UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D. C. 20549

 FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2023

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ____________ to
____________

 Commission File No. 000-55504

 UAS Drone Corp.

 (Exact name of registrant as specified in its charter)

 Nevada

 47-3052410

 (State or other jurisdiction of

incorporation or organization)

 (I.R.S. Employer

Identification No.)

 10 HaRimon Street, Mevo Carmel Science and Industrial
Park, Israel, 2069203

 (Address of Principal Executive Offices)

 Registrant's Telephone Number: +972 - 4-8124101

 Securities Registered pursuant to Section 12(b)
of the Act:

 NONE

 Securities Registered pursuant to Section 12(g)
of the Act:

 Common Stock, $0.0001 par value

 (Title of class)

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by checkmark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes No

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
 No

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See definition of "large accelerated filer," "accelerated filer,'' "smaller reporting company,"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer
 Accelerated filed
 Non-accelerated filer
 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incen-tive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 State the aggregate market value of the voting
and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the
average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second
fiscal quarter. $ 2,351,031

 As of March 14, 2024, there were 54,218,813 shares
of common stock, par value $0.0001, of the registrant issued and outstanding.

 Documents Incorporated By Reference: None.

 Item No.

 Description

 Page

 Cautionary Note Regarding Forward-Looking Statements

 ii

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accounting Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 Signatures

 i

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This Annual Report on Form
10-K (the "Annual Report"), contains "forward-looking statements," which includes information relating to future
events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such
as "may," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," and similar expressions, as well as statements in future tense, identify forward-looking
statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications
of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements
are made or management's good faith belief as of that time with respect to future events, and are subject to significant risks and
uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences include, but are not limited to:

 sales of our products;

 the size and growth of our product market;

 our activity in the civilian market;

 our manufacturing capabilities;

 our entering into certain partnerships with third parties;

 obtaining required regulatory approvals for sales or exports of our products;

 our marketing plans;

 our expectations regarding our short- and long-term capital requirements;

 our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; and

 information with respect to any other plans and strategies for our business.

 The foregoing does not represent
an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced
with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see "Risk Factors"
for additional risks that could adversely impact our business and financial performance.

 Moreover, new risks regularly
emerge and it is not possible for our management to predict or articulate all the risks we face, nor can we assess the impact of all risks
on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any
forward-looking statements. All forward-looking statements included in this Annual Report are based on information available to us on
the date of this Annual Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update
or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and
oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained above and throughout this Annual Report.

 In this Annual Report, unless
otherwise specified, all dollar amounts are expressed in United States dollars. Except as otherwise indicated by the context, references
in this Annual Report to "UAS," "we," "us" and "our" are references to UAS Drone Corp.,
a Nevada corporation, together with its consolidated subsidiaries.

 ii

 Item 1. Business.

 Corporate Overview

 We
are a robotics company developing an advanced robotics system that enables remote, real-time, pinpoint accurate firing of small arms and
light weapons. Our advanced robotics system is able to achieve pinpoint accuracy regardless of the movement of the weapons platform or
the target. We also introduced an insulator cleaning drone, which is a drone technology for conducting routine maintenance of critical
infrastructure for cleaning electric utility cable insulators.

 We
were founded in 2014 as Unlimited Aerial Systems, LLP ("UAS LLP"), and until the consummation of the Share Exchange Agreement
(as hereinafter defined), we were a developer and manufacturer of commercial unmanned aerial systems, or drones, with the goal of providing
a superior Quadrotor aerial platform at an affordable price point in the law enforcement and first responder markets.

 On
March 9, 2020, we closed on the Share Exchange Agreement (the "Share Exchange Agreement"), pursuant to which Duke Robotics,
Inc., a Delaware corporation ("Duke") became our majority-owned subsidiary (the "Share Exchange"). Such closing
date is referred to as the "Effective Time." As a result of the Share Exchange, the Company adopted the business plan of Duke.

 On
April 29, 2020, we, Duke, and UAS Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary ("UAS Sub"), executed
an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which UAS Sub was to merge, upon the satisfaction of
customary closing conditions, with and into Duke, with Duke surviving as our wholly-owned subsidiary (the "Short-Form Merger").
Pursuant to the Merger Agreement, we intended to acquire the remaining outstanding shares of Duke held by those certain Duke shareholders
that did not participate in the Share Exchange. On June 25, 2020, Duke filed a Certificate of Merger with the State of Delaware, and consequently,
Duke became our wholly-owned subsidiary and the Short-Form Merger was consummated.

 On
January 29, 2021, we, through Duke Israel (as hereinafter defined), 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 of our developed advanced robotic system mounted on an UAS, armed with lightweight firearms, which we market under
the commercial name "TIKAD."

 On
August 15, 2022, Duke Israel introduced the Insulator Cleaning ("IC") Drone, a drone technology for conducting routine maintenance
of critical infrastructure, and has signed an agreement with Israel Electric Corporation (the "IEC") to provide drone-enabled
systems for cleaning electric utility cable insulators. During October 2023, we successfully completed our obligations under its
agreement with the IEC.

 Duke
has a wholly-owned subsidiary, Duke Airborne Systems Ltd. ("Duke Israel"), which was formed under the laws of the State of
Israel in March 2014 and became the sole subsidiary of Duke after its incorporation. Our mailing address is 10 HaRimon Street, Mevo Carmel
Science and Industrial Park, Israel 2069203, and our telephone number is 011-972-4-8124101. Our web site address is

 Effective
as of October 22, 2020, the Company's common stock began to be quoted on the OTCQB tier Venture Market, under the symbol "USDR".

 Company Overview

 Until the consummation of
the Share Exchange, we were a developer and manufacturer of commercial unmanned aerial systems, or drones, with the goal of providing
a superior Quadrotor aerial platform at an affordable price point in the law enforcement and first responder markets. Following the Share
Exchange, we adopted the business plan of Duke. Duke is a robotics company dedicated to the development of an advanced robotics stabilization
system that enables remote, real-time, pinpoint accurate firing of small arms and light weapons as well as other civilian applications
with an emphasis on the field of infrastructure maintenance. Our advanced robotics system is able to achieve pinpoint accuracy regardless
of the movement of the weapons platform or the target.

 Although the first product
has been designed to be used by an unmanned aerial system (a "UAS"), the robotic solutions are also adaptable to other military
vehicles, boats and stationary environments, as well as civilian purposes, such as, high definition, high-end stabilized cameras. We believe
that the system is to small arms and light weapons (e.g., weapons weighing less than 9 kilograms, or kg, or approximately 19.9 pounds)
as drones are to air-to-ground missiles.

 We have completed our first
generation of our robotic systems. Prior to marketing our systems to potential customers, for security reasons, we are required to obtain
various governmental approvals for each sale. We have filed marketing applications with the Israeli Ministry of Defense ("IMOD")
and as a result thereof, currently hold marketing approvals for about 50 countries, including the United States. Currently, our commercialization
efforts are primarily focused on the U.S. market, with secondary efforts outside of the United States focused primarily on Western Europe.

 On January 29, 2021, we, through
Duke Israel, and Elbit, entered into the Collaboration Agreement for the global marketing and sales, and the production and further development
of our developed advanced robotic system mounted on an UAS, armed with lightweight firearms, which we market under the commercial name
"TIKAD." Following the Collaboration Agreement, we are in the process of evaluating additional different applications for
use of our technology and know-how including for its use in the civilian market.

 On May 11, 2021, we entered
into securities purchase agreements with eight non-U.S. investors (the "Investors") in a private placement offering in which
we agreed to issue and sell an aggregate of: (i) 12,500,000 shares of common stock, par value $0.0001 per share at a price of $0.40 per
share; and (ii) warrants to purchase 12,500,000 Company's Common Stock. The warrants were exercisable immediately and for a term
of 18 months and had an exercise price of $0.40 per share. The aggregate gross proceeds from the offering were approximately $5,000,000
and the offering closed on May 11, 2021. On April 5, 2022, we entered into an agreement with the
Investors pursuant to which we extended the term of the warrants, to expire on November 11, 2023. On November 1, 2023, we and the Investors
executed a second extension agreement, such that the term of the warrants was extended so that they now expire on November 11, 2024.

 On May 27, 2021, our board
of directors approved the 2021 Equity Incentive Plan (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 ("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.

 On June 15, 2021, we announced
that Duke Israel received a notice of allowance from the U.S. Patent and Trademark Office for a patent titled "Stabilization System"
regarding its stabilization technology incorporated in its advanced robotic system.

 On August 15, 2022, we announced
that Duke Israel, introduced the IC Drone, a drone technology for conducting routine maintenance of critical infrastructure, and
has signed a collaboration and development agreement with the IEC, a public and 99% government-owned
company, to provide drone-enabled systems for cleaning electric utility cable insulators.

 Market Opportunity

 Defense and military market

 Despite of Russia's
invasion of Ukraine and the Nagorno-Karabakh conflict between Armenia and Azerbaijan, the classic confrontation of army against army has
become rare, while guerilla (or asymmetric) warfare has unfortunately become commonplace. Further, the foreign policy of the United States
and other countries is increasingly designed around the parameter of not employing "boots on the ground" while at the same
time minimizing collateral damage. The United States and other countries around the world have significantly increased their use of UASs
for intelligence gathering, surveillance and tactical applications, such as delivery of heavy ordnance bombs and missiles. The use of
UASs to fire small arms and light weapons from the air, however, has not yet become a viable option. Our technology thus addresses a crucial
need of modern warfare to bring a wide range of weapons other than bombs and missiles to bear on remote hostile targets without risk to
the military personnel deploying the weapons, while at the same time minimizing collateral damage. In addition, the rapid evolution of
small, unmanned air systems ("sUAS") technologies, along with their size and low cost, enables novel concepts of employment
that present challenges to current defense systems, creating new asymmetric threats for warfighters. Our system also addresses this crucial
need for counter sUAS solutions and offers a kinetic interception, or "drone kill drone," capability for defeating enemy sUAS.

 Our system was designed with
input from veterans of Israel's elite special mission units. It is operated intuitively via a touch-based tablet, which serves as
its control unit. Minimal prior training is required in order to operate the robot. In June 2016, our robot mounted on our UAS Octocopter
platform was awarded the top prize at the Combating Terrorism Technology Conference sponsored by the United States Defense Department's
Combating Terrorism Technical Support Office, Israel's Ministry of Defense Directorate of Defense Research and Development and the
MIT Enterprise Forum of Israel.

 Civilian sector

 Insulator Cleaning Drone

 Insulators are key components of every high voltage electrical infrastructure
around the world while routine cleaning and maintenance of insulators is crucial in order to optimize system efficiency, prevent power
outages, reducing risks of flashovers and corrosion. Cleaning of high voltage infrastructure leads to better system performance and efficiency,
improves safety by reducing the risk of electricity failure and accidents especially in urban areas, and extends the life of the insulators.

 Currently, the global standard for routine cleaning of insulators involves
the use of helicopter fleets and crane trucks. The cleaning routine requires getting near to active high voltage lines and using high-pressure
washers carried by the helicopters or crane trucks. Such process is considered extremely dangerous and bears significant risks of electricity
shock or an impact of the helicopter blades with the electricity grid resulting in damages to the grid line and possible harm to human
life.

 IC Drone offers a revolutionary,
safer and cost-efficient method for maintenance of high voltage electrical infrastructure. The worldwide electricity transmission market
is huge and estimated in millions of insulators. The current cost per insulator cleaning is high and electricity operators around the
world fail to meet cleaning plans.

 Products

 UAS Octocopter Integrated with Six Degrees
of Freedom ("6 DOF") Robotic Gimbal

 Our special purpose UAS Octocopter
(DK-HIPPOGRIFF) integrates for operational usage with our 6 DOF robot and is intended primarily for Military and homeland security purposes.
Our lightweight robot allows accurate firing from various configurations consisting of UAS-mounted, land-mounted on light all-terrain
vehicles and sea-mounted on boats. The robot is mounted on our UAS Octocopter platform, a combined system which we market under the commercial
name "TIKAD."

 In addition to the various
configurations and mounting options, the robots also permit the utilization of a wide range of small arms, light weapons and shotguns,
with lethal and less lethal ammunition, with a maximum weight of nine (9) kilograms (approximately twenty (20) pounds). The combination
of our robot, along with our stabilization platform and software, provides a unique firing platform that permits precision firing regardless
of weather conditions or other variables.

 Additionally, our robot may
also be utilized as a ground sniper platform. Since the robot is a standalone unit, it can be mounted on a patrol or attack vehicle or
be positioned at a strategic location. The capability of remote operation without the need to expose the operator to tactical danger can
replace troops in different settings. This capability may reduce the number of casualties due to "friendly fire" incidents
and may also significantly reduce exposure and risk to combat troops. Our robot is controlled by a remote-control device that permits
the user to exert full control over its functions, including arming the robot as well as control the firing mechanism.

