From The recent MD&A Report Filed on SEDARThey seem to downplay the possibility of significant sales/ revenue from the CMR in the near term and may require additional funding for development of the detection systems:
Reliance on the successful development of prototype of Cognitive Microwave Radar (CMR-1) The Company’s ability to generate future revenue or achieve or sustain profitable operations is largely dependent on its ability to attract experienced management with the requisite know-how to develop new devices and to partner with larger, more established companies in the industry to successfully commercialize products. Successfully developing the prototype of CRM-1 into a commercially viable device may take several years and significant financial resources, and the Company may not achieve this objective. In order to commercialize any product, the Company will need to conduct trials, which may not succeed, and to obtain regulatory approvals, which it may fail to do. Although presently uncertain, CMR-1 may need to comply with regulatory compliance requirements prescribed for users of WTMDs. Like several other electronic devices, WTMDs must meet certain environmental standards and electrical safety requirements. Furthermore, any detection equipment that is deployed for use at airports must comply with guidelines prescribed by the TSA, the FAA and related international standards, regulations and test certifications. The Company does not know and is unable to predict the nature and frequency of any trials the TSA and FAA will require the Company to conduct before granting any necessary approvals. The development programs may not lead to a commercial product, either because of the failure to demonstrate that product candidates are safe and effective in trials or the failure to obtain necessary approvals from the TSA, FAA and/or similar foreign regulatory agencies or due to inadequate financial or other resources to advance product candidates through the trial process for successful commercialization.
Reliance on a single product, CMR-1, and a decline in the growth of demand for these products would have a material adverse effect on our operating results and growth prospects Because the Company is currently substantially dependent on CMR-1 as its only product, factors such as changes in customer preferences may have a disproportionately greater impact on the Company than if it derived significant revenue from multiple lines of products. There can be no assurance that CMR-1 technology will attain or maintain long-term customer appeal. If customer interest in CMR-1 technology in general declines, or if there is increased competition in the market for microwave radar technology, the Company may experience a significant loss of sales, cancellation of orders from customers, loss of customers, excess inventories, inventory markdowns and deterioration of our brand image, and lower revenues and gross and operating margins as a result of price reductions and may be forced to liquidate excess inventories at a discount, any or all of which would have a material adverse impact on the Company’s operating results and growth prospects. The sales potential of the Company’s products and solutions is still at an early pre-commercial stage. The ongoing and future demands for the Company’s products and solutions, in existing and target industries, is yet to be fully established and is uncertain. There is a risk that the Company may not be able to obtain and maintain market share or that there is insufficient demand for the Company’s product for revenue to be sustainable. The Company’s future performance will be dependent on its ability to design, develop, manufacture, assemble, test, market and support its current products, as well as to continue developing new products and enhancing its current products, in a timely and cost effect manner on behalf of its customers. The Company’s existing contractual relationships gives it confidence in its ability to achieve sales and maintain a customer base within its target industries, notwithstanding the risks outlined above. The Company has, and will continue to, invest in new product development to expand its business within existing markets. The Company plans to utilize funds raised from the Offering to build on existing, and develop new, relationships in the industry (see “Use of Proceeds”). The Company also plans to prioritize its research and development efforts on technologies that offer attractive long-term growth opportunities by improving its product performance and expanding its product portfolio. The Company is actively looking at the integration of other technologies onto a common platform. Until such time as that potential integration is done, CMR-1 will remain the sole product with attendant risks from lack of diversity and technical challenges Patriot has a history of losses and the Company may be unable to achieve or sustain profitability