8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 1, 2024

Kewaunee Scientific Corporation

(Exact name of registrant as specified in its charter)

Delaware	0-5286	38-0715562
(State or other jurisdiction<br><br>of incorporation)	(Commission<br><br>File Number)	(IRS. Employer<br><br>Identification No.)
2700 West Front Street<br><br>Statesville, North Carolina	28677
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(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 704-873-7202

N/A

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br><br>Symbol(s)	Name of each exchange<br><br>on which registered
Common Stock, $2.50 par value	KEQU	The Nasdaq Global Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

EXPLANATORY NOTE

On November 1, 2024 (the “Closing Date”), Kewaunee Scientific Corporation, a Delaware corporation (the “Company”), announced the closing of the Company’s acquisition (the “Acquisition”) of Nu Aire, Inc., a Minnesota corporation (“Nu Aire”), pursuant to the Securities Purchase Agreement (the “Purchase Agreement”), dated as of the Closing Date, by and among the Company, Nu Aire, Richard A. Peters, William F. Peters, Rita Peters Revocable Trust, and any amendments thereto (“Rita Trust”), Richard A. Peters Irrevocable Trust dated May 18, 2020, and any amendments thereto (“R. Peters 2020 Trust”), Richard A. Peters Revocable Trust, and any amendments thereto (“R. Peters 2005 Trust”), Karan A. Peters Revocable Trust, and any amendments thereto (“K. Peters Trust”), William F. Peters 2023 Irrevocable Trust dated December 20, 2023, and any amendments thereto (“W. Peters 2023 Trust”), and William F. Peters Revocable Trust, and any amendments thereto (“W. Peters Trust” and, together with Richard A. Peters, William F. Peters, Rita Trust, R. Peters 2020 Trust, R. Peters 2005 Trust, K. Peters Trust, and W. Peters 2023 Trust, the “Sellers” and each, a “Seller”), and William F. Peters, as Sellers’ Representative.

Pursuant to the terms of the Purchase Agreement, the Company purchased all of the outstanding capital stock of Nu Aire from the Sellers for $55,000,000 in the aggregate, subject to certain customary adjustments for debt, cash, transaction expenses and net working capital, as further described in the Purchase Agreement.

Concurrently with the entry into the Purchase Agreement, on the Closing Date, the Company entered into a Loan Agreement (the “Loan Agreement”) with PNC Bank, National Association (“PNC”). The loans governed by the Loan Agreement include:

•	a $20,000,000 committed senior secured revolving line of credit facility (the “Revolving Credit Facility”), which contains an option to increase the facility upon request by the Company and approval by PNC, in its discretion, by an additional $10,000,000; and
•	a $15,000,000 term loan (the “Term Loan”).
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Additionally, on the Closing Date, the Company entered into subordinated seller notes (the “Seller Notes”) in an aggregate amount of $23,000,000. The Seller Notes accrue interest at 8% per annum, and will mature on the third (3rd) anniversary of the Closing Date, at which time the outstanding principal amount and all unpaid accrued interest will become due and payable by the Company. The Revolving Credit Facility, the Term Loan, and the Seller Notes are collectively referred to herein as the “Financing.”

On the Closing Date, the Company filed a Current Report on Form 8-K (the “Initial 8-K”) to report the closing of the Acquisition and the Financing on such date. Under Item 9.01 of the Initial 8-K, in reliance on the instructions to such Item, the Company stated that (a) the Company would file the financial statements required by Item 9.01(a) of Form 8-K by an amendment to the Initial 8-K no later than 71 days from the date on which the Initial 8-K was required to be filed, and (b) the Company would file the financial statements required by Item 9.01 (b) of Form 8-K by an amendment to the Initial 8-K no later than 71 days from the date on which the Initial 8-K was required to be filed. Accordingly, this Current Report on Form 8-K/A (this “Amendment”) amends the Initial 8-K to provide the requisite historical audited financial statements of Nu Aire and the requisite pro forma financial information.

The unaudited pro forma condensed combined financial information included in this Amendment are presented for illustrative purposes only, contain a variety of adjustments, assumptions and estimates, and are not necessarily indicative of what the combined Company’s actual financial position or results of operations would have been had the Acquisition and the Financing been completed on the date indicated. The combined Company’s actual results and financial position may differ materially and adversely from the unaudited pro forma condensed combined financial information included in this Amendment. Important factors that may affect actual results include, but are not limited to, risks and uncertainties relating to the Company’s or Nu Aire’s business, as applicable (including each company’s ability to achieve strategic goals, objectives, and targets over applicable periods), industry performance, and general business and economic conditions.

Item 9.01	Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The audited financial statements of Nu Aire as of and for the fiscal year ended September 30, 2024, including the related notes thereto, are filed herewith as Exhibit 99.1.

(b) Pro forma financial information.

The unaudited pro forma condensed combined balance sheet of the Company as of October 31, 2024, and the unaudited pro forma condensed combined statements of operations of the Company for the year ended April 30, 2024 and the six months ended October 31, 2024, including the related notes thereto, giving effect to the Acquisition and the Financing, are filed herewith as Exhibit 99.2. The unaudited pro forma financial information gives effect to the Acquisition and the Financing on the basis of, and subject to, the assumptions set forth in accordance with Article 11 of Regulation S-X.

(d)	Exhibits:
Exhibit<br>No.
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23.1	Consent of Forvis Mazars, LLP
99.1	Audited financial statements of Nu Aire, Inc. as of and for the fiscal year ended September 30, 2024, including the related notes thereto.
99.2	Unaudited pro forma condensed combined balance sheet of the Company as of October 31, 2024, and the unaudited pro forma condensed combined statements of operations of the Company for the year ended April 30, 2024 and the six months ended October 31, 2024, including the related notes thereto.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	(Registrant)<br><br>Kewaunee Scientific Corporation
Date: January 15, 2025	/s/ Donald T. Gardner III
	Donald T. Gardner III
	Vice President, Finance and<br><br>Chief Financial Officer

EX-23.1

Exhibit 23.1

Consent of Independent Accountants

We consent to the incorporation by reference in the Registration Statements on Forms S-8 (Nos. 333-274371, 333-160276, 333-176447, 333-213413, and 333-220389) of Kewaunee Scientific Corporation of our report dated January 15, 2025, with respect to the financial statements of Nu Aire, Inc., included in this Current Report on Form 8-K/A. Our report contains an explanatory paragraph with respect to Nu Aire, Inc.’s adoption of new accounting guidance for leases, effective October 1, 2022.

/s/ Forvis Mazars, LLP

Atlanta, Georgia

January 15, 2025

EX-99.1

Exhibit 99.1

NU AIRE, INC.

FINANCIALSTATEMENTS

YEARS ENDED SEPTEMBER 30, 2024 AND 2023

NU AIRE, INC.

TABLE OF CONTENTS

YEARSENDED SEPTEMBER 30, 2024 AND 2023

INDEPENDENT AUDITOR’S REPORT	3
FINANCIAL STATEMENTS
BALANCE SHEETS	5
STATEMENTS OF INCOME AND RETAINED EARNINGS	7
STATEMENTS OF CASH FLOWS	8
NOTES TO FINANCIAL STATEMENTS	9

Independent Auditor’s Report

Board of Directors and Stockholders

Nu Aire, Inc.

Plymouth, Minnesota

Opinion

We have audited the financial statements of Nu Aire, Inc., which comprise the balance sheets as of September 30, 2024 and 2023, and the related statements of income and retained earnings, and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Nu Aire, Inc. as of September 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (“GAAS”). Our responsibilities under those standards are further described in the “ Auditor ’ s Responsibilities for the Audit of the Financial Statements ” section of our report. We are required to be independent of Nu Aire, Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

As discussed in Note 1 to the financial statements, effective October 1, 2022, Nu Aire, Inc. adopted new accounting guidance for leases. Our opinion is not modified with respect to this matter

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Nu Aire, Inc.’s ability to continue as a going concern within one year after the date that these financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

(3)

In performing an audit in accordance with GAAS, we:

•	Exercise professional judgment and maintain professional skepticism throughout the audit.
•	Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or<br>error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
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•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are<br>appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Nu Aire, Inc.’s internal control. Accordingly, no such opinion is expressed.
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•	Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting<br>estimates made by management, as well as evaluate the overall presentation of the financial statements.
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•	Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise<br>substantial doubt about Nu Aire, Inc.’s ability to continue as a going concern for a reasonable period of time.
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We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ Forvis Mazars, LLP

Atlanta, Georgia

January 15, 2025

(4)

NU AIRE, INC.

