UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
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(Registrant's telephone number, including area code) |
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N/A |
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(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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N/A |
N/A |
N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
Accelerated filer ☐ |
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Smaller reporting company |
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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.
☐
Indicate by checkmark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).
Yes
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
April 14, 2026 –
FORM 10-Q
For the Period Ended February 28, 2026
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Item 1. |
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Consolidated Balance Sheets (Unaudited) As of February 28, 2026 and May 31, 2025 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
15 |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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Consolidated Balance Sheets |
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(Unaudited) |
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February 28, |
May 31, |
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2026 |
2025 |
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Assets |
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Current Assets: |
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Cash |
$ | $ | ||||||
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Accounts receivable - |
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Trade |
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Related parties |
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Inventory |
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Prepaid expenses |
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Total Current Assets |
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Property, Plant and Equipment, net |
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Right-to-use Assets |
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Total Assets |
$ | $ | ||||||
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Liabilities and Equity |
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Current Liabilities: |
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| Current portion of revolver loan | $ | $ | ||||||
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Current portion of long-term debt |
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Current portion of financing leases |
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Current portion of operating leases |
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Accounts payable and accrued expenses |
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Deferred revenue |
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Preferred dividends payable |
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Total Current Liabilities |
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Long-Term Debt, net of current portion and debt issuance costs |
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Operating Leases, net of current portion |
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Deferred Tax Liability |
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Total Liabilities |
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Equity: |
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Preferred stock, $ |
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Common stock, $ |
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Treasury Stock, at cost, |
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Additional paid-in capital |
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Accumulated deficit |
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Total Equity |
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Total Liabilities and Equity |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Consolidated Statements of Operations |
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For the Nine Months Ended February 28, 2026 and 2025 |
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(Unaudited) |
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2026 |
2025 |
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Sales |
$ | $ | ||||||
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Cost of Sales |
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Gross Profit (Loss) |
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Selling, General and Administrative Expenses |
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Gain on involuntary conversion (see Note 5) |
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Operating Income (Loss) |
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Other Income (Expense): |
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Other Income |
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Interest Expense |
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Income (Loss) before Income Taxes |
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Benefit (Provision) for Income Taxes |
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Net Income (Loss) |
$ | ( |
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Preferred Dividends |
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Net Income (Loss) Attributable to Common Stockholders |
$ | ( |
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Net Earnings (Loss) Per Share of Common Stock - |
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Basic |
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Diluted |
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Weighted Average Shares of Common Stock Outstanding |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Consolidated Statements of Operations |
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For the Three Months Ended February 28, 2026 and 2025 |
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(Unaudited) |
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2026 |
2025 |
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Sales |
$ | $ | ||||||
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Cost of Sales |
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Gross Profit (Loss) |
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Selling, General and Administrative Expenses |
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Operating Income (Loss) |
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Other Income (Expense): |
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Other Income |
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Interest Expense |
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Income (Loss) before Income Taxes |
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Benefit (Provision) for Income Taxes |
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Net (Loss) Income |
$ | ( |
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Preferred Dividends |
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Net Income (Loss) Attributable to Common Stockholders |
$ | ( |
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Net Earnings (Loss) Per Share of Common Stock - |
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Basic |
$ | ( |
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Diluted |
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Weighted Average Shares of Common Stock Outstanding |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Consolidated Statements of Changes in Equity |
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For the Nine Months Ended February 28, 2026 and 2025 |
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(Unaudited) |
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Preferred Stock |
Common Stock |
Treasury Stock |
Additional |
Accumulated |
Stockholders' |
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Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
paid-In Capital |
Deficit |
Equity |
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Balances, May 31, 2024 |
$ | $ | $ | $ | $ | ( |
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Preferred dividends, $ |
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Net income |
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Balances, August 31, 2024 |
$ | $ | $ | $ | $ | ( |
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Preferred dividends, $ |
- | - | - | ( |
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Net loss |
- | - | - | ( |
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Balances, November 30, 2024 |
$ | $ | $ | $ | $ | ( |
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Preferred dividends, $ |
- | - | - | ( |
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Retirement of preferred stock |
( |
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Repurchase of common stock |
- | - | - | - | ( |
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Net income |
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Balances, February 28, 2025 |
$ | $ | $ | ( |
) | $ | $ | ( |
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Balances, May 31, 2025 |
$ | $ | $ | ( |
) | $ | $ | ( |
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Repurchase of common stock |
- | - | - | - | ( |
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Net loss |
- | - | - | ( |
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Balances, August 31, 2025 |
$ | $ | $ | ( |
) | $ | $ | ( |
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Net loss |
- | - | - | ( |
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Balances, November 30, 2025 |
$ | $ | $ | ( |
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Net loss |
- | - | - | ( |
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Balances, February 28, 2026 |
$ | $ | $ | ( |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Consolidated Statements of Cash Flows |
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For the Nine Months Ended February 28, 2026 and 2025 |
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(Unaudited) |
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2026 |
2025 |
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Cash Flows from Operating Activities: |