 Our lightweight robot can
also be used for civilian purposes and bring solutions that do not yet exist for different tasks that require high-end stabilization,
such as: vertical takeoff and landing ("VTOL") robotic landing gear for drones, VTOL aircrafts and medical aid robotic uses
and for maintenance and monitoring of different essential infrastructures, such as cleaning electric utility cable insulators. We expect
our sales of the robot to increase as additional product options expand. We will also address, as needed, evolving regulation of civilian
UASs.

 IC Drone

 Our IC Drone is a first-of-its-kind
robotic, drone-enabled system for cleaning electric utility insulators. The IC Drone unique system, based on Duke's advanced intellectual
property and know-how that integrates algorithms, autonomous systems, and robotic technologies used in mission-critical applications.

 Our IC Drone offers a revolutionary, safer and cost-efficient, method
for maintenance of high voltage electrical infrastructure. which require routine cleaning of insulators in order to optimize system efficiency
and prevent power outages. Currently, the global standard for routine cleaning of insulators involves the use of helicopter fleets and
crane trucks.

 Assembly and Testing

 While we maintain the ability
to assemble our robots and UAS Octocopter at our facility in Israel, we currently outsource the assembly and production to third-party
manufacturers, from which we also purchase supplies and custom-made machined parts required for the production of our robots and UAS Octocopter.
We currently source our parts and materials from approximately twenty (20) suppliers located primarily in the United States, Europe, Israel
and China. We are not, however, dependent on any single manufacturer. In addition, while the components we purchase are built according
to our specific designs and requests, we believe the components and materials we purchase are common in nature and can easily be obtained
from alternative suppliers, if necessary. Components are tested and approved against the expected points of failure during extended and
aggressive operations. For example, we test items such as the load carrying capacity of our products as well as various software components.
After the lab testing phase, the robot and UASs undergoes a series of field tests which examine the operation of each function. Results
are combined with multi-phased airborne testing.

 In addition, we have not executed
supply agreements with our third-party suppliers. More importantly, our proprietary and confidential complex kinematic algorithms and
control software is our most valuable intellectual property. We have built an in-house laboratory to support the assembly and commercialization
of our products. We believe that the current size and capacity of our in-house laboratory, located at our facilities in Israel, will be
sufficient to support all of our commercialization activities in the near future.

 Market Strategy

 Defense and Military Market

 We expect that our growth
in the defense and military market will initially derive from sales of TIKAD (our robot mounted on UAS Octocopter platform), and later
from sales of our robot mounted on other platforms, such as light all-terrain vehicles and sea-mounted on boats.

 Focus on sales in the United States. We believe that the United States military will be our lead and reference customer. The United States alone presents a significant and diverse market opportunity - special operation forces units, various counter-terrorism (federal, state and city) units, regular local police forces (the use of less-lethal weapons), U.S. Army, National Guard, U.S. Navy, Coast Guard and the Border Police.

 Sales to NATO. We believe adoption of our products in the United
States will open the markets in countries that are U.S. allies such as the NATO countries.

 Civilian Market. We believe that our robot, due to its novel
and unique capabilities, including stabilization of six degrees of freedom in real-time, can bring solutions that do not yet exists for
different tasks that require high end stabilization, such as VTOL robotic landing gear for drones and aircraft that enables take-offs
and landings on uneven terrain and on steep slopes and medical uses for robotic procedures which need high accuracy.

 IC Drone

 On August 15, 2022, we signed an agreement with the IEC to provide
drone-enabled systems for cleaning electric utility cable insulators. During October 2023, we successfully completed our obligations
under our agreement with the IEC by proving the efficiency and safety that comes by using our IC Drone.

 Our
plan is to provide insulation maintenance and washing services to electrical companies over the globe, throughout separate entities over
the world, either alone or with strategic partners.

 Intellectual Property

 Our success depends, at least
in part, on our ability to protect our proprietary technology and intellectual property, and to operate without infringing or violating
the proprietary rights of others. We rely on a combination of trade secrets, know-how, and other contractual rights (including confidentiality
and invention assignment agreements) to protect our intellectual property rights. We also restrict access to our sensitive intellectual
property information to our most senior management.

 To protect certain key technologies,
we have submitted a U.S. patent Application for stabilization system patents, which is pending. We do not know whether any of our current
or future patent applications will result in the issuance of any patents.

 Sales and Marketing

 Defense and Military Market

 Our robot has been designated
as a unique system by the IMOD and has received official approval as the sole supplier of this solution to the IMOD. The IMOD has also
publicly endorsed our combined robotic and UAS system, which we market under the commercial name TIKAD, as an innovative future battlefield
technology that may be implemented by the Israeli Defense Forces (the "IDF").

 We intend to focus our sales efforts in the United States because the
U.S. military in general and special operation forces units in particular are expected to be our largest customers.

 On January 29, 2021, we, through
Duke Israel, and Elbit entered in the Collaboration Agreement. Pursuant to the Collaboration Agreement, Duke Israel has 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 Israel 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 Collaboration Agreement until 15 years following receipt of $50 million 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 from sales of its advanced robotic
system for civil use, if such systems will include new know-how developed by Elbit.

 On June 15, 2021, we announced
that our wholly owned Israeli subsidiary, Duke Airborne Systems Ltd., received a notice of allowance from the U.S. Patent and Trademark
Office for a patent titled "Stabilization System" regarding its stabilization technology incorporated in its advanced robotic
system.

 Marketing and sales efforts related to TIKAD are being led by Elbit
due to our Collaboration Agreement with Elbit.

 Civilian Sector

 Marketing and sales efforts are currently concentrated on the IC Drone
using company employees, agent and related electric infrastructure companies that are in cooperation with the IEC. The current marketing
volume and efforts are limited and are expected to increase significantly upon the next version of the IC Drone which is expected to be
release in the fourth quarter of 2024.

 Competition

 Defense and Military Market

 While we believe that our
products are novel, and that we have unique knowledge of military operational demands and challenges and years of developing complex military
airborne systems and advanced robotics, the defense industry is a competitive environment.

 Civilian Sector

 To our knowledge there is
no equivalent cleaning system which is based on drones for cleaning insulators. Although drones are being used for cleaning solar panels
as well as windows, using high pressure water, such systems cannot handle the challenges that come with cleaning of insulators due to
the high voltage environment that effects the drones.

 Competition is based on product
and program performance, price, reputation, reliability, life cycle costs, overall value to the customer and responsiveness to customer
requirements. This includes the ability to respond to rapid changes in technology. In addition, our competitive position sometimes may
be affected by specific requirements in particular geographic and product markets.

 We plan to continually adapt
to market conditions by adjusting our business strategy to changing market conditions. In addition, we plan to seek to enter into strategic
partnership and cooperation agreements that we believe can assist us in overcoming the challenges of competing in our industry.

 Our competitors, either alone
or through their strategic partners, might have substantially greater name recognition and financial, technical, manufacturing, marketing
and human resources than we do. These entities may also have significantly greater experience and infrastructure in commercializing civilian
or defense products, obtaining regulatory approval for those products and commercializing those products around the world.

 Government Regulation

 Government Contracting
Regulations. We operate under laws, regulations and administrative rules governing defense and other government contracts,
mainly in Israel and the United States. Some of these carry major penalty provisions for non-compliance, including disqualification from
participating in future contracts. In addition, our participation in governmental procurement processes in Israel, the United States and
other countries is subject to specific regulations governing the conduct of the process of procuring defense and homeland security contracts.

 Israeli Export Regulations. Israel's
defense export policy regulates the sale of a number of our systems and products. Current Israeli policy encourages exports to approved
customers of defense systems and products such as ours, as long as the export is consistent with Israeli government policy. Subject to
certain exemptions, a license is required to initiate marketing activities. We also must receive a specific export license for defense
related hardware, software and technology exported from Israel. Israeli law also regulates export of "dual use" items (items
that are typically sold in the commercial market but that also may be used in the defense market). We have filed marketing applications
with the IMOD and have already received marketing approvals for about fifty (50) countries including the U.S. It is expected that in the
mid-term more than seventy-five (75%) of our revenue will be derived from exports subject to Israeli export regulations.

 Approval of Israeli
Defense Acquisition. The Israeli Defense Entities Law (Protection of Defense Interests) establishes conditions for the approval
of an acquisition or transfer of control of an entity that is determined to be an Israeli "defense entity" under the terms
of the law. Designation as a "defense entity" is to occur through an order to be issued jointly by the Israeli Prime Minister,
Defense Minister and Economy Minister. Although no such orders relating to us have been issued as of the date hereof, it is possible that
our Israeli subsidiary may be designated as a "defense entity" under the law. An order (pursuant to the law) would establish
conditions and restrictions regarding non-Israeli control of our Israeli subsidiary. For example, Israeli government approval might be
required for acquisition of twenty-five percent (25%) or more of the voting securities or a smaller percentage of shares of common stock
that grant "means of control" in the Company, if such were to directly affect the control of our Israeli subsidiary. Means
of Control for the purposes of the law includes the right to control the vote at a shareholders' meeting or to appoint a director.

 Approval of U.S. and
Other Defense Acquisitions. Many countries in addition to Israel also require governmental approval of acquisitions of local
defense companies or assets by foreign entities. Mergers and acquisitions of certain types of defense related businesses in the U.S. are
subject to the Foreign Investment and National Security Act ("FINSA"). Under FINSA, foreign acquisitions of certain types
of defense related businesses in the U.S. require review, and in some cases approval, by the Committee on Foreign Investment in the United
States ("CFIUS"). In that regard, if a foreign entity attempts to acquire us or all of our domestic assets, such transactions
may be subject to FINSA, and in certain instances CFIUS has the authority to order divestment and cancellation of the transaction.

 " Buy American"
Laws. The U.S. "Buy American" laws impose price differentials or prohibitions on procurement of products purchased
under U.S. government programs. The price differentials or prohibitions apply to products that are not made in the United States or that
do not contain U.S. components making up at least fifty percent (50%) of the total cost of all components in the product. However, a Memorandum
of Agreement between the United States and Israeli governments waives the "Buy American" laws for specified products, including
most of the products we are currently selling in the United States.

 Procurement Regulations. Solicitations
for procurements by governmental purchasing agencies in Israel, the United States and other countries are governed by laws, regulations
and procedures relating to procurement integrity, including avoiding conflicts of interest, corruption, human trafficking and conflict
minerals in the procurement process. Such regulations also include provisions relating to information assurance and for the avoidance
of counterfeit parts in the supply chain.

 Anti-Bribery Regulations. We
conduct operations in a number of markets that are considered high risk from an anti-bribery compliance perspective. Laws and regulations
such as the Israel Penal Code, the Organization for Economic Cooperation and Development ("OECD") Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act
and corresponding legislation in other countries, prohibit providing personal benefits or bribes to government officials in connection
with the governmental procurement process. Israeli defense exporters, like ourselves, are required to maintain an anti-bribery compliance
program, including specific procedures, record keeping and training.

 Audit Regulations. The
IMOD may audit our books and records relating to its contracts with us. Our books and records and other aspects of projects that will
be related to the U.S. defense contracts will be subject to audit by U.S. government audit agencies. Such audits review compliance with
government contracting cost accounting and other applicable standards. If discrepancies are found this could result in a downward adjustment
of the applicable contract's price. Some other customers have similar rights under specific contract provisions.

 Civil Aviation Regulations. Several
of our products for commercial aviation applications are subject to flight safety and airworthiness standards of the U.S. Federal Aviation
Administration and similar civil aviation authorities in Israel, Europe and other countries.

 Environmental, Health
and Safety Regulations. We are subject to a variety of environmental, health and safety laws and regulations in the jurisdictions
in which we have operations. This includes regulations relating to air, water and ground contamination, hazardous waste disposal and other
areas with a potential environmental or safety impact.

 Employees

 We currently have one full-time
employee, our Chief Executive Officer, and two (2) executive officers, our Chief Technology Officer and our Chief Financial Officer. We
hire freelance contractors and consultants in order to limit our operating expenses and therefore allowing us to scale as necessary. We
maintain long-term relationships with these freelance contractors and consultants.

 All of our consulting agreements
include undertakings with respect to non-competition and assignment to us of intellectual property rights developed in the course of employment
and confidentiality. The enforceability of such provisions is limited for some employees by Israeli law.

