UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended August 31, 2021
| ☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ____________
| Commission file number | 000-26331 |
| GREYSTONE LOGISTICS, INC. |
| (Exact name of registrant as specified in its charter) |
| Oklahoma | 75-2954680 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 1613 East 15th Street, Tulsa, Oklahoma 74120 |
|
(Address of principal executive offices) (Zip Code) |
| (918) 583-7441 |
| (Registrant’s telephone number, including area code) |
| (Former name, former address and former fiscal year, if changed since last report) |
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. Yes ☒ No ☐
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 post and submit such files). Yes ☒ No ☐
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.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller reporting company ☒ |
| 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 ☐ No ☒
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: October 9, 2021 - 28,561,201
GREYSTONE LOGISTICS, INC.
FORM 10-Q
For the Period Ended August 31, 2021
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Greystone Logistics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| August 31, 2021 | May 31, 2021 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 2,888,365 | $ | 4,387,533 | ||||
| Accounts receivable - | ||||||||
| Trade | 5,170,566 | 4,586,134 | ||||||
| Related parties | 114,567 | 153,550 | ||||||
| Inventory | 3,119,395 | 3,441,974 | ||||||
| Prepaid expenses | 65,192 | 52,315 | ||||||
| Total Current Assets | 11,358,085 | 12,621,506 | ||||||
| Property, Plant and Equipment, net | 30,652,779 | 30,998,988 | ||||||
| Right-of-Use Operating Lease Assets | 90,885 | 109,013 | ||||||
| Total Assets | $ | 42,101,749 | $ | 43,729,507 | ||||
| Liabilities and Equity | ||||||||
| Current Liabilities: | ||||||||
| Current portion of long-term debt | $ | 3,096,943 | $ | 3,236,113 | ||||
| Current portion of financing leases | 1,683,046 | 1,745,535 | ||||||
| Current portion of operating leases | 45,677 | 56,443 | ||||||
| Accounts payable and accrued liabilities | 4,451,990 | 3,754,556 | ||||||
| Deferred revenue | 5,306,382 | 6,430,607 | ||||||
| Preferred dividends payable | 81,918 | - | ||||||
| Total Current Liabilities | 14,665,956 | 15,223,254 | ||||||
| Long-Term Debt, net of current portion and debt issuance costs | 9,229,806 | 12,971,529 | ||||||
| Financing Leases, net of current portion | 1,521,757 | 1,848,472 | ||||||
| Operating Leases, net of current portion | 45,208 | 52,570 | ||||||
| Deferred Tax Liability | 2,373,642 | 2,380,642 | ||||||
| Equity: | ||||||||
| Preferred stock, $0.0001 par value, cumulative, 20,750,000 shares authorized, 50,000 shares issued and outstanding, liquidation preference of $5,000,000 | 5 | 5 | ||||||
| Common stock, $0.0001 par value, 5,000,000,000 shares authorized, 28,561,201 and 28,361,201 shares issued and outstanding, respectively | 2,856 | 2,836 | ||||||
| Additional paid-in capital | 53,814,744 | 53,790,764 | ||||||
| Accumulated deficit | (40,806,006 | ) | (43,776,927 | ) | ||||
| Total Greystone Stockholders’ Equity | 13,011,599 | 10,016,678 | ||||||
| Non-controlling interest | 1,253,781 | 1,236,362 | ||||||
| Total Equity | 14,265,380 | 11,253,040 | ||||||
| Total Liabilities and Equity | $ | 42,101,749 | $ | 43,729,507 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 1 |
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Income
For the Three Months Ended August 31,
(Unaudited)
| 2021 | 2020 | |||||||
| Sales | $ | 14,774,399 | $ | 17,568,176 | ||||
| Cost of Sales | 13,312,305 | 14,609,617 | ||||||
| Gross Profit | 1,462,094 | 2,958,559 | ||||||
| Selling, General and Administrative Expenses | 1,218,604 | 1,140,238 | ||||||
| Operating Income | 243,490 | 1,818,321 | ||||||
| Other Income (Expense): | ||||||||
| Other income | 26,825 | 6,510 | ||||||
| Gain from forgiveness of debt | 3,068,497 | - | ||||||
| Interest expense | (223,354 | ) | (361,673 | ) | ||||
| Income before Income Taxes | 3,115,458 | 1,463,158 | ||||||
| Benefit (Provision) for Income Taxes | 7,000 | (454,000 | ) | |||||
| Net Income | 3,122,458 | 1,009,158 | ||||||
| Income Attributable to Non-controlling Interest | (69,619 | ) | (67,039 | ) | ||||
| Preferred Dividends | (81,918 | ) | (81,918 | ) | ||||
| Net Income Attributable to Common Stockholders | $ | 2,970,921 | $ | 860,201 | ||||
| Income Per Share of Common Stock - | ||||||||
| Basic | $ | 0.10 | $ | 0.03 | ||||
| Diluted | $ | 0.09 | $ | 0.03 | ||||
| Weighted Average Shares of Common Stock Outstanding - | ||||||||
| Basic | 28,385,114 | 28,361,201 | ||||||
| Diluted | 32,214,447 | 32,363,012 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
For the Three Months Ended August 31, 2021 and 2020
(Unaudited)
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock |
Additional Paid-in |
Accumulated | Total Greystone Stockholders’ |
Non- controlling |
Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | Interest | Equity | ||||||||||||||||||||||||||||
