SEC Filing Document

Company: DUKE Robotics Corp.
Ticker: DUKR
CIK: 1638911
Filing Type: DRS
Document Type: DRS
Date Filed: 2025-12-22
Accession Number: 0001213900-25-124553
Exchange: OTC
SIC Code: 3721
SIC Description: Aircraft
URL: https://www.sec.gov/Archives/edgar/data/1638911/000121390025124553/filename1.htm

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been no changes to the Company’s significant accounting policies. The accompanying unaudited condensed consolidated interim financial statements are prepared in accordance with GAAP. The unaudited condensed consolidated interim financial statements of the Company include the Company and its wholly-owned and majority-owned subsidiaries. All inter-company balances and transactions have been eliminated. Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States 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. DUKE ROBOTICS CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continue) New Accounting Pronouncements

In November 2024, the Financial Accounting
Standards Board issued Accounting Standard Update No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation
Disclosures Subtopic 220-40, “Disaggregation of Income Statement Expenses” which addresses requests from investors for more
detailed information about certain expenses and requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation
and intangible asset amortization included in each relevant expense caption presented on the income statement. This guidance is effective
for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early
adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted. The Company is currently
evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated
Financial Statements.

NOTE 3 –
EVENTS DURING THE PERIOD

A.	On March 23, 2025, a complaint was filed against Duke Israel, by LOOL T.V. Ltd. (the “Plaintiff”),
an Israeli company, in the Tel Aviv-Yafo Magistrate’s Court. The complaint asserts that pursuant to an agreement of principles between
Duke Israel and the Plaintiff, Duke Israel is in breach of the agreement, specifically with respect to an allegation that the parties
were required to set up a partnership with respect to certain services provided to the Israel Electric Corporation (the “IEC”).
The complaint asserts a claim for breach of contract, unlawful use of intellectual property that is not exclusively owned by Duke Israel
and unjust enrichment with regards to the agreement of principles. In addition, the Plaintiff’s complaint seeks an order for a permanent
injunction to prevent Duke Israel from continuing providing these services to the IEC, and an order to enforce the agreement of principles
ordering Duke Israel to act as necessary to establish a partnership or joint venture.

The Company has filed a statement of defense against the complaint
and believes that the allegations are baseless and without merit and intends to vigorously defend Company’s rights. While at this
stage it is early to assess the likelihood or potential loss, if any, with respect to the complaint, the Company does not believe the
complaint will impact the continued performance of the agreement between Duke Israel and IEC and the Company does not believe the complaint
will have a material effect on its business, financial condition or results of operations. No accrual was made in the financial statements
as of September 30, 2025 in respect of the above complaint.

B.	On January 29, 2021, the Company, through Duke Israel, and Elbit Systems
Land Ltd., an Israeli corporation (“Elbit”), entered into a collaboration agreement (the “Collaboration Agreement”)
for the global marketing and sales, and the production and further development by Elbit of the Company’s developed advanced robotic
system mounted on a UAS, armed with lightweight firearms. In the second quarter of 2025, the Company recognized revenues from royalties
for sales of the “Bird of Prey” stabilized weapons drone systems, pursuant to the Company’s Collaboration Agreement
with Elbit signed on January 29, 2021. The Company analyzed such revenues under ASC 606, Revenue from Contracts with Customers.

On March 24, 2025, the Company and
Elbit agreed to update the January 29, 2021 agreement, to expand the Collaboration Agreement to allow the Company to market the stabilized
weapons drone system technology that Elbit has been marketing and deploying under the brand name “Bird of Prey” to military,
defense, home-land security and para-military customers, in coordination with Elbit. The Company will be entitled to a commission fee,
in the mid-single figure percentage range, from transactions resulting from its marketing activities, in addition to the royalties the
Company is entitled to receive as part of the original Collaboration Agreement.

DUKE ROBOTICS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS

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

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
year monthly payment. Lease payment are linked to the Israeli Consumer Price Index. The property became available for Company’s
use in February 2023. Based on the lease agreement terms, the Company made a deposit of $15 as a guarantee for its lease commitments.
The Company estimated at December 31, 2024, that it will utilize the two years extension option under the above lease agreement.

B.	The components of operating lease expense for the period ended September 30, 2025 and 2024 were as follows:

Nine months ended
September 30,

Operating lease expense 49 41

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

Nine months ended
September 30,

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

Operating cash flows from operating leases 50 44

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

September 30, December 31,

Operating leases:

Operating leases right-of-use asset and lease deposit 144 184

Current operating lease liabilities 68 60

Non-current operating lease liabilities 76 109

Total operating lease liabilities 144 169

Weighted average remaining lease term (years) 2.34 3.08

Weighted average discount rate 8.75	% 8.75	%

DUKE ROBOTICS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS

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

NOTE 4 –
LEASES (continue)

E.	Future minimum lease payments under non-cancellable leases as of September 30, 2025 were as follows:

Total operating lease payments 159

Less: imputed interest (15	)

Present value of lease liabilities 144

NOTE 5 -
SHARE BASED COMPENSATION

The following table presents the Company’s
stock option activity for the nine months ended September 30, 2025:

Number of
Options Weighted
Average
Exercise Price

Outstanding at December 31, 2024 2,426,812 0.81

Granted 2,070,000 0.21

Exercised - -

Forfeited or expired - -

Outstanding at September 30, 2025 4,496,812 0.54

Number of options exercisable at September 30, 2025 2,426,812 0.81

The aggregate intrinsic value of the
awards outstanding as of September 30, 2025 is $297. These amounts represent the total intrinsic value, based on the Company’s
stock price of $0.291 as of September 30, 2025, less the weighted exercise price.

The stock options outstanding as of
September 30, 2025, have been separated into exercise prices, as follows:

Exercise price Stock
options
outstanding Weighted average
remaining contractual
life – years Stock options
exercisable

As of September 30, 2025

Compensation
expense recorded by the Company in respect of its share-based compensation awards for the nine months ended September 30, 2025 and 2024
were $150 and $28, respectively. Share-based compensation awards for the three months ended September 30, 2025 and 2024 were $73 and
$1, respectively These expenses are included in General and Administrative expenses in the Statements of Operations.

DUKE ROBOTICS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS

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

NOTE 6 –
RELATED PARTIES

A.	Transactions and balances with related parties

Nine months ended
September 30 Three months ended
September 30

General and administrative expenses:

Directors and Officers compensation (1) 483 339 181 136

(1) Share base compensation 111 11 52 (*	)

Financing:

Financing expense 6 6 2 2

(*)	Less than 1 thousand

B.	Balances with related parties:

As of September 30, As of
December 31,

Other accounts liabilities 64 43

Loans 328 322

C. 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

D. 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.

DUKE ROBOTICS CORP.

NOTES TO UNAUDITED
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS