10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

(Amendment No. 1)

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED August 31, 2011

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE 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 15th Street, Tulsa, Oklahoma 74120

(Address of principal executive offices)     (Zip Code)

(918) 583-7441

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 x      No o

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted 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 x      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o (Do not check if a smaller reporting company)	Smaller reporting company  x

Indicate by checkmark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).    Yes o    No x

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:   October 18, 2011 - 26,111,201

Explanatory Note

The purpose of this Amendment No. 1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2011, filed with the Securities and Exchange Commission on October 24, 2011 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q.  Exhibit 101 provides the financial statements and related notes from the Form 10-Q formatted in XBRL (Extensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.

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:   November 16, 2011	By:	/s/ Warren F. Kruger
		Warren F. Kruger
		President and Chief Executive Officer

Date:   November 16, 2011	By:	/s/ William W. Rahhal
		William W. Rahhal
		Chief Financial Officer

INDEX TO EXHIBITS

10.1  Third 2011 Amendment to Loan Agreement dated March 5, 2005.(1)

11.1  Computation of Loss per Share is in Note 2 in the Notes to the financial statements.(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.(1)

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. (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. (1)

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. (1)

101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at August 31, 2011 and May 31, 2011, (ii) the Consolidated Statements of Operations for the three month periods ended August 31, 2011 and 2010, (iii) the Consolidated Statements of Cash Flows for the three month periods ended August 31, 2011 and 2010, and (iv) the Notes to the Consolidated Financial Statements. (2)

(1)   Filed with the registrant’s original report on Form 10-Q for the quarter ended August 31, 2011, which was filed on October 24, 2011.

(2)   Filed herewith.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Aug. 31, 2011	May 31, 2011
Allowance for doubtful accounts	$ 75,000	$ 75,000
Common shares issued	26,111,201	26,111,201

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Aug. 31, 2011	Aug. 31, 2010
Sales	$ 5,783,624	$ 4,994,208
Cost of Sales	4,627,974	4,738,456
Gross Profit	1,155,650	255,752
General, Selling and Administrative Expenses	411,987	491,084
Operating Income (Loss)	743,663	(235,332)
Other Income (Expense):
Other Income (Expense)	(2,950)	7,650
Interest Expense	(265,353)	(189,960)
Total Other Expense, net	(268,303)	(182,310)
Net Income (Loss)	475,360	(417,642)
Loss (Income) Attributable to Variable Interest Entities, net	4,375	(20,592)
Preferred Dividends	0	(81,918)
Net Income (Loss) Available to Common Stockholders	$ 479,735	$ (520,152)
Income (Loss) Available to Common Stockholders
Per Share of Common Stock - Basic and Diluted	$ 0.02	$ (0.02)

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Document and Entity Information	3 Months Ended
	Aug. 31, 2011	Oct. 18, 2011
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 31, 2011
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Entity Registrant Name	Greystone Logistics, Inc.
Entity Central Index Key	0001088413
Current Fiscal Year End Date	--05-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		26,111,201

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Fair Value of Financial Instruments

3 Months Ended

Aug. 31, 2011

Fair Value of Financial Instruments

Note 7.    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.

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Inventory

3 Months Ended

Aug. 31, 2011

Inventory

Note 3.    Inventory consists of the following:

                                                                                                August 31,       May 31,

      2011          2011     

                                                                                                (Unaudited)

                                    Raw materials                                     $   525,771     $  171,104

                                    Finished goods                                         691,813    372,453

                                    Total inventory                                    $1,217,584$  543,557

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Subsequent Event

3 Months Ended

Aug. 31, 2011

Subsequent Event

Note 8.    Subsequent Event

As discussed in Note 5, GLOG was dissolved effective September 20, 2011 and, accordingly, ceased to be a variable interest entity of Greystone.  Accordingly, GLOG will be de-consolidated effective September 1, 2011.  A condensed pro forma balance sheet as of August 31, 2011 showing the effect of the de-consolidation is as follows:

Assets:
Current assets	$    3,700,716
Property, plant and equipment, net of accumulated depreciation	4,393,988
Assets of variable interest entity, net of accumulated depreciation	3,793,747
Other assets	95,783
Total Assets	$  11,984,234
Liabilities and Deficit:
Current liabilities	$  11,156,983
Long-term debt, net of current portion	5,451,017
Long-term debt of variable interest entity, net of current portion	3,558,598
Deficit -
Greystone stockholders’ deficit	(9,109,392)
Non-controlling interests	927,028
Total deficit	(8,182,364)
Total Liabilities and Deficit	$  11,984,234

