registration Statement on Form S-1 filed on August 25, 2019).

Bylaws, as amended, on March 4, 2020.

(incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

Bylaws, as amended, on March 4, 2020 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020).

Description of Securities (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 13, 2020).

Form of Convertible Loan Agreement dated March 9, 2020 between UAS Drone Corp.

and certain lenders.

(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

of Securities Exchange Agreement dated March 9, 2020 between UAS Drone Corp.

and Alpha Capital Anstalt.

(incorporated by reference

to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

Form of Securities Exchange Agreement dated March 9, 2020 between UAS Drone Corp.

and GreenBlock Capital LLC.

(incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

of Securities Exchange Agreement dated March 9, 2020 between UAS Drone Corp.

and certain lenders.

(incorporated by reference

to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

Rights Agreement dated March 9, 2020 and certain investors.

(incorporated by reference to Exhibit 10.5 to the Current Report

on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

8% Convertible Debenture of Alpha Capital Anstalt.

(incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

8% Convertible Debenture of GreenBlock Capital LLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020)

Collaboration Agreement,

dated January 29, 2021, by and between Duke Airborne Systems Ltd.

Form of Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2021).

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2021).

UAS Drone Corp.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 2021).

Collaboration Agreement, dated January 29, 2021, by and between Duke Airborne Systems Ltd.

and Elbit Systems Land Ltd.

(translation from Hebrew)***

Services Agreement,

dated March 25, 2021, between UAS Drone Corp.

(translation from Hebrew) (incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2021) .

Services Agreement, dated March 25, 2021, between UAS Drone Corp.

and Yossef Balucka.

(incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2021).

Amended and Restated Code of Business Conduct and Ethics.

(incorporated by reference to Exhibit 14.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020).

Letter from D.

Brooks and Associates CPAS, P.A.

Addressed to the U.S.

Securities and Exchange Commission dated March 10, 2020 (incorporated by reference to Exhibit 16.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 13, 2020)

List of Subsidiaries of the Company.

Exhibit Number

List of Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2021.

Certification of Chief Executive Officer pursuant to Sec.

6 unchanged sentences

Section 1350.

The following materials

from the Registrant, formatted in XBRL (Extensible Business Reporting Language):

(i) Balance Sheets as of December 31, 2020

and 2019, (ii) Statements of Operations for the years ended December 31, 2020 and 2019, (iii) Statements of Stockholders’

Deficit for the years ended December 31, 2020 and 2019, (iv) Statements of Cash Flows for the years ended December 31, 2020

and 2019, and (v) Notes to Financial Statements.**

Pursuant to Rule

12b-32 of the SEC, this exhibit is incorporated herein by reference to our Registration Statement on Form S-1, filed with

the SEC on August 25, 2015.

The following materials from the Registrant, formatted in inline XBRL (Extensible Business Reporting Language):

(i) Balance Sheets as of December 31, 2021 and 2020, (ii) Statements of Operations for the years ended December 31, 2021 and 2020, (iii) Statements of Stockholders’ Deficit for the years ended December 31, 2021 and 2020, (iv) Statements of Cash Flows for the years ended December 31, 2021 and 2020, and (v) Notes to Financial Statements.**

Cover Page Interactive Data File (embedded within the Inline XBRL document)

Filed herewith.

Certain identified

information in the exhibit has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause

competitive harm to the Company if publicly disclosed.

Furnished herewith.

Financial Statement Schedules.

following documents are filed as part of this Report:

Certain identified information in the exhibit has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

The following documents are

filed as part of this Report:

Financial Statements

Index to Financial Statements

Financial Statement

financial statement schedules have been omitted because they are not applicable or the required information is presented in the

financial statements or the notes to the financial statements.

See Index to Financial Statements

Financial Statement Schedules:

All financial statement schedules

have been omitted because they are not applicable or the required information is presented in the financial statements or the notes to

the financial statements.

Form 10-K Summary.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

March 30, 2021

Yossef Balucka

Chief Executive

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

Pursuant to the requirements

of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by

the undersigned, thereunto duly authorized.

UAS DRONE CORP.

March 7, 2022

Yossef Balucka

/s/ Yossef Balucka

Yossef Balucka

1 unchanged sentence

(Principal Executive Officer)

March 30, 2021

/s/ Shlomo Zakai

Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

(Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

March 7, 2022

Chairman of the

/s/ Yossef Balucka

Yossef Balucka

Chief Executive Officer (Principal Executive Officer)

March 7, 2022

Erez Nachtomy

/s/ Shlomo Zakai

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

March 7, 2022

/s/ Yariv Alroy

Chairman of the Board

March 7, 2022

/s/ Erez Nachtomy

Erez Nachtomy

Vice Chairman

Vice Chairman of the Board

March 7, 2022

Chief Technology

Officer and Director

/s/ Sagiv Aharon

Chief Technology Officer and Director

March 7, 2022

UAS DRONE CORP.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets as of December 31, 2020 and December 31, 2019

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2020 and 2019

Statements of Changes in Shareholders’

Deficit for the years ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

/s/ Eran Antebi

FINANCIAL STATEMENTS

OF DECEMBER 31, 2021

FINANCIAL STATEMENTS

OF DECEMBER 31, 2021

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF

DIRECTORS AND STOCKHOLDERS OF

CONSOLIDATED FINANCIAL

Balance Sheets as of December 31, 2021 and December 31, 2020

Statements of Comprehensive Loss for the years ended December 31, 2021 and 2020

of Changes in Shareholders’ Equity (Deficit) for the years ended December 31, 2021 and 2020

Statements of Cash Flows for the years ended December 31, 2021 and 2020

to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF

UAS DRONE CORP., INC.

Opinion on the Financial Statements

We have audited the accompanying balance

sheets of UAS Drone Corp.

(the “Company”) as of December 31, 2020 and 2019, the related statements of operations and

comprehensive loss, changes in stockholders’

deficit and cash flows for the years in the period ended December 31, 2020 and

2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and

the results of its operations and its cash flows for the year in the period ended December 31, 2020 and 2019, in conformity with

accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have

been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the

Company has not yet generated material revenues from its operations to fund its activities and is therefore dependent upon external

sources for financing its operations.

As of December 31, 2020, the Company has incurred accumulated deficit of $5,131 thousands

and negative operating cash flows.

These factor among others, as discussed in Note 1 to the financial statements raise substantial

doubt about the Company’s ability to continue as a going concern.

Management’s plans concerning these matters are also

described in Note 1 to the financial statements.

The financial statements do not include any adjustments that might result from

the outcome of’

these uncertainties.

This matter is also described in the “Critical Audit Matters”

We have audited the accompanying balance sheets

of UAS Drone Corp.

(the “Company”) as of December 31, 2021 and 2020, the related statements of operations and comprehensive

loss, changes in stockholders’ equity (deficit) and cash flows for the years in the period ended December 31, 2021 and 2020, and

the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations

and its cash flows for the year in the period ended December 31, 2021 and 2020, in conformity with accounting principles generally accepted

in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based

on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required

to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control over financial reporting.

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required

to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures

to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable

basis for our opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit

matters communicated below are matters arising from the current period audit of the consolidated financial statements that were

communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material

to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and

we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on

the accounts or disclosures to which they relate.

Going concern assessment

The accompanying

consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in

Note 1 to the consolidated financial statements, the Company has not yet generated material revenues from its operations to fund

its activities and is therefore dependent upon external sources for financing its operations.

As of December 31, 2020, the Company

has incurred accumulated deficit of $5,131 thousands and negative operating cash flows.

These factor among others, as discussed

in Note 1 to the financial statements raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans concerning these matters are also described in Note 1 to the financial statements.

This matter is also

described in the “Emphasis of Matter –

Going Concern”

section of our report.

We identified

management’s assumptions used to assess the Company’s ability to continue as a going concern as a critical audit matter

due to inherent complexities and uncertainties related to the Company’s Management’s plans.

Auditing this assumptions

involved especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address

these matters.

The primary procedures we performed to

address this critical audit matter included the following:

Assessing the reasonableness of key assumptions underlying

management’s forecast operating cash flows, including revenue growth and gross margin assumptions and evaluating the reasonableness

of management’s forecast operating cash flows

Evaluating the probability that the Company will be able

to reduce capital expenditures and other operating expenditures if required

Assessing management’s plans in the context of other

audit evidence obtained during the audit to determine whether it supported or contradicted the conclusions reached by management

Assessing the effect of events and agreement signed after balance

Fair value measurement of Level 3 liabilities

As discussed in

Notes 2M and 6 to the consolidated financial statements, the Company entered into several Convertible Loan Agreements and in accordance

with ASC 815-15-25, the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair

value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value.

The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the

convertible component fair value over the face loan amount.

The fair value

of the convertible component was estimated by third party appraiser using the Black-Scholes option pricing model, to compute the

fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

Under accounting

principles generally accepted in the United States of America, these convertible component are generally classified as Level 3

convertible component.

We identified

Level 3 convertible component as a critical audit matter because of the complex proprietary models and unobservable inputs management

uses to estimate the fair value.

This evaluation required a high degree of auditor judgment and an increased extent of effort,

including the need to involve our internal valuation specialists who possess significant quantitative and modeling expertise, to

audit and evaluate the appropriateness of these models and inputs.

Our audit procedures related to the

complex proprietary models and unobservable inputs used by management to estimate the fair value of Level 3 convertible component

included the following, among others:

We assessed the consistency by which management has applied significant unobservable valuation assumptions.

With the assistance of our internal valuation specialists, we evaluated the appropriateness of the valuation methodologies and techniques used in determining the fair value of Level 3 convertible component.

Also, we evaluated the appropriateness of estimates of the key inputs used in determining the fair value of the Level 3 convertible component

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

that (i) relate to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging,

subjective, or complex judgments.

We determined there are no critical audit matters.

/s/ Halperin Ilanit .

Certified Public Accountants (Isr.)

PCAOB number 650100001

Tel Aviv, Israel

March 7, 2022

We have served as the Company’s auditor since 2019

UAS DRONE CORP.

We have served as the Company’s auditor since 2019

BALANCE SHEETS

(USD in thousands except share and per share

in thousands except share and per share data)

Current Assets

2 unchanged sentences

Total Current assets

Property and equipment,

Liabilities and Shareholders’

Property and equipment, net (Note 4)

Liabilities and Shareholders’ Equity (Deficit)

Current Liabilities

2 unchanged sentences

Other accounts liabilities (Note 5)

Stockholders loans (Note 7)

Convertible loans and debentures(Note 6B)

Convertible Loans (Note 6B)

Fair Value of convertible component in convertible loan (Note 6B)

2 unchanged sentences

Fair Value of convertible component in convertible loan (Note 6A)

Stockholders loans (Note 7)

Long term bank loans

Stockholder loans (Note 7)

Total liabilities

Stockholders’

Deficit (Note 8)

Common stock of $0.0001 par value each (“Common Stock”):

Stockholders’ Equity (Deficit) (Note 8)

Common stock of US$ 0.0001 par value each (“Common Stock”):

100,000,000 shares authorized as of December 31, 2021 and 2020;

2 unchanged sentences

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

The accompanying notes are an integral

part of the consolidated financial statements.

UAS DRONE CORP.

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE LOSS

(USD in thousands except share and per share

Cost of revenues

Research and development expenses

General and administrative expenses (Note 10)

Operating loss

Financing expenses, net

Loss per share (basic and diluted) (Note 12)

Basic and diluted weighted average number of shares of Common Stock outstanding

UAS DRONE CORP.