| Balances, May 31, 2020 | 50,000 | $ | 5 | 28,361,201 | $ | 2,836 | $ | 53,790,764 | $ | (46,807,092 | ) | $ | 6,986,513 | $ | 1,173,020 | $ | 8,159,533 | |||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||||||||||||||
| Stock options exercised, share | ||||||||||||||||||||||||||||||||||||
| Cash distributions | - | - | - | - | - | - | - | (52,200 | ) | (52,200 | ) | |||||||||||||||||||||||||
| Preferred dividends ($1.64 per share) | - | - | - | - | - | (81,918 | ) | (81,918 | ) | - | (81,918 | ) | ||||||||||||||||||||||||
| Net income | - | - | - | - | - | 942,119 | 942,119 | 67,039 | 1,009,158 | |||||||||||||||||||||||||||
| Balances, August 31, 2020 | 50,000 | $ | 5 | 28,361,201 | $ | 2,836 | $ | 53,790,764 | $ | (45,946,891 | ) | $ | 7,846,714 | $ | 1,187,859 | $ | 9,034,573 | |||||||||||||||||||
| Balances, May 31, 2021 | 50,000 | $ | 5 | 28,361,201 | $ | 2,836 | $ | 53,790,764 | $ | (43,776,927 | ) | $ | 10,016,678 | $ | 1,236,362 | $ | 11,253,040 | |||||||||||||||||||
| Balance | 50,000 | $ | 5 | 28,361,201 | $ | 2,836 | $ | 53,790,764 | $ | (43,776,927 | ) | $ | 10,016,678 | $ | 1,236,362 | $ | 11,253,040 | |||||||||||||||||||
| Stock options exercised | - | - | 200,000 | 20 | 23,980 | - | 24,000 | - | 24,000 | |||||||||||||||||||||||||||
| Cash distributions | - | - | - | - | - | - | - | (52,200 | ) | (52,200 | ) | |||||||||||||||||||||||||
| Preferred dividends ($1.64 per share) | - | - | - | - | - | (81,918 | ) | (81,918 | ) | - | (81,918 | ) | ||||||||||||||||||||||||
| Net income | - | - | - | - | - | 3,052,839 | 3,052,839 | 69,619 | 3,122,458 | |||||||||||||||||||||||||||
| Balances, August 31, 2021 | 50,000 | $ | 5 | 28,561,201 | $ | 2,856 | $ | 53,814,744 | $ | (40,806,006 | ) | $ | 13,011,599 | $ | 1,253,781 | $ | 14,265,380 | |||||||||||||||||||
| Balance | 50,000 | $ | 5 | 28,561,201 | $ | 2,856 | $ | 53,814,744 | $ | (40,806,006 | ) | $ | 13,011,599 | $ | 1,253,781 | $ | 14,265,380 | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Three Months Ended August 31,
(Unaudited)
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 3,122,458 | $ | 1,009,158 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities - | ||||||||
| Gain from forgiveness of debt | (3,068,497 | ) | - | |||||
| Gain on sale of assets | (22,336 | ) | - | |||||
| Depreciation and amortization | 1,374,324 | 1,491,244 | ||||||
| Deferred tax expense (benefit) | (7,000 | ) | 454,000 | |||||
| Decrease (increase) in trade accounts receivable | (578,662 | ) | 2,477,745 | |||||
| Decrease in related party receivables | 33,213 | 43,010 | ||||||
| Decrease in inventory | 322,579 | 857,065 | ||||||
| Increase in prepaid expenses | (12,877 | ) | (60,845 | ) | ||||
| Increase (decrease) in accounts payable and accrued liabilities | 336,666 | (638,117 | ) | |||||
| Decrease in deferred revenue | (1,124,225 | ) | (2,459,160 | ) | ||||
| Net cash provided by operating activities | 375,643 | 3,174,100 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | (659,279 | ) | (744,656 | ) | ||||
| Proceeds from sale of assets | 50,000 | - | ||||||
| Net cash used in investing activities | (609,279 | ) | (744,656 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from long-term debt | 837,000 | - | ||||||
| Principal payments on long-term debt and financing leases | (1,931,045 | ) | (1,193,676 | ) | ||||
| Principal payments on related party note payable and financing lease | (138,591 | ) | (620,230 | ) | ||||
| Principal payments on revolving loan | - | (790,000 | ) | |||||
| Payments for debt issuance costs | (4,696 | ) | - | |||||
| Proceeds from stock options exercised | 24,000 | - | ||||||
| Dividends paid on preferred stock | - | (84,110 | ) | |||||
| Distributions paid by non-controlling interest | (52,200 | ) | (52,200 | ) | ||||
| Net cash used in financing activities | (1,265,532 | ) | (2,740,216 | ) | ||||
| Net Decrease in Cash | (1,499,168 | ) | (310,772 | ) | ||||
| Cash, beginning of period | 4,387,533 | 1,131,850 | ||||||
| Cash, end of period | $ | 2,888,365 | $ | 821,078 | ||||
| Non-cash Activities: | ||||||||
| Capital expenditures in accounts payable | $ | 410,921 | $ | - | ||||
| Preferred dividend accrual | $ | 81,918 | $ | 81,918 | ||||
| Supplemental information: | ||||||||
| Interest paid | $ | 221,551 | $ | 350,497 | ||||
| Taxes paid | $ | 80,000 | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
Greystone Logistics, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Basis of Financial Statements
In the opinion of Greystone Logistics, Inc. (“Greystone”), 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 August 31, 2021 and the results of its operations and cash flows for the three months ended August 31, 2021 and 2020. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended May 31, 2021 and the notes thereto included in the Form 10-K for such period. The results of operations for the three months ended August 31, 2021 and 2020 are not necessarily indicative of the results to be expected for the full fiscal year.
