What changed in this filing

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Item 9A. Controls and Procedures

2025-03-20 compared with 2024-03-15 · 805 added, 469 removed, 804 unchanged (61% of the section changed)

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including the CEO and the CFO, to allow timely decisions regarding required disclosure.

Our management, with the participation

of our CEO and CFO, as in place as of December 31, 2023, evaluated, the effectiveness of our disclosure controls and procedures as of

December 31, 2023, pursuant to paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act.

This evaluation included a review of the

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

Annual Report.

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

and all fraud, if any.

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

that the objectives of the control system are met.

Disclosure controls and procedures are controls and other procedures that are designed

to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized

and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without

limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under

the Exchange Act is accumulated and communicated to management, including our CEO and CFO, or persons performing similar functions, as

appropriate, to allow timely decisions regarding required disclosure.

Also, the projection of any evaluation of the disclosure controls

and procedures to future periods is subject to the risk that the disclosure controls and procedures may become inadequate because of changes

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

Based on their review and

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

(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) were not effective as of December 31, 2023, at the above-described

reasonable assurance level.

During the year ended December

31, 2023, management identified the following weaknesses, which were deemed to be material weaknesses in internal controls:

Due to the size of the Company

and available resources, there are limited personnel to assist with the accounting and financial reporting function, which results in

a lack of segregation of duties.

Our management, with the

participation of our CEO and CFO, as in place as of December 31, 2024, evaluated, the effectiveness of our disclosure controls and procedures

as of December 31, 2024, pursuant to paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act.

This evaluation included a review

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

in this Annual Report.

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

all errors and all fraud, if any.

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

assurance that the objectives of the control system are met.

Disclosure controls and procedures are controls and other procedures that

are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded,

processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures

include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed

or submitted under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, or persons performing similar

functions, as appropriate, to allow timely decisions regarding required disclosure.

Also, the projection of any evaluation of the disclosure

controls and procedures to future periods is subject to the risk that the disclosure controls and procedures may become inadequate because

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

Based on their review and evaluation, and subject to the inherent limitations

described above, our CEO and CFO concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under

the Exchange Act) were not effective as of December 31, 2024, at the above-described reasonable assurance level.

During the years ended December

31, 2024 and 2023, management identified the following weaknesses, which were deemed to be material weaknesses in internal controls:

Due to the size of the Company and available resources, there is a lack of sufficient segregation of duties.

The Company does not have an

Independent Audit Committee that can provide management oversight.

Remediation Measures

plan to remediate these material weaknesses by enhancing our segregation of duties and internal control over financial reporting and by

electing an additional independent director (as defined under Nasdaq Listing Rules) to the board of directors and establish an Audit Committee,

which will assist our board of directors in overseeing our accounting and financial reporting processes, the audits of our financial statements

and internal control over financial reporting.

The Audit Committee will also assist the board of directors in overseeing our compliance

with legal and regulatory requirements.

We believe the actions described

above, once put in place, will be sufficient to remediate the identified material weakness and strengthen our internal control over financial

However, the new and enhanced controls have not yet been put in place and therefore we cannot conclude that the material weakness

will be remediated.

We will continue to monitor the effectiveness of these controls and will make any further changes management determines

Internal Control over Financial Reporting

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In making this assessment, management

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

Based on this assessment, management, as in place as of December 31, 2023, determined that the Company’s internal control

over financial reporting as of December 31, 2023, was not effective due to the material weakness previously identified as stated above.

used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 2013) in Internal Control

- Integrated Framework.

Based on this assessment, management, as in place as of December 31, 2024, determined that the Company’s

internal control over financial reporting as of December 31, 2024, was not effective due to the material weakness previously identified

as stated above.

Other Information

On May 27, 2021, our

board of directors approved 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.

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

On March 18, 2025, our board of directors approved an increase in the amount of shares of Common Stock available under the

2021 Plan from 4,800,000 to 9,000,000.

In addition, as further elaborated below, the board of directors approved the following

(i) 1,000,000 options to purchase shares of Common Stock to Mr.

Yossef Balucka, our CEO;

(ii) 500,000 options to purchase

shares of Common Stock to Mr.

Vadim Maor, our CTO, (iii) 120,000 options to purchase shares of Common Stock to Ms.

Keren Gousman Golan,

our newly appointed Director (iv) 400,000 options to purchase shares of Common Stock to Mrs.

Alexandra Papaconstantinou the

appointed Managing Director of Duke Greece, and (v) 50,000 options to purchase shares of Common Stock to Mr.

Shlomo Zakai, our

On March 18, 2025, our board

of directors appointed Mr.

Vadim Maor to serve as our CTO.

In conjunction with his appointment, we executed a consulting agreement, dated

March 18, 2025, with Mr.

Maor (the “Consulting Agreement”) to provide the company CTO services, pursuant to which he will

be subject to standard confidentiality, intellectual property assignment, non-solicitation and non-compete provisions.

In addition, in

consideration for his services, Mr.

Maor receives a monthly payment of NIS 25,000 (approx.

Under the Consulting Agreement,

Maor will also receive a grant of 500,000 options to our Common Stock, at an exercise price of $0.21 per share.

The options have the

following vesting schedule:

33% of the options will vest after 12 months and the remaining portion will vest in eight equal installments

over eight quarters.

The options expire after six (6) years from the date of grant, and such other terms and conditions set forth in our

Maor , age 53, has

been proving research and development (“R&D”) services to the Company since 2024.

Maor is an experienced head of R&D

and technology operations in the computer software industry, possessing strong professional skills in product and technology development

(IT & SaaS) and enterprise architecture design.

Since 2019 Mr.

Maor has been the CEO of OSYM Technologies Ltd., a private technology

consulting and services company.

Between 2011 to 2018 he has been co-founder and CEO of WiseSec, a private company that developed advanced

mobile platform micro-location solutions.

From 2001 to 2010 Mr.

Maor was a director at Rafael Advanced Defense Systems, and prior to that

he worked at the MOD - Israeli Ministry of Defense and at IMI - Israeli Military Industries.

Moar holds a B.A.

in Near and Middle

Eastern Studies from the Hebrew University of Jerusalem, Israel.

Except as set forth above,

there are no other arrangements or understandings between Mr.

Maor and any other persons pursuant to which he was named as CTO of the

Company and Mr.

Maor has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of

Regulation S-K.

There are no family relationships between Mr.

Maor and any director or executive officer of the Company.

On March 18, 2025, the board

of directors of the Company, appointed Ms.

Keren Gousman Golan to serve as a director, effective as of March 31, 2025.

serve until her earlier removal or resignation.

The board of directors has determined that Ms.

Gousman is an independent director as defined

under Rule 10A-3 under the Securities Exchange Act of 1934, as amended and as defined under Nasdaq Listing Rules.

In accordance with our

board of directors resolution dated April 12, 2020 and in consideration of her service, Ms.

Gousman will receive a quarterly fee of $1,500.

In addition, Ms.

Gousman will be paid $400 for each board of directors meeting attended or written resolution.

Gousman will be granted

120,000 options to purchase shares of Common Stock at an exercise price of $0.21 per share and will vest pursuant to three equal installments

of 33% at the end of each year.

The options expire after six (6) years from the date of grant, and such other terms and conditions set

forth in our 2021 Plan.

Gousman, age 50, has 25

years of extensive experience in managing operations and multi-disciplinary task teams.

Until 2022 Ms.

Gousman served as Head of the Field

Unit at the Israeli Prime Minister Office.

Following retirement from the Israeli Prime Minister Office and until 2024 she served as CEO

of AIRNETTRESS, a baby mattress company that markets and sells the “numu® air™”.

In 2024 she served as sales and

business development executive for BARIKS, a company that developed portable and foldable oxygen pressure chamber for Hyperbaric Oxygen

Therapy (HBOT).

Gousman holds dual-major B.A., from Faculty of Social Sciences from the Tel Aviv University and M.B.A in Business

Administration, specializing in Strategy and Business Entrepreneurship from the Ono Academic College.

On February 24, 2025, we

executed a consulting agreement with Mrs.

Alexandra Papaconstantinou to provide management services as the Managing Director of Duke Robotics

Hellas M I.K.E, our wholly owned Greek subsidiary, pursuant to which she will be subject to standard confidentiality, intellectual property

assignment, non-solicitation and non-compete provisions.