STATEMENTS OF CHANGES

IN STOCKHOLDERS’

(USD in thousands, except share and per

stockholders’

BALANCE AT JANUARY 1, 2019

CHANGES DURING THE YEAR ENDED DECEMBER 31, 2019:

Share based compensation for services

Comprehensive loss for the year

BALANCE AT DECEMBER 31, 2019

CHANGES DURING THE YEAR ENDED DECEMBER 31, 2020:

Issuance of shares in exchange for extinguishment of debt

Issuance of shares in exchange for convertible loans

Share based compensation for services

Effect of Reverse Capitalization

Comprehensive loss for the year

BALANCE AT DECEMBER 31, 2020

The accompanying notes are an integral

part of the consolidated financial statements.

UAS DRONE CORP.

CONSOLIDATED STATEMENTS

OF CASH FLOWS

Total stockholders’ Equity (Deficit)

Total liabilities and stockholders’ Equity (Deficit)

accompanying notes are an integral part of the consolidated financial statements.

STATEMENTS OF COMPREHENSIVE LOSS

in thousands except share and per share data)

and development expenses

and administrative expenses (Note 10)

per share (basic and diluted) (Note 14)

and diluted weighted average number of shares of Common Stock outstanding

OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

in thousands , except share and per share data)

stockholders’

AT DECEMBER 31, 2019

of shares in exchange for extinguishment of debt

of shares in exchange for convertible loans

based compensation for services

of Reverse Capitalization

Comprehensive

loss for the year

AT DECEMBER 31, 2020

paid-in capital

stockholders’

equity (deficit)

AT DECEMBER 31, 2020

of shares in exchange for convertible loans

of shares for cash (net of issuance expenses) (**)

based compensation for services granted in respect of issuance of shares (Note 8)

based compensation for services

Comprehensive

profit for the year

AT DECEMBER 31, 2021

(*) represents amount less than $1 thousand.

(**) Net of issuance expenses of $1,070.

accompanying notes are an integral part of the consolidated financial statements.

STATEMENTS OF CASH FLOWS

in thousands )

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss for the period

Adjustments required to reconcile net loss for the

period to net cash used in operating activities:

Depreciation and amortization

Finance expenses

Adjustments required to reconcile net loss for the period to net cash used in operating activities:

Stock based compensation

1 unchanged sentence

Expenses with respect to convertible loans and debentures

Decrease (increase) in other current assets

Increase (decrease) in accounts payable

Increase in other current assets

Decrease in accounts payable

Increase (decrease) in other accounts payable

2 unchanged sentences

Proceeds from secured promissory notes

Proceeds from issuance of shares

Repayments of convertible loans

Repayments of long term banking institute

Net cash provided by (used in) financing activities

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Net cash provided by financing activities

INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

5 unchanged sentences

Issuance of shares in exchange for convertible loans

The accompanying notes are an integral

part of the consolidated financial statements.

UAS DRONE CORP.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(USD in thousands)

UAS Drone Corp.

Company”

or “USDR”) was incorporated under the laws of the State of Nevada on February 4, 2015.

Company’s formation, the operations were functioning under Unlimited Aerial Systems, LLP (“UAS LLP”).

was formed under the laws of the State of Louisiana on August 22, 2014.

Issuance expenses

accompanying notes are an integral part of the consolidated financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

(the “Company” or “USDR”) was incorporated under the laws of the State of Nevada on February 4, 2015.

Prior to the Company’s formation, the operations were functioning under Unlimited Aerial Systems, LLP (“UAS LLP”).

UAS LLP was formed under the laws of the State of Louisiana on August 22, 2014.

Effective March 31, 2015, the Company completed a reverse

1 unchanged sentence

The reverse merger was accounted for as a reverse capitalization.

On March 9, 2020, the Company

closed on the Share Exchange Agreement (as defined hereunder), pursuant to which, Duke Robotics, Inc.

(“Duke Inc.”)

a corporation incorporated under the laws of the state of Delaware, became a majority-owned subsidiary of the Company.

March 9, 2020, the Company closed on the Share Exchange Agreement (as defined hereunder), pursuant to which, Duke Robotics, Inc.

Inc.”) a corporation incorporated under the laws of the state of Delaware, became a majority-owned subsidiary of the Company.

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

(“Duke Israel,”

and collectively with Duke Inc., “Duke”),

(“Duke Israel,” and collectively with Duke Inc., “Duke”),

which was formed under the laws of the State of Israel in March 2014 and became the sole subsidiary of Duke after its incorporation.

On April 29, 2020, the Company,

Duke Inc., and UAS Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (“UAS Sub”),

executed an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which UAS Sub merged with and into Duke

Upon closing of the Short-Form Merger (as defined hereunder), each outstanding share of UAS Sub’s common stock, par

value $0.0001 per share, was converted into and became one share of common stock of Duke Inc., with Duke Inc.

surviving as a wholly-owned

subsidiary of the Company.

Pursuant to the Merger Agreement, the Company intended to acquire the remaining outstanding shares of

April 29, 2020, the Company, Duke Inc., and UAS Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company

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

with and into Duke Inc.

Upon closing of the Short-Form Merger (as defined hereunder), each outstanding share of UAS Sub’s common

stock, par value $ 0.0001 per share, was converted into and became one share of common stock of Duke Inc., with Duke Inc.

a wholly-owned subsidiary of the Company.

Pursuant to the Merger Agreement, the Company intended to acquire the remaining outstanding

shares of Duke Inc.

held by certain stockholders of Duke Inc.

that did not participate in the Share Exchange Agreement (as defined hereunder).

On April 30, 2020, the Company

filed a Registration Statement on Form S-1, which was declared effective by the U.S.

Securities and Exchange Commission (“SEC”)

on June 19, 2020, to register:

(i) 63,856 shares of common stock of the Company that were issued to certain stockholders of Duke

upon the consummation of the Short-Form Merger;

(ii) 14,614,751 shares of common stock of the Company of certain selling stockholders

named in the S-1 Registration Statement;

and (iii) 3,649,733 shares of common stock of the Company issuable upon conversion of

Convertible Notes (see Note 6 below).

On June 25, 2020, at the closing

of the transaction contemplated by the Merger Agreement, the Company issued 63,856 shares to certain Duke Inc.

stockholders, and

April 30, 2020, the Company filed a Registration Statement on Form S-1, which was declared effective by the U.S.

Securities and Exchange

Commission (“SEC”) on June 19, 2020, which registered:

(i) 63,856 shares of common stock of the Company, $0.0001 par value

per share (the “Common Stock”), that were issued to certain stockholders of Duke Inc.

upon the consummation of the Short-Form

(ii) 14,614,751 shares of Common Stock of certain selling stockholders named in the Registration Statement on Form S-1;

3,649,733 shares of Common Stock issuable upon conversion of Convertible Notes (see Note 6 below).

June 25, 2020, at the closing of the transaction contemplated by the Merger Agreement, the Company issued 63,856 shares to certain Duke

stockholders, and Duke Inc.

became a wholly owned subsidiary of the Company.

The Company (collectively with

Duke, the “Group”) 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.

The Company’s advanced robotics

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

On January 29, 2021, the Company,

through Duke Israel, and Elbit Systems Land Ltd., an Israeli corporation, entered into a 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.”

Effective October 22, 2020,

Company’s common stock in quoted on the OTC Markets Group, Inc.’s OTCQB®

tier Venture Market, under the symbol

“USDR”.

On March 4, 2020, USDR entered

into a Share Exchange Agreement with Duke Inc., and certain shareholders of Duke Inc.

who executed and delivered the Share Exchange

Agreement (the “Share Exchange Agreement”), pursuant to which Duke Inc.

became a majority-owned subsidiary of USDR

(the “Share Exchange”).

The Share Exchange closed on March 9, 2020.

Such closing date is referred to as the “Effective

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Company (collectively with Duke, the “Group”) 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.

The Company’s

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

January 29, 2021, the Company, through Duke Israel, and Elbit Systems Land Ltd., an Israeli corporation, entered into a 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.” (see Note 12)

October 22, 2020, Company’s Common Stock is quoted on the OTC Markets Group, Inc.’s OTCQB® tier Venture Market, under

the symbol “USDR”.

As of December 31, 2020, the Company

had incurred accumulated losses of approximately $ 1.8 million, and based on the then Company’s projected cash flows, and Company’s

cash balance, the Company’s management was of the opinion that without further fundraising, it would not have sufficient resources

to enable it to continue advancing its activities, including the development, manufacturing, and marketing of its products, which cast

substantial doubt on the entity’s ability to continue as a going concern.

Based on the Company’s current cash balances, capital raised

during the year ended December 31, 2021, the Company has sufficient funds for its plans for the next twelve months from the issuance of

these financial statements.

The Company’s management cannot determine with reasonable certainty when and if it will have sustainable

Even if management believes that the Company have sufficient funds for our current Company's future operating plans, it may seek

additional capital if market conditions are favorable or if it have specific strategic considerations.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

1 – GENERAL (continue)

March 4, 2020, USDR entered into a Share Exchange Agreement with Duke Inc., and certain shareholders of Duke Inc.

who executed and delivered

the Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which Duke Inc.

became a majority-owned subsidiary

of USDR (the “Share Exchange”).

The Share Exchange closed on March 9, 2020.

Such closing date is referred to as the “Effective

entering into the Share Exchange Agreement:

(i) Duke entered into debt cancellation letters (the “Debt Cancellation Letters”)

with each of its Stockholders with regard to the Stockholders Loans.

Pursuant to the Debt Cancellation

Letters, 842,135 shares of the Duke Inc.

common stock (1,046,016 shares post Exchange Ratio) were issued in exchange for the cancellation

of $623 in debt, leaving $280 of outstanding Stockholders Loans.

These Stockholders Loans, including interest (which shall bear

an annual fixed interest rate of 3% as of January 1, 2020), shall be repaid at the date upon which the Company raises at least

$15 million and has achieved earnings before interest, tax, depreciation and amortization of $3 million, but not before the three

year anniversary of the Effective Time and the full repayment of the amounts outstanding under certain convertible loan agreements

in the aggregate amount of $965 (each, a “Convertible Loan Agreement”) (see Note 6B) entered into at the Effective

Time, unless such repayment is otherwise waived by the parties to the Investors’

(ii) Loans made from Duke to an executive

officer and a former executive officer, who are also stockholders were extinguished in connection with the Debt Cancellation Letters;

(iii) Duke issued a consultant 1,146,005 shares of the Duke Inc.

common stock (1,423,453 shares post Exchange Ratio), at par value,

regarding services rendered to Duke Inc.

The fair value of the shares issued was estimated at $429 and were recorded to share based

compensation expenses.;

and (iv) a convertible loan agreement in amount of $400 bearing an annual interest rate of 6%, including

accumulated interest in amount of $48, was converted into 700,000 shares of Duke Inc.

common stock (869,470 shares post Exchange

conjunction with the consummation of the Share Exchange, and as a condition thereof, the USDR entered into the agreements listed

(i) Convertible Loan Agreements, on the same terms, in the aggregated amount of $965 with several investors.

The term of each investor’s loan is for 12 month and each such agreement bears annual interest of 15%, and at the discretion

of USDR, the term of the investors’

loans can be extended for an additional 12 month period, which the Company did elect

to extend (see also note 6 below).

The investors have the option to convert the respective unpaid balance of their loan into shares

of USDR’s common stock based on the lower of the following valuations:

(i) the lowest effective price per share set in connection

with any funds raised by USDR during the six months following the Share Exchange;

(ii) 80% of the lowest effective price per share

set in connection with any funds raise by USDR at any time subsequent to six months following the Share Exchange until such time

as the Investors’

Loans are fully repaid;

(iii) a price per share reflecting a post-money valuation of USDR of $15 million

following the next investment in USDR following closing;

or (iv) if at any time following the 6 month anniversary of the closing

of the Share Exchange and until such time as the Investors’

Loans are fully repaid, USDR sells or grants any option to purchase

or sells or grants any right to reprice, or otherwise disposes of or issues any common stock entitling any person to acquire shares

of common stock at an effective price per share that is lower than $0.374.

