Nanalysis Scientific Corp.

Good afternoon, ladies and gentlemen, and welcome to the Analysis Scientific Q2 2025 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 28, 2025. And I would now like to turn the conference over to Mr. Jake Boma. Thank you. Please go ahead.

Thank you, operator, and welcome to Analysis Scientific's second quarter 2025 conference call. Before we begin, I would like to remind everyone that our remarks and responses to your questions today will contain forward-looking statements that are based on current expectations of management. These assumptions involve inherent risks and uncertainties that could cause actual results to differ materially from our responses. Certain material factors and assumptions were considered and applied in making the forward-looking statements. These risk factors are included in our filings for the six-month ended June 30, 2025. Forward-looking statements on this call may include but are not limited to statements and comments to respect to future growth of the company's business, the ability to graduate to a senior exchange, the company's acquisition strategy, the ability to develop future products, and the possible associated results. The company's actual performance and financial results in the future could differ materially from any estimates or projections of future performance applied by the forward-looking statements. The forward-looking statements made on this call speak only of today, and Analysis Scientific assumes no obligation to update such forward-looking information as a result of new information future events or otherwise except as expressly required by applicable law for additional information i encourage everyone to review our public filings and press releases which are posted on cedar filing system at www.cedarplus.ca on this call with me today are analysis founder and ceo mr sean krakowski and analysis cfo mr randall mccray With that, I would like to turn the call over to Analysis CFO, Randall McRae.

Thank you, Jake. It's a pleasure to join and speak with everyone on the call today. I'll first dive into the financial results for the second quarter, which ended June 30, 2025. All amounts referenced are in Canadian dollars. Financial highlights for the three months ended June 30th, 2025. For the three months ended, the company reported consolidated revenue of $9.6 million, a decrease of $1.9 million or 16.5% from the comparative period in 2024. This decline is primarily driven by lower product sales as ongoing global economic uncertainty and tariff risk continue to constrain customer capital budgets globally. Within the security services segment, revenue increased modestly by 9.9% year-over-year, driven by an increase in both service revenue and flow-through inventory revenue. Gross margin percentage on product sales was 61% versus 50% for the three months ended June 30, 2025 over 2024. Continuous improvement efforts have resulted in significantly improved margins over the prior year. Security service gross margin percentage in the quarter was 10%, which was the same as the prior year comparative period. The company has initiated a continuous improvement program in its processes to better manage costs of security services, including better scheduling, improving logistics processes, and managing overtime and on-call hours. This has resulted in an improvement in margins of 4% over the first quarter of 2025, and the company expects to continue to see margins improve for the remainder of the year. Adjusted EBITDA loss for the three months ended June 30th, 2025 was negative 462,000 versus an adjusted EBITDA profit of 759,000 in the same period last year. This was primarily the result of the drop in scientific equipment sales in the quarter. Net loss was 2.1 million for the second quarter of 2025, which is an increase in loss of 127,000 over the same period in 2024. This increase in net loss was due to lower revenues from scientific equipment sales, offset by lower depreciation, stock-based compensation, and the fact that losses from associate are no longer recorded in the consolidated statement of loss and comprehensive loss due to the impairment of the quad investment in 2024. For the six months ended June 30, 2025, the company reported consolidated revenue of $20.2 million, decrease of $2.5 million, or 11% from the comparative period in 2024. This is primarily the result of a $3 million decrease in product sales, offset by a $652,000 increase in security services revenue. Gross margin percentage on product sales was 64% for the six months ended June 30, 2025, up from 49% in the prior year. Continuous improvement programs have led to significant improvement in margins in scientific equipment sales for the six-month ended, as well as for the three. Gross margin percentage on service revenue was 8% for the six months ended June 30th, 2025, compared to 9% in 2024. The company has reversed its margin decline from Q4 24 and Q1 2025 and looks to continue growing margins for the rest of 2025. Adjusted EBITDA loss for the six months ended June 30th, 2025 was 282,000 versus adjusted EBITDA of 655,000 for the same period last year. The drop was primarily due to the $3 million decrease in product sales. On June 12, 2025, the company closed a fully subscribed private placement of unsecured promissory notes for gross proceeds of $2 million. The notes bear 12% annual interest, payable in cash or in common shares of the company. In connection with the financing, the company issued 1.6 million common shares at $0.25 per share to the lenders, representing 20% of the principal amount. Net proceeds will be used for general working capital and to support ongoing operations. Subsequent to June 30th, 2025, the company was able to negotiate an extension and six-month holiday on its interest-free loans from the Government of Canada. With that, I'll turn the call over to our founder and CEO, Sean Krakuski. Sean?