Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Nov. 30, 2013 | Jan. 10, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'GREYSTONE LOGISTICS, INC. | ' |
Entity Central Index Key | '0001088413 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Nov-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--05-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 26,111,201 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Nov. 30, 2013 | 31-May-13 |
Current Assets: | ' | ' |
Cash | $621,997 | $366,896 |
Accounts receivable, net of allowance of $100,000 | 1,554,031 | 2,239,594 |
Inventory | 1,916,859 | 1,044,379 |
Prepaid expenses and other | 257,241 | 119,198 |
Total Current Assets | 4,350,128 | 3,770,067 |
Property, Plant and Equipment | 16,395,398 | 15,754,959 |
Less: Accumulated Depreciation | -9,313,497 | -8,710,820 |
Property, Plant and Equipment, net | 7,081,901 | 7,044,139 |
Deferred Tax Asset | 1,412,000 | 1,159,000 |
Other Assets | 62,392 | 71,371 |
Total Assets | 12,906,421 | 12,044,577 |
Current Liabilities: | ' | ' |
Current portion of long-term debt | 1,353,905 | 1,344,160 |
Accounts payable and accrued expenses | 1,672,760 | 1,643,339 |
Accounts payable and accrued expenses - related parties | 1,691,284 | 1,551,154 |
Preferred dividends payable | 1,809,905 | 1,883,959 |
Total Current Liabilities | 6,527,854 | 6,422,612 |
Long-Term Debt, net of current portion | 8,978,701 | 9,658,020 |
Deficit: | ' | ' |
Preferred stock, $0.0001 par value, $5,000,000 liquidation preference; Shares authorized: 20,750,000; Shares issued and outstanding: 50,000 | 5 | 5 |
Common stock, $0.0001 par value; Shares authorized: 5,000,000,000; Shares issued and outstanding: 26,111,201 | 2,611 | 2,611 |
Additional paid-in capital | 53,169,429 | 53,142,717 |
Accumulated deficit | -57,023,240 | -58,321,266 |
Total Greystone Stockholders' Deficit | -3,851,195 | -5,175,933 |
Non-controlling interests | 1,251,061 | 1,139,878 |
Total Deficit | -2,600,134 | -4,036,055 |
Total Liabilities and Deficit | $12,906,421 | $12,044,577 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) | Nov. 30, 2013 | 31-May-13 |
Statement of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts | $100,000 | $100,000 |
Preferred stock par value | $0.00 | $0.00 |
Liquidation preference | $5,000,000 | $5,000,000 |
Preferred stock shares authorized | 20,750,000 | 20,750,000 |
Preferred stock shares issued | 50,000 | 50,000 |
Preferred stock shares outstanding | 50,000 | 50,000 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 5,000,000,000 | 5,000,000,000 |
Common stock shares issued | 26,111,201 | 26,111,201 |
Common stock shares outstanding | 26,111,201 | 26,111,201 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | Nov. 30, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales | $4,361,490 | $5,059,118 | $10,872,407 | $12,187,984 |
Cost of Sales | 3,635,151 | 4,175,786 | 8,000,696 | 9,779,803 |
Gross Profit | 726,339 | 883,332 | 2,871,711 | 2,408,181 |
General, Selling and Administrative Expenses | 545,569 | 542,444 | 1,141,882 | 1,101,083 |
Operating Income | 180,770 | 340,888 | 1,729,829 | 1,307,098 |
Other Income (Expense): | ' | ' | ' | ' |
Other income (expense) | 3,600 | -3,500 | 3,600 | 6,500 |
Interest expense | -197,094 | -210,511 | -398,275 | -419,354 |
Total Other Expense, net | -193,494 | -214,011 | -394,675 | -412,854 |
Income before Income Taxes | -12,724 | 126,877 | 1,335,154 | 894,244 |
Benefit from Income Taxes | ' | 9,900 | 237,000 | 209,300 |
Net Income | -12,724 | 136,777 | 1,572,154 | 1,103,544 |
Income Attributable to Variable Interest Entities, net | -56,875 | -52,256 | -111,183 | -104,210 |
Preferred Dividends | -81,027 | -81,918 | -162,945 | -164,726 |
Net Income Available to Common Stockholders | ($150,626) | $2,603 | $1,298,026 | $834,608 |
Income Available to Common Stockholders: | ' | ' | ' | ' |
Per Share of Common Stock - Basic and Diluted | ($0.01) | ' | $0.05 | $0.03 |
Weighted Average Shares of Common Stock Outstanding - | ' | ' | ' | ' |
Basic | 26,111,201 | 26,111,201 | 26,111,201 | 26,111,201 |
Diluted | 26,111,201 | 27,447,565 | 27,558,600 | 27,241,970 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | |
Cash Flows from Operating Activities: | ' | ' |