The conversion price is currently $0.374.

30, 2021, the Convertible Loan Agreements have an aggregate outstanding principal balance of $835 as a result of the conversions

of certain Convertible Loan Agreements (see note 15 below).

(ii) In addition, before entering into the Share Exchange the parties to certain consulting agreements

agreed to exchange their contractual right to receive options in Duke for options to be granted by USDR following the Effective

Time, subject to the terms and conditions of a stock incentive plan, to be adopted by the Board of Directors of USDR.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

to the Debt Cancellation Letters, 842,135 shares of the Duke Inc.

common stock (1,046,016 shares post Exchange Ratio) were issued in

exchange for the cancellation of $623 in debt, leaving $280 of outstanding Stockholders Loans.

These Stockholders Loans, including interest

(which shall bear an annual fixed interest rate of 3% as of January 1, 2020), shall be repaid at the date upon which the Company raises

at least $15 million and has achieved earnings before interest, tax, depreciation and amortization of $3 million, but not before the

three year anniversary of the Effective Time and the full repayment of the amounts outstanding under certain convertible loan agreements

in the aggregate amount of $965 (each, a “Convertible Loan Agreement”) (see Note 6B) entered into at the Effective Time,

unless such repayment is otherwise waived by the parties to the Investors’ Loan;

(ii) Loans made from Duke to an executive officer

and a former executive officer, who are also stockholders were extinguished in connection with the Debt Cancellation Letters;

issued a consultant 1,146,005 shares of the Duke Inc.

common stock (1,423,453 shares post Exchange Ratio), at par value, regarding services

rendered to Duke Inc.

The fair value of the shares issued was estimated at $429 and were recorded to share based compensation expenses.;

and (iv) a convertible loan agreement in amount of $400 bearing an annual interest rate of 6%, including accumulated interest in amount

of $48, was converted into 700,000 shares of Duke Inc.

common stock (869,470 shares post Exchange Ratio) .

conjunction with the consummation of the Share Exchange, and as a condition thereof, USDR entered into the agreements listed below:

(i) Convertible Loan Agreements, on the same terms, in the aggregated amount of $ 965 with several investors (the “Convertible Loans”).

The term of each investor’s loan was for 12 month and each such agreement bore annual interest of 15 %, and at the discretion of USDR, the term of the investors’ loans was able to be extended for an additional 12 months period, which the Company did elect to extend (see also note 6 below).

The investors had the option to convert the respective unpaid balance of their loan into shares of USDR’s Common Stock based on the lower of the following valuations:

(i) the lowest effective price per share set in connection with any funds raised by USDR during the six months following the Share Exchange;

(ii) 80% of the lowest effective price per share set in connection with any funds raise by USDR at any time subsequent to six months following the Share Exchange until such time as the Investors’ Loans are fully repaid;

(iii) a price per share reflecting a post-money valuation of USDR of $15 million following the next investment in USDR following closing;

or (iv) if at any time following the 6 month anniversary of the closing of the Share Exchange and until such time as the Investors’ Loans are fully repaid, USDR sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues any common stock entitling any person to acquire shares of common stock at an effective price per share that is lower than $0.374.

As of December 31, 2021, the Convertible Loans were fully repaid (see note 6B below).

addition, before entering into the Share Exchange the parties to certain consulting agreements

agreed to exchange their contractual right to receive options in Duke for options to be granted

by USDR following the Effective Time, subject to the terms and conditions of a stock incentive

plan, which was adopted by the Board of Directors of USDR on May 27, 2021.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

NOTE 1 –

1 – GENERAL (continue)

(iii) Securities exchange agreements with outstanding debt holders of USDR, Alpha Capital Anstalt (“Alpha”)

and GreenBlock Capital LLC (“GBC”) to respectively cancel existing debentures or debt in the total amount of $658 and

in exchange issue new debentures in the aggregate amount of $400 and issue 698,755 and 65,198 shares of common stock to each of

Alpha and GBC, respectively (the “New Debentures”).

The New Debentures mature three years from the Effective Date,

bear interest at a rate of 8% per year and are only convertible into shares of the Company’s common stock, at an original

conversion price of $0.374 (the “Original Conversion Price”);

provided, however, that such Original Conversion Price

shall be adjusted downward in the event that USDR, as applicable, sells or grants any options to purchase or sells or grants any

right to reprice, or otherwise dispose or issues any common stock or common stock equivalents entitling any purchaser to acquire

shares of the Company’s common stock at an effective price per share that is lower than the Original Conversion Price (such

issuance, a “Dilutive Event”).

In the event of a Dilutive Event at any time from the Effective Time through the six

(6) month anniversary of the Effective Time, any such adjustment shall occur immediately after the completion of such period.

As of March 30, 2021, the New Debentures have an aggregate outstanding principal balance of $200 as a result of conversions of

the New Debentures (see note 15 below).

(iv) Several Securities Exchange Agreements, with similar terms, to exchange certain promissory notes

having a total principal amount of $35 bearing interest of 6% per annum, for 9,623,621 shares of Company’s common stock.

Signatories to the Securities Exchange Agreements are entitled to an anti-dilution clause in the event that the Convertible Loans

detailed in Note 1(iii) above are converted such that such the number of shares held by such investors would not be lower than

original holding on a fully diluted basis prior to such conversions.

Per Accounting Standards Update (“ASU”) 2017-11,

the Company classified the anti-dilution to shareholders equity.

(v) A Registration Rights Agreement with GBC, Alpha, the Primary Lenders (as defined below) and certain

Duke shareholders.

The Company filed a Registration Statement on Form S-1 with the SEC, which was declared effective on June 19,

2020, in compliance with the requirements of the Registration Rights Agreement.

The deemed beneficial owners of the common stock,

or other securities, issuable under parties to the Convertible Loan Agreements and the Note Conversion are identical and, as such,

the Company refer to these parties as the “Primary Lenders.”

(vi) The Company’s former CEO’s outstanding accrued pay of $32 as well as the 25,000

options he held at the end of 2019, were converted into 45,968 shares of the post-transaction Company.

Pursuant to the terms of the

Share Exchange Agreement, at the Effective Time, the Company issued an aggregate of 28,469,065 shares of its common stock to the

stockholders in exchange for 22,920,107 shares of Duke’s Inc.

(iii) Securities exchange agreements with outstanding debt holders of USDR, Alpha Capital Anstalt (“Alpha”) and GreenBlock Capital LLC (“GBC”) to respectively cancel existing debentures or debt in the total amount of $ 658 and in exchange issue new debentures in the aggregate amount of $ 400 and issue 698,755 and 65,198 shares of Common Stock to each of Alpha and GBC, respectively (the “New Debentures”).

The New Debentures were to mature three years from the Effective Date, bore interest at a rate of 8 % per year and were only convertible into shares of Common Stock, at an original conversion price of $ 0.374 (the “Original Conversion Price”);

provided, however, that such Original Conversion Price was to be adjusted downward in the event that USDR, as applicable, sells or grants any options to purchase or sells or grants any right to reprice, or otherwise disposes or issues any common stock or common stock equivalents entitling any purchaser to acquire shares of the Company’s common stock at an effective price per share that was lower than the Original Conversion Price (such issuance, a “Dilutive Event”).

In the event of a Dilutive Event at any time from the Effective Time through the six (6) month anniversary of the Effective Time, any such adjustment shall occur immediately after the completion of such period.

As of December 31, 2021, the New Debentures were fully repaid or converted (see note 6A below).

(iv) Several Securities Exchange Agreements, with similar terms, to exchange certain promissory notes having a total principal amount of $ 35 bearing interest of 6 % per annum, for 9,623,621 shares of Common Stock.

Signatories to the Securities Exchange Agreements are entitled to an anti-dilution clause in the event that the Convertible Loans detailed in Note 1(iii) above are converted such that such the number of shares held by such investors would not be lower than original holding on a fully diluted basis prior to such conversions.

Per Accounting Standards Update (“ASU”) 2017-11, the Company classified the anti-dilution to shareholders equity.

Registration Rights Agreement with GBC, Alpha, the Primary Lenders (as defined below) and

certain Duke shareholders.

The Company filed a Registration Statement on Form S-1 with the

SEC, which was declared effective on June 19, 2020, in compliance with the requirements of

the Registration Rights Agreement.

The deemed beneficial owners of the common stock, or other

securities, issuable under parties to the Convertible Loan Agreements and the Note Conversion

are identical and, as such, the Company refer to these parties as the “Primary Lenders”.

(vi) The Company’s former CEO’s outstanding accrued pay of $ 32 as well as the 25,000 options he held at the end of 2019, were converted into 45,968 shares of the post-transaction Company .

to the terms of the Share Exchange Agreement, at the Effective Time, the Company issued an aggregate of 28,469,065 shares of Common Stock

to the Duke Inc.

stockholders in exchange for 22,920,107 shares of Duke’s Inc.

issued and outstanding shares of common stock, representing

approximately 99% of Duke’s Inc.

issued and outstanding shares of common stock.

Accordingly, each outstanding share of Duke

common stock was exchanged for the right to receive 1.2421 shares of the Company’s common stock (the “Exchange

Ratio”).

Accordingly, each outstanding share of Duke Inc.

common stock was exchanged for the right to receive 1.2421 shares of the Company’s common stock (the “Exchange Ratio”).

Of the shares of Duke Inc.

common stock that were exchanged for shares of the Company’s common stock, 51,410

(representing 63,856 shares of the Company’s common stock post-Share Exchange) were issued but remained in escrow until the

Company completed the Short-Form Merger (as defined hereunder).

On June 25, 2020, at the closing of the transaction contemplated

by the Merger Agreement, the Company released the shares in escrow.

As such, at the Effective Time,

the Duke stockholders owned an equivalent of approximately 71% of the Company’s common stock.

After giving effect to the

Share Exchange, Duke became a subsidiary of the Company.

Following the Share Exchange, the Company adopted the business plan of

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

common stock that were exchanged for shares of the Company’s common stock, 51,410 (representing 63,856

shares of the Company’s common stock post-Share Exchange) were issued but remained in escrow until the Company completed the Short-Form

Merger (as defined hereunder) .

On June 25, 2020, at the closing of the transaction contemplated by the Merger Agreement, the Company

released the shares in escrow.

such, at the Effective Time, the Duke stockholders owned an equivalent of approximately 71 % of the Company’s Common Stock.

giving effect to the Share Exchange, Duke became a subsidiary of the Company.

Following the Share Exchange, the Company adopted the business

plan of Duke.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

1 – GENERAL (continue)

The transaction was accounted

for as a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America

(“GAAP”).

Under this method of accounting, Duke was deemed to be the accounting acquirer for financial reporting purposes.

transaction was accounted for as a reverse asset acquisition in accordance with generally accepted accounting principles in the United

States of America (“GAAP”).

Under this method of accounting, Duke was deemed to be the accounting acquirer for financial

reporting purposes.

This determination was primarily based on the facts that, immediately following the Merger:

(i) Duke’s stockholders

owned a substantial majority of the voting rights in the combined company, (ii) Duke designated a majority of the members

of the initial board of directors of the combined company, and (iii) Duke’s senior management holds all key positions

in the senior management of the combined company.

As a result of the Recapitalization Transaction, the shareholders of Duke received

the largest ownership interest in the Company, and Duke was determined to be the “accounting acquirer”

in the Recapitalization

As a result, the historical financial statements of the Company were replaced with the historical financial statements

The number of shares prior to the reverse capitalization have been retroactively adjusted based on the equivalent number

of shares received by the accounting acquirer in the Recapitalization Transaction.

On April 29, 2020, the Company,

and UAS Sub, executed the Merger Agreement, pursuant to which UAS Sub merged with and into Duke, with Duke surviving

as a wholly-owned subsidiary of the Company (the “Short-Form Merger”).