Papaconstantinou, age

47, is based in Athens Greece and is an experienced manager.

Between 2004 to 2019 Ms.

Papaconstantinou was a managing director of an industrial

engineering company.

Since 2006 she is an agent in Greece of an Israeli engineering company and from 2019 she serves as the general manager

of a real estate company.

Papaconstantinou holds a BS in Business Administration from the American College of Greece and M.B.A,

major in Finance from the University of Sheffield, UK.

Disclosure Regarding Foreign Jurisdictions

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Chief Executive Officer and President

Chief Technology Officer and Director

Erez Nachtomy

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Chief Financial Officer

Chief Technology Officer

Yariv Alroy , Director

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

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

Yariv Alroy holds an LL.B from Tel

Aviv University.

From December

2018 to August 2024 Mr.

Alroy also served as member of the board of directors and Chairman of SHL Telemedicine.

Yariv Alroy holds an LL.B

from Tel Aviv University, Israel.

Yossef Balucka , CEO

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

Sagiv Aharon , CTO and

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

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

Sagiv Aharon , Director.

Sagiv Aharon is the Vice President of Development and Engineering of UVision Air Ltd.

that develops aerial loitering systems.

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

From 2008 to 2010, Mr.

Aharon worked

at the Israeli Aerospace Industry as a structural design engineer on a classified hybrid structure (composite/metal) air vehicle.

2010 to 2011, Mr.

Aharon worked at Rafael Advanced Weapon Systems Ltd.

as a mechanical design engineer for complex active/reactive

armor solutions for land vehicles.

as a mechanical design engineer for complex active/reactive armor

solutions for land vehicles.

From 2011 to 2012, Mr.

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

Aharon also serves as the CEO of Axis Aerospace

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

level quality standards (AS9100).

Aharon holds a B.Sc.

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

- Israel Institute of Technology.

in mechanical engineering

with specialty in control and robotics from the Technion - Israel Institute of Technology.

Erez Nachtomy , Director,

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investments firm.

Since May 2020 Mr.

Nachtomy is the Acting CEO of SHL Telemedicine Ltd.

From 1989 until 2001, Mr.

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

to a senior partner.

From May 2020 until September 2024 Mr.

Nachtomy served as CEO of SHL Telemedicine Ltd.

From 1989 until

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

later on promoted to a senior partner.

In March 2001, Mr.

Nachtomy joined the executive team of SHL Telemedicine Ltd.

(SWX:SHLTN), as Vice President, and

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

(SWX:SHLTN), as

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

SHL Telemedicine Ltd.

is active in the field of medical technology

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

In December 2018

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

Nachtomy has been serving as the acting

CEO of SHL Telemedicine Ltd.

is active in the field

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

From December 2018 to February 2024 Mr.

Nachtomy also served as Member of the Board of SHL Telemedicine.

Nachtomy holds an LL.B.

from Tel Aviv University, Israel.

Tel Aviv University, Israel.

Eran Antebi , Director.

Antebi is the Finance Director Omrix Biopharmaceuticals Ltd.

(a Johnson & Johnson company) since February 2017.

Prior to that

he was CFO of SHL Telemedicine Ltd.

Antebi is the Senior Finance Director, Global End to End Surgery Supply Chain at Johnson & Johnson.

From 2017 to 2022 he served

as Finance Director Biosurgery Supply Chain at Johnson & Johnson.

Prior to that he was CFO of SHL Telemedicine Ltd.

(SWX:SHLTN) since

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

Prior to joining

SHL, from 2000 to 2004, Mr.

Antebi was a manager with Ernst & Young in Israel.

Antebi is a certified public accountant (CPA) in

Israel and holds a B.A.

in Accounting and Economics from Tel Aviv University, Israel.

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

Antebi was a manager with

Ernst & Young in Israel.

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

in Accounting and Economics

from Tel Aviv University, Israel.

Shlomo Zakai , Chief

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

(SAFO:OTC) (August

(OTC:SAFO) (August

2017 to December 2021), Sonovia Ltd.

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

(TOMDF:OTC) (February 2017 till

TOMDF) (February 2017 till

January 2018).

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College of Management in Rishon Le’Zion, Israel.

Vadim Maor, Chief Technology

Maor was appointed as CTO of our Company, Duke and Duke Israel on March 18, 2025.

Prior to that he provided research

and development (“R&D”) services to the Company during 2024.

Maor is an experienced head of R&D and technology

operations in the computer software industry, possessing strong professional skills in product and technology development (IT & SaaS)

and enterprise architecture design.

Since 2019 Mr.

Maor has been the CEO of OSYM Technologies Ltd., a private technology consulting and

services company.

Between 2011 to 2018 he has been co-founder and CEO of WiseSec, a private company that developed advanced mobile platform

micro-location solutions.

From 2001 to 2010 Mr.

Maor was a director at Rafael Advanced Defense Systems, and prior to that he worked at

the MOD - Israeli Ministry of Defense and at IMI - Israeli Military Industries.

Moar holds a B.A.

in Near and Middle Eastern Studies

from the Hebrew University of Jerusalem, Israel.

Family Relationship

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

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

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

are available at our corporate offices.

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

The Code of Ethics and Business Conduct, Bylaws and Article

of Incorporation are available at our corporate offices.

Stockholders may request free printed copies of these documents from:

UAS Drone Corp.

DUKE Robotics Corp.

10 HaRimon Street

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2024 fiscal year, there were no material changes to the procedures by which security holders may recommend nominees to the board of directors.

Insider Trading Policy

We have adopted an insider

trading policy (the “Policy”) governing the purchase, sale and other transactions in our securities that applies to our directors,

executive officers, employees, and other covered persons, including immediate family members and entities controlled by any of the foregoing

persons, as well as by the Company itself.

The Policy prohibits, among

other things, insider trading and certain speculative transactions in our securities (including short sales, buying put and selling call

options and other hedging or derivative transactions in our securities) and establishes a regular blackout period schedule during which

directors, executive officers, employees, and other covered persons may not trade in the Company’s securities, as well as certain

pre-clearance procedures that directors and executive officers must observe prior to effecting any transaction in our securities.

We believe that the Policy

is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to us.

A copy of the Policy is filed as Exhibit 19.1 to this Form 10-K.

Executive Compensation.

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The following sets forth the

compensation of UAS’s Chief Executive Officer during fiscal 2023, and the other persons who served as executive officers during

the Company’s fiscal year ended December 31, 2023.

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

compensation of our Chief Executive Officer during fiscal 2024, and the other persons who served as executive officers during the Company’s

fiscal year ended December 31, 2024.

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

year ended December 31, 2024.

SUMMARY COMPENSATION TABLE - FISCAL YEAR ENDED

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consultants of our subsidiary.

The total number of awards to acquire shares of the Company’s common stock may not exceed 4,800,000

To the extent that an award lapses or is forfeited, the shares subject to such Award will again become available for grant under

the terms of the 2021 Plan.

On March 18, 2025, our board of directors approved an increase in the amount of shares of Common Stock

available under the 2021 Plan from 4,800,000 to 9,000,000.

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

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

We do not have any formal

policy that requires the Company to grant, or avoid granting, equity-based compensation at certain times.

We do not grant equity awards

in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock,

and do not time the public release of such information based on award grant dates.

The timing of any equity grants to executive officers

or directors in connection with new hires, promotions, or other non-routine grants is tied to the event giving rise to the award (such

as an executive officer’s commencement of employment or promotion effective date).

On March 18, 2025, our board

of directors approved the following grants:

(i) 1,000,000 options to purchase shares of Common Stock to Mr.

Yossef Balucka, our CEO;

500,000 options to purchase shares of Common Stock to Mr.

Vadim Maor, our CTO, (iii) 120,000 options to purchase shares of Common Stock

Gousman, our newly appointed Director, (iv) 400,000 options to purchase shares of Common Stock to Mrs.

Alexandra Papaconstantinou

the appointed Managing Director of Duke Greece, (v) 50,000 options to purchase shares of Common Stock to Mr.

Shlomo Zakai, our CFO.

The following table summarizes

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for attendance of each meeting of the board of directors.

On May 12, 2024, the board of directors

approved an increase of $3,050 per month, in the compensation received by Mr.

Erez Nachtomy, from $6,950 per month to $10,000 per month,

for his service as a member of the board of directors.

These amounts are exclusive of Israeli VAT, if applicable.