Net income | $1,572,154 | $1,103,544 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 674,473 | 659,013 |
Deferred income taxes | -253,000 | -219,300 |
Stock-based compensation | 26,712 | 26,712 |
Changes in receivables | 483,064 | 152,769 |
Changes in inventory | -872,480 | -176,924 |
Changes in prepaid expenses and other | -138,043 | -123,706 |
Change in other assets | 2,454 | 4,143 |
Changes in accounts payable and accrued expenses | 169,551 | -341,191 |
Net cash provided by operating activities | 1,664,885 | 1,085,060 |
Cash Flows from Investing Activities: | ' | ' |
Purchase of property and equipment | -705,710 | -280,176 |
Cash Flows from Financing Activities: | ' | ' |
Payments on long-term debt and capitalized leases | -669,574 | -638,902 |
Payments on advances from related party | -34,500 | 0 |
Distributions by variable interest entity | 0 | -47,082 |
Net cash used in financing activities | -704,074 | -685,984 |
Net Increase in Cash | 255,101 | 118,900 |
Cash, beginning of period | 366,896 | 194,400 |
Cash, end of period | 621,997 | 313,300 |
Non-Cash Activities: | ' | ' |
Preferred dividend accrual | 162,945 | 164,726 |
Supplemental Information: | ' | ' |
Interest paid | $181,029 | $219,921 |
1_Basis_of_Financial_Statement
1. Basis of Financial Statements | 6 Months Ended |
Nov. 30, 2013 | |
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 November 30, 2013, and the results of its operations for the six-month and three-month periods ended November 30, 2013 and 2012, and its cash flows for the six-month periods ended November 30, 2013 and 2012. These consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the fiscal year ended May 31, 2013 and the notes thereto included in Greystone's Form 10-K for such period. The results of operations for the six-month and three-month periods ended November 30, 2013 and 2012 are not necessarily indicative of the results to be expected for the full fiscal year. | |
The consolidated financial statements of Greystone include its wholly-owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”), and Plastic Pallet Production, Inc. (“PPP”), and its variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). GRE owns two buildings located in Bettendorf, Iowa which are leased to GSM. | |
2_Earnings_Per_Share
2. Earnings Per Share | 6 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
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 available to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available 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. | |||||||||
Greystone excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive. Equity instruments which have been excluded for the six-month periods ended November 30, 2013 and 2012 and the three-month period ended November 30, 2012, respectively, are (1) certain options to purchase common stock totaling 350,000 shares and (2) convertible preferred stock which is convertible into 3,333,334 shares of common stock. Equity instruments which have been excluded for the three-month period ended November 30, 2013 due to the loss available to common stockholders are (1) certain options to purchase common stock totaling 2,450,000 shares and (2) convertible preferred stock which is convertible into 3,333,334 shares of common stock. | |||||||||
The following table sets forth the computation of basic and diluted common stock to calculate earnings per share for the six-month and three-month periods ended November 30, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Six-Month Periods ended November 30, 2013 and 2012: | |||||||||
Numerator - | |||||||||
Net income available to common shareholders | $ | 1,298,026 | $ | 834,608 | |||||
Denominator - | |||||||||
Weighted-average shares outstanding | |||||||||
Basic | 26,111,201 | 26,111,201 | |||||||
Incremental shares from assumed conversion of options | 1,447,399 | 1,130,769 | |||||||
Diluted Shares | 27,558,600 | 27,241,970 | |||||||
Three-Month Periods ended November 30, 2013 and 2012: | |||||||||
Numerator - | |||||||||
Net income (loss) available to common shareholders | $ | (150,626 | ) | $ | 2,603 | ||||
Denominator - | |||||||||
Weighted-average shares outstanding | |||||||||
Basic | 26,111,201 | 26,111,201 | |||||||
