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

☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES~~ ~~EXCHANGE ACT OF 1934~~

For the quarterly period ended February ~~28,~~ ~~2023~~29, 2024

☐

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ ~~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 15^th15th Street, Tulsa,, Oklahoma			74120
(Address of principal executive offices)		(Zip Code)

~~(918)583-7441~~

~~(Registrant’s telephone number, including area code)~~

(918) 583-7441

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
NONE	GLGI	~~GLGI~~		NONE

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 ☐

Table of Contents

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~~issuer's classes of common stock, as of the latest practicable date: April ~~10, 2023 -~~ 15, 2024 – 28,279,701

Table of Contents

GREYSTONE LOGISTICS, INC.

FORM 10-Q

For the Period Ended February ~~28, 2023~~29, 2024

		~~Page~~
PART I. FINANCIAL INFORMATION		Page

Item 1. Financial Statements

	Consolidated Balance Sheets (Unaudited) As of February ~~28, 2023~~29, 2024 and May 31, ~~2022~~2023	1

	Consolidated Statements of Income (Unaudited) For the Nine Months Ended February ~~28,~~29(28), 2024 and 2023 ~~and 2022~~	2

	Consolidated Statements of Income (Unaudited) For the Three Months Ended February ~~28,~~29(28), 2024 and 2023 ~~and 2022~~	3

	Consolidated Statements of Changes in Equity (Unaudited) For the Nine Months Ended February ~~28,~~29(28), 2024 and 2023 ~~and 2022~~	4

	Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended February ~~28,~~29(28), 2024 and 2023 ~~and 2022~~	5

	Notes to Consolidated Financial Statements (Unaudited)	6

Item 2.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18 20

Item 4.	Controls and Procedures	18 20

PART II. OTHER INFORMATION		19 20

Item 1.	Legal Proceedings	19 20

Item 1A.	Risk Factors	19 20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19 21

Item 3.	Defaults Upon Senior Securities	19 21

Item 4.	Mine Safety Disclosures	19 21

Item 5.	Other Information	19 21

Item 6.	Exhibits	19 21

SIGNATURES		20 22

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Greystone Logistics, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	February 29, 2024			May 31, 2023
Assets
Current Assets:
Cash	$	4,319,849		$	695,951
Accounts receivable -
Trade		5,976,046			4,857,504
Related parties		125,202			56,550
Other		1,488,602			386,877
Inventory		3,002,754			4,484,106
Prepaid expenses		879,956			528,962
Total Current Assets		15,792,409			11,009,950
Property, Plant and Equipment, net		30,594,286			33,184,706
Right-of-Use Operating Lease Assets		5,132,215			5,335,714
Total Assets	$	51,518,910		$	49,530,370

Liabilities and Equity
Current Liabilities:
Current portion of long-term debt	$	2,384,993		$	2,249,570
Current portion of financing leases		15,288			31,981
Current portion of operating leases		232,481			240,346
Accounts payable and accrued liabilities		3,954,002			3,337,410
Deferred revenue		568,299			23,007
Preferred dividends payable		146,473			134,414
Total Current Liabilities		7,301,536			6,016,728
Long-Term Debt, net of current portion and debt issuance costs		11,635,540			14,919,687
Financing Leases, net of current portion		1,782			28,504
Operating Leases, net of current portion		4,942,738			5,119,688
Deferred Tax Liability		5,529,000			3,905,279
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, 28,279,701 shares issued and outstanding		2,828			2,828
Additional paid-in capital		53,533,272			53,533,272
Accumulated deficit		(31,427,791	)		(33,995,621	)
Total Equity		22,108,314			19,540,484

Total Liabilities and Equity	$	51,518,910		$	49,530,370

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Greystone Logistics, Inc. and Subsidiaries

Consolidated Statements of Income

For the Nine Months Ended February 29(28),

(Unaudited)

	2024			2023

Sales	$	46,990,716		$	44,633,542

Cost of Sales		37,942,179			38,590,544

Gross Profit		9,048,537			6,042,998

Selling, General and Administrative Expenses		3,863,975			3,918,205

Operating Income		5,184,562			2,124,793

Other Income (Expense):
Federal tax credits realized		-			3,270,424
Gain on deconsolidation of variable interest entity		-			569,997
Other income		180,004			189,914
Interest expense		(982,592	)		(821,138	)

Income before Income Taxes		4,381,974			5,333,990
Provision for Income Taxes		(1,375,000	)		(452,000	)
Net Income		3,006,974			4,881,990

Income Attributable to Non-controlling Interest		-			(49,599	)

Preferred Dividends		(439,144	)		(361,267	)

Net Income Attributable to Common Stockholders	$	2,567,830		$	4,471,124

Income Per Share of Common Stock -
Basic	$	0.09		$	0.16
Diluted	$	0.09		$	0.15

Weighted Average Shares of Common Stock Outstanding -
Basic		28,279,701			28,279,701
Diluted		28,774,701			32,105,424

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Greystone Logistics, Inc. and Subsidiaries

Consolidated Statements of Income

For the Three Months Ended February 29(28),

(Unaudited)

	2024			2023

Sales	$	13,980,009		$	13,578,269

Cost of Sales		12,113,699			11,220,791

Gross Profit		1,866,310			2,357,478

Selling, General and Administrative Expenses		1,277,001			1,606,626

Operating Income		589,309			750,852

Other Income (Expense):
Federal tax credits realized		-			3,270,424
Other income		176,851			183,596
Interest expense		(310,231	)		(313,376	)

Income before Income Taxes		455,929			3,891,496
Provision for Income Taxes		(158,000	)		(196,000	)
Net Income		297,929			3,695,496	)

Preferred Dividends		(146,473	)		(132,500	)

Income Attributable to Common Stockholders	$	151,456		$	3,562,996

Income Per Share of Common Stock -
Basic	$	0.01		$	0.13
Diluted	$	0.01		$	0.12

Weighted Average Shares of Common Stock Outstanding -
Basic		28,279,701			28,279,701
Diluted		28,775,156			32,104,265

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Greystone Logistics, Inc.

Consolidated Statements of Changes in Equity

For the Nine Months Ended February 29(28), 2024 and 2023

(Unaudited)

	Preferred Stock				Common Stock				Additional		Accumulated			Total Greystone Stockholders'			Non-controlling			Total
	Shares		Amount		Shares		Amount		Paid-in Capital		Deficit			Equity			Interest			Equity
Balances, May 31, 2022		50,000	$	5		28,279,701	$	2,828	$	53,533,272	$	(39,838,449	)	$	13,697,656		$	1,383,825		$	15,081,481
Capital contribution		-		-		-		-		-		-			-			1,669,000			1,669,000
Deconsolidation of variable interest entity		-		-		-		-		-		-			-			(3,102,424	)		(3,102,424	)
Preferred dividends ($2.19 per share)		-		-		-		-		-		(109,418	)		(109,418	)		-			(109,418	)
Net income		-		-		-		-		-		1,324,142			1,324,142			49,599			1,373,741
Balances, August 31, 2022		50,000		5		28,279,701		2,828		53,533,272		(38,623,725	)		14,912,380			-			14,912,380
Preferred dividends ($2.39 per share)		-		-		-		-		-		(119,349	)		(119,349	)		-			(119,349	)
Net loss		-		-		-		-		-		(187,247	)		(187,247	)		-			(187,247	)
Balances, November 30, 2022		50,000		5		28,279,701		2,828		53,533,272		(38,930,321	)		14,605,784			-			14,605,784
Preferred dividends ($2.65 per share)		-		-		-		-		-		(132,500	)		(132,500	)		-			(132,550	)
Net income		-		-		-		-		-		3,695,496			3,695,496			-			3,695,496
Balances, February 28, 2023		50,000	$	5		28,279,701	$	2,828	$	53,533,272	$	(35,367,325	)	$	18,168,780		$	-		$	18,168,780
Balances, May 31, 2023		50,000	$	5		28,279,701	$	2,828	$	53,533,272	$	(33,995,621	)	$	19,540,484		$	-		$	19,540,484
Preferred dividends ($2.92 per share)		-		-		-		-		-		(146,199	)		(146,199	)		-			(146,199	)
Net income		-		-		-		-		-		1,744,219			1,744,219			-			1,744,219
Balances, August 31, 2023		50,000		5		28,279,701		2,828		53,533,272		(32,397,601	)		21,138,504			-			21,138,504
Preferred dividends ($2.93 per share)		-		-		-		-		-		(146,472	)		(146,472	)		-			(146,472	)
Net income		-		-		-		-		-		964,826			964,826			-			964,826
Balances, November 30, 2023		50,000		5		28,279,701		2,828		53,533,272		(31,579,247	)		21,956,858			-			21,956,858
Preferred dividends ($2.93 per share)		-		-		-		-		-		(146,473	)		(146,473	)		-			(146,473	)
Net income		-		-		-		-		-		297,929			297,929			-			297,929
Balances, February 29, 2024		50,000	$	5		28,279,701	$	2,828	$	53,533,272	$	(31,427,791	)	$	22,108,314		$	-		$	22,108,314