Director Compensation

The following table provides

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certain information as of March 20, 2025 regarding the beneficial ownership of our common stock, for:

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

● each person (or group of affiliated

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

● each director;

● each named executive officer;

all directors and executive officers as a group.

● all directors and executive

officers as a group.

Beneficial ownership is determined

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Erez Nachtomy

Keren Gousman Golan

All directors and executive officers as a group (7 Persons)**

(1) The persons named in this table have sole voting and investment power with

respect to all shares of common stock reflected as beneficially owned by them.

A person is deemed to be the beneficial owner of securities

that can be acquired by such person within sixty (60) days from March 14, 2024, and the total outstanding shares used to calculate each

beneficial owner’s percentage includes such shares, although such shares are not taken into account in the calculations of the total

number of shares or percentage of outstanding shares.

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

that are not exercisable within 60 days of March 14, 2024.

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

A person is deemed to be the beneficial owner of securities that can be acquired by such person within sixty (60) days from March 20, 2025, and the total outstanding shares used to calculate each beneficial owner’s percentage includes such shares, although such shares are not taken into account in the calculations of the total number of shares or percentage of outstanding shares.

Beneficial ownership as reported does not include shares subject to option or conversion that are not exercisable within 60 days of March 20, 2025.

Zabotinsky 50, Givat Shmuel, Israel.

(3) Based solely on information

contained in Form 13D filed with the SEC on January 29, 2024.

Includes (i) 10,000,000 shares of Common Stock and 10,000,000 warrants

exercisable into 10,000,000 shares of Common Stock held directly by More Provident Funds and Pension Ltd., an Israeli company controlled

by Y.D More Investments Ltd.

and (ii) 1,250,000 shares of Common Stock and 1,250,000 warrants exercisable into 1,250,000 shares of Common

Stock held directly by More Co-Invest (L.P.), Limited Partnership, an Israeli limited partnership, whose general partner, More Co-Invest

1 (G.P.) Ltd., is controlled by Y.D More Investments Ltd.

contained in Form 13D filed with the SEC on June 20, 2024 .

Includes (i) 10,000,000 shares

of Common Stock and 10,000,000 warrants exercisable into 10,000,000 shares of Common Stock ), held

directly by More Co-Invest (L.P.), Limited Partnership, an Israeli limited partnership, whose general partner, More Co-Invest 1 (G.P.)

Ltd., is controlled by Y.D More Investments Ltd.

Y.D More Investments Ltd.

is an Israeli public company controlled through a

voting agreement among the following individuals:

is an Israeli public company controlled through a voting agreement

among the following individuals:

(a) Yosef Meirov, directly and through B.Y.M.

Mor Investments Ltd., a company he controls

with Michael Meirov and Dotan Meirov, (b) Benjamin Meirov (c) Yosef Levy and (d) Eli Levy through Elldot Ltd., a wholly owned company.

Mor Investments Ltd., a company he controls with Michael

Meirov and Dotan Meirov, (b) Benjamin Meirov (c) Yosef Levy and (d) Eli Levy through Elldot Ltd., a wholly owned company.

Changes in Control

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Director Independence

The board of directors has

not determined that we have any independent directors.

Our board of directors has

determined that Mr.

Eran Antebi and Mr.

Erez Nachtomy are “independent” directors, as defined by SEC rules and under the Nasdaq

Listing Rules.

Principal Accounting Fees and Services.

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

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

review of our financial statements and are not reported under “Audit fees.”

Tax fees - Consists of fees

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Exhibits, Financial Statement Schedules.

(a) Financial Statements .

Balance Sheets of UAS Drone Corp.

as of December 31, 2023 and 2022

Statements of Operations of UAS Drone Corp.

for the years ended December 31, 2023 and 2022

Statements of Stockholders’ Equity of UAS Drone Corp.

for the years ended December 31, 2023 and 2022

Statements of Cash Flows of UAS Drone Corp.

for the years ended December 31, 2023 and 2022

Notes to Financial Statements

(b) Exhibits .

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

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

who execute and deliver this Share Exchange Agreement.

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

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

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

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

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

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

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

Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2024)

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

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

UAS Drone Corp.

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

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

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

and Yossef Balucka.

Services Agreement, dated March 25, 2021, between the Company and Yossef Balucka.

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

Warrant Extension Agreement, dated April 5, 2022, between UAS Drone Corp.

and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2022).

Warrant Extension Agreement, dated November 1, 2023, between UAS Drone Corp.

and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 3, 2023).

Amendment to Services Agreement between the Company and Mr.

Yossef Balucka, dated August 4, 2024 (incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q filed with the SEC on August 7, 2024).

Consulting Agreement, dated March 18, 2025, between the Company and Vadim Maor.

Extension Agreement, dated April 5, 2022, between the Company and the investors signatory thereto (incorporated by reference to Exhibit

10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2022).

Warrant Extension Agreement, dated November 1, 2023, between the Company and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 3, 2023).

Form of Warrant Amendment Agreement, dated June 20, 2024, between the Company and certain warrant holders (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 24, 2024).

Amended and Restated Code of Business Conduct and Ethics.

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

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

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

Insider Trading Policy

List of Subsidiaries of the Company.

Certification of Chief Executive Officer pursuant to Sec.

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the undersigned, thereunto duly authorized.

UAS DRONE CORP.

DUKE ROBOTICS CORP.

March 20, 2025

29 unchanged sentences

/s/ Sagiv Aharon

Chief Technology Officer and Director

March 20, 2025

/s/ Eran Antebi

UAS DRONE CORP.

DUKE ROBOTICS CORP.

(FORMERLY UAS DRONE CORP.)

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2024

UAS DRONE CORP.

DUKE ROBOTICS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022

Statements of Changes in Shareholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023 F-3

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2024 and 2023 F-4

Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024 and 2023 F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-6

Notes to Consolidated Financial Statements F-7 – F- 2 4

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Duke Robotics Corp.

UAS Drone Corp.):

1 unchanged sentence

We have audited the accompanying consolidated

balance sheets of UAS Drone Corp., and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated

statements of comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended

December 31, 2023 and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and

the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023 in conformity

balance sheets of Duke Robotics Corp.

UAS Drone Corp.) and its subsidiaries (the Company) as of December 31, 2024 and

2023, the related consolidated statements of comprehensive loss, changes in stockholders’ equity, and cash flows for each of the

years in the two-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period

ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

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

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

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

Somekh Chaikin

/s/ Somekh Chaikin

Member Firm of KPMG International

We have served as the Company’s

auditor since 2023.

We have served as the Company’s auditor since 2023.

Tel Aviv, Israel

March 20, 2025

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

BALANCE SHEETS

2 unchanged sentences

Cash and cash equivalents

Restricted Cash

Trade receivables

Other current assets (Note 3)

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Total Liabilities

Stockholders’

Stockholders’ Equity (Note 8)

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

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Total liabilities and stockholders’ Equity

The accompanying notes are an integral part

of the consolidated financial statements.

UAS DRONE, CORP.

The accompanying notes

are an integral part of the consolidated financial statements.

DUKE ROBOTICS CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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an integral part of the consolidated financial statements.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

1 unchanged sentence

stockholders’

equity (deficit)

BALANCE AT DECEMBER 31, 2022

Issuance of shares to service provider (note 9)

Share based compensation for services

Stock-based compensation for services

Warrants modification (note 8)

1 unchanged sentence

BALANCE AT DECEMBER 31, 2023

Share based compensation for services

Stock-based compensation for services

Warrants modification (note 8)

1 unchanged sentence

BALANCE AT DECEMBER 31, 2024

(*) represents

amount less than $1 thousand.

The accompanying notes are an integral part

of the consolidated financial statements.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

4 unchanged sentences

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

Share based compensation

Issuance of shares for services

Stock-based compensation

Interest on loans from related parties

Reduction in the carrying amount of right-of-use assets

Decrease in the carrying amount of right-of-use assets

Change in operating lease liability

Increase in lease deposit

Decrease (increase) in other current assets

Increase in accounts payable

Increase in trade receivable

Decrease in other current assets

Increase (decrease) in accounts payable

Increase (decrease) in other liabilities

4 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS AT END OF YEAR

DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR

Supplemental disclosure of cash flow information:

Non cash transactions:

Initial recognition of operating lease right-of-use assets

Initial recognition of operating lease liability

Initial recognition of operating lease

The accompanying notes are an integral part

of the consolidated financial statements.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

UAS Drone Corp.

