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

Chunk 39 of 51
Word Count: 1499
Character Count: 9937

Document Content:

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. 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.

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.

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.