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Net income (loss) |
$ | ( |
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Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |
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Gain on involuntary conversion |
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Depreciation and amortization |
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Change in deferred taxes |
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Effects of changes in operating assets and liabilities: |
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Trade accounts receivable |
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| Related parties receivable | ( |
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Other accounts receivable |
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Inventory |
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Operating lease expense |
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Prepaid expenses |
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Accounts payable and accrued expenses |
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Deferred revenue |
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Net cash provided by operating activities |
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Cash Flows from Investing Activities: |
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Purchase of property, plant and equipment |
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Net cash used in investing activities |
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Cash Flows from Financing Activities: |
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| Advances under revolver loan | ||||||||
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Principal payments on long-term debt and financing leases |
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| Payments for retirement of preferred stock | ( |
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Repurchase of common stock |
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Dividends paid on preferred stock |
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Net cash provided by (used in) financing activities |
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Net Decrease in Cash |
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Cash, beginning of period |
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Cash, end of period |
$ | $ | ||||||
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2026 |
2025 |
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Non-Cash Activities: |
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Equipment in Accounts Payable |
$ | $ | ||||||
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Preferred dividend accrual |
$ | $ | ||||||
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Supplemental Information: |
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Interest paid |
$ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Basis of Financial Statements
In the opinion of Greystone Logistics, Inc. (“Greystone” or the “Company”), the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications, which are of a normal recurring nature, necessary to present fairly its financial position as of February 28, 2026, and the results of its operations and cash flows for the nine months and three months ended February 28, 2026 and 2025. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended May 31, 2025, and the notes thereto included in Greystone’s Annual Report on Form 10-K for such period, as filed with the Securities and Exchange Commission. The results of operations for the nine and three months ended February 28, 2026 and 2025 are not necessarily indicative of the results to be expected for the full fiscal year.
The unaudited consolidated financial statements of Greystone include its wholly owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”). All material intercompany accounts and transactions have been eliminated in the unaudited consolidated financial statements.
Certain reclassifications have been made to the May 31, 2025 consolidated financial statements to conform to the February 28, 2026 consolidated financial statements. These reclassifications had no effect on net earnings.
Note 2. Going Concern and Management’s Plan
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date these consolidated financial statements are available. At February 28, 2026, the Company has an accumulated deficit of $(
Management believes that the successful execution of its business plan and debt modifications would alleviate the substantial doubt about the Company’s ability to continue as a going concern. However, there can be no assurance that these plans will be successful. Because it is unclear whether the Company will be successful in accomplishing these objectives, there is uncertainty about the Company’s circumstances, which creates substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Note 3. Earnings (Loss) Per Share
Basic earnings (loss) earnings (loss) per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares used in the basic earnings (loss) per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding.
Greystone's Series 2003 preferred stock, which is convertible into
The following tables set forth the computation of basic and diluted (loss) earnings per share.
For the nine months ended:
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February 28, |
February 28, |
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2026 |
2025 |
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Numerator - |
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Net income (loss) ttributable to common stockholders |
$ | ( |
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Denominator - |
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Weighted-average shares outstanding - basic |
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earnings (loss) per share of common stock - basic |
$ | ( |
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Diluted earnings (loss) per share of common stock: |
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Numerator - |
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Net income (loss) attributable to common stockholders |
$ | ( |
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Denominator - |
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Weighted-average shares outstanding - basic |
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Incremental shares from assumed conversion of options warrants and preferred stock, as appropriate |
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Weighted average common stock outstanding - diluted |
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Earnings (loss) per share of common stock - diluted |
$ | ( |
) | $ | ||||
For the three months ended:
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February 28, |
February 28, |
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2026 |
2025 |
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Numerator - |
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Net income (loss) attributable to common stockholders |
$ | ( |
) | $ | ||||
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Denominator - |
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Weighted-average shares outstanding - basic |
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earnings (loss) per share of common stock - basic |
$ | ( |
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Diluted earnings (loss) per share of common stock: |
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Numerator - |
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Net income (loss) attributable to common stockholders |
$ | ( |
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Denominator - |
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Weighted-average shares outstanding - basic |
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Incremental shares from assumed conversion of options warrants and preferred stock, as appropriate |
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Weighted average common stock outstanding - diluted |
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Earnings (Loss) per share of common stock - diluted |
$ | ( |
) | $ | ||||
Note 4. Inventory
Inventory consisted of the following:
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February 28, |
May 31, |
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2026 |
2025 |
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Raw materials |
$ | $ | ||||||
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Finished goods |
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Total inventory |
$ | $ | ||||||
Note 5. Property, Plant and Equipment
A summary of property, plant and equipment for Greystone is as follows:
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February 28, |
May 31, |
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2026 |
2025 |
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Production machinery and equipment |
$ | $ | ||||||
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Plant buildings and land |
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Leasehold improvements |
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Furniture and fixtures |
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Less: Accumulated depreciation and amortization |
( |
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( |
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Net Property, Plant and Equipment |
$ | $ | ||||||
Property, plant and equipment includes deposits with a carrying value of $
Depreciation expense, including amortization expense related to financing leases, for the nine months ended February 28, 2026 and 2025 was $
In February 2024, one of the Company’s storage warehouses caught fire with damage to finished goods inventory valued at $
Note 6. Related Party Transactions
Transactions with Warren F. Kruger, Chairman
Yorktown Management & Financial Services, LLC (“Yorktown”), an entity wholly owned by Greystone’s CEO and President, owns and rents to Greystone (1) grinding equipment used to grind raw materials for Greystone’s pallet production and (2) extruders for pelletizing recycled plastic into pellets for resale and for use as raw material in the manufacture of pallets. Greystone compensates Yorktown for the use of equipment as discussed below.
