Management's Discussion & Analysis

For the quarter ended March 31, 2026

Nanalysis Scientific Corp.

NANALYSIS SCIENTIFIC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2026
AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND CERTAIN OTHER EXCEPTIONS AS NOTED

Forward Looking Statements...3
Overview...5
Critical Accounting Policies and Estimates...7
SCIENTIFIC EQUIPMENT SEGMENT...9
Product Overview...9
Technology Portfolio...10
Software Portfolio...12
Technology Under Development...12
Third Party Equipment Sales...13
SECURITY SERVICES SEGMENT...14
FINANCE AND OPERATIONS...15
Overall Performance and Discussion of Operations...16
Investment in Capital Development Costs and Research and Development Expenditures...20
Summary of Quarterly Results...21
Selected Annual Financial Information...22
LIQUIDITY & CAPITAL RESOURCES...22
Loans and Borrowings...24
Lease Liabilities...26
Financial Management...27
SHARE CAPITAL...28
REVENUE AND SEGMENT INFORMATION...32
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT...33
RELATED PARTY DISCLOSURE...37

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READER AND FORWARD-LOOKING STATEMENT ADVISORY

The Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2026, of the financial condition and results of operations of Nanalysis Scientific Corp. ("the "Company" or "Nanalysis"), is prepared as at May 19, 2026. This discussion should be read in conjunction with the Company's interim condensed consolidated financial statements (hereafter referred to as the "financial statements" or "interim condensed consolidated financial statements") for the three months ended March 31, 2026, and notes thereto. Other information on Nanalysis, including the Company's Annual Information Form, is available on SEDAR+ at www.sedarplus.ca and on the Company's website at www.nanalysis.com.

This MD&A and the interim condensed consolidated financial statements were reviewed by the Audit Committee of the Company's Board of Directors and approved by Nanalysis' Board of Directors on May 19, 2026. All dollar figures are in thousands of Canadian dollars, except per share amounts or unless otherwise stated.

This discussion should not be considered all-inclusive as it does not include all changes regarding general economic, political, governmental and environmental events. Certain comparative figures in this MD&A have been reclassified to conform with the presentation adopted in the current period.

Forward Looking Statements

This MD&A contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements included herein that address activities, events, or developments that Company expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking information is often, but not always, identified by the use of words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may", "projected", "sustain", "continues", "strategy", "potential", "projects", "grow", "take advantage", "estimate", "well positioned" or similar words or phrases suggesting future outcomes. In particular, this MD&A may contain forward-looking statements relating to: the continued stability in the Scientific Equipment segment; the replacement of units; the expectations regarding the Security Services segment; revenue increases from the Airport Security Maintenance Business; the issuance of new securities by the Company; expectations regarding cost reduction or efficiency improvement plans; future revenue, operations, opportunities, business strategies, development and production plans, and competitive advantages.

The forward-looking statements regarding the Company are based on certain key expectations and assumptions of the Company concerning anticipated financial performance, tariffs and international trade relations, business prospects, strategies, regulatory developments, exchange rates, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of labour and services and the ability to obtain financing on acceptable terms and future costs and expenses being based on historical costs and expenses, adjusted for inflation, all of which are subject to change based on market conditions and potential timing delays. Although management of the Company considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. Additionally, in the normal course of operations, the Company may become involved in, named as a party to, or be the subject of, various legal proceedings. The outcome of outstanding, pending, or future proceedings cannot be predicted with certainty. For claims in which outcomes are not determinable, no provision for settlement has been made in the consolidated financial statements.

By their very nature, forward-looking statements involve inherent risks, uncertainties (both general and specific) and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. A number of important factors could cause the actual events or results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and

NANALYSIS SCIENTIFIC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND CERTAIN OTHER EXCEPTIONS AS NOTED

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intentions expressed in the forward-looking statements, including, among other things: general economic and market factors, including business competition; changes in government regulations or in tax laws; component prices; technology development or operational activities; inability to scale manufacturing; changes in market demand; changes in international trade regulations, affecting the Company; timing and availability of external financing on acceptable terms; the ability of the Company to maintain its debt covenants and servicing requirements, and lack of qualified, skilled labour or loss of key individuals; as well as those factors detailed from time to time in the Company's interim and annual financial statements, the management's discussion and analysis of those statements, and in the Company's annual information form filed with regulators in Canada at www.sedarplus.ca. Readers are cautioned that the foregoing list is not exhaustive.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those contained in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking statements or information.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this MD&A are made as of the date of this MD&A, and the Company does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

NANALYSIS SCIENTIFIC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND CERTAIN OTHER EXCEPTIONS AS NOTED

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Business overview

Overview

The Company is the ultimate parent in the group. In June 2019, the Company completed a reverse takeover ("RTO") and obtained a listing on the TSX-V under the symbol "NSCI". The Company's executive leadership is responsible for strategic decision making, resource allocation, and assessing financial performance and, as a group, is identified as our chief operating decision maker for the purposes of reporting segment information under International Financial Reporting Standards ("IFRS").

The Company carries out its business within two reportable business segments: Scientific Equipment and Security Services.

Scientific Equipment Segment

Nanalysis is a provider of cutting-edge, patent-protected magnetic resonance ("MR") technology to facilitate simple and rapid unknown chemical identification, quantification and diagnostics in a number of end markets including pharmaceutical, biotechnology, chemical, security, food, oil & gas and educational industries. Customers include Health Canada, Nestlé, Mars Wriggly, Eli Lilly, Johnson & Johnson, Takeda Pharmaceutical, BASF, Hitachi Chemical, US Department of Agriculture, Lubrizol, Aramco Services, SABIC, Oxford University, Harvard University and many other Fortune 500 organizations.

The scientific equipment segment is primarily engaged in the development and distribution of MR technology into industrial, research and teaching markets through the sale of accessible, affordable, and automatable MR systems. By focusing on innovation in both method development and magnet and electronic design, the Company's product line addresses unmet needs of customers in a variety of applications, including pharmaceutical, academia, mining, oil and gas, and the cannabis industry, among others. Founded in 2009 with the specific intent of developing the world's first portable MR spectrometer, Nanalysis aimed to address the three main limitations of this powerful MR technique – affordability, accessibility and automatability. After approximately four years of development, Nanalysis began shipping its first commercial product in 2012. Since then, Nanalysis has expanded the platform's functionality, including launching its 100MHz instrument, which has the highest usable field on a fully featured benchtop NMR on the market, to address industrial market demands for increased performance metrics. In 2024, the Company continued to develop its 60Mhz and 100Mhz platforms to further improve manufacturability and continue to enhance end user experience. In early 2025, this resulted in the launch of its new 60MHz instrument, which is based on the successful 100MHz product line.

In March 2020, the Company acquired all outstanding shares of RS2D S.A.S., a complementary technology company based in Strasbourg, France, that specializes in the development of cutting-edge MR electronics. Based on a single electronic board, RS2D

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has developed MR product lines in high field ("HF"), Nuclear Magnetic Resonance ("NMR"), and Magnetic Resonance Imaging ("MRI") that can further advance Nanalysis' existing product lines in the Scientific Equipment segment, while rounding out the Company's MR technology portfolio.

In July 2021, the Company acquired One Moon Scientific ("OMS"), a software company based in New York, USA, specializing in a suite of software tools to streamline and automate MR data analysis and management.

In January 2022, the Company acquired K'(Prime) Technologies Inc. ("K'Prime"). Founded in 1997, K'Prime is a North American sales and service company, with a particular focus on scientific instrumentation for pharma, food, chemical and oil & gas customers, as well as imaging systems for security applications. Within the Scientific Equipment segment, the Company has provided manufacturer representative services as an outsourced sales force for original equipment manufacturers of chemical analysis laboratory instrumentation and provided ad hoc maintenance and other services on the same equipment, although the Company phased out this service line in 2025.

Nanalysis continued to expand its presence in the NMR market with its 39% (March 31, 2025 - 43%) strategic investment in QUAD Systems AG ("Quad") in 2022, a company based in Zurich, Switzerland that offers traditional MR technology with innovative solutions to address long standing limitations of MR technology, including accelerated data acquisition and improved sensitivity in biological samples. In April 2023, Quad launched its full high-field NMR system with a minimum resolution of 400MHz. Nanalysis supports Quad with the development and manufacturing of an NMR console capable of resolutions from 300MHz to 800MHz.

For the year ended December 31, 2024, the Company identified impairment indicators related to its investment in Quad, and a loan advanced to Quad in 2023. The Company completed an impairment analysis on Quad using the discounted cash flow method and expected credit losses method for the investment and loan, resulting in full impairment of both balances. No further impairment or recovery was recorded since.

The Company maintains a focused, direct sales force in the United States, Germany, France, and Canada, and works through distributors and dealers in other geographic areas to ensure market penetration.

Security Services Segment

The Company's Security Services segment provides preventative and on-call maintenance services for technological detection equipment across a variety of security verticals, as well as general sales and maintenance of commercial security equipment. Since the Company's acquisition of K'Prime in January 2022, the Company has been providing services for original equipment manufacturers and individual customers in service lines such as airport security equipment maintenance, secure facility detection equipment maintenance, and installation of such equipment. In May 2022, the Company was awarded a six-year, $160 million contract to provide airport security equipment maintenance services across Canada. This contract allowed the Company to materially expand its security services business by providing preventative maintenance, on-call maintenance, and ad-hoc services in Canadian airports through the second quarter of 2028, with two five-year renewal periods at the customer's option. Upon adding the new service (the "Airport Security Maintenance Business"), the Company rapidly expanded this segment. The Company began ramping up the Airport Security Maintenance Business in 2022 and completed its rollout of all essential services in all required locations in January 2024.