Pursuant to the Merger Agreement, on June 25,

2020, the Company acquired the remaining outstanding shares of Duke held by those certain Duke shareholders that did not participate

in the Share Exchange.

The COVID-19 pandemic has caused

states of emergency to be declared in various countries, travel restrictions imposed globally, quarantines established in certain

jurisdictions and various institutions and companies being closed.

COVID-19 has also adversely affect the Group’s ability

to conduct its business effectively due to disruptions to its capabilities, availability and productivity of personnel, while the

Group simultaneously attempts to comply with rapidly changing restrictions, such as travel restrictions, curfews and others.

particular, on January 24, 2021, the Government of Israel announced that effective January 26, 2021, non-Israeli residents or citizens,

except for non-nationals whose lives are based in Israel, are not allowed to enter Israel, and the number of Israeli citizens permitted

to enter the country per day will be capped at 3,000.

In addition, the Ministry of Health in the State of Israel issued guidelines

on March 11, 2020, which were most recently updated in March 2021, recommending people avoid gatherings in one space and providing

that no gathering of more than 20 people should be held under any circumstances.

Employers (including the Group) are also required

to prepare and increase as much as possible the capacity and arrangement for employees to work remotely.

In addition, on January

25, 2021, the President of the United States issued a proclamation to restrict travel to the United States from foreign nationals

who have recently been in China, Iran, South Africa, and certain European and Latin America countries.

Although to date these restrictions

have not impacted the Group’s operations, the effect on its business, from the spread of COVID-19 and the actions implemented

by the governments of the State of Israel, the United States and elsewhere across the globe, may worsen over time.

The spread of

COVID-19 may also result in the inability of the Group’s manufacturers to deliver components or finished products on a timely

basis and may also result in the inability of the Group’s suppliers to deliver the parts required by its manufacturers to

complete manufacturing of components or finished products.

In addition, governments may divert spending from other budgeted resources

as they seek to reduce and/or stop the spread of COVID-19.

Such events may result in a period of business and manufacturing disruption,

and in reduced operations, any of which could materially affect the Group’s business, financial condition and results of

The extent to which COVID-19 impacts the Group’s business will depend on future developments, which are highly

uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions

to contain COVID-19 or treat its impact, among others.

The Group is actively monitoring the pandemic and it is taking any necessary

measures to respond to the situation in cooperation with the various stakeholders.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

in thousands)

GENERAL (continue)

Going Concern

Since inception, the Group has

devoted substantially all its efforts to research and development.

The Group is still in its development stage and the extent of

the Group’s future operating losses and the timing of becoming profitable, if ever, are uncertain.

As of December 31, 2020,

the Group had $105 in cash and cash equivalents, net losses of $1,368, an accumulated deficit of $5,131, and a negative working

capital of $1,176.

The Group will need to secure

additional capital in the future in order to meet its anticipated liquidity needs primarily through the sale of additional Common

Stock or other equity securities and/or debt financing.

Funds from these sources may not be available to the Group on acceptable

terms, if at all, and the Group cannot give assurance that it will be successful in securing such additional capital.

These conditions raise substantial

doubt about the Group’s ability to continue to operate as a “going concern.”

The Company’s ability to continue

operating as a going concern is dependent on several factors, among them is the ability to raise sufficient additional funding.

The financial statements do

not include any adjustments that might result from the outcome of this uncertainty.

The Group faces a number of

risks, including uncertainties regarding finalization of the development process, demand and market acceptance of the Group’s

products, the effects of technological changes, competition and the development of products by competitors.

Additionally, other

risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Group’s

future results.

In addition, the Group expects to continue incurring significant operating costs and losses in connection

with the development of its products and marketing efforts.

The Group has not yet generated significant revenues from its

operations to fund its activities, and therefore the continuance of its activities as a going concern depends on the receipt of

additional funding from its current stockholders and investors or from third parties.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

stockholders owned a substantial majority of the voting rights in the combined company, (ii) Duke designated a majority of the members

of the initial board of directors of the combined company, and (iii) Duke’s senior management holds all key positions in the

senior management of the combined company.

a result of the Recapitalization Transaction, the shareholders of Duke received the largest ownership interest in the Company, and Duke

was determined to be the “accounting acquirer” in the Recapitalization Transaction.

As a result, the historical financial

statements of the Company were replaced with the historical financial statements of Duke.

The number of shares prior to the reverse capitalization

have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization

April 29, 2020, the Company, Duke Inc.

and UAS Sub, executed the Merger Agreement, pursuant to which UAS Sub merged with and into Duke,

with Duke surviving as a wholly-owned subsidiary of the Company (the “Short-Form Merger”).

Pursuant to the Merger Agreement,

on June 25, 2020, the Company acquired the remaining outstanding shares of Duke held by those certain Duke shareholders that did not

participate in the Share Exchange.

have not experienced any material impact on our financial condition and results of operations due to COVID-19, and we do not expect to

experience any material impact on our overall liquidity positions and outlook as a result of the outbreak.

Nevertheless, given that COVID-19

is still an ongoing event in different parts of the world, it is still not possible at this time to estimate the full impact that the

COVID-19 pandemic, the continued spread of COVID-19, and any additional measures taken by governments, health officials or by us in response

to such spread, could have on our business results of operations and financial condition.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

2 – SIGNIFICANT ACCOUNTING POLICIES

The financial statements were

prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

Use of estimates in the preparation of financial statements

The preparation of financial

statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported

amounts of expenses during the reporting periods.

Actual results could differ from those estimates.

As applicable to these financial

statements, the most significant estimates and assumptions relate to the going concern assumptions and convertible loans.

Functional currency

A majority of the Group’s

expected revenues is generated in dollars.

In addition, most of the Group’s costs are denominated and determined in

dollars and in new Israeli shekels.

Management believes that the dollar is the currency in the primary economic environment in

which the Group operates.

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements,

and the reported amounts of expenses during the reporting periods.

Actual results could differ from those estimates including the effects

As applicable to these financial statements, the most significant estimates and assumptions relate to going concern and share based compensation.

majority of the Group’s revenues is generated in dollars.

In addition, most of the Group’s costs are denominated and determined

in dollars and in new Israeli shekels.

Management believes that the dollar is the currency in the primary economic environment in which

the Group operates.

Thus, the functional and reporting currency of the Group is the dollar.

Accordingly, monetary accounts

maintained in currencies other than the dollar are remeasured into dollars in accordance with Accounting Standards Codification

(“ASC”) 830, “Foreign Currency Matters.”

All transaction gains and losses of the remeasured monetary balance

sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.

Principles of consolidation

The consolidated financial statements

include the accounts of the Company and its subsidiaries Duke Inc., UAS Sub and Duke Israel.

All significant intercompany balances

and transactions have been eliminated on consolidation.

Cash and cash equivalents, and Restricted cash

Cash equivalents are short-term

highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted

as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

Property, plant and equipment, net

monetary accounts maintained in currencies other than the dollar are remeasured into dollars in accordance with Accounting Standards

Codification (ASC) 830, “Foreign Currency Matters”.

All transaction gains and losses of the remeasured monetary balance sheet

items are reflected in the statements of operations as financial income or expenses, as appropriate.

of consolidation

consolidated financial statements include the accounts of the Company and its subsidiaries Duke Inc., UAS Sub, and Duke Israel.

All significant

intercompany balances and transactions have been eliminated on consolidation.

and cash equivalents

equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit),

that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the

date acquired.

plant and equipment, net

Property and equipment are stated at cost, net of accumulated depreciation.

Depreciation is calculated

using the straight-line method over the estimated useful lives of the assets.

When an asset is retired or otherwise disposed of,

the related cost and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized

from disposition is reflected in the Statements of Operations and Comprehensive Loss.

Rates of depreciation:

Furniture and office equipment

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.

When an asset is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in the Statements of Operations and Comprehensive Loss.

of depreciation:

and office equipment

Office improvements

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

1 unchanged sentence

Impairment of long-lived assets

The Group’s long-lived

assets are reviewed for impairment in accordance with ASC Topic 360, “Property, Plant and Equipment”, whenever events

or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be

held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to

be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount

by which the carrying amount of the asset exceeds its fair value.

No impairment expenses were recorded during the years ended December

31, 2020 or 2019.

Deferred income taxes

The Group accounts for income

taxes in accordance with ASC Topic 740, “Income Taxes”

(“ASC Topic 740-10”).

Accordingly, deferred income

taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between

the financial accounting and the tax bases of assets and liabilities under the applicable tax law.

Deferred tax balances are computed

using the enacted tax rates expected to be in effect when these differences reverse.

Valuation allowances in respect of deferred

tax assets are provided for, if necessary, to reduce deferred tax assets to amounts more likely than not to be realized.

The Group accounts for uncertain

tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition,

measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements.

According to ASC

Topic 740-10, tax positions must meet a more-likely-than-not recognition threshold.

The Company’s accounting policy is to

classify interest and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize such

items in its fiscal 2020 and 2019 financial statements and did not recognize any liability with respect to an unrecognized tax

position in its balance sheets.

Research and development expenses

Group’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”)

Topic 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount

of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of

an asset to the future undiscounted cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the

impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value.

No impairment

expenses were recorded during the years ended December 31, 2021 or 2020.

Group accounts for income taxes in accordance with ASC Topic 740, “Income Taxes”.

Accordingly, deferred income taxes are

determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting

and the tax bases of assets and liabilities under the applicable tax law.

Deferred tax balances are computed using the enacted tax rates

expected to be in effect when these differences reverse.

Valuation allowances in respect of deferred tax assets are provided for, if

necessary, to reduce deferred tax assets to amounts more likely than not to be realized.

Group accounts for uncertain tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial

statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements.

According to ASC Topic 740-10, tax positions must meet a more-likely-than-not recognition threshold.

The Company’s accounting policy

is to classify interest and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize such

items in its fiscal 2021 and 2020 financial statements and did not recognize any liability with respect to an unrecognized tax position

in its balance sheets.

Research and development expenses

are charged to operations as incurred.

and development expenses are charged to operations as incurred.

Basic and diluted loss per share

Basic loss per share is computed

by dividing the loss for the period applicable to shareholders, by the weighted average number of shares of common stock outstanding

during the period.

Securities that may participate in dividends with the shares of common stock (such as the convertible preferred)

are considered in the computation of basic loss per share under the two class method.

However, in periods of net loss, only the

convertible preferred shares are considered, since such shares have a contractual obligation to share in the losses of the Company.

In computing diluted loss per

share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of potential shares.

loss per share is computed by dividing the loss for the period applicable to shareholders, by the weighted average

number of shares of common stock outstanding during the period.

Securities that may participate in dividends with the shares of common

stock (such as the convertible preferred) are considered in the computation of basic loss per share under the two class method.

in periods of net loss, only the convertible preferred shares are considered, since such shares have a contractual obligation to share

in the losses of the Company.

computing diluted loss per share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise

of potential shares.

Accordingly, in periods of net loss, no potential shares are considered.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Company measures and recognizes the compensation expense for all equity-based payments to employees based on their estimated fair values

in accordance with ASC 718, “Compensation-Stock Compensation”.

Share-based payments including grants of stock options are

recognized in the statement of comprehensive loss as an operating expense based on the fair value of the award at the date of grant.

The fair value of stock options granted is estimated using the Black-Scholes option-pricing model.

The Company has expensed compensation

costs, net of estimated forfeitures, applying the accelerated vesting method, over the requisite service period or over the implicit

service period when a performance condition affects the vesting, and it is considered probable that the performance condition will be

payments awarded to consultants (non-employees) are accounted for in accordance with ASC Topic 505-50, “Equity-Based Payments to

Non-Employees”.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

2 – SIGNIFICANT ACCOUNTING POLICIES (continue)

Stock-based compensation

The Company measures and recognizes

the compensation expense for all equity-based payments to employees based on their estimated fair values in accordance with ASC

718, “Compensation-Stock Compensation.”