 We are also currently a "smaller
reporting company," meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent
company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50
million during the most recently completed fiscal year. As a "smaller reporting company" we are able to provide simplified
executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002
(the "Sarbanes-Oxley Act") requiring that independent registered public accounting firms provide an attestation report on
the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings,
including, among other things, only being required to provide two years of audited financial statements in annual reports.

 Item 1A. Risk Factors.

 The following risk factors,
among others, could affect our actual results of operations and could cause our actual results to differ materially from those expressed
in forward-looking statements made by us. These forward-looking statements are based on current expectations and except as required by
law we assume no obligation to update this information. You should carefully consider the risks described below and elsewhere in this
Annual Report before making an investment decision. Our business, financial condition or results of operations could be materially adversely
affected by any of these risks. Our common stock is considered speculative and the trading price of our common stock could decline due
to any of these risks, and you may lose all or part of your investment. The following risk factors are not the only risk factors facing
our Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

 Risks Related to our Business and Industry

 We have a limited operating history and
have generated limited revenues to date.

 Our limited operating history
makes evaluating the business and future prospects difficult and may increase the risk of your investment. Our operating subsidiary in
Israel was formed in March 2014. To date, we have generated limited revenues and have not yet begun meaningful commercialization efforts
with respect to our products. We intend in the long-term to derive substantial revenues from the sales of our products as well as future
models of other robots and our UAS platforms for both military and civilian use, but there can be no assurance that we will be able to
do so.

 We may not be able to obtain adequate financing
to continue our operations.

 We expect that we will need
to raise additional funds to continue the design, manufacture, sale and servicing of our TIKAD as well as develop future robot products
and other platforms for the implementation of our robot. We believe that we will need to raise additional capital in the future to fund
our research and development and commercialization efforts. If we seek to raise additional capital, we may do so through the issuance
of equity, equity-related, or debt securities or through obtaining credit from government or financial institutions or other persons.
This capital will be necessary to fund ongoing operations, continue research, development and design efforts, establish a sales infrastructure
and make the investments in tooling and equipment required to develop and manufacture our products. Moreover, the terms of any financing
may adversely affect the holdings or the rights of holders of our securities and the issuance of additional securities, whether equity
or debt, by us, or the possibility of such issuance, may cause the market price of our common shares to decline. The incurrence of indebtedness
could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations
on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other
operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through
arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to
relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have
a material adverse effect on our business, operating results and prospects. Even if we believe that we have sufficient funds for our current
or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

 We have inadequate capital and need for
additional financing to accomplish our business and strategic plans. Terms of subsequent financing, if any, may adversely impact your
investment.

 We have limited funds, and
such funds are not fully adequate to fully support our future development and business plans. Our ultimate success may depend on our ability
to raise additional capital. In the absence of additional financing or significant revenues and profits, the Company will have to approach
its business plan from a much different and much more restricted direction, attempting to secure additional funding sources to fund its
growth, borrowing money from lenders or elsewhere or to take other actions to attempt to provide funding.

 We may have to engage in common
equity, debt, or preferred stock financings in the future. Your rights and the value of your investment in the common stock could be reduced
by the dilution caused by future equity issuances. Interest on debt securities could increase costs and negatively impact operating results.
In the event we are permitted to issue preferred stock pursuant to the terms of our articles of incorporation, preferred stock could be
issued in series from time to time with such designation, rights, preferences, and limitations as needed to raise capital. The terms of
preferred stock would be more advantageous to those investors than to the holders of common stock. In addition, if we need to raise more
equity capital from the sale of common stock, institutional or other investors may negotiate terms possibly less favorable to us, and
thereby adversely impact your investment. Shares of common stock which we sell from time to time could be sold into any market that develops,
which could adversely affect the market price of our common stock.

 Our revenues will depend heavily on government contracts

 We expect to derive most of
our immediate future revenues directly or indirectly from government agencies, mainly the U.S. Department of Defense ("DoD").
In addition, we offer our products to IMOD and intend to offer these to other governmental and quasi-governmental agencies around the
world, including U.S. allies such as the NATO and equivalent authorities of various countries pursuant to contracts awarded to us under
defense and homeland security-related programs. Technology products from foreign countries have an inherent disadvantage against domestic
offerings. The funding of government programs could be reduced or eliminated due to numerous factors, including geo-political events and
macro-economic conditions that are beyond our control. Reduction or elimination of government spending under our contracts would imperil
the sales of our products and may cause a negative effect on our revenues, results of operations, cash flow and financial condition.

 We face other risks in our expected international
sales.

 We expect to derive a significant
portion of our revenues ultimately from international sales. Changes in international, political, economic or geographic events could
cause significant reductions in our revenues, which could harm our business, financial condition and results of operations. In addition
to the other risks from international operations set forth elsewhere in these Risk Factors, some of the risks of doing business internationally
include imposition of tariffs and other trade barriers and restrictions, political and economic instability in the countries of our customers
and suppliers, changes in diplomatic and trade relationships and increasing instances of terrorism worldwide. Due to our subsidiary being
located in the State of Israel, some of these risks may be affected by Israel's overall political situation. (See "Risks Related
to Israeli Law and Our Operations in Israel" below.)

 We may experience production delays if suppliers
fail to make compliant or timely deliveries.

 The manufacturing process
for some of our products largely consists of the assembly, integration and testing of purchased components. If a supplier stops delivery
of such components, finding another source could result in added cost and manufacturing delays. Moreover, if our subcontractors fail to
meet their design, delivery schedule or other obligations we could be held liable by our customers, and we may be unable to obtain full
or partial recovery from our subcontractors for those liabilities. The foregoing risks could have a material adverse effect on our operating
results.

 If we fail to manage growth or to prepare
for product scalability effectively, it could have an adverse effect on our employee efficiency, product quality, working capital levels
and results of operations.

 Any significant growth in the
market for our products or our entry into new markets may require an expansion of our employee base for managerial, operational, financial,
and other purposes. As of March 14, 2024, we had one full-time employee, our Chief Executive Officer, and have two (2) executive officers,
our Chief Technology Officer and our Chief Financial Officer. During any period of growth, we may face problems related to our operational
and financial systems and controls, including quality control and delivery and service capacities. We would also need to continue to expand,
train and manage our employee base. Continued future growth will impose significant added responsibilities upon the members of management
to identify, recruit, maintain, integrate, and motivate new employees.

 Aside from increased difficulties
in the management of human resources, we may also encounter working capital issues, as we will need increased liquidity to finance the
development of new products, and the hiring of additional employees. For effective growth management, we will be required to continue
improving our operations, management, and financial systems and controls. Our failure to manage growth effectively may lead to operational
and financial inefficiencies that will have a negative effect on our profitability. We cannot assure investors that we will be able to
timely and effectively meet that demand and maintain the quality standards required by our existing and potential customers.

 We were granted a patent for certain of our key technologies and may apply for additional patents in the
future. Our ability to protect our intellectual property and proprietary technology is uncertain and may be inadequate, which may have
a material and adverse effect on us.

 Our success depends significantly
on our ability to protect our proprietary rights to the technologies used in our products. We applied for a patent with the United States
Office Patent and Trademark Office to protect certain of our key technologies, however, we cannot assure you that we will be able to control
all of the rights for all of our intellectual property. We do not know whether any of our current or future patent applications, if any,
will result in the issuance of any patents. Even issued patents may be challenged, invalidated or circumvented. Patents may not provide
a competitive advantage or afford protection against competitors with similar technology. Competitors or potential competitors may have
filed applications for, or may have received patents and may obtain additional and proprietary rights to compounds or processes used by
or competitive with ours. Both the patent application process and the process of managing patent disputes can be time-consuming and expensive.
Competitors may be able to design around our patents or develop products which provide outcomes which are comparable or may even be superior
to ours.

 In the event a competitor
infringes upon our intellectual property rights, enforcing those rights may be costly, uncertain, difficult and time consuming. Even if
successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time
consuming and could divert our management's attention. We may not have sufficient resources to enforce our intellectual property
rights or to defend our patents rights against a challenge. The failure to obtain patents and/or protect our intellectual property rights
could have a material and adverse effect on our business, results of operations and financial condition.

 In addition, we have taken
steps to protect our intellectual property and proprietary technology, including entering into confidentiality agreements and intellectual
property assignment agreements with all of our executive officers, employees, consultants and advisors, however, such agreements may not
provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or
other breaches of the agreements. Furthermore, the laws of foreign countries may not protect our intellectual property rights to the same
extent as do the laws of the United States. However, we have not executed confidentiality agreement or non-compete agreements with our
third-party suppliers and there is no restriction on their working with our competitors or selling our component designs to other parties.
In that regard, we deem our complex kinematic algorithms and control software to be our most valuable intellectual property and is done
in-house only with no sub-contractor involved.

 We may become subject to claims of infringement
or misappropriation of the intellectual property rights of others, which could prohibit us from developing our products, require us to
obtain licenses from third parties or to develop non-infringing alternatives and subject us to substantial monetary damages.

 Third parties could, in the
future, assert infringement or misappropriation claims against us with respect to products we develop. Whether a product infringes a patent
or misappropriates other intellectual property involves complex legal and factual issues, the determination of which is often uncertain.
Therefore, we cannot be certain that we have not infringed the intellectual property rights of others. Our potential competitors may assert
that some aspect of our product infringes their patents. Because patent applications may take years to issue, there also may be applications
now pending of which we are unaware that may later result in issued patents upon which our products could infringe. There also may be
existing patents or pending patent applications of which we are unaware upon which our products may inadvertently infringe.

 Any infringement or misappropriation
claim could cause us to incur significant costs, place significant strain on our financial resources, divert management's attention
from our business and harm our reputation. If the relevant patents in such claim were upheld as valid and enforceable and we were found
to infringe them, we could be prohibited from selling any product that is found to infringe unless we could obtain licenses to use the
technology covered by the patent or are able to design around the patent. We may be unable to obtain such a license on terms acceptable
to us, if at all, and we may not be able to redesign our products to avoid infringement. A court could also order us to pay compensatory
damages for such infringement, plus prejudgment interest and could, in addition, treble the compensatory damages and award attorney fees.
These damages could be substantial and could harm our reputation, business, financial condition and operating results. A court also could
enter orders that temporarily, preliminarily or permanently enjoin us and our customers from making, using, or selling products, and could
enter an order mandating that we undertake certain remedial activities. Depending on the nature of the relief ordered by the court, we
could become liable for additional damages to third parties.

 The sale of our products is subject to various
regulatory requirements of the Israeli Ministry of Defense and will also be subject to regulatory requirements in countries in which we
seek to sell our products.

 Due to the fact that we sell
products used that may be purchased in the defense and/ or military industry, and otherwise conduct business with the IMOD, we may be
required to obtain approval from the IMOD with respect to each agreement for the sale of our products. In that regard, we are required
to secure the approval of the IMOD prior to offering the sale of our products to any third party. In addition, we are required to obtain
approvals from the IMOD prior to the execution and performance of any such agreement. If we fail to obtain approvals in the future, if
approvals previously obtained are revoked or expire and are not renewed or if government policies change, our ability to sell our products
and services to customers would be impacted, resulting in a material adverse effect on our business, revenues, assets, liabilities and
results of operations.

 Risks Related to our Common Stock

 Our executive officer, directors and certain
stockholders who are beneficial owners of more than 5% of our outstanding common shares possess the majority of our voting power, and
through this ownership, have the ability to control our Company and our corporate actions.

 Following the Share Exchange,
our current executive officer and directors hold approximately 23.2% of the issued and outstanding voting power of the Company's
outstanding shares. These persons have a controlling influence in determining the outcome of any corporate transaction or other matters
submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets,
election of directors, and other significant corporate actions. As such, our directors and executive officer may have the power, acting
alone or together, to prevent or cause a change in control; therefore, without their consent we could be prevented from entering into
transactions that could be beneficial to us. The interests of our executive officer may give rise to a conflict of interest with the Company
and the Company's shareholders.

 In addition, we have a number
of stockholders who are beneficial owners of more than 5% of our outstanding common shares, as of the Effective Time, including one such
shareholder who beneficially owns approximately 34.4% of our issued and outstanding shares, and as such, also may have the ability to
prevent us from entering into transactions that could be beneficial to us and/or other shareholders. In addition, we have one additional
non-affiliated stockholder who beneficially owns more than 5% of our outstanding common shares. Although none of these non-affiliated
stockholders currently have a controlling influence in determining the outcome of any corporate transaction or other matters submitted
to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of
directors, and other significant corporate actions, obtaining their vote on certain matters may be necessary to effect certain actions
that our management and directors otherwise deem to be in the best interests of the Company.

 There is a substantial lack of liquidity
of our common stock and volatility risks.

