DUKE Robotics Corp. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, 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, 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: 1. Due to the size of the Company and available resources, there is a lack of sufficient segregation of duties. 2. The Company does not have an Independent Audit Committee that can provide management oversight. 26 Remediation Measures We 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 reporting. 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 appropriate. Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even internal controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error, and the risk of fraud. The projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies may deteriorate. Because of these limitations, there can be no assurance that any system of internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management. This Annual Report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the Commission that exempt from this requirement issuers that are neither accelerated filers nor large accelerated filers. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting during the year ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Under the supervision and with the participation of the Company’s management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management 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. 27 Item 9B. 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 granted. 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 grants: (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 CFO. 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. US$6,950). Under the Consulting Agreement, Mr. 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 2021 Plan. Mr. Maor , age 53, has been proving research and development (“R&D”) services to the Company since 2024. Mr. 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. Mr. 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. Ms. Gousman will 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. Ms. 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. Ms. 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). Ms. 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. Mrs. 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. Mrs. 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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 28 PART III Item 10. Directors, Executive Officers, and Corporate Governance. Our directors and executive officer and their ages as of March 20, 2025, are as follows: Name Age Position Yariv Alroy 64 Chairman Yossef Balucka 56 Chief Executive Officer and President Sagiv Aharon 43 Director Erez Nachtomy 63 Vice Chairman Eran Antebi 54 Director Shlomo Zakai 55 Chief Financial Officer Vadim Maor 53 Chief Technology Officer Yariv Alroy , Director and Chairman. Mr. Yariv Alroy is the Managing Director of T.N.S.A Consulting and Management LTD., a private consulting services and investments firm. From 1989 to 1993 Mr. Alroy worked for an Israeli law firm, with his last position as a partner. From 1993 to 1997, Mr. Alroy served as COO of SHAHAL Medical Services, and from 1997 to 2000 as Managing Director of SHL International Ltd. From 2000 until January 2016 Mr. Alroy served as Co-CEO of SHL Telemedicine LTD a company in the field of medical technology development and provision of global telemedicine services, including in the United States, Germany, India, Japan and Israel, traded in the Swiss Stock exchange (SWX:SHLTN). 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 and President. Mr. Yossef Balucka has been serving as CEO and President of our Company, Duke and Duke Israel since March 2021. Prior to entering the private sector, Mr. Balucka served for twenty-five years in various field and headquarters positions in the Israeli Navy and retired as Colonel. Following his retirement from the Israeli Navy, between 2014 to 2016, Mr. Balucka served as a senior executive and management member for retail and customer service at Partner Communications Ltd. (TASE:PTNR), one of the leading mobile telecommunications companies in Israel. From 2017 to 2019 Mr. Balucka served as the CEO of Electra Technologies Ltd., a division of Electra Ltd. (TASE:ELTR), which is active in the fields of integrated electro-mechanical and construction. Since 2019 Mr. Balucka is the owner of T.R. Eshkolot Com Services Ltd., providing global strategic consulting services. Mr. Balucka holds a BA in Economics and Business Administration and an MA in Social Sciences from the Haifa University, and MA in Public Administration from the Bar Ilan University. Sagiv Aharon , Director. Mr. Sagiv Aharon is the Vice President of Development and Engineering of UVision Air Ltd. that develops aerial loitering systems. Mr. 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. From 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. From 2011 to 2012, Mr. Aharon worked for Elbit Systems Ltd. (NASDAQ:ESLT) as a mechanical design engineer and a system integrator at several remotely operated weapon systems upon land vehicles. Mr. Aharon holds a B.Sc. in mechanical engineering with specialty in control and robotics from the Technion - Israel Institute of Technology. Erez Nachtomy , Director, Vice Chairman of the Board. Mr. Erez Nachtomy is the Managing Director of Ermi Nachtomy Assets Ltd., a private consulting services and investments firm. From May 2020 until September 2024 Mr. Nachtomy served as CEO of SHL Telemedicine Ltd. (SWX:SHLTN). From 1989 until 2001, Mr. 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. 