BALANCE SHEETS

SEPTEMBER30, 2024 AND 2023

			2023
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	13,455,974		$	6,893,060
Certificates of Deposit	991,082			985,473
Accounts Receivable, Net of Allowance for Credit Losses of 150,000 and 175,000,<br>respectively	10,560,193			12,211,066
Inventories, Net	12,559,018			15,659,124
Prepaid Expenses	817,527			454,625
Income Taxes Receivable	154,818			—
Total Current Assets	38,538,612			36,203,348
PROPERTY AND EQUIPMENT
Leasehold Improvements	709,565			597,707
Machinery and Equipment	13,375,505			13,284,837
Office Furniture and Equipment	3,240,349			3,186,010
Vehicles	262,490			262,490
Software	3,240,597			3,240,597
Construction in Process	420,332			—
Total	21,248,838			20,571,641
Less: Accumulated Depreciation	(18,856,875	)		(17,276,479	)
Total Property and Equipment (at Depreciated Cost)	2,391,963			3,295,162
OTHER ASSETS
Noncompete Agreement, Net	20,833			270,833
Operating<br>Right-of-Use Asset, Net	6,413,855			7,227,954
Deferred Tax Asset	606,057			891,000
Deposits	6,861			6,861
Total Other Assets	7,047,606			8,396,648
Total Assets	47,978,181		$	47,895,158

All values are in US Dollars.

See accompanying Notes to FinancialStatements

(5)

NU AIRE, INC.

BALANCE SHEETS (CONTINUED)

YEARS ENDED SEPTEMBER 30, 2024 AND 2023

		2023
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable	3,650,249	$	4,191,472
Current Portion of Lease Liability - Operating	1,315,402		1,071,973
Income Taxes Payable	180,539		111,821
Accrued Compensation	2,127,269		2,046,248
Accrued Commissions	1,064,020		1,487,902
Other Accrued Expenses	2,181,943		3,000,433
Total Current Liabilities	10,519,422		11,909,849
LONG-TERM LIABILITIES
Reserve for Uncertain Tax Positions	—		2,336,000
Long-Term Lease Liability - Operating (Less Current Portion)	5,376,568		6,404,789
Total Long-Term Liabilities	5,376,568		8,740,789
Total Liabilities	15,895,990		20,650,638
STOCKHOLDERS’ EQUITY
Common Stock - Par Value 0.10 Per Share; Authorized 100,000 Voting and 1,000,000 Nonvoting<br>Shares; 27,300 Voting and 273,000 Nonvoting Shares Issued and Outstanding	30,030		30,030
Additional Paid-In Capital	12,359		12,359
Retained Earnings	32,039,802		27,202,131
Total Stockholders’ Equity	32,082,191		27,244,520
Total Liabilities and Stockholders’ Equity	47,978,181	$	47,895,158

All values are in US Dollars.

See accompanying Notes to Financial Statements

(6)

NU AIRE, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

YEARS ENDED SEPTEMBER 30, 2024 AND 2023

	2024						2023
	Amount			Percent			Amount		Percent
NET REVENUES	$	74,850,302			100.0	%	$	81,501,340		100.0	%
COST OF REVENUES		51,168,691			68.4			58,459,987		71.7
GROSS PROFIT		23,681,611			31.6			23,041,353		28.3
OPERATING EXPENSE
Selling Expense		11,738,103			15.7			12,103,472		14.9
General and Administrative		6,162,806			8.2			6,192,173		7.6
Research and Development		532,092			0.7			1,023,243		1.3
Total Operating Expense		18,433,001			24.6			19,318,888		23.7
INCOME FROM OPERATIONS		5,248,610			7.0			3,722,465		4.6
OTHER INCOME
Interest Income - Net		513,770			0.6			127,230		0.2
Other Income		189,840			0.3			285,040		0.3
Total Other Income		703,610			0.9			412,270		0.5
INCOME BEFORE INCOME TAXES		5,952,220			8.0			4,134,735		5.1
PROVISION FOR INCOME TAXES		513,949			0.7			1,179,000		1.4
NET INCOME		5,438,271			7.3			2,955,735		3.6
Retained Earnings - Beginning of Year		27,202,131						18,984,955
Dividends		(600,600	)					—
Adoption of a New Accounting Standard - See Note 5		—						5,261,441
RETAINED EARNINGS - END OF YEAR	$	32,039,802					$	27,202,131

See accompanying Notes to FinancialStatements

(7)

NU AIRE, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2024 AND 2023

	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	5,438,271		$	2,955,735
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization		1,830,395			1,984,873
Gain on Disposal of Property and Equipment		—			(2,000	)
Deferred Income Taxes		(2,051,057	)		802,000
Increase (Reduction) in Inventory Reserve		291,596			(100,000	)
Change in Operating Assets and Liabilities:
Accounts Receivable		1,650,873			(338,989	)
Prepaid Expenses		(362,902	)		216,185
Inventories		2,808,510			908,100
Income Taxes		(86,100	)		507,728
Accounts Payable		(541,223	)		(1,093,561	)
Accrued Expenses		(1,161,351	)		1,099,693
ROU Asset and Lease Liability		29,307			47,726
Net Cash and Cash Equivalents Provided by Operating Activities		7,846,319			6,987,490
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment		(677,196	)		(633,230	)
Acquisition of Certificates of Deposits		(5,609	)		(985,473	)
Proceeds from Sale of Property and Equipment		—			2,000
Net Cash and Cash Equivalents Used by Investing Activities		(682,805	)		(1,616,703	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of Dividends		(600,600	)		—
NET INCREASE IN CASH AND CASH EQUIVALENTS		6,562,914			5,370,787
Cash and Cash Equivalents - Beginning of Year		6,893,060			1,522,273
CASH AND CASH EQUIVALENTS - END OF YEAR	$	13,455,974		$	6,893,060

See accompanying Notes to FinancialStatements

(8)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Nature of Business

Nu Aire, Inc. (the “Company”) is engaged in the design, manufacture, and marketing of biological safety cabinets, CO2 water jacketed incubators, and laminar airflow products used primarily in the medical and research fields. The Company sells throughout the United States and internationally.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all investments with original maturity dates of 90 days or less to be cash equivalents.

The Company maintains cash balances in financial institutions in the United States and Canada. At times, such cash balances may be in excess of the Federal Deposit Insurance Corporation insurance limit.

Certificates of Deposit

Certificates of deposits with an original maturity greater than three months are recorded at cost.

(9)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts Receivable and Allowance for Credit Losses

Accounts receivable, less allowances, consist primarily of trade receivables from customers and receivables from suppliers for marketing or incentive programs. The Company determines the past due status of trade receivables based on contractual terms with each customer and evaluates the collectability of accounts receivable to determine an appropriate allowance for credit losses on trade receivables. To calculate an allowance for credit losses, the Company estimates uncollectible amounts based on historical loss experience, and expectations regarding future losses. Allowances are recorded for all other receivables based on an analysis of historical trends of write-offs and recoveries. At September 30, 2024 and 2023, the allowance for credit losses was $150,000 and $175,000, respectively.

Balance - Beginning of Year		175,000
Current Period Provision for Expected Credit Losses		11,689
Direct Write-Downs Charged Against the Allowance		(36,689	)
Balance - End of Year	$	150,000

Inventories

Inventories consist primarily of raw materials, finished goods, and work in process. The Company accounts for all inventories at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. An inventory reserve is provided for slow moving and obsolete inventory which has not had movement in the 2 most recent years.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method on property and equipment over the following estimated useful lives:

Leasehold Improvements	Lesser of Useful Life or Term of the Lease
Machinery, Furniture, and Equipment	5 to 12 Years
Vehicles	5 Years
Software	3 Years

Depreciation expense was approximately $1,579,000 and $1,734,000 for the years ended September 30, 2024 and 2023, respectively.

Adoption of New Accounting Standards

In fiscal year 2024, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which modifies the measurement of expected credit losses. The Company adopted this new guidance utilizing the modified retrospective transition method. This ASU replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the standard using the modified retrospective approach.

(10)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Adoption of New Accounting Standards (Continued)

The adoption of this Standard did not have a material impact on the Company’s financial statements, but did change how the allowance for credit losses is determined. The Company maintains an allowance for credit losses which represents an estimate of expected credit losses based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, historical experience and current and expected future economic conditions. The Company writes-off a receivable and charges it against its recorded allowance when management has exhausted collection efforts without success.

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (ASC 842). The new standard increases transparency and comparability among organizations by requiring the recognition of right-of-use (ROU) assets and lease liabilities on the balance sheet. Most prominent of the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company adopted the requirements of the guidance effective October 1, 2022, and has elected to apply the provisions of this standard to the beginning of the period of adoption.

The Company has elected to adopt the package of practical expedients available in the year of adoption. The Company has elected to adopt the available practical expedient to use hindsight in determining the lease term and in assessing impairment of the Company’s ROU assets.