The consolidated financial statements of Greystone include its wholly owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”), and the variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). GRE owns two buildings located in Bettendorf, Iowa which are leased to GSM. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.
Note 2. Earnings Per Share
Basic earnings per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income attributable to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares used in the basic earnings per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding.
The following tables set forth the computation of basic and diluted earnings per share for the three months ended August 31, 2021 and 2020:
Schedule of Basic and Diluted Earnings Per Share
| 2021 | 2020 | |||||||
| Basic earnings per share of common stock: | ||||||||
| Numerator - | ||||||||
| Net income attributable to common stockholders | $ | 2,970,921 | $ | 860,201 | ||||
| Denominator - | ||||||||
| Weighted-average shares outstanding - basic | 28,385,114 | 28,361,201 | ||||||
| Income per share of common stock - basic | $ | 0.10 | $ | 0.03 | ||||
| Diluted earnings per share of common stock: | ||||||||
| Numerator - | ||||||||
| Net income attributable to common stockholders | $ | 2,970,921 | $ | 860,201 | ||||
| Add: Preferred stock dividends for assumed conversion | 81,918 | 81,918 | ||||||
| Net income allocated to common stockholders | $ | 3,052,839 | $ | 942,119 | ||||
| Denominator - | ||||||||
| Weighted-average shares outstanding - basic | 28,385,114 | 28,361,201 | ||||||
| Incremental shares from assumed conversion of options, warrants and preferred stock, as appropriate | 3,829,333 | 4,001,811 | ||||||
| Weighted average common stock outstanding - diluted | 32,214,447 | 32,363,012 | ||||||
| Income per share of common stock - diluted | $ | 0.09 | $ | 0.03 | ||||
| 5 |
Note 3. Inventory
Inventory consists of the following:
Schedule of Inventory
| August 31, | May 31, | |||||||
| 2021 | 2021 | |||||||
| Raw materials | $ | 2,014,203 | $ | 2,520,654 | ||||
| Finished goods | 1,105,192 | 921,320 | ||||||
| Total inventory | $ | 3,119,395 | $ | 3,441,974 | ||||
Note 4. Property, Plant and Equipment
A summary of property, plant and equipment for Greystone is as follows:
Schedule of Property, Plant and Equipment
|
August 31, 2021 |
May 31, 2021 |
|||||||
| Production machinery and equipment | $ | 52,143,812 | $ | 52,292,733 | ||||
| Plant buildings and land | 7,020,542 | 6,970,949 | ||||||
| Leasehold improvements | 1,487,398 | 1,487,398 | ||||||
| Furniture and fixtures | 529,262 | 550,337 | ||||||
| 61,181,014 | 61,301,417 | |||||||
| Less: Accumulated depreciation and amortization | (30,528,235 | ) | (30,302,429 | ) | ||||
| Net Property, Plant and Equipment | $ | 30,652,779 | $ | 30,998,988 | ||||
Production machinery includes deposits on equipment in the amount of $499,349 as of August 31, 2021, which has not been placed into service. Plant buildings and land include two properties which are owned by GRE, a variable interest entity (“VIE”) and have an aggregate net book value of $2,635,837 as of August 31, 2021.
Depreciation expense, including amortization expense related to financing leases, for the three months ended August 31, 2021 and 2020 was $1,373,089 and $1,489,953, respectively.
Note 5. Related Party Transactions/Activity
Yorktown Management & Financial Services, LLC
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. GSM pays weekly rental fees to Yorktown of $27,500 for use of Yorktown’s grinding equipment and pelletizing equipment. Rental fees were $357,500 and $330,000 for the three months ended August 31, 2021 and 2020, respectively.
Effective January 1, 2017, Greystone and Yorktown entered into a five-year lease for office space at a monthly rental of $4,000 per month. Total rent expense was $12,000 for each of the three months ended August 31, 2021 and 2020. As of August 31, 2021, future minimum payments under the non-cancelable operating lease for the remaining year is $16,000.
TriEnda Holdings, L.L.C.
TriEnda Holdings, L.L.C. (“TriEnda”) is a manufacturer of plastic pallets, protective packaging and dunnage utilizing thermoform processing for which Warren F. Kruger, Greystone’s President and CEO, serves TriEnda as the non-executive Chairman of the Board and is a partner in a partnership which has a majority ownership interest in TriEnda. Greystone may purchase pallets from TriEnda for resale or sell Greystone pallets to TriEnda. During the three months ended August 31, 2021 and 2020, Greystone purchases from TriEnda totaled $27,104 and $11,385, respectively and sales to TriEnda totaled $30,630 and $2,572, respectively. As of August 31, 2021, TriEnda owed $68,667 to Greystone. As of August 31, 2021, Greystone owed $1,010 to TriEnda.
