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Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-03-15 · 93 added, 90 removed, 118 unchanged (61% of the section changed)

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Company Overview

We are a robotics company

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

robotics system can achieve pinpoint accuracy regardless of the movement of the weapons platform or the target.

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.

On March 9, 2020, Duke and

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

January 29, 2021, we, through 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.”

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

and has signed an agreement with 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.

On January 29, 2021, we, through 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.” While the agreement

was intended to facilitate commercialization and we are aware that Elbit is marketing drone-mounted remote weapon systems, including a

system in the name of “Bird of Prey”.

We requested reports from Elbit regarding sales and royalties related to drone-mounted

remote weapon systems, as outlined in the Collaboration Agreement and it is in discussion with Elbit.

On August 15, 2022, Duke Israel

introduced the IC Drone, a drone technology for conducting routine maintenance of critical infrastructure and has signed an agreement

with 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.

Following that successful pilot, in August 2024, we, through Duke Israel, entered into

an agreement with the IEC to provide high-voltage insulator washing services using IC Drone system.

October 28, 2024, a Certificate of Amendment to our Articles of Incorporation with the Nevada Secretary of State to change the Company’s

corporate name from UAS Drone Corp.

to DUKE Robotics Corp.

effective as of November 4, 2024.

connection with the Certificate of Amendment, we also filed an issuer notification form with FINRA reflecting our name change and requesting

a change in its trading symbol from “USDR” to “DUKR”.

Effective as of market open on Monday, November 4, 2024,

the name changed to DUKE Robotics Corp.

and the transition of its OTCQB ticker symbol from “USDR” to “DUKR” took

On February 18, 2025, we announced

that we established Duke Greece, a wholly owned subsidiary which is focused on expanding our innovative IC Drone technology in Greece.

Our innovative IC Drone technology provides utility companies with a safer, more efficient, and environmentally sustainable solution for

maintaining high-voltage electric infrastructure as well as potential other applications of our technologies and capabilities.

The subsidiary

is expected to facilitate market expansion, strategic partnerships, and additional revenue streams in Greece.

While we anticipate initial

setup and operational costs, we believe this investment will drive long-term growth.

Operating Results

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in revenues for the year ended December 31, 2024.

During the year ended December 31, 2022, we had no revenues.

The revenues for the year

ended December 31, 2023 were derived from our agreement with IEC to provide drone-enabled systems for cleaning electric utility cable

insulators, which we successfully completed during October 2023.

During the year ended December 31, 2023, we had $300,000 in revenues.

revenues for the year ended December 31, 2023 were derived from our earlier August 2022 collaboration and development agreement

with IEC to provide drone-enabled systems for high-voltage insulator washing , which we successfully

completed during October 2023.

The revenues for the year ended December 31, 2024, were derived from our August 2024 commercial

agreement for high-voltage insulator washing services with the IEC.

These services to IEC are seasonal in their nature (spring to fall

seasons) and revenues derived from the 2024 agreement commenced during the mid-season, in August 2024.

Cost of revenues .

the year ended December 31, 2023, we had $273,000 in cost of revenues expenses, compared to $0 for the year ended December 31, 2022.

cost of revenues in 2023 mainly consists of professional services associated with our agreement with IEC as detailed above.

and Development .

During the year ended December 31, 2023, we had $3,000 in research and development expenses, compared to $20,000

in research and development expenses for the year ended December 31, 2022.

The decrease in our research and development are mainly due

to activities related to the TIKAD product which are carried out by Elbit pursuant to the Collaboration Agreement.

During the year ended December 31, 2024, we had $71,000 in cost of

revenues expenses, compared to $273,000 for the year ended December 31, 2023.

The cost of revenues in 2024 mainly consists of professional

services associated with our agreements with the IEC as detailed above.

The cost of revenues for

the year ended December 31, 2023 were derived from our earlier August 2022 collaboration and development agreement

with IEC to provide drone-enabled systems for high-voltage insulator washing , which we successfully

completed during October 2023.

The cost of revenues for the year ended December 31, 2024, were derived from our August 2024 commercial

agreement for high-voltage insulator washing services with the IEC commenced during in August 2024.

Research and Development .

During the year ended December 31, 2024, we had $157,000 in research and development expenses, compared to $3,000 in research and development

expenses for the year ended December 31, 2023.

The increase in our research and development are mainly due to professional services and

other field tests associated with our continued development of additional capabilities of our IC Drone system.