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Greystone Logistics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended February 29(28),

(Unaudited)

	2024			2023
Cash Flows from Operating Activities:
Net income	$	3,006,974		$	4,881,990
Adjustments to reconcile net income to net cash provided by operating activities -
Gain on deconsolidation of variable interest entity		-			(569,997	)
Loss on disposition of assets		12,649			-
Depreciation and amortization		4,319,390			3,958,766
Deferred tax expense		1,623,721			296,000
Decrease (increase) in trade accounts receivable		(1,118,542	)		934,369
Decrease (increase) in related party receivables		(68,652	)		131,278
Increase in other receivable		(939,877	)		-
Decrease (increase) in inventory		1,481,352			(714,583	)
Increase in prepaid expenses		(350,994	)		(340,144	)
Increase (decrease) in accounts payable and accrued liabilities		761,654			(2,865,056	)
Increase (decrease) in deferred revenue		545,292			(5,306,040	)
Net cash provided by operating activities		9,272,967			406,583

Cash Flows from Investing Activities:
Purchase of property, plant and equipment		(2,040,776	)		(3,201,187	)
Deconsolidation of variable interest entity		-			(2,806	)
Net cash used in investing activities		(2,040,776	)		(3,203,993	)

Cash Flows from Financing Activities:
Proceeds from long-term debt		-			8,707,426
Payments on long-term debt and financing leases		(1,668,123	)		(5,412,171	)
Payments on related party note payable and financing lease		-			(3,348,178	)
Proceeds from revolving loan		-			1,090,648
Payments on revolving loan		(1,500,000	)		(1,790,648	)
Payments for debt issuance costs		(13,085	)		(71,154	)
Dividends paid on preferred stock		(427,085	)		(314,144	)
Capital contribution to non-controlling interest		-			1,669,000
Net cash provided by (used in) financing activities		(3,608,293	)		530,779
Net Increase (Decrease) in Cash		3,623,898			(2,266,631	)
Cash, beginning of period		695,951			3,143,257
Cash, end of period	$	4,319,849		$	876,626
Non-cash Activities:
Refinancing of certain term loans	$	-		$	2,669,892
Deconsolidation of net assets of variable interest entity	$	-		$	3,102,424
Capital expenditures in accounts payable	$	-		$	51,403
Net book value of leases terminated	$	27,903		$	-
Decrease in financing lease liabilities from termination	$	15,254		$	-
Preferred dividend accrual	$	146,473		$	132,500
Supplemental information:
Interest paid	$	990,877		$	818,222
Income taxes paid	$	-		$	510,000

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

Greystone Logistics, Inc. and Subsidiaries

~~Consolidated Balance Sheets~~

~~(Unaudited)~~

February 28, 2023 May 31, 2022
Assets
Current Assets:
Cash $ 876,626 $ 3,143,257
Accounts receivable -
Trade 5,066,680 6,001,049
Related parties 120,834 252,112
Inventory 4,827,079 4,112,496
Prepaid expenses 644,384 304,240
Total Current Assets 11,535,603 13,813,154
Property, Plant and Equipment, net 28,519,162 31,876,765
Right-of-Use Operating Lease Assets 5,402,769 55,535
Total Assets $ 45,457,534 $ 45,745,454

Liabilities and Equity
Current Liabilities:
Current portion of long-term debt $ 2,217,304 $ 4,160,403
Current portion of financing leases 41,487 1,630,895
Current portion of operating leases 243,951 33,881
Accounts payable and accrued liabilities 4,881,056 7,820,837
Deferred revenue 23,007 5,329,047
Preferred dividends payable 132,500 85,377
Total Current Liabilities 7,539,305 19,060,440
Long-Term Debt, net of current portion and debt issue costs 12,523,087 9,306,037
Financing Leases, net of current portion 27,850 532,148
Operating Leases, net of current portion 5,158,818 21,654
Deferred Tax Liability 2,039,694 1,743,694
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, 28,279,701 shares issued and outstanding 2,828 2,828
Additional paid-in capital 53,533,272 53,533,272
Accumulated deficit (35,367,325 ) (39,838,449 )
Total Greystone Stockholders’ Equity 18,168,780 13,697,656
Non-controlling interest - 1,383,825
Total Equity 18,168,780 15,081,481

Total Liabilities and Equity $ 45,457,534 $ 45,745,454

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Greystone Logistics, Inc.~~

~~Consolidated Statements of Income~~

~~For the Nine Months Ended February 28,~~

~~(Unaudited)~~

2023 2022

Sales $ 44,633,542 $ 53,069,648

Cost of Sales 38,590,544 47,914,061

Gross Profit 6,042,998 5,155,587

Selling, General and Administrative Expenses 3,918,205 4,033,483

Operating Income 2,124,793 1,122,104

Other Income (Expense):
Federal tax credits realized 3,270,424 -
Gain from forgiveness of debt - 3,068,497
Gain from deconsolidation of variable interest entity 569,997 -
Other income 189,914 35,731
Interest expense (821,138 ) (631,115 )

Income before Income Taxes 5,333,990 3,595,217
Provision for Income Taxes (452,000 ) (99,000 )
Net Income 4,881,990 3,496,217

Income Attributable to Non-controlling Interest (49,599 ) (208,600 )

Preferred Dividends (361,267 ) (243,082 )

Net Income Attributable to Common Stockholders $ 4,471,124 $ 3,044,535

Income Per Share of Common Stock -
Basic $ 0.16 $ 0.11
Diluted $ 0.15 $ 0.10

Weighted Average Shares of Common Stock Outstanding -
Basic 28,279,701 28,472,256
Diluted 32,105,424 32,301,084

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Greystone Logistics, Inc.~~

~~Consolidated Statements of Income~~

~~For the Three Months Ended February 28,~~

~~(Unaudited)~~

2023 2022

Sales $ 13,578,269 $ 22,450,682

Cost of Sales 11,220,791 19,734,155

Gross Profit 2,357,478 2,716,527

Selling, General and Administrative Expenses 1,606,626 1,680,979

Operating Income 750,852 1,035,548

Other Income (Expense):
Federal tax credits realized 3,270,424 -
Other income 183,596 3,688
Interest expense (313,376 ) (201,992 )

Income before Income Taxes 3,891,496 837,244
Provision for Income Taxes (196,000 ) (234,000 )
Net Income 3,695,496 603,244

Income Attributable to Non-controlling Interest - (70,649 )

Preferred Dividends (132,500 ) (80,137 )

Net Income Attributable to Common Stockholders $ 3,562,996 $ 452,458

Income Per Share of Common Stock -
Basic $ 0.13 $ 0.02
Diluted $ 0.12 $ 0.02

Weighted Average Shares of Common Stock Outstanding -
Basic 28,279,701 28,472,639
Diluted 32,104,265 28,967,144

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Greystone Logistics, Inc.~~

~~Consolidated Statements of Changes in Equity~~

~~For the Nine Months Ended February 28, 2023 and 2022~~

~~(Unaudited)~~

Shares Amount Shares Amount Capital Deficit Equity Interest Equity
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, 2021 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/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
Balances 50,000 5 28,561,201 2,856 53,814,744 (40,806,006 ) 13,011,599 1,253,781 14,265,380
Preferred dividends, $1.62/share - - - - - (81,027 ) (81,027 ) - (81,027 )
Net income (loss) - - - - - (297,817 ) (297,817 ) 68,332 (229,485 )
Balances, November 30, 2021 50,000 5 28,561,201 2,856 53,814,744 (41,184,850 ) 12,632,755 1,322,113 13,954,868
Balances 50,000 5 28,561,201 2,856 53,814,744 (41,184,850 ) 12,632,755 1,322,113 13,954,868
Common stock purchase - - (281,500 ) (28 ) (281,472 ) - (281,500 ) - (281,500 )
Cash distributions - - - - - - - (80,000 ) (80,000 )
Preferred dividends, $1.60/share - - - - - (80,137 ) (80,137 ) - (80,137 )
Net income - - - - - 532,595 532,595 70,649 603,244
Balances, February 28, 2022 50,000 $ 5 28,279,701 $ 2,828 $ 53,533,272 $ (40,732,392 ) $ 12,803,713 $ 1,312,762 $ 14,116,475
Balances 50,000 $ 5 28,279,701 $ 2,828 $ 53,533,272 $ (40,732,392 ) $ 12,803,713 $ 1,312,762 $ 14,116,475