The Company elected the available practical expedients to account for existing capital leases and operating leases as finance leases and operating leases, respectively, under the new guidance, without reassessing (a) whether the contracts contain leases under the new standard, (b) whether classification of capital leases or operating leases would be different in accordance with the new guidance, or (c) whether the unamortized initial direct costs before transition adjustments would have met the definition of initial direct costs in the new guidance at lease commencement.

As a result of the adoption of the new lease accounting guidance, the Company recognized on October 1, 2022, an operating lease liability of $8,485,011, which represents the present value of the remaining operating lease payments of approximate $9,797,344 discounted using the Company’s weighted average risk-free rate of 3.97% and an operating right-of-use asset of $8,283,929. The difference between the right-of-use asset and the lease liability reflects the existing deferred rent balances as of the date of adoption. As a result of the adoption of the new accounting guidance, the deferred gain balance was recorded to retained earnings through a cumulative effect adjustment net of income tax (see Note 5).

The standard had a material impact on the balance sheets and the statements of operations but did not have an impact on the statements of cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.

Leases

The Company leases office and production space and equipment with maturity dates through 2030. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, and operating lease liabilities on the balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most leases do not provide an implicit rate, the Company uses a risk-free rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected to recognize payments for short-term leases with a lease term of 12 months or less as expense as incurred and these leases are not included as lease liabilities or right-of-use assets on the balance sheets.

The Company has elected not to separate nonlease components from lease components and instead accounts for each separate lease component and the nonlease component as a single lease component.

Long-Lived Assets

Long-lived assets to be held and used are tested for recoverability whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount over the fair value of the asset. Certain long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. As of September 30, 2024 and 2023, long-lived assets are not considered to be impaired by management.

(11)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

The Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company receives purchase orders from customers for the purchase of a specific product (laboratory equipment and compounding pharmacy airflow products). The pricing and payment terms for purchase orders are based on the Company’s standard terms and conditions or the result of specific negotiations with each customer. Contracts do not contain a significant financing component as the Company’s standard terms and conditions generally require payment within 30 days from the date control of the goods transfers to the customer.

Revenue is recognized when control of the equipment has transferred to the customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point in time when the goods have been delivered to or have been picked up by the customer, as that is generally when legal title, physical possession, and the risks and rewards of those items transfers to the customer.

For the years ended September 30, 2024 and 2023, the Company recognized $73,590,975 and $80,480,312, respectively, from equipment that transferred to the customer at a point in time. The remaining revenue recognized during the years ended September 30, 2024 and 2023, of $1,259,327 and $1,021,028, respectively, relate to in-lab installation and consultation which is recognized over the installation or consultation period.

The timing of revenue recognition, billings, and cash collections results in receivables, contract assets, and contract liabilities. Account receivables are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheets. The Company does not have other contract assets as of September 30, 2024 and 2023. When the Company is entitled to bill a customer in advance of the recognition of revenue, a contract liability is recognized. Contract liabilities represent customer deposits from international customers for the exchange of manufactured products under a contract for which the Company has not yet transferred control of, pursuant to shipping terms. Customer deposits are included in other accrued expenses on the balance sheet. Contract balances were as follows at September 30:

	2024		2023		2022
Accounts Receivable, Net	$	10,560,193	$	12,211,066	$	12,496,358
Customer Deposits		534,026		1,438,273		597,646
Deferred Revenue		322,568		303,933		278,261

(12)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

Shipping and Handling

Amounts billed to customers related to shipping and handling costs are included in net revenues in the statements of income and retained earnings. The Company has elected to account for shipping and handling costs as fulfillment costs and are included in cost of sales in the statements of operations and retained earnings. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

Practical Expedient

The Company has elected a practical expedient to recognize incremental costs incurred to obtain contracts, which primarily represent sales commissions where the amortization period would be less than one year, as a selling expense when incurred in the financial statements.

Income Taxes

The Company utilizes an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Deferred tax assets and liabilities are classified as noncurrent on the balance sheet, regardless of the classification of the related asset or liability for financial reporting purposes.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. No allowance for the deferred tax asset is deemed necessary at September 30, 2024 and 2023.

In accordance with Accounting Standards Codification (“ASC”) 740; Income Taxes, the Company evaluates uncertain tax positions on the basis of a two-step process in which management determines (1) whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax obligation that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company’s income tax returns are subject to review and examination by federal, state, and local authorities. The tax returns for the tax years 2021 through 2023 are open to examination by federal authorities.

(13)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations

Foreign receivables account for approximately 16% and 20% of accounts receivable at September 30, 2024 and 2023, respectively. Foreign sales account for approximately 16% and 21% of net revenues for the years ended September 30, 2024 and 2023, respectively. One customer accounted for approximately 13% of accounts receivable, net, at September 30, 2024. One customer accounted for approximately 10% of accounts receivable, net, at September 30, 2023. One customer accounted for approximately 11% of net revenues for the year ended September 30, 2024. One customer accounted for approximately 10% of net revenues for the year ended September 30, 2023.

The Company recorded gains from foreign currency transactions approximating $29,000 and $53,000 for the years ended September 30, 2024 and 2023, respectively. These gains are included in general and administrative expenses in the statements of income and retained earnings.

Research and Development

Research and development costs are charged to expense as incurred. Total research and development costs were approximately $532,000 and $1,023,000 for the years ended September 30, 2024 and 2023, respectively.

Advertising Costs

Advertising costs are charged to expense as incurred. Advertising expense was approximately $692,000 and $778,000 for the years ended September 30, 2024 and 2023, respectively.

Presentation of Tax Collected from Customers

The Company collects various types of tax from its customers and remits the entire amount to the appropriate government authority. The Company’s accounting policy is to exclude the tax collected and remitted to the governmental authority from net revenues and cost of sales.

Reclassifications

Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements.

Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through January 15, 2025, the date the financial statements were available to be issued.

(14)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 2	INVENTORIES

Inventories consist of the following at September 30:

	2024			2023
Raw Materials and Fabricated Parts	$	9,676,838		$	12,581,029
Work in Process		718,461			890,568
Finished Goods		2,855,315			2,587,527
Reserve for Slow Moving and Obsolete Inventory		(691,596	)		(400,000	)
Total	$	12,559,018		$	15,659,124
NOTE 3	LONG-TERM DEBT
---	---

The Company had a revolving line of credit agreement with Wells Fargo Bank, N.A. The line provided for advances up to $1,000,000 and was terminated on October 16, 2024. Interest was payable monthly at the daily Secured Overnight Financing Rate (“SOFR”) plus 1.6%, was due on demand and was secured by accounts receivable, inventory, and equipment. The line of credit was subject to certain financial covenants. The Company did not have an outstanding balance on this line of credit at September 30, 2024 and 2023.

NOTE 4	PRODUCT WARRANTY

The Company sells the majority of its products to consumers along with a limited warranty. The length and terms of the warranty vary based on the products sold. The accompanying financial statements include an $800,000 warranty reserve reported in other accrued expenses for estimated warranty claims based on the Company’s experience of actual claims incurred. The following is a reconciliation of the warranty provision at September 30:

	2024			2023
Reserve Balance - Beginning of Year	$	800,000		$	800,000
Payments Made During the Year		(1,005,296	)		(698,223	)
Provision for Current Year Warranties		731,343			779,738
Modification to Existing Reserve		273,953			(81,515	)
Reserve Balance - End of Year	$	800,000		$	800,000
NOTE 5	SALE OF BUILDINGS
---	---

Effective April 22, 2020, the Company entered into a sale leaseback agreement in connection with the sale of two manufacturing buildings totaling $14,815,185. The lease terms extend through April 30, 2030. The sale resulted in a gain of approximately $8,856,000. The Company recognized the gain as a liability and was amortizing the gain over the life of the underlying lease term. As part of the adoption of Accounting Standard Codification (ASC) 842 in fiscal 2023, the Company’s remaining deferred gain balance of $6,682,441 was adjusted through retained earnings as a cumulative effect adjustment net of income tax of $1,421,000.

(15)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 6	OPERATING LEASES

The Company leases four facilities for office, manufacturing, and warehouse space in Long Lake, Plymouth, and Crystal, Minnesota under long-term, non-cancelable lease arrangements. The Company also leases a vehicle through 2027. The agreements generally require the Company to pay real estate taxes, insurance, and repairs.

