Form of Notice to Stockholders who are Record Holders

EXHIBIT 4.2

SCHMITT INDUSTRIES, INC.

2765 N.W. Nicolai Street

Portland, Oregon ###-###-####

[●], 2017

Dear Shareholder:

Enclosed is the Prospectus dated [●], 2017, and other materials relating to the rights offering (the “Rights Offering”) by SCHMITT INDUSTRIES, INC. (the “Company”) to the holders of record of its common stock, no par value (the “Common Stock”, such record holders of the Company’s Common Stock, the “Record Holders”). Record Holders as of [●], 2017 (the “Record Date”) will receive at no charge non-transferable subscription rights (the “Subscription Rights”) to purchase up to an aggregate of [●] shares of Common Stock (the “Shares”) at a subscription price of $[●] per Share (the “Subscription Price”) for up to aggregate gross proceeds to the Company of approximately $[●] million. Each Record Holder will receive a Subscription Right for each share of the Common Stock that such Record Holder owned on the Record Date. Each Subscription Right will entitle the Record Holder to purchase one-third of a Share at the Subscription Price (the “Basic Subscription Privilege”).

Please carefully review the Prospectus and other materials and the instructions below, which describe how you can participate in the Rights Offering. You will be able to exercise your Subscription Rights to purchase additional shares of the Company’s Common Stock only during a limited period. You will find answers to some frequently asked questions about the Rights Offering in the Prospectus. The exercise of Subscription Rights is irrevocable. Neither the Company, its board nor the Subscription Agent is making any recommendation regarding your exercise of the Subscription Rights. The Subscription Rights will not be listed for trading or quoted on the Nasdaq Capital Market or on any other stock exchange or market.

The Rights Offering is expected to expire at 5:00 p.m., Eastern Time, on [●], 2017 (the “Expiration Date”), subject to extension and earlier termination. After the Expiration Date, unexercised Subscription Rights will be null and void. The Company will not be obligated to honor any purported exercise of the Subscription Rights received by Broadridge Corporate Issuer Solutions, Inc. (the “Subscription Agent”) after 5:00 p.m., Eastern Time, on the Expiration Date, regardless of when the documents relating to such exercise were sent.

There is no minimum number of Shares you must purchase. If you exercise your Basic Subscription Privilege in full, you may also subscribe for additional Shares that remain unsubscribed at the Expiration Date at the same Subscription Price (the “Oversubscription Privilege”), subject to certain limitations described in the Prospectus. If an insufficient number of Shares are available to fully satisfy all Oversubscription Privilege exercises, the available Shares will be allocated proportionately among those who exercise their Oversubscription Privilege based on the number of Shares each such person subscribed for under the Basic Subscription Privilege. See “The Rights Offering — The Subscription Rights” in the Prospectus.

The number of Subscription Rights to which you are entitled is printed on the face of your Subscription Rights Certificate. You should indicate your wishes with regard to the exercise of your Subscription Rights by completing the appropriate portions of your Subscription Rights Certificate and/or Beneficial Owner Election Form and returning it to the Subscription Agent in the envelope provided pursuant to the procedures described herein.

YOUR SUBSCRIPTION RIGHTS CERTIFICATE (OR NOTICE OF GUARANTEED DELIVERY) AND SUBSCRIPTION PRICE PAYMENT FOR EACH SUBSCRIPTION RIGHT THAT IS EXERCISED PURSUANT TO THE BASIC SUBSCRIPTION PRIVILEGE PLUS THE FULL SUBSCRIPTION PRICE FOR ANY ADDITIONAL SHARES OF COMMON STOCK SUBSCRIBED FOR PURSUANT TO THE OVERSUBSCRIPTION PRIVILEGE, BY PERSONAL, CASHIER’S OR CERTIFIED CHECK DRAWN ON A U.S. BANK, U.S. POSTAL MONEY ORDER OR BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS, MUST BE ACTUALLY RECEIVED BY THE SUBSCRIPTION AGENT, PRIOR TO 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE. ONCE A RECORD HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE AND THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED. SUBSCRIPTION RIGHTS NOT EXERCISED PRIOR TO 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE, AS EXTENDED, OF THE RIGHTS OFFERING WILL EXPIRE.

1. Method of Exercise and Payment.

Subscriptions by Record Holders

A record holder is a holder of our Common Stock whose shares are registered in his, her or its name. To exercise your Subscription Rights, complete your Subscription Rights Certificate and send the properly completed and executed Subscription Rights Certificate evidencing such Subscription Rights, with any signatures required to be guaranteed, together with payment in full of the Subscription Price for each Share subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege, to the Subscription Agent so that it will be received by the Subscription Agent prior to 5:00 p.m., Eastern time, on the Expiration Date. Payment of the Subscription Price for the Basic Subscription Privilege and the Oversubscription Privilege will be held in a segregated account to be maintained by the Subscription Agent until the Shares are issued. All payments must be made in U.S. dollars for the full number of Shares being subscribed for by a personal, cashier’s or certified check drawn on a U.S. bank, or U.S. Postal money order, payable to “Broadridge Corporate Issuer Solutions, Inc. (acting as subscription agent for SCHMITT INDUSTRIES, INC.)” or by wire transfer of immediately available funds directly to the account maintained by Broadridge Corporate Issuer Solutions, Inc. as agent for SCHMITT INDUSTRIES, INC., for purposes of accepting subscriptions in the Rights Offering, at U.S. Bank, 800 Nicollet Mall, Minneapolis, MN 55402 United States, Beneficiary Account Name: Broadridge, Account Number: 153910728465, ABA/Routing number: 123000848, with reference to the Subscription Rights holder’s name. Please reference your Subscription Rights Certificate Number on your check.