Balances, May 31, 2022 50,000 $ 5 28,279,701 $ 2,828 $ 53,533,272 $ (39,838,449 ) $ 13,697,656 $ 1,383,825 $ 15,081,481
Balances 50,000 $ 5 28,279,701 $ 2,828 $ 53,533,272 $ (39,838,449 ) $ 13,697,656 $ 1,383,825 $ 15,081,481
Capital contribution - - - - - - - 1,669,000 1,669,000
Deconsolidation of variable interest entity - - - - - - - (3,102,424 ) (3,102,424 )
Preferred dividends, 2.19/share - - - - - (109,418 ) (109,418 ) - (109,418 )
Net income - - - - - 1,324,142 1,324,142 49,599 1,373,741
Balances, August 31, 2022 50,000 5 28,279,701 2,828 53,533,272 (38,623,725 ) 14,912,380 - 14,912,380
Balances 50,000 5 28,279,701 2,828 53,533,272 (38,623,725 ) 14,912,380 - 14,912,380
Preferred dividends, $2.39/share - - - - - (119,349 ) (119,349 ) - (119,349 )
Net income (loss) - - - - - (187,247 ) (187,247 ) - (187,247 )
Balances, November 30, 2022 50,000 5 28,279,701 2,828 53,533,272 (38,930,321 ) 14,605,784 - 14,605,784
Balances 50,000 5 28,279,701 2,828 53,533,272 (38,930,321 ) 14,605,784 - 14,605,784
Preferred dividends, $2.65/share - - - - - (132,500 ) (132,500 ) - (132,500 )
Preferred dividends - - - - - (132,500 ) (132,500 ) - (132,500 )
Net income - - - - - 3,695,496 3,695,496 - 3,695,496
Net income (loss) - - - - - 3,695,496 3,695,496 - 3,695,496
Balances, February 28, 2023 50,000 $ 5 28,279,701 $ 2,828 $ 53,533,272 $ (35,367,325 ) $ 18,168,780 $ - $ 18,168,780
Balance 50,000 $ 5 28,279,701 $ 2,828 $ 53,533,272 $ (35,367,325 ) $ 18,168,780 $ - $ 18,168,780

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Greystone Logistics, Inc.~~

~~Consolidated Statements of Cash Flows~~

~~For the Nine Months Ended February 28,~~

~~(Unaudited)~~

2023 2022
Cash Flows from Operating Activities:
Net income $ 4,881,990 $ 3,496,217
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization 3,958,766 4,015,292
Gain on forgiveness of debt - (3,068,497 )
Gain on deconsolidation of variable interest entity (569,997 ) -
Gain on sale of assets - (22,336 )
Deferred tax expense 296,000 99,000
Decrease (increase) in trade accounts receivable 934,369 (999,470 )
Decrease in related party receivables 131,278 41,376
Increase in inventory (714,583 ) (846,041 )
Increase in prepaid expenses (340,144 ) (577,297 )
Increase (decrease) in accounts payable and accrued liabilities (2,865,056 ) 3,258,539
Increase (decrease) in deferred revenue (5,306,040 ) 3,787,750
Net cash provided by operating activities 406,583 9,184,533

Cash Flows from Investing Activities:
Purchase of property and equipment (3,201,187 ) (4,875,530 )
Deconsolidation of variable interest entity (2,806 ) -
Proceeds from sale of assets - 50,000
Net cash used in investing activities (3,203,993 ) (4,825,530 )

Cash Flows from Financing Activities:
Proceeds from long-term debt 8,707,426 837,000
Payments on long-term debt and financing leases (5,412,171 ) (4,390,444 )
Payments on related party note payable and financing lease (3,348,178 ) (353,523 )
Proceeds from revolving loan 1,090,648 3,700,000
Payments on revolving loan (1,790,648 ) -
Proceeds from stock options exercised - 24,000
Purchase of treasury stock - (281,500 )
Payments for debt issuance costs (71,154 ) (4,752 )
Dividends paid on preferred stock (314,144 ) (162,945 )
Capital contribution on non-controlling interest 1,669,000 -
Distributions paid by non-controlling interest - (132,200 )
Net cash provided by (used in) financing activities 530,779 (764,364 )
Net Increase (Decrease) in Cash (2,266,631 ) 3,594,639
Cash, beginning of period 3,143,257 4,387,533
Cash, end of period $ 876,626 $ 7,982,172
Non-cash Activities:
Deconsolidation of variable interest entity $ 3,102,424 $ -
Refinancing of certain term loans $ 2,669,892 $ -
Capital expenditures in accounts payable $ 51,403 $ 255,062
Acquisition of equipment through financing lease $ - $ 24,441
Preferred dividend accrual $ 132,500 $ 80,137
Supplemental information:
Interest paid $ 818,222 $ 627,555
Income taxes paid $ 510,000 $ 1,015,000

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Greystone Logistics, Inc.~~

Notes to Consolidated Financial Statements

(Unaudited)

Note 1.

Basis of Financial Statements

~~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 February ~~28, 2023,~~29, 2024, the results of its operations for the nine months and three months ended February ~~28,~~29(28), 2024 and 2023 ~~and 2022~~ and its cash flows for the nine months ended February ~~28, 2023~~29(28), 2024 and ~~2022.~~2023. 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, ~~2022~~2023 and the notes thereto included in the Form 10-K for such period. The results of operations for the nine months and three months ended February ~~28,~~29(28), 2024 and 2023 ~~and 2022~~ 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”), and the variable interest entity, Greystone Real Estate, L.L.C. (“GRE”) for the period from June 1, 2022 through July 29, 2022. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

GRE owns two buildings located in Bettendorf, IA, which are occupied by Greystone. GRE is ~~wholly-owned~~wholly owned by Robert B. Rosene, Jr., a member of Greystone’s Board of ~~Directors, owns two primary manufacturing facilities which are occupied by Greystone.~~Directors. Effective July 29, 2022, GRE paid off its mortgage payable and, in conjunction with Greystone’s refinancing described in Note 6, GRE was removed from the cross-collateralization ~~in the loan agreement between Greystone and International Bank of Commerce.~~agreement. Following these transactions, Greystone was no longer determined to be the primary beneficiary of GRE. Accordingly, GRE was deconsolidated from Greystone’s consolidated financial statements as of July 29, 2022, resulting in the recognition of a gain in the amount of $~~569,997~~.$569,997. Subsequent to the deconsolidation, Greystone entered into a new lease agreement with ~~the related party~~GRE and recorded right-of-use assets and liabilities for the new ~~lease, see~~lease. See Note 7.

~~Certain balances in the consolidated balance sheet as of May 31, 2022, have been restated for comparative purposes.~~

Note 2.

Earnings Per Share

~~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.

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Greystone excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive. Instruments which have an anti-dilutive effect ~~are the preferred stock convertible into~~ ~~3,333,333~~ ~~shares of common stock~~ for the ~~three months~~periods ended February ~~28, 2022.~~29(28) are as follows:

	2024		2023
For the nine months ended February 29(28):
Preferred stock convertible into common stock		3,333,333		-
For the three months ended February 29(28):
Preferred stock convertible into common stock		3,333,333		-

The following tables set forth the computation of basic and diluted earnings per share.

~~Schedule of Basic and Diluted Earnings Per Share~~

For the nine months ended February ~~28, 2023~~29(28), 2024 and ~~2022:~~2023:

	2023		2022		2024		2023
Basic earnings per share of common stock:
Numerator -
Net income attributable to common stockholders	$	4,471,124	$	3,044,535	$	2,567,830	$	4,471,124
Denominator -
Weighted-average shares outstanding - basic		28,279,701		28,472,256		28,279,701		28,279,701
Income per share of common stock - basic	$	0.16	$	0.11	$	0.09	$	0.16

Diluted earnings per share of common stock:
Numerator -
Net income attributable to common stockholders	$	4,471,124	$	3,044,535	$	2,567,830	$	4,471,124
Add: Preferred stock dividends for assumed conversion		361,267		243,082		-		361,267
Net income allocated to common stockholders	$	4,832,391	$	3,287,617	$	2,567,830	$	4,832,391
Denominator -
Weighted-average shares outstanding – basic		28,279,701		28,472,256		28,279,701		28,279,701
Incremental shares from assumed conversion of options, warrants and preferred stock, as appropriate		3,825,723		3,828,828
Incremental shares from assumed conversion of warrants and preferred stock, as appropriate						495,000		3,825,723
Weighted average common stock outstanding – diluted		32,105,424		32,301,084		28,774,701		32,105,424
Income per share of common stock – diluted	$	0.15	$	0.10	$	0.09	$	0.15

For the three months ended February ~~28, 2023~~29(28), 2024 and ~~2022:~~

2023 2022
Basic earnings per share of common stock:
Numerator -
Net income attributable to common stockholders $ 3,562,996 $ 452,458
Denominator -
Weighted-average shares outstanding – basic 28,279,701 28,472,639
Income per share of common stock – basic $ 0.13 $ 0.02

Diluted earnings per share of common stock:
Numerator -
Net income attributable to common stockholders $ 3,562,996 $ 452,458
Add: Preferred stock dividends for assumed conversion 132,500 -
Net income attributable to common stockholders $ 3,695,496 $ 452,458
Denominator -
Weighted-average shares outstanding - basic 28,279,701 28,472,639
Incremental shares from assumed conversion of warrants or options, as appropriate 3,824,564 494,505
Weighted average common stock outstanding - diluted 32,104,265 28,967,144
Income per share of common stock – diluted $ 0.12 $ 0.02

~~Note 3.~~ ~~Inventory~~2023:

	2024		2023
Basic earnings per share of common stock:
Numerator -
Net income attributable to common stockholders	$	151,456	$	3,562,996
Denominator -
Weighted-average shares outstanding - basic		28,279,701		28,279,701
Income per share of common stock - basic	$	0.01	$	0.13

Diluted earnings per share of common stock:
Numerator -
Net income attributable to common stockholders	$	151,456	$	3,562,996
Add: Preferred stock dividends for assumed conversion		-		132,500
	$	151,456	$	3,695,496
Denominator -
Weighted-average shares outstanding - basic		28,279,701		28,279,701
Incremental shares from assumed conversion of warrants and preferred stock, as appropriate		495,455		3,824,564
Weighted average common stock outstanding – diluted		28,775,156		32,104,265
Income per share of common stock - diluted	$	0.01	$	0.12

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Note 3.

