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, 2010

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))

Item 2.02 Results of Operations and Financial Condition.

On October 8, 2010, Schmitt Industries, Inc. issued a press release entitled “Schmitt Industries Announces First Quarter of Fiscal 2011 Operating Results; Revenues Increase Significantly.” 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 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press release entitled “Schmitt Industries Announces First Quarter of Fiscal 2011 Operating Results; Revenues Increase Significantly” dated October 8, 2010.

Forward Looking Statements

This Current Report on Form 8-K, including its exhibits, contains forward-looking statements. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “intend,” “estimate” and similar words, although some forward-looking statements are expressed differently. Forward-looking statements represent our management’s judgment regarding future events. Although Schmitt believes that the expectations reflected in such forward-looking statements are reasonable, Schmitt can give no assurance that such expectations will prove to be correct. All statements other than statements of historical fact included on this Current Report on Form 8-K are forward-looking statements. Schmitt cannot guarantee the accuracy of the forward-looking statements, and you should be aware that Schmitt’s actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under “Risk Factors” contained in Schmitt’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

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, 2010	By:	/s/ Wayne A. Case
		Name:	Wayne A. Case
		Title:	Chairman and Chief Executive Officer

EX-99.1

Exhibit 99.1

IMMEDIATE NEWS RELEASE

Schmitt Industries Announces First Quarter of Fiscal 2011 Operating Results; Revenues

Increase Significantly

October 8, 2010 NASDAQ:    SMIT

Portland, Oregon – Schmitt Industries, Inc. (NASDAQ: SMIT) today announced its operating results for the first quarter of Fiscal year 2011. Sales for the three months ended August 31, 2010 increased 96.6% to $2,404,467 compared to $1,223,234 for the same period last year. Net loss for the first quarter ended August 31, 2010 was $112,625, or $.04 per fully diluted share, compared to net loss of $574,997, or $.20 per fully diluted share, for the same period last year.

Sales in the SBS Balancer segment increased $645,295, or 73.2%, to $1,527,417 in the first quarter of Fiscal 2011 compared to $882,122 in the first quarter of Fiscal 2010. Sales in the SMS Measurement segment also increased $535,938, or 157.1%, to $877,050 for the three months ended August 31, 2010 compared to $341,112 for the same period last year. Sales of the Company’s balancer and laser-based measurement products increased from prior periods due to an increase in demand which resulted in higher volumes of shipments in the quarter.

Gross margins for the first quarter of Fiscal 2011 increased to 45.7% for the three months ended August 31, 2010 as compared to 44.9% for the same period in the prior year primarily due to a shift of the product sales towards higher margin products and higher production volumes resulting in improved absorption of labor and overhead. Operating expenses increased $82,397, or 7.3%, to $1,216,148 during the three months ended August 31, 2010 as compared to $1,133,751 for the same period in the prior year. This increase was primarily due to higher commissions related to the increase in sales.

“We are pleased with the significant increase in sales across both business segments and the narrowing of our net loss. This is also the second consecutive quarter in which we have experienced sales increases in both our SBS Balancer and SMS Measurement segments on a quarter over quarter as well as a sequential basis,” commented Wayne A. Case, CEO of Schmitt Industries. “While we are cautiously optimistic that market conditions will continue to improve in the U.S. auto industry and in the global manufacturing and industrial markets generally, we are continuing to closely monitor both our order rates and our expense structure,” Case continued.

“Since the economic downturn negatively impacted the Company beginning in December 2008, we have not only worked to reduce operating expenses but have also continued to make the investments in product development and marketing and sales activities necessary to increase sales. We believe that we are starting to see the positive results of those investments coupled with the improvement in general market conditions,” commented Jim Fitzhenry, President of Schmitt Industries.

“Our recently introduced SB-5500™ controller for the Balancer market has been favorably received by customers. We have also just introduced the AE-1000™, a low-price, single channel acoustic emission monitoring system for the Balancer market, and the response has been very positive. In addition, interest in the Lasercheck® line of laser-based surface roughness measurement gauges has seen steady growth resulting in increased sales. Finally, we have increased shipments of the Xact™ remote tank monitoring system for the propane industry and customers are pleased with the product. At the end of the quarter ended August 31, 2010, we had approximately $3.5 million in cash and cash equivalents, no debt and an unused $1.0 million line of credit. We are working hard to return the Company to profitability and believe we will do so in the near term,” concluded Fitzhenry.