Share-based payments including grants of stock options are recognized in the

statement of comprehensive loss as an operating expense based on the fair value of the award at the date of grant.

The fair value

of stock options granted is estimated using the Black-Scholes option-pricing model.

The Company has expensed compensation costs,

net of estimated forfeitures, applying the accelerated vesting method, over the requisite service period or over the implicit service

period when a performance condition affects the vesting, and it is considered probable that the performance condition will be achieved.

Share-based payments awarded

to consultants (non-employees) are accounted for in accordance with ASC Topic 505-50, “Equity-Based Payments to Non-Employees.”

Concentrations of credit risk

Financial instruments that potentially

subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents as well as certain other current

assets that do not amount to a significant amount.

Cash and cash equivalents, which are primarily held in Dollars and New Israeli

Shekels, are deposited with major banks in Israel and the United States.

Management believes that such financial institutions are

financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments.

The Company does not

have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts or other

foreign hedging arrangements.

Concentrations

of credit risk

instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents as

well as certain other current assets that do not amount to a significant amount.

Cash and cash equivalents, which are primarily held

in Dollars and New Israeli Shekels, are deposited with major banks in Israel and the United States.

Management believes that such

financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial

The Company does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange

contracts, option contracts or other foreign hedging arrangements.

Contingencies

The Company records accruals

for loss contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred

and the amount can be reasonably estimated.

These accruals are adjusted periodically as assessments change or additional information

becomes available.

Company records accruals for loss contingencies arising from claims, litigation and other sources when it is probable that a liability

has been incurred and the amount can be reasonably estimated.

These accruals are adjusted periodically as assessments change or additional

information becomes available.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

Derivative Liabilities and Fair Value of Financial Instruments

Fair value accounting requires

bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement

of their fair value for accounting purposes.

In assessing the convertible debt instruments, management determines if the convertible

debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement.

If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation

process of these instruments as derivative financial instruments under ASC 815.

Once determined, derivative

liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being

recorded in results of operations as an adjustment to fair value of derivatives.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

in thousands)

SIGNIFICANT ACCOUNTING POLICIES (continue)

Fair value of certain of the

Company’s financial instruments including cash, accounts receivable, account payable, accrued expenses, notes payables, and

other accrued liabilities approximate cost because of their short maturities.

The Company measures and reports fair value in accordance

with ASC 820, “Fair Value Measurements and Disclosure”

(“ASC 820”) defines fair value, establishes a framework

for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

Fair value, as defined in ASC

820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments

and measurement of their fair value for accounting purposes.

In assessing the convertible debt instruments, management determines if

the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring

If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.

determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in

the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

value of certain of the Company’s financial instruments including cash, accounts receivable, account payable, accrued expenses,

notes payables, and other accrued liabilities approximate cost because of their short maturities.

The Company measures and reports fair

value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for

measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date.

The fair value of an asset should reflect its highest and best use by market participants,

principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise.

The fair value of a liability should

reflect the risk of non-performance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally

classified into three categories:

The fair value of a liability should reflect

the risk of non-performance, which includes, among other things, the Company’s credit risk.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

2 – SIGNIFICANT ACCOUNTING POLICIES (continue)

techniques are generally classified into three categories:

the market approach;

1 unchanged sentence

and the cost approach.

The selection and application

of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset

or liability, and the quality and availability of inputs.

Valuation techniques used to measure fair value under ASC 820 must maximize

the use of observable inputs and minimize the use of unobservable inputs.

ASC 820 also provides fair value hierarchy for inputs

and resulting measurement as follows:

Quoted prices (unadjusted)

in active markets that are accessible at the measurement date for identical assets or liabilities.

Quoted prices for similar

assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

The selection

and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics

of the asset or liability, and the quality and availability of inputs.

Valuation techniques used to measure fair value under ASC 820

must maximize the use of observable inputs and minimize the use of unobservable inputs.

ASC 820 also provides fair value hierarchy for

inputs and resulting measurement as follows:

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in

markets that are not active;

inputs other than quoted prices that are observable for the asset or liability;

and inputs that are derived principally from or

corroborated by observable market data for substantially the full term of the assets or liabilities;

Unobservable inputs

for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are

required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall.

Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements

including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to

the following:

total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings,

and a description of where those gains or losses included in earning are reported in the statement of income.

The Company records a debt discount

related to the issuance of convertible debts that have conversion features at adjustable rates.

The debt discount for the convertible

instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and

as a reduction to the carrying amount of the convertible instrument equal to the fair value of the conversion features.

discount will be accreted by recording additional non-cash gains and losses related to the change in fair values of derivative

and inputs that are derived

principally from or corroborated by observable market data for substantially the full term of the assets or liabilities;

Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the

value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in

their entirety fall.

Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded

disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period

attributable to the following:

total gains or losses for the period (realized and unrealized), segregating those gains or losses included

in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates.

discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional

paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the fair value of the conversion features.

The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair values of derivative

liabilities over the life of the convertible notes.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value

hierarchy are as follows:

of convertible component in convertible loan

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

2– SIGNIFICANT ACCOUNTING POLICIES (continue)

The Company’s financial

assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

Balance as of December 31, 2020

Fair Value of convertible component in convertible loan

Total liabilities

The following table presents

the changes in fair value of the level 3 liabilities for the Year ended December 31, 2020:

following table presents the changes in fair value of the level 3 liabilities for the years ended December 31, 2020 and 2021:

Fair value of Convertible

1 unchanged sentence

Fair value of issued level 3 liability

Changes in fair value

Outstanding at December 31, 2020

Outstanding at December 31, 2021

Certain Financial Instruments with Down Round Features

The Company accounts Certain

Financial Instruments with Down Round Features based on ASU 2017-11, “Earnings per share:

Accounting for Certain Financial

Instruments with Down Round Features,”

which allows companies to exclude a down round feature when determining whether a

financial instrument is considered indexed to the entity’s own stock.

Company accounts Certain Financial Instruments with Down Round Features based on ASU 2017-11, “Earnings per share:

for Certain Financial Instruments with Down Round Features,” which allows companies to exclude a down round feature when determining

whether a financial instrument is considered indexed to the entity’s own stock.

As a result, financial instruments with down round

features may no longer be required to be accounted classified as liabilities.

A company will recognize the value of a down round

feature only when it is triggered, and the strike price has been adjusted downward.

For equity-classified freestanding financial

instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and

a reduction of income available to common shareholders in computing basic earnings per share.

Recent Accounting Pronouncements

A company will recognize the value of a down round feature

only when it is triggered, and the strike price has been adjusted downward.

For equity-classified freestanding financial instruments,

such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income

available to common shareholders in computing basic earnings per share.

Accounting Pronouncements

Adopted in 2020

In June 2016, the Financial

Accounting Standards Board (the “FASB”) issued an ASU that supersedes the existing impairment model for most financial

assets to a current expected credit loss model.

The new guidance requires an entity to recognize an impairment allowance equal

to its current estimate of all contractual cash flows the entity does not expect to collect.

The Group adopted this guidance effective

January 1, 2020, with no material impact on its consolidated financial statements

In June 2016, the FASB issued

ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.

This guidance

replaces the current incurred loss impairment methodology.

Under the new guidance, on initial recognition and at each reporting

period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred

over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts.

NOTES TO CONSOLIDATED

October 1, 2021, the Company early adopted ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for convertible instruments by reducing the number of accounting

models available for convertible debt instruments.

This guidance also eliminates the treasury stock method to calculate diluted earnings

per share for convertible instruments and requires the use of the if-converted method.

The new standard was effective for us beginning

January 1, 2022, with early adoption permitted.

The adoption of this new standard is not expected to have a material impact on our consolidated

financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

2 – SIGNIFICANT ACCOUNTING POLICIES (continue)

The guidance became effective

on January 1, 2020, including interim periods within that year and requires a modified retrospective transition approach through

a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

Under the modified retrospective

method of adoption, prior year reported results are not restated.

The Company has performed its analysis of the impact on its financial

instruments that are within the scope of this guidance and has concluded that there was no material impact to its consolidated

financial statements.

In August 2018, the FASB issued

2018-13, “Fair Value Measurement (Topic 820):

Framework —

the Disclosure Requirements for Fair Value Measurement”

(“ASU No.

2018-13”) as part of the FASB’s broader

disclosure framework project.

2018-13 removes, modifies and adds certain disclosures, providing greater focus on requirements

that clearly communicate the most important information to the users of the financial statements with respect to fair value measurements.

The adoption of ASU No.

2018-13 as of January 1, 2020 did not have a material impact on the Company’s consolidated financial

Recently Issued Accounting

Pronouncements Not Yet Adopted

In December 2019, the FASB issued

ASU 2019-12, Income Taxes (Topic 740):

“Simplifying the Accounting for Income

Taxes.”

The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general

principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting

ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods

beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial

statements have not yet been issued.

This standard is not expected to have a material impact to the Company’s consolidated

financial statements after evaluation.

December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The amendments in this ASU simplify the accounting for income taxes, eliminates certain

exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent

application among reporting entities.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim

periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any

interim period for which financial statements have not yet been issued.

This standard is not expected to have a material impact to

the Company’s consolidated financial statements after evaluation.

August 2020, the FASB issued ASU No.

2020-06, “Debt - Debt with Conversion and Other Options”

(Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for

Convertible Instruments and Contracts in an Entity’s Own Equity.

ASU 2020-06 will simplify the accounting for

convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible

preferred stock.

Limiting the accounting models results in fewer embedded conversion features being separately recognized

from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation

models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that

meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2)

convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity

to reduce form-over-substance-based accounting conclusions.

2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and

Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in

an Entity s Own Equity.

ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of

accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models results in fewer

embedded conversion features being separately recognized from the host contract as compared with current GAAP.

instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly

and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception

from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded

as paid-in capital.

ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s

own equity to reduce form-over-substance-based accounting conclusions.

ASU 2020-06 will be effective for public companies for

fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is

permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal

The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s

consolidated financial statement presentation or disclosures.

Other new pronouncements issued

but not effective as of December 31, 2020 are not expected to have a material impact on the Company’s consolidated financial

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Early adoption is permitted,

but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial

statement presentation or disclosures.

new pronouncements issued but not effective as of December 31, 2021 are not expected to have a material impact on the Company’s

consolidated financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

3 – OTHER CURRENT ASSTES

Loans to executive officers (1)

Prepaid expenses

Government Institutions

Investment in subsidiary

(1) On November 20, 2017, the Group made available to an

executive officer and a former executive officer, who are also stockholders, a loan in the amount of $10 each.

The loans bear

interest at a rate of approximately 3% per year.

The loans, including the accumulated interest amount, shall be repaid at the

earlier of the following dates:

(i) December 31, 2019;

or (ii) at the date of repayment of the loan made available by the stockholders

to the Company according to a loan agreement as stated in Note 5;

or (iii) from any dividend or other distribution to be made

by the Company to its shareholders.

The two stockholders are entitled to repay the outstanding amount of the loan at any time.

The loans to executive officers were extinguished in connection with and prior to the Share Exchange.

in subsidiary

4 – PROPERTY AND EQUIPMENT, NET

Furniture and office equipment

Leasehold improvements

Less - accumulated depreciation

Total property and equipment, net

ended December 31, 2020 and 2019, depreciation was US$ 5 and US$ 2 respectively.

5 –OTHER ACCOUNTS LIABILITIES

Accrued expenses

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

and office equipment

- accumulated depreciation

property and equipment, net

the years ended December 31, 2021 and 2020, depreciation was US$ 3 and US$ 5 respectively.