The following table provides quantitative information concerning the Company’s leases at September 30:

	2024			2023
Lease Costs:
Operating Lease Costs	$	1,355,898		$	1,370,841
Other Information:
Operating Cash Flows from Operating Leases	$	1,345,282		$	1,323,115
Right-of-Use<br>Assets Obtained in Exchange for New Operating Lease Liabilities	$	—		$	8,283,929
Weighted-Average Remaining Lease Term - Operating Leases		5.5 Years			6.4 Years
Weighted-Average Discount Rate - Operating Leases		3.97	%		3.97	%

The Company classifies the total discounted lease payments that are due in the next 12 months as current. A maturity analysis of annual undiscounted cash flows for lease liabilities as of September 30, 2024 is as follows:

Year Ending September 30,	Operating
2025	$	1,352,114
2026		1,378,379
2027		1,392,727
2028		1,301,640
2029		1,285,672
Thereafter		725,915
Undiscounted Cash Flows		7,436,447
Less: Imputed Interest		(744,477	)
Total Present Value	$	6,691,970
Short-Term Lease Liabilities		(1,315,402	)
Long-Term Lease Liabilities		(5,376,568	)
Total Lease Liability	$	(6,691,970	)

(16)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 7	INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the accompanying financial statements and consist of taxes currently due plus or minus deferred taxes. Income tax expense (benefit) consisted of the following for the years ended September 30:

	2024			2023
Current:
Federal	$	1,277,581		$	360,000
State		(1,050,481	)		401,000
Total Current		227,100			761,000
Deferred:
Federal		324,448			411,000
State		(37,599	)		7,000
Total Deferred		286,849			418,000
Total Provision for Income Taxes	$	513,949		$	1,179,000

Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and tax credit carryforwards that create deferred tax assets and liabilities are as follows for the years ended September 30:

	2024		2023
Deferred Tax Assets:
Reserve for Bad Debts	$	35,131	$	37,005
Accrued Vacation		208,681		209,515
Accrued Bonus		1,401		—
Inventory Reserve		161,976		84,584
Warranty Reserve		187,365		169,167
UNICAP		46,419		30,815
Federal Benefit of State UTP Reserve		24,242		490,992
Accrued Health Insurance Claims		54,596		50,352
Intangible Assets		113,850		137,902
Accrued Commissions		70,420		153,167
Accrued Shareholder Wages		3,133		1,466
Lease Liability		1,934,904		1,581,027
Section 174 Capitalized Costs		239,785		121,779
Total Current Deferred Tax Asset		3,081,903		3,067,771
Deferred Tax Liabilities:
Property and Equipment		592,351		648,357
Right-of-Use<br>Asset		1,883,495		1,528,414
Total Deferred Tax Liabilities		2,475,846		2,176,771
Total Long-Term Deferred Tax Asset	$	606,057	$	891,000

(17)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 7	INCOME TAXES (CONTINUED)

A reconciliation of income tax expense at the federal statutory rate to the Company’s actual income tax expense is shown below for the years ended September 30:

	2024			2023
Federal Tax Expense at the Statutory Rates	$	1,249,966		$	860,676
Foreign-Derived Intangible Income		(61,969	)		(67,097	)
State Income Tax, Net of Federal Income Tax Benefit		77,497			19,373
Change in Uncertain Tax Positions		(785,889	)		383,827
Research and Development Tax Credits		(20,396	)		(20,396	)
Other Permanent Differences		54,740			2,617
Total	$	513,949		$	1,179,000

As noted in Note 1, in accordance with ASC 740, the Company evaluates uncertain tax positions on the basis of a two-step process in which management determines (1) whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax obligation that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company evaluated its tax positions and recorded uncertain tax positions of $2,335,585 as of September 30, 2023. As of September 30, 2024 there were no uncertain tax positions. The Company recognizes interest related to uncertain tax positions in the provision for income taxes. Interest for the fiscal years ended September 30, 2024 and 2023 was $105,100 and $296,294, respectively. The Company does not expect significant changes in its liability for uncertain tax positions over the next 12 months. The change in the uncertain tax position consists of the following:

	2024			2023
Beginning Balance	$	2,335,585		$	1,951,758
Increases Related to Tax Positions taken During a Prior Year		—			164,171
(Decreases) Increases Related to Tax Positions taken During the Current Year		(2,335,585	)		219,656
Ending Balance	$	—		$	2,335,585

(18)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 8	PRIOR PERIOD ADJUSTMENT

During the year ended September 30, 2024, the Company discovered that previously issued financial statements included certain errors in applying U.S. GAAP. As result of correction of these errors, as of October 1, 2022, the Company decreased its total equity by $489,959 for the cumulative effect of the correction of the errors. Had these errors not occurred, the prior year income from operations would have increased by $36,275.

Based upon management’s review, it has been determined that these errors were immaterial. The errors related to the recording of revenue cutoff.

The effect on the Company’s previously issued 2023 financial statements is summarized as follows:

Balance sheet as of September 30, 2023:

	As Previously<br>Reported		As Revised		Change
Accounts Receivable, Net	$	12,548,376	$	12,211,066	$	(337,310	)
Inventories		15,498,549		15,659,124		160,575
Accrued Commissions		1,514,887		1,487,902		(26,985	)
Other Accrued Expenses		2,696,500		3,000,433		303,933
Retained Earnings		27,655,814		27,202,131		(453,683	)
Total	$	59,914,126	$	59,560,656	$	(353,470	)

Statement of income for the year ended September 30, 2023:

	As Previously<br>Reported		As Revised		Change
Net Revenues	$	81,306,605	$	81,501,340	$	194,735
Cost of Revenues		58,324,485		58,459,987		135,502
Selling Expenses		12,080,515		12,103,472		22,957
Net Income	$	151,711,605	$	152,064,799	$	353,194

Statement of cash flows for the year ended September 30, 2023:

	As Previously<br>Reported			As Revised			Change
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net Income	$	2,919,459		$	2,955,735		$	36,276
Accounts Receivable		(52,018	)		(338,989	)		(286,971	)
Inventory		772,598			908,100			135,502
Accrued Expenses		984,500			1,099,693			115,193

(19)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 9	FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Disclosures about instruments measured at fair value require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities as of the reporting date.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities as of the reporting date.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair values of assets measured as of September 30 are as follows:

	2024
	Level 1		Level 2		Level 3		Total
Certificate of Deposit	$	991,082		—		—	$	991,082
	2023
	Level 1		Level 2		Level 3		Total
Certificate of Deposit	$	985,473		—		—	$	985,473
NOTE 10	BENEFIT PLAN
---	---

The Company has a qualified profit sharing plan which also includes a retirement plan under Section 401(k) of the Internal Revenue Code (IRC). The plan covers substantially all employees after specified periods of service and attainment of minimum age requirements. Profit sharing and employer 401(k) matching contributions to the plan are determined at the discretion of the board of directors but are limited to the maximum amount allowed as a deduction under the IRC. Contributions to the plan were approximately $461,000 and $455,000 for the years ended September 30, 2024 and 2023, respectively.

NOTE 11	SELF-FUNDED INSURANCE PLAN

The Company has a self-funded insurance plan for employee medical coverage. The plan has stop-loss insurance, which limits the Company’s losses during the policy period to $120,000 per person and a maximum aggregate of approximately $4,023,000. The Company estimates its obligation for unpaid claims and claims incurred but not reported based on management’s knowledge and experience about past and current claims, and assumptions about future claims. As of September 30, 2024 and 2023, the reserve for self-insured medical claims included in other accrued expenses was approximately $233,000 and $238,000, respectively.

NOTE 12	STOCKHOLDER AGREEMENT

The stockholders entered into an agreement that restricts the transfer of voting and nonvoting common stock as specified in the agreement. The Company retains the right of first refusal to purchase a stockholder’s share of common stock. Individual stockholders have a put option to require the Company to purchase all of their shares of stock at any time based on the terms and conditions set forth in the stockholder agreement. The purchase price specified in the agreement is the fair market value on the date of the sale determined by an independent appraisal. The payment of the purchase price will include a portion paid immediately in cash with the remaining amount to be paid through terms defined in the agreement.

(20)

NU AIRE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2024 AND 2023

NOTE 13	STOCK REDEMPTION

Effective November 8, 2019, the Company redeemed 89,500 shares of common stock from a stockholder. In conjunction with the redemption, the Company entered into a noncompete agreement with the former owner for $1,250,000. The term of the noncompete agreement runs through November 9, 2024. The Company has capitalized the noncompete agreement and is amortizing the cost over the term of the agreement. Amortization expense incurred on this noncompete agreement was $250,000 for the years ended September 30, 2024 and 2023. The net balance of the capitalized noncompete agreement as of September 30, 2024 and 2023 was $20,833 and $270,833, respectively.

NOTE 14	SUBSEQUENT EVENTS

On October 30, 2024, the Company made a dividend distribution totaling $12,612,600.

On November 1, 2024, the stockholders of the Company sold 100% of their stock to an unrelated third party.