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

About Schmitt Industries

Schmitt Industries, Inc. designs, manufactures and markets computer-controlled vibration detection and balancing equipment (the Balancer segment) primarily to the machine tool industry. Through its wholly owned subsidiary, Schmitt Measurement Systems, Inc., the Company designs, manufactures and markets precision laser-based surface measurement products for a wide variety of commercial applications in addition to the disk drive, silicon wafer and optics industries; laser-based distance measurement products for a wide variety of industrial applications; and ultrasonic measurement products that accurately measure the fill levels of large liquefied propane tanks and transmit that data via satellite to a secure web site (the Measurement segment). The Company also sells and markets its products in Europe through its wholly owned subsidiary, Schmitt Europe Ltd. located in the United Kingdom.

FORWARD-LOOKING STATEMENTS

The statements in this release, including but not limited to remarks by Wayne Case and Jim Fitzhenry regarding the impact of the global economy on the Company’s historical and future sales, the impact of the introduction of the Xact™, Lasercheck^®, SB-5500™ and acoustic emission monitoring products and the expected contributions of these investments, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations, estimates and projections about the Company’s business that are based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors including but not limited to the uncertainties of the Company’s new product introductions, the risks of increased competition and technological change in the Company’s industry and other factors detailed in the Company’s SEC filings. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements 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: Linda M. Case, Investor Relations (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, 2010			May 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	3,468,222		$	3,545,986
Accounts receivable, net of allowance of $21,800 and $23,387 at August 31, 2010 and May 31, 2010, respectively		1,299,423			1,144,420
Inventories		3,636,840			3,645,303
Prepaid expenses		202,430			192,167
Income taxes receivable		26,670			21,570
		8,633,585			8,549,446
Property and equipment
Land		299,000			299,000
Buildings and improvements		1,564,880			1,564,880
Furniture, fixtures and equipment		1,076,588			1,059,496
Vehicles		90,452			90,452
		3,030,920			3,013,828
Less accumulated depreciation and amortization		(1,768,904	)		(1,720,880	)
		1,262,016			1,292,948
Other assets
Intangible assets		1,466,454			1,509,711
TOTAL ASSETS	$	11,362,055		$	11,352,105
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	611,310		$	665,044
Accrued commissions		185,358			170,614
Accrued payroll liabilities		221,136			231,390
Other accrued liabilities		298,955			160,717
Total current liabilities		1,316,759			1,227,765
Long-term liabilities		—			3,591
Stockholders’ equity
Common stock, no par value, 20,000,000 shares authorized, 2,894,802 shares issued and outstanding at both August 31, 2010 and May 31, 2010		9,749,090			9,739,391
Accumulated other comprehensive loss		(236,531	)		(264,004	)
Retained earnings		532,737			645,362
Total stockholders’ equity		10,045,296			10,120,749
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,362,055		$	11,352,105

SCHMITT INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED AUGUST 31, 2010 AND 2009

(UNAUDITED)

	Three Months Ended August 31,
	2010			2009
Net sales	$	2,404,467		$	1,223,234
Cost of sales		1,304,721			674,145
Gross profit		1,099,746			549,089
Operating expenses:
General, administration and sales		1,107,450			960,707
Research and development		108,698			173,044
Total operating expenses		1,216,148			1,133,751
Operating loss		(116,402	)		(584,662	)
Other income (expense)		(5,322	)		9,665
Loss before income taxes		(121,724	)		(574,997	)
Benefit for income taxes		(9,099	)		—
Net loss	$	(112,625	)	$	(574,997	)
Net loss per common share:
Basic	$	(0.04	)	$	(0.20	)
Weighted average number of common shares, basic		2,894,802			2,870,160
Diluted	$	(0.04	)	$	(0.20	)
Weighted average number of common shares, diluted		2,894,802			2,870,160