Incremental shares from assumed conversion of options | - | 1,336,364 | |||||||
Diluted Shares | 26,111,201 | 27,447,565 | |||||||
3_Inventory
3. Inventory | 6 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Inventory | ' | ||||||||
Inventory consists of the following: | |||||||||
November 30, | May 31, | ||||||||
2013 | 2013 | ||||||||
Raw materials | $ | 998,492 | $ | 750,819 | |||||
Finished goods | 918,367 | 293,560 | |||||||
Total inventory | $ | 1,916,859 | $ | 1,044,379 |
4_Related_Party_Receivable
4. Related Party Receivable | 6 Months Ended |
Nov. 30, 2013 | |
Related Party Receivable | ' |
Yorktown Management & Financial Services, LLC (“Yorktown”), an entity wholly owned by Warren Kruger, Greystone’s CEO and President, owns certain equipment that Greystone uses for its pallet and resin production. Prior to February 1, 2013, Greystone paid advances to Yorktown in recognition of the amounts owed pursuant to certain agreements for the purchase of raw materials on Greystone’s behalf and use of Yorktown equipment. While the agreements for the purchase of raw materials were terminated effective January 31, 2013, Greystone continues to pay Yorktown for the use of its equipment. Payments for equipment rentals totaled $715,720 for the six-month period ended November 30, 2013. In addition, Greystone continues to pay the labor and certain other costs on behalf of Yorktown’s Tulsa, Oklahoma grinding operation and invoice Yorktown for the costs on a monthly basis. | |
As of November 30, 2013, net advances due from Yorktown totaled $3,715,873 in connection with the relationship between Greystone and Yorktown described in the paragraph above. Mr. Kruger has agreed that, if necessary and if permitted under Greystone’s loan documentation, the amounts due Greystone could be offset against the amounts that Greystone owes him or Yorktown. The offset against the net advances as reflected in the consolidated balance sheet as of November 30, 2013 is the combination of (i) the accrued interest of $909,852 payable to Mr. Kruger, (ii) advances payable to Mr. Kruger of $407,681, (iii) an account payable of $794,411 for deferred compensation payable to Mr. Kruger and (iv) preferred dividends of $1,603,929 payable to Mr. Kruger. |
5_Notes_Payable
5. Notes Payable | 6 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Notes Payable | ' | ||||||||
Notes payable as of November 30, 2013 and May 31, 2013 are as follows: | |||||||||
November 30, | May 31, | ||||||||
2013 | 2013 | ||||||||
Note payable to F&M Bank & Trust Company, prime rate of interest but not less than 4.5%, due March 13, 2015, monthly principal payments of $76,561 plus interest | $ | 4,134,285 | $ | 4,593,650 | |||||
Note payable by GRE to F&M Bank & Trust Company, prime rate of interest but not less than 4.75%, due February 15, 2016, monthly installments $35,512, secured by buildings and land | 3,232,827 | 3,366,108 | |||||||
Capitalized lease payable, 5% interest | 326,953 | 381,727 | |||||||
Note payable to Robert Rosene, 7.5% interest, due January 15, 2015 | 2,066,000 | 2,066,000 | |||||||
Note payable to Warren Kruger, 7.5% interest, due January 15, 2015 | 527,716 | 527,716 | |||||||
Other note payable | 44,825 | 66,979 | |||||||
10,332,606 | 11,002,180 | ||||||||
Less: Current portion | (1,353,905 | ) | (1,344,160 | ) | |||||
Long-term debt | $ | 8,978,701 | $ | 9,658,020 | |||||
The prime rate of interest as of November 30, 2013 was 3.25%. | |||||||||
Loans with F&M Bank & Trust Company | |||||||||
Greystone, GSM, GRE, Warren F. Kruger, President and CEO, and Robert B. Rosene, Jr., a Greystone director, are parties to a loan agreement (the “F&M Agreement”) dated as of March 4, 2005, as amended, with F&M Bank & Trust Company (“F&M”). There are two loans outstanding under the F&M Agreement as follows: | |||||||||
(a) | A term loan as listed above in the amount of $4,134,285 at November 30, 2013 with GSM as the borrower and Greystone, Mr. Kruger and Mr. Rosene as guarantors. | ||||||||
(b) | A term loan with a balance of $3,356,000 at November 30, 2013, with Messrs. Kruger and Rosene as borrowers and a maturity date of March 15, 2014. The loan is collateralized with 25,000 shares of Greystone’s Series 2003 Preferred Stock owned by Mr. Kruger and 25,000 shares of Greystone’s Series 2003 Preferred Stock owned by Mr. Rosene. This term loan is the personal liability of Messrs. Kruger and Rosene and, accordingly, is not included in the Greystone financial statements. | ||||||||