Inventory

Inventory consists of the following:

	February 29,		May 31,
	2024		2023
Raw materials	$	1,933,401	$	2,299,911
Finished goods		1,069,353		2,184,195
Total inventory	$	3,002,754	$	4,484,106

~~Schedule of Inventory~~

February 28, May 31,
2023 2022
Raw materials $ 2,109,820 $ 2,091,551
Finished goods 2,717,259 2,020,945
Total inventory $ 4,827,079 $ 4,112,496

Note 4.

Property, Plant and Equipment

~~Note 4.~~ ~~Property, Plant and Equipment~~

A summary of property, plant and equipment is as follows:

~~Schedule of Property, Plant and Equipment~~

	February 28, 2023			May 31, 2022			February 29, 2024			May 31, 2023
Production machinery and equipment	$	60,395,743		$	57,341,906		$	67,786,046		$	66,068,625
Plant buildings and land		2,364,089			7,020,543			2,164,232			2,364,089
Leasehold improvements		1,553,138			1,487,398			1,624,513			1,553,138
Furniture and fixtures		542,057			542,057			542,057			542,057
Property plant and equipment gross		64,855,027			66,391,904
								72,116,848			70,527,909

Less: Accumulated depreciation and amortization		(36,335,865	)		(34,515,139	)		(41,522,562	)		(37,343,203	)

Net Property, Plant and Equipment	$	28,519,162		$	31,876,765		$	30,594,286		$	33,184,706

Production machinery includes deposits on equipment in the amount of $~~3,494,467~~$450,454 as of February ~~28, 2023,~~29, 2024, which has not been placed into service. ~~As of May 31, 2022, plant buildings and land included two properties which are owned by GRE, a variable interest entity (“VIE”), and had an aggregate net book value of $2,548,933. As discussed in Note 1, GRE was deconsolidated effective July 29, 2022.~~

Depreciation ~~and amortization~~ expense, including amortization expense related to financing leases, for the nine months ended February ~~28,~~29(28), 2024 and 2023 was $4,296,383 and ~~2022 was $3,954,444~~ ~~and $4,011,025~~,$3,954,444, respectively.

Note 5.

Related Party Transactions/Activity

~~Note 5.~~ ~~Related Party Transactions/Activity~~

Yorktown Management & Financial Services, LLC

Yorktown Management & Financial Services, LLC (“Yorktown”), an entity wholly-owned by Warren F. Kruger, Greystone’s CEO, President, Chairman of the Board, and ~~CEO,~~a significant stockholder of Greystone, 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~~$27,500 for use of Yorktown’s grinding equipment and pelletizing equipment. Rental fees were $~~1,072,500~~$1,072,500 for the each of the nine months ended February ~~28, 2023~~29(28), 2024 and ~~2022~~2023.

~~Effective January 1, 2017,~~ Greystone ~~and Yorktown entered into a~~ ~~five-year~~ ~~lease for~~leases office space from Yorktown at a monthly rental of $~~4,000~~ ~~per month with a~~ ~~one-year extension~~ ~~at $5,200~~$5,200 per month which ~~extension was executed by Greystone. Subsequent~~increased to $6,250 per month effective July 1, 2023, with the intent of Greystone and Yorktown finalizing a new lease agreement, subject to the ~~maturity on December 31, 2022, Greystone pays rent to Yorktown at the monthly rate~~Board of $~~5,200~~ ~~on a month-to-month basis.~~Directors approval. Total rent ~~expense was $46,800~~expenses were $55,200 and $~~36,000~~$46,800 for the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ respectively.

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TriEnda Holdings, L.L.C.

TriEnda Holdings, L.L.C. (“TriEnda”) is a manufacturer of plastic pallets, protective packing and dunnage utilizing thermoform processing for which Warren F. Kruger, Greystone’s CEO, President, Chairman of the Board, and ~~CEO,~~a significant stockholder of Greystone, 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 nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ Greystone purchases from TriEnda totaled $~~431~~$7,516 and $~~4,222~~,$431, respectively and sales to TriEnda totaled $~~31,231~~$150,389 and $~~62,089~~,$31,231, respectively. As of February ~~28, 2023,~~29, 2024, TriEnda owed $~~41,284~~$65,907 to ~~Greystone.~~Greystone and Greystone owed $7,716 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 CEO, President, Chairman of the Board, and ~~CEO.~~a significant stockholder of Greystone. Greystone had sales to Green of $~~574,768~~$146,454 and $~~348,330~~$574,768 for the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ respectively. The account receivable due from Green as of February ~~28, 2023~~29, 2024 was $~~79,550~~.$59,295.

Note 6.

Long-term Debt

~~Note 6.~~ ~~Long-term Debt~~

Debt as of February ~~28, 2023~~29, 2024 and May 31, ~~2022~~2023 is as follows:

	February 29,			May 31,
	2024			2023
Term loans dated July 29, 2022, payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.50%, maturing July 29, 2027	$	12,992,827		$	14,334,736

Revolving loan payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.50%, due July 29, 2024		-			1,500,000

Term loan payable to First Interstate Bank, interest rate of 3.70%, monthly principal and interest payments of $27,593, due March 19, 2025, secured by certain equipment		350,878			585,536

Term loan payable to First Interstate Bank, interest rate of 3.50%, monthly principal and interest payments of $5,997, due August 10, 2028, secured by certain real estate		725,647			759,639

Other		43,965			73,368
Total long-term debt		14,113,317			17,253,279
Debt issuance costs, net of amortization		(92,784	)		(84,022	)
Total debt, net of debt issuance costs		14,020,533			17,169,257
Less: Current portion of long-term debt		(2,384,993	)		(2,249,570	)
Long-term debt, net of current portion	$	11,635,540		$	14,919,687

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~~Schedule of Long-Term Debt~~

February 28, May 31,
2023 2022
Term loan A dated July 29, 2022, payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.50%, maturing July 29, 2027 $ 7,281,420 $ -
Term loan A dated July 29, 2022, payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.50%, maturing July 29, 2027 $ 7,281,420 $ -

Term loan B dated July 29, 2022, payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.50%, maturing July 29, 2027 3,039,219 -

Term loans payable to International Bank of Commerce, prime rate of interest plus 0.5% with interest floors between 4.0% and 5.25%. These loans were refinanced by the IBC Restated Loan Agreement dated July 29, 2022, and rolled into Term Loan A above - 2,870,169

Revolving loan payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.5%, due July 29, 2024 3,000,000 3,700,000

Term loan payable by GRE to International Bank of Commerce, interest rate of 5.5%, paid off July 27, 2022 - 1,826,361

Term loan payable to First Interstate Bank, interest rate of 3.7%, monthly principal and interest payments of $27,593, due March 19, 2025, secured by certain equipment 662,485 888,642

Term loan payable to First Interstate Bank, interest rate of 3.5%, monthly principal and interest payments of $5,997, due August 10, 2028, secured by certain real estate 770,840 803,941

Note payable to Robert Rosene, 7.5% interest, paid off August 3, 2022 - 3,295,704

Other 83,010 111,374
Total long-term debt 14,836,974 13,496,191
Debt issuance costs, net of amortization (96,583 ) (29,751 )
Total debt, net of debt issuance costs 14,740,391 13,466,440
Less: Current portion of long-term debt (2,217,304 ) (4,160,403 )
Long-term debt, net of current portion $ 12,523,087 $ 9,306,037

The prime rate of interest as of February ~~28, 2023,~~29, 2024 was ~~7.75~~%8.50%. ~~Subsequent to February 28, 2023, the prime rate of interest was increased to~~ ~~8.00% on March 23, 2023.~~

Debt issuance costs ~~consists~~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 $~~4,322~~$4,323 and $~~4,267~~$4,322 for the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ respectively.