Currently, the Company has over 130 employees in the Security Services segment and operates in all provinces and territories in Canada. The Company provides preventative maintenance, corrective maintenance, and additional project work related to the Airport Security Maintenance Business in up to 89 active airports and training locations in Canada. This entails having technicians stationed in 24 primary locations while travelling for maintenance work in satellite locations tied to the primary location. Under the

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existing airport security maintenance contract in Canada, the Company must maintain strict response times in the event of equipment breakdown or malfunction and provide on-call services in its primary locations. Response times required vary from airport to airport. In addition, the Company provides inventory services to the customer by maintaining certain spare parts stock at various locations within Canada. This involves the Company monitoring inventory levels, ordering, and distributing inventory within Canada on behalf of the customer. With the project roll-out complete, the Company continues to enhance efficiency in this business and complete additional project work for the customer. Currently, this constitutes the majority of the Company's Security Services segment.

In addition, the Company provides installation and maintenance for a wide spectrum of security equipment, including security cameras, access controls, and screening systems, including millimeter wave and X-Ray technology, to a variety of customers. The Company is continuing to pursue growth initiatives in its services business.

The Company expects to expand the Security Services segment by adding new customers and entering into new service agreements in the future.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements and this MD&A requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Notes 2 and 3 of the Company's audited consolidated financial statements as at and for the year ended December 31, 2025, contain a description of the accounting policies, judgements, estimates and assumptions that are considered significant.

Non-IFRS and Supplementary Financial Measures

The Company prepares and reports its financial statements in accordance with IFRS as issued by the International Accounting Standards Board, as adopted by the Canadian Accounting Standards Board. However, this MD&A may make references to certain non-IFRS measures, including key performance indicators used by management. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.

The Company uses non-IFRS measures, including, Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA") and Loans and leases, which may be calculated differently by other companies. These non-IFRS measures and metrics are used to provide investors with supplemental measures of the Company's operating performance and liquidity and thus highlight trends in the Company's business that may not otherwise be apparent when relying solely on IFRS measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies in similar industries. Management also uses non-IFRS measures and metrics to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to determine components of executive compensation.

NANALYSIS

Adjusted EBITDA

($000's)	Three months ended March 31
	2026	2025	($) Change
Net loss	(1,281)	(1,307)	26
Depreciation and amortization expense	888	924	(36)
Finance expense	354	327	27
Stock-based compensation	63	131	(68)
Other (income) expenses	13	(138)	151
Amortization of deferred wages	216	190	26
Current income tax expense (recovery)	33	27	6
Deferred income tax (recovery) expense	6	26	(20)
Adjusted EBITDA	292	180	112

Loans and Leases

($ 000's)	March 31, 2026	December 31, 2025
Total loans and borrowings net of finance fees	13,468	15,990
Lease liabilities	1,400	1,588
Loans and Leases	14,868	17,578

Supplementary Financial Measures

The Company may also use supplementary financial measures, which are intended to be disclosed on a periodic basis to depict the historical or expected future financial performance, cash position, or cash flow of the Company, and are not a non-IFRS measures not presented in the financial statements. The measures discussed in the MD&A include:

Working capital, which is defined as current assets less current liabilities;
Gross margin, which is defined as either Product sales less Cost of product sold, or, Security services revenue less Security services cost; and,
Gross margin percentage, which is defined as either (Product sales less Cost of product sold) divided by Product sales or (Security services revenue less Security services costs) divided by Security services revenue.

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SCIENTIFIC EQUIPMENT SEGMENT

Product Overview

Magnetic Resonance Test, Measurement and Diagnostic Systems

The Company's line of MR imaging and spectroscopy systems are designed to offer accessible and affordable options to proliferate the use of this powerful technique in underserved markets (e.g., academia, small and medium sized enterprise based chemical production, etc.), industrial quality assurance and control assays (e.g., pharma/biotechnology, materials/polymers, cannabis, food, etc.), process control (e.g., crude refining, chemical production), and, in the long-term vision of the Company, point-of-need diagnostics (e.g. doctor's offices etc.).

By powering most MR products on one electronic platform, the Cameleon 4 or $\mathrm{Cam4^{TM}}$, and building tailored software layers from the ground up, Nanalysis can optimize data acquisition, processing, analysis, and integrity. Additionally, it provides flexibility to add automated software layers to ensure that these products can be operated by non-experts without compromising repeatability or reliability of the results.

Bridging the Gap in MR Accessibility

MRI and NMR spectroscopy have long been workhorses of medical diagnostics and chemical analysis. Given the capital and operating expenditures of these instruments, however, they are often limited by accessibility and other, often lesser techniques, are used to supplement these applications. To address this issue, in 2009, the Company's first focus was on developing powerful, extremely uniform, permanent magnet-based systems that were more affordable and required little to no maintenance.

Launching its first platform, the 60 MHz, in 2012, the flagship 100MHz in 2019, and its advanced 60MHz platform in 2025, Nanalysis continues to expand its MR portfolio to offer high-field NMR electronics and accessories, as well as MRI for pre-clinical applications.

NANALYSIS SCIENTIFIC CORP.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND

CERTAIN OTHER EXCEPTIONS AS NOTED

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Technology Portfolio

		Underserved Traditional MR Markets
		Teaching	Research	Industrial QA/QC	Process	Diagnostics
Benchtop NMR	60 MHz	✓		✓	✓
	100 MHz	✓	✓
	Accessories - Flow		✓		✓
	Accessories - AUTOSampler		✓	✓
HF-NMR	QUAD NMR Console	✓	✓	✓
MRI	Cam 4 Console	✓	✓			✓
Software	NMRGUI	✓	✓	✓
	SPINit	✓	✓			✓
	NMRFx	✓	✓	✓	✓	✓

Nanalysis 60-TEACH
Nanalysis 60-NMR

The first commercial product of Nanalysis, the original 60 MHz is the most compact model in its class. Shipping commercially since 2012, there are almost 1,000 instruments in the field in a variety of applications within industries and market segments including academia, industrial QA/QC assay and process chemistry innovators and early adopters.

Most popular in the academic teaching space, the latest subproduct of this original line, the 60-TEACH, gives educators and researchers a high-quality product, unmatched in ease of use, at a competitive price point.

Launched in March 2025, the latest product from Nanalysis is the 60-NMR. Based on the successful 100-NMR platform, this next generation of the 60 MHz product offering provides superior NMR data in a standard 60 MHz field strength instrument. With a variety of optional software add-ons, this product advances Nanalysis' offering by bringing many of the same advances found in the 100-NMR Platform to a more compact, 60 MHz design.

To grow the market of the 60 MHz product line, Nanalysis is actively working with collaborators in method development to provide the necessary software layers to simplify and automate data analysis and maintain data integrity in several fields (e.g., cannabinoid detection, lithium quantification in brine).

NANALYSIS SCIENTIFIC CORP.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND

CERTAIN OTHER EXCEPTIONS AS NOTED

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Nanalysis 100-NMR

The flagship Nanalysis 100 MHz platform provides the highest usable field strength in a fully featured Benchtop NMR unit available today. Developed to meet the requirements of customers needing higher sensitivity and resolution than the original 60 MHz platform could provide, it's easy-to-use ergonomic touchscreen and unparalleled data has been well received in the market since it began shipping in late 2020.

With the launch of the new 60-NMR Platform in Q1 2025, the 100-NMR and 60-NMR offer two highly capable options to Nanalysis customers on a unified software platform.

High-Field NMR

High field NMR Console

Aimed as an OEM console to support High Field NMR systems, this compact high-field electronics platform can be incorporated on existing super conducting systems ranging from 300-800 MHz.

The Company currently manufactures these High Field NMR consoles for QUAD, in which the Company holds a 39% direct investment.

MRI

Cameleon 4 Console

The Cam 4™ console provides a compact and affordable MRI console alternative to facilitate the adoption of MRI in teaching and to springboard MRI innovations to provide safer, high-resolution instruments and develop necessary software for earlier identification with key OEM partners.

NANALYSIS SCIENTIFIC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND CERTAIN OTHER EXCEPTIONS AS NOTED

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Software Portfolio

NMRGui

The onboard Nanalysis user interface enables one-click data acquisition and processing for the Benchtop NMR product line. The interface was designed to simplify usage for non-experts while still providing more advanced users with the flexibility to modify acquisition parameters, or experiment sequences as required. This python-based software operates on a Linux operating system to allow users to write their own applications while also ensuring data integrity and automation.

SPINit

SPINit is an all-in-one MR software platform to facilitate data acquisition, processing and high-level pulse programming for the Company's High-field NMR and MRI product lines. While competitive software packages require coding knowledge and expertise to develop experiments, the SPINit design philosophy is focused on transparency and usability to generate experiments directly from a graphical interface without requiring coding. There are several optional plug-ins to SPINit which allow for tailored workflow and automation to the user. These include SPINplanner (to control an autosampler) and Driver (to launch acquisition from any software).

