8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 8, 2019

SCHMITT INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Oregon	000-23996	93-1151989
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

2765 N.W. Nicolai Street Portland, Oregon	97210-1818
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (503) 227-7908

Not Applicable

Former name or former address, if changed since last report

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)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock – no par value Series A Junior Participating Preferred Stock Purchase Rights	SMIT	NASDAQ Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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.  ☐

Item 2.02 Results of Operations and Financial Condition.

On October 8, 2019, Schmitt Industries, Inc. issued a press release entitled “Schmitt Announces Positive First Quarter 2020 Operating Results and Annual Shareholders Meeting.” A copy of the press release is furnished as Exhibit 99.1 to this report.

The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01 Other Events.

On October 8, 2019, Schmitt Industries, Inc. announced the date of its 2019 Annual Meeting of Shareholders. A copy of the announcement is included in the press release entitled “Schmitt Announces Positive First Quarter 2020 Operating Results and Annual Shareholders Meeting” furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press release entitled “Schmitt Announces Positive First Quarter 2020 Operating Results and Annual Shareholders Meeting.”

Forward Looking Statements

This document may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors. A complete discussion of the risks and uncertainties that may affect Schmitt’s business, including the business of its subsidiary, is included in “Risk Factors” in the Company’s most recent Annual Report on Form 10-K as filed by the Company with the Securities and Exchange Commission.

For further information regarding risks and uncertainties associated with the Company’s business, please refer to Schmitt’s SEC filings, including, but not limited to, its Forms 10-K, 10-Q and 8-K.

The forward-looking statements in this release speak only as of the date on which they were made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes to this document made by wire services or internet service providers.

SIGNATURES

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.

	SCHMITT INDUSTRIES, INC.
October 8, 2019	By:	/s/ Ann M Ferguson
		Name: Ann M Ferguson
		Title: Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

IMMEDIATE NEWS RELEASE

Schmitt Announces Positive First Quarter 2020 Operating Results and Annual Shareholders Meeting

October 8, 2019 NASDAQ: SMIT

Portland, Oregon – Schmitt Industries, Inc. (NASDAQ: SMIT) (the “Company” or “Schmitt”) today announced its operating results for the first quarter of Fiscal 2020.

Highlights of the quarter ended August 31, 2019:

• Consolidated revenue decreased $98,568, or 2.9%, to $3,341,885 for the three months ended August 31, 2019 from $3,440,453 for three months ended August 31, 2018, attributed to a decrease in Measurement segment revenue.

• Balancer segment revenue increased $52,775, or 2.4%, to $2,247,107 for the three months ended August 31, 2019 as compared to $2,194,332 for the three months ended August 31, 2018, attributed to growth in the North American market.

• Measurement segment revenue decreased $151,343, or 12.1%, to $1,094,778 for the three months ended August 31, 2019 as compared to $1,246,121 for the three months ended August 31, 2018, attributed to a decrease in Xact product revenue. Xact’s services in the “Internet of Things” environment continued to grow with monitoring revenue increasing 16.3% to $367,841 for the three months ended August 31, 2019 as compared to $316,173 for the three months ended August 31, 2018.

• Operating expenses decreased $162,426, or 11.2%, to $1,291,174 for the three months ended August 31, 2019 from $1,453,600 for the three months ended August 31, 2018.

• Net income (loss) was $169,808, or $0.04 per fully diluted share, for the three months ended August 31, 2019 as compared to net income (loss) of $(211,819), or $(0.05) per fully diluted share, for the three months ended August 31, 2018.

Michael Zapata, Chief Executive Officer and President, commented, “I would like to thank management and the entire Schmitt team for their commitment and hard work as we have implemented change these past nine months. The reorganization, which was announced December 2018, has led to our profitability and increased our cash flow position, with positive net income and earnings per share gains as we enter fiscal year 2020. While there is much to do, this quarter is one key step in the right direction and shows true improvement over prior practices.”

Schmitt’s 2019 Annual Meeting of Shareholders

Schmitt’s 2019 Annual Meeting of Shareholders will be held on December 5, 2019, in Portland, Oregon. The Company expects a record date of October 21, 2019, with an expected mailing date of November 4, 2019.