(“the Company” or “USDR”)

was incorporated under the laws of the State of Nevada on February 4, 2015.

(USD in thousands, except share and per share data)

DUKE ROBOTICS CORP.

( FORMERLY UAS DRONE CORP .)

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

On March 9, 2020, the Company closed

16 unchanged sentences

Israel became a wholly-owned subsidiary of Duke Inc., which is a wholly-owned subsidiary of the Company.

The Company (collectively with Duke,

the “Group”) is a robotics company focused on 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.

The Company’s advanced robotics system is able to achieve pinpoint accuracy regardless of the movement

of the weapons platform or the target.

Effective October 22, 2020, Company’s

common stock is quoted on the OTC Markets Group, Inc.’s OTCQB® tier Venture Market, under the symbol “USDR”.

In October 2023, Hamas terrorists infiltrated Israel’s

southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets.

Hamas also launched extensive

rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas

within the State of Israel.

These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers.

the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations

commenced in parallel to their continued rocket and terror attacks.

Following the attack by Hamas on Israel’s southern border, Hezbollah

in Lebanon also launched missile, rocket, drone and shooting attacks against Israeli military sites, troops and Israeli towns in northern

In response to these attacked, the Israeli army has carried out a number of targeted strikes on sites belonging to Hezbollah in

southern Lebanon.

It is possible that the hostilities with Hezbollah will escalate, and that other terrorist organizations, including

Palestinian military organizations in the West Bank, as well as other hostile countries, such as Iran, will join the hostilities.

hostilities may include terror and missile attacks.

Certain of our consultants in Israel may be called up for reserve duty,

in addition to employees of our service providers located in Israel, have been called, for service and such persons may be absent for

an extended period of time.

In the event that hostilities disrupt our ongoing operations, our ability to deliver or provide services in

a timely manner to meet our contractual obligations towards customers and vendors could be materially and adversely affected.

The intensity and duration of

Israel’s current war against Hamas is difficult to predict, as are such economic implications on the

Company’s business and operations and on Israel’s economy in general.

These events may be intertwined with wider

macroeconomic indications of a deterioration of Israel’s economic standing, which may have a material adverse effect on the

Company and its ability to effectively conduct its operations.

Since this is an event that is not

under the control of the Company, and matters such as the fighting continuing or stopping may affect the Company’s assessments,

as at the reporting date the Company is unable to assess the extent of the effect of the war on its business activities and on the business

activities of its subsidiaries, and on their medium and long term results.

The Company is continuing to regularly follow developments

on the matter and is examining the effects on its operations and the value of its assets.

UAS DRONE, CORP.

The Company (collectively with

Duke, the “Group”) is a robotics company dedicated to developing 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 in the field of routine infrastructure maintenance.

The Company offers high-voltage insulator washing abilities using

its innovative Insulator Cleaning (“IC”) Drone system.

This technology provides an efficient and safe method for

cleaning high-voltage insulators, improving their performance, enhancing safety, and reducing maintenance costs.

On October 28, 2024, the Company

filed a certificate of amendment to its 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.

The Company’s Common Stock

is quoted on the OTC Markets Group, Inc.’s OTCQB® tier Venture Market, under the symbol “DUKR”

(“USDR” prior to November 4, 2024).

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

(USD in thousands, except share and per share data)

GENERAL (continue)

October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of horrific

terrorist attacks on civilian and military targets.

Following the attack, Israel’s security cabinet declared war and commenced

a military campaign in Gaza against Hamas.

Since the commencement of these events, there have been additional active hostilities,

including military operations focused in southern Lebanon against Hezbollah, air force operations against the Houthi movement in

Yemen and multiple airstrikes in Iran, in response to Iranian missile attacks.

In October 2024, Israel began ground operations

against Hezbollah in Lebanon culminating in a 60-day cease fire agreed to between Israel and Lebanon on November 27, 2024.

January 27, 2025, the ceasefire between Israel and Lebanon was extended to February 18, 2025.

Following February 18,

2025, Israeli forces retained control over strategic positions in southern Lebanon while seeking for diplomatic

efforts to resolve the dispute.

On January 19, 2025, a temporary ceasefire between Israel and Hamas went into effect, the result of

which is uncertain.

While ceasefire agreements have been reached, there is no guarantee that the parties will continue to comply

with the terms of the agreements and, accordingly, it is possible that these hostilities will resume with little to no warning and

that additional terrorist organizations and, possibly, countries will actively join the hostilities.

Such clashes may escalate in

the future into a greater regional conflict.

Due to the fact that most of our operations are

conducted in Israel and all members of the Company’s board of directors, management, as well as a majority of its employees and consultants, including

employees of its service providers, are located in Israel, the Company’s business and operations are directly affected by economic, political, geopolitical

and military conditions affecting Israel.

Although the current war has not materially impacted the Company’s business or operations as of the date

of this report, any escalation or expansion of the war could have a negative impact on both global and regional conditions and may adversely

affect the Company’s business, financial condition, and results of operations.

– SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Since inception, the Company has incurred

losses and negative cash flows from operations.

The Company has financed its operations mainly through fundraising from various investors.

Based on the projected cash flows

and cash balances as of the date of these financial statements, management is of the opinion that its existing cash will be sufficient

to meet its obligations for a period which is longer than 12 months from the date of the approval of these consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial

statements include the accounts of the Company and its subsidiaries Duke Inc., and Duke Israel.

All significant intercompany balances

and transactions have been eliminated on consolidation.

Use of Estimates in the preparation of financial statements

4 unchanged sentences

Actual results could differ from those estimates.

As applicable to these financial statements, the most significant estimates and assumptions

relate to share based compensation.

Functional currency

A majority of the Group’s revenues

is generated in U.S.

In addition, most of the Group’s costs are denominated and determined in dollars.

Management believes

that the dollar is the currency in the primary economic environment in which the Group operates.

Thus, the functional and reporting currency

of the Group is the U.S.

Transactions and monetary balances in other currencies are translated into the functional currency using

the current exchange rate.

Accordingly, monetary accounts maintained

in currencies other than the dollar are remeasured into dollars in accordance with Accounting Standards Codification (ASC) 830, “Foreign

Currency Matters”.

All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the statements

of operations as financial income or expenses, as appropriate.

Principles of consolidation

The accompanying consolidated financial

statements include the accounts of the Company and its subsidiaries Duke Inc., and Duke Israel.

All significant intercompany balances

and transactions have been eliminated on consolidation.

Cash and cash equivalents

2 unchanged sentences

or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

– SIGNIFICANT ACCOUNTING POLICIES (continued)

(USD in thousands, except share and per share data)

– SIGNIFICANT ACCOUNTING POLICIES (continue)

Functional currency

Most of the Group’s costs are

denominated and determined in dollars.

Management believes that the dollar is the currency in the primary economic environment in which

the Group operates.

Thus, the functional and reporting currency of the Group is the U.S.

Transactions and monetary balances in

other currencies are translated into the functional currency using the current exchange rate.

Accordingly, monetary accounts maintained

in currencies other than the dollar are remeasured into dollars in accordance with Accounting Standards Codification (ASC) 830, “Foreign

Currency Matters”.

All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the statements

of comprehensive loss as financial income or expenses, as appropriate.

Since inception, the Company has incurred

losses and negative cash flows from operations.

The Company has financed its operations mainly through fundraising from various investors.

Based on the projected cash flows and

cash balances as of the date of these financial statements, management is of the opinion that its existing cash will be sufficient to

meet its obligations for a period which is longer than 12 months from the date of the approval of these consolidated financial statements.

Property, plant and equipment, net

Property and equipment are stated at cost, net of accumulated depreciation.

Depreciation is calculated

using the straight-line method over the estimated useful lives of the assets.

When an asset is retired or otherwise disposed of, the related

cost and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition

is reflected in the Statements of Operations and Comprehensive Loss.

Depreciation is calculated using the straight-line method

over the estimated useful lives of the assets.

When an asset is retired or otherwise disposed of, the related cost and accumulated depreciation

are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in the Statements

of Comprehensive Loss.

Rates of depreciation :

10 unchanged sentences

No impairment expenses were recorded during the years ended December 31, 2024 or 2023.

Income taxes are accounted for under the asset and liability

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

– SIGNIFICANT ACCOUNTING POLICIES (continue)

Income taxes are accounted for under the asset and liability method.