The Subscription Rights Certificate (or, if applicable, Notice of Guaranteed Delivery as described below) and payment of the Subscription Price (unless submitted by wire transfer) must be delivered to the Subscription Agent by hand, mail or overnight courier to the following address:

Delivery to an address other than those above does not constitute valid delivery.

If you wish to exercise your Subscription Rights, but you do not have sufficient time to deliver your Subscription Rights Certificate to the Subscription Agent on or prior to the Expiration Time, you may cause a written guarantee substantially in the form of Annex A to these instructions (the “Notice of Guaranteed Delivery”), from a member firm of a registered national securities exchange or a member of the Financial Industry Regulatory Authority, Inc., or from a commercial bank or trust company having an office or correspondent in the United States or from a bank, shareholder, savings and loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, (each, an “Eligible Institution”), to be received by the Subscription Agent on or prior to the Expiration Time, together with payment in full of the applicable subscription price. Such Notice of Guaranteed Delivery must state:

If this procedure is followed, the properly completed Rights Certificate(s) evidencing the Rights being exercised must be received by the subscription agent within two (2) Nasdaq Capital Market trading days following the date of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered to the subscription agent in the same manner as Rights Certificates at the address set forth above. Additional copies of the Notice of Guaranteed Delivery may be obtained upon request from the Subscription Agent at the address or phone number set forth above.

Subscriptions by Beneficial Owners

A beneficial owner is a holder of our Common Stock whose shares are registered in the name of a broker, custodian bank or other nominees. In such case, the broker, custodian bank or other nominees is the record holder of the Subscription Rights. To exercise your Subscription Rights, instruct your broker, custodian bank or other nominee to exercise your rights and deliver all documents and payment in full of the Subscription Price on your behalf for each Share subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege, to the Subscription Agent so that it will be actually received by the Subscription Agent prior to 5:00 p.m., Eastern Time, on the Expiration Date.

By making arrangements with your broker, custodian bank or other nominee for the delivery of funds on your behalf, you may also request such broker, custodian bank or other nominee to exercise the Rights Certificate on your behalf.

2. Issuance of Common Stock.

Following the receipt of a properly completed and executed Subscription Rights Certificate, together with the payment of the Subscription Price for the Shares subscribed for, and promptly after all pro rata allocations and adjustments contemplated by the terms of the Rights Offering have been effected, the following deliveries and payments will be made to the address shown on the face of your Subscription Rights Certificate, or, if you hold your shares in book-entry form, such deliveries and payments will be in the form of a credit to your account:

3. Sale, Transfer or Assignment of Subscription Rights.

Subscription Rights may not be sold, transferred or assigned; provided, however, that Subscription Rights are transferable to an affiliate of the holder or by operation of law (for example, the transfer of Rights to the estate of a recipient upon the recipient’s death).

4. Commissions, Fees and Expenses.

The Company will pay all fees and expenses of the Subscription Agent related to its acting in such role in connection with the Rights Offering. You are responsible for paying any other commissions, fees, taxes or expenses incurred in connection with the exercise of Subscription Rights or subscribing for Shares. Neither the Subscription Agent nor the Company will pay such expenses.

5. Execution.

6. Method of Delivery to Subscription Agent.

The method of delivery of Subscription Rights Certificates and payment of the Subscription Price to the Subscription Agent for each Share subscribed for will be at the risk of the holders of Subscription Rights. If sent by mail, we recommend that you send those certificates and payments by overnight courier or by registered first class mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the Subscription Agent and clearance of payment prior to 5:00 p.m., Eastern Time, on the Expiration Date.

7. Special Provisions Relating to the Delivery of Subscription Rights through the Depository Trust Company.

In the case of Subscription Rights that are held of record through the Depository Trust Company (the “Book-Entry Transfer Facility”), exercises of Subscription Rights under the Basic Subscription Privilege and the Oversubscription Privilege may be effected by instructing the Book-Entry Transfer Facility to transfer Subscription Rights from the Book-Entry Transfer Facility account of such holder to the Book-Entry Transfer Facility account of the Subscription Agent, together with certification as to the aggregate number of Subscription Rights exercised and the number of Shares thereby subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege by each beneficial owner of Subscription Rights on whose behalf such nominee is acting, and payment of the Subscription Price for each Share subscribed for pursuant to the Basic Subscription Privilege and the Oversubscription Privilege.

Payments of the Subscription Price (unless submitted by wire transfer) should be mailed or delivered to the appropriate address (or, for wire transfer payments, to the appropriate account) as described under Section 1, “Method of Exercise and Payment” above.

8. Substitute Form W-9.

TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING U.S. FEDERAL, STATE OR LOCAL TAX PENALTIES, (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTION OR MATTERS DISCUSSED HEREIN, AND (C) THE TAXPAYER SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

Each holder who elects to exercise Rights should provide the Subscription Agent with a correct Taxpayer Identification Number (“TIN”) on Substitute Form W-9, a copy of which is being furnished to each holder. Additional copies of Substitute Form W-9 may be obtained upon request from the Subscription Agent at the address set forth above or by contacting Broadridge Corporate Issuer Solutions, Inc., the Information Agent. Failure to provide the information on the form may subject such holder to a $50.00 penalty for each such failure and to U.S. federal income tax backup withholding (currently at a 28% rate) with respect to dividends that may be paid by the Company on shares of Common Stock purchased upon the exercise of Rights (for those holders exercising Rights).

If you have any questions concerning the rights offering, please contact the information agent, Broadridge Corporate Issuer Solutions, Inc., the Information Agent, Attn: BCIS IWS, 51 Mercedes Way, Edgewood, New York 11717, by telephone (800 ###-###-####) or by email ***@***).

Sincerely,

SCHMITT INDUSTRIES, INC.

Annex A

Notice of Guaranteed Delivery