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. Mr. Nachtomy holds an LL.B. from Tel Aviv University, Israel. 29 Eran Antebi , Director. Mr. 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 2008. Mr. 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. Mr. 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 Financial Officer. Mr. Zakai brings extensive and proven experience in similar positions with companies operating in international markets and related industries. Prior to joining the Company Mr. Zakai served as the Chief Financial Officer of Save Foods, Inc. (OTC:SAFO) (August 2017 to December 2021), Sonovia Ltd. (NNTTF:OTC) (October 2014 to August 2020) and of Todos Medical Ltd. (OTC: TOMDF) (February 2017 till January 2018). Prior to that, Mr Zakai worked as an accountant for nine years at Kost, Forer, Gabbay & Kasierer, an independent registered public accounting firm and a member firm of Ernst & Young Global, where he last served as a Senior Manager and worked with technology companies publicly traded on the Nasdaq Stock Market and on the Tel Aviv Stock Exchange. Mr. Zakai holds a B.A. in accounting from the College of Management in Rishon Le’Zion, Israel. Vadim Maor, Chief Technology Officer . Mr. 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. Mr. 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. Mr. Moar holds a B.A. in Near and Middle Eastern Studies from the Hebrew University of Jerusalem, Israel. Family Relationship There is no family relationship among the directors and officers of the Company. Involvement in Certain Legal Proceedings Over the past ten (10) years, none of our directors or our executive officer have been (i) involved in any petition under Federal bankruptcy laws or any state insolvency law, (ii) convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses), (iii) subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from (a) acting as a future’s commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity, (b) engaging in any type of business practice, or (c) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws, or (d) subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right to engage in any activity described in (iii)(a), (iv) found by a court of competent jurisdiction in a civil action or by the U.S. Securities and Exchange Commission (the “SEC”) to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated, (v) found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated. (vi) subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation, (b) any law or regulation respecting financial institutions or insurance companies, or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity, or (vii) the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Except as set forth in our discussion below in “Transactions with Related Persons; Promoters and Certain Control Persons; Director Independence,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. 30 CORPORATE GOVERNANCE Code of Ethics We uphold a set of basic values to guide our actions and are committed to maintaining the highest standards of business conduct and corporate governance. Effective March 9, 2020, we adopted an Amended and Restated Code of Business Conduct and Ethics for directors, officers (including our principal executive 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 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: DUKE Robotics Corp. Attn: CFO 10 HaRimon Street Mevo Carmel Science and Industrial Park, Israel 2069203 Committees of the Board of Directors We do not have an audit or compensation committee and have no independent directors that examines transactions of the nature described herein this item. We do not have any audit or compensation committee. The board of directors performs these functions as a whole. Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions. To the extent possible, a majority of the disinterested members of our board of directors will approve future affiliated transactions. Additionally, because the Company’s Common Stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees. Nominees to the Board of Directors During the Company’s 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. 31 Item 11. Executive Compensation. Summary Compensation Table The following sets forth the 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 DECEMBER 31, 2024 Name and principal position Year Salary ($) Bonus ($) Stock awards ($) Option awards ($) Non-equity incentive plan compensation ($) Change in Pension Value and Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) Yossef Bakula - 2023 97,568 0 0 20,864 0 0 0 118,431 CEO 2024 110,549 31,830 0 3,149 0 0 0 145,528 Shlomo Zakai - 2023 35,262 0 0 2,685 0 0 0 37,947 CFO 2024 22,957 0 0 793 0 0 0 23,750 Restricted Stock Awards There were no shares of restricted stock awarded during the Company’s fiscal year ended December 31, 2024. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2024 Outstanding Equity Awards at Fiscal Year End There are no outstanding equity awards for the year ended December 31, 2024 except as disclosed below. Grants of Plan-Based Awards for 2024 The following table presents the outstanding equity awards held as of December 31, 2024 by our named executive officers and directors, all of which have been issued pursuant to our 2021 Equity Compensation Plan, or the 2021 Plan: Name Number of shares that have not vested (#) Market value of shares that have not vested ($) Equity incentive plan awards: Number of shares that have not vested (#) Equity incentive plan awards: Market value of shares that have not vested ($) Yossef Bakula - - - - Erez Nachtomy - - - - Eran Antebi - - - - Sagiv Aharon - - - - Shlomo Zakai - - - - 32 Pension Benefits We have no arrangements or plans, except for those we are obligated to maintain pursuant to the Israeli law, under which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options or restricted shares at the discretion of our Board in the future. Nonqualified Deferred Compensation The Company does not have a Deferred Compensation Plan for its executive officers. Other Potential Post-Employment Payments As of December 31, 2024, there were no named executives with employment contracts that require or required severance or other post-employment payments. Summary Information about Equity Compensation Plans Equity Compensation Plan Information On May 27, 2021, our Board of Directors approved the 2021 Plan, pursuant to which we may issue awards, from time to time, consisting of non-qualified stock options, restricted stock grants and restricted stock units (“RSUs”). In addition, stock option awards that qualify under Section 102 of the Israeli Tax Ordinance (New Version) 1961 (the “ITO”), and/or under Section 3(i) of the ITO, may be granted. A summary of the 2021 Plan is found below. Under the 2021 Plan, options, restricted share and RSUs may be granted to our officers, directors, employees and consultants or the officers, directors, employees and consultants of our subsidiary. 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; (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. 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 certain information regarding our equity compensation plans as of December 31, 2024: Plan Category Number of securities to be issued upon exercise of outstanding options Weighted-average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans Equity compensation plan not approved by security holders 2,426,812 0.81 2,373,188 No Loans for Option Exercises. It is our policy to not make loans to employees or officers for the purpose of paying for the exercise of stock options. 33 Director Compensation We reimburse directors for out-of-pocket expenses they incur when attending meetings of the board of directors. On April 12, 2020, effective as of March 1, 2020, our board of directors approved payment of certain fees to our directors in the amounts of $4,980, $4,980 and $6,950 per month to our directors, Yariv Alroy, Sagiv Aharon and Erez Nachtomy (each, an “Active Director”), respectively. On April 12, 2020, we also enacted a policy to pay each director (that is not otherwise an Active Director) an amount of $1,500 for each calendar quarter and $400 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 $10,000 per month, for his service as a member of the board of directors. These amounts are exclusive of Israeli VAT, if applicable. The following table provides information regarding compensation earned by, awarded or paid to each person for serving as a director who is not an executive officer during the fiscal year ended December 31, 2024: Name Fees Earned or Paid in Cash ($) Stock Awards ($) Total ($) Yariv Alroy 59,868 - 59,868 Sagiv Aharon 59,782 1,904 61,686 Erez Nachtomy 107,810 3,173 110,983 Eran Antebi 8,400 1,904 10,304 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security Ownership of Certain Beneficial Owners The following table sets forth 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 director; ● each named executive officer; and ● all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially owned, subject to applicable community property laws. 34 In computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of the date of this prospectus are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, the address of each person listed below is c/o Duke Robotics Ltd., 10 HaRimon Street, Mevo Carmel Science and Industrial Park, Israel, Israel 2069203. We relied on information received from each stockholder as to beneficial ownership, including information contained on Schedules 13D and 13G and Forms 3, 4 and 5. As of March 18, 2025, there were 54,218,813 shares of common stock issued and outstanding. Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class 5% Stockholders: Afek Trading - Kadosh and Razi Ltd. (2) 7,423,895 13.69 % Y.D More Investments Ltd. (3) 22,500,000 34.37 % Named Executive Officers: Sagiv Aharon 5,024,537 9.25 % Yariv Alroy 5,813,267 10.72 % Eran Antebi 120,000 0.22 % Yossef Balucka 450,000 0.82 % Erez Nachtomy 1,516,801 2.72 % Shlomo Zakai 50,000 0.09 % Keren Gousman Golan - - % Vadim Maor - - % All directors and executive officers as a group (7 Persons)** 12,739,605 23.52 % (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 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. (2) Address: C/O Mr. Amir Kadosh, Zabotinsky 50, Givat Shmuel, Israel. (3) Based solely on information 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: (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. 