The Group accounts for income taxes in accordance with ASC Topic 740, “Income Taxes”.

Accordingly, deferred income

taxes are determined based on the estimated future tax effects of differences between the financial accounting and the tax bases of assets

and liabilities under the applicable tax law.

Deferred tax balances are computed using the enacted tax rates expected to be in effect

when these differences reverse.

Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred

tax assets to amounts more likely than not to be realized.

The Group accounts for uncertain tax

positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition, measurement

and disclosure of uncertain tax positions recognized in an enterprise’s financial statements.

Accordingly, deferred taxes are determined

based on the estimated future tax effects of differences between the financial statement carrying amount and the tax bases of assets and

liabilities under the applicable tax law.

Deferred tax balances are computed using the enacted tax rates expected to be in effect when

these differences reverse.

Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred tax

assets to amounts more likely than not to be realized.

Taxes on GILTI are accounted for as period costs similar to special deductions.

The Group accounts for tax

positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition,

measurement and disclosure of tax positions in an enterprise’s financial statements.

According to ASC Topic 740-10, tax

positions must meet a more-likely-than-not recognition threshold.

The Company’s accounting policy is to classify interest and penalties

relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its fiscal 2023 and 2022 financial

statements and did not recognize any liability with respect to an unrecognized tax position in its balance sheets.

UAS DRONE, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

NOTE 2 – SIGNIFICANT ACCOUNTING

POLICIES (continued)

Recognized tax positions are measured as the largest amount of tax

benefit that is greater than 50 percent likely of being realized.

The Company’s accounting policy is to classify interest and

penalties relating to income taxes under income taxes, however the Company did not recognize such items in its fiscal

2024 and 2023 financial statements and did not record any unrecognized tax benefits in its balance

Revenue recognition

12 unchanged sentences

to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the product.

The Company has elected to use the practical expedient provided

in ASC 606-10-55-18, which allows revenue to be recognized in the amount to which the Company has a right to invoice.

This method is applied

to contracts where the invoicing aligns with the performance obligations satisfied over time.

(see note 11(2)).

8 unchanged sentences

in 2024 and 2023, no potential shares are considered.

Stock-based compensation

The Company measures and recognizes

the compensation expense for all equity-based payments to non employees directors and officers based on their estimated fair values in

accordance with ASC 718, “Compensation-Stock Compensation”.

Share-based payments including grants of stock options are recognized

in the statement of comprehensive loss as an operating expense based on the fair value of the award at the date of grant.

The fair value

of stock options granted is estimated using the Black-Scholes option-pricing model.

The Company has expensed compensation costs, net of

estimated forfeitures, over the requisite service period.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

– SIGNIFICANT ACCOUNTING POLICIES (continued)

(USD in thousands, except share and per share data)

– SIGNIFICANT ACCOUNTING POLICIES (continue)

Stock-based compensation

The Company measures and recognizes the compensation expense for all

equity-based payments to non employees directors and officers based on their estimated fair values in accordance with ASC 718, “Compensation-Stock

Compensation”.

Stock-based payments including grants of stock options are recognized in the statement of comprehensive loss as an

operating expense based on the fair value of the award at the date of grant.

The fair value of stock options granted is estimated using

the Black-Scholes option-pricing model.

The Company has expensed compensation costs, net of estimated forfeitures, over the requisite

service period.

Concentrations of credit risk

16 unchanged sentences

Fair value of certain of the Company’s

financial instruments including cash, accounts receivable, account payable, accrued expenses, notes payables, and other accrued liabilities

financial instruments including cash, accounts receivable, account payable, accrued expenses, accounts payable, and other accrued liabilities

approximate cost because of their short maturities.

9 unchanged sentences

which includes, among other things, the Company’s credit risk.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

– SIGNIFICANT ACCOUNTING POLICIES (continue)

Valuation techniques are generally

17 unchanged sentences

by observable market data for substantially the full term of the assets or liabilities;

UAS DRONE, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

– SIGNIFICANT ACCOUNTING POLICIES (continued)

Unobservable inputs for the

31 unchanged sentences

balance is recorded in statement of comprehensive loss.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

(USD in thousands, except share and per share data)

– SIGNIFICANT ACCOUNTING POLICIES (continue)

New Accounting Pronouncements

Recently Adopted Accounting

Segment Reporting:

In November 2023,

the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment

Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

It requires incremental disclosures related to an entity’s

reportable segments, including (i) significant segment expense categories and amounts for each reportable segment that are provided to

the chief operating decision maker (“CODM”), (ii) an aggregate amount and description of other segment items included in each

reported measure, (iii) all annual disclosures about a reportable segment’s profit or loss and assets required by Topic 280 to be

disclosed in interim periods, (iv) the title and position of the individual or the name of the group identified as the CODM and (v) an

explanation of how the CODM uses the reported measures of segment profit or loss to assess performance and allocate resources to the segment.

The standard improves transparency by providing disaggregated expense information about an entity’s reportable segments.

does not change the definition of a segment, the method for determining segments or the criteria for aggregating operating segments into

reportable segments.

This guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting

periods beginning after December 15, 2024.

The Company adopted this guidance retrospectively, providing the additional disclosures as

See note 15, for more information.

Accounting Standards Not Yet

Income Taxes:

2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU

The amendments in this ASU add specific requirements for income tax disclosures to improve transparency and

decision usefulness.

The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income

tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold.

addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal,

state, and foreign taxes and disaggregated by individual jurisdictions.

The ASU also includes other disclosure amendments related to

the disaggregation of income tax expense between federal, state and foreign taxes.

The guidance is effective for the Company for

annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been

issued or made available for issuance.

The amendments in this update should be applied on a prospective basis and retrospective

application is permitted.

The Company does not expect this ASU to have a material effect on its consolidated financial

In November 2024, the FASB issued ASU

2024-03 Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40).

The ASU improves the

disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly

presented expense captions.

The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose

amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such

as cost of sales, selling, general and administrative expenses, and research and development).

Amounts remaining in relevant expense captions that are not separately disclosed

will be described qualitatively.

Certain amounts that are already required to be disclosed under currently effective U.S GAAP will be

included in the same disclosure as the other disaggregation requirements.

The amendments also require disclosing the total amount of selling

expenses and, in annual reporting periods, the definition of selling expenses.

The ASU is effective for fiscal years beginning after December

15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently

evaluating this ASU to determine its impact on the Company’s disclosures.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

OTHER CURRENT ASSETS

5 unchanged sentences

Lease payment are linked to the Israeli Consumer Price Index.

The property became available for Company’s use at February 2023.

The property became available for the Company’s use in February 2023.

Based on the lease agreement terms, the Company made a deposit of $ 15 as a guarantee for its lease commitments.

The components of operating

lease expense for the period ended December 31, 2023 and 2022 were as follows:

As of December 31, 2024, the Company estimates it will utilize the 2 years extension option under the above lease agreement.

The components of operating lease expense for the period ended December 31, 2024 and 2023 were as follows:

Operating lease expense

Supplemental cash flow information related to operating leases

was as follows:

Supplemental cash flow information related to operating leases was as follows:

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating leases

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

LEASES (continued)

Amounts reported in the consolidated balance sheets related

to operating lease as of December 31, 2023 and 2022 are as follows:

(USD in thousands, except share and per share data)

LEASES (continue)

Supplemental balance sheet information related to operating leases was as follows:

Operating leases:

5 unchanged sentences

Weighted average discount rate 8.75 % 8.75 %

Future minimum lease payments under non-cancellable leases

as of December 31, 2023 are as follows:

Future minimum lease payments under leases as of December 31, 2024 are as follows:

Total operating lease payments

7 unchanged sentences

In the years ended December 31, 2024

2023 and 2022, depreciation expenses amounted to $ 20 and $ 2 respectively, and additional property and equipment were purchased for

cash in an amount of $ 18 and $ 35 during the years ended December 31, 2023 and 2022, respectively.

UAS DRONE, CORP.

and 2023, depreciation expenses amounted to $ 29 and $ 20 respectively, and additional property and equipment were purchased for cash in

an amount of $ 77 and $ 18 during the years ended December 31, 2024 and 2023, respectively.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

(USD in thousands, except share and per share data)

– OTHER LIABILITIES

2 unchanged sentences

– RELATED PARTIES LOANS

The Company has outstanding loans with

related parties.