NMRFx

The newest component to Nanalysis' MR offerings, the NMRFx Platform offers a suite of premium software tools to streamline and automate MR data analysis and management. Originally developed in a leading pharmaceutical company, this advanced software platform was designed to be a powerful platform to provide routine, high-performance data processing and fill niches in MR data analysis including machine learning and database construction and search algorithms.

By combining these premium data analysis tools with the NMRGui software interface, Nanalysis offers analysis and application software tools alongside its NMR equipment offerings.

Technology Under Development

MRI Technology Platform

Nanalysis has worked on research projects with a variety of third parties to further develop its existing $\mathrm{Cam4^{TM}}$ console for MRI applications. Projects included improving the safety, innovation, portability, and economics for neonatal, intraoperative, and mobile MRI. Nanalysis has also worked on projects that apply MRI to non-human applications, such as the study of plants and other living things. These projects entailed combining Nanalysis' innovative core competencies associated with MRI electronics and software with that of our research partner's expertise to develop next generation MRI technology. It is the Company's current vision to one day develop an FDA approved, application specific, prevention centric MRI machine for human use, in partnership with companies experienced in the FDA approval process and system wide product knowledge. While this vision is many years

away from becoming a reality, the Company's current commercial technology in the area of NMR spectroscopy, combined with MRI research activity and commercial console technology, is taking us towards our vision, while continuing to establish a solid business foundation.

Robust Industrial Detector

The unique magnet designs at Nanalysis enable the development of an industrial-hardened spectrometer, capable of being incorporated directly into chemical production and refinery-type applications. With high-pressure and high-temperature sampling as well as explosion proof requirements, Nanalysis is working to use their existing Benchtop NMR platforms to develop an online sensor that can improve safety, limit by-product formation, and improve yields in a completely automated manner.

Automated Industrial Analyzer

Benchtop NMR also lends itself to use in streamlining industrial quality control and quality assurance assays to get accurate, reliable, and quantitative information quickly without substantial expense or requiring a high level of technical expertise. Leveraging these inherent advantages, Nanalysis is developing an illicit drug analyzer to facilitate the rapid and accurate identification of known clandestine drugs and provide law enforcement officers a tool to aid rapid identification of new psychoactive substances.

Full High-Field NMR Systems

To offer traditional NMR users improved performance and innovative MR components, as well as improved product scalability, Nanalysis acquired a 39% equity stake in Quad and their team of experienced MR specialists, who have made significant contributions to the manufacture, integration, and development of NMR methods and components. In addition to using Nanalysis Cam4™ based consoles, Quad provides the High-Field NMR market with full MR system upgrades and new Quad High Field NMR installations in the academic, pharmaceutical, and chemical industry market. In 2025 Quad completed development on two new types of probe technology and is experiencing solid demand in the market.

Third Party Equipment Sales

The Company previously operated a direct sales force in Canada that provided manufacturer representative sales services to a major chemistry equipment manufacturer in select sales territories across North America. The Company ceased providing these manufacturer representative services at the end of 2025. The Company will, however, continue to partner with third-party imaging equipment manufacturers as part of its Security Services business.

NANALYSIS SCIENTIFIC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND CERTAIN OTHER EXCEPTIONS AS NOTED

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SECURITY SERVICES SEGMENT

Airport Security Maintenance Services

The Company offers a variety of security service solutions, with a particular specialization in the maintenance of large-scale and highly complex security systems, such as those used in airport security. In May 2022, the Company was awarded a six-year, $160 million contract to service and maintain airport security equipment at Canadian airports. This significantly expanded its presence in the airport security market. The Company started rolling out the contract in the second quarter of 2022 and began providing services under it in the fourth quarter of that year. Throughout 2023, the Company continued to hire and train more than 130 employees, expanding its services. By January 2024, the Company had completed its initial rollout of the project and was delivering all essential services under the contract at each required airport across Canada. During 2025, the Company completed several continuous improvement projects to benefit its security equipment maintenance operations. Contracts like this are often renewed for at least one additional five-year term, creating the potential for a long-term recurring business opportunity in the Airport Security Maintenance Business.

The security services group offers a range of services across thirteen technical platforms, including scheduled preventive maintenance, corrective maintenance, installation and upgrade projects for detection and security equipment, and other technical maintenance services as requested by clients for various air passenger screening devices.

In July 2025, the Company partnered with Liberty Defense Holdings Ltd. to sell its HEXWAVE™ walkthrough screening equipment to both the Canadian aviation and urban security markets. The HEXWAVE TM screens for concealed metallic and non-metallic weapons and other threats using millimeter wave, advanced 3D imaging, and artificial intelligence for enhanced security. The system is considered an excellent complement to the Company's existing imaging services programs, incorporating cutting-edge screening technology for use in laboratories, airports, sporting venues, casinos, ports, schools and municipal buildings. It is also the Canadian distributor for LINEV Systems with a proven line of X-ray imaging, body scanners, and security technologies. In February 2026, the Company secured a new North American distributor agreement with CEIA USA to sell its complete line of world-leading security products and walk-through metal detectors, including its groundbreaking OPENGATE® product.

Building these new partnerships, coupled with our unique strategic advantage of a national network of highly-trained technicians, enables us to drive sales of top-of-the-line security screening equipment while expanding the asset base we service.

Through recent organizational changes, the Security Services Segment has seen a strong turnaround in performance, along with new opportunities emerging. The Security Services Segment is poised for growth and is well-positioned to expand its customer base to include additional government (municipal, provincial, state, and federal) and non-government customers through the sale and maintenance of top-tier security screening systems.

Through its security services business, the Company also provides installation and maintenance services for commercial security equipment, including scanning devices, metal detectors, detection equipment, and other general security equipment, in Canada. Customers include companies across a variety of industries, including retail, property management, and agriculture.

NANALYSIS SCIENTIFIC CORP.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND

CERTAIN OTHER EXCEPTIONS AS NOTED

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FINANCE AND OPERATIONS

Three months ended March 31

($000's)	2026	2025	Change
Product sales	2,179	3,687	(1,508)
Service revenue	8,488	6,907	1,581
Total sales and revenue	10,667	10,594	73
Cost of product sold	915	1,270	(355)
Cost of services	7,354	6,608	746
Total cost of sales	8,269	7,878	391
Gross profit	2,398	2,716	(318)
Expenses
Sales and marketing	815	1,089	(274)
General and administration	1,315	1,559	(244)
Research and development	235	143	92
(Loss) Income before other items	33	(75)	108
Other Items
Depreciation and amortization expense	845	859	(14)
Finance expense	354	327	27
Stock-based compensation	63	131	(68)
Other expenses (income)	13	(138)	151
Loss before tax	(1,242)	(1,254)	12
Current income tax expense (income)	33	27	6
Deferred income tax (recovery) expense	6	26	(20)
Net loss	(1,281)	(1,307)	26
Other comprehensive income (loss)	(25)	(139)	114
Total comprehensive loss	(1,306)	(1,446)	140
Share Information
Loss per share (basic and diluted)	(0.01)	(0.01)	-
Share price	0.14	0.28	(0.14)
Other Information
Capitalized property plant and equipment	37	54	(17)
Capitalized intangible assets	170	535	(365)
($ 000's)	March 31, 2026	December 31, 2025
Financial Position
Total assets	34,999	38,413
Total loans, repayable contributions and leases	14,868	17,578
Total liabilities	22,051	24,994
Shareholders' equity	12,948	13,419

See Footnote 2

1 Total loans, repayable contributions and leases include current and long-term portions of lease liabilities, long-term debt and repayable contributions.

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Overall Performance and Discussion of Operations

Scientific Equipment Outlook and Gross Margin

Revenue and Outlook – Scientific Equipment

Scientific Equipment segment revenue is generated from sales of Benchtop NMR equipment, MRI equipment and contracted MRI installation services, licenses and software sales, consulting services related to NMR, High Field NMR consoles, and commission revenue from third-party equipment sales.

($000's)	Three months ended March 31
	2026	2025	($) Change	Change
Product sales	2,179	3,687	(1,508)	-41%
Cost of products sold	915	1,270	(355)	-28%
Gross margin	1,264	2,417	(1,153)	-48%
Gross margin percentage	58%	66%

Product sales

For the three months ended March 31, 2026, the Company reported consolidated product sales of $2,179. Which is a 41% decrease over the prior year. Since Q2 2025, economic and geopolitical uncertainties have negatively impacted scientific equipment sales, as customers restricted capital budgets amid their own risks. This has had a global impact on the business, reducing expected growth, particularly in the European market. Another significant reason for the year over year decrease is the impact of the Company's sole third party equipment sales customer moving sales in-house in the second half of 2025, which decreased quarterly revenue by $502 year over year.

During 2026, while the Company has continued to develop its sales funnel, the number of sales closed has decreased relative to its pipeline size. As a result, product sales revenue for the three months ended March 31, 2026, was lower compared to the prior year, despite relatively strong levels of identified sales opportunities. Management continues to monitor market conditions and slower closing of capital equipment sales closely. The Company is working to navigate market uncertainties and implement risk mitigation strategies, including improving distributor relationships in markets outside the United States, as well as building out its local salesforce in key markets, though slower activity remains a risk factor for the remainder of 2026 due to continued macroeconomic uncertainty.

Cost of product sold

Cost of products sold for the Company includes the costs of manufacturing its products and costs of providing warranties and service for those products. Cost of sales for products is comprised of raw materials, direct costs, direct labour, an allocation of overhead, freight charges, warranty, depreciation, and, in certain cases, finished goods costs for third-party equipment sales. The Company completes all its manufacturing at its facility in Calgary, Alberta.