Rental fees. GSM pays weekly rental fees of $
Yorktown provides administrative office space for Greystone in Tulsa, Oklahoma under a -year lease at a rental rate of $
Transactions with Greystone Real Estate, L.L.C.
Greystone Real Estate, L.L.C. (“GRE”) owns two primary manufacturing facilities occupied by Greystone and is wholly owned by Robert B. Rosene, Jr., a member of Greystone’s Board of Directors.
Effective August 1, 2022, Greystone and GRE entered into a non-cancellable -year lease agreement with a -year extension for the use of these manufacturing facilities at the initial rate of $
Transactions with TriEnda Holdings, L.L.C.
TriEnda Holdings, L.L.C. (“TriEnda”) is a manufacturer of plastic pallets, protective packaging and dunnage utilizing thermoform processing of which Warren F. Kruger, Greystone’s President and CEO, is the non-executive chairman of the board of directors of Kruger Family Holdings, LLC (“KFH”), which owns a majority interest in TriEnda. Greystone may purchase pallets from TriEnda for resale or sell Greystone pallets to TriEnda. During the nine months ended February 28, 2026 and 2025, Greystone purchases from TriEnda totaled $
Durakon Industries, Inc. is a Mexican subsidiary of Trienda Holdings, LLC with which the Company also does business. Sales to Durakon totaled $
Transactions with Green Plastic Pallets
Green Plastic Pallets (“Green”) is an entity that is owned by James Kruger, a brother to Warren Kruger, Greystone’s President and CEO. Green purchased pallets from Greystone totaling $
Note 7. Long-term Debt
Debt as of February 28, 2026 and May 31, 2025 was as follows:
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February 28, 2026 |
May 31, 2025 |
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Term loans dated July 29, 2022, payable to International Bank of Commerce, prime rate of interest plus |
$ | $ | ||||||
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Term loan payable to First Interstate Bank, interest rate of |
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Revolving loan dated July 29, 2022, payable to International Bank of Commerce, prime rate of interest plus |
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Total |
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Debt issuance costs, net of amortization |
( |
) | ( |
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Total debt, net of debt issuance costs |
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Less: Current portion of long-term debt |
( |
) | ( |
) | ||||
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Long-term debt, net of current portion |
$ | $ | ||||||
The revolving loan as well as the term loans above are subject to certain financial covenants as well as cross default provisions. Greystone was not in compliance with certain financial covenants as of February 28, 2026. Therefore, all of the long term debt has been classified as current. Greystone and IBC are currently in negotiations to amend the Restated Loan Agreement, which includes curing the covenant violations. IBC has not exercised their rights to accelerate the maturity of the outstanding balance of the term loans. Management intends to renew the revolving loan at comparable terms and believes it is probable such renewal will be successful.
Debt issuance costs consist of the amounts paid to third parties in connection with the issuance and modification of debt instruments. These costs are shown on the consolidated balance sheet as a direct reduction to the related debt instrument. Amortization of these costs is included in interest expense. Greystone recorded amortization of debt issuance costs of $
Restated and Amended Loan Agreement between Greystone and IBC
On July 29, 2022, Greystone and GSM (collectively “Borrowers”) and International Bank of Commerce (“IBC”) entered into an Amended and Restated Loan Agreement (“IBC Restated Loan Agreement”) that provided for the consolidation of certain term loans and a renewed revolver loan.
The IBC Restated Loan Agreement, dated July 29, 2022, as amended, provided for IBC to make certain term loans to Greystone to consolidate all existing term loans and provide additional funding for the purchase of equipment and renewal of the revolving loan in the aggregate principal amount of $
Prior to January 9, 2026, the IBC term loans required equal monthly payments of principal and interest in such amounts sufficient to amortize the principal balance of the loans over the remaining lives. The monthly payments of principal and interest on the IBC term loans may vary due to changes in the prime rate of interest. Prior to January 9, 2026, the aggregate payments for the IBC term loans were approximately $
The IBC Restated Loan Agreement includes customary events of default, including events of default relating to non-payment of principal and other amounts owing under the IBC Restated Loan Agreement from time to time, inaccuracy of representations, violation of covenants, defaults under other agreements, bankruptcy and similar events, the death of a guarantor, certain material adverse changes relating to a Borrower or guarantor, certain judgments or awards against a Borrower, or government action affecting a Borrower’s or guarantor’s ability to perform under the IBC Restated Loan Agreement or the related loan documents. In addition, without prior written consent, Greystone shall not declare or pay any dividends, redemptions, distributions and withdrawals with respect to its equity interest other than distributions to holders of its preferred stock in the aggregate of $
The IBC Restated Loan Agreement is secured by a lien on substantially all assets of the Borrowers. Warren F. Kruger, the Company’s President and CEO, and Robert B. Rosene, Jr., a member of the Company’s Board of Directors and a member of the board for IBC, have provided limited guaranties of the Borrowers’ obligations under the IBC Restated Loan Agreement. Mr. Kruger’s guarantee is limited to
On February 5, 2024, Greystone and IBC entered into a Second Amendment to the Amended and Restated Loan Agreement. Among other things, the primary terms extended the maturity date of the Revolving Loan from July 29, 2024 to February 5, 2026. In addition, distributions to holders of its preferred stock was raised to $
On January 14, 2025, Greystone and IBC entered into a Third Amendment to the Amended and Restated Loan Agreement. The amendment served to limit the repurchase of equity instruments in Greystone Logistics in an aggregate amount not exceeding $
On January 9, 2026, Greystone and IBC entered into a fourth amendment for the term loans to adjust the interest rate floor to
A waiver was obtained related to the preferred and common stock repurchases being in excess of the maximum allowable under the credit agreement.
