Item 1.01. Entry Into Material Definitive Agreement.

On October 25, 2022, Schmitt Industries, Inc., an Oregon corporation (the "Company"), issued a Promissory Note (the "Note") in favor of Sententia Capital Management LLC ("Sententia") in the principal amount of $1,000,000 as a bridge financing for the Company. In connection with the Note, the Company also entered into a Security Agreement (the "Security Agreement"), dated October 25, 2022, among the Company, Ample Hills Acquisition LLC, Schmitt Measurement Systems, Inc. and Sententia to secure the obligations under the Note. As previously disclosed, Sententia is an entity affiliated with Michael Zapata, the Company's Chief Executive Officer and Chairman of the Board.

The Note bears an interest rate of 12% per year and a default interest rate of 22% per year. The Note matures at the earlier of (a) one year from the issuance date, subject to two six month extensions at the option of the Company, or (b) an event of default under the Note. Under the Note, proceeds from any source or series of related or unrelated sources, including but not limited to, payments from customers, the issuance of equity or debt, the issuance of securities pursuant to an equity line of credit of the Borrower or the sale of assets, may be used to pay down principal amount of the Note.

The Note contains the following fees: (a) a commitment fee of 3% of the principal amount; (b) an exit fee of 2% of the principal amount, (c) an extension fee of 3% of the principal amount earned at the exercise of each six-month extension; and (d) a monitor fee of $10,000 per year paid in cash.

The foregoing descriptions of the Note and Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Note and Security Agreement, copies of which are filed herewith as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an


           Off-Balance Sheet Arrangement of a Registrant.

The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.






(d) Exhibits



Exhibit Description



10.1*     Promissory Note, dated October 25, 2022, in favor of Sententia Capital
        Management LLC.

10.2*     Security Agreement, dated October 25, 2022, among Schmitt Industries,
        Inc., Schmitt Measurement Systems, Inc., Ample Hills Acquisition LLC and
        Sententia Capital Management LLC.

104     Cover Page Interactive Data File (embedded within the Inline XBRL
        document).

*       The exhibits and schedules to this Exhibit have been omitted in
        accordance with Item 601(a)(5) of Regulation S-K. The Registrant agrees
        to furnish supplementally to the SEC a copy of all omitted exhibits and
        schedules upon its request.

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