Green Plastic Pallets
Greystone sells plastic pallets to Green Plastic Pallets (“Green”), an entity that is owned by James Kruger, brother to Warren Kruger, Greystone’s President and CEO. Greystone had sales to Green of $160,650 and $64,260 for the three months ended August 31, 2021 and 2020, respectively. The account receivable due from Green as of August 31, 2021 was $45,900.
| 6 |
Note 6. Long-term Debt
Debt as of August 31, 2021 and May 31, 2021 is as follows:
Schedule of Long-Term Debt
| August 31, | May 31, | |||||||
| 2021 | 2021 | |||||||
| Total long-term debt | 12,360,936 | 16,238,368 | ||||||
| Term loan A payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, maturing April 30, 2023 | $ | 1,409,275 | $ | 1,623,572 | ||||
| Term loan C payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, maturing August 4, 2024 | 839,236 | 905,822 | ||||||
| Term loan D payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, maturing January 10, 2022 | 320,218 | 487,390 | ||||||
| Term loan E payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, maturing February 28, 2023 | 383,541 | 447,551 | ||||||
| Term loan F payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 5.25%, maturing February 29, 2024 | 1,851,485 | 2,035,670 | ||||||
| Term loan G payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.5%, refinanced with Great Western Bank | - | 789,926 | ||||||
| Paycheck Protection Program note, interest rate of 1.0%, debt forgiven June 11, 2021 | - | 3,034,000 | ||||||
| Term loan payable by GRE to International Bank of Commerce, interest rate of 5.5%, monthly principal and interest payment of $27,688, due April 30, 2023 | 1,995,429 | 2,049,941 | ||||||
| Term loan payable to Great Western Bank, interest rate of 3.7%, monthly principal and interest payments of $27,593, due March 19, 2025, secured by certain equipment | 1,108,928 | 1,180,470 | ||||||
| Term loan payable to Great Western Bank, interest rate of 3.5%, monthly principal and interest payments of $5,997, due August 10, 2028, secured by certain real estate | 837,000 | - | ||||||
| Note payable to Robert Rosene, 7.5% interest, due January 15, 2023 | 3,476,874 | 3,536,112 | ||||||
| Other | 138,950 | 147,914 | ||||||
| Total long-term debt | 12,360,936 | 16,238,368 | ||||||
| Debt issuance costs, net of amortization | (34,187 | ) | (30,726 | ) | ||||
| Total debt, net of debt issuance costs | 12,326,749 | 16,207,642 | ||||||
| Less: Current portion of long-term debt | (3,096,943 | ) | (3,236,113 | ) | ||||
| Long-term debt, net of current portion | $ | 9,229,806 | $ | 12,971,529 | ||||
| 7 |
The prime rate of interest as of August 31, 2021 was 3.25%.
Debt Issuance Costs consists 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 $1,291 and $1,290 for the three months ended August 31, 2021 and 2020, respectively.
Loan Agreement between Greystone and IBC
The Loan Agreement (“IBC Loan Agreement”), dated January 31, 2014 as amended, among Greystone and GSM (the “Borrowers”) and International Bank of Commerce (“IBC”) provides for certain term loans and a revolver loan.
The IBC term loans make 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. Currently, the aggregate payments for the IBC term loans are approximately $251,000 per month.
The IBC Loan Agreement, as amended, provides a revolving loan in an aggregate principal amount of up to $4,000,000 (the “Revolving Loan”). The amount which can be borrowed from time to time is dependent upon the amount of the borrowing base not to exceed $4,000,000. The Revolving Loan bears interest at the greater of the prime rate of interest plus 0.5%, or 4.50% and matures January 31, 2023. The Borrowers are required to pay all interest accrued on the outstanding principal balance of the Revolving Loan on a monthly basis. Any principal on the Revolving Loan that is prepaid by the Borrowers does not reduce the original amount available to the Borrowers. Greystone’s available revolving loan borrowing capacity was $4,000,000 as of August 31, 2021. There were no outstanding advances on the revolver at August 31, 2021 or May 31, 2021.
| 8 |
The IBC Loan Agreement includes customary events of default, including events of default relating to non-payment of principal and other amounts owing under the IBC 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 Loan Agreement or the related loan documents. Among other things, a default under the IBC Loan Agreement would permit IBC to cease lending funds under the IBC Loan Agreement and require immediate repayment of any outstanding notes with interest and any unpaid accrued fees.
The IBC Loan Agreement is secured by a lien on substantially all assets of the Borrowers. In addition, the IBC Loan Agreement is secured by a mortgage granted by GRE on the real property owned by GRE in Bettendorf, Iowa (the “Mortgage”). GRE is owned by Warren F. Kruger, Greystone’s President and CEO, and Robert B. Rosene, Jr., a director of Greystone. Messrs. Kruger and Rosene have provided a combined limited guaranty of the Borrowers’ obligations under the IBC Loan Agreement, with such guaranty being limited to a combined amount of $6,500,000 (the “Guaranty”) subsequently amended and restated as of January 7, 2016, reducing the maximum aggregate guaranty limit to $3,500,000 if Greystone maintained a Debt Coverage Ratio of at least 1.35:1.00 for a period of six consecutive quarters. Greystone has maintained a ratio of at least 1.35:1.00 for the specified time and has notified IBC accordingly. The Mortgage and the Guaranty also secure or guaranty, as applicable, the obligations of GRE under the Loan Agreement between GRE and IBC dated January 31, 2014 as discussed herein.