(21)

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

On November 1, 2024 (the “Closing Date”), Kewaunee Scientific Corporation (“Kewaunee”, or the “Company”) completed an acquisition (the “Acquisition”) of Nu Aire, Inc. (“Nu Aire”) pursuant to the terms of the Securities Purchase Agreement (the “Purchase Agreement”), dated as of the Closing Date, by and among the Company, Nu Aire, Richard A. Peters, William F. Peters, Rita Peters Revocable Trust, and any amendments thereto (“Rita Trust”), Richard A. Peters Irrevocable Trust dated May 18, 2020, and any amendments thereto (“R. Peters 2020 Trust”), Richard A. Peters Revocable Trust, and any amendments thereto (“R. Peters 2005 Trust”), Karan A. Peters Revocable Trust, and any amendments thereto (“K. Peters Trust”), William F. Peters 2023 Irrevocable Trust dated December 20, 2023, and any amendments thereto (“W. Peters 2023 Trust”), William F. Peters Revocable Trust, and any amendments thereto (“W. Peters Trust” and, together with Richard A. Peters, William F. Peters, Rita Trust, R. Peters 2020 Trust, R. Peters 2005 Trust, K. Peters Trust, and W. Peters 2023 Trust, the “Sellers” and each, a “Seller”) and William F Peters as Sellers’ Representative.

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

The unaudited pro forma condensed combined balance sheet as of October 31, 2024 gives effect to the Acquisition and the debt financing (see “Description of the Financing” for explanation of the debt financing) as if those transactions had been completed on October 31, 2024. The unaudited pro forma condensed combined statements of operations for the year ended April 30, 2024 and the six months ended October 31, 2024 give effect to the Acquisition and the debt financing as if those transactions had occurred on May 1, 2023, the first day of Kewaunee’s fiscal year 2024 and combines the historical results of Kewaunee and Nu Aire.

The historical financial statements of Kewaunee and Nu Aire have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma events that are transaction accounting adjustments which are necessary to account for the Acquisition and the debt financing, in accordance with U.S. GAAP. The unaudited pro forma adjustments are based upon available information and certain assumptions that our management believes are reasonable.

The unaudited pro forma condensed combined financial information should be read in conjunction with:

•	The accompanying notes to the unaudited pro forma condensed combined financial information;<br>
•	The separate audited financial statements of Kewaunee as of and for the fiscal year ended April 30, 2024 and<br>the related notes, included in Kewaunee’s Annual Report on Form 10-K for the fiscal year ended April 30, 2024;
---	---
•	The separate unaudited financial statements of Kewaunee as of and for the six months ended October 31, 2024<br>and the related notes, included in Kewaunee’s Quarterly Report on Form 10-Q for the period ended October 31, 2024; and
---	---
•	The separate audited financial statements of Nu Aire as of and for the fiscal year ended September 30, 2024<br>and the related notes, included as an exhibit to this Form 8-K/A.
---	---

Description of theFinancing

Kewaunee purchased all of the outstanding capital stock of Nu Aire from the Sellers for $55 million in the aggregate (the “Purchase Price”), subject to adjustments for debt, cash, transaction expenses and net working capital, as further described in the Purchase Agreement (the “Transaction”). The Company funded the Purchase Price with a combination of proceeds from a Loan Agreement (as defined below) with PNC Bank, National Association (“PNC”) and subordinated notes issued to the Sellers in conjunction with the closing of the Acquisition (the “Seller Notes”). **** The Loan Agreement and the Seller Notes are collectively referred to herein as the “debt financing” or “financing”.

Loan Agreement

On the Closing Date, Kewaunee entered into a Loan Agreement with PNC. The loans governed by the Loan Agreement include:

•	a $20 million committed senior secured revolving line of credit facility (the “Revolving Credit<br>Facility”), which contains an option to increase the facility by an additional $10 million upon request by Kewaunee and approval by PNC, in its discretion; and
•	a $15 million term loan (the “Term Loan”).
---	---

The Revolving Credit Facility and Term Loan mature on the 5-year anniversary of the Closing, or November 1, 2029.

For the Revolving Credit Facility, the interest rate will be selected by Kewaunee at each advance from one of two options. Option one will be a base rate option which will be the highest of the following: (1) PNC prime rate, (2) an overnight bank funding rate as determined by the Federal Reserve Bank of New York plus 50 basis points, or (3) the sum of the daily simple secured overnight financing rate administered by the Federal Reserve Bank of New York, as adjusted by PNC, plus 100 basis points, plus 10 basis points in each case increased by an Applicable Margin of 50 to 100 basis points determined by the ratio of senior debt to Kewaunee’s EBITDA. Option two will be a daily secured overnight financing rate plus 150 to 200 basis points determined by the ratio of senior debt to Kewaunee’s EBITDA and plus 10 basis points. There is an unused fee of 0.15% to 0.25%, determined by the ratio of senior debt to Kewaunee’s EBITDA, of the unused daily balance of the Revolving Credit Facility. This unused fee is calculated on the basis of a 360-day year for the actual number of days elapsed and paid quarterly.

For the Term Loan, the principal will be paid in 60 substantially equal monthly installments commencing on the Closing Date. Interest will be paid at the same time and calculated on the outstanding principal balance at an interest rate equal to the rate under Option two of the Revolving Credit Facility.

Seller Notes

As noted above, $23 million of the Purchase Price was paid by the issuance of the Seller Notes entered into by and between Kewaunee and each Seller on the Closing Date. The Seller Notes will accrue interest at 8% per annum and will mature on the third anniversary of the Closing, at which time the outstanding principal amount and all unpaid accrued interest will become due and payable by the Company.

The rights of the Sellers to receive payments under the Seller Notes are subordinate to the rights of PNC under the Loan Agreement pursuant to the separate Subordination Agreements that the Sellers entered into with PNC on the Closing Date in connection with the Transaction.

Accounting for the Acquisition

The Acquisition is being accounted for as a business combination using the acquisition method with Kewaunee as the accounting acquirer in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under this method of accounting, the aggregate consideration will be allocated to Nu Aire’s assets acquired and liabilities assumed based upon their estimated fair values at the date of completion of the Acquisition. The process of valuing the net assets of Nu Aire immediately prior to the Acquisition, as well as evaluating accounting policies for conformity, is preliminary. Any differences between the estimated fair value of the consideration transferred and the estimated fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Accordingly, the aggregate acquisition consideration allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair value. Refer to Note 1 – Basis of Presentation for more information.

All financial data included in the unaudited condensed combined financial information is presented in thousands of U.S. Dollars and shares, except per share amounts, and has been prepared on the basis of U.S. GAAP and Kewaunee’s accounting policies.

The unaudited pro forma condensed combined financial information presented is for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Acquisition and the debt financing had been completed on the dates set forth above, nor is it indicative of the future results or financial position of the combined company.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of October 31, 2024

($ in thousands)

	KewauneeScientificCorporationHistorical<br>As of October<br>31, 2024			Nu Aire, Inc.Reclassed<br>As of October<br>31, 2024<br>(Note 2)		Transaction<br>AccountingAdjustments			(Note 4)		TransactionAccountingAdjustments –Financing		(Note 4)		Pro FormaCombined
Assets
Current Assets:
Cash and cash equivalents	$	25,963		$	1,245	$	(29,055	)		(a)	$	20,050		(a)	$	18,203
Restricted cash		3,701			—		—					—				3,701
Receivables, less allowance		41,885			10,650		—					—				52,535
Inventories		18,659			13,108		636			(b)		—				32,403
Prepaid expenses and other current assets		6,228			827		—					—				7,055
Total Current Assets	$	96,436		$	25,830	$	(28,419	)			$	20,050			$	113,897
Net Property, Plant and Equipment		16,990			2,514		4,581			(c)		—				24,085
Goodwill		—			—		(9,971	)		(d)		23,000		(d)		13,029
Other intangible assets, net		—			—		18,600			(e)		—				18,600
Right of use assets		6,941			6,320		1,244			(f)		—				14,505
Deferred income taxes		8,305			618		(5,263	)		(g)		—				3,660
Other assets		5,806			7		—					53		(h)		5,866
Total Assets	$	134,478		$	35,289	$	(19,228	)			$	43,103			$	193,642
Liabilities and Stockholders’ Equity
Current Liabilities:
Short-term borrowings	$	805		$	—	$	—				$	—			$	805
Current portion of financing liability		750			—		—					3,000		(h)		3,750
Current portion of financing lease liabilities		109			—		—					—				109
Current portion of operating lease liabilities		2,112			1,311		—					—				3,423
Accounts payable		21,458			4,293		—					—				25,751
Employee compensation and amounts withheld		3,708			2,642		—					—				6,350
Deferred revenue		6,239			636		—					—				6,875
Other accrued expenses		1,290			1,890		698			(i)		—				3,878
Total Current Liabilities	$	36,471		$	10,772	$	698				$	3,000			$	50,941
Long-term portion of financing liability		27,032			—		—					40,103		(h)		67,135
Long-term portion of financing lease liabilities		156			—		—					—				156
Long-term portion of operating lease liabilities		5,035			5,289		—					—				10,324
Accrued pension and deferred compensation costs		3,625			—		—					—				3,625
Deferred income taxes		1,042			—		—					—				1,042
Other non-current liabilities		460			—		—					—				460
Total Liabilities	$	73,821		$	16,061	$	698				$	43,103			$	133,683
Commitments and Contingencies
Stockholders’ Equity:
Common stock		7,353			30		(30	)		(j)		—				7,353
Additional<br>paid-in-capital		4,885			12		(12	)		(j)		—				4,885
Retained earnings		52,715			19,186		(19,884	)		(j)		—				52,017
Accumulated other comprehensive loss		(3,574	)		—		—					—				(3,574	)
Common stock in treasury, at cost		(2,051	)		—		—					—				(2,051	)
Total Kewaunee Scientific Corporation Stockholders’ Equity	$	59,328		$	19,228	$	(19,926	)			$	—			$	58,630
Non-controlling interest		1,329			—		—					—				1,329
Total Stockholders’ Equity		60,657			19,228		(19,926	)				—				59,959
Total Liabilities and Stockholders’ Equity	$	134,478		$	35,289	$	(19,228	)			$	43,103			$	193,642