Cost of products sold for the three months ended March 31, 2026, was $915, or 42% of revenue, compared to $1,270, or 40% of non-third-party sales revenue, for the same period in the prior year. For the three months ended March 31, 2026, benchtop, high-field NMR and MRI margin percentages remain consistent with prior year.

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Gross margin

For the three months ended March 31, 2026, product gross margins was $1,264 compared to $2,417 for the same period in the prior year. Gross margin percentage for Q1 2026 was 58% compared to 66% in Q1 2025, with the decrease primarily due to the termination of third-party sales.

Security Services Outlook and Gross Margin

Revenue and Outlook – Security Services

The Company is a leading provider of airport security equipment maintenance services in Canada through its Security Services segment. In addition to generating revenue from airport security and imaging equipment maintenance services, revenue is also generated from the purchase and resale of parts for the Company's airport security customer in Canada and from installing and servicing commercial and complex security equipment for a variety of industries. The Company is the Canadian distributor for both aviation and urban markets for Liberty Defense Holdings Ltd. and its Al-based HEXWAVE™ automated threat detection system. It is also the Canadian distributor for LINEV Systems with a proven line of X-ray imaging and security technologies.

($000's)	Three months ended March 31
	2026	2025	($) Change	Change
Services revenue	5,904	5,023	881	18%
Services costs	4,770	4,724	46	1%
Gross margin	1,134	299	835	N/A
Gross margin percentage	19%	6%
($000's)	Three months ended March 31
---	---	---	---	---
	2026	2025	($) Change	Change
Flow-through inventory revenue	2,584	1,884	700	37%
Flow-through inventory costs	2,584	1,884	700	37%
Gross margin	-	-	-

Security services revenue

For the three months ended March 31, 2026, the Company reported $5,904 in security services revenue, which is higher than the $5,023 reported for the same period in 2025. The 18% increase is due to an increase in project work related to the airport security maintenance business.

Cost of security services

Cost of security services includes direct labour, travel, training, materials and direct overhead related to existing airport security services provided in the Security Services segment, excluding flow-through parts costs.

During the three months ended March 31, 2026, the Company incurred $4,770 in security services costs compared to $4,724 for the corresponding period ended March 31, 2025. The increase in cost for the three months ended March 31, 2026, was primarily due to increases in wages and training costs associated with providing services under the Airport Security Maintenance Business. These higher costs are in line with higher revenue generated for the same period.

During 2022 and 2023, the Company deferred direct labour costs on the Airport Security Maintenance Business while employees were trained to take over a particular customer service location. Upon all airports receiving essential services in early 2024, deferred costs began to be amortized into income over the first five-year term of the airport security maintenance contract. For the three

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months ended March 31, 2026, the Company amortized $216 of deferred wages into cost of services (three months ended March 31, 2025 - $190). These represent non-cash charges to expenses, as the wages being amortized into income were paid in prior years.

Flow-through inventory revenue and costs

The Company provides inventory management services for its Airport Security Maintenance Business customer, buying and reselling spare parts and other inventory to the customer. No margin is generated on these sales; however, the Company charges a fixed service fee, which is included in Security services revenue.

Gross margin

For the three months ended March 31, 2026, security services gross margin was $1,134 compared to $299 for the same period in the prior year, an increase of $835. Gross margin percentage for Q1 2026 was 19% compared to 6% in Q1 2025.

The increase in gross margin is primarily due to operational improvement initiatives implemented in the second half of 2025, including better scheduling, enhanced logistics processes and more effective management of overtime and on-call hours. Management continues to evaluate the effectiveness of the operational improvement initiatives implemented and their impact on cost structure and margin improvement in future periods.

Sales and Marketing, General and Administration, Research and Development, and Other Items

Sales and marketing ("S&M")

S&M expenses include salaries, benefits, commissions, advertising, marketing expenses, and all related selling costs. S&M for the three months ended March 31, 2025, were $815 as compared to $1,089 for the same periods in prior year. The decrease in S&M expenses is primarily due to reductions in sales staff as the Company terminated its third-party equipment sales business, and lower sales commissions due to lower sales levels overall.

General and administration expenses ("G&A")

G&A includes the cost of maintaining a corporate office, all expenses related to being a publicly traded company, and shared administration costs incurred with respect to the day-to-day operations of each segment of the Company. For the three months ended March 31, 2026, G&A expenses were $1,315 compared to $1,559 for the same period of the prior year.

The decrease in G&A expenses for the three months ended March 31, 2026, was primarily due to the implementation of cost reduction measures, and reduced acquisition related legal fees.

Research and development expenses ("R&D")

R&D expenses are research and development costs that do not meet IFRS criteria to be capitalized to intangible assets and, therefore, are expensed in the period in which they are incurred. These costs stem from research activities in the Scientific Equipment segment. These activities are essential to the R&D and product development strategy for the Company. For the three months ended March 31, 2026, R&D expenses were $235 compared to $143 for the three months ended March 31, 2025. The increase for the three months ended March 31, 2026 was primarily due to a reduction in capitalizable activities.

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Depreciation and amortization expense

For the three months ended March 31, 2026, depreciation and amortization expense was $845, compared to $859 for the three months ended March 31, 2025. Depreciation and amortization expenses were comparable with prior year.

Finance expense

For the three months ended March 31, 2026, finance expenses were $354, compared to $327 for the same period in 2025. Net cash interest paid decreased by $57 due to a lower term loan balance. Non-cash interest expense increased by $84 due to interest accruals on the promissory notes, entered into in the second quarter of 2025 and accounting revaluations of interest free government debt.

Other expenses (income)

Other expenses include gains and losses related to contingent consideration, foreign exchange, asset disposals, and restructuring costs.

($000's)	Three months ended March 31
	2026	2025
Contingent consideration (gain) loss	-	(38)
Foreign exchange (gain) loss	13	(135)
Restructuring costs	-	35
	13	(138)

Contingent consideration (gain) loss

This account reflects the changes in valuation related to share-based contingent consideration from past acquisitions. There were no changes in contingent consideration for the three months ended March 31, 2026.

Foreign exchange gain

Foreign exchange gains or losses typically occur when the exchange rate changes between the time revenue or expenses are recognized and when the resulting receivable is collected or the invoice is paid. Nanalysis conducts significant portions of its business in US dollars and Euros, resulting in exposure to foreign exchange gains and losses.

The Company had foreign exchange losses of $13 for the three months ended March 31, 2026, compared to gains of $135 three months ended March 31, 2025.

Adjusted EBITDA and Net Loss

($000's)	Three months ended March 31
	2026	2025	($) Change
Net loss	(1,281)	(1,307)	26
Depreciation and amortization expense	888	924	(36)
Finance expense	354	327	27
Stock-based compensation	63	131	(68)
Other (income) expenses	13	(138)	151
Amortization of deferred wages	216	190	26
Current income tax expense (recovery)	33	27	6
Deferred income tax (recovery) expense	6	26	(20)
Adjusted EBITDA	292	180	112

Adjusted EBITDA

The Company recorded Adjusted EBITDA of $292 for the three months ended March 31, 2026. This represents an increase of $112 over Adjusted EBITDA of $180 for the three months ended March 31, 2025. This was primarily the result of an increase in services margin and lower spending in sales and marketing expenses and general and administrative expenses, offset by lower product margin.

Net loss

The Company incurred a net loss of $1,281 for the three months ended March 31, 2026, which is an improvement of $26 over the same period in 2025. The decrease in net loss for the three months ended March 31, 2026, was mainly due to improved Adjusted EBITDA, and lower stock-based compensation.

Investment in Capitalized Development Costs and Research and Development Expenditures

($000'S)	Three months ended March 31
	2026	2025
Gross research and development costs	672	680
Less: research expenses	(235)	(143)
Development costs	437	537
Less: government grants and assistance	(267)	(208)
Net development costs capitalized to intangible assets	170	329

The Company is engaged in R&D activities and has internally generated intangible assets. Total development costs that meet the criteria for capitalization are reduced by government grants, with the net difference being capitalized. Government grants consist of Canadian federal grants received under various programs, Canadian provincial grants, and foreign grants related to work performed by RS2D S.A.S.

Capitalized development costs are development costs that meet the criteria listed under IFRS for capitalization and represent capital expenditures that the Company believes hold future benefits. Capitalized development costs for the three months ended March

31, 2026, were $170 (three months ended March 31, 2025 - $329). The primary reason for the decline in capitalized R&D for the three months ended March 31, 2026, is a reduction in work spent on capitalizable activities.