Restated and Amended Loan Agreement between Greystone and IBC

On July 29, 2022, Greystone and GSM ~~(collectively~~(each a “Borrower” and together the “Borrowers”) ~~and IBC~~ entered into an Amended and Restated Loan Agreement (“IBC Restated Loan Agreement”) with International Bank of Commerce (“IBC”) that ~~provides~~provided for the consolidation of certain term loans and a renewed 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,~~As of February 29, 2024, the aggregate payments for the IBC term loans are approximately $~~232,000~~$254,000 per month.

The IBC Restated Loan Agreement, ~~provides~~dated July 29, 2022, as amended, provided for IBC to make certain term loans to Greystone, ~~(i) a term loan in the amount of $7,854,708, Term Loan A,~~ to consolidate all existing term loans in the aggregate amount of $~~2,669,892~~ ~~with Lender, extend credit~~approximately $2,700,000 and additional funding in the approximate amount of $~~3,271,987~~ ~~to pay off a note payable to Robert B. Rosene, Jr. and extend additional credit to fund~~$13,200,000 for the purchase ~~in the amount~~ of $~~1,912,829~~ ~~of the~~ equipment ~~subject to the iGPS Logistics, LLC, leases~~ and ~~(ii) an advancing term loan facility, Term Loan B, whereby Greystone may obtain advances up to the aggregate amount of $7,000,000~~ ~~(items i and ii referred to as “Term Loans”) (iii) a~~ renewal of the revolving loan with an increase of $~~2,000,000~~$2,000,000 to an aggregate principal amount of $~~6,000,000~~$6,000,000 (the “Revolving Loan”), subject to borrowing base limitations. As of February ~~28, 2023,~~29, 2024, Greystone’s available revolving loan borrowing capacity was approximately $~~3,000,000. In addition, there is approximately $3,477,000~~ ~~available to Greystone under the advancing Term Loan B for the purchase of equipment.~~$5,770,000.

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 $500,000 in any fiscal year. Among other things, a default under the IBC Restated Loan Agreement would permit IBC to cease lending funds under the IBC Restated Loan Agreement and require immediate repayment of any outstanding notes with interest and any unpaid accrued fees.

The IBC Restated Loan Agreement is secured by a lien on substantially all assets of the Borrowers. Warren F. Kruger, the Company’s President, CEO and ~~CEO,~~Chairman of the Board and a significant stockholder of Greystone, and Robert B. Rosene, Jr., a member of the Company’s Board of Directors, have provided limited guaranties of the Borrowers’ obligations under the IBC Restated Loan Agreement. Mr. Kruger’s guarantee is limited to ~~32.4~~%32.4% of all debt obligations to IBC. Mr. Rosene’s limited guaranty is the lesser of (i) $~~3,500,000~~$3,500,000 less all amounts paid on the principal amount of the loans after the date of the agreement excluding payments on the revolver and (ii) the amount owed to IBC of the loans outstanding from time to time including accrued interest and fees.

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Loan Agreement with First Interstate Bank, formerly Great Western Bank

On August 23, 2021, Greystone entered into a loan agreement with First Interstate Bank (“FIB Loan Agreement”) to include prior commercial loans and subsequent loans. GSM is a named guarantor under the FIB Loan Agreement.

The FIB Loan Agreement includes customary ~~events~~representations and warranties and affirmative and negative covenants which include (i) requiring the Borrowers to maintain a debt service coverage ratio of ~~default, including events~~1:25 to 1:00 as of ~~default relating~~the end of each fiscal year end and debt to ~~non-payment~~tangible net worth ratio of ~~principal and other amounts owing under~~4:00 to 1:00 as of the end of each fiscal year end with a decrease of 0.50 in the ratio each year thereafter until reaching a minimum ratio of 3:00 to 1:00. In addition, the FIB Loan Agreement ~~from time to time, inaccuracy~~provides that Greystone shall not, without prior consent of ~~representations, violation of covenants, defaults under other agreements, bankruptcy and similar events, certain material adverse changes relating to a Borrower, certain judgments~~the bank, incur or ~~awards against a Borrower,~~assume additional indebtedness or guarantor’s ability to perform under the FIB Loan Agreement. Among other things, a default under the FIB Loan Agreement would permit FIB to cease lending funds under the FIB Loan Agreement and require immediate repayment of any outstanding notes with interest and any unpaid accrued fees.capital leases.

The FIB Loan Agreement is secured by a mortgage on one of Greystone’s warehouses.

Maturities

Maturities of Greystone’s long-term debt for the five years subsequent to February ~~28, 2023,~~29, 2024, are $~~2,217,304, $5,387,090, $2,228,841, $1,215,659~~$2,384,993, $2,242,998, $2,404,975, $6,552,966 and $~~3,260,851~~ ~~with $527,229~~ ~~thereafter.~~$527,385.

Note 7.

Leases

~~Note 7.~~ ~~Leases~~

Financing Leases

Financing leases as of February ~~28, 2023~~29, 2024 and May 31, ~~2022:~~2023:

	February 29, 2024			May 31, 2023
Non-cancellable financing leases	$	17,070		$	60,485
Less: Current portion		(15,288	)		(31,981	)
Non-cancellable financing leases, net of current portion	$	1,782		$	28,504

~~Schedule of Financing Lease~~

February 28,
2023

May 31,
2022

Non-cancellable financing leases $ 69,337 $ 2,163,043
Less: Current portion (41,487 ) (1,630,895 )
Non-cancellable financing leases, net of current portion $ 27,850 $ 532,148

~~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 an effective interest rate of~~ ~~7.4~~%. Effective October 17, 2022, Greystone and the private company entered into an agreement for Greystone to pay off the leases and acquire the equipment at the unamortized principal balance of the leases or a total of $~~1,527,293~~.

~~Effective December 29, 2022, Greystone exercised its option under a lease agreement dated December 28, 2017, with Yorktown to purchase the production equipment therein for $10,000~~.

The production equipment under the remaining non-cancelable financing leases as of February ~~28, 2023, have~~29, 2024, has a gross carrying amount of $~~176,565~~.

$63,457 as of February 29, 2024. Amortization of the carrying amount of $~~189,927~~$21,470 and $~~721,923~~$189,927 was included in depreciation expense for the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ 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~~%5.40% and (ii) two buildings on a ten year lease with a five year renewal option and a discount rate of ~~6.0~~%6.00%. The leases are single-term with defined constant monthly rental rates.

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As discussed in Note 1, effective August 1, 2022, Greystone and GRE entered into a non-cancellable ten-year lease agreement with a five-year extension for which Greystone recorded a right-of-use asset and liability based on the present value of the lease payments in the amount of $~~5,516,006, using a term of one hundred eighty (180) months and a discount rate of~~ ~~6.00~~%.

Lease Summary Information

For the nine-months ended February 29(28), 2024 and 2023:

	2024			2023
Lease Expense
Financing lease expense -
Amortization of right-of-use assets	$	21,470		$	189,927
Interest on lease liabilities		1,415			30,614
Operating lease expense		454,893			335,378
Short-term lease expense		1,205,951			1,217,095
Total	$	1,683,729		$	1,773,014

Other Information
Cash paid for amounts included in the measurement of lease liabilities for finance leases -
Operating cash flows	$	1,415		$	30,614
Financing cash flows	$	11,650		$	626,329
Cash paid for amounts included in the measurement of lease liabilities for operating leases -
Operating cash flows	$	467,182		$	335,378
Weighted-average remaining lease term (in years) -
Financing leases		1.0			1.9
Operating leases		13.4			14.4
Weighted-average discount rate -
Financing leases		4.8	%		4.4	%
Operating leases		6.0	%		6.0	%

~~For the periods ending February 28, 2023 and 2022:~~

~~Summary of Lease Activity~~

2023 2022
Lease Expense
Financing lease expense -
Amortization of right-of-use assets $ 189,927 $ 721,923
Interest on lease liabilities 30,614 119,000
Operating lease expense 335,378 53,411
Short-term lease expense 1,217,095 1,101,133
Total $ 1,773,014 $ 1,995,467

Other Information
Cash paid for amounts included in the measurement of lease liabilities for finance leases -
Operating cash flows $ 30,614 $ 119,000
Financing cash flows $ 626,329 $ 1,248,371
Cash paid for amounts included in the measurement of lease liabilities for operating leases -
Operating cash flows $ 335,378 $ 53,411
Right-of-use assets obtained in exchange for lease liabilities -
Financing leases $ - $
24,441

Operating leases $
5,516,006
$ -
Weighted-average remaining lease term (in years) -
Financing leases 1.9 1.5
Operating leases 14.4 1.9
Weighted-average discount rate -
Financing leases 4.4 % 7.3 %
Operating leases 6.0 % 5.4 %

Future minimum lease payments under non-cancelable leases as of February ~~28, 2023,~~29, 2024, are approximately:

	Financing Leases		Operating Leases
Twelve months ended February 28, 2025	$	15,715	$	534,000
Twelve months ended February 28, 2026		1,798		534,000
Twelve months ended February 28, 2027		-		534,000
Twelve months ended February 29, 2028		-		549,610
Twelve months ended February 28, 2029		-		560,760
Thereafter		-		4,859,530
Total future minimum lease payments		17,513		7,571,900
Present value discount		443		2,396,681
Present value of minimum lease payments	$	17,070	$	5,175,219

~~Schedule~~

Table of ~~Future Minimum Lease Payments~~Contents

Financing
Leases

Operating
Leases

Twelve months ended February 29, 2024 $ 42,185 $ 561,947
Twelve months ended February 28, 2025 22,440 543,612
Twelve months ended February 28, 2026 7,811 534,000
Twelve months ended February 28, 2027 - 534,000
Twelve months ended February 29, 2028 - 549,610
Thereafter - 5,420,290
Total future minimum lease payments 72,436 8,143,459
Present value discount 3,099 2,740,690
Present value of minimum lease payments $ 69,337 $ 5,402,769

Note 8.