 Our common stock is traded
on the over-the-counter market with quotations published on the OTC Markets Group, Inc.'s OTCQB tier Venture Market, under the symbol
"USDR." The trading volume of our common stock historically has been limited and sporadic, and the stock prices have been
volatile. As a result of the limited and sporadic trading activity, the quoted price for our common stock on the over-the-counter market
is not necessarily a reliable indicator of its fair market value. The price at which our common stock will trade in the future may be
highly volatile and may fluctuate as a result of a number of factors, including, without limitation, any potential business combination
that we announce, as well as the number of shares available for sale in the market.

 The trading volume of our
common stock may be limited and sporadic. This situation is attributable to a number of factors, including the fact that we are a small
company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became
more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal
or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading
market for our common stock will develop or be sustained, or that current trading levels will be sustained. As a result of such trading
activity, the quoted price for our common stock on the OTCQB may not necessarily be a reliable indicator of our fair market value. In
addition, if our shares of common stock cease to be quoted, holders would find it more difficult to dispose of or to obtain accurate quotation
as to the market value of, our common stock and as a result, the market value of our common stock likely would decline.

 Other factors that could have
a similar impact include, but are not limited to:

 the increased concentration of the ownership of our shares by a limited number of affiliated stockholders following the Share Exchange may limit interest in our securities;

 limited "public float" in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

 variations in quarterly operating results from the expectations;

 revisions in securities analysts' estimates or reductions;

 our ability to obtain working capital financing;

 announcements of new products or services by us or our competitors and changes in our industry;

 reductions in the market share of our products;

 announcements by us or our competitors of significant strategic acquisitions;

 loss of any strategic relationship;

 regulatory developments;

 general technological, market or economic trends;

 investor perception of our industry or prospects;

 insider selling or buying;

 investors entering into short sale contracts;

 regulatory developments affecting our industry; and

 additions or departures of key personnel.

 Many of these factors are
beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any
predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our
common stock will sustain current market prices, or as to what effect that the sale of shares or the availability of common stock for
sale at any time will have on the prevailing market price.

 Because we became public by means of a "reverse
merger," we may not be able to attract the attention of major brokerage firms.

 There may be risks associated
with us becoming public through a "reverse merger." Securities analysts of major brokerage firms and securities institutions
may not provide coverage of us because there were no broker-dealers who sold our stock in a public offering that would be incentivized
to follow or recommend the purchase of our common stock. The absence of such research coverage could limit investor interest in our common
stock, resulting in decreased liquidity. No assurance can be given that established brokerage firms will, in the future, want to cover
our securities or conduct any secondary offerings or other financings on our behalf.

 Our common stock may never be listed on
a major stock exchange.

 While we may seek the listing
of our common stock on a national or other securities exchange at some time in the future, we currently do not satisfy the initial listing
standards and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing
on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected
for listing, the trading price of our common stock could suffer, the trading market for our common stock may be less liquid, and our common
stock price may be subject to increased volatility.

 Our common stock is subject to price volatility
unrelated to us or our operations.

 The market price of our common
stock could fluctuate substantially due to a variety of factors, including quarterly operating results of other companies in the same
industry, changes in general conditions in the economy and the financial markets, or other developments affecting the Company's
competitors. In addition, the OTCQB is subject to extreme price and volume fluctuations in general. This volatility has had a significant
effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have
the same effect on our common stock.

 In addition, the securities
markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

 Sales of our currently issued and outstanding
stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price
of the shares of our common stock.

 A substantial portion of the
outstanding shares of common stock are "restricted securities" within the meaning of Rule 144 under the Securities Act of
1933, as amended ("Rule 144" and the "Securities Act", respectively). As restricted shares, these shares may be
resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from
registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that a non-affiliate
who has held restricted securities for a period of at least six (6) months may sell their shares of common stock. Under Rule 144, affiliates
who have held restricted securities for a period of at least six (6) months may, under certain conditions, sell every three months, in
brokerage transactions, a number of shares that does not exceed the greater of 1% of a company's outstanding shares of common stock
or the average weekly trading volume during the four calendar weeks prior to the sale (the four calendar week rule does not apply to companies
quoted on the OTCQB). A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent
registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market
that may develop.

 The securities issued in connection with
the Share Exchange are restricted securities and may not be transferred in the absence of registration or the availability of a resale
exemption.

 The shares of common stock
issued in connection with the Share Exchange were issued in reliance on an exemption from the registration requirements under Section
4(a)(2) of the Securities Act. Consequently, these securities are subject to restrictions on transfer under the Securities Act and may
not be transferred in the absence of registration or the availability of a resale exemption. In particular, in the absence of registration,
such securities cannot be resold to the public until certain requirements under Rule 144 promulgated under the Securities Act have been
satisfied, including certain holding period requirements. As a result, a purchaser who receives any such securities issued in connection
with the Share Exchange may be unable to sell such securities at the time or at the price or upon such other terms and conditions as the
purchaser desires, and the terms of such sale may be less favorable to the purchaser than might be obtainable in the absence of such limitations
and restrictions.

 We do not plan to declare or pay any dividends
to our stockholders in the near future.

 We have not declared any dividends
in the past, and we do not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends
will be made at the discretion of the board of directors and will depend upon, among other things, the results of operations, cash flows
and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is
no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such
dividend.

 "Penny Stock" rules may make
buying or selling our common stock difficult.

 Trading in our common stock
is subject to the "penny stock" rules. The SEC has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer
that recommends our common stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special
written suitability determination for the purchaser and receive the purchaser's written agreement to execute the transaction. Unless
an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose
commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer.
The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our
common stock, which could severely limit the market price and liquidity of our common stock.

 The sales practice requirements of the Financial
Industry Regulatory Authority ("FINRA") may also limit a stockholder's ability to buy and sell our stock.

 In addition to the "penny
stock" rules described above, FINRA has adopted Rule 2111 that requires a broker-dealer to have reasonable grounds for believing
that an investment is suitable for a customer before recommending the investment. Prior to recommending speculative low-priced securities
to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial
status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a
high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make
it more difficult for broker-dealers to recommend that their customers buy the Company's common stock, which may limit your ability
to buy and sell the Company's stock and have an adverse effect on the market for our shares.

 Risks Related to Israeli Law and Our Operations
in Israel

 Our principal executive
offices and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic
and military instability in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel's
war against them.

 Our
executive offices and corporate headquarters are located in Israel. In addition, our officers and directors are residents of Israel. Accordingly,
political, economic and military and security conditions in Israel and the surrounding region may directly affect our business. Any conflicts,
political instability, terrorism, cyberattacks or any other hostilities involving Israel or the interruption or curtailment of trade between
Israel and its present trading partners could adversely affect our operations. Ongoing and revived hostilities in the Middle East or other
Israeli political or economic factors, could harm our operations.

 In
October 2023, Hamas terrorists infiltrated Israel's southern border from the Gaza Strip and conducted a series of attacks on civilian
and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel's
border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping
of civilians and soldiers. Following the attack, Israel's security cabinet declared war against Hamas and a military campaign against
these terrorist organizations commenced in parallel to their continued rocket and terror attacks.

 The
intensity and duration of Israel's current war against Hamas is difficult to predict, as are such war's economic implications
on the Company's business and operations and on Israel's economy in general. These events may be intertwined with wider macroeconomic
indications of a deterioration of Israel's economic standing, which may have a material adverse effect on the Company and its ability
to effectively conduct some of its operations.

 In
connection with the Israeli security cabinet's declaration of war against Hamas and possible hostilities with other organizations,
several hundred thousand Israeli military reservists were drafted to perform immediate military service. As of March 14, 2024 none of
our employees and regular consultants (and their spouses or partners) in Israel have been called for reserve service. Additional employees
(or their spouses or partners) may be called, for service in the current or future wars or other armed conflicts with Hamas, and such
persons may be absent for an extended period of time. As a result, our operations in Israel may be disrupted by such absences, which disruption
may materially and adversely affect our business, prospects, financial condition and results of operations.

 Following
the attack by Hamas on Israel's southern border, Hezbollah in Lebanon has also launched missile, rocket and shooting attacks against
Israeli military sites, troops, and Israeli towns in northern Israel. In response to these attacks, the Israeli army has carried out a
number of targeted strikes on sites belonging to Hezbollah in southern Lebanon. It is possible that other terrorist organizations, including
Palestinian military organizations in the West Bank, as well as other hostile countries, such as Iran, will join the hostilities. Such
hostilities may include terror and missile attacks. Any hostilities involving Israel or the interruption or curtailment of trade between
Israel and its trading partners could adversely affect our operations and results of operations. Although the Israeli government currently
covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government
coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have
a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business
conditions and could harm our results of operations.

 Further, in the past, the
State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State
of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial
condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which
could also adversely impact our business. Moreover, we cannot predict how this war will ultimately affect Israel's economy in general,
which may involve a downgrade in Israel's credit rating by rating agencies (such as the recent downgrade by Moody's of its
credit rating of Israel from A1 to A2, as well as the downgrade of its outlook rating from "stable" to "negative").
We may also be targeted by cyber terrorists specifically because we are an Israeli-related company.

 Prior
to the Hamas attack in October 2023, the Israeli government pursued extensive changes to Israel's judicial system. In response to
the foregoing developments, individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that
the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest
or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased
volatility in securities markets, and other changes in macroeconomic conditions. The risk of such negative developments has increased
in light of the recent Hamas attacks and the war against Hamas declared by Israel, regardless of the proposed changes to the judicial
system and the related debate. To the extent that any of these negative developments do occur, they may have an adverse effect on our
business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors.

 Our operations are subject to currency and
interest rate fluctuations.

 We incur expenses in U.S.
dollars and NIS, but our financial statements are denominated in U.S. dollars. The U.S. dollar is our functional currency. However, as
we also incur expenses in NIS, we are affected by foreign currency exchange fluctuations through both translation risk and transaction
risk. As a result, we are exposed to the risk that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative
to the dollar, that the inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation
may lag behind inflation in Israel. In any such event, the dollar cost of our operations in Israel would increase and our dollar-denominated
results of operations would be adversely affected.

 It may be difficult to enforce a judgment
of a United States court against us and our officers and directors to assert United States securities laws claims in Israel or to serve
process on our officers and directors and these experts.

 Our executive office, corporate
headquarters and manufacturing facilities are located in Israel. In addition, all of our officers and directors are residents of Israel.
All of our assets and most of the assets of these persons are located in Israel. Service of process upon us or our non-U.S. resident directors
and officers and enforcement of judgments obtained in the United States against us or our non-U.S. our directors and executive officers
may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to
assert claims under U.S. securities laws in original actions instituted in Israel, or obtain a judgment based on the civil liability provisions
of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or
our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an
Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found
to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain
matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described
above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered
against us or our non-U.S. officers and directors.

 Moreover, an Israeli court
will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli
courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if
it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same
matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel
at the time the foreign action was brought.

 Our operations may be disrupted as a result
of the obligation of management or key personnel to perform military service.

 Our employees and consultants
in Israel, including members of our senior management, may be obligated to perform one month, and in some cases longer periods, of military
reserve duty until they reach the age of 40 (or older, for citizens who hold certain positions in the Israeli armed forces reserves) and,
in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods
of significant call-ups of military reservists. It is possible that there will be similar large-scale military reserve duty call-ups in
the future. Our operations could be disrupted by the absence of a significant number of our officers, directors, employees and consultants.
Such disruption could materially adversely affect our business and operations.

 General Risk Factors

 We operate in a competitive industry.

 While we believe that we are
the only developer and manufacturer of UASs capable of pinpoint accurate firing of light weapons, the UAS market generally in which we
participate is highly competitive and becoming more so. This market is also characterized by rapid and innovative technological change.
If we are unable to improve existing systems and products and develop new systems and technologies in order to meet evolving customer
demands, our business could be adversely affected. In addition, our competitors could introduce new products with innovative capabilities,
which could adversely affect our business. We compete with many large and mid-tier defense companies on the basis of system performance,
cost, overall value, delivery and reputation. Many of these competitors are larger and have greater resources than us, and therefore may
be better positioned to take advantage of economies of scale and develop new technologies.

 Undetected problems in our products could
impair our financial results and give rise to potential product liability claims.

 If there are defects in the
design, production or testing of our products and systems, we could face substantial repair, replacement or service costs, potential liability
and damage to our reputation. Defects or malfunctioning of our products, if they were to occur, would likely result in significant damage
and loss of life. We may not be able to obtain product liability or other insurance to fully cover such risks, and our efforts to implement
appropriate design, testing and manufacturing processes for our products or systems may not be sufficient to prevent such occurrences,
which could have a material adverse effect on our business, results of operations and financial condition.