Summary of Quarterly Results

The following table highlights revenue, cash (used in) generated from operating activities, net loss, and loss per share for the eight most recently completed quarters ended March 31, 2026.

| ($000's) (except per share information) | 2026
Q1 | 2025 | | | | 2024 | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Revenue | 10,667 | 10,676 | 9,285 | 9,576 | 10,594 | 12,289 | 10,570 | 11,474 |
| Cash generated (used in) from operating activities | (131) | 2,650 | (309) | (1,568) | 2,679 | 1,067 | (323) | 1,055 |
| Net loss for the period | (1,281) | (729) | (1,500) | (2,122) | (1,307) | (7,452) | (1,644) | (1,995) |
| Loss per share, basic and diluted | (0.01) | (0.01) | (0.01) | (0.02) | (0.01) | (0.06) | (0.02) | (0.02) |

In Q1 2026, revenue was consistent with Q4 2025, however shifted in source, with a $1,952 decrease in product sales, a $1,604 increase in flow through inventory revenue and a $342 increase in services revenue. Cash generated from operating activities decreased by $2,781 primarily as a result of the lower product sales. Net loss increased by $552.
In Q4 2025, revenue increased by $1,391 from Q3 2025, primarily due to an increase in sales in the Scientific Equipment business consistent with the segment's seasonality pattern. Cash generated from operating activities was $2,650, which is an improvement of $2,959 compared to Q3 2025, as both Scientific Equipment and Security Services margins continued to recover. Net loss decreased from ($1,500) in Q3 2025 to ($729) in Q4 2025, primarily due to higher Scientific Equipment margins resulting from operational improvements.
In Q3 2025, revenue decreased by $291 from Q2 2025, primarily due to normal seasonality in the Scientific Equipment business. Cash used in operating activities remained negative for the quarter but did improve over Q2 2025 as Security Services margins continued their recovery, offset by reduced gross margins in the Scientific Equipment business. Net loss decreased from ($2,122) in Q2 2025 to ($1,500) in Q3 2025, driven by higher Security Services margins resulting from operational improvements.
In Q2 2025 sales were down by $1,018 from Q1 2025 mainly due to full quarter impacts of economic uncertainty and tariff risks. This has cooled markets for capital equipment globally and eliminated expected 2025 growth and, in fact, resulted in a decline in overall sales globally. Cash used in operating activities turned negative in the quarter, driven by the significant decline in revenues. Net loss increased over Q1 2025 due to the same decline in scientific equipment sales.
In Q1 2025 sales decreased by $1,695 from Q4 2024. This was due to Q1 being seasonally slower than Q4 in product sales generally, the negative effect of economic and tariff uncertainty on the Company's sales prospects in Q1, and slower activity in security services. Cash generated from operations, however, was up significantly over Q4 2024. The $1,612 increase was primarily due to strong working capital management, particularly the accelerated collection of receivables, in Q1 2025. Net losses were down from ($7,452) in Q4 2024 to ($1,307) in Q11. This was primarily due to impairments of intangible assets, a loan to associate, and investment in associate in Q4 2024, as well as stronger margins and the results of the Company's cost cutting measures taken in 2024.
In Q4 2024, revenue was $1,719 higher compared to Q3 2024 due to higher sales in the Scientific Equipment segment and higher revenue from securities services. Cash generated from operations was up by $1,390 over Q3 2024, primarily due to higher product sales and security services in the fourth quarter. Net loss increased by $5,808 in Q4 2024 compared to Q3 2024 due to the impairment of an intangible asset and the impairment of assets, loan and investment in its associate.

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In Q3 2024, revenue was down $904 over Q2 2024 due mostly to seasonality in the Scientific Equipment segment, as sales are typically slow during the summer months. Cash generated from operations was down by $1,378 over Q2 2024, primarily due to reduced sales in the third quarter as well as increased use of cash for working capital. Net loss decreased by $351 in Q3 2024 compared to Q2 2024, due to improved margins in both the Security Services and Scientific Equipment segments.
In Q2 2024, total revenues were up $312 compared to Q1 2024 despite flow-through inventory revenue being down $1,416. This was due to strong product sales driven by a sale and installation of a third-party medical imaging system that occurred in Q2 2024 and Security services revenue increasing $542 over the first six months of 2024. Combined, this led to revenue (excluding flow-through inventory revenue) increasing from $8,939 in Q1 2024 to $10,667 in Q2 2024, an increase of $1,728. The Company generated $1,055 of operating cash flow due to continued strong sales and improving margins in the Security Services segment, offset in part by increased use of cash in working capital compared to the first quarter of 2024. Net loss decreased from ($2,522) to ($1,995) on the back of increased revenues in the second quarter of 2024.

Selected Annual Financial Information

The following table illustrates selected annual information for the years ending December 31.

($000's) (except per share information)	31-Dec-25	31-Dec-24	31-Dec-23	31-Dec-22
Revenue	40,131	45,495	28,466	24,821
Net Loss	(5,658)	(13,613)	(16,784)	(9,915)
Loss per share, basic and diluted	(0.05)	(0.12)	(0.16)	(0.10)
Total assets	38,413	42,371	53,824	69,902
Total long-term liabilities	7,795	12,448	15,747	8,824

LIQUIDITY & CAPITAL RESOURCES

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern and manage capital so that it can continue to provide returns for shareholders and benefits for other stakeholders through the development, maintenance, and expansion of its operating segments. When managing the Company's capital and ability to continue as a going concern, the Company considers available information about the future, including the availability of financing, future cash flow projections including growth rates and forecasted margins, as well as the current working capital balance and future commitments of the Company.

The Company defines its capital as share capital, debt and contributed surplus. The Company manages the capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company's liquidity needs in the short and long term can be addressed in multiple ways, including funds from operations, available cash and working capital balances, available undrawn amounts on its operating line of credit, new debt instruments, equity issuances, and government funding. The Company monitors its financing requirements through regular forecasting of its cash position. Financing decisions are based on the timing and extent of expected operating and capital outlays. The Company has financed its capital requirements primarily through loans and share issuances since inception. The Company may issue new securities. The Company is not subject to any externally imposed capital requirements.

Working Capital

($000's)	March 31, 2026	December 31, 2025	$ Change
Cash and restricted cash	731	3,158	(2,427)
Loans and leases	14,868	17,578	(2,710)
Working capital	250	(464)	714

As at March 31, 2026, the Company had $250 of working capital (December 31, 2025 – ($464)). Cash was used to pay down the ATB term loan and line of credit. Further, the increase in working capital is due to cash generated from the collection of receivables generated in Q4 2025. Working capital includes $731 of cash (December 31, 2025 - $3,158) and also reflects the current portion of amounts also included within Loans and leases. Loans and leases include both the current and long-term portions of included liabilities.

The interim condensed consolidated financial statements have been prepared in accordance with IFRS policies applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at March 31, 2026, the Company's borrowings, which are subject to financial covenants, were $3,716 from its term loan and $2,226 borrowed on its line of credit (December 31, 2025 - $5,867 from its term loan and $2,799 on the line of credit). As at March 31, 2026, the Company was subject to a funded debt to Bank EBITDA covenant of no greater than 3.50:1, a fixed charge coverage ratio of no less than 1.20:1 and a current ratio covenant of 1.10:1.00.

As at March 31, 2026, the Company was compliant with its current ratio covenant but was not in compliance with either its funded debt to Bank EBITDA covenant or fixed charge coverage ratio covenant. As such, this has created an unconditional right for ATB Financial to demand repayment of the term loan and the Company has therefore classified the full balance of the term loan as a current liability as at March 31, 2026. At the reporting date, the Company's lender has not issued a demand for repayment on this amount.

The Company's liquidity is dependent on its ability to generate positive cash flows from operations, to raise capital by selling additional equity, or by obtaining new or amended credit facilities. There can be no assurance that the Company will maintain sufficient cash flows to fund its ongoing operations. In addition, the Company may not be able to secure adequate debt or equity financing on desirable terms, or at all. Due to the above factors, there is material uncertainty that may cast doubt on the Company's ability to continue as a going concern.

For further details, please see the Loans and Borrowings section of this MD&A.

Loans and Borrowings

($000's)	Note	March 31, 2026	December 31, 2025
Western Economic Diversification Canada interest-free loans	A	1,160	1,147
Prêt garanti par l'état Euro denominated loan	B	8	16
Regional Recovery Relief Fund interest-free loan	A	478	472
Business Scale-up interest-free loan	A	4,227	4,158
Line of credit	C	2,226	2,799
Term Bank loan	D	3,716	5,867
Unsecured Promissory Notes	E	1,905	1,796
Other		17	20
Total loans and borrowings		13,737	16,275
Less: Deferred finance fees		(269)	(285)
Total loans and borrowings net of finance fees		13,468	15,990
Less: Current portion		6,817	9,788
Non-current portion of loans and borrowings		6,651	6,202

Credit Facilities

Note A – Nanalysis

The Company has the following unsecured interest-free loans:

WINN #2: $2,773 initially repayable in monthly installments of $46 commencing February 1, 2022, and maturing on January 31, 2027. The obligation was recorded at its fair value at inception, estimated using a 6.0% discount rate. Any amounts in default will incur interest at the Bank of Canada minimum lending interest rate plus 3% compounded monthly. This loan is unsecured.
Regional Recovery Relief Fund ("RRRF"): $1,000 initially repayable in 35 monthly installments of $28 commencing January 1, 2023. The obligation was recorded at its fair value at inception, estimated using a 6.0% discount rate. Any amounts in default will incur interest at the Bank of Canada minimum lending interest rate plus 3% compounded monthly. This loan is unsecured.
Business Scale-up: In 2022, the Company received a funding contribution commitment of $5,000 from Prairies Economic Development Canada's Business Scale-up and Productivity program. The obligation was recorded at its fair value at inception estimated using a 6%-12% discount rate depending on the timing of each drawdown on the facility. Any amounts in default will incur interest at the Bank of Canada minimum lending interest rate plus 3% compounded monthly. This loan is unsecured and repayable over 60 months beginning September 1, 2025.