All indebtedness outstanding under the F&M Agreement and the loan agreement governing the loan to GRE is cross-collateralized, which means that if an event of default occurs under the F&M Agreement, F&M could foreclose on the collateral that secures the indebtedness outstanding under the loan agreement with GRE in order to satisfy the indebtedness outstanding under the F&M Agreement, and vice versa. In addition, all of the indebtedness outstanding under the F&M Agreement and the loan agreement with GRE is cross-defaulted, which means that an event of default under the F&M Agreement is also an event of default under the loan agreement with GRE, and vice versa | |||||||||
The F&M Agreement contains certain financial covenants and restricts the payments of dividends. GSM’s note payable to F&M is secured by cash, accounts receivable, inventory and equipment. | |||||||||
As of November 30, 2013, the parties to the F&M Agreement were in compliance with the covenants under the F&M Agreement and GRE was in compliance with its covenants under the loan agreement between F&M and GRE. | |||||||||
Capitalized Lease Payable | |||||||||
Effective January 2, 2014, Greystone paid $114,641 to buy out the capitalized lease. The difference of $212,312 between the outstanding debt balance and the purchase amount will be applied against the asset’s carrying value. | |||||||||
6_Fair_Value_of_Financial_Inst
6. Fair Value of Financial Instruments | 6 Months Ended |
Nov. 30, 2013 | |
Fair Value of Financial Instruments | ' |
The following methods and assumptions are used in estimating the fair-value disclosures for financial instruments: | |
Long-Term Debt: The carrying amount of loans with floating rates of interest approximate fair value. Fixed rate loans are valued based on cash flows using estimated rates of comparable loans. The carrying amounts reported in the balance sheet approximate fair value. | |
7_Risks_and_Uncertainties
7. Risks and Uncertainties | 6 Months Ended |
Nov. 30, 2013 | |
Risks and Uncertainties | ' |
Greystone derives a substantial portion of its revenue from a national brewer. This customer accounted for approximately 58% and 74% of Greystone’s pallet sales and 56% and 65% of Greystone’s total sales for the six-month periods ended November 30, 2013 and 2012, respectively. Greystone’s recycled plastic pallets are approved for use by the customer and, at the current time, are the only plastic pallets used by the customer for shipping products. There is no assurance that Greystone will retain this customer’s business at the same level, or at all. The loss of a material amount of business from this customer could have a material adverse effect on Greystone. | |
Warren F. Kruger, President and CEO, and Robert B. Rosene, Jr., a Greystone director, have provided financing to Greystone and guarantees on Greystone’s bank debt. As of November 30, 2013, Greystone was indebted to Mr. Kruger in the amount of $527,716 for a note payable and to Mr. Rosene in the amount of $3,757,267 for a note payable and related accrued interest. Effective January 15, 2013, Messrs. Kruger and Rosene agreed to a two year extension on the debt. There is no assurance that these individuals will continue to provide extensions in the future. | |
See Note 5 for a discussion of the cross-default and cross-collateralization provisions contained in the loan agreement dated as of March 4, 2005, as amended, with F&M. |
8_Commitments
8. Commitments | 6 Months Ended |
Nov. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
8. Commitments | ' |
As of November 30, 2013, Greystone has outstanding commitments of $325,000 for the purchase of production equipment. | |
2_Earnings_Per_Share_Tables
2. Earnings Per Share (Tables) | 6 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Computation of Basic and Diluted Shares | ' | ||||||||
2013 | 2012 | ||||||||
Six-Month Periods ended November 30, 2013 and 2012: | |||||||||
Numerator - | |||||||||
Net income available to common shareholders | $ | 1,298,026 | $ | 834,608 | |||||