General and Administrative

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services and $108,000 related to stock-based compensation expenses.

This decrease in general and administrative expenses for the year

ended December 31, 2023, was mainly due to the decrease in share-based compensations expenses.

This increase in general and administrative expenses for the year

ended December 31, 2024, was mainly due to an increase in professional services partially offset by a decrease in stock-based compensation

Financial Income, net .

For the year ended December 31, 2024, our financial income amounted to $40,000 as compared to $76,000 for the year ended December 31,

The reason for the increase in financial income for the year ended December 31, 2023, was mainly due to the increase in interest

income on bank deposits resulted from the increase in interest rates.

ended December 31, 2023 and 2022, we recorded a net loss of $726,000 and $1,101,000, respectively, which represented a decrease compared

The reason for the decrease in financial income for the year ended December 31, 2024, was mainly due to the decrease in our available

cash which resulted in a decrease in interest income on our bank deposits.

ended December 31, 2024 and 2023, we recorded a net loss of $985,000 and $726,000, respectively, which represented an increase compared

to the year ended December 31, 2024, of $259,000.

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Our significant accounting

policies are discussed in Note 2, “Summary of Significant Accounting Policies,” of the notes to consolidated financial statement,

which are incorporated by reference into this prospectus.

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

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.

policies are discussed in Note 2, “ Summary of Significant Accounting Policies ,” of the notes to consolidated financial

statement, which are incorporated by reference into this prospectus.

Liquidity and Capital Resources

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substantially all our efforts to research and development and have incurred accumulated losses of $11,162,000.

During the year ended December

31, 2023, our loss of $726,000 included non-cash stock-based compensation of $108,000.

As of December 31, 2023, we had a working

capital of $2,011,000 as compared to a working capital of $2,674,000 as of December 31, 2022.

As of December 31, 2023, we

had a cash balance of $2,281,000 compared to the cash balance of $2,849,000 as of December 31, 2022.

The reason for the decrease in our

cash balance was mainly due to the operating expenses describe above.

During the year ended December 31, 2024, our loss of $985,000 included

non-cash stock-based compensation of $28,000.

As of December 31, 2024, we had a working capital of $1,010,000 as compared to a working

capital of $2,011,000 as of December 31, 2023.

As of December 31, 2024, we had a cash balance

of $1,256,000 compared to a cash balance of $2,281,000 as of December 31, 2023.

The reason for the decrease in our cash balance was mainly

due to the operating expenses describe above .

Cash used in operations for

the year ended December 31, 2024, was $918,000 as compared to cash used in operations of $548,000 for the year ended December 31, 2023.

The reason for the decrease in cash used in operations is related to the decrease in our operating expenses and cash received under our

Collaboration and Development Agreement with the IEC.

The reason for the increase in cash used in operations is mainly related to the increase in our

operating expenses .

Since our inception we and

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December 31, 2023, the outstanding balances of such stockholders’ loans were $322,000 and $314,000, respectively.

On September 2, 2019, we executed

the Promissory Note having a total principal amount of $35,000 bearing interest at 6% per annum and maturing September 2, 2021.

The Promissory

Note was a non-recourse and carried no personal guarantees.

In conjunction with the consummation of the Share Exchange, and as a condition

thereof, on March 6, 2020, we entered into several Securities Exchange Agreements, on the same terms, to exchange the Promissory Note

for 9,623,621 shares of our Common Stock.

On May 18, 2021, we issued 54,019 shares of Common Stock of the Company, to several holders

pursuant to the terms of the Security Exchange Agreements pursuant to which, such holders were entitled to an anti-dilution clause in

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.

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

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

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 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 to expire on November 11, 2024.

On June 20, 2024, we entered into a Warrant Amendment Agreement with the Investors

to amend the terms of the warrants issued in connection with the May 11, 2021 securities purchase agreements.

Under the Warrant Amendment

Agreement, we and the Investors agreed to:

(i) extend the warrant exercise term to May 11, 2026;

(ii) amend the warrant exercise price,

increasing it from $0.40 per share to $0.65 per share;

and (iii) include a beneficial ownership blocker that limits the exercise of such

warrants if the exercise would result in the holder beneficially owning more than 19.99% of the Company’s common stock immediately

following the exercise.

We believe that we have sufficient

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

Quantitative and Qualitative Disclosure

about Market Risk

Quantitative and Qualitative

Disclosure about Market Risk

Not applicable to smaller

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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