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On March 13, 2024, the Company renegotiated its payments related to WINN #2 and RRRF as follows:

WINN #2 became repayable in monthly installments of one thousand dollars per month, effective April 1, 2024, and increasing to $71 effective April 1, 2025, until maturity on January 31, 2027. All other terms and conditions of the loan remain unchanged.
RRRF became repayable in monthly installments of one hundred dollars per month, effective April 1, 2024, and increasing to $18, effective April 1, 2025, with a revised maturity date of December 31, 2027. This reflects an extension to maturity of two years.

Effective August 25, 2025, the Company obtained a payment holiday on the WINN #2, RRRF and Business Scale-up loans for six months, as well as a six-month extension in the amortization period of each.

On January 23, 2026, the Company obtained a further amendment on the WINN #2, RRRF and Business Scale-up loans, with $10 payable monthly for six months. Scheduled repayments resume in August for the RRRF loan and September for the Business Scale-up and WINN #2 loans.

Note B – RS2D

RS2D has one Euro denominated loan - Prêt garanti par l’état – (“PGE”). This is an unsecured Euro denominated loan granted by the French state to RS2D. The loan bears interest at 0.7% and is repayable in monthly installments of $3, commencing on July 20, 2021, and maturing on June 20, 2026. The obligation was recorded as its fair value at inception estimated using a 2.5% discount rate.

Note C – Line of Credit

The Company has an operating line of credit with ATB Financial, under which the Company may borrow up to $5,000 at an interest rate of prime plus 1.0%. This facility also bears a standby fee of 0.4% per annum on the unused portion of the facility. On March 28, 2024, the Company negotiated a covenant holiday with its lender which resulted in an increase to the interest rate to prime plus 2.5%. During any period of default, the Company’s fees and interest rates will increase by 2.00%. See Note F – Debt Covenants.

The borrowing base of the facility is based on the value of the Company’s accounts receivable and inventory, less any amounts outstanding on its $300 credit card facility, also advanced by ATB Financial. The available borrowing base for the Company was reduced as a result of the covenant breach, from $5,000 to $4,300 during the third quarter of 2025 and has remained there as the covenant breach has continued.

Note D – Term Bank Loan

The Company has a term loan of $10,000 from ATB Financial which was advanced in one tranche on June 29, 2023, and bears interest at a rate of prime plus 2.50%. During any period of default, the Company’s fees and interest rates will increase by 2.00%. The loan was originally amortized over 48 months, with repayments having begun in January 2024. During the first half of 2025, the Company signed an amending agreement with its lender, obtaining a reduction in its loan principal payment from May 31, 2025, to April 30, 2026, as well as an extension of its loan amortization to May 31, 2028. Included in this amending agreement was a financing fee payable to the Company’s lender of $200.

On January 29, 2026, an amendment to the ATB Term Loan was signed. In exchange for the early repayment of $2,150 of the loan, a 12-month principal repayment holiday was granted.

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Note E – Unsecured promissory notes

On June 12, 2025, the Company issued unsecured promissory notes for aggregate gross proceeds of $2,000 (Note 12[b] of the interim condensed consolidated financial statements). The unsecured promissory notes mature on June 13, 2027, and bear simple interest at a rate of 12% per annum, payable annually within 30 days of the first and second anniversary date of the unsecured promissory notes. At the Company's option, and subject to TSX Venture Exchange approval, interest may be paid in cash or common shares of the Company.

Note F – Debt Covenants

Both the operating line of credit (Note C) and term loan facility (Note D) are secured by a general security agreement over the property of Nanalysis Scientific Corp. and its significant subsidiaries. As a condition of both the operating and term facilities, the Company must maintain a current ratio greater than or equal to 1.10:1.00, funded debt to Bank EBITDA must not exceed 3.50:1, and the Company must maintain a fixed charge coverage ratio of greater than or equal to 1.20:1.

On May 27, 2025, the Company renewed its term and operating facilities with ATB Financial and renegotiated its covenant terms. Pursuant to the amending agreement, the Company was subject to a funded debt to Bank EBITDA covenant of no greater than 4.00:1. Effective March 31, 2025, the Company was required to maintain a funded debt to Bank EBITDA covenant of 3.50:1. Additionally, the Company was subject to a fixed charge coverage ratio covenant of no less than 1.00:1. Effective March 31, 2026, the Company was required to maintain a fixed charge coverage ratio covenant of 1.20:1.

At March 31, 2026, the Company's applicable current ratio for its bank covenant was 1.60:1.00, but the Company was not in compliance with its funded debt to Bank EBITDA covenant and the fixed charge coverage ratio covenant. As such, this has created an unconditional right for ATB Financial to demand repayment of the term loan and the Company has therefore classified the full balance of the term loan as a current liability at March 31, 2026.

At March 31, 2026 the Company was not in compliance with its funded debt to Bank EBITDA and fixed charge coverage ratio covenants.

Lease Liabilities

($000's)	March 31, 2026	December 31, 2025
Balance beginning of period	1,588	2,204
Additions	-	395
Lease payments	(192)	(816)
Disposals	-	(175)
Foreign exchange	4	(20)
Balance, end of the period	1,400	1,588
Current portion	783	779
Long-term portion	617	809
($000's)	Three months ended March 31
---	---	---
	2026	2025
Interest expense related to leases	35	40

NANALYSIS SCIENTIFIC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

AMOUNTS ARE STATED IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS AND CERTAIN OTHER EXCEPTIONS AS NOTED

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The Company and its subsidiaries have commitments under leases for buildings, office space, and vehicles, with varying terms that expire between 2026 and 2028. The Company has sub-leased one of its building facilities starting December 2024.

The Company also has contractual commitments for leases that are short-term or low-value and accounts for them as operating leases. These operating leases relate to airport spaces, and the leases are due as follows:

($000's)	March 31, 2026
Within one year	187
1-3 years	97
4-5 years	-
Total operating lease commitments	284

Financial Management

($000's)	2026	2025	$ Change
Cash generated from (used in):
Operating activities	(131)	2,679	(2,810)
Investing activities	(182)	(579)	397
Financing activities	(2,114)	(2,769)	655
Increase in cash	(2,427)	(669)	(1,758)

Cash used in operations was $131 for the three months ended March 31, 2026, a decrease of $2,810 from the same period in 2025.

Cash flows used in investing activities for the period ending March 31, 2026, decreased by $397 compared to the same period in the prior year, primarily due to reductions in capitalized R&D expenditures.

Cash flows used in financing activities for the three months ended March 31, 2026, were $2,114, a decrease of $655 compared to $2,769 in the three months ended March 31, 2025, primarily due to cash received from the non-brokered private placement.

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SHARE CAPITAL

[a] Authorized

Unlimited number of common shares, without nominal or par value
Unlimited number of Class A voting preferred shares without par value
Unlimited number of Class B non-voting preferred shares without par value

[b] Issued Common shares

Common Shares Issued	Number
Balance, December 31, 2024	113,224,492
Issuance of common shares	19,085,656
Exercise of stock options and RSUs	-
Balance, December 31, 2025	132,310,148
Issuance of common shares	6,145,300
Exercise of stock options and RSUs	-
Balance at March 31, 2026	138,455,448

On June 12, 2025, in connection with the unsecured promissory notes, the Company issued 1,600,000 common shares of the Company to the lenders. These shares represent a value equal to 20% of the principal amount of the unsecured promissory notes, calculated based on a market price of $0.25 per share, which was the closing price of the Company's common shares on June 5, 2025, prior to the announcement of the promissory note offering. These shares were subject to a four-month hold period, expiring October 13, 2025.

On October 1, 2025, the Company settled a contingent liability in the amount of $182 for a total of 959,373 shares.

On December 23, 2025, the Company announced and closed a non-brokered private placement offering of units with each unit comprised of one common share and one half warrant exercisable at $0.20 and expiring on December 23, 2027. A total of 16,526,283 units were issued at a price of $0.15 per unit for gross proceeds of $2,479. The units were valued utilizing the residual method. The warrants were valued using the Black-Scholes option-pricing model, with a fair value of $413 at the date of issuance, incorporating assumptions relevant on the date of issuance. The residual value under gross proceeds was allocated to common shares at $2,063.

On January 26, 2026, the Company announced and closed the second and final tranche of its $3.4MM non-brokered private placement offering. A total of 6,145,300 units were issued at a price of $0.15 per unit for gross proceeds of $921 and net proceeds of $772. Each unit comprised of one common share and one half warrant exercisable at $0.20 and expiring two years after issuance. The Warrants are subject to an acceleration provision whereby, if the closing price of the Shares on the TSX Venture Exchange equals or exceeds $0.30 for any 10 consecutive trading days, the Company may accelerate the expiry date of the Warrants to the date that is 30 days after the Company provides notice of or issues a press release announcing such acceleration.

[c] Loss per share

| | Three months ended
March 31 | |
| --- | --- | --- |
| ($000's) except for number of shares | 2025 | 2024 |
| Numerator | | |
| Loss attributable to common shares ($) | (1,281) | (1,307) |
| Denominator | | |
| Weighted average number of shares for basic earning per share calculation (000's) | 136,884 | 113,224 |
| Weighted average number of shares for diluted earning per share calculation (000's) | 136,884 | 113,224 |
| Basic loss per common share ($/share) | (0.01) | (0.01) |
| Diluted loss per common share ($/share) | (0.01) | (0.01) |

All potentially dilutive instruments were excluded from the diluted weighted-average share calculation as they were anti-dilutive to the loss for the period.

