What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-24 compared with 2022-03-07 · 112 added, 116 removed, 82 unchanged (74% of the section changed)

17 unchanged sentences

Following the Share Exchange, the Company has adopted the business plan of Duke.

On April 29, 2020, the

Company, Duke, and UAS Sub, entered into the Merger Agreement, pursuant to which UAS Sub was to merge, upon the satisfaction of customary

closing conditions, with and into Duke.

Upon closing of the Short-Form Merger, each outstanding share of UAS Sub’s common stock,

par value $0.0001 per share, was to be converted into and become one share of common stock of Duke, with Duke surviving as a wholly-owned

subsidiary of the Company.

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

held by certain stockholders of Duke that did not participate in the Share Exchange Agreement.

At the closing of the transaction contemplated

by the Merger Agreement, the Company was to issue 63,856 shares to certain Duke stockholders, and Duke will become a wholly owned subsidiary

On April 29, 2020, the Company,

Duke, and UAS Sub, entered into the Merger Agreement, pursuant to which UAS Sub was to merge, upon the satisfaction of customary closing

conditions, with and into Duke.

Upon closing of the Short-Form Merger, each outstanding share of UAS Sub’s common stock, par value

$0.0001 per share, was to be converted into and become one share of common stock of Duke, with Duke surviving as a wholly-owned subsidiary

of the Company.

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

subsidiary of the Company and the Short-Form Merger was consummated.

Pursuant to the Merger Agreement, the Company acquired the remaining outstanding shares of Duke held by certain stockholders

of Duke that did not participate in the Share Exchange Agreement.

At the closing of the transaction contemplated by the Merger Agreement,

the Company was to issue 63,856 shares to certain Duke stockholders, and Duke will become a wholly owned subsidiary of the Company.

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

of the Company, and the Short-Form Merger was consummated.

As the result of the Share

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The data set forth below should

be read in conjunction with the financial statements and accompanying notes elsewhere in this prospectus.

be read in conjunction with the financial statements and accompanying notes elsewhere in this annual report.

USD in thousands

Research and development expenses

General and administrative expenses

Operating loss

Financing expense

Financing income

Comparison of the year ended December 31,

2022 to the year ended December 31, 2021

We had $500,000

in revenues for the year ended December 31, 2021.

During the year ended December 31, 2020, we had no revenues.

revenues for the year ended December 31, 2022.

During the year ended December 31, 2021, we had $500,000 in revenues related to the Collaboration

Agreement with Elbit.

Research and Development .

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For the year ended December 31, 2022, our general and administrative expenses amounted to $1,104,000, of which $598,000

were related to stock-based compensation expenses, and were $1,305,000 for the year ended December 31, 2020, of which $645,000 related

to stock-based compensation expenses.

This decrease in general and administrative expenses for the year ended December 31, 2021 was mainly

due to a decrease in stock-based compensation of $229,000.

were related to professional services, such as accounting, auditing, insurance costs, consulting and legal services, and $426,000

were related to stock-based compensation expenses, and were $1,026,000 for the year ended December 31, 2021, of which $521,000 were related

to professional services and $416,000 related to stock-based compensation expenses.

This increase in general and administrative expenses

for the year ended December 31, 2022 was mainly due to an increase in professional services of $51,000.

Financial Expenses .

For the year ended December 31, 2021 and 2020, our financial expenses amounted to $446,000 and $63,000, respectively.

The reason for the

increase in financial expenses for the year ended December 31, 2021, was mainly due to the increase in interest expense related to our

previously outstanding convertible loans.

ended December 31, 2021 and 2020, we recorded a net loss of $888,000 and $1,368,000, respectively, which represented a decrease compared

to the year ended December 31, 2020, of $480,000.

For the year ended December 31, 2022, our financial expenses amounted to $19,000 and were $448,000 for the year ended December 31, 2021.

The reason for the decrease in financial expenses for the year ended December 31, 2022, was mainly due to the decrease in interest expense

related to our previously outstanding convertible loans which were repaid and/or converted in full during 2021.

Financial Income .

For the year ended December 31, 2022, our financial income amounted to $42,000 and were $2,000 for the year ended December 31, 2021.

reason for the increase in financial expenses for the year ended December 31, 2022, was mainly due to the interest income on bank deposits

resulted from the increase in interest rates.

year ended December 31, 2022 and 2021, we recorded a net loss of $1,101,000 and $888,000, respectively, which represented an increase

compared to the year ended December 31, 2021, of $213,000.

Critical Accounting Policies

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actual results could differ from our assumptions and estimates, and such differences could be material.

