What changed in this filing

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Item 1. Business

2023-03-24 compared with 2022-03-07 · 338 added, 334 removed, 28 unchanged (96% of the section changed)

are a robotics company dedicated to the development of an advanced robotics system that enables remote, real-time, pinpoint accurate

firing of small arms and light weapons.

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

of the weapons platform or the target.

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

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

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

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

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

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

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

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

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

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

that did not participate in the Share Exchange.

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

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

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

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

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

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

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

Corporate Overview

We are a robotics company

dedicated to the development of an advanced robotics system that enables remote, real-time, pinpoint accurate firing of small arms and

light weapons as well as other civilian applications with an emphasis on the field of infrastructure maintenance.

Our advanced robotics

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

We were founded in 2014 as

Unlimited Aerial Systems, LLP (“UAS LLP”), and until the consummation of the Share Exchange Agreement (as hereinafter defined),

we were a developer and manufacturer of commercial unmanned aerial systems, or drones, with the goal of providing a superior Quadrotor

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

On March 9, 2020, we closed

on the Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which Duke Robotics, Inc., a Delaware corporation

(“Duke”) became our majority-owned subsidiary (the “Share Exchange”).

Such closing date is referred to as the

“Effective Time.” As a result of the Share Exchange, the Company adopted the business plan of Duke.

On April 29, 2020, we, Duke,

and UAS Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“UAS Sub”), executed an Agreement and Plan

of Merger (the “Merger Agreement”), pursuant to which UAS Sub was to merge, upon the satisfaction of customary closing conditions,

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

Pursuant to the Merger Agreement,

we acquired the remaining outstanding shares of Duke held by those certain Duke shareholders that did not participate in the Share Exchange.

On June 25, 2020, Duke filed a Certificate of Merger with the State of Delaware, and consequently, Duke became our wholly-owned subsidiary

and the Short-Form Merger was consummated.

Duke has a wholly-owned subsidiary,

Duke Airborne Systems Ltd.

(“Duke Israel”), which was formed under the laws of the State of Israel in March 2014 and became

the sole subsidiary of Duke after its incorporation.

Our mailing address is 10 HaRimon Street, Mevo Carmel Science and Industrial Park,

Israel 2069203, and our telephone number is 011-972-4-8124101.

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

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

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

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

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

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

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

In late 2016, we began

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

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

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

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

future generations;

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

During 2020 and 2021, following

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

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

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

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

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

have completed our first generation of our robotic systems.

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

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

We have filed marketing applications with the Israeli Ministry

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

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

market, with secondary efforts outside of the United

States focused primarily on Western Europe.

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

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

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

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

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

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

investors in a private placement offering in which we

agreed to issue and sell an aggregate of:

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

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

The Warrants were exercisable immediately and for a term

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

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

and the Offering closed on May 11, 2021.

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

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

and restricted stock units (“RSUs”).

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

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

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

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

Effective as of October 22,

2020, the Company’s common stock began to be quoted on the OTCQB tier Venture Market, under the symbol “USDR”.

Company Overview

Until the consummation of

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

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

Following the Share

Exchange, we adopted the business plan of Duke.

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

system that enables remote, real-time, pinpoint accurate firing of small arms and light weapons as well as other civilian applications

with an emphasis on the field of infrastructure maintenance.

Our advanced robotics system is able to achieve pinpoint accuracy regardless

of the movement of the weapons platform or the target.

Although the first product

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

vehicles, boats and stationary environments, as well as civilian purposes, such as, high definition, high-end stabilized cameras.

that the system is to small arms and light weapons (e.g., weapons weighing less than 9 kilograms, or kg, or approximately 19.9 pounds)

as drones are to air-to-ground missiles.

We have completed our first

generation of our robotic systems.

Prior to marketing our systems to potential customers, for security reasons, we are required to obtain

various governmental approvals for each sale.

We have filed marketing applications with the Israeli Ministry of Defense (“IMOD”)

and as a result thereof, currently hold marketing approvals for about 50 countries, including the United States.

Currently, our commercialization

efforts are primarily focused on the U.S.

market, with secondary efforts outside of the United States focused primarily on Western Europe.