[d] Stock options

The Company has a stock option plan that provides for the issuance of options to eligible persons. The option price under each option granted must be no less than the discount market price defined by the TSX-V. The term of the options must be no longer than five years, and the directors of the Company determine the vesting period, which is typically three years. The maximum number of outstanding options must be no more than 10% of the issued and outstanding common shares at any point in time, with the 10% including both stock options and restricted share units. The maximum number of outstanding options issued for investor relations must be no more than 2% of the issued and outstanding shares, and options issued for investor relations must vest in stages over a 12-month period with no more than one quarter of the options vesting in any three-month period. Stock options and RSUs are settled in shares of the Company.

Stock Options Outstanding	Number	Weighted Average Exercise Price ($)
Balance, December 31, 2024	7,697,390	0.91
Granted	1,162,000	0.43
Expired	(824,167)	0.60
Forfeitures	(1,828,342)	0.97
Balance, December 31, 2025	6,206,881	0.81
Granted	350,000	0.20
Expired	(572,500)	0.60
Forfeitures	(108,500)	1.13
Balance at March 31, 2026	5,875,881	0.78

The fair values of stock options granted were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions.

	2026	2025
Risk-free interest rate	3.11%	2.63% - 2.96%
Estimated annualized volatility based on historical performance	72%	72% - 74%
Expected life	5.0 years	5.0 years
Expected dividend yield	0%	0%
Exercise price	$0.20	$0.35 - $0.50

As at March 31, 2026, the Company had the following stock options outstanding and exercisable:

Exercise Price	Number of Options Outstanding	Weighted Average Life	Number of Options Exercisable
$0.20	350,000	4.90	-
$0.35	575,000	4.32	200,000
$0.50	2,489,000	3.86	1,271,510
$1.10	1,029,881	2.35	798,254
$1.20	25,000	1.23	25,000
$1.24	50,000	0.54	50,000
$1.30	100,000	0.26	100,000
$1.32	957,000	0.92	957,000
$1.50	200,000	0.71	200,000
$1.70	100,000	0.63	100,000
	5,875,881		3,701,764

[e] Restricted Share Units ("RSUs")

The Company maintains an RSU plan as compensation for certain directors and employees of the Company. These RSUs vest over three years from the grant date and expire at the end of the third full calendar year subsequent to the grant date.

During the year ended December 31, 2025, the shareholders approved an amendment to the RSU plan to add 2,000,000 RSUs to the existing plan and increase the total amount of RSUs available to be granted to 3,000,000. As at March 31, 2026, 2,050,000 RSUs have been granted, and there were 1,675,000 RSUs outstanding.

RSUs Outstanding
Balance, December 31, 2024	625,000
Granted	-
Exercised	-
Balance, December 31, 2025	625,000
Granted	1,050,000
Exercised	-
Balance at March 31, 2026	1,675,000

[f] Stock-based compensation expense

($000's)	Three months ended March 31
	2026	2025
Stock-based compensation expenses related to stock options	47	114
Stock-based compensation expenses related to RSUs	16	17
Total	63	131

[g] Warrants

Warrants Outstanding	Number	Weighted Average Exercise Price ($)
Balance, December 31, 2024	6,907,724	0.66
Issued	8,263,142	0.20
Expired	(500,000)	0.80
Balance, December 31, 2025	14,670,866	0.39
Issued	3,072,650	0.20
Expired	(6,407,724)	0.65
Balance at March 31, 2026	11,335,792	0.20
Type of Warrant	Expiry Date	Exercise Price ($)
---	---	---
Warrant	December 23, 2027	0.20
Warrant	January 26, 2028	0.20

On December 23, 2025, the Company completed a non-brokered private placement offering, of units discussed in Note 12[b] of the interim condensed consolidated financial statements, which resulted in the Company issuing 8,263,142 warrants that expire on December 23, 2027.

On January 26, 2026, the Company completed the second tranche of a non-brokered private placement offering of units discussed in Note 12[b] of the interim condensed consolidated financial statements, which resulted in the Company issuing 3,072,650 warrants that expire on January 26, 2028.

During the period ended March 31, 2026 6,407,724 warrants expired resulting in an increase in contributed surplus of $94.

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REVENUE AND SEGMENT INFORMATION

[a] Segment information

The Company's activities are carried out through three operating segments, within which are two reportable segments: Scientific Equipment and Security Services. The Company's executive leadership is responsible for strategic decision making, resource allocation, and assessing financial performance, and, as a group, is identified as our chief operating decision maker for the purpose of reporting segment information.

The Company's Scientific Equipment segment is comprised of its proprietary product sales as well as sales of third-party products and investment in associate. The Security Services segment is comprised of the Company's commercial and airport security equipment maintenance and installation services. Its Corporate operating segment includes the Company's costs related to general corporate overhead.

Inter-segment transactions are recorded at values that approximate third-party selling prices and are eliminated for segmented reporting.

| ($000's)
Three months ended March 31, 2026 | Scientific Equipment | Security Services | Corporate | Total |
| --- | --- | --- | --- | --- |
| Revenue | 2,179 | 8,488 | - | 10,667 |
| Income (loss) before other items | (347) | 1,000 | (620) | 33 |
| Net (loss) income | (1,224) | 889 | (946) | (1,281) |
| Depreciation and amortization expense | 726 | 119 | - | 845 |
| Capital expenditures | 202 | 5 | - | 207 |
| Total assets as at March 31, 2026 | 19,138 | 14,892 | 969 | 34,999 |
| ($000's)
Three months ended March 31, 2025 | Scientific Equipment | Security Services | Corporate | Total |
| --- | --- | --- | --- | --- |
| Revenue | 3,687 | 6,907 | | 10,594 |
| Income (loss) before other items | 611 | 82 | (768) | (75) |
| Net (loss) income | (286) | (85) | (936) | (1,307) |
| Depreciation and amortization expense | 723 | 136 | | 859 |
| Capital expenditures | 427 | 162 | | 589 |
| Total assets as at March 31, 2024 | 21,736 | 15,810 | 985 | 38,531 |

[b] Geographic segments

The Company's revenues are allocated to geographic segments as follows:

($000's)	Three months ended March 31
	2026	2025
Canada	8,609	7,674
United States of America	892	2,572
Europe	714	151
Asia	451	87
Other	1	110
	10,667	10,594

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

[a] Fair value of financial instruments

The carrying values of cash, accounts receivable, other receivables, accounts payable and accrued liabilities, and the line of credit approximate fair value due to the short-term nature of these instruments. The loan to associate is measured at amortized cost and its fair value approximates its carrying value. The Company's bank loan, WINN loan, RRRF loan, Prêt garanti par l'état, and business scale-up loans are measured at amortized cost and its fair value approximates its carrying value.

[b] Fair value of contingent consideration

One Moon Scientific Acquisition

Contingent consideration payable related to the acquisition of One Moon Scientific ("OMS") is based on performance goals related to specific targets that OMS must meet through the end of 2026. The Company has used internal forecasts to estimate the amount of each component of contingent consideration and valued it using an income approach, discounted using a risk-adjusted discount rate.

The Company reassesses the forecast and estimated amount of contingent consideration and revises the risk-free discount rate based on available market data at each reporting period.

For the three months ended March 31, 2026, the Company recognized an unrealized (loss) gain of $nil related to revaluation of contingent consideration related to the OMS acquisition within business acquisition costs (three months ended March 31, 2025 – unrealized gain of $1).

Significant assumptions used in valuation of contingent consideration include forecasted revenue and applicable discount rates.

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[c] Fair value hierarchy

The three-level hierarchy reflects the significance of inputs used when determining fair value:

Level 1: Fair value is determined using readily observable inputs from public or active markets.
Level 2: Fair value is determined using inputs other than those quoted in public or active markets and may be both directly and indirectly observable.
Level 3: Fair value is derived using unobservable inputs for which there is little to no available market data, and therefore the Company must develop its own assumptions for valuation.

Contingent consideration was valued using a level 3 estimate for both 2026 ($153) and 2025 ($153).

[d] Risk management

The following presents information about the Company's exposure to each of the above risks and the Company's objectives, policies, and processes for measuring and managing risk.

[i] Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.

[ii] Credit risk

Credit risk is the risk of a financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk in the event of non-performance by counterparties in connection with its cash, accounts receivable, other receivables and loan to associate. The Company's maximum exposure to credit risk at March 31, 2026, is the carrying amount of cash, accounts receivable, other receivables, and loan to associate on the consolidated statement of financial position. The Company mitigates this risk by holding its cash in major Canadian financial institutions and performing credit inquiries on its customers.

Management regularly assesses the Company's exposure to credit risk and provides allowances for potentially uncollectible accounts receivable as they become known. Although collection of these receivables could be influenced by economic factors, management considers the risk of significant loss to be mitigated by the number, reputation, and nature of the companies with which the Company does business.

Management assesses the expected risk of credit loss at each reporting period based on consideration of factors such as the history, creditworthiness and financial condition of each individual customer, economic factors, the age of the financial instrument, in particular instruments over 180 days past due, the willingness of the counterparty to engage in a payment plan, and any other criteria deemed material to the analysis. Trade accounts receivable are written off when there is no reasonable expectation of recovery. During the three months ended March 31, 2026, bad debts of $Nil were recognized as an expense (2025 - $Nil).