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Basis of Financial Statements

3 Months Ended

Aug. 31, 2011

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 August 31, 2011, and the results of its operations and its cash flows for the three-month periods ended August 31, 2011 and 2010.  These consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the fiscal year ended May 31, 2011 and the notes thereto included in Greystone’s Form 10-K for such period. The results of operations for the three-month periods ended August 31, 2011 and 2010 are not necessarily indicative of the results to be expected for the full fiscal year.

The accompanying financial statements have been prepared assuming that Greystone will continue as a going concern.  Greystone reported a net loss for the fiscal year ended May 31, 2011 and net income for the two fiscal years prior thereto.  Greystone believes that it has the capacity to produce sufficient plastic pallets to achieve profitability.  However, Greystone continues to be dependent on one customer. Sales to this major customer were approximately 73% of pallet sales (54% of total sales) for the three-month period ended August 31, 2011 and 77% of pallet sales (58% of total sales) for the three-month period ended August 31, 2010. To date, Greystone has received substantial advances from investors to finance its operations and will require additional substantial funding and/or personal guarantees of debt in order to attain its business plan and continue to achieve profitable operations.  Historically, Greystone has been successful in financing its operations primarily through short-term loans and personal guarantees of bank loans by its officers and directors. Management has continued to seek long-term and/or permanent financing, and on March 15, 2011, Greystone entered into an amended bank loan agreement which provides for a three-year term on Greystone’s primary indebtedness.  While such amendment’s extended terms provided important near-term relief, profitable growth will still require additional capital resources. Neither the receipt of additional funding in adequate amounts nor the successful implementation of Greystone’s business plan can be assured.  The combination of these factors raises substantial doubt about Greystone’s ability to continue as a going concern.

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Capitalized Lease Obligation

3 Months Ended

Aug. 31, 2011

Capitalized Lease Obligation

Note 4.    Capitalized Lease

Effective August 12, 2011, Greystone entered into an agreement with Sonoco Products Company to lease certain molds for a period of sixty months at a monthly rental of $10,625 per month plus $0.50 per pallet sold each month in excess of 12,500.  The lease and related debt have been capitalized at 5% interest for a total amount of $563,026.

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Note Payable

3 Months Ended

Aug. 31, 2011

Note Payable

Note 5.    Note Payable

            Greystone, GSM, GRE and GLOG are parties to a loan agreement dated as of March 4, 2005, as amended, with F&M Bank & Trust Company (“F&M”).  Effective August 31, 2011, GLOG distributed its assets, Greystone’s Series 2003 Convertible Preferred Stock, to its members, Warren F. Kruger, Greystone’s president and CEO, and Robert B. Rosene, Jr., a member of Greystone’s board of directors (collectively, the “Borrowers”).   Effective as of August 31, 2011, the loan agreement was amended to (a) cause all of GLOG’s rights and obligations under the loan agreement to be transferred to  Warren F. Kruger and Robert B. Rosene, Jr., (b) affirm the cross-collateralization and cross-default provisions of the loan agreement among property and debts of GSM, GLOG and Greystone Real Estate, L.L.C., an entity owned by Warren F. Kruger and Robert B. Rosene, Jr., (c) amend the cross-collateralization and cross-default provisions of the loan agreement to include Messrs. Kruger and Rosene and (d) amend certain financial covenants of the loan agreement. GLOG was dissolved effective September 20, 2011.

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Variable Interest Entities (VIE)

3 Months Ended

Aug. 31, 2011

Variable Interest Entities (VIE)

Note 6.    Variable Interest Entities (VIE)

The consolidated financial statements of Greystone include Greystone Real Estate, L.L.C. (“GRE”) and GLOG Investments, L.L.C. (“GLOG”).  GRE owns two buildings located in Bettendorf, Iowa which are leased to Greystone Manufacturing, L.L.C. (“GSM”).  At August 31, 2011 and prior to the asset distribution discussed in Note 5 above, GLOG’s sole asset was Greystone’s Series 2003 Convertible Preferred Stock in the face amount of $5,000,000 and its only liability was a $3,669,084 note payable to F&M Bank & Trust Company (“F&M”).  GRE, GLOG, and GSM were parties to an amended loan agreement with F&M which contained cross-collateralization and cross-default provisions.  Effective with the August 31, 2011 loan amendment with F&M as discussed in Note 5 above, GLOG was replaced by the Borrowers under the loan agreement. 