35 Changes in Control There are no arrangements known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. Item 13. Certain Relationships and Related Transactions, and Director Independence. Transactions with Related Persons During the fiscal years ended December 31, 2023 and 2024, we did not participate in any transaction, and we are not currently participating in any proposed transaction, or series of transactions, in which the amount involved exceeded the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which, to our knowledge, any of our directors, officers, five percent beneficial security holders, or any member of the immediate family of the foregoing persons had, or will have, a direct or indirect material interest. Director Independence 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. Item 14. Principal Accounting Fees and Services. Our independent registered public accounting firm for the year ended December 31, 2024 is Somekh Chaikin, a member firm of KPMG International, located in Tel Aviv, Israel, PCAOB ID 1057.The following is a summary of the fees billed by Somekh Chaikin, during the calendar years ended December 31, 2024 and 2023: Fee category 2024 2023 Audit Fees $ 105,000 $ 105,000 Audit - related fees - - Tax fees $ 10,000 $ 10,000 All other fees - - Total fees $ 115,000 $ 115,000 Audit fees - Consists of fees for professional services rendered by our principal auditor for the audit of our annual financial statements and the review of financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements. Audit-related fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.” Tax fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning. All other fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees” and “Tax fees” above. 36 PART IV Item 15. Exhibits, Financial Statement Schedules. (b) Exhibits . Exhibit Number Description 2.1 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). 2.2 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). 3.1 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). 3.2 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). 3.3 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) 4.1 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). 4.2 Form of Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2021). 10.1 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). 10.2 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). 10.3*** Collaboration Agreement, dated January 29, 2021, by and between Duke Airborne Systems Ltd. and Elbit Systems Land Ltd. (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). 10.4 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). 37 Exhibit Number Description 10.5 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). 10.6* Consulting Agreement, dated March 18, 2025, between the Company and Vadim Maor. 10.7 Warrant 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). 10.8 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). 10.9 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). 14.1 Amended and Restated Code of Business Conduct and Ethics. (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). 19.1* Insider Trading Policy 21.1* List of Subsidiaries of the Company. 31.1* Certification of Chief Executive Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Chief Financial Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. 32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. 101 The following materials from the Registrant, formatted in inline XBRL (Extensible Business Reporting Language): (i) Balance Sheets as of December 31, 2024 and 2023, (ii) Statements of Operations for the years ended December 31, 2024 and 2023, (iii) Statements of Stockholders’ Deficit for the years ended December 31, 2024 and 2023, (iv) Statements of Cash Flows for the years ended December 31, 2024, and 2023, and (v) Notes to Financial Statements.** 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ** Furnished herewith. *** Certain identified information in the exhibit has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. (c) Financial Statement Schedules. The following documents are filed as part of this Report: 1. Financial Statements See Index to Financial Statements 2. Financial Statement Schedules: All financial statement schedules have been omitted because they are not applicable or the required information is presented in the financial statements or the notes to the financial statements. Item 16. Form 10-K Summary. None. 38 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DUKE ROBOTICS CORP. Date: March 20, 2025 By: /s/ Yossef Balucka Yossef Balucka Chief Executive Officer (Principal Executive Officer) By: /s/ Shlomo Zakai Shlomo Zakai Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 20, 2025 By: /s/ Yossef Balucka Yossef Balucka Chief Executive Officer (Principal Executive Officer) Date: March 20, 2025 By : /s/ Shlomo Zakai Shlomo Zakai Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: March 20, 2025 By: /s/ Yariv Alroy Yariv Alroy Chairman of the Board Date: March 20, 2025 By: /s/ Erez Nachtomy Erez Nachtomy Vice Chairman of the Board Date: March 20, 2025 By: /s/ Sagiv Aharon Sagiv Aharon Director Date: March 20, 2025 By: /s/ Eran Antebi Eran Antebi Director 39 DUKE ROBOTICS CORP. (FORMERLY UAS DRONE CORP.) CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 DUKE ROBOTICS CORP. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Firm Name: Somekh Chaikin / PCAOB ID No. 1057 / Location: Tel Aviv, Israel ) F-2 CONSOLIDATED FINANCIAL STATEMENTS: 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 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Duke Robotics Corp. (formerly: UAS Drone Corp.): Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Duke Robotics Corp. (formerly: 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (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. /s/ Somekh Chaikin Member Firm of KPMG International We have served as the Company’s auditor since 2023. Tel Aviv, Israel March 20, 2025 F- 2 DUKE ROBOTICS CORP. CONSOLIDATED BALANCE SHEETS (USD in thousands except share and per share data) December 31, December 31, 2024 2023 Assets Current Assets Cash and cash equivalents 1,256 2,281 Restricted Cash 31 - Trade receivables 37 - Other current assets (Note 3) 31 41 Total Current Assets 1,355 2,322 Operating lease right-of-use asset and lease deposit (Note 4) 184 117 Property and equipment, net (Note 5) 88 40 Total Assets 1,627 2,479 Liabilities and Shareholders’ Equity Current Liabilities Accounts payable 92 98 Operating lease liability 60 52 Other liabilities (Note 6) 193 161 Total current liabilities 345 311 Related parties loans (Note 7) 322 314 Operating lease liability (Note 4) 109 46 Total Liabilities 776 671 Stockholders’ Equity (Note 8) Common stock of US$ 0.0001 par value each (“Common Stock”): 100,000,000 shares authorized as of December 31, 2024 and 2023; issued and outstanding 54,218,813 shares as of December 31, 2024 and 2023. 