Loan Agreement with First Interstate Bank, formerly Great Western Bank
On August 23, 2021, Greystone and First Interstate Bank entered into a loan agreement (the “FIB Loan Agreement”) in connection with certain prior loans and a mortgage loan to refinance certain land and buildings located in Bettendorf, IA.
The FIB Loan Agreement includes customary representations and warranties and affirmative and negative covenants which include (i) requiring the Borrowers to maintain a debt service coverage ratio of to 1:00 as of the end of each fiscal year end and debt to tangible net worth ratio of to 1:00 as of the end of each fiscal year end with a decrease of
The FIB Loan Agreement is secured by a mortgage on one of Greystone’s warehouses.
Maturities
Maturities of Greystone’s long-term debt, excluding the revolver balance, for the years subsequent to February 28, 2026, are $
Note 8. Leases
Financing Leases
The outstanding liability for financing leases is as follows:
|
February 28, |
May 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Non-cancelable financing leases |
$ | $ | ||||||
|
Less: Current portion |
( |
) | ||||||
|
Non-cancelable financing leases, net of current portion |
$ | $ | ||||||
The production equipment under the non-cancelable financing leases is as follows:
|
February 28, |
May 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Production equipment under financing leases |
$ | $ | ||||||
|
Less: Accumulated amortization |
( |
) | ( |
) | ||||
|
Production equipment under financing leases, net |
$ | $ | ||||||
Amortization of the carrying amount of $
Operating Leases
Greystone recognized a lease liability for each lease based on the present value of remaining minimum fixed rental payments, using a discount rate that approximates the rate of interest for a collateralized loan over a similar term. A right-of-use asset is recognized for each lease, valued at the lease liability. Minimum fixed rental payments are recognized on a straight-line basis over the life of the lease as costs and expenses on the consolidated statements of operations. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.
Greystone has two non-cancellable operating leases for (i) two buildings owned by GRE with a
The outstanding liability for right to use assets under operating leases is as follows:
|
February 28, |
May 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Liability under operating leases |
$ | $ | ||||||
|
Less: Current portion |
( |
) | ( |
) | ||||
|
Long-term portion of liability under operating leases |
$ | $ | ||||||
Lease Summary Information
Lease summary information as of and for the nine month periods ending is as follows:
|
February 28, |
February 28, |
|||||||
|
2026 |
2025 |
|||||||
|
Lease Expense |
||||||||
|
Financing lease expense - |
||||||||
|
Amortization of right-of-use assets |
$ | $ | ||||||
|
Interest on lease liabilities |
||||||||
|
Operating lease expense |
||||||||
|
Short-term lease expense |
||||||||
|
Total |
$ | $ | ||||||
|
Other Information |
||||||||
|
Cash paid for amounts included in the measurement of lease liabilities for finance leases - |
||||||||
|
Operating cash flows |
$ | $ | ||||||
|
Financing cash flows |
$ | $ | ||||||
|
Cash paid for amounts included in the measurement of lease liabilities for operating leases - |
||||||||
|
Operating cash flows |
$ | $ | ||||||
|
Weighted-average remaining lease term (in years) - |
||||||||
|
Financing leases |
- | |||||||
|
Operating leases |
||||||||
|
Weighted-average discount rate - |
||||||||
|
Financing leases |
% | |||||||
|
Operating leases |
% | % | ||||||
Future minimum lease payments under non-cancelable leases as of February 28, 2026, are approximately:
|
Operating |
||||
|
Leases |
||||
|
Twelve months ending February 28, 2027 |
$ | |||
|
Twelve months ending February 28, 2028 |
||||
|
Twelve months ending February 28, 2029 |
||||
|
Twelve months ending February 28, 2030 |
||||
|
Twelve months ending February 28, 2031 |
||||
|
Thereafter |
||||
|
Total future minimum lease payments |
||||
|
Less: Imputed interest |
( |
) | ||
|
Present value of minimum lease payments |
$ | |||
Subsequent to February 28, 2026, the Company sold certain real property to Robert B. Rosene, Jr., a member of the Company’s Board of Directors, for $
Subsequent to February 28, 2026, the Company began leasing certain idle equipment to an outside entity. The terms of the agreement are still being negotiated, but the Company anticipates receiving monthly rental income of approximately $
Note 9. Deferred Revenue
Advances from customers pursuant to a contract for the sale of plastic pallets is recognized as deferred revenue. Revenue is recognized by Greystone as pallets are shipped to the customer. Revenue related to prior advances totaled $
Note 10. Revenue and Revenue Recognition
Greystone’s principal product is plastic pallets produced from recycled plastic resin. Sales are primarily to customers in the continental United States of America. International sales are made to customers in Canada, Mexico, and other Central America countries which totaled approximately $
Greystone’s customers include stocking and non-stocking distributors and direct sales to end-user customers. Sales to the following categories of customers for the nine months ended February 28, 2026 and 2025, respectively, were as follows:
|
2026 |
2025 |
|||||||
|
End-user customers |
% | % | ||||||
|
Distributors |
% | % | ||||||
Note 11. Fair Value of Financial Instruments
The following methods and assumptions are used in estimating the fair-value disclosures for financial instruments:
Debt: The carrying amount of notes with floating rates of interest approximate fair value. Fixed rate notes are valued based on cash flows using estimated rates of comparable notes. The carrying amounts reported on the consolidated balance sheets approximate fair value.