See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For The Six Months Ended October 31, 2024

($ and shares in thousands, except per share amounts)

	KewauneeScientificCorporationHistorical<br>Six MonthsEnded<br>October 31, 2024			Nu Aire, Inc.Reclassed SixMonths Ended<br>October 31, 2024<br>(Note 2)		TransactionAccountingAdjustments			(Note 5)		TransactionAccountingAdjustments –Financing			(Note 5)		Pro FormaCombined			(Note 5)
Net sales	$	96,157		$	36,224	$	—				$	—				$	132,381
Cost of products sold		69,717			25,885		9			(a)		—					95,611
Gross profit		26,440			10,339		(9	)				—					36,770
Operating expenses		19,431			9,125		905			(b)		5			(c)		29,466
Operating profit		7,009			1,214		(914	)				(5	)				7,304
Other income, net		266			572		—					—					838
Interest expense		(914	)		—		—					(1,734	)		(c)		(2,648	)
Profit before income taxes		6,361			1,786		(914	)				(1,739	)				5,494
Income tax (benefit) expense		1,108			18		(192	)		(d)		(365	)		(d)		569
Net earnings		5,253			1,768		(722	)				(1,374	)				4,925
Less: Net earnings attributable to the non-controlling<br>interest		52			—		—					—					52
Net earnings attributable to Kewaunee Scientific Corporation	$	5,201		$	1,768	$	(722	)			$	(1,374	)			$	4,873
Net earnings per share attributable to Kewaunee Scientific Corporation stockholders
Basic	$	1.82														$	1.70			(e)
Diluted	$	1.75														$	1.64 ****			(e)
Weighted average number of common shares outstanding
Basic		2,861															2,861 ****
Diluted		2,971															2,971 ****

See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended April 30, 2024

($ and shares in thousands, except per share amounts)

	KewauneeScientificCorporationHistorical<br>Year Ended<br>April 30, 2024			Nu Aire, Inc.Reclassed YearEnded<br>April 30, 2024<br>(Note 2)		TransactionAccountingAdjustments			(Note 5)		TransactionAccountingAdjustments –Financing			(Note 5)		Pro FormaCombined			(Note 5)
Net sales	$	203,755		$	80,875	$	—				$	—				$	284,630
Cost of products sold		151,704			55,054		638			(a)		—					207,396
Gross profit		52,051			25,821		(638	)				—					77,234
Operating expenses		33,770			20,169		2,467			(b)		11			(c)		56,417
Operating profit		18,281			5,652		(3,105	)				(11	)				20,817
Pension expense		(4,177	)		—		—					—					(4,177	)
Other income, net		814			418		—					—					1,232
Interest expense		(1,799	)		—		—					(3,479	)		(c)		(5,278	)
Profit before income taxes		13,119			6,070		(3,105	)				(3,490	)				12,594
Income tax (benefit) expense		(5,938	)		1,034		(652	)		(d)		(733	)		(d)		(6,289	)
Net earnings		19,057			5,036		(2,453	)				(2,757	)				18,883
Less: Net earnings attributable to the non-controlling<br>interest		304			—		—					—					304
Net earnings attributable to Kewaunee Scientific Corporation	$	18,753		$	5,036	$	(2,453	)			$	(2,757	)			$	18,579
Net earnings per share attributable to Kewaunee Scientific Corporation stockholders
Basic	$	6.51														$	6.45			(e)
Diluted	$	6.38														$	6.32			(e)
Weighted average number of common shares outstanding
Basic		2,879															2,879 ****
Diluted		2,938															2,938 ****

See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1 - Basis of Presentation

The unaudited pro forma condensed combined financial information and related notes are prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”.

Kewaunee and Nu Aire’s historical financial statements were prepared in accordance with U.S. GAAP and presented in U.S. dollars. As discussed in Note 2, certain reclassifications were made to align Kewaunee and Nu Aire’s financial statement presentation. Kewaunee is currently in the process of evaluating Nu Aire’s accounting policies and as a result of that review, additional differences could be identified between the accounting policies of the two companies. With the information currently available, Kewaunee has determined that no significant adjustments are necessary to conform Nu Aire’s financial statements to the accounting policies used by Kewaunee.

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with Kewaunee as the accounting acquirer, using the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and based on the historical financial statements of Kewaunee and Nu Aire. Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs associated with the business combination are expensed as incurred. The excess of consideration over the estimated fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The allocation of the aggregate consideration depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the aggregate consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. The allocation of the aggregate consideration set forth herein is preliminary and will be revised as additional information becomes available during the measurement period, which could be up to twelve months from the Closing Date. Any such revisions or changes may be material.

Pursuant to Rule 11-02(c)(3) of Regulation S-X, if the fiscal year end of an acquired entity differs from the acquirer’s fiscal year end by more than 93 days, the acquired entity’s statement of operations must be brought up within 93 days of the acquirer’s fiscal year end.

The unaudited pro forma condensed combined balance sheet, as of October 31, 2024, the unaudited pro forma condensed combined statement of operations for the six months ended October 31, 2024 and the unaudited pro forma condensed combined statement of operations for the year ended April 30, 2024, presented herein, are based on the historical financial statements of Kewaunee and Nu Aire. As a result of Kewaunee having a different fiscal period-end than Nu Aire, the unaudited pro forma condensed combined financial information has been aligned as follows:

The unaudited pro forma condensed combined balance sheet as of October 31, 2024 is presented as if the Acquisition and debt financing had occurred on October 31, 2024 and combines the historical balance sheet of Kewaunee as of October 31, 2024 with the unaudited accounting records of Nu Aire as of October 31, 2024.

•	The unaudited pro forma condensed combined statement of operations for the six months ended October 31, 2024<br>has been prepared as if the Acquisition and debt financing had occurred on May 1, 2023 and combines Kewaunee’s historical statement of operations for the six months ended October 31, 2024 with Nu Aire’s historical statement of<br>operations for the six months ended October 31, 2024.
•	Nu Aire’s historical statement of operations for the six months ended October 31, 2024 was derived from<br>the historical statement of operations for the twelve months ended September 30, 2024 and Nu Aire’s internal accounting records.
---	---
•	The unaudited pro forma condensed combined statement of operations for the year ended April 30, 2024 has<br>been prepared as if the Acquisition and debt financing had occurred on May 1, 2023 and combines Kewaunee’s historical statement of operations for the fiscal year ended April 30, 2024 with Nu Aire’s historical statement of<br>operations for the 12 months ended April 30, 2024.
---	---
•	Nu Aire’s historical statement of operations for the 12 months ended April 30, 2024 was derived from<br>the historical statement of operations for the twelve months ended September 30, 2023 and September 30, 2024 and Nu Aire’s internal accounting records.
---	---

The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dissynergies, operating efficiencies or cost savings that may result from the Acquisition or any integration costs that may be incurred. The pro forma adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that Kewaunee believes are reasonable under the circumstances. Kewaunee is not aware of any material transactions between Kewaunee and Nu Aire during the periods presented. Accordingly, adjustments to eliminate transactions between Kewaunee and Nu Aire have not been reflected in the unaudited pro forma condensed combined financial information.