 Our business depends on proprietary technology
that may be infringed.

 Many of our systems and products
depend on our proprietary technology for their success. Like other technology-oriented companies, we rely on a combination of trade secrets,
copyrights and trademarks, together with non-disclosure agreements, confidentiality provisions in sales, procurement, employment and other
agreements and technical measures to establish and protect proprietary rights in our products. While we are in the process of seeking
patents for our technology, there is no guarantee that such patents will be granted. Our ability to successfully protect our technology
may be limited because:

 intellectual property laws in certain jurisdictions may be relatively ineffective;

 detecting infringements and enforcing proprietary rights may divert management's attention and company resources;

 contractual measures such as non-disclosure agreements and confidentiality provisions may afford only limited protection;

 any patents we may receive will expire, thus providing competitors access to the applicable technology;

 competitors may independently develop products that are substantially equivalent or superior to our products or circumvent our intellectual property rights; and

 competitors may register patents in technologies relevant to our business areas;

 In addition, various parties
may assert infringement claims against us. The cost of defending against infringement claims could be significant, regardless of whether
the claims are valid. If we are not successful in defending such claims, we may be prevented from the use or sale of certain of our products,
or liable for damages and required to obtain licenses, which may not be available on reasonable terms, any of which may have a material
adverse impact on our business, results of operation or financial condition.

 Potential product liability claims could
adversely affect our future earnings and financial condition.

 We face an inherent business
risk of exposure to product liability claims in the event that the use of our products results in adverse effects. We may not be able
to maintain adequate levels of insurance for these liabilities at reasonable cost and/or reasonable terms. Excessive insurance costs or
uninsured claims would add to our future operating expenses and adversely affect our financial condition.

 We rely on highly skilled personnel and,
if we are unable to retain or motivate key personnel or hire additional qualified personnel, we may not be able to grow effectively.

 Our performance is largely
dependent on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify,
hire, develop, motivate, and retain highly skilled personnel for all areas of our organization. Our continued ability to compete effectively
depends on our ability to retain and motivate existing employees. Due to our reliance upon skilled laborers, the failure to attract, integrate,
motivate, and retain current and/or additional key employees could have a material adverse effect on our business, operating results and
financial condition. We do not maintain key person life insurance for any of our employees.

 Our management team may not be able to successfully
implement our business strategies.

 If our management team is
unable to execute on its business strategies, then our development, including the establishment of revenues and our sales and marketing
activities would be materially and adversely affected. In addition, we may encounter difficulties in effectively managing the budgeting,
forecasting and other process control issues presented by any future growth. We may seek to augment or replace members of our management
team, or we may lose key members of our management team, and we may not be able to attract new management talent with sufficient skill
and experience.

 Significant disruptions of our information
technology systems or breaches of our data security could adversely affect our business.

 A significant invasion, interruption,
destruction or breakdown of our information technology systems and/or infrastructure by persons with authorized or unauthorized access
could negatively impact our business and operations. We could also experience business interruption, information theft and/or reputational
damage from cyber-attacks, which may compromise our systems and lead to data leakage either internally or at our third party providers.
The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign
governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions
from around the world have increased. If such an event were to interrupt our operations, it could result in a material disruption of our
product development programs. Our systems have been, and are expected to continue to be, the target of malware and other cyber-attacks.
Although we have invested in measures to reduce these risks, we cannot assure that these measures will be successful in preventing compromise
and/or disruption of our information technology systems and related data. See Item 1C. "Cybersecurity" for more information.

 A decline in the price of our common stock
could affect our ability to raise working capital and adversely impact our ability to continue operations.

 A prolonged decline in the
price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital.
A decline in the price of our common stock could be especially detrimental to our liquidity and our operations. Such reductions may force
us to reallocate funds from other planned uses and may have a significant negative effect on our business plan and operations, including
our ability to develop new services and continue our current operations. If our common stock price declines, we can offer no assurance
that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations. If we are unable
to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.

 The requirements of being a public company
may strain our resources and distract management.

 As a public company, we are
subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act") and the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). These requirements are extensive. The Exchange Act requires that we
file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that
we maintain effective disclosure controls and procedures and internal controls over financial reporting.

 We may incur significant costs
associated with our public company reporting requirements and costs associated with applicable corporate governance requirements. We expect
all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities
more time consuming and costly. This may divert management's attention from other business concerns, which could have a material
adverse effect on our business, financial condition and results of operations. We also expect that these applicable rules and regulations
may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept
reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be
more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are
currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional
costs we may incur or the timing of such costs.

 Future changes in financial accounting standards
or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.

 A change in accounting standards
or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before
the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may
occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results
or the way we conduct business.

 Item 1B. Unresolved Staff Comments.

 Not applicable to smaller
reporting companies.

 Item 1C. Cybersecurity.

 Our Board and management
recognize the critical importance of maintaining the trust and confidence of our customers, clients, business pa rtners
and employees.

 In
general, we seek to address cybersecurity risks through a comprehensive, cross-functional approach that is focused on preserving the
confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity
threats and effectively responding to cybersecurity incidents when they occur.

 Our
cybersecurity risk management efforts include:

 risk
 assessments designed to help identify material cybersecurity risks to our critical systems,
 information, products, services, and our broader enterprise IT environment;

 a
 security team principally responsible for managing (1) our cybersecurity risk assessment
 processes, (2) our security controls, and (3) our response to cybersecurity incidents; and

 a
 cybersecurity incident response plan that includes procedures for responding to cybersecurity
 incidents.

 Cybersecurity Governance

 Our board of directors considers
cybersecurity risks as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other
information technology risks. The Audit Committee oversees management's implementation of our cybersecurity risk management efforts.

 Management updates the Audit
Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.

 Our CEO and CFO are responsible
for assessing and managing our material risks from cybersecurity threats, our overall cybersecurity risk management efforts, and supervise
both our internal cybersecurity personnel and our retained external cybersecurity consultants.

 Our CEO and CFO supervise efforts
to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which include ensuring routine briefings
from internal security personnel, obtaining threat intelligence and other information obtained from governmental, public or private sources,
including external consultants engaged by us, and providing Company personnel with alerts and reports produced by security tools deployed
in the IT environment.

 Item 2. Properties.

 Our principal executive office
is currently located at 10 HaRimon Street, Mevo Carmel Science and Industrial Park, Israel. In April 2022, Duke Israel entered into 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 April 2022 property became available for the Company's use in February
2023. In addition, pursuant to an agreement entered into by Duke, we have the right to use office space and receive other administrative
services at a location in the State of Florida.

 Item 3. Legal Proceedings.

 We are currently not a party
to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that we believe is not ordinary routine
litigation incidental to our business or otherwise material to the financial condition of our business.

 Item 4. Mine Safety Disclosures

 Not applicable.

 Item 5. Market for Registrant's Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Our common stock is quoted
on the OTCQB under the symbol "USDR." As of March 14, 2024, there were 154 holders of record of our common stock. This figure
includes an indeterminate number of stockholders who hold their shares in "street name."

 We have not declared any cash
dividends on our common stock, and do not intend to declare dividends in the foreseeable future. Management intends to use all available
funds for the development of our plan of operation.

 Item 6. [Reserved]

 Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations.

 You should read the following
discussion and analysis of our financial condition and results of operations together with our audited annual consolidated financial statements
as of December 31, 2023 and December 31, 2022 and accompanying notes appearing elsewhere in this Annual Report. This discussion and analysis
contain forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Risk
Factors" and elsewhere in this Annual Report. All amounts are in U.S. dollars and rounded.

 Company Overview

 On March 9, 2020, Duke and
certain shareholders of Duke entered into the Share Exchange with the Company, pursuant to which approximately 99% of the issued and outstanding
shares of common stock of Duke were purchased by the Company in exchange for shares of the Company's common stock, resulting in
Duke becoming a subsidiary of the Company. Following the Share Exchange, the Company has adopted the business plan of Duke.

 On April 29, 2020, the Company,
Duke, and UAS Sub, entered into the Merger Agreement, pursuant to which UAS Sub was to merge, upon the satisfaction of customary closing
conditions, with and into Duke. Upon closing of the Short-Form Merger, each outstanding share of UAS Sub's common stock, par value
$0.0001 per share, was to be converted into and become one share of common stock of Duke, with Duke surviving as a wholly-owned subsidiary
of the Company. Pursuant to the Merger Agreement, the Company acquired the remaining outstanding shares of Duke held by certain stockholders
of Duke that did not participate in the Share Exchange Agreement. At the closing of the transaction contemplated by the Merger Agreement,
the Company was to issue 63,856 shares to certain Duke stockholders, and Duke will become a wholly owned subsidiary of the Company. On
June 25, 2020, Duke filed a Certificate of Merger with the State of Delaware, and consequently, Duke became a wholly-owned subsidiary
of the Company, and the Short-Form Merger was consummated.

 On
January 29, 2021, we, through Duke Israel, and Elbit, entered into the Collaboration Agreement for the global marketing and sales, and
the production and further development of our developed advanced robotic system mounted on an UAS, armed with lightweight firearms, which
we market under the commercial name "TIKAD."

 On
August 15, 2022, Duke Israel introduced the IC Drone, a drone technology for conducting routine maintenance of critical infrastructure
and has signed an agreement with IEC to provide drone-enabled systems for cleaning electric utility cable insulators. During October 2023,
we successfully completed our obligations under its agreement with the IEC.

 Operating Results

 The selected historical financial
information presented below is derived from the Company's audited consolidated financial statements for the year ended December
31, 2023 and Duke's audited consolidated financial statements for the year ended December 31, 2022. The data set forth below should
be read in conjunction with the financial statements and accompanying notes elsewhere in this annual report.

 USD in thousands

 2023

 2022

 Revenues

 -

 Cost of revenues

 (273
)

 -

 Gross profit

 -

 Research and development expenses

 (3
)

 (20
)

 General and administrative expenses

 (826
)

 (1,104
)

 Operating loss

 (802
)

 (1,124
)

 Financial income, net

 Net loss

 (726
)

 (1,101
)

 Comparison of the year ended December 31,
2023 to the year ended December 31, 2022

 Revenues. We had $300,000
in revenues for the year ended December 31, 2023. During the year ended December 31, 2022, we had no revenues. The revenues for the year
ended December 31, 2023 were derived from our agreement with IEC to provide drone-enabled systems for cleaning electric utility cable
insulators, which we successfully completed during October 2023.

 Cost of revenues. During
the year ended December 31, 2023, we had $273,000 in cost of revenues expenses, compared to $0 for the year ended December 31, 2022. The
cost of revenues in 2023 mainly consists of professional services associated with our agreement with IEC as detailed above.

 Research
and Development. During the year ended December 31, 2023, we had $3,000 in research and development expenses, compared to $20,000
in research and development expenses for the year ended December 31, 2022. The decrease in our research and development are mainly due
to activities related to the TIKAD product which are carried out by Elbit pursuant to the Collaboration Agreement.

 General and Administrative
Expenses. For the year ended December 31, 2023, our general and administrative expenses amounted to $826,000, of which $575,000 were
related to professional services, such as accounting, auditing, insurance costs, consulting and legal services, and $108,000 were related
to stock-based compensation expenses, and were $1,104,000 for the year ended December 31, 2022, of which $598,000 were related to professional
services and $426,000 related to stock-based compensation expenses. This decrease in general and administrative expenses for the year
ended December 31, 2023, was mainly due to the decrease in share-based compensations expenses.

 Financial Income, net.
For the year ended December 31, 2023, our financial income amounted to $76,000 as compared to $23,000 for the year ended December 31,
2022. The reason for the increase in financial income for the year ended December 31, 2023, was mainly due to the increase in interest
income on bank deposits resulted from the increase in interest rates.

 Net Loss. For the year
ended December 31, 2023 and 2022, we recorded a net loss of $726,000 and $1,101,000, respectively, which represented a decrease compared
to the year ended December 31, 2022, of $375,000.

 Critical Accounting Policies

 This Management Discussion
and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In connection with the preparation
of our financial statements, we were required to make assumptions and estimates about future events and apply judgments that affect the
reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments
on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial
statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure
that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects
cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

 Our significant accounting
policies are discussed in Note 2, "Summary of Significant Accounting Policies," of the notes to consolidated financial statement,
which are incorporated by reference into this prospectus. Our management believes that, as for the financial statements for the periods
included in this prospectus, the accounting for share based compensation is critical accounting policy. However, due to the early stage
of operations of our Company, there are no other accounting policies that are considered to be critical accounting policies by management.