Note 12. Concentrations, Risks and Uncertainties
Greystone derived approximately
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements and Material Risks
This Quarterly Report on Form 10-Q includes certain statements that may be deemed "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, that address activities, events or developments that Greystone expects, believes or anticipates will or may occur in the future, including decreased costs, securing financing, the profitability of Greystone, potential sales of pallets or other possible business developments, are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q could be affected by any of the following factors: Greystone's prospects could be affected by changes in availability of raw materials, competition, rapid technological change and new legislation regarding environmental matters; Greystone may not be able to secure additional financing necessary to sustain and grow its operations; and a material portion of Greystone's business is and will be dependent upon a few large customers and there is no assurance that Greystone will be able to retain such customers. These risks and other risks that could affect Greystone's business are more fully described in Greystone's Annual Report on Form 10-K for the fiscal year ended May 31, 2025, which was filed with the Securities and Exchange Commission on August 29, 2025, as the same may be updated from time to time. Actual results may vary materially from the forward-looking statements. The results of operations for the nine months ended February 28, 2026, are not necessarily indicative of the results for the fiscal year ending May 31, 2026. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q.
Results of Operations
General to All Periods
The unaudited consolidated statements include Greystone Logistics, Inc., and its two wholly owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”). All material intercompany accounts and transactions have been eliminated.
Sales
Greystone's primary focus is to provide quality plastic pallets to its existing customers while continuing its marketing efforts to broaden its customer base. Greystone's existing customers are primarily located in the United States and engaged in the beverage, pharmaceutical and other industries. Greystone has generated, and plans to continue to generate, interest in its pallets by attending trade shows sponsored by industry segments that would benefit from Greystone's products. Greystone hopes to gain wider product acceptance by marketing the concept that the widespread use of plastic pallets could greatly reduce the destruction of trees on a worldwide basis. Greystone’s marketing is conducted through contract distributors, its President and other employees.
Personnel
Greystone had full-time equivalents of approximately 82 and 181 regular employees as of February 28, 2026 and 2025, respectively. As of February 28, 2026 with the reduction in the production schedule due to loss of a major customer, the Company has stopped using temporary employees, prior to the reduction in production, at any point in time, the Company could have between 65-70 temporary employees. Full-time equivalent is a measure based on time worked.
Nine months Ended February 28, 2026 Compared to Nine months Ended February 28, 2025
Sales
During fiscal year 2026, the Company lost a major customer. Based on historical sales to this customer, management expects a total loss of sales of approximately $30 million for fiscal year 2026. During the nine months ended February 28, 2026, total sales decreased $17,938,676, or 45%. Sales decreased primarily due to reductions of approximately $11 million from the lost major customer. The Company also experienced additional reductions in sales of $4.3 million from another major customer; however, this loss is due to delays in construction of specific production equipment related to this customers’ orders. Sales for this customer are projected to return to normal in the fourth quarter. Additional miscellaneous fluctuations among other existing customers contributed to the overall change. No significant new or other lost customers were reported during the period.
Greystone’s two major customers accounted for approximately 60% and 71% of total sales during the nine months ended February 28, 2026 and 2025, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to increase sales through the addition of new customers developed through Greystone’s marketing efforts.
Cost of Sales
The cost of sales for the nine months ended February 28, 2026, was $23,360,699 or 106% of sales, compared to $33,890,446, or 85% of sales, for the nine months ended February 28, 2025. The increase in the ratio of cost of sales to sales for the nine months ended February 28, 2026, over the prior period was primarily the result of reduced production during the nine months ended February 28, 2026, specifically, the Company capitalized less overhead costs as fewer pallets were produced due to loss of customers described above. Due to Greystone’s inflexible manufacturing costs, the gross profit margin is directly affected by variations in the quantity of plastic pallets produced.