Note 2 - Nu Aire reclassification adjustments

During the preparation of this unaudited pro forma condensed combined financial information, management performed a preliminary analysis of Nu Aire’s financial information to identify differences in financial statement presentation as compared to the financial statement presentation of Kewaunee. Certain reclassification adjustments have been made to conform Nu Aire’s historical financial statement presentation to Kewaunee’s financial statement presentation. Kewaunee is currently in the process of conducting a more detailed review of reclassifications, which could be materially different from the amounts set forth in the unaudited pro forma condensed combined financial information presented herein.

A)	Refer to the table below for a summary of reclassification adjustments made to Nu Aire’s balance sheet as<br>of October 31, 2024 in order to conform the presentation with that of Kewaunee:
( in thousands)
---	---	---	---	---	---	---	---	---	---
Nu Aire, Inc. Historical<br>Condensed Consolidated Balance Sheet Line Items	Nu Aire, Inc. HistoricalCondensed ConsolidatedBalances<br>As of October 31, 2024		Reclassification			Notes		Nu Aire, Inc.Reclassed<br>As of October 31,2024
Cash and Cash Equivalents	$	1,245	$	—				$	1,245
Accounts Receivable, Net of Allowance for Credit Losses		10,650		—					10,650
Inventories, Net		13,108		—					13,108
Prepaid Expenses		672		155			(a)		827
Income Taxes Receivable		155		(155	)		(a)		—
Total Property and Equipment (at Depreciated Cost)		2,514		—					2,514
Operating<br>Right-of-Use Asset, Net		6,320		—					6,320
Deferred Tax Asset		618		—					618
Deposits		7		—					7
Current Portion of Lease Liability - Operating		1,311		—					1,311
Accounts Payable		4,370		(77	)		(b)		4,293
Accrued Compensation		1,828		814			(b), (c), (d)		2,642
Accrued Commissions		916		(916	)		(c)		—
		—		636			(c)		636
Other Accrued Expenses		2,239		(349	)		(d), (e), (f)		1,890
Income Taxes Payable		108		(108	)		(f)		—
Long-Term Lease Liability - Operating (Less Current Portion)		5,289		—					5,289
Common Stock		30		—					30
Additional Paid-In Capital		12		—					12
Retained Earnings		19,186		—					19,186

All values are in US Dollars.

a)	Reclassification of $0.2 million of Income Taxes Receivable to Prepaid expenses and other current assets.<br>
b)	Reclassification of $0.1 million of Accounts Payable to Employee compensation and amounts withheld.<br>
---	---
c)	Reclassification of $0.9 million of Accrued Commissions to Employee compensation and amounts withheld.<br>
---	---
d)	Reclassification of $0.2 million of Accrued Compensation to Other accrued expenses.
---	---
e)	Reclassification of $0.6 million of Other Accrued Expenses to Deferred revenue.
---	---
f)	Reclassification of $0.1 million of Income Taxes Payable to Other accrued expenses.
---	---
B)	Refer to the table below for a summary of adjustments made to present Nu Aire’s statement of operations<br>for the six months ended October 31, 2024 to conform with that of Kewaunee’s:
---	---

($ in thousands)

Nu Aire, Inc. Historical CondensedConsolidated Statement ofOperationsLine Items	Kewaunee Scientific CorporationHistorical Condensed ConsolidatedStatement of Operations Line Items	Nu Aire, Inc. SixMonths EndedOctober 31, 2024		Reclassification			Notes		Nu Aire, Inc. Reclassed<br>Six Months<br>Ended October 31, 2024
Net Revenues	Net sales	$	36,224	$	—				$	36,224
Cost of Revenues	Cost of products sold		25,885		—					25,885
Total Operating Expense	Operating expenses		9,125		—					9,125
Other Income	Other income, net		234		338			(a)		572
Interest Income - Net			338		(338	)		(a)		—
Provision for Income Taxes	Income tax (benefit) expense		18		—					18
a)	Reclassification of $0.3 million of Interest Income - Net to Other income, net.
---	---
C)	Refer to the table below for a summary of adjustments made to present Nu Aire’s statement of operations<br>for the year ended April 30, 2024 to conform with that of Kewaunee’s:
---	---

($ in thousands)

Nu Aire, Inc. Historical CondensedConsolidated Statement ofOperationsLine Items	Kewaunee Scientific CorporationHistorical Condensed ConsolidatedStatement of Operations Line Items	Nu Aire, Inc. YearEnded April 30,2024		Reclassification			Notes		Nu Aire, Inc. ReclassedYear Ended April 30,2024
Net Revenues	Net sales	$	80,875	$	—				$	80,875
Cost of Revenues	Cost of products sold		55,054		—					55,054
Total Operating Expense	Operating expenses		20,169		—					20,169
Other Income	Other income, net		95		323			(a)		418
Interest Income - Net			323		(323	)		(a)		—
Provision for Income Taxes	Income tax (benefit) expense		1,034		—					1,034
a)	Reclassification of $0.3 million of Interest Income - Net to Other income, net.
---	---

Note 3 – Preliminary purchase price allocation

Preliminary Aggregate Acquisition Consideration

The following table summarizes the preliminary aggregate acquisition consideration for Nu Aire:

($ in thousands)	Amount
Cash paid to Nu Aire	$	27,744
Subordinated Promissory Notes due to Nu Aire		23,000
Payment of Nu Aire transaction expenses		311
Cash paid to escrow		1,000
Preliminary aggregate acquisition consideration (“Purchase Price”)	$	52,055

Preliminary Aggregate Acquisition Consideration Allocation

The assumed accounting for the Acquisition, including the preliminary aggregate acquisition consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon the preliminary estimate of fair values. For the preliminary estimate of fair values of assets acquired and liabilities assumed of Nu Aire, **** Kewaunee used publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. Kewaunee **** is expected to use widely accepted income-based, market-based, and cost-based valuation approaches upon finalization of purchase accounting for the Acquisition. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that **** Kewaunee believes are reasonable under the circumstances. The purchase price allocation set forth herein is preliminary and will be revised as additional information becomes available during the measurement period, which could be up to twelve months from the Closing Date. Any such revisions or changes may be material.

The following table summarizes the preliminary aggregate acquisition consideration allocation, as if the Acquisition had been completed on October 31, 2024:

($ in thousands)	Amount
Assets:
Cash and cash equivalents	$	1,245
Receivables, less allowance		10,650
Inventories (i)		13,744
Prepaid expenses and other current assets		827
Net Property, Plant and Equipment (ii)		7,095
Goodwill		13,029
Intangibles, net (iii)		18,600
Right of use assets		7,564
Deferred income taxes(iv)		(4,645	)
Other assets		7
Liabilities:
Current portion of operating lease liabilities		(1,311	)
Accounts payable		(4,293	)
Employee compensation and amounts withheld		(2,642	)
Deferred revenue		(636	)
Other accrued expenses		(1,890	)
Long-term portion of operating lease liabilities		(5,289	)
Preliminary aggregate acquisition consideration (“Purchase Price”)	$	52,055	****
i)	The unaudited pro forma condensed combined balance sheet has been adjusted to record Nu Aire’s inventories<br>at a preliminary fair value of approximately $13.7 million, an increase of $0.6 million from the carrying value. The unaudited pro forma condensed combined statement of operations for the year ended April 30, 2024 has been adjusted to<br>recognize additional cost of products sold related to the increased basis. The additional costs are not anticipated to affect the condensed combined statement of operations beyond twelve months after the acquisition date.
---	---
ii)	The unaudited pro forma condensed combined balance sheet has been adjusted to record Nu Aire’s property,<br>plant and equipment at a preliminary fair value of approximately $7.1 million, an increase of $4.6 million from the carrying value. The unaudited pro forma condensed combined statement of operations have been adjusted to recognize<br>additional depreciation expense related to the increased basis under cost of products sold and operating expenses. Refer to Notes 5(a) and 5(b) below for additional information on the incremental depreciation expense recorded in each period.<br>
---	---
iii)	Preliminary identifiable intangible assets in the unaudited pro forma condensed combined financial information<br>consists of the following:
---	---
($ in thousands)	Preliminary FairValue		Estimated Useful Life
---	---	---	---	---
Preliminary fair value of intangible assets acquired:
Customer relationships	$	9,800		10
Trade names and trademarks		4,900		—
Developed technology		3,900		7
Intangible assets acquired	$	18,600

A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the amortization expense of approximately $76,857 for the six months ended October 31, 2024 and $153,714 for the year ended April 30, 2024. Pro forma amortization is preliminary and based on the use of straight-line amortization. The amount of amortization following the Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.

iv)	The adjustment to deferred tax assets was derived based on incremental differences in the book and tax basis<br>created from the preliminary purchase allocation.