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Aug. 31, 2011	Aug. 31, 2010
Cash Flows from Operating Activities:
Net income (loss)	$ 475,360	$ (417,642)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	276,509	272,246
Stock-based compensation	0	23,992
Changes in receivables	295,536	392,018
Changes in inventory	(674,027)	(264,189)
Changes in prepaid expenses and other	31,467	16,861
Change in other assets	690	(3,750)
Changes in accounts payable and accrued expenses	268,462	481,241
Net cash provided by operating activities	673,997	500,777
Cash Flows from Investing Activities:
Purchase of property and equipment	(183,390)	(192,724)
Cash Flows from Financing Activities:
Payments on long-term debt	(271,827)	(97,208)
Payments on advances from related party	(34,500)	(126,501)
Payments on long-term debt of variable interest entities	(93,232)	(13,447)
Capital contributions to variable interest entity	75,000	0
Distributions by variable interest entity	(18,112)	0
Net cash used in financing activities	(342,671)	(237,156)
Net Increase in Cash	147,936	70,897
Cash, beginning of period	169,420	163,749
Cash, end of period	317,356	234,646
Non-Cash Activities:
Acquisition of equipment by capital lease or debt	563,026	390,000
Preferred dividend accrual	0	81,918
Supplemental Information:
Interest paid	$ 159,995	$ 100,310

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Earnings Per Share

3 Months Ended

Aug. 31, 2011

Earnings Per Share

Note 2.    Earnings Per Share

For the three-month period ended August 31, 2011, basic and diluted EPS were the same as the effect of the stock options to purchase common stock and the convertible provisions of the Series 2003 preferred stock were anti-dilutive. 

           The following securities (rounded to thousands) were not included in the computation of diluted earnings per share for the three month period ended August 31, 2011 as their effect would have been antidilutive:

                        Options to purchase common stock                             1,940,000

                        Convertible preferred stock                                         3,333,000

5,273,000

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Consolidated Balance Sheets (Unaudited) (USD $)	Aug. 31, 2011	May 31, 2011
Current Assets:
Cash	$ 317,356	$ 169,420
Accounts receivable -
Trade receivables, net of allowance of $75,000 at August 31, 2011 and May 31, 2011	1,500,324	1,769,387
Related party receivables	625,929	652,402
Inventory	1,217,584	543,557
Prepaid expenses and other	39,523	70,990
Total Current Assets	3,700,716	3,205,756
Property, Plant and Equipment	9,983,652	9,237,236
Less: Accumulated Depreciation	(5,589,664)	(5,346,073)
Property, Plant and Equipment, net	4,393,988	3,891,163
Assets of Variable Interest Entity	4,663,339	4,663,339
Less: Accumulated Depreciation of Variable Interest Entity Property	(869,592)	(840,894)
Assets of Variable Interest Entity, net	3,793,747	3,822,445
Other Assets	95,783	100,693
Total Assets	11,984,234	11,020,057
Current Liabilities:
Current portion of long-term debt	3,722,179	3,689,738
Advances payable - related party	690,580	725,080
Current portion of variable interest entities’ long-term debt	369,517	383,016
Accounts payable and accrued expenses	2,086,703	1,927,162
Accounts payable and accrued expenses - related parties	1,730,759	1,621,838
Total Current Liabilities	8,599,738	8,346,834
Long-Term Debt, net of current portion	5,451,017	5,192,259
Long-Term Debt of Variable Interest Entities, net of current portion	7,106,222	7,185,955
Common shares authorized: 5,000,000,000
Common shares issued: 26,111,201 at August 31, 2011 and May 31, 2011	2,611	2,611
Additional paid-in capital	48,089,298	48,089,298
Accumulated deficit	(61,801,507)	(62,297,986)
Total Greystone Stockholders’ Deficit	(13,709,598)	(14,206,077)
Non-controlling interests	4,536,855	4,501,086
Total Deficit	(9,172,743)	(9,704,991)
Total Liabilities and Deficit	$ 11,984,234	$ 11,020,057