Gross Profit (Loss)
Gross profit (loss) for the nine months ended February 28, 2026, was $(1,387,683), or (6.3%) of sales, compared to $6,021,246, or 15% of sales, for the nine months ended February 28, 2025. The principal reason for decrease in gross profit margin for the nine months ended February 28, 2026, over the prior period was the decline in production as discussed above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $ 4,190,611, or 19% of sales, for the nine months ended February 28, 2026 compared to $4,556,062, or 11% of sales, for the nine months ended February 28, 2025, representing a decrease of $365,451. The decrease is primarily due to continued tight control of other expenses given the loss of a major customer.
Gain from Involuntary Conversion
During the nine months ended February 28, 2025, the Company and the insurer agreed on the amount of settlements on certain casualty losses occurring in fiscal years 2024 and 2023. The payments resulted in a gain of $741,821 recorded in the first quarter of fiscal year 2025, this did not reoccur in fiscal year 2026.
Other Income (Expenses)
Other income, generally from interest income and the sale of scrap material, was $12,400 and $115,956 for the nine months ended February 28, 2026 and 2025, respectively.
Interest expense was $712,473 for the nine months ended February 28, 2026, compared to $818,786 for the nine months ended February 28, 2025, representing a decrease of $106,313. This decrease is due to the continuing payments on the principal of outstanding debt as well as reductions in the prime rate of interest which was 6.75% at February 28, 2026, compared to 7.50% at February 28, 2025.
Benefit (Provision) for Income Taxes
The benefit (provision) for income taxes was $313,172 and $(407,770) for the nine months ended February 28, 2026 and 2025, respectively. The significant change in provision primarily reflects a shift from taxable income in 2025 to a pretax loss in 2026. As a result, the current year provision reflects an income tax benefit associated with the pretax loss, whereas the prior year included income tax expense related to taxable earnings. The effective tax rate differs from federal statutory rates due principally to state income taxes, charges (income) which have no tax benefit (expense), and changes in the valuation allowance.
Based upon a review of its income tax filing positions, Greystone believes that its positions would be sustained upon an audit by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.
Net Income (Loss)
Greystone recorded net loss of $(5,965,195) for the nine months ended February 28, 2026, compared to net income of $1,096,405 for nine months ended February 28, 2025, primarily for the reasons discussed above.
Net Income (Loss) Attributable to Common Stockholders
The net loss attributable to common stockholders for the nine months ended February 28, 2026, was $(5,965,195) or $(0.22) per share, compared to net income attributable to common stockholders of $691,942, or $0.02 per share, for the nine months ended February 28, 2025, primarily for the reasons discussed above.
Three months Ended February 28, 2026 Compared to Three months Ended February 28, 2025
Sales
During fiscal year 2026, the Company lost a major customer. Based on historical sales to this customer, management expects a total loss of sales of approximately $30 million for fiscal year 2026. During the three months ended February 28, 2026, total sales decreased $10,844,399, or 76%. Sales decreased primarily due to reductions of approximately $7.6 million from the lost major customer. The Company also experienced additional reductions in sales of $1.7 million from another major customer; however this loss is due to delays in construction of specific production equipment related to this customers’ orders. Sales for this customer are projected to return to normal in the fourth quarter. Additional miscellaneous fluctuations among other existing customers contributed to the overall change. No significant new or other lost customers were reported during the period.
Greystone’s two major customers discussed above accounted for approximately 22% and 71% of total sales during the three months ended February 28, 2026 and 2025, respectively. Additionally, Greystone has one other major customer that accounted for approximately 13% and 4% of total sales during the three months ended February 28, 2026 and 2025, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to increase sales through the addition of new customers developed through Greystone’s marketing efforts.
Cost of Sales
The cost of sales for the three months ended February 28, 2026, was $4,930,543 or 142% of sales, compared to $11,577,980, or 81% of sales, for the three months ended February 28, 2025. The increase in the ratio of cost of sales to sales for the three months ended February 28, 2026, over the prior period was primarily the result of reduced production during the three months ended February 28, 2026, specifically, the Company capitalized less overhead costs as fewer pallets were produced. Due to Greystone’s inflexible manufacturing costs, the gross profit margin is directly affected by variations in the quantity of plastic pallets produced.
Gross Profit (Loss)
Gross profit (loss) for the three months ended February 28, 2026, was $(1,459,144), or (42%). of sales, compared to $2,737,818, or 19% of sales, for the three months ended February 28, 2025. The principal reason for decrease in gross profit margin for the three months ended February 28, 2026, over the prior period was the decline in production as discussed above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $1,202,930, or 35% of sales, for the three months ended February 28, 2026 compared to $1,374,914, or 10% of sales, for the three months ended February 28, 2025, representing a decrease of $171,984. The decrease is primarily due to continued tight control of other expenses given the loss of a major customer.
Other Income (Expenses)
Other income, generally from interest income and the sale of scrap material, was $3,012 and $45,486 for the three months ended February 28, 2026 and 2025.