Loan Agreement between GRE and IBC
On January 31, 2014, GRE and IBC entered into a Loan Agreement, as amended, providing for a mortgage loan to GRE of $3,412,500. The loan provides for a 5.5% interest rate and a maturity of April 30, 2023 and is secured by a mortgage on the two buildings in Bettendorf, Iowa which are leased to Greystone.
Loan Agreement with Great Western Bank
On August 23, 2021, Greystone entered into a loan agreement with Great Western Bank (“Western Loan Agreement”) to include prior commercial loans and subsequent loans. GSM is a named guarantor under the Western Loan Agreement.
The Western Loan Agreement includes customary events of default, including events of default relating to non-payment of principal and other amounts owing under the Western Loan Agreement from time to time, inaccuracy of representations, violation of covenants, defaults under other agreements, bankruptcy and similar events, certain material adverse changes relating to a Borrower, certain judgments or awards against a Borrower, or guarantor’s ability to perform under the Western Loan Agreement. Among other things, a default under the Western Loan Agreement would permit Western to cease lending funds under the Western Loan Agreement and require immediate repayment of any outstanding notes with interest and any unpaid accrued fees.
| 9 |
The Western Loan Agreement is secured by a mortgage on one of Greystone’s warehouses.
Note Payable between Greystone and Robert B. Rosene, Jr.
Effective December 15, 2005, Greystone entered into an agreement with Robert B. Rosene, Jr., a member of Greystone’s board of directors, to convert $2,066,000 of advances into an unsecured note payable at 7.5% interest.
Effective June 1, 2016, the note payable with Mr. Rosene was restated (the “Restated Note”) to aggregate the accrued interest with the outstanding principal resulting in a combined note payable in the principal amount of $4,541,690 with an interest rate of 7.5% and a maturity of January 15, 2019, subsequently amended to January 15, 2023. The Restated Note requires the payment of accrued interest to Mr. Rosene. In addition, the Restated Note allows Greystone to make additional payments, at Greystone’s discretion, up to an amount allowed by the IBC Loan Agreement.
Maturities
Maturities of Greystone’s long-term debt for the five years subsequent to August 31, 2021 are $3,096,943, $7,363,936, $982,581, $262,960 and $49,537 with $604,979 due thereafter.
Note 7. Leases
Financing Leases
Financing leases as of August 31, 2021 and May 31, 2021:
Schedule of Financing Lease
|
August
31,
2021 |
May
31,
2021 |
|||||||
| Non-cancellable financing leases | $ | 3,204,803 | $ | 3,594,007 | ||||
| Less: Current portion | (1,683,046 | ) | (1,745,535 | ) | ||||
| Non-cancellable financing leases, net of current portion | $ | 1,521,757 | $ | 1,848,472 | ||||
Greystone and an unrelated private company entered into three lease agreements for certain production equipment with a total cost of approximately $6.9 million which were effective February 24, 2018, August 2, 2018 and December 21, 2018, respectively, with five-year terms and a capitalized interest rate of 7.4%. Each of the lease agreements include a bargain purchase option to acquire the production equipment at the end of the lease term. The leased equipment is principally used to produce pallets for the private company. Lease payments are made as a credit on the sales invoice at the rate of $3.32 for each pallet produced and shipped from the respective leased equipment. The estimated aggregate monthly rental payments are approximately $155,000. The rent payments can vary each month depending on the quantity of pallets produced from each machine. The lease agreements provide for minimum monthly lease rental payments based upon the total pallets sold over a specified amount not to exceed the monthly productive capacity of the leased machines.
| 10 |
Effective December 28, 2018, Yorktown purchased certain production equipment from Greystone at net book value of $968,168 and entered into a lease agreement with Greystone for the equipment with a monthly rent of $27,915 for the initial thirty-six months and $7,695 for the following twelve months and maturing December 27, 2022. The lease agreement has a $10,000 purchase option at the end of the lease.
The production equipment under the non-cancelable financing leases has a gross carrying amount of $8,473,357 as of August 31, 2021. Amortization of the carrying amount of $252,967 and $288,414 was included in depreciation expense for the three months ended August 31, 2021 and 2020, respectively.
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 income. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.
Greystone has three non-cancellable operating leases for (i) equipment with a fifty-two month term and a forty-eight month term and a discount rate of 5.40% and (ii) office space on a sixty month term and a discount rate of 5.0%. The leases are single term with constant monthly rental rates.
