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Item 1. Business

2024-03-15 compared with 2023-03-24 · 167 added, 124 removed, 242 unchanged (55% of the section changed)

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.

are a robotics company developing 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

We also introduced an insulator cleaning drone, which is a drone technology for conducting routine maintenance of critical

infrastructure for cleaning electric utility cable insulators.

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 Duke.

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

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

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

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

that did not participate in the Share Exchange.

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

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

January 29, 2021, we, through Duke Israel (as hereinafter defined), 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.”

August 15, 2022, Duke Israel introduced the Insulator Cleaning ("IC") Drone, a drone technology for conducting routine maintenance

of critical infrastructure, and has signed an agreement with Israel Electric Corporation (the “IEC”) to provide drone-enabled

systems for cleaning electric utility cable insulators.

During October 2023, we successfully completed our obligations under its

agreement with the IEC.

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/.

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”.

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

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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.

Duke Israel, and Elbit, entered into 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.

investors (the “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 had 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 11, 2021.

On April 5, 2022, we entered into an agreement with the

Investors pursuant to which we extended the term of the warrants, to expire on November 11, 2023.

On November 1, 2023, we and the Investors

executed a second extension agreement, such that the term of the warrants was extended so that they now expire on November 11, 2024.

On May 27, 2021, our board

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regarding its stabilization technology incorporated in its advanced robotic system.

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.

On 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 IEC, a public and 99% government-owned

company, to provide drone-enabled systems for cleaning electric utility cable insulators.

Market Opportunity

Defense and military market

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

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.

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.

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MIT Enterprise Forum of Israel.

Civilian sector

Insulator Cleaning Drone

Insulators are key components of every high voltage electrical infrastructure

around the world while routine cleaning and maintenance of insulators is crucial in order to optimize system efficiency, prevent power

outages, reducing risks of flashovers and corrosion.

Cleaning of high voltage infrastructure leads to better system performance and efficiency,

improves safety by reducing the risk of electricity failure and accidents especially in urban areas, and extends the life of the insulators.

Currently, the global standard for routine cleaning of insulators involves

the use of helicopter fleets and crane trucks.

The cleaning routine requires getting near to active high voltage lines and using high-pressure

washers carried by the helicopters or crane trucks.

Such process is considered extremely dangerous and bears significant risks of electricity

shock or an impact of the helicopter blades with the electricity grid resulting in damages to the grid line and possible harm to human

IC Drone offers a revolutionary,

safer and cost-efficient method for maintenance of high voltage electrical infrastructure.

The worldwide electricity transmission market

is huge and estimated in millions of insulators.

The current cost per insulator cleaning is high and electricity operators around the

world fail to meet cleaning plans.

UAS Octocopter Integrated with Six Degrees

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

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

stabilization, such as:

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

aid robotic uses 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

Our lightweight robot can

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

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

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

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

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

Our IC Drone is a first-of-its-kind

robotic, drone-enabled system for cleaning electric utility insulators.

The IC Drone unique system, based on Duke’s advanced intellectual

property and know-how that integrates algorithms, autonomous systems, and robotic technologies used in mission-critical applications.

Our IC Drone offers a revolutionary, safer and cost-efficient, method

for maintenance of high voltage electrical infrastructure.

which require routine cleaning of insulators in order to optimize system efficiency

and prevent power outages.

Currently, the global standard for routine cleaning of insulators involves the use of helicopter fleets and

crane trucks.

Assembly and Testing

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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.

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.

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

Defense and Military Market

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?

in the defense and military market will initially derive from sales of TIKAD (our robot mounted on UAS Octocopter platform), and later

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

Focus on sales in the United States .

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Sales to NATO .

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

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.

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.

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.

On August 15, 2022, we signed an agreement with the IEC to provide

drone-enabled systems for cleaning electric utility cable insulators.

During October 2023, we successfully completed our obligations

under our agreement with the IEC by proving the efficiency and safety that comes by using our IC Drone.

plan is to provide insulation maintenance and washing services to electrical companies over the globe, throughout separate entities over

the world, either alone or with strategic partners.

Intellectual Property

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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

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

The IMOD has also publicly endorsed our combined robotic and UAS

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

Israeli Defense Forces (the “IDF”).

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.

Defense and Military Market

Our robot has been designated

as a unique system by the IMOD and has received official approval as the sole supplier of this solution to the IMOD.

The IMOD has also

publicly endorsed our combined robotic and UAS system, which we market under the commercial name TIKAD, as an innovative future battlefield

technology that may be implemented by the Israeli Defense Forces (the “IDF”).

We intend to focus our sales efforts in the United States because the

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

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

Marketing and sales efforts related to TIKAD are being led by Elbit

due to our Collaboration Agreement with Elbit.

Civilian Sector

Marketing and sales efforts are currently concentrated on the IC Drone

using company employees, agent and related electric infrastructure companies that are in cooperation with the IEC.

The current marketing

volume and efforts are limited and are expected to increase significantly upon the next version of the IC Drone which is expected to be

release in the fourth quarter of 2024.

Defense and Military Market

While we believe that our

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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.

Civilian Sector

To our knowledge there is

no equivalent cleaning system which is based on drones for cleaning insulators.

Although drones are being used for cleaning solar panels

as well as windows, using high pressure water, such systems cannot handle the challenges that come with cleaning of insulators due to

the high voltage environment that effects the drones.

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.

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.

In addition, our competitive position sometimes may

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

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.

Our competitors, either alone

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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.

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

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

Government Regulation

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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)

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

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

and have certain other decreased disclosure

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

in annual reports.

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.

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) of the Sarbanes-Oxley Act of 2002

(the “Sarbanes-Oxley Act”) requiring that independent registered public accounting firms provide an attestation report on

the effectiveness of internal control over financial reporting;

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

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

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

What changed 10-K

Item 1. Business