On January 29, 2021, we, through

Duke Israel, and Elbit Systems Land Ltd., an Israeli corporation (“Elbit”), entered into a collaboration agreement (the “Collaboration

Agreement”) for the global marketing and sales, and the production and further development of our developed advanced robotic system

mounted on an UAS, armed with lightweight firearms, which we market under the commercial name “TIKAD.” Following the Collaboration

Agreement, we are in the process of evaluating additional different applications for use of our technology and know-how including for

its use in the civilian market.

On May 11, 2021, we entered

into securities purchase agreements with eight non-U.S.

investors in a private placement offering in which we agreed to issue and sell

an aggregate of:

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

and (ii) warrants to

purchase 12,500,000 Company’s Common Stock.

The warrants were exercisable immediately and for a term of 18 months and had an exercise

price of $0.40 per share.

The aggregate gross proceeds from the offering was approximately $5,000,000 and the offering closed on May 11,

On April 5, 2022, we amended the terms of the warrants such that they now expire on November 11, 2023.

On May 27, 2021, our board

of directors” approved the 2021 Equity Incentive Plan (the “2021 Plan”) pursuant to which the Company may issue awards,

from time to time, consisting of non-qualified stock options, restricted stock grants and restricted stock units (“RSUs”).

In addition, stock option awards that qualify under Section 102 of the Israeli Tax Ordinance (New Version) 1961 (the “ITO”),

and/or under Section 3(i) of the ITO, may be granted.

On June 15, 2021, we announced

that Duke Israel received a notice of allowance from the U.S.

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

regarding its stabilization technology incorporated in its advanced robotic system.

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

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

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

The United States and other countries around the world have

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

ordnance bombs and missiles.

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

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

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

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

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

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

capability for defeating enemy sUAS.

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

It is operated intuitively via a touch-based

tablet, which serves as its control unit.

August 15, 2022, we announced that Duke Israel, introduced the IC Drone, a drone technology for conducting routine maintenance of critical

infrastructure, and has signed a collaboration and development agreement with the Israel Electric Corporation Ltd.

(IEC), a public

and 99% government-owned company, to provide drone-enabled systems for

cleaning electric utility cable insulators.

Market Opportunity

Despite of Russia’s

invasion of Ukraine and the Nagorno-Karabakh conflict between Armenia and Azerbaijan, the classic confrontation of army against army

has become rare, while guerilla (or asymmetric) warfare has unfortunately become commonplace.

Further, the foreign policy of the United

States and other countries is increasingly designed around the parameter of not employing “boots on the ground” while at the

same time minimizing collateral damage.

The United States and other countries around the world have significantly increased their use

of UASs for intelligence gathering, surveillance and tactical applications, such as delivery of heavy ordnance bombs and missiles.

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

Our technology thus addresses

a crucial need of modern warfare to bring a wide range of weapons other than bombs and missiles to bear on remote hostile targets without

risk to the military personnel deploying the weapons, while at the same time minimizing collateral damage.

In addition, the rapid evolution

of small, unmanned air systems (“sUAS”) technologies, along with their size and low cost, enables novel concepts of employment

that present challenges to current defense systems, creating new asymmetric threats for warfighters.

Our system also addresses this crucial

need for counter sUAS solutions and offers a kinetic interception, or “drone kill drone,” capability for defeating enemy sUAS.

Our system was designed with

input from veterans of Israel’s elite special mission units.

It is operated intuitively via a touch-based tablet, which serves as

its control unit.

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

In June 2016, our robot mounted

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

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

and Development and the MIT Enterprise Forum of Israel.

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

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

and homeland security purposes.

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

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

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

we market under the commercial name “TIKAD.”

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

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

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

precision firing regardless of weather conditions or other variables.

Additionally,

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

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

vehicle or be positioned at a strategic location.

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

danger can replace troops in different settings.

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

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

Our robot is controlled by a remote-control device that

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

In June 2016, our robot mounted on our UAS Octocopter

platform was awarded the top prize at the Combating Terrorism Technology Conference sponsored by the United States Defense Department’s

Combating Terrorism Technical Support Office, Israel’s Ministry of Defense Directorate of Defense Research and Development and the

MIT Enterprise Forum of Israel.