Deferred Revenue

~~Note 8.~~ ~~Deferred Revenue~~

Advances from a customer pursuant to a contract for the sale of plastic pallets is recognized as deferred revenue. Revenue ~~related to these advances~~ is recognized by Greystone as pallets are shipped to the customer which totaled $~~6,378,040~~$-0- and $~~9,772,750~~$6,378,040 during the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ respectively. Customer advances received during the nine months ended February ~~28,~~29(28), 2024 and 2023 were $545,292 and ~~2022 were $1,072,000~~ ~~and $13,560,500~~,$1,072,000, respectively. The unrecognized balance of deferred revenue as of February ~~28, 2023~~29, 2024 and May 31, ~~2022,~~2023, was $~~23,007~~$568,299 and $~~5,329,047~~,$23,007, respectively.

Note 9.

Revenue and Revenue Recognition

~~Note 9.~~ ~~Revenue and Revenue Recognition~~

Revenue is recognized at the 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. Contract liabilities associated with sales arrangements primarily relate to deferred revenue on prepaid sales of goods. Greystone generally permits returns of product due to defects; however, product returns are historically insignificant. The amount of revenue recognized reflects the consideration to which Greystone expects to be entitled to receive in exchange for its products.

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 ~~0.8~~%0.8% and ~~1.6~~%0.8% of sales during the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ 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 nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ respectively, were as follows:

Category	2024			2023
End User Customers		83	%		71	%
Distributors		17	%		29	%

~~Schedule of Sale of Revenues for Customer Categories~~

Category 2023 2022
End User Customers 71 % 74 %
Distributors 29 % 26 %

Note 10.

Fair Value of Financial Instruments

~~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 ~~approximates~~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 11.

Concentrations, Risks and Uncertainties

~~Note 11.~~ ~~Concentrations, Risks and Uncertainties~~

Greystone derived approximately 71%83% and 74%71% of its total sales from ~~three~~its major customers (which generally ranges from two to four customers) during the nine months ended February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ 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 $~~599,700~~$637,906 and $~~313,050~~ ~~in fiscal years~~$599,700 during the nine months ended February 29(28), 2024 and 2023, ~~and 2022,~~ respectively, were from one of its ~~principal~~major customers.

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.

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~~Note 12.~~ ~~Commitments~~

In February 2024, one of the Company’s storage warehouses caught fire with damage to finished goods inventory valued at $1,326,752 and the building with a net book value of $161,850. The Company recorded an insurance receivable of $1,488,602 as an estimate primarily for damage to the inventory. The insurer is currently reviewing the claim which may result in a change to the recovery. The Company anticipates that the final settlement will result in a gain primarily due to the damage to the building; however, there is insufficient information currently available to determine a reasonable estimate.

Note 12.

Commitments

As of February ~~28, 2023, Greystone~~29, 2024, the Company had commitments ~~totaling approximately $5.3~~ ~~million~~outstanding of $166,800 toward the purchase of production equipment.

~~Note 13.~~ ~~Employee Retention Credits~~

As a response to the COVID-19 outbreak, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which authorized emergency loans to businesses by establishing, and providing funding for, forgivable loans under the Paycheck Protection Program (PPP). The PPP provided loans to qualifying businesses for amounts up to 2.5 times the average monthly payroll expenses of the qualifying business.

~~In June 2021, the Company received forgiveness of its $3,034,000~~ ~~PPP loan plus accrued interest by the Small Business Administration (“SBA”). The Company recognized the forgiveness as other income for the year ended May 31, 2022.~~

The CARES Act also provided an Employee Retention Credit (“ERC”) which is a refundable tax credit against certain employment taxes equal to 50% of qualified wages paid, up to $10,000 per employee annually for wages paid. Additional relief provisions were passed by the United States government, which extended and expanded the qualified wage caps on these credits to 70% of qualified wages paid, up to $10,000 per employee per quarter, through September 30, 2021.

~~By notices dated January 9, 2023, the Department of Treasury notified Greystone of ERC credits awarded under the CARES Act in the total amount of $3,270,424~~ ~~due to Greystone for the quarters ended June 30, 2021 and September 30, 2021.~~ Due to the subjectivity of the credit, the Company elected to account for the ERC as a gain analogizing to ASC 450-30, Gain Contingencies. The Company recognized the amount as other income for the nine months ended February 28, 2023.

~~By notice dated March 27, 2023, the Department of Treasury notified Greystone of ERC credits awarded under the CARES Act in the total amount of approximately $1,641,000~~ ~~due to Greystone for the quarter ended March 31, 2021.~~ ~~Greystone will record these credits in March 2023, which is the point in which the uncertainty surrounding them is resolved and they become realizable.~~

Item 2. ~~Management’s~~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, 2023, which was filed with the Securities and Exchange Commission on August 28, 2023, 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 29, 2024, are not necessarily indicative of the results for the fiscal year ending May 31, 2024. 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~~wholly owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”). Greystone also consolidated the variable interest entity, Greystone Real Estate, L.L.C. (“GRE”) through July 29, 2022, at which time a deconsolidation of the entity occurred. All material intercompany accounts and transactions have been eliminated.

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~~References to fiscal year 2023 refer to the nine months and three months ended February 28, 2023. References to fiscal year 2022 refer to the nine months and three months ended February 28, 2022.~~Sales

~~Sales~~

~~Greystone’s~~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~~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~~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, contract sales personnel and its President and other employees.

~~Personnel~~

Personnel

Greystone had full-time-equivalents of approximately 167 and 189 ~~and 239 full-time~~full‑time employees and 5679 and 8056 temporary employees as of February ~~28,~~29(28), 2024 and 2023, ~~and 2022,~~ respectively. Full-time equivalent is a measure based on time worked.

Nine Months Ended February ~~28, 2023~~29, 2024 Compared to Nine Months Ended February 28, ~~2022~~2023

Sales

Sales for ~~fiscal year 2023~~the nine months ended February 29, 2024, were ~~$44,633,542~~$46,990,716 compared to ~~$53,069,648 in fiscal year 2022~~$44,633,542 for ~~a decrease~~the nine months ended February 28, 2023, for an increase of ~~$8,436,106,~~$2,357,174, or ~~15.9%~~5.3%. The number of pallets sold ~~in fiscal year 2023 decreased~~during the nine months ended February 29, 2024, increased by ~~about 24%~~approximately 9% from the prior period ~~primarily related to sales to two principal customers. However,~~offset by an approximate 3% decrease in the average price per pallet ~~sold in fiscal year 2023 increased by about 10%~~sold.

Greystone’s principal customers, ranging from ~~the prior period. Sales~~two to ~~these two~~four customers, ~~may vary by period and the decrease in fiscal year 2023 is not considered indicative of future sales therein.~~

~~Greystone had three customers which~~ accounted for approximately ~~71%~~83% and ~~74%~~71% of sales ~~in fiscal years~~for the nine months ended February 29(28), 2024 and 2023, ~~and 2022,~~ respectively. Greystone is not able to predict the future needs of these principal customers and will continue its efforts to ~~grow~~increase sales through the addition of new customers developed through Greystone’s marketing efforts.

Cost of Sales

Cost of sales ~~in fiscal year 2023~~for the nine months ended February 29, 2024, was $37,942,179, or 81% of sales, compared to $38,590,544, or 86% of sales, ~~compared to $47,914,061, or 90% of sales, in fiscal year 2022.~~for the nine months ended February 28, 2023. The decrease in the ratio of cost of sales to sales ~~in fiscal year 2023~~for the nine months ended February 29, 2024, from the prior period was primarily the result of declines in the cost of raw material ~~coupled with increases~~and an improvement in the ~~average price per pallet sold. Management continues to strive for additional reductions in the cost to produce pallets~~production overhead burden due to anticipated savings from scheduled increases in the capacity for internally refining unprocessed recycled plastic. While production decreases during fiscal year 2023 adversely affected the cost to produce pallets because of Greystone’s inflexible fixed costs, management believes that increases in pallet production will assist in further decreasesan increase in production ~~costs.~~of approximately 20% over the prior period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were ~~$3,918,205 in fiscal year 2023~~$3,863,975 for the nine months ended February 29, 2024, compared to ~~$4,033,483 in fiscal year 2022~~$3,918,205 for the nine months ended February 28, 2023, for a decrease of ~~$115,278. Legal fees decreased by approximately $501,000 from fiscal year 2022 as a result of settlement of an arbitration dispute. However, the decrease~~$54,230. The change in ~~legal~~selling, general and administrative expenses was ~~somewhat offset by increases in personnel costs during fiscal year 2023.~~nominal for the two periods.

