GREYSTONE LOGISTICS, INC.

Previous wording

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, 2024, which was filed with the Securities and Exchange Commission on September 13, 2024, as the same may be updated from time to time. Actual results may vary materially from the forward-looking statements. The results of operations for the nine months ended February 28, 2025, are not necessarily indicative of the results for the fiscal year ending May 31, 2025. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q.

Current wording

This Quarterly Report on Form 10-Q includes certain statements that may be deemed "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, that address activities, events or developments that Greystone expects, believes or anticipates will or may occur in the future, including decreased costs, securing financing, the profitability of Greystone, potential sales of pallets or other possible business developments, are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q could be affected by any of the following factors: Greystone's prospects could be affected by changes in availability of raw materials, competition, rapid technological change and new legislation regarding environmental matters; Greystone may not be able to secure additional financing necessary to sustain and grow its operations; and a material portion of Greystone's business is and will be dependent upon a few large customers and there is no assurance that Greystone will be able to retain such customers. These risks and other risks that could affect Greystone's business are more fully described in Greystone's Annual Report on Form 10-K for the fiscal year ended May 31, 2025, which was filed with the Securities and Exchange Commission on August 29, 2025, as the same may be updated from time to time. Actual results may vary materially from the forward-looking statements. The results of operations for the three months ended August 31, 2025, are not necessarily indicative of the results for the fiscal year ending May 31, 2026. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q.

Previous wording

Greystone had full-time equivalents of approximately 181 and 167 regular employees as of February 28(29), 2025 and 2024, respectively, additionally at any point in time, the Company can have between 65-80 temporary employees. Full-time equivalent is a measure based on time worked.

Current wording

Greystone had full-time equivalents of approximately 143 and 168 regular employees and 49 and 72 temporary employees as of August 31, 2025 and 2024, respectively. Full-time equivalent is a measure based on time worked.

Previous wording

Greystone generally has a limited number of customers, generally 2 to 4, that accounted for approximately 75% and 82% of sales during the three months ended February 28(29), 2025 and 2024, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to increase sales through the addition of new customers developed through Greystone’s marketing efforts.

Current wording

Greystone’s major customers, varying from one to four, accounted for approximately 63% of total sales during the three months ended August 31, 2025 and 2024, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to increase sales through the addition of new customers developed through Greystone’s marketing efforts.

Previous wording

The cost of sales for the nine months ended February 28, 2025, was $33,890,446, or 85% of sales, compared to $37,942,179, or 81% of sales, for the nine months ended February 29, 2024. The increase in the ratio of cost of sales to sales for the nine months ended February 28, 2025, over the prior period was primarily the result of an approximate 30% decrease in production of plastic pallets. Due to Greystone’s inflexible manufacturing costs, the gross profit margin is directly affected by variations in the quantity of plastic pallets produced.

Current wording

The cost of sales for the three months ended August 31, 2025, was $10,414,230, or 97% of sales, compared to $11,557,753, or 86% of sales, for the three months ended August 31, 2024. The increase in the ratio of cost of sales to sales for the three months ended August 31, 2025, over the prior period was primarily the result of reduced production during the three months ended August 31, 2025. Due to Greystone’s inflexible manufacturing costs, the gross profit margin is directly affected by variations in the quantity of plastic pallets produced, specifically, the Company capitalized significantly less overhead costs as fewer pallets were produced.

Previous wording

Gross profit for the three months ended February 28, 2025, was $2,737,818 or 19% of sales, compared to $1,866,310 or 13% of sales, for the three months ended February 29, 2024. The principal reason for the increase in gross profit margin for the three months ended February 28, 2025, over the prior period was due to efficiencies in production as discussed above.

Current wording

Gross profit for the three months ended August 31, 2025, was $318,343, or 3%. of sales, compared to $1,902,894, or 14% of sales, for the three months ended August 31, 2024. The principal reason for decrease in gross profit margin for the three months ended August 31, 2025, over the prior period was the decline in production as discussed above.

