Toronto, Ontario--(Newsfile Corp. - August 31, 2026) - Paragon Advanced Labs Inc. (TSXV: PALS) ("Paragon" or the "Company"), a provider of advanced mineral analytical services to the natural resource industry, today reported its financial and operating results for the three and six months ended June 30, 2026.

Paragon generated quarterly revenue of $4.1 million during the second quarter of 2026, an increase of approximately 85% from $2.2 million in the first quarter of 2026 and more than five times the revenue of $0.8 million in the second quarter of 2025.

Increased laboratory utilization translated into improved gross profitability. The Company generated gross profit of $419,175, representing a gross margin of approximately 10.3%, compared with a gross loss of $217,217 in Q1 2026.

"The second quarter provided clear evidence of the operational leverage in our business. Revenue increased 85% from Q1, we moved into positive gross profit, and we still have significant available capacity to support further growth. With recently announced commercial wins we expect the momentum to continue into the second half of the year," said Peter Shippen, CEO of Paragon.

The Company continues to optimize operations to better manage costs, including labour and staffing, the utilization of third-party services and other items such as freight and consumables.

Q2 2026 Financial Highlights

For the six months ended June 30, 2026, revenue totaled $6.3 million, representing an increase of approximately 142% compared to $2.6 million during the corresponding period in 2025. The increase demonstrates continued growth in customer demand, expanded operational capacity and increasing utilization of the Company's testing facilities.

Further, for the six months ended June 30, 2026, the Company generated a gross profit of $0.2 million, compared to a gross loss of $0.1 million during the same period in 2025, reflecting the Company's transition toward positive operating leverage as revenue continue to grow.

The Company temporarily outsourced certain sample preparation activities during Q2 as personnel were recruited and trained and internal capacity was expanded. This contributed to increased sample preparation and freight costs during the period. Management expects these costs to moderate as additional internal sample preparation capacity becomes available.

Net loss from operations for the six months ended June 30, 2026 included depreciation on leased and other assets of $2.4 million, finance costs of $2.7 million and $1.1 million of nonrecurring professional fees related to capital markets guidance and advisory fees.

IFRS 16 Lease Accounting and Cash Cost Context

Because Paragon leases rather than owns its PhotonAssay™ machines, standard IFRS accounting treatment creates a presentation that requires context to interpret correctly. Paragon believes it is important that investors understand the accounting treatment associated with its PhotonAssay™ fleet and other leased assets.

The Company recognizes right-of-use assets and corresponding lease liabilities for its leased PhotonAssay™ units in accordance with IFRS 16. Accordingly, the Company's income statement recognizes depreciation of the ROU assets and interest expense on the related lease liabilities. The related lease payments are presented in the statement of cash flows in accordance with the Company's accounting policy.

For the second quarter:

• cost of sales included approximately $789,000 of depreciation;

• finance expense included approximately $1.28 million of lease interest; and

• the Company made approximately $1.89 million of actual cash lease payments.

The lease-payment amount includes PhotonAssay™ units as well as certain facility, equipment and other leases and therefore should not be viewed as a direct substitute for the depreciation included in cost of sales. Management believes investors should consider both the reported IFRS results and the Company's actual lease cash obligations when assessing the operating economics and cash requirements of the laboratory platform.

Operating Developments

During Q2, Paragon continued to increase its operational capacity across North America. The Company's Thunder Bay sample preparation facility, which commenced operations in April 2026, continued to ramp up during the quarter. Expansion of the Sparks, Nevada geochemistry laboratory also progressed and is expected, once completed, to more than double the geochemical analytical capacity at that facility.

Subsequent to quarter-end, Paragon entered into a memorandum of understanding with McEwen Inc. ("McEwen") contemplating an advanced laboratory and PhotonAssay™ facility supporting McEwen's Gold Bar operations in Nevada, with potential future facilities in Timmins, Ontario and Mexico. Under the contemplated Nevada arrangement, McEwen would fund the land and construction of the laboratory buildings, with Paragon responsible for operating the commercial laboratory.

The Company also appointed John Pizimolas as Chief Commercial Officer effective August 24, 2026. His prior experience includes senior commercial roles at SGS, ALS, Bureau Veritas, Veracio and Chrysos Corporation.

Shares for Debt

The Company further announces its intention to settle an aggregate of approximately $835,884 of indebtedness (the "Debt Settlement") through the issuance of common shares of the Company (the "Shares") at a deemed price of $3.10 per Share.

The indebtedness relates to consulting services provided to the Company. The Company has determined that it is in its best interests to settle the indebtedness through the issuance of Shares in order to preserve its cash for working capital and ongoing operations.

The proposed Debt Settlement remains subject to all required regulatory approvals, including the approval of the TSX Venture Exchange ("TSXV").

Any Shares issued pursuant to the Debt Settlement will be subject to a statutory hold period of four months and one day from the date of issuance in accordance with applicable securities laws and the policies of the TSXV.

As part of its ongoing efforts to prudently manage shareholder dilution, the Company intends to cancel an aggregate of 253,400 previously granted restricted share units ("RSUs"), subject to the terms of the Company's equity incentive plan and any required regulatory approvals.

ON BEHALF OF THE BOARD OF DIRECTORS OF PARAGON ADVANCED LABS INC.

Peter Shippen
Chief Executive Officer and Director
Paragon Advanced Labs Inc.

Cautionary Statement Regarding Forward-Looking Information

This news release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). Forward-looking statements are based on management's current expectations, estimates, projections and assumptions as of the date of this news release and are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements in this news release include, but are not limited to, statements regarding: the Company's expected operational and financial performance; anticipated continued revenue growth, laboratory utilization and gross profitability; expectations that commercial momentum will continue into the second half of 2026; the Company's ability to optimize operations and reduce costs, including labour, freight, consumables and third-party service costs; the anticipated moderation of sample preparation costs as internal capacity expands; the completion and expected benefits of the Sparks, Nevada laboratory expansion; the continued ramp-up of the Thunder Bay sample preparation facility; the anticipated benefits of the memorandum of understanding with McEwen Inc., including the potential development of laboratory facilities in Nevada, Timmins and Mexico; the receipt of all required regulatory approvals for the proposed debt settlement and RSU cancellation; the completion of the debt settlement and the issuance of common shares in connection therewith; and the Company's future business strategy, growth plans and commercial opportunities.

Forward-looking statements are based on certain assumptions, including, without limitation: continued demand for the Company's analytical services; successful execution of the Company's business strategy; the timely completion of planned operational initiatives and facility expansions; the availability of qualified personnel; the ability to maintain and expand customer relationships; the receipt of required regulatory approvals; and general business, economic and market conditions remaining consistent with management's expectations.

Actual results may differ materially from those expressed or implied by these forward-looking statements due to a variety of risks and uncertainties, including, without limitation: the Company's ability to execute its business plan; risks associated with laboratory operations and expansion projects; delays in commissioning or achieving anticipated utilization levels; changes in customer demand; the loss of key customers or contracts; the inability to realize anticipated cost reductions or operating efficiencies; the availability of financing; regulatory approvals not being obtained on the expected terms or timeline, or at all; changes in commodity markets affecting customer activity; general economic, financial and capital market conditions; and the other risk factors described in the Company's continuous disclosure documents filed on SEDAR+.

Readers are cautioned not to place undue reliance on forward-looking statements. Except as required by applicable securities laws, the Company undertakes no obligation to update or revise any forward-looking statements to reflect new information, future events or otherwise, except as required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/312142

Source: Paragon Advanced Labs Inc.