5 –OTHER ACCOUNTS LIABILITIES

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

6 – CONVERTIBLE LOANS

As detailed in Note 1 above, the New Debentures in the amount of $400, mature three years from

the Effective Date, bear interest at a rate of 8% per year and are only convertible into shares of the Company’s common stock,

at the Original Conversion Price ;

provided, however, that such Original Conversion Price shall be adjusted downward in the

event that the Company, as applicable, sells or grants any options to purchase or sells or grants any right to reprice, or otherwise

dispose or issues any common stock or common stock equivalents entitling any purchaser to acquire shares of the Company’s

common stock at Dilutive Event.

In the event of a Dilutive Event at any time from the Effective Time through the six (6) month

anniversary of the Effective Time, any such adjustment shall occur immediately after the completion of such period.

March 30, 2021, the New Debentures have an aggregate outstanding principal balance of $200 as a result of conversions of the New

Debentures (see note 15 below).

In accordance with ASC 815-15-25,

the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value as its fair value

can be separated from the convertible loan and its conversion is independent of the underlying note value.

The Company recorded

finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component

fair value over the face loan amount.

The conversion liability is then marked to market each reporting period with the resulting

gains or losses shown in the statements of operations.

fair value of the convertible component was estimated by third party appraiser using the Black-Scholes option pricing model,

to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet

The Company has estimated the fair value of such derivative at a value of $132 at the date of issuance and at a value

of $26 as of December 31, 2020.

The following are the data and assumptions used as of the balance sheet date:

Common stock price

Expected volatility

Expected term

Risk free rate

Forfeiture rate

Expected dividend yield

The fair value allocated to

loans out of the New Debentures was estimated by third party appraiser based on the debentures’

and market interest’

rates and was estimated at a value of $332 at the issuance date.

The access of the calculated fair values of the loan and the convertible

components over the loan face amounted to $67, and was recorded as interest expenses.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

As detailed in Note 1A above, in conjunction with the consummation of the Share Exchange, USDR entered into Securities exchange agreements with outstanding debt holders of USDR, Alpha and GBC to respectively cancel existing debentures or debt in the total amount of $658 and in exchange issue the New Debentures in the aggregate amount of $400 and issue 698,755 and 65,198 shares of Common Stock to each of Alpha and GBC, respectively.

The New Debentures mature three years from the Effective Date in amount of $400, bear interest at a rate of 8% per year and are only convertible into shares of Common Stock, at an original conversion price of $0.3740;

provided, however, that such Original Conversion Price was to be adjusted downward in the event of a Dilutive Event.

In the event of a Dilutive Event at any time from the Effective Time through the six (6) month anniversary of the Effective Time, any such adjustment was to occur immediately after the completion of such period.

February 2021, Alpha converted $ 200 of the principal amount ($ 215 including accrued interest) of the New Debentures into 575,044 shares

of Common Stock.

May 11, 2021, Alpha converted the remaining $ 100 of its principal amount ($ 111 including accrued interest) of the New Debentures into

295,759 shares of Common Stock.

May 14, 2021, the Company repaid GBC the full principal balance and interest amount of the New Debentures in the amount of $ 109 .

accordance with ASC 815-15-25 the conversion feature was considered an embedded derivative instrument, and is to be recorded at its

fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note

The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of

the convertible component fair value over the face loan amount.

The conversion liability is then marked to market each reporting

period with the resulting gains or losses shown in the statements of operations.

fair value of the convertible component was estimated by third party appraiser using the Black-Scholes option pricing model, to compute

the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

The Company has estimated

the fair value of such derivative at a value of $ 26 as of December 31, 2020.

The following are the data and assumptions used as

of the balance sheet date:

dividend yield

a result of the above repayments and conversions, as of December 31, 2021, the balance of the New Debentures and the conversion feature

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

NOTE 6 –

6 – CONVERTIBLE NOTES (continue)

In connection with the Share Exchange, immediately prior to the Effective Time, the Company entered

into several Convertible Loan Agreements, on the same terms, in the aggregate amount of $965.

The terms of the Convertible Loan

Agreements require repayment of the borrowed amount by the one-year anniversary of the Effective Time, unless, at Company’s

discretion, and subject to its compliance with any and all terms of the material terms of the Convertible Loan Agreements, the

term of such loans is extended for an additional twelve (12) month period.

The terms of the Convertible Loan Agreements also provide

that the Company may repay any portion of the remaining outstanding loan amount, without penalty, provided, however, that the Company

provides the specific lender with three business days’

written notice prior to such repayment, during which time the lender

may elect to convert any or all of the outstanding loan amount into shares of common stock of the Company.

The Convertible Loan

Agreements bear simple interest at a rate equal to 15% per annum, payable on the 15th day of each calendar month.

On December 9,

2020, the Company utilized its rights under the above agreement and extended the terms of the loans for additional twelve month.

The lenders will have the option

to convert the unpaid balance of their respective Convertible Loans into shares of Company’s common stock based on the lower

of (A) lowest effective price per share set in connection with any funds raised by the Company during the six (6) months following

the Effective Time.

“Effective price”

per share means (i) if only shares of Company’s common stock are sold in

a transaction, the amount actually received in cash by the Company, and (ii) if shares of Company’s common stock are sold

in a transaction and, in connection therewith additional securities or rights are sold or otherwise issued, the amount actually

received in cash by the Company, for the shares of Company’s common stock and such additional rights upon their issuance,

reduced by the aggregate fair market value of the additional rights (as determined using the Black-Scholes option pricing model

or another method determined by the Company in good faith), in each case divided by the number of shares of Company’s common

stock issued in such transaction;

(B) 80% of the lowest effective price per share set in connection with any funds raise by the

Company at any time subsequent to six (6) months following the Effective Time until such time as the loans outstanding under all

of the Convertible Loan Agreements are fully repaid or otherwise converted provided, however, that such price per share shall not

In connection with the Share Exchange, immediately prior to the Effective Time, the Company entered into several Convertible Loan Agreements, on the same terms, in the aggregate amount of $965.

The terms of the Convertible Loan Agreements required repayment of the borrowed amount by the one-year anniversary of the Effective Time, unless, at our discretion, and subject to its compliance with any and all terms of the material terms of the Convertible Loan Agreements, the term of such loans is extended for an additional twelve (12) month period.

The terms of the Convertible Loan Agreements also provided that we may repay any portion of the remaining outstanding loan amount, without penalty, provided, however, that the Company provides the specific lender with three business days’ written notice prior to such repayment, during which time the lender may elect to convert any or all of the outstanding loan amount into shares of Common Stock.

The Convertible Loan Agreements bore simple interest at a rate equal to 15% per annum, payable on the 15th day of each calendar month.

lenders had the option to convert the unpaid balance of their respective Convertible Loans into shares of Common Stock based on the lower

of (A) lowest effective price per share set in connection with any funds raised by the Company during the six (6) months following the

Effective Time.

“Effective price” per share means (i) if only shares of Common Stock are sold in a transaction, the amount

actually received in cash by the Company, and (ii) if shares of Common Stock are sold in a transaction and, in connection therewith additional

securities or rights are sold or otherwise issued, the amount actually received in cash by the Company, for the shares of Common Stock

and such additional rights upon their issuance, reduced by the aggregate fair market value of the additional rights (as determined using

the Black-Scholes option pricing model or another method determined by the Company in good faith), in each case divided by the number

of shares of Common Stock issued in such transaction;

(B) 80 % of the lowest effective price per share set in connection with any funds

raise by the Company at any time subsequent to six (6) months following the Effective Time until such time as the loans outstanding under

all of the Convertible Loan Agreements are fully repaid or otherwise converted provided, however, that such price per share shall not

be available in the event of an issuance of Alternative Securities to the lender);

valuation of the Company of $15million following the next investment in the Company following the Effective Time;

or (D) the conversion

price, as adjusted for a Dilutive Event, under the New Debentures.

The conversion price is currently $0.374.

As of March 30, 2021,

the Convertible Loan Agreements have an aggregate outstanding principal balance of $835 as a result of the conversions of certain

Convertible Loan Agreements (see note 15 below).

In accordance with ASC 815-15-25,

the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value as its fair value

can be separated from the convertible loan and its conversion is independent of the underlying note value.

The Company recorded

finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component

fair value over the face loan amount.

The conversion liability is then marked to market each reporting period with the resulting

gains or losses shown in the statements of operations.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

of the Company of $ 15 million following the next investment in the Company following the Effective Time;

or (D) the conversion price,

as adjusted for a Dilutive Event, under the New Debentures.

March 5, 2021, a holder of a Convertible Loan converted the principal amount of $ 130 into 347,594 shares of Common Stock.

May 17 and 18, 2021, the Company repaid the remaining full principal balance of the Convertible Loans, in the principal amount of $ 835 .

accordance with ASC 815-15-25 the conversion feature was considered an embedded derivative instrument, and is to be recorded at

its fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying

The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess

amount of the convertible component fair value over the face loan amount.

The conversion liability is then marked to market each

reporting period with the resulting gains or losses shown in the statements of operations.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

6 – CONVERTIBLE NOTES (continue)

The fair value of the convertible

component was estimated by third party appraiser using the Black-Scholes option pricing model, to compute the fair value of the

derivative and to mark to market the fair value of the derivative at each balance sheet date.

The Company has estimated the fair

value of such derivative at a value of $144 at the date of issuance and at a value of $22 as of December 31, 2020.

The following

are the data and assumptions used as of the balance sheet date:

fair value of the convertible component was estimated by third party appraiser using the Black-Scholes option pricing model, to compute

the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.

The Company has estimated

the fair value of such derivative at a value of $ 22 at December 31, 2020.

The following are the data and assumptions used as of

the balance sheet date:

Common stock price

4 unchanged sentences

Expected dividend yield

The fair value allocated to

loans net of the convertible component was estimated at a value of $822 at the issuance date.

a result of the above repayments and conversions, as of December 31, 2021, the balance of the New Debentures and the conversion feature

7 - STOCKHOLDERS LOANS

Since Duke’s inception and until 2017, certain Duke

affiliates provided loans to Duke from time to time, as needed.

Some of the Stockholders Loans bear an annual fixed interest at

3.00% and some of the Stockholders Loans bear an annual interest rate as defined in section 3(j) of the Israeli tax ordinance (the

interest rate 2019 was set on 2.56% per annum).

The Stockholders’

loans, including the accumulated interest amount, were

to be repaid in full within 7-15 days from any capital raised by the Company or related parties of the Company, whether by a stock

offering and / or loans in excess of NIS 10 million (approximately $2.5 million).

As detailed in note 1 above, before

entering into the Share Exchange Agreement:

(i) Duke entered into Debt Cancellation Letters with each of its Stockholders with

regard to the Stockholders Loans noted above.

Pursuant to the Debt Cancellation Letters, 842,135 shares of the Duke Inc.

stock (1,046,016 shares post Exchange Ratio) were issued in exchange for the cancellation of $623 in debt, waiving $83 of accrued

interest and leaving $280 of outstanding Stockholders Loans.

These Stockholders Loans, including interest (which shall bear an

annual fixed interest rate of 3% as of January 1, 2020), shall be repaid at the date upon which the Company raises at least $15

million and has achieved earnings before interest, tax, depreciation and amortization of $3 million, but not before the three year

anniversary of the Effective Time and the full repayment of the amounts outstanding under certain convertible loan agreements in

the aggregate amount of $965 (see additional information in Note 6B).

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Since Duke’s inception and until 2017, certain Duke affiliates

provided loans to Duke from time to time, as needed.

detailed in note 1 above, before entering into the Share Exchange Agreement:

(i) Duke entered into Debt Cancellation Letters with each

of its Stockholders with regard to the Stockholders Loans noted above.