5 5 Additional paid-in capital 12,008 11,750 Accumulated deficit ( 11,162 ) ( 9,947 ) Total Stockholders’ Equity 851 1,808 Total liabilities and stockholders’ Equity 1,627 2,479 The accompanying notes are an integral part of the consolidated financial statements. F- 3 DUKE ROBOTICS CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD in thousands except share and per share data) Year ended December 31, 2024 2023 Revenues (Note 11(2)) 108 300 Cost of revenues ( 71 ) ( 273 ) Gross profit 37 27 Research and development expenses ( 157 ) ( 3 ) General and administrative expenses (Note 10) ( 905 ) ( 826 ) Operating loss ( 1,025 ) ( 802 ) Financial income, net 40 76 Net loss ( 985 ) ( 726 ) Loss per share (basic and diluted) (Note 13) ( 0.02 ) ( 0.02 ) Basic and diluted weighted average number of shares of Common Stock outstanding 54,651,600 54,530,423 The accompanying notes are an integral part of the consolidated financial statements. F- 4 DUKE ROBOTICS CORP. STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (USD in thousands, except share and per share data) Number of Shares Amount Additional paid-in capital Accumulated deficit Total stockholders’ equity (deficit) BALANCE AT DECEMBER 31, 2022 54,218,813 5 11,437 ( 9,016 ) 2,426 Stock-based compensation for services - - 108 - 108 Warrants modification (note 8) - - 205 ( 205 ) - Net loss for the year - - - ( 726 ) ( 726 ) BALANCE AT DECEMBER 31, 2023 54,218,813 5 11,750 ( 9,947 ) 1,808 Stock-based compensation for services - - 28 - 28 Warrants modification (note 8) - - 230 ( 230 ) - Net loss for the year - - - ( 985 ) ( 985 ) BALANCE AT DECEMBER 31, 2024 54,218,813 5 12,008 ( 11,162 ) 851 The accompanying notes are an integral part of the consolidated financial statements. F- 5 DUKE ROBOTICS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (USD in thousands, except share and per share data) Year ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss for the year ( 985 ) ( 726 ) Adjustments required to reconcile net loss for the year to net cash used in operating activities: Depreciation 29 20 Stock-based compensation 28 108 Interest on loans from related parties 8 9 Decrease in the carrying amount of right-of-use assets 51 43 Change in operating lease liability ( 48 ) ( 47 ) Increase in trade receivable ( 37 ) - Decrease in other current assets 10 47 Increase (decrease) in accounts payable ( 6 ) 13 Increase (decrease) in other liabilities 32 ( 15 ) Net cash used in operating activities ( 918 ) ( 548 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 77 ) ( 18 ) Net cash used in investing activities ( 77 ) ( 18 ) Effect of exchange rate changes on cash and cash equivalents 1 ( 2 ) DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 994 ) ( 568 ) CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR 2,281 2,849 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR 1,287 2,281 Supplemental disclosure of cash flow information: Non cash transactions: Initial recognition of operating lease 119 146 The accompanying notes are an integral part of the consolidated financial statements. F- 6 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 1 – GENERAL A. 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 on the Share Exchange Agreement (as defined hereunder), pursuant to which, Duke Robotics, Inc. (“Duke Inc.”) a corporation incorporated under the laws of the state of Delaware, became a majority-owned subsidiary of the Company. Duke Inc. has a wholly-owned subsidiary, Duke Airborne Systems Ltd. (“Duke Israel,” and collectively with Duke Inc., “Duke”), which was formed under the laws of the State of Israel in March 2014 and became the sole subsidiary of Duke after its incorporation. On April 29, 2020, the Company, Duke Inc., and UAS Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (“UAS Sub”), executed an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which UAS Sub merged with and into Duke Inc., with Duke Inc. surviving as our wholly-owned subsidiary (the “Short-Form Merger”). Upon closing of the Short-Form Merger, each outstanding share of UAS Sub’s common stock, par value $ 0.0001 per share, was converted into and became one share of common stock of Duke Inc., with Duke Inc. surviving as a wholly-owned subsidiary of the Company. Following the above transactions, Duke 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 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). F- 7 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 1 – GENERAL (continue) B. In 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. On 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. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). A. 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. B. Use of Estimates in the preparation of financial statements The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. C. Cash and cash equivalents Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired. F- 8 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continue) D. 