 Liquidity and Capital Resources

 Since inception, we have devoted
substantially all our efforts to research and development and have incurred accumulated losses of $9,947,000.

 During the year ended December
31, 2023, our loss of $726,000 included non-cash stock-based compensation of $108,000. As of December 31, 2023, we had a working
capital of $2,011,000 as compared to a working capital of $2,674,000 as of December 31, 2022.

 As of December 31, 2023, we
had a cash balance of $2,281,000 compared to the cash balance of $2,849,000 as of December 31, 2022. The reason for the decrease in our
cash balance was mainly due to the operating expenses describe above.

 Cash used in operations for
the year ended December 31, 2023, was $548,000 as compared to cash used in operations of $672,000 for the year ended December 31, 2022.
The reason for the decrease in cash used in operations is related to the decrease in our operating expenses and cash received under our
Collaboration and Development Agreement with the IEC.

 Since our inception we and
Duke have funded our operations through equity and debt financing, bank loans, loans provided by shareholders and demonstration projects
of its technology to potential customers.

 Since Duke's inception
and until 2017, certain Duke affiliates provided loans to Duke from time to time, as needed. Before entering into the Share Exchange,
Duke entered into debt cancellation letters (the "Debt Cancellation Letters") with regard to the Stockholders Loans. Pursuant
to the Debt Cancellation Letters the accumulated interest on the Stockholders' Loans was waived and 842,135 shares of Duke's
common stock were issued in exchange for the cancellation of $623,180 in debt, leaving $280,000 of outstanding Stockholders Loans (the
"Outstanding Stockholders' Loans"). The Outstanding Stockholders' Loans, including the accumulated interest amount,
shall be repaid on the later of the following: (i) three years after the Effective Date (March 9, 2020); or (ii) Duke raised capital amounting
to at least $15 million following the Effective Date and the Earnings before interest, tax, depreciation and amortization of Duke has
reached an amount of $3 million.

 As of December 31, 2023, and
December 31, 2022, the outstanding balances of such stockholders' loans were $314,000 and $305,000, respectively.

 On September 2, 2019, we executed
the Promissory Note having a total principal amount of $35,000 bearing interest at 6% per annum and maturing September 2, 2021. The Promissory
Note was a non-recourse and carried no personal guarantees. In conjunction with the consummation of the Share Exchange, and as a condition
thereof, on March 6, 2020, we entered into several Securities Exchange Agreements, on the same terms, to exchange the Promissory Note
for 9,623,621 shares of our Common Stock. On May 18, 2021, we issued 54,019 shares of Common Stock of the Company, to several holders
pursuant to the terms of the Security Exchange Agreements pursuant to which, such holders were entitled to an anti-dilution clause in
the event that the Convertible Debentures were converted into shares of our Common Stock.

 In connection with the Share
Exchange, immediately prior to the Effective Time, we entered into several Convertible Loan Agreements, on the same terms, in the aggregate
amount of $965,000. The terms of the Convertible Loan Agreements required repayment of the borrowed amount by the one-year anniversary
of the Effective Time, unless, at our discretion, and subject to its compliance with any and all terms of the material terms of the Convertible
Loan Agreements, the term of such loans is extended for an additional twelve (12) month period. The terms of the Convertible Loan Agreements
also provide that we may repay any portion of the remaining outstanding loan amount, without penalty, provided, however, that the Company
provides the specific lender with three business days' written notice prior to such repayment, during which time the lender may
elect to convert any or all of the outstanding loan amount into shares of common stock of the Company. The Convertible Loan Agreements
bore simple interest at a rate equal to 15% per annum, payable on the 15th day of each calendar month. On December 9, 2020, we utilized
our rights under the Convertible Loan Agreements and extended the terms of the loans for an additional twelve months. During March 2021,
a portion of the Convertible Debentures, representing principal amount of $130,000 was converted into 347,594 shares of Common Stock and
during May 2021, we repaid the full balance of the principal of the Convertible Loans in the amount of $835,000.

 Also, in connection with the
Share Exchange, we entered into Exchange Agreements with our outstanding debt with Alpha and GBC to respectively cancel existing debentures
or debt in the total amount of $658,323 and in exchange issue new debentures in the aggregate amount of $400,000 and issue 698,755 and
65,198 shares of common stock to each of Alpha and GBC, respectively. The New Debentures matured three years from the Effective Date,
bore interest at a rate of 8% per year and were only convertible into shares of the Company's common stock, at an original conversion
price of $0.3740; provided, however, that such Original Conversion Price shall be adjusted downward in the event that the Company, as
applicable, sells or grants any options to purchase or sells or grants any right to reprice, or otherwise dispose or issues any common
stock or common stock equivalents entitling any purchaser to acquire shares of the Company's common stock at an effective price
per share that is lower than the Original Conversion Price (such issuance, a "Dilutive Event"). In the event of a Dilutive
Event at any time from the Effective Time through the six (6) month anniversary of the Effective Time, any such adjustment shall occur
immediately after the completion of such period. Subsequent to March 31, 2021, a portion of the Convertible Debentures, representing an
aggregate amount of $110,614 (including interest) was converted into 295,759 shares of Common Stock. During May 2021, we prepaid the full
balance of the principal and interest amount of the Convertible Debentures in the amount of $108,541.

 On May 11, 2021, we entered
into securities purchase agreements with eight (8) non-U.S. Investors, pursuant to which we, in a private placement offering, agreed to
issue and sell to investors an aggregate of: (i) 12,500,000 shares of our Common Stock at a price of $0.40 per share; and (ii) warrants
to purchase 12,500,000 of our Common Stock. The warrants were exercisable immediately and 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 $5,000,000 and the offering closed on May
11, 2021. On April 5, 2022, we entered into an agreement with the Investors pursuant to which we
extended the term of the warrants, to expire on November 11, 2023. On November 1, 2023, we and the Investors executed a second extension
agreement, such that the term of the warrants was extended so that they now expire on November 11, 2024.

 We believe that we have sufficient
cash to fund our operations for at least the next 12 months. Readers are advised that available resources may be consumed more rapidly
than currently anticipated, resulting in the need for additional funding sooner than expected. Should this occur, we will need to seek
additional capital earlier than anticipated in order to fund (1) further development and, if needed (2) expenses which will be required
in order to expand manufacturing of our products, (3) sales and marketing efforts and (4) general working capital. Such funding may be
unavailable to us on acceptable terms, or at all. Our failure to obtain such funding when needed could create a negative impact on our
stock price or could potentially lead to the failure of our company. This would particularly be the case if we are unable to commercially
distribute our products and services in the jurisdictions and in the timeframes we expect.

 Item 7A. Quantitative and Qualitative Disclosure
about Market Risk

 Not applicable to smaller
reporting companies.

 Item 8. Financial Statements and Supplementary
Data.

 All information required by
this item is included in Item 15 of Part IV of this Annual Report and is incorporated into this item by reference.

 Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure

 On January 6, 2023, our Board
of Directors dismissed Halperin Ilanit CPA (the "Former Auditor") as our independent registered public accounting firm.

 The audit reports of the Former
Auditor on our financial statements for the fiscal years ended December 31, 2021 and 2020 contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the report for the fiscal
year ended December 31, 2020 contained an explanatory paragraph stating that there was substantial doubt about our ability to continue
as a going concern.

 During the fiscal years ended
December 31, 2021 and 2020, there were (i) no "disagreements" (as that term is defined in Item 304(a)(1)(iv) of Regulation
S-K and the related instructions) between us and the Former Auditor on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the Former Auditor, would have
caused the Former Auditor to make reference to the subject matter of the disagreement in its reports on the Company's financial
statements and (ii) no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K and the related
instructions).

 On January 6, 2023, our Board
of Directors approved the engagement of Somekh Chaikin, a member firm of KPMG International (the "New Auditor") as our independent
registered public accounting firm, effective upon the effectiveness of the dismissal of the Former Auditor. During the fiscal years ended
December 31, 2023 and 2022, neither we, nor anyone on its behalf, consulted the New Auditor regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial
statements, and no written report or oral advice was provided to us by the New Auditor that the New Auditor concluded was an important
factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue or (ii) any matter that was
the subject of a "disagreement" (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions)
or a "reportable event" (as that term is defined in Item 304(a)(1)(v) of Regulation S-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, 2023, evaluated, the effectiveness of our disclosure controls and procedures as of
December 31, 2023, pursuant to paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act. This evaluation included a review of the
controls' objectives and design, the operation of the controls, and the effect of the controls on the information presented in this
Annual Report. Our management, including the CEO and CFO, do not expect that disclosure controls can or will prevent or detect all errors
and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Disclosure controls and procedures are controls and other procedures that are designed
to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under
the Exchange Act is accumulated and communicated to management, including our CEO and CFO, or persons performing similar functions, as
appropriate, to allow timely decisions regarding required disclosure. Also, the projection of any evaluation of the disclosure controls
and procedures to future periods is subject to the risk that the disclosure controls and procedures may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 Based on their review and
evaluation, and subject to the inherent limitations described above, our CEO and CFO concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) were not effective as of December 31, 2023, at the above-described
reasonable assurance level.

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

 1.
 Due to the size of the Company
and available resources, there are limited personnel to assist with the accounting and financial reporting function, which results in
a lack of segregation of duties.

 2.
 The Company does not have an
Independent Audit Committee that can provide management oversight.

 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, 2023, 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, 2023. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated
Framework. Based on this assessment, management, as in place as of December 31, 2023, determined that the Company's internal control
over financial reporting as of December 31, 2023, was not effective due to the material weakness previously identified as stated above.

 Item 9B. Other Information

 None.

 Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections

 None.

 Item 10. Directors, Executive Officers, and
Corporate Governance.

 Our directors and executive
officer and their ages as of March 14, 2024, are as follows:

 Name

 Age

 Position

 Yariv Alroy

 Chairman

 Yossef Balucka

 Chief Executive Officer and President

 Chief Technology Officer and Director

 Vice Chairman

 Director

 Chief Financial 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). In December
2018 Mr. Alroy was nominated as member of the board of directors and Chairman of SHL Telemedicine. Yariv Alroy holds an LL.B from Tel
Aviv University.

 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, CTO and
Director. Mr. Sagiv 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 also serves as the CEO of Axis Aerospace
Mechanical Design Ltd., a company working in the field of airborne structural projects and flight experiments, following strict aerospace
level quality standards (AS9100). 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. Since May 2020 Mr. Nachtomy is the Acting 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. In December 2018
Mr. Nachtomy was nominated as Member of the Board of SHL Telemedicine, and since May 2021 Mr. Nachtomy has been serving as the acting
CEO of SHL Telemedicine Ltd. Mr. Nachtomy holds an LL.B. from Tel Aviv University, Israel.

 Eran Antebi, Director.
Mr. Antebi is the Finance Director Omrix Biopharmaceuticals Ltd. (a Johnson & Johnson company) since February 2017. Prior to that
he was CFO of SHL Telemedicine Ltd. (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. (SAFO:OTC) (August
2017 to December 2021), Sonovia Ltd. (NNTTF:OTC) (October 2014 to August 2020) and of Todos Medical Ltd. (TOMDF:OTC) (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.

 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.

 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 UAS. The Code of Ethics and Business Conduct, Bylaws and Article of Incorporation
are available at our corporate offices. Stockholders may request free printed copies of these documents from:

 UAS Drone Corp.

 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
2023 fiscal year, there were no material changes to the procedures by which security holders may recommend nominees to the board of directors.

 Item 11. Executive Compensation.

 Summary Compensation Table

 The following sets forth the
compensation of UAS's Chief Executive Officer during fiscal 2023, and the other persons who served as executive officers during
the Company's fiscal year ended December 31, 2023. Unless otherwise noted, the amounts shown represent what was earned in the Company's
fiscal year ended December 31, 2023.

 SUMMARY COMPENSATION TABLE - FISCAL YEAR ENDED
DECEMBER 31, 2023

 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 -

 2022

 107,878

 61,410

 169,289

 CEO

 2023

 97,568

 20,864

 118,431

 Shlomo Zakai -

 2022

 28,900

 8,497

 37,397

 CFO

 2023

 35,262

 2,685

 37,947

 Restricted Stock Awards

 There were no shares of restricted
stock awarded during the Company's fiscal year ended December 31, 2023.

 OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023

 Outstanding Equity Awards at Fiscal Year
End

 There are no outstanding equity
awards for the year ended December 31, 2023 except as disclosed below.

 Grants of Plan-Based Awards for 2023

 The following table presents
the outstanding equity awards held as of December 31, 2023 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

 -

 -

 112,500

 11,250

 -

 -

 50,000

 -

 -

 -

 30,000

 -

 -

 -

 30,000

 -

 -

 -

 12,500

 -

 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, 2023, 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. The total number of awards to acquire shares of the Company's common stock may not exceed 4,800,000
shares. 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.