Lease Summary Information
For the periods ending August 31, 2021 and 2020:
Summary of Lease Activity
| 2021 | 2020 | |||||||
| Lease Expense | ||||||||
| Financing lease expense - | ||||||||
| Amortization of right-of-use assets | $ | 252,967 | $ | 288,414 | ||||
| Interest on lease liabilities | 44,966 | 86,558 | ||||||
| Operating lease expense | 20,470 | 20,470 | ||||||
| Short-term lease expense | 364,285 | 346,566 | ||||||
| Total | $ | 682,688 | $ | 742,008 | ||||
| Other Information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities for finance leases - | ||||||||
| Operating cash flows | $ | 44,966 | $ | 86,558 | ||||
| Financing cash flows | $ | 389,204 | $ | 467,970 | ||||
| Cash paid for amounts included in the measurement of lease liabilities for operating leases - | ||||||||
| Operating cash flows | $ | 20,470 | $ | 20,470 | ||||
| Weighted-average remaining lease term (in years) - | ||||||||
| Financing leases | 2.0 | 3.2 | ||||||
| Operating leases | 2.0 | 2.9 | ||||||
| Weighted-average discount rate - | ||||||||
| Financing leases | 7.4 | % | 7.4 | % | ||||
| Operating leases | 5.3 | % | 5.2 | % | ||||
| 11 |
Future minimum lease payments under non-cancelable leases as of August 31, 2021, are approximately:
Schedule of Future Minimum Lease Payments
|
Financing Leases |
Operating Leases |
|||||||
| Twelve months ended August 31, 2022 | $ | 1,861,477 | $ | 49,881 | ||||
| Twelve months ended August 31, 2023 | 1,372,589 | 33,138 | ||||||
| Twelve months ended August 31, 2024 | 203,813 | 14,024 | ||||||
| Twelve months ended August 31, 2025 | 7,947 | - | ||||||
| Total future minimum lease payments | 3,445,826 | 97,043 | ||||||
| Present value discount | 241,023 | 6,158 | ||||||
| Present value of minimum lease payments | $ | 3,204,803 | $ | 90,885 | ||||
Note 8. 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 which totaled $1,184,725 and $2,459,160 during the three months ended August 31, 2021 and 2020, respectively. Customer advances received during the three months ended August 31, 2021 and 2020 totaled $60,500 and $-0-, respectively. The unrecognized balance of deferred revenue as of August 31, 2021 and May 31, 2021, was $5,306,382 and $6,430,607, respectively.
Note 9. 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 and Mexico which totaled approximately $184,000 and $131,000 during the three months ended August 31, 2021 and 2020, respectively.
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 three months ended August 31, 2021 and 2020, respectively, were as follows:
Schedule of Sale of Revenues for Customer Categories
| Category | 2021 | 2020 | ||||||
| End user customers | 71 | % | 87 | % | ||||
| Distributors | 29 | % | 13 | % | ||||
| 12 |
Note 10. 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 balance sheets approximate fair value.
Note 11. Concentrations, Risks and Uncertainties
Greystone derived approximately 71% and 87% of its total sales from three customers and four customers during the three months ended August 31, 2021 and 2020, respectively. The loss of a material amount of business from one or more of these customers could have a material adverse effect on Greystone.
Greystone purchases damaged pallets from its customers at a price based on the value of the raw material content in the pallet. A majority of these purchases, totaling $158,365 and $301,421 during the three months ended August 31, 2021 and 2020, respectively, is from one of its major customers.
Robert B. Rosene, Jr., a Greystone director, has provided financing and guarantees on Greystone’s bank debt. As of August 31, 2021, Greystone is indebted to Mr. Rosene in the amount of $3,476,874 for a note payable due January 15, 2023. There is no assurance that Mr. Rosene will renew the note as of the maturity date.
COVID-19 Risks. The impact of COVID-19 and the related Delta variant has created much uncertainty in the marketplace. To date, the demand for Greystone’s products has not been affected as Greystone’s pallets are generally used logistically by essential entities. The major issue that Greystone has incurred is maintaining adequate work force to meet demand for pallets. The virus has impacted the overall workforce in our operating area as well as Greystone’s workforce due to employees electing to stay at home for protection from COVID-19 and reductions of recruitment of new employees. Management is unable to predict the stability of its workforce due to the uncertainty created as long as the virus continues to stay active.
| 13 |
Legal Proceeding
On February 1, 2021, iGPS Logistics, LLC (“iGPS”), filed a Demand for Arbitration (the “Demand”) with the International Centre for Dispute Resolution of the American Arbitration Association (the “AAA”) against Greystone Manufacturing, LLC (“GSM”). iGPS alleges breaches by GSM under that certain manufacturing supply agreement dated as of December 16, 2015, by and between iGPS and GSM (the “MSA”) and the implied covenant of good faith and fair dealing, including, among other things, with respect to (1) improperly terminating the MSA, (2) improperly seeking to revoke its warranty of workmanship and materials, (3) failing to utilize a lower-priced and higher-quality PiRod, (4) making knowing false representations about compliance with UL certification requirements, and (5) refusing to permit an audit. iGPS seeks, among other things, (a) a declaratory judgment that iGPS is entitled to an audit of GSM’s material costs, (b) damages in excess of $500,000, including pre-judgment and post-judgment interest, (c) indemnification pursuant to MSA, (d) a preliminary and permanent injunction preventing GSM from taking any actions that are contrary to the exclusivity and non-competition provisions of the MSA, and (e) fees, costs, and expenses of bringing the arbitration.