Pursuant to the Debt Cancellation Letters, 842,135 shares of the

common stock ( 1,046,016 shares post Exchange Ratio) were issued in exchange for the cancellation of $ 623 in debt, waiving $ 83

of accrued interest and leaving $ 280 of outstanding Stockholders Loans.

These Stockholders Loans, including interest (which shall bear

an annual fixed interest rate of 3 % as of January 1, 2020), shall be repaid at the date upon which the Company raises at least $ 15 million

and has achieved earnings before interest, tax, depreciation and amortization of $ 3 million, but not before the three year anniversary

of the Effective Time and the full repayment of the amounts outstanding under certain convertible loan agreements in the aggregate amount

of $ 965 (see additional information in Note 6B).

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

SHAREHOLDERS’

Description of the rights

attached to the Shares in the Company :

The holders of shares of Common

Stock vote together as one class on all matters as to which holders of Common Stock are entitled to vote.

Except as otherwise required

by applicable law and subject to the preferential rights of any outstanding preferred stock, all voting rights are vested in and

exercised by the holders of Common Stock with each share of our Common Stock being entitled to one vote, including in all elections

of directors.

The Company does not have a classified board of directors (the “Board”).

Subject to preferences that

may be applicable to any outstanding preferred stock, the holders of Common Stock are entitled to receive ratably such dividends,

8 – SHAREHOLDERS’ EQUITY

of the rights attached to the Shares in the Company:

holders of shares of Common Stock vote together as one class on all matters as to which holders of Common Stock are entitled to vote.

Except as otherwise required by applicable law and subject to the preferential rights of any outstanding preferred stock, all voting

rights are vested in and exercised by the holders of Common Stock with each share of our Common Stock being entitled to one vote, including

in all elections of directors.

The Company does not have a classified board of directors (the “Board”).

Subject to preferences

that may be applicable to any outstanding preferred stock, the holders of Common Stock are entitled to receive ratably such dividends,

if any, as may be declared from time to time by the Board out of legally available funds therefore.

In the event of the Company’s

liquidation, dissolution or winding up, holders of the Common Stock are entitled to share ratably in all assets remaining after

payment of liabilities, subject to prior liquidation rights of preferred stock, if any, then outstanding.

The Common Stock has

no cumulative voting rights and no preemptive or other rights to subscribe for shares of the Company.

There are no redemption or

sinking fund provisions applicable to the Common Stock.

In the event of the Company’s

liquidation, dissolution or winding up, holders of the Common Stock are entitled to share ratably in all assets remaining after payment

of liabilities, subject to prior liquidation rights of preferred stock, if any, then outstanding.

The Common Stock has no cumulative

voting rights and no preemptive or other rights to subscribe for shares of the Company.

There are no redemption or sinking fund provisions

applicable to the Common Stock.

All shares of Common Stock currently outstanding are fully paid and non-assessable.

Transactions:

1, 2018, the Company granted an aggregate of 200,000 shares of common stock to a consultant at a value of $3.00 per share of common

June 1, 2018, the Company granted an aggregate of 200,000 shares of common stock to a consultant at a value of $ 3.00 per share of common

stock in exchange for consulting services.

The stock will be issued to the consultant over a 3 year vesting period.

2019 the Company issued to the consultant the first tranche of 66,667 shares of common stock.

During the year ended December 31,

2020 the Company recorded compensation expenses in regard to such offering in the amount of $108.

On June 1, 2019 the

Company issued to the consultant the first tranche of 66,667 shares of common stock.

During the years ended December 31, 2021 and 2020

the Company recorded compensation expenses in regard to such offering in the amount of $ 28 and $ 108 , respectively.

to notes 1 above regarding shares issued during 2020.

February 12, 2021, March 2, 2021 and May 18, 2021, the Company issued an aggregate of 225,265 shares of Common Stock to several holders

who were signatories to the Securities Exchange according to which such holders are entitled to an anti-dilution clause in the event

that the Convertible Loans detailed in Note 6B above are converted such that such the number of shares held by such investors would not

be lower than original holding on a fully diluted basis prior to such conversions.

May 11, 2021, the Company entered into Securities Purchase Agreements (the “Securities Purchase Agreements”) with eight (8)

investors, pursuant to which the Company, in a private placement offering (the “Offering”), agreed to issue and

sell to the investors an aggregate of:

(i) 12,500,000 shares of the Company’s Common Stock, at a price of $0.40 per share;

(ii) warrants (the “Warrants”) to purchase 12,500,000 Company’s Common Stock.

The Warrants are 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 were approximately

The Company recorded $1,070 of issuance costs - see below.

May 11, 2021, the Company signed a service agreement with a non U.S.

third party pursuant to which the service provider agreed to

provide the Company with financial and project oversight services with respect to the Offering.

Pursuant to the service agreement,

the Company agreed to pay the service provider (1) 6% of the investment amounts received which amounted to $351 and (2) options to

receive a number of units (each unit for a price of $0.40 includes one share and one warrant with an exercise price of $0.40 per

share) equal to 6% of the investment amount received, divided by $0.40.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

8 – SHAREHOLDERS’ EQUITY ( continue )

the event that the investors that participated in the Offering exercise their Warrants, the service provider shall be entitled to

receive an additional payment of (1) 6% of the investment amounts received (2) 6% of the warrants exercised

amounts received and (3) options to receive a number of units equal to 6% of the warrants exercised amounts received, divided by $0.40.

fair value of such options as of the offering date was estimated at $ 686 using the Black-Scholes option-pricing model and is presented

within the consolidated statements of changes in shareholders equity (deficit).

following are the data and assumptions used:

Dividend yield

Expected volatility (%)

Risk-free interest rate

Expected term of options

(years) (***)

Exercise price (US dollars)

Share price (US dollars)

Fair value (USD in thousands)

fair value of the expected cash payments as of May 11, 2021 was estimated based on the expected probability that the investors would

exercise their warrants and was estimated at $ 33 .

The fair value expected cash payments as of December 31, 2021 was estimated at $ 41

(see Note 5).

9 – STOCK OPTIONS

The following table presents

Duke Inc.’s stock option activity the year ended December 31, 2020:

Exercise Price

Outstanding at December 31,2019

Forfeited or expired

Outstanding at December 31,2020

Number of options exercisable at December 31, 2020

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

May 27, 2021, the board of directors of the Company 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

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.

July 2021, the Board of Directors of the Company approved the issuance of options to purchase 2,445,443 shares of the Company’s

Common Stock to certain employees, directors and services providers, under the Company’s 2021 Plan.

Options to purchase 1,629,443

shares of Common Stock shall vest as follows:

50% on the first anniversary of the grant date, 25% after the second anniversary of the

grant and 25% after the third anniversary of the grant date.

Options to purchase 450,000 shares of Common Stock shall vest as follows:

50% on the first anniversary of the grant date, 25% after the second anniversary of the grant and 25% after the third anniversary of

the grant date.

Options to purchase 366,000 shares of Common Stock shall fully vest on the first anniversary of the grant date.

fair value of the options was determined using the Black-Scholes pricing model, assuming a risk free rate of 0.07%, a volatility factor

of 156.12%, dividend yields of 0% and an expected life of 5-6.

Total value of share based compensation were estimated to an amounted

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

9 – STOCK OPTIONS ( continue )

The aggregate intrinsic value

of the awards outstanding as of December 31, 2020 is $0.

These amounts represent the total intrinsic value, based on the Company’s

stock price of $0.374 as of December 31, 2020, less the weighted exercise price.

This represents the potential amount received

by the option holders had all option holders exercised their options as of that date.

The stock options outstanding

as of December 31, 2020, have been separated into exercise prices, as follows:

following table presents Company’s stock option activity the year ended December 31, 2020 and 2021:

Average Exercise Price

at December 31,2020

( 1,013,631 )

at December 31,2021

of options exercisable at December 31, 2021

aggregate intrinsic value of the awards outstanding as of December 31, 2021 is $ 99 .

These amounts represent the total intrinsic

value, based on the Company’s stock price of $ 0.22 as of December 31, 2021, less the weighted exercise price.

This represents

the potential amount received by the option holders had all option holders exercised their options as of that date.

stock options outstanding as of December 31, 2021, have been separated into exercise prices, as follows:

Exercise price

Weighted average

remaining contractual

Stock options vested

of December 31, 2020

The stock options outstanding

as of December 31, 2019, have been separated into exercise prices, as follows:

As of December 31,

stock options outstanding as of December 31, 2020, have been separated into exercise prices, as follows:

Exercise price

Weighted average

remaining contractual

Stock options vested

As of December 31,

Compensation expense recorded

by the Company in respect of its stock-based compensation awards for the period ended December 31, 2020 was $108 and are included

in General and Administrative expenses in the Statements of Operations

UAS DRONE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands , except share and per

expense recorded by the Company in respect of its stock-based compensation awards for the Year ended December 31, 2021 was $ 388 and

are included in General and Administrative expenses in the Statements of Operations.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands , except share and per share data)

10 – GENERAL AND ADMINISTRATIVE EXPENSES

Year ended December 31

Professional services

4 unchanged sentences

Other expenses

On February 14, 2018, a complaint

was filed against the:

11 – LITIGATION

(1) On February 14, 2018, a complaint was filed against the:

(i) Duke Inc., (ii) Duke Israel, (iii) Aphek Trading Kadosh and Razi Ltd.

(“Aphek”) an Israeli

corporation owned by Raziel Atuar and Amir Kadosh, and (iv) Mr.

Aharon Sagiv, currently, the Chief Technology Officer and Director

of the Company, by Blackhawk Laboratories (the “Plaintiff”), a U.S.

(“Aphek”) an Israeli corporation owned by Raziel Atuar and Amir Kadosh, and (iv) Mr.

Aharon Sagiv, currently, the Chief Technology Officer and Director of the Company, by Blackhawk Laboratories (the “Plaintiff”), a U.S.

based company, in the Tel Aviv District of Israel.

31727-02-18).

The complaint asserts a claim for breach of contract, breach of duty, negligence and unjust enrichment

with regard to a services agreement dated June 13, 2014 between the Plaintiff and Duke.

The complaint asserts that Duke Israel

agreed to pay for certain services alleged to have been performed by the Plaintiff and that the Plaintiff was entitled to receive

8% of the issued and outstanding shares of common stock of, over a 12 month period from June 2014 to June 2015.

The Plaintiff’s

complaint seeks an order requiring either Duke Israel to issue to the Plaintiff 8% of its issued and outstanding shares of our

common stock;

The complaint asserted a claim for breach of contract, breach of duty, negligence and unjust enrichment with regard to a services agreement dated June 13, 2014 between the Plaintiff and Duke.

The complaint asserted that Duke Israel agreed to pay for certain services alleged to have been performed by the Plaintiff and that the Plaintiff was entitled to receive 8% of the issued and outstanding shares of common stock of, over a 12 month period from June 2014 to June 2015.

The Plaintiff’s complaint sought an order requiring either Duke Israel to issue to the Plaintiff 8% of its issued and outstanding shares of our common stock;

or alternatively for Duke Inc.

to issue to the Plaintiff 4.8% of its issued and outstanding shares of our common

to issue to the Plaintiff 4.8% of its issued and outstanding shares of our common stock;

or alternatively for Aphek and Mr.

Aharon Sagiv to transfer 8% of their shareholdings in the Company to the Plaintiff.

The defendants believe the Plaintiff’s

complaint has no merit and they intend to vigorously defend the lawsuit.

The Company and Duke Inc.

do not believe the lawsuit will

have a material effect on the Company as all three co-founders of the Company (Raziel Atuar, Amir Kadosh and Sagiv Aharon) have

agreed to indemnify the Group for any losses resulting from the lawsuit, including taking responsibility for the issuance of any

shares of the Group’s common stock in the event the Plaintiff is successful in its lawsuit.

three co-founders of the Company (Raziel Atuar, Amir Kadosh and Sagiv Aharon) have agreed to indemnify the Group for any losses resulting

from the lawsuit, including taking responsibility for the issuance of any shares of the Group’s common stock in the event the Plaintiff

is successful in its lawsuit.