Other Income (Expenses)

During nine months ended February 28, 2023, the Company realized:

~~During fiscal year 2023, Greystone received~~
●
Federal tax credits realized in the amount of $3,270,424 from the Department of Treasury for claims filed pursuant to the Employee Retention Credits (“ERC”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

Table of Treasury for claims filed pursuant to the Employee Retention Credits (“ERC”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Also in fiscal year 2023, Greystone recognized a gain of $569,997 upon the deconsolidation GRE, a variable interest entity GRE.Contents

~~During fiscal year 2022, a gain was recognized on the forgiveness of debt plus accrued interest in the amount of $3,068,497 from the Paycheck Protection Program loan under the CARES Act.~~
●
Gain from deconsolidation of variable interest entity in the amount of $569,997 upon the deconsolidation GRE, a variable interest entity.

Other income ~~in fiscal year~~for the nine months ended February 29(28), 2024 and 2023, was $180,004 and $189,914, respectively. The other income for the nine months ended February 29, 2024, consisted primarily of ~~$189,914 resulted~~insurance recoveries and interest income. Other income for the nine months ended February 28, 2023, was primarily from interest ~~income related to the payment of the ERC award. Other income in fiscal year 2022 of $35,731 was primarily from gain on sale of equipment and scrap sales.~~income.

Interest expense was $982,592 for the nine months ended February 29, 2024, compared to $821,138 in ~~fiscal year 2023 compared to $631,115 in fiscal year 2022~~the prior period for an increase of ~~$190,023. Increases in the~~$161,454. The average U.S. prime rate of interest for the nine months ended February 29, 2024, was 8.50% compared the ~~primary cause of~~6.14% for the ~~increase.~~prior period.

Provision for Income Taxes

The provision for income taxes was $1,375,000 and $452,000 for the nine months ended February 29(28), 2024 and ~~$99,000 in fiscal years~~ 2023, ~~and 2022,~~ respectively. The effective tax rate differs from federal statutory rates principally due to state income taxes, charges or income which have no tax benefit or expense, changes in the valuation allowance, and the basis that 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.

Net Income

Greystone recorded net income of ~~$4,881,990 in fiscal year 2023~~$3,006,974 for the nine months ended February 29, 2024, compared to ~~$3,496,217 in fiscal year 2022~~$4,881,990 for the nine months ended February 28, 2023, primarily for the reasons discussed above.

Net Income Attributable to Common Stockholders

The net income attributable to common stockholders (net income less preferred dividends and GRE’s net income) for ~~fiscal year 2023~~the nine months ended February 29, 2024, was $2,567,830, or $0.09 per share, compared $4,471,124, or $0.16 per share, ~~compared $3,044,535, or $0.11 per share, in fiscal year 2022~~for the nine months ended February 28, 2023, primarily for the reasons discussed above.

Three Months Ended February ~~28, 2023~~29, 2024 Compared to Three Months Ended February 28, ~~2022~~2023

Sales

Sales for ~~fiscal year 2023~~the three months ended February 29, 2024, were ~~$13,578,269~~$13,980,009 compared to ~~$22,450,682 in fiscal year 2022~~$13,578,269 for ~~a decrease~~the three months ended February 28, 2023, for an increase of ~~$8,872,413,~~$401,740, or ~~39.5%~~3.0%. The ~~number of pallets sold~~increase in ~~fiscal year 2023 decreased approximately 41% from fiscal year 2022~~sales for the nine months ended February 29, 2024, over the prior period was primarily ~~related~~due to ~~sales to two principal customers. However,~~an approximate 2% increase in the average price per pallet ~~sold in fiscal year 2023 increased by about 3%~~sold.

Greystone’s principal customers, ranging from ~~the comparable prior period. Sales~~two to ~~these two~~four customers, ~~may vary by period and the decrease in fiscal year 2023 is not considered indicative of future sales therein.~~

~~Greystone had three customers which~~ accounted for approximately ~~65%~~82% and ~~71%~~65% of sales ~~in fiscal years~~for the nine months ended February 29(28), 2024 and 2023, ~~and 2022,~~ respectively. Greystone is not able to predict the future needs of these principal customers and will continue its efforts to ~~grow~~increase sales through the addition of new customers developed through Greystone’s marketing efforts.

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Cost of Sales

Cost of sales ~~in fiscal year 2023~~for the three months ended February 29, 2024, was $12,113,699, or 87% of sales, compared to $11,220,791, or 83% of sales, ~~compared to $19,734,155, or 88% of sales,~~ in ~~fiscal year 2022.~~the prior period. The ~~decrease~~increase in the ratio of cost of sales to sales ~~in fiscal year 2023~~for the current period over the prior period was primarily the result of ~~declines~~an increase in the ~~cost of raw material coupled with increases in the average price per pallet sold. Management continues to strive for additional reductions in the cost to produce pallets~~production overhead burden due to ~~anticipated savings from scheduled increases~~a decrease in ~~the capacity for internally refining unprocessed recycled plastic.~~production of approximately 12%.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $1,277,001 for the three months ended February 2, 2024, compared to $1,606,626 in ~~fiscal year 2023 compared to $1,680,979 in fiscal year 2022~~the prior period for a decrease of ~~$74,353. Legal fees decreased by approximately $297,000~~$329,625. The decrease resulted from ~~fiscal year 2022 as a result of~~employee bonuses paid during the ~~settlement of an arbitration dispute. However, the decrease in legal expenses was somewhat offset by increases in personnel costs during fiscal year~~three months ended February 28, 2023.

Other Income (Expenses)

During ~~fiscal year~~the three months ended February 28, 2023, ~~Greystone received~~the Company realized Federal tax credits realized in the amount of $3,270,424 from the Department of Treasury for claims filed pursuant to the Employee Retention Credits (“ERC”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES ~~Act.~~Act”).

Other income ~~in fiscal year~~for the three months ended February 29(28), 2024 and 2023, was $176,851 and $183,596, respectively The other income for the three months ended February 29, 2024, consisted primarily of ~~$183,596 primarily related to~~insurance recoveries and interest income. Other income ~~received upon~~for the ~~payment of the ERC award. Oher income of $3,688 in fiscal year 2022~~three months ended February 28, 2023, was primarily from ~~scrap sales.~~interest income.

Interest expense was $310,231 for the three months ended February 29, 2024, compared to $313,376 in ~~fiscal year 2023 compared to $201,992 in fiscal year 2022~~the prior period for ~~an increase~~a decrease of ~~$111,384. Increases in the~~$3,145. The average U.S. prime rate of interest for the three months ended February 29, 2024, was 8.50% compared the ~~primary cause~~7.23% for the prior period. The amortization of long-term debt and financing leases offset by the effect of the ~~increase.~~increase in the average U.S. prime rate of interest for the comparable periods resulted in the net decrease.

Provision for Income Taxes

The provision for income taxes was $158,000 and $196,000 in the three months ended February 29(28), 2024 and ~~$234,000 in fiscal years~~ 2023, ~~and 2022,~~ respectively. The effective tax rate differs from federal statutory rates due principally to state income taxes, charges or income which have no tax benefit or 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.

Net Income

Greystone recorded net income of ~~$3,695,496 in fiscal year 2023~~$297,929 for the three months ended February 29, 2024, compared to ~~$603,244 in fiscal year 2022~~$3,695,496 for the three months ended February 28, 2023, primarily for the reasons discussed above.

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Net Income Attributable to Common Stockholders

The net income attributable to common stockholders (net income less preferred dividends and GRE’s net income) for ~~fiscal year 2023~~nine months ended February 29, 2024, was $151,456, or $0.01 per share, compared $3,562,996, or $0.13 per share, ~~compared $452,458, or $0.02 per share, in fiscal year 2022~~for the three months ended February 28, 2023, primarily for the reasons discussed above.

Liquidity and Capital Resources

A summary of cash flows for the nine months ended February ~~28, 2023,~~29, 2024, is as follows:

Cash provided by operating activities	$	406,583		$	9,272,967

Cash used in investing activities	$	(3,203,993	)	$	(2,040,776	)

Cash provided by financing activities	$	530,779		$	(3,608,293	)

The cash provided by operating activities was impacted by the utilization of approximately $5.3 million of customer deposits during the current fiscal year. The cash provided by financing operations included new term loans of approximately $8.7 million for the acquisition of equipment and approximately $1.7 in capital provided by the non-controlling interest to pay off the mortgage loan of GRE.

