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, 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.

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 six months ended November 30, 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 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.

Current wording

Greystone had full-time equivalents of approximately 82 and 161 regular employees as of November 30, 2025 and 2024, respectively. As of November 30, 2025, the Company has stopped using temporary employees, prior to the reduction in production, at any point in time, the Company can have between 65-70 temporary employees. Full-time equivalent is a measure based on time worked.

Previous 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.

Current wording

Selling, general and administrative expenses were $ 2,987,681, or 16% of sales, for the six months ended November 30, 2025 compared to $3,181,148, or 12% of sales, for the six months ended November 30, 2024, representing a decrease of $193,467. The decrease is primarily due to bonuses paid during the six months ended November 30, 2024 that did not reoccur in the six months ended November 30, 2025, plus continued tight control of other expenses given the loss of a major customer.

Previous 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.

Current wording

During the six months ended November 30, 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 fiscal year 2026.

Previous 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.

Current wording

The benefit (provision) for income taxes was $212,232 and $(213,750) for the six months ended November 30, 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’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.

Current wording

Greystone’s two major customers accounted for approximately 66% and 75% of total sales during the three months ended November 30, 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 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.

Current wording

The cost of sales for the three months ended November 30, 2025, was $8,119,543 or 105% of sales, compared to $10,754,713, or 89% of sales, for the three months ended November 30, 2024. The increase in the ratio of cost of sales to sales for the three months ended November 30, 2025, over the prior period was primarily the result of reduced production during the three months ended November 30, 2025. Specifically the Company capitalized less overhead costs as fewer pallets were produced. Due to Greystone’s inflexible manufacturing costs, the gross profit margin is directly affected by variations in the quantity of plastic pallets produced. Additionally, with the reduction in force, labor expense decreased approximately $1.3 million for the period.

Previous 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.

Current wording

Gross profit (loss) for the three months ended November 30, 2025, was $(350,499), or -5%. of sales, compared to $1,380,534, or 11% of sales, for the three months ended November 30, 2024. The principal reason for decrease in gross profit margin for the three months ended November 30, 2025, over the prior period was the decline in production as discussed above.

Previous 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.

Current wording

Other income, generally from interest income and the sale of scrap material, was $4,269 and $51,081 for the three months ended November 30, 2025 and 2024.

Previous 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.

Current wording

Interest expense was $238,688 for the three months ended November 30, 2025, compared to $275,372 for the three months ended November 30, 2024, representing a decrease of $36,684. 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 7.0% at November 30, 2025, compared to 7.75% at November 30, 2024.

Previous 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.

Current wording

Greystone recorded net loss of $2,064,095 for the three months ended November 30, 2025, compared to net loss of $204,714 for three months ended November 30, 2024, primarily for the reasons discussed above.

Previous 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.

Current wording

The net loss attributable to common stockholders for the six months ended November 30, 2025, was $2,064,095 or $0.08 per share, compared to net loss attributable to common stockholders of $345,297, or $0.01 per share, for the three months ended November 30, 2024, primarily for the reasons discussed above.

Previous wording

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

Current wording

A summary of cash flows for the six months ended November 30, 2025, was as follows:

Previous wording

Greystone had a working capital of $2,970,008 as of August 31, 2025.

Current wording

Greystone had a working capital of $994,387 as of November 30, 2025.

Previous 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.

Current wording

Greystone’s principal debt obligations include $900,000 borrowed under a $6,000,000 revolver loan, subject to borrowing base computation, and several term notes with various maturities. To provide for the funding to meet Greystone's operating activities and contractual obligations as of November 30, 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 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.

Current wording

A substantial portion of debt financing that Greystone has received through November 30, 2025, has been provided by loans or through bank loan guarantees from an officer of Greystone. Greystone continues to be dependent upon its officers to provide and/or secure additional financing and there is no assurance that its officers will continue to do so, or that they will do so on terms that are acceptable to Greystone.

Previous 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.

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 six months ended November 30, 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

During the year ended May 31, 2025, the Company repurchased 519,124 shares of its common stock for an aggregate amount of $606,737 under a share repurchase program announced by the Board on June 28, 2024. During the first quarter of fiscal 2026, covering the three-month period ended August 31, 2025, the Company repurchased an additional 89,876 shares for $123,147 under the same program. As disclosed in the Form 8-K filed on June 28, 2024, the Board’s intent in authorizing the program was to employ strategic buybacks as a means of enhancing shareholder value.

Current wording

During the year ended May 31, 2025, the Company repurchased 519,124 shares of its common stock for an aggregate amount of $606,737 under a share repurchase program announced by the Board on June 28, 2024. During the first quarter of fiscal 2026, covering the three-month period ended August 31, 2025, the Company repurchased an additional 89,876 shares for $123,147 under the same program. No additional activity occurred during the second quarter of fiscal 2026. As disclosed in the Form 8-K filed on June 28, 2024, the Board’s intent in authorizing the program was to employ strategic buybacks as a means of enhancing shareholder value.

Previous wording

Greystone accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax bases of assets and liabilities and tax loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

Current wording

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 unaudited consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the unaudited consolidated financial statements and tax bases of assets and liabilities and tax loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

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 August 31, 2025 and May 31, 2025, and, accordingly, no valuation allowance was recorded.

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. Management has determined that as of November 30, 2025, Greystone will not be able to realize the full effect of the deferred tax assets so a valuation allowance of $631,980 has been recorded. As of May 31, 2025, no valuation allowance was recorded. As of November 30, 2025 and May 31, 2025 there was $692,035 and $263,935, respectively of prepaid tax expenses related to fiscal year 2025.