June 14, 2021 the Company, the three co-founders and the Plaintiff signed a settlement agreement according to which certain co-founders

would transfer to the Plaintiff the shares of Common Stock of the Company owned by them for complete and final resolution of the complaint.

(2) On August 22, 2021 , the Company and a former vendor of the Company signed a settlement agreement according to which the Company agreed to pay the former vendor NIS160 (approximately $ 50 ) for an alleged debt to the vendor for complete and final resolution of the vendor’s complaint and the Company’s counter claim.

The amount was included as part of other income.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands , except share and per share data)

resident companies are

taxed on their worldwide income for corporate income tax purposes at a statutory rate of 21% this reflect certain effects of the

Act which includes a reduction in the corporate tax rate from 35% to 21% as well as other changes.

No further taxes are payable

on this profit unless that profit is distributed.

If certain conditions are met, income derived from foreign subsidiaries is tax

exempt in the US under applicable tax treaties to avoid double taxation.

Income of the Israeli company

is taxable from 2018 onwards, at corporate tax rate of 23%.

The Company and subsidiaries

have not received final tax assessments since its inception.

As of December 31, 2020, the

Company and subsidiaries had carry forward losses for tax purposes of approximately $1,225 and $2,813, respectively, which can

be offset against future taxable income, if any.

The following is reconciliation between the theoretical tax on pre-tax income, at the tax rate

applicable to the Company (federal tax rate) and the tax expense reported in the financial statements:

Year ended December 31

Federal tax rate

Income tax computed at the ordinary tax rate

Stock-based compensation

Tax in respect of differences in corporate tax rates

Losses and timing differences in respect of which no deferred taxes were generated

Deferred taxes result primarily from temporary differences in the recognition of certain revenue

and expense items for financial and income tax reporting purposes.

Significant components of the Company’s future tax assets

12 – COLLABORATION AGREEMENT

January 29, 2021, the Company, through its wholly owned subsidiary Duke Israel and Elbit Systems Land Ltd., an Israeli corporation (“Elbit”),

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

development of Duke Israel’s developed advanced robotic system mounted on an Unmanned Aerial Solution (“UAS”), armed

with lightweight firearms, which the Company markets under the commercial name “TIKAD.”

to the Agreement, Duke Israel 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

consideration for granting the worldwide exclusive license, Elbit will pay Duke 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 Agreement until 15 years following receipt of $ 50,000 in cumulative revenues from sales of

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

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

No TIKAD units were sold

during 2021 by the Company or Elbit.

to the terms of the Agreement, the parties also agreed to cooperate in continuing a project (the “Project”) that has already

started with a customer in the Asia Pacific region.

Per the agreement, Duke Israel shall be entitled to portion of the revenues generated

in the Evaluation Phase of the Project.

In addition, Elbit has agreed to invest, at its discretion and pursuant to certain milestones,

in the further development and setting up of serial production lines of TIKAD, and may elect to increase such investment subject to the

satisfaction of certain criteria, including Elbit’s right to terminate the Agreement if, for example, the Project is cancelled

by the customer.

Such investment amounts will be made into Elbit’s owned assets and production lines of TIKAD.

Elbit will recoup

50 % of its investment amount, up to $ 6,000 , by offsetting 50 % of royalty payments that may be due to Duke Israel.

No revenues were generated

from the Evaluation Phase of the Project during 2021.

addition to the above Elbit paid Duke Israel an upfront fee at the time of signing the Agreement for transfer of the engineering material

and support for transferring the required information to Elbit.

The upfront fee was recorded as revenues as of December 31, 2021.

13 – INCOME TAX

resident companies are taxed on their worldwide income for corporate income tax purposes at a statutory rate of 21 % this reflects certain

effects of the Act which includes a reduction in the corporate tax rate from 35 % to 21 % as well as other changes.

No further taxes are

payable on this profit unless that profit is distributed.

If certain conditions are met, income derived from foreign subsidiaries is

tax exempt in the US under applicable tax treaties to avoid double taxation.

of the Israeli company is taxable from 2018 onwards, at corporate tax rate of 23 %.

Company and subsidiaries have not received final tax assessments since its inception.

of December 31, 2021, the Company and subsidiaries has carry forward losses for tax purposes of approximately $1,255 and $1,979,

respectively, which can be offset against future taxable income, if any.

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands , except share and per share data)

INCOME TAX ( continue )

following is reconciliation between the theoretical tax on pre-tax income, at the tax rate

applicable to the Company (federal tax rate) and the tax expense reported in the financial

tax computed at the ordinary tax rate

Non-deductible

in respect of differences in corporate tax rates

and timing differences in respect of which no

deferred taxes were generated

taxes result primarily from temporary differences in the recognition of certain revenue and

expense items for financial and income tax reporting purposes.

Significant components of

the Company’s future tax assets are as follows:

of deferred tax assets:

Non capital loss

carry forwards

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars, except share and per share data)

14 – LOSS PER SHARE

loss per share is computed by dividing net loss by the weighted average number of shares outstanding during the year.

The weighted average

number of shares of common stock used in computing basic and diluted loss per share for the years ended December 31, 2021 and

2020, are as follows:

Year ended December 31

Composition of deferred tax assets:

Non capital loss carry forwards

Valuation allowance

UAS DRONE CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands , except share and per

average number of shares of common stock outstanding attributable to shareholders

weighted average number of shares of common stock related to outstanding options, excluded from the calculations of diluted

loss per share (*)

Basic loss per share is computed

by dividing net loss by the weighted average number of shares outstanding during the year.

The weighted average number of shares

of common stock used in computing basic and diluted loss per share for the years ended December 31, 2020 and 2019, are as follows:

Year ended December 31

Weighted average number of shares of common stock outstanding attributable to shareholders

Total weighted average number of shares of common stock related to outstanding options, excluded from the calculations of diluted loss per share (*)

(*) The effect of the inclusion of option and convertible

loans in 2020 and 2019 is anti-dilutive.

The effect of the inclusion of option and convertible loans in 2021 and 2020 is anti-dilutive.

15 – RELATED PARTIES

Transactions and balances with related parties

Year ended December 31

General and administrative expenses:

Directors compensation

Financing expense

Financing income

Balances with related parties:

As of December 31,

Other accounts liabilities

and balances with related parties

and administrative expenses:

and Officers compensation (*)

(*) Share base compensation

with related parties:

Other accounts

Stockholders loans

Convertible loans

On April 12, 2020, effective as of March 1, 2020, the Board of Directors approved the payment of

certain fees to directors in the amounts of $4.98, $4.98 and $6.95 per month to Yariv Alroy, Sagiv Aharon and Erez Nachtomy (each,

an “Active Director”), respectively.

On April 12, 2020, the Company also enacted a policy to pay each director (that

is not otherwise an Active Director) an amount of $1.5 for each calendar quarter and $0.40 for attendance of each meeting of the

board of directors.

These amounts are exclusive of Israeli VAT if applicable.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

in thousands)

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars, except share and per share data)

15 – RELATED PARTIES ( continue )

March 25, 2021, the Board of Directors appointed Yossi Balucka to serve as its Chief Executive Officer.

Balucka is entitled to a

monthly fee of NIS30,000 (approximately $9,650), reimbursement of expenses and discretionary performance bonus.

In conjunction with the

appointment of Mr.

Balucka, the Company issued to Mr.

Balucka options to purchase 450,000 shares of the Company’s commons stock

at an exercise price of $0.0001 per share, subject to and in accordance with the terms and conditions of an Option Plan .

shall vest over a three year period, with 50 % of the options to vest on the first anniversary of the grant date, and the balance of 50 %

of the options to vest in equal parts on the second and third anniversary of the grant date, respectively, subject to the Mr.

providing continued services to the Company.

The fair value of the options were determined using the Black-Scholes pricing model, assuming

a risk free rate of 0.07 %, a volatility factor of 156.12 %, dividend yields of 0 % and an expected life of 5 years.

Total value of share

based compensation were estimated to an amounted of $ 189 .

Total share based compensation expenses during the Year ended December 31,

2021 amounted to $ 104 .

In addition, in July 2021, the Board of Directors of the Company approved the issuance options to purchase 490,000 shares of the Company’s Common Stock to its Vice Chairman, directors and CFO.

The options shall vest over a three year period, with 50 % of the options to vest on the first anniversary of the grant date, and the balance of 50 % of the options to vest in equal parts on the second and third anniversary of the grant date.

fair value of the options were determined using the Black-Scholes pricing model, assuming a risk free rate of 0.07 %, a volatility factor

of 156.12 %, dividend yields of 0 % and an expected life of 6 years.

Total value of share based compensation were estimated to an amounted

Total share based compensation expenses during the Year ended December

31, 2021 amounted to $ 58 .

16 – SUBSEQUENT EVENTS

On January 29, 2021, the Company, through its wholly owned subsidiary Duke Israel

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

and further development of Duke’s developed advanced robotic system mounted on an Unmanned Aerial Solution (“UAS”),

armed with lightweight firearms, which the Company markets under the commercial name “TIKAD.”

Pursuant to the Agreement, Duke

has granted Elbit a worldwide exclusive license for the use of Duke’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 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 Agreement until 15 years following receipt of $5,000 in cumulative revenues from sales of

In addition, Duke 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.

Pursuant to the terms of the

Agreement, the parties also agreed to cooperate in continuing a project (the “Project”) that has already started with

a customer in the Asia Pacific region.

Elbit has agreed to invest, at its discretion and pursuant to certain milestones, in the

further development and setting up of serial production lines of TIKAD, and may elect to increase such investment subject to the

satisfaction of certain criteria, including Elbit’s right to terminate the Agreement if, for example, the Project is cancelled

by the customer.

Such investment amounts will be made into Elbit’s owned assets and production lines of TIKAD.

recoup 50% of its investment amount, up to $6,000, by offsetting 50% of royalty payments that may be due to Duke.

During February 2021, holder of Convertible Loan as detailed in note 6A above, converted $200 principal

amount ($215.066 including accrued interest) into 575,044 common stock of the Company.

On February 12, 2021 and March 2, 2021, the Company issued 171,246 common stock of the Company,

to several holders Security Exchange Agreement signed at March 9, 2020 between the Company and several debt holders (see note 1(iii)

above), according to which, such holders are entitled to an anti-dilution clause in the event that the Convertible Loans detailed

in notes 6B and 1(iii) above are converted such that such the number of shares held by such investors would not be lower than original

holding on a fully diluted basis prior to such conversions.

On March 5, 2021 holder of Convertible Loan as detailed in note 6B above, converted the principal

amount of $130 into 347,594 shares of the Company’s common stock.

On March 25, 2021, the Board of Directors appointed Yossef Balucka

to serve as its Chief Executive Officer and President.

In conjunction with the appointment of Mr.

Balucka, the Company issued to

Balucka options to purchase 450,000 shares of the Company’s commons stock at an exercise price of $0.0001 per share,

subject to and in accordance with the terms and conditions of an Option Plan to be set up and approved by the Company at the discretion

of the board of directors.

The options shall vest over a three year period, with 50% of the options to vest on the first anniversary

of the grant date, and the balance of 50% of the options to vest in equal parts on the second and third anniversary of the grant

date, respectively, subject to the Mr.

Balucka providing continued services to the Company.

On March 1, 2022, the Company signed

an investor relations service agreement with a consultant pursuant to which the Company agreed to pay the consultant a monthly retainer

and in addition, to issue the consultant 300,000 restricted shares of common stock, to be issued in three tranches.

In the event that

the agreement is terminated prior to the issuance date, the remaining share obligation shall be void.

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 9A. Controls and Procedures