[iii] Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they come due. As of March 31, 2026, the Company had working capital of $250 (December 31, 2025 – ($464)). The Company's exposure to liquidity risk is dependent on its

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ability to capitalize on its research and development, ability to manufacture and deploy new products, sale of inventory, collection of accounts receivable and other receivables, and the raising of funds to meet commitments, sustain operations, continue research and development, and service contracts. The Company manages liquidity risk through the management of working capital, cash flows, availability of borrowing facilities and share issuances. The Company has liabilities with varying maturities as disclosed in the interim condensed consolidated statement of financial position and Notes 9, 10, and 11.

[iv] Market risk

Market risk is the risk of loss that results from changes in market prices. Market risk is comprised of foreign currency risk and interest rate risk. The level of market risk to which the Company is exposed to depends on market conditions, expectations of future price or market rate movements, and the composition of the Company's financial assets and liabilities. The Company regularly monitors market risk exposure, tolerance, and control processes in order to manage the exposure related to changes in market risk and to stay within acceptable market risk limits.

[v] Currency risk

The Company is exposed to the financial risk related to the fluctuation of foreign exchanges rates. The majority of the Company's sales are in Canadian dollars and U.S. dollars. The Company has not entered into foreign exchange derivative contracts.

The Company had the following assets and liabilities denominated in U.S. dollars at the end of period:

| (000's) | March 31, 2026
US$ | December 31, 2025
US$ |
| --- | --- | --- |
| Cash | 171 | 358 |
| Accounts receivable | 1,126 | 1,047 |
| Prepayments and other receivables | 22 | 85 |
| Lease receivables | 201 | 238 |
| Inventory | - | 10 |
| Accounts payable & accrued liabilities | (215) | (535) |
| Unearned revenue | (553) | (521) |
| Debt and lease liabilities | (185) | (220) |
| Total | 567 | 462 |

The above assets and liabilities were translated using an exchange rate of 1.39 at March 31, 2026 (December 31, 2025 - 1.37). Based on the above net exposure, as at March 31, 2026, assuming all other variables remain constant, a 10% appreciation or deterioration of the Canadian dollar against the U.S. dollar would result in a change of approximately $79 in the Company's other comprehensive income (December 31, 2025 - $63). Total sales in U.S. dollars for the three months ended March 31, 2026, were $1,138 (three months ended March 31, 2025 - $1,895). A 10% appreciation or deterioration of the Canadian dollar against the U.S. dollar would result in a change of approximately $156 in revenue (three months ended March 31, 2025 - $272).

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The Company had the following assets and liabilities denominated in Euros at the end of the period:

| (000's) | March 31, 2026
Euro (€) | December 31, 2025
Euro (€) |
| --- | --- | --- |
| Cash | 306 | 44 |
| Accounts receivable | 493 | 621 |
| Prepayments and other receivables | 147 | 398 |
| Inventory | 63 | 67 |
| Accounts payable and accrued liabilities | (258) | (289) |
| Unearned revenue | (602) | (524) |
| Debt and lease liabilities | (13) | (24) |
| Total | 136 | 293 |

The above assets and liabilities were translated at 1.61 at March 31, 2026 (December 31, 2025 – 1.61). Based on the above net exposure as at March 31, 2026, assuming that all other variables remain constant, a 10% appreciation or deterioration of the Canadian dollar against the Euro would result in a change of approximately $22 in the Company's other comprehensive income (December 31, 2025 - $47). Total sales in Euros for the three months ended March 31, 2026, were €329 (three months ended March 31, 2025 - €192). A 10% appreciation or deterioration of the Canadian dollar against the Euro would result in a change of approximately $53 in revenue (three months ended March 31, 2025 - $29).

[vi] Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. During the three months ended March 31, 2026, fluctuations in the bank prime interest rate had an insignificant impact on the Company's interest expense. At March 31, 2026, the Company had $3,716 of outstanding debt on its interest-bearing term loan. If the prime borrowing rate changed by 4%, it would have an impact of $149 on interest expense on an annualized basis (December 31, 2025 - $234).

[vii] Economic dependence

A portion of the Company's operations consists of providing airport security equipment maintenance services to a Crown Corporation of the Government of Canada. During the three months ended March 31, 2026, the Company was dependent on this service contract for 79% of its revenue (March 31, 2025 – 64%). The contract is due for renewal in May 2028. There were no other customers who accounted for more than 10% of the Company's revenue during the period.

Additional Risk Factors

In addition to the Risk Factors discussed in the Company's Annual Information Form dated December 31, 2023, and filed on www.sedar.com, the Company has identified the following additional risk factors.

Trade Dispute and Tariff Risk

The Company conducts significant portions of its business selling into foreign markets, largely from a Canadian manufacturing base. Changes to tariffs rates, or the imposition of tariffs or retaliatory tariffs by any nation the Company is selling into, or purchasing from, may have a significant, or material, adverse effect on the Company's gross margins.

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In addition, competitors of the Company are, or may be, located in jurisdictions with no, or lower, tariffs than the Company. This may make it difficult or impossible for the Company to pass tariff costs through to its customers.

Finally, the economic uncertainty created by tariffs and the changing tariff environment may have a negative impact on the confidence of the Company's customers, reducing customer demand for the Company's products.

The timing, rate, or applicability of any tariffs is difficult to predict.

The Company also maintains supply chains which involved jurisdictions that may be involved in trade disputes with Canada or other jurisdictions in which the Company operates. As a result, the Company may be unable to source key raw materials to produce its goods in sufficient quantities, or at all. This may result in the Company being unable to fulfill some or all of its product sales orders.

RELATED PARTY DISCLOSURE

Key management personnel compensation

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the business activities of the Company, including all of its directors, along with certain executives. Directors are remunerated through a cash director's fee and participation in the stock option and RSU plans. Executive compensation is comprised of base salary, benefits and participation in the stock option and RSU plans. The Company does not have a defined benefit or actuarial pension plan. Key management personnel participate in the stock option plan.

Related party transactions

Related party transactions are assessed for significance within the Company's normal process for transaction approval. Transactions determined to be significant by Management are approved by the Audit Committee of the Board of Directors.

Related party transactions with associate

For the three months ended March 31, 2026, the Company provided $48 of consultancy services and $68 of product sales to Quad (three months ended March 31, 2025 - $15 of consultancy services and $82 of product sales). These amounts are gross and subject to elimination of 43.48% related to the Company's share in associate until June 20, 2025. On June 20, 2025, there was an increase in share capital in Quad System AG issued to other shareholders, resulting in a relative decrease of the Company's ownership for Quad from 43.48% to 39.12%.

At March 31, 2026, the Company had gross outstanding balances of $308 (December 31, 2025 - $263) in accounts receivable and $94 in accounts payable and accrued liabilities (December 31, 2025 - $94), due from and to its associate, respectively. During the twelve months ended December 31, 2024, the Company recognized an impairment provision of $496 against certain outstanding balances due from its associate. No further impairment provision has been recognized since, and collection efforts continue.

AI assistant

Nanalysis Scientific — Management Reports 2026

47423_rns_2026-05-20_cfcc2f2b-97c2-4254-911b-af6b4e904a7d.pdf

Management's Discussion & Analysis

Contents

READER AND FORWARD-LOOKING STATEMENT ADVISORY

Forward Looking Statements

Business overview

Overview

Scientific Equipment Segment

Security Services Segment

Critical Accounting Policies and Estimates

Non-IFRS and Supplementary Financial Measures

NANALYSIS

Adjusted EBITDA

Loans and Leases

Supplementary Financial Measures

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SCIENTIFIC EQUIPMENT SEGMENT

Product Overview

Magnetic Resonance Test, Measurement and Diagnostic Systems

Bridging the Gap in MR Accessibility

Nanalysis 100-NMR

High-Field NMR

High field NMR Console

MRI

Cameleon 4 Console

Software Portfolio

NMRGui

SPINit

NMRFx

Technology Under Development

MRI Technology Platform

Robust Industrial Detector

Automated Industrial Analyzer

Full High-Field NMR Systems

Third Party Equipment Sales

SECURITY SERVICES SEGMENT

Airport Security Maintenance Services

FINANCE AND OPERATIONS

Overall Performance and Discussion of Operations

Scientific Equipment Outlook and Gross Margin

Revenue and Outlook – Scientific Equipment

Product sales

Cost of product sold

Gross margin

Security Services Outlook and Gross Margin

Revenue and Outlook – Security Services

Security services revenue

Cost of security services

Flow-through inventory revenue and costs

Gross margin

Sales and Marketing, General and Administration, Research and Development, and Other Items

Sales and marketing ("S&M")

General and administration expenses ("G&A")

Research and development expenses ("R&D")

Depreciation and amortization expense

Finance expense

Other expenses (income)

Contingent consideration (gain) loss

Foreign exchange gain

Adjusted EBITDA and Net Loss

Adjusted EBITDA

Net loss

Investment in Capitalized Development Costs and Research and Development Expenditures

Summary of Quarterly Results

Selected Annual Financial Information

LIQUIDITY & CAPITAL RESOURCES

Working Capital

Loans and Borrowings

Credit Facilities

Note A – Nanalysis

Note B – RS2D

Note C – Line of Credit

Note D – Term Bank Loan

Note E – Unsecured promissory notes

Note F – Debt Covenants

Lease Liabilities

Financial Management

SHARE CAPITAL

Nanalysis Scientific Management Reports 2026