Previous wording

Selling, general and administrative expenses were $4,548,946, or 11% of sales, for the nine months ended February 28, 2025 compared to $3,863,975, or 8% of sales, for the nine months ended February 29, 2024, representing an increase of $692,087. The increase is primarily due to bonuses paid during the nine months ended February 28, 2025.

Current wording

Selling, general and administrative expenses were $1,543,327, or 14% of sales, for the three months ended August 31, 2025 compared to $1,820,191, or 14% of sales, for the three months ended August 31, 2024, representing a decrease of $276,864. The decrease is primarily due to bonuses paid during the three months ended August 31, 2024 that did not reoccur in the three months ended August 31, 2025.

Previous wording

During the nine months ended February 28, 2025, the Company and the insurer agreed on the amount of settlements on certain casualty losses occurring in fiscal years 2024 and 2023. The payments resulted in a gain of $741,821.

Current wording

During the three months ended August 31, 2024, the Company and the insurer agreed on the amount of settlements on certain casualty losses occurring in fiscal years 2024 and 2023. The payments resulted in a gain of $741,821 recorded in the first quarter of fiscal year 2025, this did not reoccur in the first quarter of fiscal year 2026.

Previous wording

Other income, generally from interest income and the sale of scrap material, was $45,486 and $176,851 for the three months ended February 28(29), 2025 and 2024, respectively.

Current wording

Other income, generally from interest income and the sale of scrap material, was $5,119 and $19,389 for the three months ended August 31, 2025 and 2024.

Previous wording

Interest expense was $248,705 for the three months ended February 28, 2025, compared to $310,231 for the three months ended February 29, 2024, representing a decrease of $61,526. This decrease is due to the continuing payments on the principal of outstanding debt as well as a reduction in the Prime rate.

Current wording

Interest expense was $229,829 for the three months ended August 31, 2025, compared to $294,709 for the three months ended August 31, 2024, representing a decrease of $64,880. This decrease is due to the continuing payments on the principal of outstanding debt as well as reductions in the prime rate of interest which was 7.5% at August 31, 2025, compared to 8.5% at August 31, 2024.

Previous wording

The provision for income taxes was $194,020 and $158,000 for the three months ended February 28(29), 2025 and 2024, respectively. The effective tax rate differs from federal statutory rates due principally to state income taxes, charges (income) which have no tax benefit (expense), and changes in the valuation allowance.

Current wording

The benefit (provision) for income taxes was $350,672 and $(213,750) for the three months ended August 31, 2025 and 2024, respectively. The significant change in provision primarily reflects a shift from taxable income in 2024 to a pretax loss in 2025. As a result, the current year provision reflects an income tax benefit associated with the pretax loss, whereas the prior year included income tax expense related to taxable earnings. The effective tax rate differs from federal statutory rates due principally to state income taxes, charges (income) which have no tax benefit (expense), and changes in the valuation allowance.

Previous wording

Greystone recorded net income of $965,665 for the three months ended February 28, 2025, compared to $297,929 for the three months ended February 29, 2024, primarily for the reasons discussed above.

Current wording

Greystone recorded net loss of $1,099,022 for the three months ended August 31, 2025, compared to net income of $335,454 for three months ended August 31, 2024, primarily for the reasons discussed above.

Previous wording

Net Income Attributable to Common Stockholders

Current wording

The net loss attributable to common stockholders for the three months ended August 31, 2025, was $1,099,022 or $0.04 per share, compared to net income attributable to common stockholders of $187,372, or $0.01 per share, for the three months ended August 31, 2024, primarily for the reasons discussed above.

Previous wording

A summary of cash flows for the nine months ended February 28, 2025, was as follows:

Current wording

A summary of cash flows for the three months ended August 31, 2025, was as follows:

Previous wording

The contractual obligations and rents of Greystone are as follows:

Current wording

The contractual obligations and rents of Greystone as of August 31, 2025 were as follows:

Previous wording

Greystone had a working capital of $5,926,695 as of February 28, 2025. To provide for the funding to meet Greystone's operating activities and contractual obligations as of February 28, 2025, 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.