Denominator - | |||||||||
Weighted-average shares outstanding | |||||||||
Basic | 26,111,201 | 26,111,201 | |||||||
Incremental shares from assumed conversion of options | 1,447,399 | 1,130,769 | |||||||
Diluted Shares | 27,558,600 | 27,241,970 | |||||||
Three-Month Periods ended November 30, 2013 and 2012: | |||||||||
Numerator - | |||||||||
Net income (loss) available to common shareholders | $ | (150,626 | ) | $ | 2,603 | ||||
Denominator - | |||||||||
Weighted-average shares outstanding | |||||||||
Basic | 26,111,201 | 26,111,201 | |||||||
Incremental shares from assumed conversion of options | - | 1,336,364 | |||||||
Diluted Shares | 26,111,201 | 27,447,565 |
3_Inventory_Tables
3. Inventory (Tables) | 6 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Inventory | ' | ||||||||
November 30, | May 31, | ||||||||
2013 | 2013 | ||||||||
Raw materials | $ | 998,492 | $ | 750,819 | |||||
Finished goods | 918,367 | 293,560 | |||||||
Total inventory | $ | 1,916,859 | $ | 1,044,379 |
5_Notes_Payable_Tables
5. Notes Payable (Tables) | 6 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Notes Payable | ' | ||||||||
November 30, | May 31, | ||||||||
2013 | 2013 | ||||||||
Note payable to F&M Bank & Trust Company, prime rate of interest but not less than 4.5%, due March 13, 2015, monthly principal payments of $76,561 plus interest | $ | 4,134,285 | $ | 4,593,650 | |||||
Note payable by GRE to F&M Bank & Trust Company, prime rate of interest but not less than 4.75%, due February 15, 2016, monthly installments $35,512, secured by buildings and land | 3,232,827 | 3,366,108 | |||||||
Capitalized lease payable, 5% interest | 326,953 | 381,727 | |||||||
Note payable to Robert Rosene, 7.5% interest, due January 15, 2015 | 2,066,000 | 2,066,000 | |||||||
Note payable to Warren Kruger, 7.5% interest, due January 15, 2015 | 527,716 | 527,716 | |||||||
Other note payable | 44,825 | 66,979 | |||||||
10,332,606 | 11,002,180 | ||||||||
Less: Current portion | (1,353,905 | ) | (1,344,160 | ) | |||||
Long-term debt | $ | 8,978,701 | $ | 9,658,020 |
2_Earnings_Per_Share_Details
2. Earnings Per Share (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | Nov. 30, 2012 | |
Numerator: | ' | ' | ' | ' |
Net income available to common shareholders | ($150,626) | $2,603 | $1,298,026 | $834,608 |
Denominator: | ' | ' | ' | ' |
Weighted-average shares outstanding: Basic | 26,111,201 | 26,111,201 | 26,111,201 | 26,111,201 |
Incremental shares from assumed conversion of options | 0 | 1,336,364 | 1,447,399 | 1,130,769 |
Diluted shares | 26,111,201 | 27,447,565 | 27,558,600 | 27,241,970 |
2_Earnings_Per_Share_Details_N
2. Earnings Per Share (Details Narrative) | 3 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | |
Convertible Preferred Stock [Member] | ' | ' |
Antidilutive Securities | 3,333,334 | 3,333,334 |
Call Option [Member] | ' | ' |
Antidilutive Securities | 2,450,000 | 350,000 |
3_Inventory_Details
3. Inventory (Details) (USD $) | Nov. 30, 2013 | 31-May-13 |
Inventory Details | ' | ' |
Raw materials | $998,492 | $750,819 |
Finished goods | 918,367 | 293,560 |
Total inventory | $1,916,859 | $1,044,379 |
5_Notes_Payable_Details
5. Notes Payable (Details) (USD $) | Nov. 30, 2013 | 31-May-13 |
Notes Payable Details | ' | ' |
Note payable to F&M Bank & Trust Company, prime rate of interest but not less than 4.5%, due March 13, 2015, monthly principal payments of $76,561 plus interest | $4,134,285 | $4,593,650 |
Note payable by GRE to F&M Bank & Trust Company, prime rate of interest but not less than 4.75%, due February 15, 2016, monthly installments $35,512, secured by buildings and land | 3,232,827 | 3,366,108 |
Capitalized lease payable, 5% interest | 326,953 | 381,727 |
Note payable to Robert Rosene, 7.5% interest, due January 15, 2015 | 2,066,000 | 2,066,000 |
Note payable to Warren Kruger, 7.5% interest, due January 15, 2015 | 527,716 | 527,716 |
Other notes payable | 44,825 | 66,979 |
Total Notes Payable | 10,332,606 | 11,002,180 |
Less: Current portion | -1,353,905 | -1,344,160 |
Long-term Debt | $8,978,701 | $9,658,020 |
8_Commitments_Details_Narrativ
8. Commitments (Details Narrative) (USD $) | Nov. 30, 2013 |
Commitments Details Narrative | ' |
Commitments | $325,000 |