UAS Octocopter Integrated with Six Degrees

of Freedom (“6 DOF”) Robotic Gimbal

Our special purpose UAS Octocopter

(DK-HIPPOGRIFF) integrates for operational usage with our 6 DOF robot and is intended primarily for Military and homeland security purposes.

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

vehicles and sea-mounted on boats.

The robot is mounted on our UAS Octocopter platform, a combined system which we market under the commercial

name “TIKAD.”

In addition to the various

configurations and mounting options, the robots also permit the utilization of a wide range of small arms, light weapons and shotguns,

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

The combination

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

of weather conditions or other variables.

Additionally, our robot may

also be utilized as a ground sniper platform.

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

be positioned at a strategic location.

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

replace troops in different settings.

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

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

Our robot is controlled by a remote-control device that permits

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

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

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

aid robotic uses.

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

to increase as additional product options expand.

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

mounted with M4 5.56mm Assault Rifle and the Control Unit

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

We outsource the production of certain components to third-party

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

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

We currently source our parts and materials from approximately twenty

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

aid robotic uses and for maintenance and monitoring of different essential infrastructures, such as cleaning electric utility cable insulators.

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

We will also address, as needed, evolving regulation

of civilian UASs.

TIKAD mounted with M4 5.56mm Assault Rifle and

the Control Unit

Assembly and Testing

While we maintain the ability

to assemble our robots and UAS Octocopter at our facility in Israel, we currently outsource the assembly and production to third-party

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

We currently source our parts and materials from approximately twenty (20) suppliers located primarily in the United States, Europe, Israel

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

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

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

Components are tested

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

For example, we test items such as the

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

After the lab testing phase, the robot and UASs undergoes

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

Results are combined with multi-phased airborne testing.

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

More importantly, our proprietary and confidential complex

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

We have built an in-house laboratory to support

the assembly and commercialization of our products.

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

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

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

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

on sales in the United States .

In addition, while the components we purchase are built according

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

from alternative suppliers, if necessary.

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

aggressive operations.

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

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

are combined with multi-phased airborne testing.

In addition, we have not

executed supply agreements with our third-party suppliers.

More importantly, our proprietary and confidential complex kinematic algorithms

and control software is our most valuable intellectual property.

We have built an in-house laboratory to support the assembly and commercialization

of our products.

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

be sufficient to support all of our commercialization activities in the near future.

Market Strategy

We expect that our growth

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

other platforms, such as light all-terrain vehicles and sea-mounted on boats [Civilian products?

Focus on sales in the United States .

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

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

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

The United States alone presents a significant and diverse market opportunity - special operation forces units, various counter-terrorism (federal, state and city) units, regular local police forces (the use of less-lethal weapons), U.S.

Army, National Guard, U.S.

Coast Guard and the Border Police.

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

Navy, Coast Guard and the Border Police.

Sales to NATO .

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

allies such as the NATO countries.

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

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

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

robotic procedures which need high accuracy.

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

infringing or violating the proprietary rights of others.

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

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

We also restrict

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

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

Civilian Market .

We believe that our robot, due to its novel and unique capabilities, including stabilization of six degrees of freedom in real-time, can bring solutions that do not yet exists for different tasks that require high end stabilization, such as VTOL robotic landing gear for drones and aircraft that enables take-offs and landings on uneven terrain and on steep slopes and medical uses for robotic procedures which need high accuracy.

Intellectual Property

Our success depends, at least

in part, on our ability to protect our proprietary technology and intellectual property, and to operate without infringing or violating

the proprietary rights of others.

We rely on a combination of trade secrets, know-how, and other contractual rights (including confidentiality

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

We also restrict access to our sensitive intellectual

property information to our most senior management.

To protect certain key technologies,

we have submitted a U.S.

patent Application for stabilization system patents, which is pending.

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

and Marketing

and sales efforts are currently concentrated on TIKAD.

We do not know whether any of our current

or future patent applications will result in the issuance of any patents.