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. dollar. 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. E. Liquidity 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. F. Property, plant and equipment, net 1. 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 Comprehensive Loss. 2. Rates of depreciation : % Furniture and office equipment 7 - 15 Computers 33 Drones 50 Vehicles 15 Office improvements 5 G. Impairment of long-lived assets The Group’s long-lived assets are reviewed for impairment in accordance with ASC Topic 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. No impairment expenses were recorded during the years ended December 31, 2024 or 2023. F- 9 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continue) H. Income taxes 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 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. 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 sheets. I. Revenue recognition The Group provides services to customers and has related performance obligations and recognizes revenue in accordance with ASC 606. Revenues are recognized when the Group satisfies performance obligations under the terms of its contracts, and control of its services or products is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products. This process involves identifying the customer contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or product 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)). J. Research and development expenses Research and development expenses are charged to operations as incurred. K. Basic and diluted loss per share Basic loss per share is computed by dividing the loss for the period applicable to shareholders, by the weighted average number of shares of common stock outstanding during the period. In computing diluted loss per share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of potential shares. Accordingly, in 2024 and 2023, no potential shares are considered. F- 10 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continue) L. 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. M. Concentrations of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents as well as certain other current assets that do not amount to a significant amount. Cash and cash equivalents, which are primarily held in Dollars and New Israeli Shekels, are deposited with major banks in Israel and the United States. Management believes that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The Company does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements. N. Commitments and Contingencies The Company records accruals for loss contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Legal costs incurred in connection with loss contingencies are expensed as incurred. O. Fair Value Measurements Fair value of certain of the Company’s financial instruments including cash, accounts receivable, account payable, accrued expenses, accounts payable, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments. Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, the Company’s credit risk. F- 11 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continue) Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values. Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of comprehensive loss. P. Leases The Company determines if an arrangement is or contains a lease at contract inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in statement of comprehensive loss. F- 12 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continue) Q. New Accounting Pronouncements Recently Adopted Accounting Standards 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. The standard 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 required. See note 15, for more information. Accounting Standards Not Yet Adopted Income Taxes: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). 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. In 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 statements. In November 2024, the FASB issued ASU No. 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. F- 13 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 3 – OTHER CURRENT ASSETS December 31, 2024 2023 Prepaid and deferred expenses 21 24 Government Institutions 10 17 31 41 NOTE 4 – LEASES A. On April 4, 2022, the Company signed a lease agreement for an office space in Mevo Carmel Science and Industry Park, Israel for a term of 3 years, with an option to extend the term of the lease agreement for an additional 2 years. The monthly lease payments under the lease agreement, for the first two years are NIS 16.5 (approximately $ 4.6 ) and for the third year NIS 17.2 (approximately $ 4.8 ). The monthly lease payments for the option period will be agreed between the parties, with a minimum increase of 5 % above the third years monthly payments. Lease payment are linked to the Israeli Consumer Price Index. 