Note 4 – Adjustments to the Unaudited Pro Forma Condensed Combined BalanceSheet

Adjustments included in the Transaction Accounting Adjustments column and Transaction Accounting Adjustments – Financing column in the accompanying unaudited pro forma condensed combined balance sheet as of October 31, 2024 are as follows:

(a)	Reflects adjustment to cash and cash equivalents:
($ in thousands)	Amount
---	---	---	---
Pro forma transaction accounting adjustments:
Cash consideration paid to Nu Aire	$	(27,744	)
Cash payment of Nu Aire transaction expenses		(311	)
Cash payment to escrow		(1,000	)
Net pro forma transaction accounting adjustments to cash and cash equivalents	$	(29,055	)
Pro forma transaction accounting adjustments - financing:
Cash from new debt financing, net of debt issuance costs	$	20,050
(b)	Reflects the preliminary purchase accounting adjustment for inventories, net based on the acquisition method of<br>accounting.
---	---
($ in thousands)	Amount
---	---	---	---
Pro forma transaction accounting adjustments:
Elimination of Nu Aire’s inventories, net	$	(13,108	)
Preliminary fair value of acquired inventories, net		13,744
Net pro forma transaction accounting adjustment to inventories, net	$	636

Represents the adjustment of acquired inventories, net to its preliminary estimated fair value. The step up in inventories, net to fair value will increase cost of products sold as the inventories are sold, which for purposes of these pro forma financial statements is assumed to occur within the first year after the Acquisition.

(c)	Reflects the preliminary purchase accounting adjustment for property, plant and equipment based on the<br>acquisition method of accounting.
($ in thousands)	Amount
---	---	---	---
Pro forma transaction accounting adjustments:
Elimination of Nu Aire’s historical net book value of property, plant &<br>equipment	$	(2,514	)
Preliminary fair value of acquired property, plant & equipment		7,095
Net pro forma transaction accounting adjustments to property, plant & equipment	$	4,581
(d)	Preliminary goodwill adjustment of $13.0 million which represents the excess of the estimated purchase<br>price over the preliminary fair value of the underlying assets acquired and liabilities assumed.
---	---
(e)	Reflects the preliminary purchase accounting adjustment for estimated intangibles of $18.6 million based<br>on the acquisition method of accounting. Refer to Note 3 above for additional information on the acquired intangible assets expected to be recognized.
---	---
(f)	Reflects the preliminary purchase accounting adjustment to right-of-use assets of $1.2 million, to measure the operating lease right-of-use assets at the same amount as the<br>associated lease liability in accordance with the acquisition method of accounting, and also reflects the net favorable terms of the leases when compared with market terms. The calculated value is preliminary and subject to change and could vary<br>materially from the final purchase price allocation.
---	---
(g)	Represents the adjustment to deferred tax assets of $5.3 million associated with the incremental<br>differences in the book and tax basis created from the preliminary purchase allocation, primarily resulting from the preliminary fair value of intangible assets. **** These adjustments were based on the applicable statutory tax rate with the<br>respective estimated purchase price allocation. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-acquisition activities, including cash needs, the geographical mix of income<br>and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Acquisition. This determination is<br>preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.
---	---
(h)	Reflects the Revolving Credit Facility, Term Loan, and the Seller Notes to fund a portion of the Acquisition.<br>The adjustment to current and long-term debt is comprised of the following items:
---	---
($ in thousands)	Current portion of financingliability		Long-term portion offinancing liability		Total
---	---	---	---	---	---	---
Pro forma transaction accounting adjustments—financing:
Revolving Credit Facility (i)	$	—	$	5,563	$	5,563
Term Loan		3,000		12,000		15,000
Seller Notes		—		22,540		22,540
Net pro forma transaction accounting adjustments -financing to current portion of long-term debt<br>and long-term debt	$	3,000	$	40,103	$	43,103
i)	$0.1 million of fees related to the establishment of the $20.0 million senior secured revolving<br>credit facility pursuant to the Loan Agreement is capitalized to other assets.
---	---
(i)	Represents additional transaction costs to be incurred by Kewaunee subsequent to October 31, 2024. These<br>costs are not expected to affect Kewaunee’s condensed combined statement of operations beyond twelve months after the acquisition date.
---	---
(j)	Reflects the adjustments to Stockholders’ equity:
---	---
($ in thousands)	Common Stock			Additional Paid-in Capital			Retained Earnings
---	---	---	---	---	---	---	---	---	---
Pro forma transaction accounting adjustments:
Elimination of Nu Aire’s historical equity	$	(30	)	$	(12	)	$	(19,186	)
Estimated transaction costs (i)		—			—			(698	)
Net pro forma transaction accounting adjustments to equity	$	(30	)	$	(12	)	$	(19,884	)
i)	These costs consist of financial advisory, legal advisory, accounting and consulting costs.<br>
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Note 5 – Pro Forma Adjustments to the Unaudited Condensed Combined Statement of Operations

Adjustments included in the Transaction Accounting Adjustments column and Transaction Accounting Adjustments – Financing column in the accompanying unaudited pro forma condensed combined statement of operations for the six months ended October 31, 2024 and fiscal year ended April 30, 2024 are as follows:

(a) Reflects the adjustments to cost of products sold. This includes $636,000 for the fiscal year ended April 30, 2024, relating to the estimated fair value of inventories recognized through cost of products sold during the first year after the Acquisition and $8,696 and $2,011 for the six months ended October 31, 2024 and fiscal year ended April 30, 2024, respectively, relating to the incremental depreciation expense from the fair value adjustment to property, plant and equipment.

(b) Reflects the adjustments to operating expenses including the amortization of the estimated fair value of intangibles, the incremental depreciation expense from the fair value adjustment to property, plant, and equipment, and the estimated transaction costs expensed.

($ in thousands)	For the Six MonthsEnded October 31,2024		For the Year Ended<br>April 30, 2024
Pro forma transaction accounting adjustments:
Amortization of intangible assets	$	882	$	1,764
Property, plant and equipment depreciation<br>step-up		23		5
Expected transaction expenses (i)		—		698
Net pro forma transaction accounting adjustment to operating expenses	$	905	$	2,467
i)	Represents additional transaction costs to be incurred by Kewaunee subsequent to October 31, 2024. These<br>costs are not expected to affect Kewaunee’s condensed combined statement of operations beyond twelve months after the acquisition date.
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(c) Reflects the expense related to the financing and amortization of issuance costs related to the Acquisition:

($ in thousands)	For the Six MonthsEnded October 31,2024			For the Year Ended<br>April 30, 2024
Pro forma transaction accounting adjustments—financing:
Revolving Credit Facility	$	(266	)	$	(512	)
Term Loan		(378	)		(905	)
Seller Notes		(1,090	)		(2,062	)
Net pro forma transaction accounting adjustments—financing to interest expense	$	(1,734	)	$	(3,479	)

The new interest expense on transaction financing adjustments included in the unaudited pro forma condensed combined statement of operations reflect the interest expense associated with new debt from the commitment parties. Interest was recognized for the Revolving Credit Facility, Term Loan, and the Seller Notes using the effective interest method with the rate equal to the Adjusted Secured Overnight Financing Rate (“SOFR”) plus 1.6% per annum for the Revolving Facility and Term Loan, and 8.0% for the Seller Notes. The costs incurred to secure the Revolving Credit Facility of $5,250 and $10,500 for the six months ended October 31, 2024 and fiscal year ended April 30, 2024, respectively, are amortized to operating expenses on a straight-line basis over the five year term of the commitment.

A sensitivity analysis on interest expense has been performed to assess the effect of a 12.5 basis point change of the hypothetical interest on the debt financing. This change would cause a corresponding increase or decrease in the interest expense of approximately $28,900 for the six months ending October 31, 2024 and $55,969 for the year ended April 30, 2024.

(d) To record the income tax impact of the pro forma adjustments utilizing a statutory income tax rate in effect of 21% for the year ended April 30, 2024 and for the six months ended October 31, 2024. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-Acquisition activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.

(e) In connection with the Acquisition, no additional shares were issued. Accordingly, the pro forma basic and diluted weighted average shares outstanding are as follows:

($ and shares in thousands, except per share amounts)	For the Six MonthsEnded October 31,2024		For the Year Ended<br>April 30, 2024
Pro forma net earnings per share:
Pro forma net earnings attributable to Kewaunee Scientific Corporation stockholders	$	4,873	$	18,579
Weighted average shares outstanding - basic		2,861		2,879
Weighted average shares outstanding - diluted		2,971		2,938
Pro forma earnings per share attributable to common stockholders - basic	$	1.70	$	6.45
Pro forma earnings per share attributable to common stockholders - diluted	$	1.64	$	6.32