GSM denies the allegations set forth in the Demand and intends to vigorously defend itself. On March 1, 2021, GSM filed an Answer to the Demand with the AAA (the “Answer”). In its Answer, GSM states, among other things, (i) within the first year of the MSA, and repeatedly thereafter, iGPS made substantial and material reconfigurations of the original mold design, routinely demanding that GSM alone bear virtually all the increasing costs and provide warranties for the experimental redesigns iGPS demanded, (ii) the iGPS-GSM relationship changed dramatically in 2019 after a leadership change, (iii) the new iGPS leadership began disclaiming the understandings reached between iGPS and GSM in the earlier years, (iv) although GSM terminated the MSA on March 17, 2020, it has not missed a run on any of the pallets sold to iGPS over a year after termination, and (v) GSM has not breached the exclusivity and non-competition provisions of the MSA. GSM seeks, among other things, (A) certain declaratory awards, (B) damages, including pre-judgment and post-judgment interest, and (C) attorney’s fees, costs, and expenses associated with the arbitration.
Greystone continues to manufacture and sell plastic pallets to iGPS.
Greystone is subject to litigation, claims and other commitments and contingencies arising in the ordinary course of business. Although the asserted value of these matters may be significant, the company currently does not expect that the ultimate resolution of any open matters will have a material adverse effect on its consolidated financial position or results of operations.
Note 12. Commitments
As of August 31, 2021, Greystone had commitments totaling $499,349 toward the purchase of production equipment.
| 14 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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”). Greystone also consolidates the variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). All material intercompany accounts and transactions have been eliminated.
References to fiscal year 2022 refer to the three months ended August 31, 2021. References to fiscal year 2021 refer to the three months ended August 31, 2020.
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 264 and 284 regular employees and 19 and 60 temporary employees as of August 31, 2021 and 2020, respectively. Full-time equivalent is a measure based on time worked.
Three Months Ended August 31, 2021 Compared to Three Months Ended August 31, 2020
Sales
Sales for fiscal year 2022 were $14,774,399 compared to $17,568,176 in fiscal year 2021 for a decrease of $2,793,777. This decline in sales was principally due to a decline of approximately 30% in pallet production during the quarter ended August 31, 2021 compared to the prior year. Greystone has been unable to operate on a full-time basis because of shortage of production personnel and downtime on certain pallet production machines. The shortage of personnel appears to be a problem for companies as recovery from the COVID-19 and Delta variant pandemic and availability of job seekers has not achieved expectations.
Greystone is working with its customers to effect price increases, where possible, to mitigate the impact of material and labor price increases as discussed below under Cost of Sales. Based on new orders and relationships, Greystone believes that the demand for its pallets is increasing which is primarily expected to have a positive impact on operations during the last half of the current fiscal year as well as future years.
| 15 |
Greystone had three (four in fiscal year 2021) larger customers which accounted for approximately 71% and 87% of sales in fiscal years 2022 and 2021, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to grow sales through the addition of new customers developed through Greystone’s marketing efforts.
Cost of Sales
Cost of sales in fiscal year 2022 was $13,312,305, or 90% of sales, compared to $14,609,617, or 83% of sales, in fiscal year 2021. The increase in cost of sales to sales in fiscal year 2021 was the result of several factors. Because of the disruption in the supply chain from the COVID-19 and Delta variant pandemic, prices of raw materials have increased significantly. Also as discussed above, a shortage of personnel and machine downtime resulted in an increase in cost per pallet due to Greystone’s inflexible cost structure.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $1,218,604, or 8.2% of sales, in fiscal year 2022 compared to $1,140,238, or 6.5% of sales, in fiscal year 2021 for an increase of $78,366, or 6.8%, over fiscal year 2021. The increase in fiscal year 2022 over fiscal year 2021 was principally attributable to legal fees.
Other Income (Expenses)
Other income was $3,095,322 in fiscal year 2022 compared to $6,510 in fiscal year 2021. During fiscal year 2022, other income includes the forgiveness of the PPP loan and accrued interest in the amount of $3,068,497 and a gain of $22,336 from the sale of equipment. Income from the sale of scrap material totaled $4,489 and $6,510 in fiscal years 2022 and 2021, respectively.
Interest expense was $223,354 in fiscal year 2022 compared to $361,673 in fiscal year 2021 for a decrease of $138,319. Greystone’s liability for long-term debt, financing leases and operating leases decreased approximately $10,000,000 as of August 31, 2021 compared to August 31, 2020.
Provision for Income Taxes
The benefit from (provision for) income taxes was $7,000 and $(454,000) in fiscal years 2022 and 2021, respectively. The effective tax rate differs from federal statutory rates due principally to state income taxes, charges (income) which have no tax benefit (expense), changes in the valuation allowance, and the basis that the net income from GRE is not taxable at the corporate level because GRE is a limited liability company of which Greystone has no equity ownership.
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.
| 16 |
Net Income
Greystone recorded net income of $3,122,458 in fiscal year 2022 compared to $1,009,158 in fiscal year 2021 primarily for the reasons discussed above.
Net Income Attributable to Common Stockholders
The net income attributable to common stockholders for fiscal year 2022 was $2,970,921, or $0.10 per share, compared $860,201, or $0.03 per share, in fiscal year 2021 primarily for the reasons discussed above.