CORPORATE OFFICE: 2765 NW NICOLAI ST. • PORTLAND, OREGON 97210 • 503/227-7908 • FAX 503/223-1258

Summary data for the three months ended August 31, 2019 and 2018:

	Three Months Ended August 31,
	2019			2018			Change ($)			Change (%)
Total net revenue	$	3,341,885		$	3,440,453		$	(98,568	)		(2.9%)
Balancer segment		2,247,107			2,194,332			52,775			2.4%
Measurement segment		1,094,778			1,246,121			(151,343	)		(12.1%)
Gross margin		46.7	%		38.9	%
Operating expenses	$	1,291,174		$	1,453,600			(162,426	)		(11.2%)
Net income (loss)	$	169,808		$	(211,819	)		381,627
Net income (loss) per fully diluted share	$	0.04		$	(0.05	)

About Schmitt Industries

Schmitt Industries, Inc. (“Schmitt” or the “Company”), founded in 1987, designs, manufactures and sells high precision test and measurement products, solutions and services through our SBS^®, Acuity^® and Xact^® product lines, which are reported in two business segments. In the Balancer segment, our SBS product line provides computer-controlled vibration detection, balancing and process control systems for the worldwide machine tool industry. In the Measurement segment, our Acuity line provides laser and white light sensor distance measurement and dimensional sizing products, and our Xact line provides ultrasonic-based remote tank monitoring products and related monitoring revenues for markets in the Internet of Things environment.

FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors. A complete discussion of the risks and uncertainties that may affect Schmitt’s business, including the business of its subsidiary, is included in “Risk Factors” in the Company’s most recent Annual Report on Form 10-K as filed by the Company with the Securities and Exchange Commission.

For further information regarding risks and uncertainties associated with the Company’s business, please refer to Schmitt’s SEC filings, including, but not limited to, its Forms 10-K, 10-Q and 8-K.

The forward-looking statements in this release speak only as of the date on which they were made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes to this document made by wire services or internet service providers.

For more information contact: Michael R. Zapata, President and CEO Ann M. Ferguson, CFO and Treasurer (503) 227-7908 or visit our web site at www.schmitt-ind.com

CORPORATE OFFICE: 2765 NW NICOLAI ST. • PORTLAND, OREGON 97210 • 503/227-7908 • FAX 503/223-1258

SCHMITT INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	August 31, 2019			May 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	1,592,847		$	1,411,732
Restricted cash		54,895			55,703
Accounts receivable, net		2,004,159			1,996,240
Inventories		5,019,109			5,019,044
Prepaid expenses		155,405			150,975
Total current assets		8,826,415			8,633,694
Property and equipment, net		817,478			839,374
Other assets
Intangible assets, net		366,039			392,185
Operating lease right-of-use assets		102,767			—
TOTAL ASSETS	$	10,112,699		$	9,865,253
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	505,496		$	496,362
Accrued commissions		173,491			200,116
Accrued payroll liabilities		171,768			239,476
Customer deposits and prepayments		197,982			188,236
Other accrued liabilities		127,635			218,268
Income taxes payable		14,134			491
Current portion of long-term liabilities		21,258			20,828
Current portion of operating lease liabilities		32,721			—
Total current liabilities		1,244,485			1,363,777
Long-term liabilities		23,065			28,543
Long-term operating lease liabilities		70,046			—
Total liabilities		1,337,596			1,392,320
Stockholders’ equity
Common stock, no par value, 20,000,000 shares authorized, 4,032,878 shares issued and outstanding at August 31, 2019 and May 31, 2019		13,317,453			13,245,439
Accumulated other comprehensive loss		(467,479	)		(527,827	)
Accumulated deficit		(4,074,871	)		(4,244,679	)
Total stockholders’ equity		8,775,103			8,472,933
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	10,112,699		$	9,865,253

SCHMITT INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED AUGUST 31, 2019 AND 2018

(UNAUDITED)

	Three Months Ended August 31,
	2019			2018
Net revenue	$	3,341,885		$	3,440,453
Cost of revenue		1,781,547			2,100,655
Gross profit		1,560,338			1,339,798
Operating expenses:
General, administration and sales		1,279,007			1,405,363
Research and development		12,167			48,237
Total operating expenses		1,291,174			1,453,600
Operating income (loss)		269,164			(113,802	)
Other income (expense), net		(83,388	)		(91,651	)
Income (loss) before income taxes		185,776			(205,453	)
Provision for income taxes		15,968			6,366
Net income (loss)	$	169,808		$	(211,819	)
Net income (loss) per common share, basic	$	0.04		$	(0.05	)
Weighted average number of common shares, basic		4,032,878			3,994,545
Net income (loss) per common share, diluted	$	0.04		$	(0.05	)
Weighted average number of common shares, diluted		4,059,279			3,994,545