The loans bear an annual fixed interest rate of 3 % and shall be repaid (principal and interest) at the date upon which

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

SHAREHOLDERS’ EQUITY

Description of the rights attached

to the Shares in the Company :

Common stock:

The holders of shares of Common Stock

vote together as one class on all matters as to which holders of Common Stock are entitled to vote.

Except as otherwise required by applicable

law and subject to the preferential rights of any outstanding preferred stock, all voting rights are vested in and exercised by the holders

of Common Stock with each share of our Common Stock being entitled to one vote, including in all elections of directors.

Subject to preferences

that may be applicable to any outstanding preferred stock, the holders of Common Stock are entitled to receive ratably such dividends,

if any, as may be declared from time to time by the board of directors out of legally available funds.

In the event of the Company’s

liquidation, dissolution or winding up, holders of the Common Stock are entitled to share ratably in all assets remaining after payment

of liabilities, subject to prior liquidation rights of preferred stock, if any, then outstanding.

The Common Stock has no cumulative voting

rights and no preemptive or other rights to subscribe for shares of the Company.

There is no redemption or sinking fund provisions applicable

to the Common Stock.

All shares of Common Stock currently outstanding are fully paid and non-assessable.

As of December 31, 2023, there

were no outstanding preferred stock.

The Company has outstanding loans with related parties.

The loans bear

an annual fixed interest rate of 3 % and shall be repaid (principal and interest) at the date upon which the Company has raised at least

$ 15 million and has achieved earnings before interest, tax, depreciation and amortization of $ 3 million.

NOTE 8 – SHAREHOLDERS’

of the rights attached to the Shares in the Company :

The holders of shares of Common

Stock vote together as one class on all matters as to which holders of Common Stock are entitled to vote.

Except as otherwise

required by applicable law and subject to the preferential rights of any outstanding preferred stock, all voting rights are vested

in and exercised by the holders of Common Stock with each share of our Common Stock being entitled to one vote, including in all

elections of directors.

Subject to preferences that may be applicable to any outstanding preferred stock, the holders of Common

Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of

legally available funds.

In the event of the Company’s liquidation, dissolution or winding up, holders of the Common Stock are

entitled to share ratably in all assets remaining after payment of liabilities, subject to prior liquidation rights of preferred

stock, if any, then outstanding.

The Common Stock has no cumulative voting rights and no preemptive or other rights to subscribe for

shares of the Company.

There is no redemption or sinking fund provisions applicable to the Common Stock.

All shares of Common Stock

currently outstanding are fully paid and non-assessable.

As of December 31, 2024 and 2023, there were no outstanding preferred stock.

Transactions :

On May 11, 2021, the Company entered

into Securities Purchase Agreements (the “Securities Purchase Agreements”) with eight (8) non-U.S.

investors, pursuant to

which the Company, in a private placement offering (the “Offering”), agreed to issue and sell to the investors an aggregate

(i) 12,500,000 shares of the Company’s Common Stock, at a price of $ 0.40 per share;

and (ii) warrants (the “Warrants”)

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

The Warrants are exercisable immediately and for a term of 18 months and have an

exercise price of $ 0.40 per share.

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

(the “Securities Purchase Agreements”) with eight (8) non-U.S.

investors, pursuant to which the Company, in a private placement

offering (the “Offering”), agreed to issue and sell to the investors an aggregate of:

(i) 12,500,000 shares of the Company’s

Common Stock, at a price of $ 0.40 per share;

and (ii) warrants (the “Warrants”) to purchase 12,500,000 Company’s Common

The Warrants were exercisable immediately at the time of issuance for a term of 18 months and have an exercise price of $ 0.40 per

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

The Company recorded $ 1,070

of issuance costs.

UAS DRONE, CORP.

The Company recorded $ 1,070 of issuance costs.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

SHAREHOLDERS’ EQUITY (continued)

On May 11, 2021, the Company signed

a service agreement with a non U.S.

third party pursuant to which the service provider agreed to provide the Company with financial and

project oversight services with respect to the Offering.

Pursuant to the service agreement, the Company agreed to pay the service provider

(1) 6% of the investment amounts received which amounted to $351 and (2) options to receive a number of units (each unit for a price of

$0.40 includes one share and one warrant with an exercise price of $0.40 per share) equal to 6% of the investment amount received, divided

(USD in thousands, except share and per share data)

SHAREHOLDERS’ EQUITY (continue)

On May 11, 2021, the Company signed a service agreement with a non

third party pursuant to which the service provider agreed to provide the Company with financial and project oversight services with

respect to the Offering.

Pursuant to the service agreement, the Company agreed to pay the service provider (1) 6 % of the investment amounts

received which amounted to $ 351 and (2) options to receive a number of units (each unit for a price of $ 0.40 includes one share and one

warrant with an exercise price of $ 0.40 per share) equal to 6 % of the investment amount received, divided by $ 0.40 (totaling to 3,000,000

In the event that the investors that

6 unchanged sentences

the investors executed an addition extension agreement, such that the term of the Warrants was extended so that they expire on November

The Company accounted for the Warrants

extensions as a dividend component.

The fair value of the Warrants modifications were estimated using the Black-Scholes option-pricing

model and is presented within the consolidated statements of changes in shareholders equity as a credit to additional paid in capital

and a debit to the accumulated deficit.

The following are

the data and assumptions used:

On June 20, 2024, the Company

entered into a warrant amendment agreement with certain existing warrant holders (the “Holders”) of certain Common Stock

purchase warrants (the “June 2024 Amendment”).

According to the June 2024 Amendment agreement, the Company and Holders agreed to (i) extend the warrant exercise

term to May 11, 2026;

(ii) amend the warrant exercise price and increase it from $ 0.40 per share to $ 0.65 per share;

include a beneficial ownership blocker that limits the exercise of such warrants if such exercise would result in the holder

beneficially owning in excess of 19.99 % of the number of shares of the Company’s Common Stock immediately after giving effect

to the issuance of shares of Common Stock issuable upon exercise of the warrant.

The Company accounted for the

Warrants amendments as deemed dividends.

The fair value of the Warrants modifications was estimated using the

Black-Scholes option-pricing model and is presented within the consolidated statements of changes in shareholders equity as a credit

to additional paid in capital and a debit to the accumulated deficit.

The following are the data and assumptions

Dividend yield

5 unchanged sentences

4.70 - 5.37 %

Expected term of options (years)

Contractual term of options (years)

Exercise price (US dollars)

1 unchanged sentence

Fair value (USD in thousands)

The fair value of

the expected cash payments component as of December 31, 2023 and 2022 was estimated at $ 13 and $ 16 , respectively.

On March 1, 2022,

the Company signed an investor relations service agreement with a consultant pursuant to which the Company agreed to pay the consultant

a monthly retainer and in addition, to issue the consultant 300,000 restricted shares of common stock, to be issued in three tranches.

In the event that the agreement is terminated prior to the issuance date, the remaining share obligation shall be void.

On March 17, 2022,

the Company issued 100,000 restricted shares of Common Stock pursuant to the agreement.

On July 13, 2022 the Company issued 100,000 restricted

shares of Common Stock pursuant to the agreement.

On September 22, 2022, the Company decided to terminate the service agreement.

determined the value of the shares issued based on Company’s shares price at the agreement date, at $ 31 of which were recorded as

share based compensation expenses in the year ended December 31, 2022.

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

SHARE BASED COMPENSATION

(USD in thousands, except share and per share data)

STOCK BASED COMPENSATION

The following table presents the Company’s

12 unchanged sentences

December 31, 2024, have been separated into exercise prices, as follows:

Exercise price

Exercise price Stock

outstanding Weighted

life – years Stock

As of December 31, 2024

0.0001 450,000 1.23 450,000

0.38 1,256,822 2.53 1,256,822

1.00 99,369 2.50 99,369

2.25 620,621 2.50 620,621

2,426,812 2.28 2,426,812

The stock options outstanding as of

December 31, 2023, have been separated into exercise prices, as follows:

Exercise price

Exercise price Stock

outstanding Weighted

life – years Stock

As of December 31, 2023

UAS DRONE, CORP.

0.0001 450,000 2.23 337,500

0.38 1,256,822 3.53 942,617

1.00 99,369 3.50 99,369

2.25 620,621 3.50 527,466

2,426,812 3.28 1,906,952

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

SHARE BASED COMPENSATION (continued)

(USD in thousands, except share and per share data)

STOCK BASED COMPENSATION (continue)

As of December 31, 2024 and 2023, there

was $ 0 and $ 28 , respectively of total unrecognized compensation cost related to non-vested options.

