Annual Report for Fiscal Year Ending 05-31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Information

This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern Greystone's plans, expectations and objectives for future operations. All statements, other than statements of historical facts, included in this Form 10-K that address activities, events or developments that Greystone expects, believes or anticipates will or may occur in the future are forward-looking statements. The words "believe," "plan," "intend," "anticipate," "estimate," "project," and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, among others, such things as:

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expansion and growth of Greystone's business and operations;

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future financial performance;

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future acquisitions and developments;

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potential sales of products;

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future financing activities; and

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business strategy.

These forward-looking statements are based on assumptions that Greystone believes are reasonable based on current expectations and projections about future events and industry conditions and trends affecting Greystone's business. However, whether actual results and developments will conform to Greystone's expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, including those factors discussed under the section of this Form 10-K entitled "Risk Factors." In addition, Greystone's historical financial performance is not necessarily indicative of the results that may be expected in the future and Greystone believes that such comparisons cannot be relied upon as indicators of future performance.

Critical Accounting Policies and Estimates

General

Management's discussion and analysis of financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

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 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.

Inventories

Inventory consists of finished pallets and raw materials which are stated at the lower of average cost or net realizable value, with cost being determined on the "first-in, first-out" basis of accounting. The cost of finished goods include an estimate for manufacturing overhead.

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 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.

Results of Operations

General

The consolidated financial statements include Greystone and its two wholly owned subsidiaries, Greystone Manufacturing, L.L.C. ("GSM"), and Plastic Pallet Production, Inc. ("PPP").

Greystone's primary business is the manufacturing of plastic pallets utilizing recycled plastic and selling the pallets through one of its wholly owned subsidiaries, GSM.

As of May 31, 2025 and 2024, Greystone had FTE's of approximately 190 employees. Temporary personnel from a personnel service entity are utilized as needed. At any point in time, the Company can have between 65-80 temporary employees. Greystone's in-house production capacity for its injection molding machines capable of producing pallets is approximately 225,000 plastic pallets per month, or 2,700,000 per year. Production levels will vary proportionately as a result of the pallet design, machine downtime or customer restrictions for maintaining stringent sizing on certain pallets.

Year Ended May 31, 2025 Compared to Year Ended May 31, 2024

Sales

Sales were $57,869,480 for fiscal year 2025 compared to $61,780,715 for fiscal year 2024 representing a decrease of $3,911,235, or about 6%. The reduction in sales, compared to the prior period is primarily attributable to an approximate 24% decrease in demand from one of its significant customers, which was offset somewhat by an increase in demand from another of its significant customers. The increase in demand from the latter customer was due to a newly designed plastic pallet to specifically meet the customer's needs.

Greystone's major customers, varying from three to four, accounted for approximately 76% and 81% of total sales in fiscal years 2025 and 2024, respectively. Customers that account for significant sales may vary in any one year. Generally, customers purchasing substantial quantities to replace or add pallets to their inventory consistently comprise a significant portion of sales. Any customer(s) needing a substantial quantity of pallets to fulfill a specific need may vary from year to year.

Cost of Sales

Cost of sales was $48,391,187 (84% of sales) and $50,065,085 (81% of sales) in fiscal years 2025 and 2024, respectively. The increase in the ratio of cost of sales to sales (the "ratio") in fiscal year 2025 from fiscal year 2024 was the result of several factors, including a decline 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 pellets produced.

Selling, General and Administrative Expenses

Selling, general and administrative (SGA) expenses were $5,906,804, (10% of sales) for fiscal year 2025 compared to $5,168,607, (8.4% of sales) for fiscal year 2024, representing an increase of $738,197. The increase is primarily due to bonuses paid during the year ended May 31, 2025.

Gain on Involuntary Conversion

Gain on involuntary conversion was $741,821 for fiscal year 2025. 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. As of May 31, 2024, the Company recorded an insurance receivable of $2,058,602 as an estimate for damage to the inventory and building, which resulted in a gain from the involuntary conversion of $593,647 for the fiscal year ended May 31, 2024. The insurer and Company finalized the claim value for the inventory as well as a prior claim for equipment damage from an electrical storm occurring in December 2022, resulting in an additional gain from the involuntary conversion of $741,821 for the year ended May 31, 2025. All amounts owed related to these claims, reflected in other receivables as of May 31, 2024 on the consolidated balance sheets, were fully funded during the second quarter by the insurer.

Other Income (Expenses)

Other income for fiscal years 2025 and 2024 included:

		2025				2024
Interest Income		$	98,361			$	57,826
Other			63,888				151,253
Total Other Income		$	162,249			$	209,079

Interest expense was $1,018,084 in fiscal year 2025 compared to $1,291,054 in fiscal year 2024 for a decrease of $272,970. This decrease is primarily attributable to the decrease in the prime rate of interest which was 7.5% at May 31, 2025, compared to 8.5% at May 31, 2024.

Provision for Income Taxes

The provision for income taxes was $1,106,465 in fiscal year 2025 compared to $1,031,204 in fiscal year 2024. The effective tax rate differs from federal statutory rates due to state income taxes, charges which have no income tax benefit, changes in the valuation allowance, and provision to return adjustments primarily attributable to fixed assets depreciation and lease accounting.

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

Net income was $2,351,010 in fiscal year 2025 compared to $5,027,491 in fiscal year 2024 for a decrease of $2,676,481 for the reasons discussed above.