Interest expense was $243,956 for the three months ended February 28, 2026, compared to $248,705 for the three months ended February 28, 2025, representing a decrease of $4,749. This decrease is due to the continuing payments on the principal of outstanding debt as well as reductions in the prime rate of interest which was 6.75% at February 28, 2026, compared to 7.50% at February 28, 2025.
Benefit (Provision) for Income Taxes
The benefit (provision) for income taxes was $100,940 and $(194,020) for the three months ended February 28, 2026 and 2025, respectively. The significant change in provision primarily reflects a shift from taxable income in 2025 to a pretax loss in 2026. As a result, the current year provision reflects an income tax benefit associated with the pretax loss, whereas the prior year included income tax expense related to taxable earnings. The effective tax rate differs from federal statutory rates due principally to state income taxes, charges (income) which have no tax benefit (expense), and changes in the valuation allowance.
Based upon a review of its income tax filing positions, Greystone believes that its positions would be sustained upon an audit by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.
Net Income (Loss)
Greystone recorded net loss of $(2,802,078) for the three months ended February 28, 2026, compared to net income of $965,665 for three months ended February 28, 2025, primarily for the reasons discussed above.
Net Income (Loss) Attributable to Common Stockholders
The net loss attributable to common stockholders for the three months ended February 28, 2026, was $(2,802,078) or $(0.10) per share, compared to net income attributable to common stockholders of $849,867, or $0.03 per share, for the three months ended February 28, 2025, primarily for the reasons discussed above.
Liquidity and Capital Resources
A summary of cash flows for the nine months ended February 28, 2026, was as follows:
|
Cash provided by operating activities |
$ | 2,660 | ||
|
Cash used in investing activities |
$ | (1,796,189 | ) | |
|
Cash provided by financing activities |
$ | 465,094 |
The contractual obligations and rents of Greystone as of February 28, 2026 were as follows:
|
Less than |
||||||||||||||||||||
|
Total |
1 year |
2-3 years |
4-5 years |
Thereafter |
||||||||||||||||
|
Long-term debt |
$ | 11,763,650 | $ | 11,763,650 | $ | - | $ | - | $ | - | ||||||||||
|
Operating leases |
$ | 6,791,400 | $ | 609,000 | $ | 1,260,370 | $ | 1,184,020 | $ | 3,738,010 | ||||||||||
Greystone had a working capital of $1,196,903 as of February 28, 2026.
Greystone’s principal debt obligations include a $6,000,000 revolving loan, subject to borrowing base limitations, and several term notes. Greystone was not in compliance with certain financial covenants as of February 28, 2026. Therefore, all of the long term debt has been classified as current. To provide for the funding to meet Greystone's operating activities and contractual obligations as of February 28, 2026, Greystone will have to produce positive operating results or explore various options including additional long-term debt and equity financing. However, there is no guarantee that Greystone will continue to create positive operating results or be able to raise sufficient capital to meet these obligations.
A substantial portion of debt financing that Greystone has received through February 28, 2026, has been provided by loans or through bank loan guarantees from the officers and directors of Greystone. Greystone continues to be dependent upon its officers and directors to provide and/or secure additional financing and there is no assurance that its officers and directors will continue to do so, or that they will do so on terms that are acceptable to Greystone.
During the third and fourth quarter of fiscal year 2025, the Company paid $5,000,000 to retire all shares of preferred stock. Prior to retiring, Greystone had 50,000 outstanding shares of cumulative 2003 preferred stock for a total of $5,000,000 with a preferred dividend rate at the prime rate of interest plus 3.25%. Greystone paid accrued dividends to its preferred stockholders during the nine months ended February 28, 2026 and 2025 of $1,610 and $378,938, respectively. Preferred stock dividend payments to the holders of its preferred stock were allowed under the terms of the IBC Restated Loan Agreement as discussed herein under the caption “Loans from International Bank of Commerce” which allows for such payments not to exceed $1,000,000 per year. Greystone does not anticipate that it will make cash dividend payments to any holders of its common stock unless and until the financial position of Greystone improves through increased revenues, additional financing or otherwise. Further, pursuant to the terms and conditions of certain loan documentation with International Bank of Commerce, as discussed herein and the terms and conditions of Greystone’s 2003 preferred stock, Greystone is restricted in its ability to pay dividends to holders of its common stock.
During the year ended May 31, 2025, the Company repurchased 519,124 shares of its common stock for an aggregate amount of $606,737 under a share repurchase program announced by the Board on June 28, 2024. During the first quarter of fiscal 2026, covering the three-month period ended August 31, 2025, the Company repurchased an additional 89,876 shares for $123,147 under the same program. No additional activity occurred during the second or third quarters of fiscal 2026. As disclosed in the Form 8-K filed on June 28, 2024, the Board’s intent in authorizing the program was to employ strategic buybacks as a means of enhancing shareholder value.