Sales and Marketing

Marketing and sales efforts

are currently concentrated on TIKAD [Civilian products?

Our robot has been designated as a unique system by the IMOD and has received

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Israeli Defense Forces (the “IDF”).

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

This includes cooperation

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

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

consultant for U.S.

We are currently in the process

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

This includes cooperation with agents, distributors

and resellers of products that are experienced in our market.

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

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

We intend to focus our sales

efforts in the United States because the U.S.

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

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

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

Pursuant to the Collaboration Agreement,

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

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

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

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

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

revenues from sales of TIKAD units.

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

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

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

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

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

regarding its stabilization technology incorporated in its advanced robotic system.

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

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

Competition is

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

to customer requirements.

We intend to focus our sales efforts in the United

States because the U.S.

military in general and special operation forces units in particular are expected to be our largest customers,

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

On January 29, 2021 we, through

Duke Israel, and Elbit entered in the Collaboration Agreement.

Pursuant to the Collaboration Agreement, Duke Israel has granted Elbit

a worldwide exclusive license for the use of Duke Israel’s know-how and intellectual property and the marketing, sales, production,

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

As consideration for granting the

worldwide exclusive license, Elbit will pay Duke Israel royalties from revenues received from worldwide sales of TIKAD, with royalty rates

ranging from low to mid-double-figure percentages, depending on the tiers of the selling price of TIKAD, for a period starting from the

date of the Collaboration Agreement until 15 years following receipt of $50 million in cumulative revenues from sales of TIKAD units.

In addition, Duke Israel agreed to pay Elbit similar rates of royalties for revenues received by Duke from sales of its advanced robotic

system for civil use, if such systems will include new know-how developed by Elbit.

On June 15, 2021, we announced

that our wholly owned Israeli subsidiary, Duke Airborne Systems Ltd., received a notice of allowance from the U.S.

Patent and Trademark

Office for a patent titled “Stabilization System” regarding its stabilization technology incorporated in its advanced robotic

While we believe that our

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

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

Competition is based on product and program

performance, price, reputation, reliability, life cycle costs, overall value to the customer and responsiveness to customer requirements.

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

In addition, our competitive position

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

consolidation in the defense industry has affected competition.

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

capabilities.

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

We plan to continually

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

In addition, we plan to seek to enter into

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

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

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

manufacturing, marketing and human resources than we do.

These entities may also have significantly greater experience and infrastructure

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

Contracting Regulations.

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

contracts, mainly in Israel and the United States.

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

from participating in future contracts.

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

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

Export Regulations.

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

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

with Israeli government policy.

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

We also must receive

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

Israeli law also regulates export

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

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

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

export regulations.

of Israeli Defense Acquisition.

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

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

the terms of the law.

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

Prime Minister, Defense Minister and Economy Minister.

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

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

An order (pursuant to the

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

For example, Israeli government

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

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

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

appoint a director.

and Other Defense Acquisitions.

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

of local defense companies or assets by foreign entities.

Mergers and acquisitions of certain types of defense related businesses in

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

Under FINSA, foreign acquisitions of

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

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

in the United States (“CFIUS”).

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

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

American” Laws.

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

of products purchased under U.S.

In addition, our competitive position sometimes may be affected by

specific requirements in particular geographic and product markets.

Continuing consolidation in

the defense industry has affected competition.

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

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

We plan to continually adapt to market

conditions by adjusting our business strategy to changing market conditions.

In addition, we plan to seek to enter into strategic partnership

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

We also anticipate

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

Our competitors, either alone

or through their strategic partners, might have substantially greater name recognition and financial, technical, manufacturing, marketing

and human resources than we do.

These entities may also have significantly greater experience and infrastructure in commercializing defense

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

Government Regulation

Government Contracting

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

mainly in Israel and the United States.

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

participating in future contracts.

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

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

Israeli Export Regulations.

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

Current Israeli policy encourages exports to approved

customers of defense systems and products such as ours, as long as the export is consistent with Israeli government policy.

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

We also must receive a specific export license for defense

related hardware, software and technology exported from Israel.

Israeli law also regulates export of “dual use” items (items

that are typically sold in the commercial market but that also may be used in the defense market).