Net Income Attributable to Common Stockholders

After deducting preferred dividends and income attributable to non-controlling interests, the net income attributable to common stockholders was $1,922,297, or $0.07 per share, in fiscal year 2025 compared to $4,440,265, or $0.16 per share, in fiscal year 2024 for the reasons discussed above. As of May 31, 2025, all preferred stock has been retired so no futher dividend payments are anticipated.

Liquidity and Capital Resources

General

A summary of Greystone's cash flows for the year ended May 31, 2025, was as follows:

Cash provided by operating activities		$	10,287,449
Cash used in investing activities		$	(5,703,429	)
Cash used in financing activities		$	(8,837,626	)

Contractual obligations of Greystone as of May 31, 2025, were as follows:

						Less than
		Total				1 year				2-3 years				4-5 years				Thereafter
Long-term debt		$	11,169,342			$	2,122,210			$	8,529,218			$	517,914			$	-
Financing leases		$	4,457			$	4,457			$	-			$	-			$	-
Operating leases		$	6,714,450			$	609,000			$	1,267,360			$	1,240,270			$	3,597,820
Commitments		$	39,925			$	39,925			$	-			$	-			$	-

Greystone had a working capital of $4,230,393 as of May 31, 2025.

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 May 31, 2025, Greystone will have to continue to produce positive operating results or explore various options including 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 financing to meet these obligations.

A substantial portion of debt financing that Greystone received through May 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 either will do so.

During the third and fourth quarters for 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 fiscal years 2025 and 2024 of $427,103 and $721,640, 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 under the caption "Loans from International Bank of Commerce," 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

During the year ended May 31, 2025, the Company paid $606,737 to repurchase 519,124 shares of outstanding common stock under a plan announced by the Board on June 28, 2024. Under the plan, the Company has the ability to repurchase an additional $393,263 worth of shares for a total repurchase commitment of $1 million through the period ended June 28, 2025. The Board's intent as disclosed in the 8k filed on June 28, 2024, was to employ strategic buybacks to enhance shareholder value. Subsequent to year-end, the Company paid $111,897 to repurchase an additional 80,876 shares.

Transactions with Warren Kruger and Related Entities

Yorktown Management & Financial Services, LLC ("Yorktown"), an entity wholly owned by Mr. Kruger, Greystone's CEO and President, owns and rents to Greystone certain grinding equipment used to grind raw materials and certain extruders for pelletizing recycled plastic into pellets for use as raw material in the manufacture of pallets. Greystone compensates Yorktown for the use of equipment as discussed below.

Rental fees. GSM pays weekly rental fees of $27,500 to Yorktown for grinding equipment and pelletizing equipment. Total rental fees were $1,457,200 for both fiscal years 2025 and 2024.

Yorktown provides administrative office space for Greystone in Tulsa, Oklahoma under a 6 year lease agreement at a rental rate of $6,250 per month.

Loans from International Bank of Commerce ("IBC")

On July 29, 2022, Greystone and International Bank of Commerce ("IBC") entered into an Amended and Restated Loan Agreement (the "Restated IBC Loan Agreement") as further described in Note 5, Long-Term Debt, of the consolidated financial statements. The Restated IBC Loan Agreement provides for the IBC to make to Greystone (i) a term loan in the amount of $7,854,708 to consolidate all existing term loans in the aggregate amount of $2,669,892 with Lender, extend credit in the amount of $3,271,987 to pay off a note payable to Robert B. Rosene, Jr. and extend additional credit in the amount of $1,912,829 to fund the purchase of the equipment subject to the iGPS Logistics, LLC, leases, (ii) an advancing term loan facility whereby Greystone may obtain advances up to the aggregate amount of $7,000,000 subsequently increased by $1,000,000 under the First Amendment dated May 5, 2023 (items i and ii referred to as "Term Loans"), and (iii) a renewal of the revolving loan with an increase of $2,000,000 (the "Revolving Loan"). The exact amount which can be borrowed under the Revolving Loan from time to time is dependent upon the amount of the borrowing base but can in no event exceed $6,000,000. The Restated Loan Agreement requires limited guarantees from Warren F. Kruger, President and CEO, and Robert B. Rosene, Jr., a director of Greystone. During 2025, Mr. Rosene was released from his limited guaranty in accordance with the IBC Restated Loan Agreement. Robert B. Rosene, Jr., also sits on the board for IBC. The debt agreements were negotiated on an arm's length basis and terms are no less favorable than those that could have been obtained from an unrelated third party and the Company has concluded that the relationship is not a conflict of interest.

On February 5, 2024, Greystone and IBC entered into a Second Amendment to the Amended and Restated Loan agreement. Among other things, the primary terms extended the maturity date of the Revolving Loan from July 29, 2024 to February 5, 2026. In addition distributions to holders of its preferred stock was raised to $1,000,000. IBC authorized the Greystone stock repurchase plan not to exceed $1,000,000.

On January 14, 2025, Greystone and IBC entered into a Third Amendment to the Amended and Restated Loan Agreement. The amendment served to limit repurchase of equity interests in Greystone Logistics in an aggregate amount not exceeding $1,000,000 through the period ended May 31, 2026.

A waiver was obtained related to the current year preferred and common stock repurchases being in excess of the maximum allowable under the credit agreement.

Transactions with Robert B. Rosene, Jr.

Effective August 1, 2022, Greystone and GRE, a limited liability company owned by Mr. Rosene, 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%.

Off-Balance Sheet Arrangements

Greystone does not have any off-balance sheet arrangements.