Current wording

Greystone’s principal long-term debt obligations include a $6,000,000 revolving line of credit and several term notes with various maturities. To provide for the funding to meet Greystone's operating activities and contractual obligations as of August 31, 2025, Greystone will have to produce positive operating results or explore various options including additional long-term debt and equity financing. However, there is no guarantee that Greystone will continue to create positive operating results or be able to raise sufficient capital to meet these obligations.

Previous wording

A substantial amount of Greystone’s debt financing has resulted primarily from bank notes which are guaranteed by certain officers and directors of Greystone. Greystone continues to be dependent upon its officers and directors to secure, or possibly provide, additional financing and there is no assurance that its officers and directors will continue to do so, or that they will do so on terms that are acceptable to Greystone. As such, there is no assurance that funding will be available for Greystone to continue operations.

Current wording

A substantial portion of debt financing that Greystone has received through August 31, 2025, has been provided by loans or through bank loan guarantees from the officers and directors of Greystone. Greystone continues to be dependent upon its officers and directors to provide and/or secure additional financing and there is no assurance that its officers and directors will continue to do so, or that they will do so on terms that are acceptable to Greystone.

Previous wording

Greystone has 29,000 outstanding shares of cumulative 2003 Preferred Stock with a liquidation preference of $2,900,000 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 Restated Loan Agreement, as discussed in Note 6 to the unaudited consolidated financial statements, Greystone may pay dividends on its preferred stock in an amount not to exceed $1,000,000 per year. The Company has determined that the remaining 29,000 shares of preferred stock will be fully extinguished during the fourth quarter of fiscal year 2025.

Current wording

During the third and fourth quarter of fiscal year 2025, the Company paid $5,000,000 to retire all shares of preferred stock. Prior to retiring, Greystone has 50,000 outstanding shares of cumulative 2003 preferred stock for a total of $5,000,000 with a preferred dividend rate at the prime rate of interest plus 3.25%. Greystone paid accrued dividends to its preferred stockholders during the three months ended August 31, 2025 and 2024 of $1,610 and $96,575, respectively. Preferred stock dividend payments to the holders of its preferred stock were allowed under the terms of the IBC Restated Loan Agreement as discussed herein under the caption “Loans from International Bank of Commerce” which allows for such payments not to exceed $1,000,000 per year. Greystone does not anticipate that it will make cash dividend payments to any holders of its common stock unless and until the financial position of Greystone improves through increased revenues, additional financing or otherwise. Further, pursuant to the terms and conditions of certain loan documentation with International Bank of Commerce, as discussed herein and the terms and conditions of Greystone’s 2003 preferred stock, Greystone is restricted in its ability to pay dividends to holders of its common stock.

Previous wording

A deferred tax asset is recognized for tax-deductible temporary differences and operating losses using the applicable enacted tax rate. In assessing the realizability of deferred tax assets, management considers the likelihood of whether it is more likely than not the net deferred tax asset will be realized. Based on this evaluation, management will provide a valuation allowance if it is determined more likely than not the associated asset will not be recognized. Based on this, management has determined that Greystone will be able to realize the full effect of the deferred tax assets as of February 28, 2025, and, accordingly, no valuation allowance was recorded. As of May 31, 2024, management determined that Greystone would not be able to realize the full effect of deferred taxes and a valuation allowance of $793,337 was recorded. The primary reason for no valuation allowance as of February 28, 2025, was the expiration of outstanding net operating losses during the current fiscal year ending May 31, 2025.

Current wording

A deferred tax asset is recognized for tax-deductible temporary differences and operating losses using the applicable enacted tax rate. In assessing the realizability of deferred tax assets, management considers the likelihood of whether it is more likely than not the net deferred tax asset will be realized. Based on this evaluation, management will provide a valuation allowance if it is determined more likely than not the associated asset will not be recognized. Based on this, management has determined that Greystone will be able to realize the full effect of the deferred tax assets as of August 31, 2025 and May 31, 2025, and, accordingly, no valuation allowance was recorded.