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. As of December 31, 2024, the Company estimates it will utilize the 2 years extension option under the above lease agreement. B. The components of operating lease expense for the period ended December 31, 2024 and 2023 were as follows: December 31, 2024 2023 Operating lease expense 54 53 C. Supplemental cash flow information related to operating leases was as follows: December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 59 52 Right-of-use assets obtained in exchange for lease obligations (non-cash): Operating leases 119 146 F- 14 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 4 – LEASES (continue) D. Supplemental balance sheet information related to operating leases was as follows: Year ended December 31, 2024 2023 Operating leases: Operating leases right-of-use asset and lease deposit 184 117 Current operating lease liabilities 60 52 Non-current operating lease liabilities 109 46 Total operating lease liabilities 169 98 Weighted average remaining lease term (years) 3.08 2.09 Weighted average discount rate 8.75 % 8.75 % E. Future minimum lease payments under leases as of December 31, 2024 are as follows: 2025 63 2026 66 2027 61 2028 1 Total operating lease payments 191 Less: imputed interest ( 22 ) Present value of lease liabilities 169 NOTE 5 – PROPERTY AND EQUIPMENT, NET December 31, 2024 2023 Computers 10 10 Furniture and office equipment 14 14 Drones 52 - Vehicles 25 - Leasehold improvements 66 66 167 90 Less - accumulated depreciation ( 79 ) ( 50 ) Total property and equipment, net 88 40 In the years ended December 31, 2024 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. F- 15 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 6 – OTHER LIABILITIES December 31, 2024 2023 Accrued expenses 180 148 Other (note 8) 13 13 193 161 NOTE 7 – 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 has raised at least $ 15 million and has achieved earnings before interest, tax, depreciation and amortization of $ 3 million. NOTE 8 – 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, 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 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 Stock. 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 share. The aggregate gross proceeds from the Offering were approximately $ 5,000 . The Company recorded $ 1,070 of issuance costs. F- 16 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 8 – SHAREHOLDERS’ EQUITY (continue) 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 by $ 0.40 (totaling to 3,000,000 warrants). In the event that the investors that participated in the Offering exercise their Warrants, the service provider shall be entitled to receive an additional payment of (1) 6 % of the investment amounts received (2) 6 % of the warrants exercised amounts received and (3) options to receive a number of units equal to 6% of the warrants exercised amounts received, divided by $ 0.40 . On April 5, 2022, the Company and the investors executed an extension agreement, such that the term of the Warrants was extended so that they expire on November 11, 2023. On November 1, 2023, the Company and the investors executed an addition extension agreement, such that the term of the Warrants was extended so that they expire on November 11, 2024. 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; and (iii) 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 used: November 1, 2023 June 20, 2024 Dividend yield 0 0 Expected volatility (%) 128.44 - 184.22 % 125.58 - 143.75 % Risk-free interest rate (%) 5.44 - 5.56 % 4.70 - 5.37 % Contractual term of options (years) 0.03 - 1.11 0.39 - 1.98 Exercise price (US dollars) 0.4 0.4 - 0.65 Share price (US dollars) 0.08 0.07 Fair value (USD in thousands) 205 230 F- 17 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 9 – STOCK BASED COMPENSATION The following table presents the Company’s stock option activity: Number of Options Weighted Average Exercise Price Outstanding at December 31,2022 2,426,812 0.81 Granted - - Exercised - - Forfeited or expired - - Outstanding at December 31,2023 2,426,812 0.81 Granted - - Exercised - - Forfeited or expired - - Outstanding on December 31, 2024 2,426,812 0.81 Number of options exercisable on December 31, 2024 2,426,812 0.81 The aggregate intrinsic value of the awards outstanding as of December 31, 2024 is $ 67 . These amounts represent the total intrinsic value, based on the Company’s stock price of $ 0.15 as of December 31, 2024, less the weighted exercise price. The stock options outstanding as of December 31, 2024, have been separated into exercise prices, as follows: Exercise price Stock options outstanding Weighted average remaining contractual life – years Stock options exercisable 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 Stock options outstanding Weighted average remaining contractual life – years Stock options exercisable As of December 31, 2023 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 F- 18 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 9 – 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. 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 . NOTE 10 – GENERAL AND ADMINISTRATIVE EXPENSES Year ended December 31, 2024 2023 Professional services 686 575 Share base compensation 28 108 Insurance 41 45 Rent and office maintenance 69 60 Levies and tolls 12 8 Depreciation 18 20 Promotions 3 - Other expenses 48 10 905 826 NOTE 11 – AGREEMENTS 1. 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 granted Elbit a worldwide exclusive license for the use of Duke Israel’s know-how and intellectual property and the marketing, sales, production, and further development of the TIKAD for military, defense, homeland security, and para-military uses. As consideration for granting the worldwide exclusive license, Elbit will pay Duke 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. F- 19 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 11 – AGREEMENTS (continue) Pursuant to the terms of the Agreement, the parties also agreed to cooperate in continuing a project (the “Project”) that has already started with a customer in the Asia Pacific region. Per the agreement, Duke Israel shall be entitled to portion of the revenues generated in the Evaluation Phase of the Project. In addition, Elbit has agreed to invest, at its discretion and pursuant to certain milestones, in the further development and setting up of serial production lines of TIKAD, and may elect to increase such investment subject to the satisfaction of certain criteria, including Elbit’s right to terminate the Agreement if, for example, the Project is cancelled by the customer. Such investment amounts will be made into Elbit’s owned assets and production lines of TIKAD. Elbit will recoup 50 % of its investment amount, up to $ 6,000 , by offsetting 50 % of royalty payments that may be due to Duke Israel. 