Liquidity and Capital Resources
A summary of cash flows for the three months ended August 31, 2021 is as follows:
| Cash provided by operating activities | $ | 375,643 | ||
| Cash used in investing activities | $ | (609,279 | ) | |
| Cash used in financing activities | $ | (1,265,532 | ) |
The contractual obligations of Greystone are as follows:
|
Total |
Less than 1 year |
1-3 years |
4-5 years |
Thereafter |
||||||||||||||||
| Long-term debt | $ | 12,360,936 | $ | 3,096,943 | $ | 8,346,517 | $ | 312,497 | $ | 604,979 | ||||||||||
| Financing leases | $ | 3,445,826 | $ | 1,861,477 | $ | 1,576,402 | $ | 7,947 | $ | - | ||||||||||
| Operating leases | $ | 97,043 | $ | 49,881 | $ | 47,162 | $ | - | $ | - | ||||||||||
| Commitments | $ | 499,349 | $ | 499,349 | $ | - | $ | - | $ | - | ||||||||||
Greystone had a working capital deficit of $(3,307,871) as of August 31, 2021. To provide for the funding to meet Greystone’s operating activities and contractual obligations as of August 31, 2021, Greystone will have to continue 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 amount of the Greystone’s debt financing has resulted primarily from bank notes which are guaranteed by certain officers and directors of Greystone and from loans provided by certain 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. As such, there is no assurance that funding will be available for Greystone to continue operations.
| 17 |
Greystone has 50,000 outstanding shares of cumulative 2003 Preferred Stock with a liquidation preference of $5,000,000 and a preferred dividend rate of the prime rate of interest plus 3.25%. 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, another financing transaction or otherwise. Pursuant to the IBC Loan Agreement, as discussed in Note 6 to the consolidated financial statements, Greystone may pay dividends on its preferred stock in an amount not to exceed $500,000 per year.
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. These forward-looking statements are made in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. 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 Form 10-K for the fiscal year ended May 31, 2021, which was filed on August 20, 2021. Actual results may vary materially from the forward-looking statements. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q.
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 and Chief Financial Officer of the effectiveness of the design and operation of Greystone’s disclosure controls and procedures pursuant to the Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based on an evaluation as of May 31, 2021, Warren F. Kruger, Greystone’s Chief Executive Officer, and William W. Rahhal, Greystone’s Chief Financial Officer, identified no material weakness in Greystone’s internal control over financial reporting. As a result, Greystone’s CEO and Chief Financial Officer concluded that the design and operation of Greystone’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) were effective as of August 31, 2021.
During the three months ended August 31, 2021, there were no changes in Greystone’s internal controls over financial reporting that have materially affected, or that are reasonably likely to materially affect, Greystone’s internal control over financial reporting.
| 18 |
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
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.
Item 5. Other Information.
None.
| 19 |
Item 6. Exhibits.
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
| 31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at August 31, 2021 and May 31, 2021, (ii) the Consolidated Statements of Income for the three months ended August 31, 2021 and 2020, (iii) the Consolidated Statements of Changes in Equity for the three months ended August 31, 2021 and 2020, (iv) the Consolidated Statements of Cash Flows for the three months ended August 31, 2021 and 2020, and (v) the Notes to the Consolidated Financial Statements (submitted herewith). |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | Inline XBRL Schema |
| 101.CAL | Inline XBRL Calculation |
| 101.DEF | Inline XBRL Definition |
| 101.LAB | Inline XBRL Label |
| 101.PRE | Inline XBRL Presentation |
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 |
| 20 |
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 thereunto duly authorized.
| GREYSTONE LOGISTICS, INC. | |
| (Registrant) | |
| Date: October 14, 2021 | /s/ Warren F. Kruger |
| Warren F. Kruger, President and Chief | |
| Executive Officer (Principal Executive Officer) | |
| Date: October 14, 2021 | /s/ William W. Rahhal |
| William W. Rahhal, Chief Financial Officer | |
| (Principal Financial Officer and Principal Accounting Officer) |
| 21 |
Index to Exhibits
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
| 31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (submitted herewith). |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at August 31, 2021 and May 31, 2021, (ii) the Consolidated Statements of Income for the three months ended August 31, 2021 and 2020, (iii) the Consolidated Statements of Changes in Equity for the three months ended August 31, 2021 and 2020, (iv) the Consolidated Statements of Cash Flows for the three months ended August 31, 2021 and 2020, and (v) the Notes to the Consolidated Financial Statements (submitted herewith). |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | Inline XBRL Schema |
| 101.CAL | Inline XBRL Calculation |
| 101.DEF | Inline XBRL Definition |
| 101.LAB | Inline XBRL Label |
| 101.PRE | Inline XBRL Presentation |
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 |
| 22 |
Exhibit 31.1
CERTIFICATION
I, Warren F. Kruger, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Greystone Logistics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| October 14, 2021 | /s/ Warren F. Kruger |
| Warren F. Kruger | |
| President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, William W. Rahhal, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Greystone Logistics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| October 14, 2021 | /s/ William W. Rahhal |
| William W. Rahhal | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Greystone Logistics, Inc. (the “Company”) on Form 10-Q for the period ending August 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Warren F. Kruger, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| October 14, 2021 | /s/ Warren F. Kruger |
| Warren F. Kruger | |
| President and Chief Executive Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Greystone Logistics, Inc. (the “Company”) on Form 10-Q for the period ending August 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William W. Rahhal, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| October 14, 2021 | /s/ William W. Rahhal |
| William W. Rahhal | |
| Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.