Nanalysis Reports First Quarter 2023 Results.

CALGARY, AB: Nanalysis Scientific Corp. ("the Company", TSXV: NSCI, OTCQX: NSCIF, FRA: 1N1), a leader in portable NMR machines and MRI technology for industrial and research applications, releases its first quarter results ending March 31, 2023. Chief Executive Officer, Sean Krakiwsky and Chief Financial Officer, Randall McRae will host a conference call at 5 P.M. Eastern Time today to discuss the results. The second call for European investors at 8:30am ET, tomorrow, Friday, May 26 has been cancelled since Mr. Krakiwsky will be conducting meetings in person.

"Nanalysis reported consolidated revenue of $4,674K for the first quarter of 2023," said Sean Krakiwsky Founder and CEO of Nanalysis. "We planned and expected K'Prime's CATSA airport security contract and Quad's revenue to be modest in the quarter as those business lines are in the early stage of roll out, but we underperformed on the rest of our business segment revenues, particularly in Benchtop NMR. Management is not satisfied with this overall financial result and has taken corrective action as identified below. That being said, I remain confident about the Company's prospects and long term vision."

Financial and Operational Highlights1

Financial highlights for the three months ended March 31, 2023:

For the three months ended March 31, 2022, the Company reported consolidated revenue of $4,674K, a decrease of $880K or 16% from the comparative period in 2022. This includes $3,034K in product sales and $1,640K of service revenue, predominantly related to security services.

Gross profit margins on product sales were 40% for the three months ended March 31, 2023. This was due to lower manufacturing department utilization, warranty costs of $135K related to the same customer service issues discussed in the December 31, 2022, financial statements, and higher weighted average costs due to post-COVID inflationary increases and supply chain issues affecting raw materials pricing. The Company is taking several steps to manage its margins and mitigate further materials cost pressure going forward.

Service gross profit margins in the quarter were (53%) as the Company accelerated its training schedule for the CATSA project and began expensing wages related to airports that were in service. Wages related to airports not yet in service continue to be deferred as prepaid expenses. Management also ramped up its training program for security service employees in conjunction with taking on more...