As applicable to the consolidated

financial statements included elsewhere in this prospectus, the most significant estimates and assumptions relate to the going concern

and share based compensation assumptions.

Our significant accounting

2 unchanged sentences

Our management believes that, as for the financial statements for the periods

included in this prospectus, the “going concern” assessment and accounting share based compensation are critical accounting

However, due to the early stage of operations of our Company, there are no other accounting policies that are considered to

be critical accounting policies by management.

included in this prospectus, the accounting for share based compensation is critical accounting policy.

However, due to the early stage

of operations of our Company, there are no other accounting policies that are considered to be critical accounting policies by management

Liquidity and Capital Resources

Since inception, we have devoted

substantially all our efforts to research and development and have incurred accumulated losses of $6,019,000.

During the year ended December

31, 2021, our loss of $888,000 included non-cash stock-based compensation of $416,000.

As of December 31, 2021, we had a working capital

of $3,389,000, as compared to a negative working capital of $1,176,000 as of December 31, 2020.

inception, we have devoted substantially all our efforts to research and development and have incurred accumulated losses of $9,016,000.

During the year ended December 31, 2022, our loss of $1,101,000 included

non-cash stock-based compensation of $426,000.

As of December 31, 2022, we had a working capital of $2,674,000, as compared to a

working capital of $3,389,000 as of December 31, 2021.

As of December 31, 2022, we

had a cash balance of $2,849,000 compared to the cash balance of $3,560,000 as of December 31, 2021.

The reason for the increase in our

cash balance was due to the financing transactions we completed in 2021 as discussed more fully below and our revenues as discussed in

note 12 to the financial statements.

The reason for the decrease in our

cash balance was mainly due to the operating expenses describe above and the purchase of property and equipment.

Since our inception we and

1 unchanged sentence

of its technology to potential customers.

As of December 31, 2021, the

outstanding balance of the bank loans stood at zero and as of December 31, 2020 at $6,000.

Since Duke’s inception and until 2017, certain Duke affiliates

provided loans to Duke from time to time, as needed.

Before entering into the

Share Exchange, Duke entered into debt cancellation letters (the “Debt Cancellation Letters”) with regard to the Stockholders

Pursuant to the Debt Cancellation Letters the accumulated interest on the Stockholders’ Loans was waived and 842,135 shares

of Duke’s common stock were issued in exchange for the cancellation of $623,180 in debt, leaving $280,000 of outstanding Stockholders

Loans (the “Outstanding Stockholders’ Loans”).

The Outstanding Stockholders’ Loans, including the accumulated

interest amount, shall be repaid on the earlier of the following:

Since Duke’s inception

and until 2017, certain Duke affiliates provided loans to Duke from time to time, as needed.

Before entering into the Share Exchange,

Duke entered into debt cancellation letters (the “Debt Cancellation Letters”) with regard to the Stockholders Loans.

to the Debt Cancellation Letters the accumulated interest on the Stockholders’ Loans was waived and 842,135 shares of Duke’s

common stock were issued in exchange for the cancellation of $623,180 in debt, leaving $280,000 of outstanding Stockholders Loans (the

“Outstanding Stockholders’ Loans”).

The Outstanding Stockholders’ Loans, including the accumulated interest amount,

shall be repaid on the later of the following:

(i) three years after the Effective Date;

or (ii) Duke raised capital

amounting to at least $15 million following the Effective Date and the Earnings before interest, tax, depreciation and amortization of

Duke has reached an amount of $3 million.

or (ii) Duke raised capital amounting to at least

$15 million following the Effective Date and the Earnings before interest, tax, depreciation and amortization of Duke has reached an amount

of $3 million.

As of December 31, 2022, and

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the event that the Convertible Debentures were converted into shares of our Common Stock.

In connection with the Share Exchange, immediately prior to the Effective

Time, we entered into several Convertible Loan Agreements, on the same terms, in the aggregate amount of $965,000.

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 provide 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 of the Company.

The Convertible Loan Agreements bore simple interest at a rate equal

to 15% per annum, payable on the 15th day of each calendar month.

On December 9, 2020, we utilized our rights under the Convertible Loan

Agreements and extended the terms of the loans for an additional twelve months.

During March 2021, a portion of the Convertible Debentures,

representing principal amount of $130,000 was converted into 347,594 shares of Common Stock and during May 2021, we repaid the full balance

of the principal of the Convertible Loans in the amount of $835,000.