 The following table summarizes
certain information regarding our equity compensation plans as of December 31, 2023:

 Plan Category

 Number of
 securities

to be
 issued upon
 exercise of
 outstanding

 Weighted-average
 exercise
 price of
 outstanding

 Number of
 securities remaining
 available for
 future issuance under equity
 compensation plans

 Equity compensation plan not approved by security holders

 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.

 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. These amounts are exclusive of Israeli VAT, if applicable.

 Director Compensation

 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, 2023:

 Name

 Fees Earned
 or Paid in
 Cash
 ($)

 Stock Awards
 ($)

 Total
 ($)

 Yariv Alroy

 64,395

 -

 64,395

 60,655

 6,444

 67,099

 84,550

 10,739

 95,289

 9,253

 6,444

 15,697

 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 14, 2024 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.

 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 14, 2024, 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:

 4,994,537

 9.2
 %

 Yariv Alroy

 5,813,267

 10.72
 %

 90,000

 0.17
 %

 Yossef Balucka

 337,500

 0.62
 %

 1,466,801

 2.70
 %

 37,500

 0.07
 %

 All directors and executive officers as a group (6 Persons)**

 12,739,605

 23.20
 %

 (1)
 The persons named in this table have sole voting and investment power with
respect to all shares of common stock reflected as beneficially owned by them. A person is deemed to be the beneficial owner of securities
that can be acquired by such person within sixty (60) days from March 14, 2024, and the total outstanding shares used to calculate each
beneficial owner's percentage includes such shares, although such shares are not taken into account in the calculations of the total
number of shares or percentage of outstanding shares. Beneficial ownership as reported does not include shares subject to option or conversion
that are not exercisable within 60 days of March 14, 2024.

 (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 January 29, 2024. Includes (i) 10,000,000 shares of Common Stock and 10,000,000 warrants
exercisable into 10,000,000 shares of Common Stock held directly by More Provident Funds and Pension Ltd., an Israeli company controlled
by Y.D More Investments Ltd. and (ii) 1,250,000 shares of Common Stock and 1,250,000 warrants exercisable into 1,250,000 shares of Common
Stock held directly by More Co-Invest (L.P.), Limited Partnership, an Israeli limited partnership, whose general partner, More Co-Invest
1 (G.P.) Ltd., is controlled by Y.D More Investments Ltd. 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.

 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, 2022 and 2023, 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

 The board of directors has
not determined that we have any independent directors.

 Item 14. Principal Accounting Fees and Services.

 Our independent registered
public accounting firm for the year ended December 31, 2023 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, 2023
and 2022:

 Fee category

 2023

 2022

 Audit Fees

 $
 105,000

 $
 68,000

 Audit - related fees

 -

 -

 Tax fees

 10,000

 -

 All other fees

 -

 -

 Total fees

 $
 115,000

 $
 68,000

 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 UAS's 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.

 Item 15. Exhibits, Financial Statement Schedules.

 (a) Financial Statements.

 Balance Sheets of UAS Drone Corp. as of December 31, 2023 and 2022

 Statements of Operations of UAS Drone Corp. for the years ended December 31, 2023 and 2022

 Statements of Stockholders' Equity of UAS Drone Corp. for the years ended December 31, 2023 and 2022

 Statements of Cash Flows of UAS Drone Corp. for the years ended December 31, 2023 and 2022

 Notes to Financial Statements

 (b) Exhibits.

 Exhibit

Number

 Description

 2.1

 Share Exchange Agreement dated March 4, 2020, by and among UAS Drone Corp., Duke Robotics, Inc., 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 UAS Drone Corp., 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 the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020).

 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

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

 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 UAS Drone Corp. 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).

 Exhibit

Number

 Description

 10.5

 Warrant Extension Agreement, dated April 5, 2022, between UAS Drone Corp. and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2022).

 10.6

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

 14.1

 Amended and Restated Code of Business Conduct and Ethics. (incorporated by reference to Exhibit 14.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2020).

 21.1

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

 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.

 *

 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.

 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.

 UAS DRONE CORP.

 By:

 /s/ Yossef Balucka

 Yossef Balucka

 Chief Executive Officer

 (Principal Executive Officer)

 By:

 /s/ 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.

 By:

 /s/ Yossef Balucka

 Yossef Balucka

 Chief Executive Officer

 (Principal Executive Officer)

 By:

 /s/ Shlomo Zakai

 Chief Financial Officer

 (Principal Financial Officer and

 Principal Accounting Officer)

 By:

 /s/ Yariv Alroy

 Yariv Alroy

 Chairman of the Board

 By:

 /s/ Erez Nachtomy

 Vice Chairman of the Board

 By:

 /s/ Sagiv Aharon

 Chief Technology Officer and Director

 By:

 /s/ Eran Antebi

 Director

 UAS DRONE CORP.

 CONSOLIDATED FINANCIAL STATEMENTS

 AS OF DECEMBER 31, 2023

 UAS DRONE CORP.

 CONSOLIDATED FINANCIAL STATEMENTS

 AS OF DECEMBER 31, 2023

 Page

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

(Firm Name: Somekh Chaikin / PCAOB ID No. 1057/ Location: Tel Aviv, Israel)

 CONSOLIDATED FINANCIAL STATEMENTS:

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

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

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

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

 Notes to Consolidated Financial Statements

 F-7 – F- 22

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Stockholders and Board of Directors

UAS Drone Corp.:

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated
balance sheets of UAS Drone Corp., and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated
statements of comprehensive loss, changes in stockholders' equity, and cash flows for each of the years in the two-year period ended
December 31, 2023 and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and
the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023 in conformity
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 (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

 Somekh Chaikin

 Member Firm of KPMG International

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

 Tel Aviv, Israel

 March 15, 2024

 F- 2

 CONSOLIDATED
BALANCE SHEETS

 (USD in thousands except share and per share data)

 2023

 2022

 A s s e t s

 Current Assets

 Cash and cash equivalents

 2,281

 2,849

 Other current assets (Note 3)

 Total Current Assets

 2,322

 2,935

 Operating lease right-of-use asset and lease deposit (Note 4)

 Property and equipment, net (Note 5)

 Total Assets

 2,479

 2,992

 Liabilities and Shareholders' Equity

 Current Liabilities

 Accounts payable

 Operating lease liability

 Other liabilities (Note 6)

 Total current liabilities

 Related parties loans (Note 7)

 Operating lease liability (Note 4)

 -

 Total Liabilities

 Stockholders'
 Equity (Note
 8)

 Common stock of US$ 0.0001 par value each ("Common Stock"):
 100,000,000 shares authorized as of December 31, 2023 and 2022; issued and outstanding 54,218,813 shares as of December 31, 2023 and 2022.

 Additional paid-in capital

 11,750

 11,437

 Accumulated deficit

 ( 9,947
)

 ( 9,016
)

 Total Stockholders' Equity

 1,808

 2,426

 Total liabilities and stockholders' Equity

 2,479

 2,992

 The accompanying notes are an integral part
of the consolidated financial statements.

 F- 3

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 (USD in thousands except share and per share data)

 2023

 2022

 Revenues (Note 11(2))

 -

 Cost of revenues

 ( 273
)

 -

 Gross profit

 Research and development expenses

 ( 3
)

 ( 20
)

 General and administrative expenses (Note 10)

 ( 826
)

 ( 1,104
)

 Operating loss

 ( 802
)

 ( 1,124
)

 Financial income, net

 Net loss

 ( 726
)

)

 Loss per share (basic and diluted) (Note 13)

 ( 0.02
)

 ( 0.06
)

 Basic and diluted weighted average number of shares of Common Stock outstanding

 54,530,423

 54,318,060

 The accompanying notes are
an integral part of the consolidated financial statements.

 F- 4

 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, 2021

 54,018,813

 9,115

 ( 6,019
)

 3,101

 Issuance of shares to service provider (note 9)

 200,000

 (*)-

 -

 Share based compensation for services

 -

 -

 -

 Warrants modification (note 8)

 -

 -

 1,896

 ( 1,896
)

 -

 Net loss for the year

 -

 -

 -

)

)

 BALANCE AT DECEMBER 31, 2022

 54,218,813

 11,437

 ( 9,016
)

 2,426

 Share based compensation for services

 -

 -

 -

 Warrants modification (note 8)

 -

 -

 ( 205
)

 -

 Net loss for the year

 -

 -

 -

 ( 726
)

 ( 726
)

 BALANCE AT DECEMBER 31, 2023

 54,218,813

 11,750

 ( 9,947
)

 1,808

 (*)
 represents
amount less than $1 thousand.

 The accompanying notes are an integral part
of the consolidated financial statements.

 F- 5

 CONSOLIDATED STATEMENTS OF CASH FLOWS

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

 2023

 2022

 CASH FLOWS FROM OPERATING ACTIVITIES:

 Net loss for the year

 ( 726
)

)

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

 Depreciation

 Share based compensation

 Issuance of shares for services

 -

 Interest on loans from related parties

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

 -

 Change in operating lease liability

 ( 47
)

 -

 Increase in lease deposit

 -

 ( 15
)

 Decrease (increase) in other current assets

 ( 42
)

 Increase in accounts payable

 Increase (decrease) in other liabilities

 ( 15
)

 Net cash used in operating activities

 ( 548
)

 ( 672
)

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchase of property and equipment

 ( 18
)

 ( 35
)

 Net cash used in investing activities

 ( 18
)

 ( 35
)

 Effect of exchange rate changes on cash and cash equivalents

 ( 2
)

 ( 4
)

 DECREASE IN CASH AND CASH EQUIVALENTS

 ( 568
)

 ( 711
)

 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

 2,849

 3,560

 CASH AND CASH EQUIVALENTS AT END OF YEAR

 2,281

 2,849

 Supplemental disclosure of cash flow information:

 Non cash transactions:

 Initial recognition of operating lease right-of-use assets

 -

 Initial recognition of operating lease liability

 -

 The accompanying notes are an integral part
of the consolidated financial statements.

 F- 6

data)

 NOTE 1 –
GENERAL

 A.
 UAS Drone Corp. ("the Company" or "USDR")
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 focused on the development of an advanced robotics stabilization system that enables remote,
real-time, pinpoint accurate firing of small arms and light weapons as well as other civilian applications with an emphasis on the field
of infrastructure maintenance. The Company's advanced robotics system is able to achieve pinpoint accuracy regardless of the movement
of the weapons platform or the target.

 Effective October 22, 2020, Company's
common stock is quoted on the OTC Markets Group, Inc.'s OTCQB tier Venture Market, under the symbol "USDR".

 B.
 In October 2023, Hamas terrorists infiltrated Israel's
southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive
rocket attacks on Israeli population and industrial centers located along Israel's border with the Gaza Strip and in other areas
within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following
the attack, Israel's security cabinet declared war against Hamas and a military campaign against these terrorist organizations
commenced in parallel to their continued rocket and terror attacks. Following the attack by Hamas on Israel's southern border, Hezbollah
in Lebanon also launched missile, rocket, drone and shooting attacks against Israeli military sites, troops and Israeli towns in northern
Israel. In response to these attacked, the Israeli army has carried out a number of targeted strikes on sites belonging to Hezbollah in
southern Lebanon. It is possible that the hostilities with Hezbollah will escalate, and that other terrorist organizations, including
Palestinian military organizations in the West Bank, as well as other hostile countries, such as Iran, will join the hostilities. Such
hostilities may include terror and missile attacks.

 Certain of our consultants in Israel may be called up for reserve duty,
in addition to employees of our service providers located in Israel, have been called, for service and such persons may be absent for
an extended period of time. In the event that hostilities disrupt our ongoing operations, our ability to deliver or provide services in
a timely manner to meet our contractual obligations towards customers and vendors could be materially and adversely affected.

 The intensity and duration of
Israel's current war against Hamas is difficult to predict, as are such economic implications on the
Company's business and operations and on Israel's economy in general. These events may be intertwined with wider
macroeconomic indications of a deterioration of Israel's economic standing, which may have a material adverse effect on the
Company and its ability to effectively conduct its operations.

 Since this is an event that is not
under the control of the Company, and matters such as the fighting continuing or stopping may affect the Company's assessments,
as at the reporting date the Company is unable to assess the extent of the effect of the war on its business activities and on the business
activities of its subsidiaries, and on their medium and long term results. The Company is continuing to regularly follow developments
on the matter and is examining the effects on its operations and the value of its assets.

 F- 7

data)

 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.
 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.