The contractual obligations of Greystone are as follows:

	Total		Less than 1 year		1-3 years		4-5 years		Thereafter		Total		Less than 1 year		1-3 years		4-5 years		Thereafter
Long-term debt	$	14,836,974	$	2,217,304	$	7,615,931	$	4,476,510	$	527,229	$	14,113,317	$	2,384,993	$	4,647,973	$	7,080,351	$	-
Financing lease rents	$	72,436	$	42,185	$	30,251	$	-	$	-	$	17,513	$	15,715	$	1,798	$	-	$	-
Operating lease rents	$	8,143,459	$	561,947	$	1,077,612	$	1,083,610	$	5,420,290	$	7,571,900	$	534,000	$	1,068,000	$	1,110,370	$	4,859,530
Commitments	$	5,317,935	$	5,317,935	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Greystone had a working capital of ~~$3,996,298~~$8,490,873 as of February ~~28, 2023.~~29, 2024. To provide for the funding to meet ~~Greystone’s~~Greystone's operating activities and contractual obligations as of February ~~28, 2023,~~29, 2024, 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.

By notice dated March 27, 2023, the Department of Treasury notified Greystone of Employee Retention Credits awarded under the CARES Act in the total amount of approximately $1,641,000 due to Greystone for the quarter ended March 31, 2021. Greystone anticipates the receipt of these funds during its fiscal fourth quarter 2023 and plans to use the funds to improve its working capital, reduce debt, and cover portions of our unfinanced commitments.

As of February 28, 2023, Greystone had commitments for capital expenditures of approximately $5.3 million of which approximately $3.5 million is available under the advancing term loan with IBC, see Note 6 to the consolidated financial statements.

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.

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 toof the consolidated financial statements, Greystone may pay dividends on its preferred stock in an amount not to exceed $500,000 per year.

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Off-Balance Sheet Arrangements

~~Forward Looking Statements~~

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 ~~Material Risks~~Estimates

Greystone believes that the following critical policies affect Greystone’s more significant judgments and estimates used in preparation of Greystone’s financial statements.

~~This Quarterly Report on Form 10-Q includes certain~~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 ~~may be deemed “forward-looking statements” within~~affect the ~~meaning~~reported amounts of ~~Section 27A~~assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~Securities Act~~financial statements and the reported amounts of ~~1933, as amended,~~revenues and ~~Section 21E~~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 ~~Securities Exchange Act~~goods is subject to approval by the customer, revenue is recognized upon approval by the customer unless, historically, there have been insignificant rejections of ~~1934,~~goods by the customer.

Accounts receivable

Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts. Management determines the allowance for credit losses 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 ~~amended. These forward-looking~~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 ~~made in reliance~~determined based on the ~~safe harbor protections provided under~~difference between the ~~Private Securities Litigation Reform Act~~consolidated financial statements and tax bases of ~~1995. All statements, other~~assets and liabilities and tax loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

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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 ~~statements of historical fact, that address activities, events or developments~~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. Based on this, management has determined that Greystone ~~expects, believes or anticipates~~ will or may occur in the future, including decreased costs, timing of manufacturing enhancements, 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;~~realize the full effect of the deferred tax assets and a valuation allowance of $793,337 and $1,044,361 has been recorded as of February 29, 2024 and May 31, 2023, respectively.

New Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material ~~portion of Greystone’s business is and will be dependent upon a few large customers and there is no assurance that~~effect on the accompanying unaudited consolidated financial statements. As new accounting pronouncements are issued, Greystone will ~~be able~~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 ~~retain such customers. These risks and other risks that could affect~~have a material effect on Greystone’s business are more fully described in Greystone’s Amended Form 10-K for the fiscal year ended May 31, 2022, which was filed on August 23, 2022. Actual results may vary materially from the forward-lookingunaudited consolidated financial 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~~Greystone's Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of ~~the design and operation of Greystone’s~~Greystone's disclosure controls and procedures pursuant to the ~~Securities Exchange Act~~ 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 May 31, 2022, 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,February 29, 2024, Greystone’s CEO and ~~Chief Financial Officer~~CFO 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 February ~~28, 2023.~~29, 2024.

During the ~~three~~nine months ended February ~~28, 2023,~~29, 2024, there were no changes in ~~Greystone’s~~Greystone's internal controls over financial reporting that have materially affected, or that are reasonably likely to materially affect, ~~Greystone’s~~Greystone's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

dItem 3.Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

~~None.~~

Item 6. Exhibits.

The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.

31.1*	~~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).~~2002.
31.2*
	~~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).~~2002.
32.1**
	~~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).~~2002.
32.2**
	~~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).~~2002.
101.INS*		Inline XBRL Instance Document.
10. SCH*	~~101~~	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at February 28, 2023 and May 31, 2022, (ii) the Consolidated Statements of Income for the nine months and three months ended February 28, 2023 and 2022, (iii) the Consolidated Statements of Changes in Equity for the nine months ended February 28, 2023 and 2022, (iv) the Consolidated Statements of Cash Flows for the nine months ended February 28, 2023 and 2022, and (v) the Notes to the Consolidated Financial Statements (submitted herewith). Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	~~104~~ Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	Inline XBRL Taxonomy Extension Labels Linkbase.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase.
104*	Cover Page Interactive Data File (embedded within the Inline XBRL ~~document.)~~and contained in Exhibit 101).

*	Filed herewith.

**	Furnished herewith.

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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: April ~~14, 2023~~15, 2024	/s/ Warren F. Kruger
	Warren F. Kruger, President and Chief
	Executive Officer (Principal Executive Officer)

Date: April ~~14, 2023~~15, 2024	/s/ ~~William W. Rahhal~~R. Brice Dille
	~~William W. Rahhal,~~R. Brice Dille, Interim Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

~~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 February 28, 2023 and May 31, 2022, (ii) the Consolidated Statements of Income for nine months and three months ended February 28, 2023 and 2022, (iii) the Consolidated Statements of Changes in Equity for the nine months ended February 28, 2023 and 2022, (iv) the Consolidated Statements of Cash Flows for the nine months ended February 28, 2023 and 2022, and (v) the Notes to the Consolidated Financial Statements (submitted herewith).

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

	February 28, 2023			May 31, 2022
Assets
Current Assets:
Cash	$	876,626		$	3,143,257
Accounts receivable -
Trade		5,066,680			6,001,049
Related parties		120,834			252,112
Inventory		4,827,079			4,112,496
Prepaid expenses		644,384			304,240
Total Current Assets		11,535,603			13,813,154
Property, Plant and Equipment, net		28,519,162			31,876,765
Right-of-Use Operating Lease Assets		5,402,769			55,535
Total Assets	$	45,457,534		$	45,745,454

Liabilities and Equity
Current Liabilities:
Current portion of long-term debt	$	2,217,304		$	4,160,403
Current portion of financing leases		41,487			1,630,895
Current portion of operating leases		243,951			33,881
Accounts payable and accrued liabilities		4,881,056			7,820,837
Deferred revenue		23,007			5,329,047
Preferred dividends payable		132,500			85,377
Total Current Liabilities		7,539,305			19,060,440
Long-Term Debt, net of current portion and debt issue costs		12,523,087			9,306,037
Financing Leases, net of current portion		27,850			532,148
Operating Leases, net of current portion		5,158,818			21,654
Deferred Tax Liability		2,039,694			1,743,694
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, 28,279,701 shares issued and outstanding		2,828			2,828
Additional paid-in capital		53,533,272			53,533,272
Accumulated deficit		(35,367,325	)		(39,838,449	)
Total Greystone Stockholders’ Equity		18,168,780			13,697,656
Non-controlling interest		-			1,383,825
Total Equity		18,168,780			15,081,481

Total Liabilities and Equity	$	45,457,534		$	45,745,454

	February 28,		May 31,
	2023		2022
Raw materials	$	2,109,820	$	2,091,551
Finished goods		2,717,259		2,020,945
Total inventory	$	4,827,079	$	4,112,496

	February 28, 2023			May 31, 2022
Non-cancellable financing leases	$	69,337		$	2,163,043
Less: Current portion		(41,487	)		(1,630,895	)
Non-cancellable financing leases, net of current portion	$	27,850		$	532,148

	Financing Leases		Operating Leases
Twelve months ended February 29, 2024	$	42,185	$	561,947
Twelve months ended February 28, 2025		22,440		543,612
Twelve months ended February 28, 2026		7,811		534,000
Twelve months ended February 28, 2027		-		534,000
Twelve months ended February 29, 2028		-		549,610
Thereafter		-		5,420,290
Total future minimum lease payments		72,436		8,143,459
Present value discount		3,099		2,740,690
Present value of minimum lease payments	$	69,337	$	5,402,769