Also, in connection with the Share Exchange, we entered into Exchange

Agreements with our outstanding debt with Alpha and GBC to respectively cancel existing debentures or debt in the total amount of $658,323

and in exchange issue new debentures in the aggregate amount of $400,000 and issue 698,755 and 65,198 shares of common stock to each of

Alpha and GBC, respectively.

The New Debentures matured three years from the Effective Date, bore interest at a rate of 8% per year and

were only convertible into shares of the Company’s common stock, at an original conversion price of $0.3740;

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 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.

to March 31, 2021, a portion of the Convertible Debentures, representing an aggregate amount of $110,614 (including interest) was converted

into 295,759 shares of Common Stock.

During May 2021, we prepaid the full balance of the principal and interest amount of the Convertible

Debentures in the amount of $108,541.

On May 11, 2021, we entered into the Securities Purchase Agreements

with eight (8) non-U.S.

Investors, pursuant to which we, in a private placement Offering, agreed to issue and sell to the Investors an

aggregate of:

In connection with the Share

Exchange, immediately prior to the Effective Time, we entered into several Convertible Loan Agreements, on the same terms, in the aggregate

amount of $965,000.

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 provide 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 of the Company.

The Convertible Loan Agreements

bore simple interest at a rate equal to 15% per annum, payable on the 15th day of each calendar month.

On December 9, 2020, we utilized

our rights under the Convertible Loan Agreements and extended the terms of the loans for an additional twelve months.

During March 2021,

a portion of the Convertible Debentures, representing principal amount of $130,000 was converted into 347,594 shares of Common Stock and

during May 2021, we repaid the full balance of the principal of the Convertible Loans in the amount of $835,000.

Also, in connection with the

Share Exchange, we entered into Exchange Agreements with our outstanding debt with Alpha and GBC to respectively cancel existing debentures

or debt in the total amount of $658,323 and in exchange issue new debentures in the aggregate amount of $400,000 and issue 698,755 and

65,198 shares of common stock to each of Alpha and GBC, respectively.

The New Debentures matured three years from the Effective Date,

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

price of $0.3740;

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 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.

Subsequent to March 31, 2021, a portion of the Convertible Debentures, representing an

aggregate amount of $110,614 (including interest) was converted into 295,759 shares of Common Stock.

During May 2021, we prepaid the full

balance of the principal and interest amount of the Convertible Debentures in the amount of $108,541.

On May 11, 2021, we entered

into securities purchase agreements with eight (8) non-U.S.

Investors, pursuant to which we, in a private placement offering, agreed to

issue and sell to investors an aggregate of:

(i) 12,500,000 shares of our Common Stock at a price of $0.40 per share;

and (ii) Warrants to purchase 12,500,000 of our

Common Stock.

The Warrants are exercisable immediately and for a term of 18 months and have an exercise price of $0.40 per share.

aggregate gross proceeds from the Offering were approximately $5,000,000 and the Offering closed on May 11, 2021.

The spread of COVID-19 throughout

the world may result in a period of business and manufacturing disruption, and in reduced operations, any of which could materially affect

our business, financial condition and results of operations especially regarding its ability to obtain the necessary finance to continue

Duke’s operations.

The extent to which COVID-19 impacts the Company’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.

We intend to continue to undertake

efforts to raise additional funding;

provided, however, that there can be no assurance that we will be able to raise capital, or that

any capital raise will be on favorable terms or on terms that do not create further dilution to our stockholders.

In addition, we do not

know if the COVID-19 pandemic will have a material effect on our ability to raise capital or if this will require us to raise capital

on terms less favorable to us as a result of global market conditions or as a result of the direct effect, if any, of COVID-19 on our

and (ii) warrants

to purchase 12,500,000 of our 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 were approximately $5,000,000 and the offering closed on May

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

believe that we have sufficient cash to fund our operations for at least the next 12 months.

Readers are advised that available resources

may be consumed more rapidly than currently anticipated, resulting in the need for additional funding sooner than expected.

occur, we will need to seek additional capital earlier than anticipated in order to fund (1) further development and, if needed (2) expenses

which will be required in order to expand manufacturing of our products, (3) sales and marketing efforts and (4) general working capital.

Such funding may be unavailable to us on acceptable terms, or at all.

Our failure to obtain such funding when needed could create a negative

impact on our stock price or could potentially lead to the failure of our company.

This would particularly be the case if we are unable

to commercially distribute our products and services in the jurisdictions and in the timeframes we expect.

Quantitative and Qualitative Disclosure

2 unchanged sentences

reporting companies.

Financial Statements and Supplementary

All information required by

this item is included in Item 15 of Part IV of this Annual Report and is incorporated into this item by reference.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

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 7. Management’s Discussion and Analysis