We have filed marketing applications

with the IMOD and have already received marketing approvals for about fifty (50) countries including the U.S.

It is expected that in the

mid-term more than seventy-five (75%) of our revenue will be derived from exports subject to Israeli export regulations.

Approval of Israeli

Defense Acquisition.

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

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

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

Defense Minister and Economy Minister.

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

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

An order (pursuant to the law) would establish

conditions and restrictions regarding non-Israeli control of our Israeli subsidiary.

For example, Israeli government approval might be

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

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

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

Approval of U.S.

Other Defense Acquisitions.

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

defense companies or assets by foreign entities.

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

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

Under FINSA, foreign acquisitions of certain types

of defense related businesses in the U.S.

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

States (“CFIUS”).

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

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

“ Buy American”

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

government programs.

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

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

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

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

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

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

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

human trafficking and conflict minerals in the procurement process.

Such regulations also include provisions relating to information

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

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

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

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

Foreign Corrupt Practices

Act, the U.K.

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

officials in connection with the governmental procurement process.

Israeli defense exporters, like ourselves, are required to maintain

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

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

Our books and records and other

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

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

do not contain U.S.

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

However, a Memorandum

of Agreement between the United States and Israeli governments waives the “Buy American” laws for specified products, including

most of the products we are currently selling in the United States.

Procurement Regulations.

Solicitations

for procurements by governmental purchasing agencies in Israel, the United States and other countries are governed by laws, regulations

and procedures relating to procurement integrity, including avoiding conflicts of interest, corruption, human trafficking and conflict

minerals in the procurement process.

Such regulations also include provisions relating to information assurance and for the avoidance

of counterfeit parts in the supply chain.

Anti-Bribery Regulations.

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

Laws and regulations

such as the Israel Penal Code, the Organization for Economic Cooperation and Development (“OECD”) Convention on Combating

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

Foreign Corrupt Practices Act, the U.K.

and corresponding legislation in other countries, prohibit providing personal benefits or bribes to government officials in connection

with the governmental procurement process.

Israeli defense exporters, like ourselves, are required to maintain an anti-bribery compliance

program, including specific procedures, record keeping and training.

Audit Regulations.

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

Our books and records and other aspects of projects that will

be related to the U.S.

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

government audit agencies.

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

If discrepancies are found this

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

Some other customers have similar rights under specific

contract provisions.

Aviation Regulations.

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

standards of the U.S.

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

Environmental,

Health and Safety Regulations.

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

jurisdictions in which we have operations.

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

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

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

our Chief Financial Officer.

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

us to scale as necessary.

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

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

developed in the course of employment and confidentiality.

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

Growth Company

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

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

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

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

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

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

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

applicable generally to public companies.

These provisions include:

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

reduced “Management’s Discussion and Analysis” disclosure;

disclosure about our executive compensation arrangements;

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

arrangements;

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

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

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

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

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

revised accounting standards.

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

those standards would otherwise apply to private companies.

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

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

is required for non-emerging growth companies.

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

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

Notwithstanding

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

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

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

In the event that we are still

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

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

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

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

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

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

Such audits review compliance with

government contracting cost accounting and other applicable standards.

If discrepancies are found this could result in a downward adjustment

of the applicable contract’s price.

Some other customers have similar rights under specific contract provisions.

Civil Aviation Regulations.

of our products for commercial aviation applications are subject to flight safety and airworthiness standards of the U.S.

Federal Aviation

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

Environmental, Health

and Safety Regulations.

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

in which we have operations.

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

areas with a potential environmental or safety impact.

We currently have one full-time

employee, our Chief Executive Officer, and two (2) executive officers, our Chief Technology Officer and our Chief Financial Officer.

hire freelance contractors and consultants in order to limit our operating expenses and therefore allowing us to scale as necessary.

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

All of our consulting agreements

include undertakings with respect to non-competition and assignment to us of intellectual property rights developed in the course of employment

and confidentiality.

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

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

a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million

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

As a “smaller reporting company”

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

are exempt from the provisions of Section 404(b)

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What changed 10-K

Item 1. Business