 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. As applicable to these financial statements, the most significant estimates and assumptions
relate to share based compensation.

 C.
 Functional currency

 A majority of the Group's revenues
is generated in U.S. dollars. In addition, most of the Group's costs are denominated and determined in dollars. Management believes
that the dollar is the currency in the primary economic environment in which the Group operates. Thus, the functional and reporting currency
of the Group is the U.S. 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 operations as financial income or expenses, as appropriate.

 D.
 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.

 E.
 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

data)

 NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (continued)

 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 Operations and Comprehensive Loss.

 2.
 Rates of depreciation:

 %

 Furniture and office equipment

 7 - 15

 Computers

 Office improvements

 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, 2023 or 2022.

 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 income
taxes are determined based on the estimated future tax effects of differences between the financial accounting and the tax bases of assets
and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected to be in effect
when these differences reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred
tax assets to amounts more likely than not to be realized.

 The Group accounts for uncertain tax
positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition, measurement
and disclosure of uncertain tax positions recognized in an enterprise's financial statements. According to ASC Topic 740-10, tax
positions must meet a more-likely-than-not recognition threshold. The Company's accounting policy is to classify interest and penalties
relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its fiscal 2023 and 2022 financial
statements and did not recognize any liability with respect to an unrecognized tax position in its balance sheets.

 F- 9

data)

 NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES (continued)

 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. (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 2023 and 2022, no potential shares are considered.

 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". Share-based payments including grants of stock options are recognized
in the statement of comprehensive loss as an operating expense based on the fair value of the award at the date of grant. The fair value
of stock options granted is estimated using the Black-Scholes option-pricing model. The Company has expensed compensation costs, net of
estimated forfeitures, over the requisite service period.

 F- 10

data)

 NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (continued)

 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, notes payables, 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.

 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

 F- 11

data)

 NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (continued)

 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

data)

 NOTE 3 –
OTHER CURRENT ASSETS

 2023

 2022

 Prepaid and deferred expenses

 Government Institutions

 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 Company's use at February 2023. Based on the lease agreement terms, the Company made a deposit of $ 15 as a guarantee for its lease commitments

 B.
 The components of operating
lease expense for the period ended December 31, 2023 and 2022 were as follows:

 2023

 2022

 Operating lease expense

 -

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

 2023

 2022

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

 Operating cash flows from operating leases

 -

 Right-of-use assets obtained in exchange for lease obligations (non-cash):

 Operating leases

 -

 F- 13

data)

 NOTE 4 –
LEASES (continued)

 D.
 Amounts reported in the consolidated balance sheets related
to operating lease as of December 31, 2023 and 2022 are as follows:

 2023

 2022

 Operating leases:

 Operating leases right-of-use asset and lease deposit

 -

 Current operating lease liabilities

 -

 Non-current operating lease liabilities

 -

 Total operating lease liabilities

 -

 Weighted average remaining lease term (years)

 2.09

 -

 Weighted average discount rate

 8.75
 %

 -

 E.
 Future minimum lease payments under non-cancellable leases
as of December 31, 2023 are as follows:

 2024

 2025

 Total operating lease payments

 Less: imputed interest

 ( 9
)

 Present value of lease liabilities

 NOTE 5 –
PROPERTY AND EQUIPMENT, NET

 2023

 2022

 Computers

 Furniture and office equipment

 Leasehold improvements

 Less - accumulated depreciation

 ( 50
)

 ( 30
)

 Total property and equipment, net

 In the years ended December 31,
2023 and 2022, depreciation expenses amounted to $ 20 and $ 2 respectively, and additional property and equipment were purchased for
cash in an amount of $ 18 and $ 35 during the years ended December 31, 2023 and 2022, respectively.

 F- 14

data)

 NOTE 6
– OTHER LIABILITIES

 2023

 2022

 Accrued expenses

 Other (note 8)

 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 raises 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, 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 are exercisable immediately and 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- 15

data)

 NOTE 8 –
 SHAREHOLDERS' EQUITY (continued)

 On May 11, 2021, the Company signed
a service agreement with a non U.S. third party pursuant to which the service provider agreed to provide the Company with financial and
project oversight services with respect to the Offering. Pursuant to the service agreement, the Company agreed to pay the service provider
(1) 6% of the investment amounts received which amounted to $351 and (2) options to receive a number of units (each unit for a price of
$0.40 includes one share and one warrant with an exercise price of $0.40 per share) equal to 6% of the investment amount received, divided
by $0.40.

 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.

 The Company accounted for the Warrants
extensions as a dividend component. The fair value of the Warrants modifications were estimated using the Black-Scholes option-pricing
model and is presented within the consolidated statements of changes in shareholders equity as a credit to additional paid in capital
and a debit to the accumulated deficit.

 The following are
the data and assumptions used:

 April 5,

 2022

 November 1,

 2023

 Dividend yield

 Expected volatility (%)

 105.25 - 149.49 %

 128.44 - 184.22 %

 Risk-free interest rate (%)

 1.45 - 2.14 %

 5.44 - 5.56 %

 Expected term of options (years)

 0.6 - 1.68

 0.03 - 1.11

 Exercise price (US dollars)

 0.4

 0.4

 Share price (US dollars)

 0.35

 0.08

 Fair value (USD in thousands)

 1,896

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

 On March 1, 2022,
the Company signed an investor relations service agreement with a consultant pursuant to which the Company agreed to pay the consultant
a monthly retainer and in addition, to issue the consultant 300,000 restricted shares of common stock, to be issued in three tranches.
In the event that the agreement is terminated prior to the issuance date, the remaining share obligation shall be void. On March 17, 2022,
the Company issued 100,000 restricted shares of Common Stock pursuant to the agreement. On July 13, 2022 the Company issued 100,000 restricted
shares of Common Stock pursuant to the agreement. On September 22, 2022, the Company decided to terminate the service agreement. The Company
determined the value of the shares issued based on Company's shares price at the agreement date, at $ 31 of which were recorded as
share based compensation expenses in the year ended December 31, 2022.

 F- 16

data)

 NOTE 9 –
SHARE BASED COMPENSATION

 The following table presents the Company's
stock option activity:

 Number of
 Options

 Weighted
 Average
 Exercise
 Price

 Outstanding at December 31, 2021

 0.81

 Granted

 -

 -

 Exercised

 -

 -

 Forfeited or expired

 -

 -

 Outstanding at December 31, 2022

 0.81

 Granted

 -

 -

 Exercised

 -

 -

 Forfeited or expired

 -

 -

 Outstanding on December 31, 2023

 0.81

 Number of options exercisable on December 31, 2023

 1,906,952

 0.86

 The aggregate intrinsic value of the
awards outstanding as of December 31, 2023 is $ 45. These amounts represent the total intrinsic value, based on the Company's stock
price of $ 0.10 as of December 31, 2023, less the weighted exercise price.

 The stock options outstanding as of
December 31, 2023, have been separated into exercise prices, as follows:

 Exercise price

 Stock

 outstanding

 Weighted

 average

 remaining

 contractual

 life – years

 Stock

 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

 3.28

 1,906,952

 The stock options outstanding as of
December 31, 2022, have been separated into exercise prices, as follows:

 Exercise price

 Stock

 outstanding

 Weighted

 average

 remaining

 contractual

 life – years

 Stock

 vested

 As of December 31, 2022

 0.0001

 450,000

 3.23

 225,000

 0.38

 1,256,822

 4.53

 628,412

 1.00

 99,369

 4.50

 99,369

 2.25

 620,621

 4.50

 434,311

 4.28

 1,387,092

 F- 17

data)

 NOTE 9 –
SHARE BASED COMPENSATION (continued)

 As of December 31, 2023 and 2022, there
was $ 28 and $ 137, respectively of total unrecognized compensation cost related to non-vested options. The cost is expected to be recognized
over a weighted average period of 0.38 years. Compensation expense recorded by the Company in respect of its stock-based compensation
awards for the period ended December 31, 2023 and 2022, was $ 108 and $ 395, respectively and are included in General and Administrative
expenses in the Statements of Operations.

 NOTE 10 –
 GENERAL AND ADMINISTRATIVE EXPENSES

 2023

 2022

 Professional services

 Share base compensation

 Insurance

 Adverting and promotion

 -

 Rent and office maintenance

 Levies and tolls

 Depreciation

 Other expenses

 1,104

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

 F- 18

data)

 NOTE 11
– AGREEMENTS (continued)

 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 from the Evaluation Phase of the Project
during 2023 and 2022.

 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.

 No royalties were accrued during the years
ended December 31, 2023 and 2022.

 2.
 On August 15, 2022, Duke Israel, signed a Collaboration and Development Agreement with the Israel Electric Corporation Ltd. (IEC), to perform a test pilot together with IEC of a robotic drone-enabled system for cleaning electric utility insulators to be developed by Duke Israel for a total amount of $ 300. ICE is a public utility and a 99 % government-owned company that generates, transmits, and supplies electricity to all sectors of the State of Israel. During October 2023, the Company successfully completed its obligations under the agreement with IEC upon delivery of the robotic drone, and accordingly recorded revenues and corresponding expenses at that point in time. As part of the agreement, Duke will be obligated to pay IEC percentage of earned revenues for all future transactions relating to the developed technology up to a maximum of $ 900.

 F- 19

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 % this reflects certain effects of the Act which includes
a reduction in the corporate tax rate from 35 % to 21 % as well as other changes. No further taxes are payable on this profit unless that
profit is distributed. 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 its inception although the tax reports of Duke Israel for the years ended by December 31, 2017 are
deemed to be final.

 As of December 31, 2023, the Company
and subsidiaries have carry forward losses for tax purposes of approximately $ 4,609, which can be offset against future taxable income,
if any.

 A.
 The following is reconciliation between the theoretical tax
on pre-tax income, at the tax rate applicable to the Company (federal tax rate) and the tax expense reported in the financial statements:

 2023

 2022

 US Dollars

 Pretax loss

 ( 726
)

)

 Federal tax rate

 %

 %

 Income tax computed at the ordinary tax rate

 Stock-based compensation

 ( 23
)

 ( 83
)

 Non-deductible income

 Tax in respect of differences in corporate tax rates

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

 ( 143
)

 ( 163
)

 -

 -

 B.
 Deferred taxes result primarily from temporary differences
in the recognition of certain revenue and expense items for financial and income tax reporting purposes. Significant components of the
Company's future tax assets are as follows:

 2023

 2022

 US Dollars

 Composition of deferred tax assets:

 Non capital loss carry forwards

 1,011

 Valuation allowance

 ( 1,011
)

 ( 875
)

 -

 -

 The net change during the year ended December
31, 2023 in the total valuation allowance amounted to $ 136.

 F- 20

 (U.S. dollars, 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, 2023 and 2022, are as follows:

 2023

 2022

 Number of shares

 Weighted average number of shares of common stock outstanding attributable to shareholders

 54,530,423

 54,318,060

 Total weighted average number of shares of common stock related to outstanding options and warrants, excluded from the calculations of diluted loss per share

 17,589,312

 17,701,812

 NOTE 14 –
 RELATED PARTIES

 A.
 Transactions and balances with related parties

 2023

 2022

 General and administrative expenses:

 Directors and Officers compensation (*)

 (*) Share base compensation

 Financing:

 Financing expense

 B.
 Balances with related parties:

 As of December 31,

 2023

 2022

 Other accounts liabilities

 Loans

 F- 21

 (U.S. dollars, except share and per share data)

 NOTE 14 –
 RELATED PARTIES (continued)

 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 NIS 30,000 (approximately $ 9,650), reimbursement of
expenses and discretionary performance bonus. In conjunction with the appointment of Mr. Balucka, the Company issued to Mr. Balucka options
to purchase 450,000 shares of the Company's commons stock at an exercise price of $ 0.0001 per share, subject to and in accordance
with the terms and conditions of an option plan. The options shall vest over a three year period, with 50 % of the options to vest on the
first anniversary of the grant date, and the balance of 50 % of the options to vest in equal parts on the second and third anniversary
of the grant date, respectively, subject to the Mr. Balucka providing continued services to the Company. The fair value of the options
was determined using the Black-Scholes pricing model, assuming a risk free rate of 0.07 %, a volatility factor of 193.47 %, dividend yields
of 0 % and an expected life of 5 years. Total value of share based compensation were estimated to an amount of $ 189. Total share based
compensation expenses during the Year ended December 31, 2023 amounted to $ 21.

 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 193.47 %, dividend yields of 0 % and an
expected life of 3.38 years. Total value of share based compensation were estimated to an amounted of $ 176. Total share based compensation
expenses during the year ended December 31, 2023 amounted to $ 26.

 F- 22

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