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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Word Count: 1498
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2023 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, 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 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.

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.

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,

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

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.

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,

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,

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,