Item 1.01. Entry into a Material Definitive
On November 22, 2019, Schmitt Industries, Inc. (“Schmitt” or
the “Company”) entered into a Transition Services Agreement
(“TSA”), whereby Tosei America, Inc. and Tosei Engineering Corp.
(collectively, “Tosei”) and Schmitt will render critical
operational services to one another for up to one year. Tosei and
Schmitt will bill for services rendered based a formula whereby the
percentage of each employee’s time spent on performing operational
services for the other party is multiplied by that employee’s
On November 22, 2019, Tosei America, Inc. entered into a
10-year triple net lease of
Avenue manufacturing facility. Base rent for the first twelve
months will be approximately $23 thousand a month.
The foregoing descriptions of the TSA and the lease agreement do
not purport to be complete and are qualified in their entirety by
reference to the TSA and the lease agreement which are incorporated
herein by reference.
Item 2.01 Completion of Acquisition or Disposition of
On November 22, 2019, Schmitt completed the previously
announced sale of its Schmitt Dynamic Balance Systems (“SBS”)
business line to Tosei, for a purchase price of $10.5 million
Schmitt previously reported the definitive agreement to sell SBS to
Tosei in the Current Report on Form 8-K filed with the Securities and
Exchange Commission on October 11, 2019.
Item 8.01 Other Events.
On November 27, 2019, Schmitt issued a press release in
connection with the foregoing. A copy of the press release is
attached hereto as Exhibit 99.3 and is incorporated herein by
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
The unaudited pro forma consolidated financial information of
Schmitt, giving effect to the Transaction, as of August 31,
2019 and for the three months then ended, and for the fiscal years
ended May 31, 2019 and 2018, is filed as Exhibit 99.4 to this
Current Report on Form 8-K
and is incorporated herein by reference.