During fiscal year 2026, the Company lost a major customer, which represented a significant portion of consolidated revenues. This change is expected to impact future sales values and will reduce operating cash flows in both the current and subsequent periods. In response, management plans to continue its efforts to expand the present market area and increase sales to its existing customers and seek new customer opportunities. Management also intends to continue tight control over all expenditures and an increased emphasis on inventory and production management. This will lead to decreased labor needs and the discontinued use of temporary labor. Management plans to make sales price adjustments in the future as necessary to correspond with current contribution margins. During the quarter ended February 28, 2026, the Company was able to modify terms of its debt to extend the maturity and require interest only payments for the next 10 months. Management believes that the successful execution of its business plan coupled with the debt modifications will be sufficient to meet its funding requirements for the foreseeable future.
Off-Balance Sheet Arrangements
Greystone does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
Greystone believes that the following critical policies affect Greystone’s more significant judgments and estimates used in preparation of Greystone’s financial statements.
General
The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recognition of Revenues
Revenue is recognized at the point in time a good or service is transferred to a customer and the customer obtains control of that good or receives the service performed. Sales arrangements with customers are short-term in nature involving single performance obligations related to the delivery of goods and generally provide for transfer of control at the time of shipment. In limited circumstances, where acceptance of the goods is subject to approval by the customer, revenue is recognized upon approval by the customer unless, historically, there have been insignificant rejections of goods by the customer.
Accounts receivable
Trade receivables are carried at the original invoice amount less an allowance for credit losses. Management determines the allowance by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Trade receivables are written off against the allowance when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. The Company generally does not charge interest on past due accounts.
Inventory
Inventory consists of finished pallets and raw materials which are stated at the lower of average cost or net realizable value. Management applies overhead costs to inventory based on an analysis of the Company's expense categories. The specific costs are then applied to inventory based on production during the period. Management relies on estimates and assumptions regarding the specific costs to include in the production costs, as well as the period to use in determining inventory production.
Income Taxes
Greystone accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax bases of assets and liabilities and tax loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.
A deferred tax asset is recognized for tax-deductible temporary differences and operating losses using the applicable enacted tax rate. In assessing the realizability of deferred tax assets, management considers the likelihood of whether it is more likely than not the net deferred tax asset will be realized. Based on this evaluation, management will provide a valuation allowance if it is determined more likely than not the associated asset will not be recognized. Management has determined that as of February 28, 2026, Greystone will not be able to realize the full effect of the deferred tax assets so a valuation allowance of $1,293,139 has been recorded. As of May 31, 2025, no valuation allowance was recorded. As of February 28, 2026 and May 31, 2025, there was $692,035 and $268,935, respectively of prepaid tax expenses related to fiscal year 2025.
New Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying unaudited consolidated financial statements. As new accounting pronouncements are issued, Greystone will adopt those that are applicable under the circumstances.
Recent accounting pronouncements issued by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants and the SEC did not or are not believed by management to have a material effect on Greystone’s unaudited consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, Greystone carried out an evaluation under the supervision of Greystone's Chief Executive Officer (CEO) of the effectiveness of Greystone's disclosure controls and procedures pursuant to the Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”). Based on an evaluation as of February 28, 2026, Greystone’s CEO and CFO concluded that Greystone’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) were not effective as of February 28, 2026, as a result of a weakness in the design of internal controls over financial reporting identified below.
Management has determined that a material weakness exists due for the following reasons:
|
● |
The Company has an ineffective control environment due to a lack of the necessary corporate accounting resources with SEC financial reporting experience to ensure consistent, complete and accurate financial reporting, as well as disclosure controls and procedures. |
|
● |
The Company has limited resources to ensure that necessary internal controls are implemented and followed throughout the Company. The limited resources result in inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances and events that could have a material impact on the Company’s financial reporting process. |
During the nine months ended February 28, 2026, there were no changes in Greystone's internal control over financial reporting that have materially affected, or that are reasonably likely to materially affect Greystone's internal control over financial reporting.
None.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Clawback Policy Disclosure
During the quarter ended February 28, 2026, the Company did not identify any accounting restatements that would trigger a recovery of incentive-based compensation under its clawback policy adopted pursuant to Rule 10D-1 of the Securities Exchange Act of 1934. Accordingly, no recoveries were made during the period. The Company has performed a recovery analysis in accordance with its clawback policy and determined that no incentive-based compensation was subject to recovery during the applicable period.
Cybersecurity Incident Disclosure
During the quarter ended February 28, 2026, the Company did not identify any material cybersecurity incidents. The Company continues to monitor and manage cybersecurity risks through its established governance and risk management framework.
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
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31.1* |
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32.1** |
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99.1 |
Press release issued by the registrant on June 28, 2024 |
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101.INS* |
Inline XBRL Instance Document. |
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10. SCH* |
Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase. |
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101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase. |
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101.LAB* |
Inline XBRL Taxonomy Extension Labels Linkbase. |
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101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase. |
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104* |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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* |
Filed herewith. |
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** |
Furnished herewith. |
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 thereunto duly authorized.
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GREYSTONE LOGISTICS, INC. |
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(Registrant) |
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Date: April 14, 2026 |
/s/ Warren F. Kruger |
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Warren F. Kruger, Director, President, Chief |
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Executive Officer (Principal Executive Officer) and Chief Financial Officer |
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