The cost is expected to be recognized

over a weighted average period of 0.38 years.

Compensation expense recorded by the Company in respect of its stock-based compensation

awards for the period ended December 31, 2023 and 2022, was $ 108 and $ 395 , respectively and are included in General and Administrative

expenses in the Statements of Operations.

Compensation expense recorded by the

Company in respect of its stock-based compensation awards for the period ended December 31, 2024 and 2023 was $ 28 and $ 108 , respectively

and are included in General and Administrative expenses in the Statements of Comprehensive Loss.

The income tax benefit for the stock-based

compensation after the valuation allowance is 0 .

GENERAL AND ADMINISTRATIVE EXPENSES

1 unchanged sentence

Share base compensation

Adverting and promotion

Rent and office maintenance

1 unchanged sentence

Other expenses

On January 29, 2021, the Company, through its wholly owned

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

(the “Agreement”) for the global marketing and sales, and the production and further development of Duke Israel’s developed

advanced robotic system mounted on an Unmanned Aerial Solution (“UAS”), armed with lightweight firearms, which the Company

markets under the commercial name “TIKAD.”

On January 29, 2021, the Company, through its wholly owned subsidiary Duke Israel and Elbit Systems Land

Ltd., an Israeli corporation (“Elbit”), entered into a Collaboration Agreement (the “Agreement”) for the global

marketing and sales, and the production and further development of Duke Israel’s developed advanced robotic system mounted on an

Unmanned Aerial Solution (“UAS”), armed with lightweight firearms, which the Company markets under the commercial name “TIKAD.”

Pursuant to the Agreement, Duke Israel

1 unchanged sentence

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

As consideration for granting the worldwide

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

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

Agreement until 15 years following receipt of $ 50,000 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 Israel from sales of its advanced robotic system for civil use,

if such systems will include new know-how developed by Elbit.

No TIKAD units were sold during 2023 and 2022 by the Company or Elbit.

UAS DRONE, CORP.

As consideration for granting the worldwide exclusive license, Elbit

will pay Duke royalties from revenues received from worldwide sales of TIKAD, with royalty rates ranging from low to mid-double-figure

percentages, depending on the tiers of the selling price of TIKAD, for a period starting from the date of the Agreement until 15 years

following receipt of $ 50,000 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 Israel from sales of its advanced robotic system for civil use, if such systems will include

new know-how developed by Elbit.

Duke Israel has requested information from Elbit regarding sales and royalties related to drone-mounted

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

No royalties were accrued during the years ended

December 31, 2024 and 2023.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

– AGREEMENTS (continued)

(USD in thousands, except share and per share data)

– AGREEMENTS (continue)

Pursuant to the terms of the Agreement,

9 unchanged sentences

by offsetting 50 % of royalty payments that may be due to Duke Israel.

No revenues were generated from the Evaluation Phase of the Project

during 2023 and 2022.

No revenues were generated during 2024 and 2023 or are expected to be generated under the Evaluation Phase of the Project.

In addition to the above, Elbit paid Duke

1 unchanged sentence

information to Elbit.

No royalties were accrued during the years

ended December 31, 2023 and 2022.

On August 15, 2022, Duke Israel, signed a Collaboration and Development Agreement with the Israel Electric Corporation Ltd.

(IEC), to perform a test pilot together with IEC of a robotic drone-enabled system for cleaning electric utility insulators to be developed by Duke Israel for a total amount of $ 300 .

ICE is a public utility and a 99 % government-owned company that generates, transmits, and supplies electricity to all sectors of the State of Israel.

During October 2023, the Company successfully completed its obligations under the agreement with IEC upon delivery of the robotic drone, and accordingly recorded revenues and corresponding expenses at that point in time.

As part of the agreement, Duke will be obligated to pay IEC percentage of earned revenues for all future transactions relating to the developed technology up to a maximum of $ 900 .

UAS DRONE, CORP.

On August 15, 2022 Duke Israel, signed a Collaboration and Development

Agreement with the Israel Electric Corporation Ltd.

(the “IEC”), to perform a test pilot together with IEC of a robotic drone-enabled

system for cleaning electric utility insulators to be developed by Duke Israel for a total amount of $ 300 .

IEC is a 99 % government-owned company that generates, transmits, and supplies electricity to all sectors of the State of Israel.

During October

2023, the Company successfully completed its obligations under the agreement with IEC upon delivery of the robotic drone, and accordingly

recorded revenues and corresponding expenses at that point in time.

As part of the agreement, Duke Israel will be obligated to pay IEC

percentage of earned revenues for all future transactions relating to the developed technology up to a maximum of $ 900 .

Following the successful pilot program conducted with the IEC, in August

2024, the Company, through Duke Israel, entered into an agreement with the IEC to provide high-voltage insulator washing services using

the innovative IC Drone system.

Under the terms of the agreement, the

IEC will receive washing services for its high-voltage electric insulators using the IC Drone system and Duke Israel will receive compensation

based on services provided, in New Israeli Shekels (NIS) in an amount totaling in the low seven figures (in NIS) during the period that

services are provided.

The Company accounts for the contract as a single performance obligation and recognizes revenue once it has a right

to issue an invoice for the services provided.

Additionally, as part of the agreement, the IEC has committed to a minimum guaranteed paid

utilization of the service, amounting to approximately half of the total contract value described above, within the first year of the

This contract accounts for all of the revenues recognized during the period.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share

(USD in thousands, except share and per share data)

resident companies are taxed on

their worldwide income for corporate income tax purposes at a statutory rate of 21 % this reflects certain effects of the Act which includes

a reduction in the corporate tax rate from 35 % to 21 % as well as other changes.

No further taxes are payable on this profit unless that

profit is distributed.

their worldwide income for corporate income tax purposes at a statutory rate of 21 %.

If certain conditions are met, income derived from foreign subsidiaries is tax exempt in the US under applicable

3 unchanged sentences

The Company and subsidiaries have not

received final tax assessments since its inception although the tax reports of Duke Israel for the years ended by December 31, 2017 are

received final tax assessments since their inceptions although the tax reports of Duke Israel for the years ended by December 31, 2019 are

deemed to be final.

As of December 31, 2023, the Company

and subsidiaries have carry forward losses for tax purposes of approximately $ 4,609 , which can be offset against future taxable income,

The following is reconciliation between the theoretical tax

on pre-tax income, at the tax rate applicable to the Company (federal tax rate) and the tax expense reported in the financial statements:

Federal tax rate

Income tax computed at the ordinary tax rate

Stock-based compensation

Non-deductible income

Tax in respect of differences in corporate tax rates

Losses and timing differences in respect of which no deferred taxes were

Deferred taxes result primarily from temporary differences

in the recognition of certain revenue and expense items for financial and income tax reporting purposes.

Significant components of the

Company’s future tax assets are as follows:

As of December 31, 2024, the

Company and subsidiaries have operating loss carry forwards of approximately $ 5,383 , of which $ 814 can be offset against taxable income generated until

2027 and $ 4,569 can be offset

against future taxable income, if any, indefinitely.

The following is reconciliation between the theoretical tax on the loss before income taxes, at the tax rate applicable to the Company (the U.S.

federal statutory income tax rate) and the income tax expense reported in the financial statements:

Loss before income taxes

U.S federal statutory income tax rate

Income tax computed at the statutory income tax rate

and timing differences in respect of which no deferred taxes were generated

Nontaxable income

Impact of differences in statutory income tax rates

Remeasurement of deferred taxes for foreign currency effects

Deferred taxes assets recognition for prior years

Change in valuation allowance

Deferred taxes result primarily from noncapital loss carry-forwards.

Significant components of the Company’s deferred tax assets are as follows:

Year ended December 31

Composition of deferred tax assets:

Non capital loss carry forwards

Operating loss carry-forwards

Operating lease liabilities

Share-based compensation

Other temporary differences

Total deferred tax assets

Composition of deferred tax liabilities:

Right-of-use asset

Total deferred tax liabilities

Net deferred tax assets

Valuation allowance

The net change during the year ended December

31, 2023 in the total valuation allowance amounted to $ 136 .

UAS DRONE, CORP.