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 Israel an upfront fee at the time of signing the Agreement for transfer of the engineering material and support for transferring the required information to Elbit. 2. 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 agreement. This contract accounts for all of the revenues recognized during the period. F- 20 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 – INCOME TAX U.S. resident companies are taxed on 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 tax treaties to avoid double taxation. Income of the Israeli company is taxable from 2018 onwards, at corporate tax rate of 23 %. The Company and subsidiaries have not 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, 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. A. 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: Year ended December 31, 2024 2023 US Dollars Loss before income taxes ( 985 ) ( 726 ) U.S federal statutory income tax rate 21 % 21 % Income tax computed at the statutory income tax rate 207 153 Losses and timing differences in respect of which no deferred taxes were generated - ( 41 ) Nontaxable income - 1 Impact of differences in statutory income tax rates 17 12 Remeasurement of deferred taxes for foreign currency effects 9 11 Deferred taxes assets recognition for prior years 244 - Change in valuation allowance ( 477 ) ( 136 ) - - B. 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 2024 2023 Composition of deferred tax assets: US Dollars Operating loss carry-forwards 1,188 1,011 Operating lease liabilities 39 - Share-based compensation 222 - Other temporary differences 78 - Total deferred tax assets 1,527 1,011 Composition of deferred tax liabilities: Right-of-use asset ( 39 ) - Total deferred tax liabilities ( 39 ) - Net deferred tax assets 1,488 1,011 Valuation allowance ( 1,488 ) ( 1,011 ) - - The net change during the year ended December 31, 2024 and 2023 in the total valuation allowance amounted to $ 477 and $ 136 , respectively. F- 21 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 13 – LOSS PER SHARE Basic loss per share is computed by dividing net loss by the weighted average number of shares outstanding during the year. The weighted average number of shares of common stock used in computing basic and diluted loss per share for the years ended December 31, 2024 and 2023, are as follows: Year ended December 31, 2024 2023 Number of shares Weighted average number of shares of common stock outstanding attributable to shareholders 54,651,600 54,530,423 Total weighted average number of shares of common stock related to outstanding options and warrants, excluded from the calculations of diluted loss per share 17,476,812 17,589,312 NOTE 14 – RELATED PARTIES A. Transactions and balances with related parties Year ended December 31, 2024 2023 General and administrative expenses: Directors and Officers compensation (*) 445 425 (*) Share base compensation 11 47 Financing: Financing expense 8 9 B. Balances with related parties: As of December 31, 2024 2023 Other accounts liabilities 43 38 Loans 322 314 F- 22 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 14 – RELATED PARTIES (continue) C. On March 25, 2021, the Board of Directors appointed Yossi Balucka to serve as its Chief Executive Officer. Mr. 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 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 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. D. 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 156.12 %, dividend yields of 0 % and an expected life of 6 years. 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. NOTE 15 – 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. F- 23 DUKE ROBOTICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ((USD in thousands, except share and per share data)) NOTE 15 – 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: Year ended December 31, 2024 2023 Revenue from drones isolators washing 108 300 Cost of revenues from drones isolators washing ( 71 ) ( 273 ) Gross profit 37 27 Research and development expenses ( 157 ) ( 3 ) Depreciation ( 18 ) ( 20 ) Professional services ( 686 ) ( 575 ) Share base compensation ( 28 ) ( 108 ) Other general and administrative expenses (see note 10) ( 173 ) ( 123 ) Operating loss ( 1,025 ) ( 802 ) Interest expenses ( 15 ) ( 11 ) Interest income 55 87 Net loss ( 985 ) ( 726 ) 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. NOTE 16 – SUBSEQUENT EVENTS 1. 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. 2. On February 24, 2025, the Company executed a consulting agreement with Mrs. Alexandra Papaconstantinou to provide management services as the Managing Director of Duke Greece. 3. 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 . 4. On March 18, 2025, the board of directors of the Company approved the following grants pursuant to the 2021 Plan: (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. 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 2021 Plan. (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. F- 24