31, 2024 and 2023 in the total valuation allowance amounted to $ 477 and $ 136 , respectively.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

dollars, except share and per share data)

(USD in thousands, except share and per share data)

LOSS PER SHARE

15 unchanged sentences

Other accounts liabilities

UAS DRONE, CORP.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

dollars, except share and per share data)

RELATED PARTIES (continued)

On March 25, 2021, the Board of Directors appointed Yossi Balucka to

serve as its Chief Executive Officer.

Balucka is entitled to a monthly fee of NIS 30,000 (approximately $ 9,650 ), reimbursement of

expenses and discretionary performance bonus.

(USD in thousands, except share and per share data)

RELATED PARTIES (continue)

On March 25, 2021, the Board of Directors appointed Yossi Balucka to serve as its Chief Executive Officer.

Balucka is entitled to a monthly fee of NIS30,000 (approximately $ 8,200 ), reimbursement of expenses and discretionary performance bonus.

In conjunction with the appointment of Mr.

Balucka, the Company issued to Mr.

Balucka options

to purchase 450,000 shares of the Company’s commons stock at an exercise price of $ 0.0001 per share, subject to and in accordance

with the terms and conditions of an option plan.

The options shall vest over a three year period, with 50 % of the options to vest on the

first anniversary of the grant date, and the balance of 50 % of the options to vest in equal parts on the second and third anniversary

of the grant date, respectively, subject to the Mr.

Balucka options to purchase 450,000 shares of the Company’s commons stock at an exercise price of $ 0.0001 per share, subject to and in accordance with the terms and conditions of an Option Plan.

The options shall vest over a three year period, with 50 % of the options to vest on the first anniversary of the grant date, and the balance of 50 % of the options to vest in equal parts on the second and third anniversary of the grant date, respectively, subject to Mr.

Balucka providing continued services to the Company.

The fair value of the options

was determined using the Black-Scholes pricing model, assuming a risk free rate of 0.07 %, a volatility factor of 193.47 %, dividend yields

of 0 % and an expected life of 5 years.

Total value of share based compensation were estimated to an amount of $ 189 .

Total share based

compensation expenses during the Year ended December 31, 2023 amounted to $ 21 .

In addition, in July 2021, the Board of Directors of the

Company approved the issuance of options to purchase 490,000 shares of the Company’s Common Stock to its Vice Chairman, directors

and CFO for exercise price of $ 0.38 .

The options shall vest over a three year period, with 50 % of the options to vest on the first anniversary

of the grant date, and the balance of 50 % of the options to vest in equal parts on the second and third anniversary of the grant date.

The fair value of the options was determined using the Black-Scholes pricing model, assuming a risk free rate of 0.07 %, a volatility factor of 193.47 %, dividend yields of 0 % and an expected life of 5 years.

Total value of stock- based compensation were estimated to an amount of $ 189 .

Total stock-based compensation expenses during the Year ended December 31, 2024 and 2023 amounted to $ 3 and $ 21 , respectively.

On August 4, 2024, the Company entered

into a First Amendment to Service Agreement with Mr.

Balucka pursuant to which his monthly fee was increased, from NIS 30,000 (approximately

$ 8,200 ) to NIS 40,000 (approximately $ 11,000 ) effective August 1, 2024.

In addition, on August 4, 2024, the Company’s board of directors

approved an annual bonus of NIS 120,000 (approximately $ 32,900 ) for Mr.

Balucka pursuant to the terms of his existing Services Agreement.

In addition, in July 2021, the Board of Directors of the Company approved the issuance of options to purchase

490,000 shares of the Company’s Common Stock to its Vice Chairman, directors and CFO for exercise price of $ 0.38 .

The options shall

vest over a three year period, with 50 % of the options to vest on the first anniversary of the grant date, and the balance of 50 % of the

options to vest in equal parts on the second and third anniversary of the grant date.

The fair value of the options was determined

1 unchanged sentence

expected life of 6 years.

Total value of share based compensation were estimated to an amounted of $ 176 .

Total share based compensation

expenses during the year ended December 31, 2023 amounted to $ 26 .

Total value of stock-based compensation were estimated to an amounted of $ 176 .

Total stock-based compensation

expenses during the year ended December 31, 2024 and 2023 amounted to $ 8 and $ 26 , respectively.

SEGMENT INFORMATION

This segment structure reflects the financial information and reports

used by the Company’s management, specifically its Chief Operating Decision Maker (“CODM”), to make decisions regarding

the Company’s business, including resource allocations and performance assessments, as well as the current operating focus in compliance

with ASC 280, Segment Reporting.

The Company reports segment information based on the management approach,

which designates the internal reporting used by the CODM, the Company’s Chief Executive Officer and the Vice Chairman of the Board,

for making decisions and assessing performance as the source of the Company’s reportable segments.

The CODM allocate resources and

assesses the performance of each operating segment based on potential business opportunities, historical and potential future sales and

operating expenses.

The Company has one operating

and reportable segment, Drones isolators washing activity.

The Drones isolators washing activity

segment generates revenue by providing isolators washing services for electricity companies.

The Company’s method for measuring

profitability on a reportable segment basis is operating loss.

The Company adopted ASU 2023-07 in December 2024.

The most significant provision

was for the Company to disclose significant segment expenses that are regularly provided to the CODM.

The Company’s CODM periodically

reviews cost of revenues by segment and treats it as a significant segment expense.

DUKE ROBOTICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

((USD in thousands, except share and per share

SEGMENT INFORMATION (continue)

The following table presents information

about the Company’s reportable segment for the year ended December 31, 2024 and 2023:

Revenue related to the Company’s reportable

segments is as follows:

Revenue from drones isolators washing

Cost of revenues from drones isolators washing

Research and development expenses

Professional services

Share base compensation

Other general and administrative expenses (see note 10)

Operating loss

Interest expenses

Interest income

For the year ended December 31,

2024 and 2023, The Company’s operations were mostly confined to Israel.

As of December 31, 2024 and 2023, all of the fixed assets

of the Company were located in Israel.

SUBSEQUENT EVENTS

On February 18, 2025, the Company established Duke Robotics Hellas M I.K.E

(“ Duke Greece”), our wholly owned subsidiary, formed under the laws of Greece, to support the ongoing global commercialization

efforts of our IC Drone.

On February 24, 2025, the Company executed a consulting agreement

Alexandra Papaconstantinou to provide management services as the Managing Director of Duke

On March 18, 2025, the board of directors of the Company approved an

increase in the amount of shares of Common Stock available under the 2021 Equity Incentive Plan (the “2021 Plan”) from 4,800,000

to 9,000,000 .

On March 18, 2025, the board of directors of the Company approved the following grants pursuant to the

(i) 1,000,000

options to purchase shares of Common Stock to Mr.

Yossef Balucka, CEO, at an exercise price of $ 0.21 per share, and vest in three equal

installments of 33 % at the end of each year.

The options expire after six ( 6 ) years from the date of grant, and such other terms and conditions

set forth in our 2021 Plan.

(ii) 500,000 options

to our Common Stock to Mr.

Vadim Maor, Company's CTO nominated at March 18, 205, at an exercise price of $ 0.21 per share.

have the following vesting schedule:

33 % of the options will vest after 12 months and the remaining portion will vest in eight equal installments

over eight quarters.

The options expire after six ( 6 ) years from the date of grant, and such other terms and conditions set forth in our

(iii) 120,000

options to purchase shares of Common Stock to Ms.

Keren Gousman Golan, director at an exercise price of $ 0.21 per share and vest in three

equal installments of 33 % at the end of each year.

The options expire after six ( 6 ) years from the date of grant, and such other terms

and conditions set forth in our 2021 Plan.

(iv) 400,000 options

to purchase shares of Common Stock to Mrs.

Alexandra Papaconstantinou, Managing Director of Duke Greece.

The options were granted at an

exercise price of $ 0.21 per share and vest in three equal installments of 33 % at the end of each year.

The options expire after six ( 6 )

years from the date of grant, and such other terms and conditions set forth in our 2021 Plan.

(v) 50,000 options

to purchase shares of Common Stock to Mr.

Shlomo Zakai, CFO, at an exercise price of $ 0.21 per share, and vest in three equal installments

of 33 % at the end of each year.

The options expire after six ( 6 ) years from the date of grant, and such other terms and conditions set

forth in our 2021 Plan.

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

What changed 10-K

Item 9A. Controls and Procedures