UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED February 28, 2015 |
| [ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 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 Securities 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 [ ]
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 [ ]
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 [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] (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 [ ] 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: April 14, 2015 - 27,411,201
GREYSTONE LOGISTICS, INC.
FORM 10-Q
For the Period Ended February 28, 2015
| 2 |
Greystone Logistics, Inc. and Subsidiaries
(Unaudited)
| February 28, 2015 | May 31, 2014 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 205,311 | $ | 661,263 | ||||
| Accounts receivable - | ||||||||
| Trade, net of allowance for doubtful accounts of $71,462 | 636,700 | 2,023,563 | ||||||
| Related party receivable | 400,930 | 219,505 | ||||||
| Inventory | 2,938,866 | 1,616,165 | ||||||
| Deferred tax asset - current | 1,330,000 | 1,077,000 | ||||||
| Prepaid expenses | 55,813 | 97,170 | ||||||
| Total Current Assets | 5,567,620 | 5,694,666 | ||||||
| Property and Equipment, net of accumulated depreciation | 8,673,841 | 8,776,137 | ||||||
| Deferred Tax Asset | 951,955 | 1,133,000 | ||||||
| Other Assets | 138,979 | 163,188 | ||||||
| Total Assets | $ | 15,332,395 | $ | 15,766,991 | ||||
| Liabilities and Deficit | ||||||||
| Current Liabilities: | ||||||||
| Current portion of long-term debt | $ | 2,550,923 | $ | 3,979,376 | ||||
| Accounts payable and accrued expenses | 1,484,391 | 782,591 | ||||||
| Accrued interest - related party | 2,063,618 | 1,835,999 | ||||||
| Preferred dividends payable | 52,534 | 27,603 | ||||||
| Total Current Liabilities | 6,151,466 | 6,625,569 | ||||||
| Long-Term Debt, net of current portion | 10,774,829 | 10,524,745 | ||||||
| Deficit: | ||||||||
| Preferred stock, $0.0001 par value, cumulative, 20,750,000 shares authorized, 50,000 shares issued and outstanding, liquidation preference of $5,000,000 | 5 | 5 | ||||||
| Common stock, $0.0001 par value, 5,000,000,000 shares authorized, 27,411,201 and 26,461,201 shares issued and outstanding | 2,741 | 2,646 | ||||||
| Additional paid-in capital | 53,490,079 | 53,336,106 | ||||||
| Accumulated deficit | (56,097,967 | ) | (55,715,203 | ) | ||||
| Total Greystone Stockholders’ Deficit | (2,605,142 | ) | (2,376,446 | ) | ||||
| Non-controlling interest | 1,011,242 | 993,123 | ||||||
| Total Deficit | (1,593,900 | ) | (1,383,323 | ) | ||||
| Total Liabilities and Deficit | $ | 15,332,395 | $ | 15,766,991 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-1 |
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| For the Nine Months Ended February 28, | ||||||||
| 2015 | 2014 | |||||||
| Sales | $ | 13,676,492 | $ | 15,405,169 | ||||
| Cost of Sales | 11,428,901 | 11,804,150 | ||||||
| Gross Profit | 2,247,591 | 3,601,019 | ||||||
| General, Selling and Administrative Expenses | 1,679,041 | 1,782,411 | ||||||
| Operating Income | 568,550 | 1,818,608 | ||||||
| Other Income (Expense): | ||||||||
| Other income | 2,500 | - | ||||||
| Interest expense | (611,568 | ) | (634,530 | ) | ||||
| Total Other Expense, net | (609,068 | ) | (634,530 | ) | ||||
| Income (Loss) before Income Taxes | (40,518 | ) | 1,184,078 | |||||
| Benefit from Income Taxes | 71,955 | 290,000 | ||||||
| Net Income | 31,437 | 1,474,078 | ||||||
| Income Attributable to Variable Interest Entities, net | (171,119 | ) | (146,523 | ) | ||||
| Preferred Dividends | (243,082 | ) | (243,082 | ) | ||||
| Net Income (Loss) Attributable to Common Stockholders | $ | (382,764 | ) | $ | 1,084,473 | |||
| Income (Loss) Per Share of Common Stock - | ||||||||
| Basic and Diluted | $ | (0.01 | ) | $ | 0.04 | |||
| Weighted Average Shares of Common Stock Outstanding - | ||||||||
| Basic | 26,828,417 | 26,111,201 | ||||||
| Diluted | 26,828,417 | 27,552,209 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended February 28, | ||||||||
| 2015 | 2014 | |||||||
| Sales | $ | 3,685,044 | $ | 4,532,762 | ||||
| Cost of Sales | 2,431,250 | 3,803,454 | ||||||
| Gross Profit | 1,253,794 | 729,308 | ||||||
| General, Selling and Administrative Expenses | 573,099 | 640,529 | ||||||
| Operating Income | 680,695 | 88,779 | ||||||
| Other Income (Expense): | ||||||||
| Other income (expense) | - | (3,600 | ) | |||||
| Interest expense | (200,151 | ) | (236,255 | ) | ||||
| Total Other Expense, net | (200,151 | ) | (239,855 | ) | ||||
| Income (Loss) before Income Taxes | 480,544 | (151,076 | ) | |||||
| (Provision) Benefit from Income Taxes | (143,728 | ) | 53,000 | |||||
| Net Income (Loss) | 336,816 | (98,076 | ) | |||||
| Income Attributable to Variable Interest Entities, net | (57,820 | ) | (35,340 | ) | ||||
| Preferred Dividends | (80,137 | ) | (80,137 | ) | ||||
| Net Income (Loss) Attributable to Common Stockholders | $ | 198,859 | $ | (213,553 | ) | |||
| Income (Loss) Per Share of Common Stock - | ||||||||
| Basic and Diluted | $ | 0.01 | $ | (0.01 | ) | |||
| Weighted Average Shares of Common Stock Outstanding - | ||||||||
| Basic | 27,309,812 | 26,111,201 | ||||||
| Diluted | 28,014,651 | 26,111,201 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
Greystone Logistics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended February 28, | ||||||||
| 2015 | 2014 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 31,437 | $ | 1,474,078 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 1,054,118 | 1,008,959 | ||||||
| Increase in deferred tax asset | (71,955 | ) | (301,000 | ) | ||||
| Stock based compensation | 40,068 | 40,068 | ||||||
| Changes in trade accounts receivable | 1,386,863 | 543,481 | ||||||
| Changes in related party receivable | (256,425 | ) | (358,746 | ) | ||||
| Changes in inventory | (1,322,701 | ) | (1,835,297 | ) | ||||
| Changes in prepaid expenses | 41,357 | (91,294 | ) | |||||
| Changes in accounts payable and accrued expenses | 929,419 | 616,053 | ||||||
| Other | - | 2,785 | ||||||
| Net cash provided by operating activities | 1,832,181 | 1,099,087 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | (820,364 | ) | (2,301,788 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from long-term debt | - | 13,337,500 | ||||||
| Proceeds from revolving loan | 600,000 | - | ||||||
| Payments on long-term debt and capitalized lease | (1,425,618 | ) | (8,190,518 | ) | ||||
| Payments on revolving loan | (385,000 | ) | - | |||||
| Payments on notes and advances payable to related party | - | (92,000 | ) | |||||
| Issuance cost of long-term debt | - | (110,996 | ) | |||||
| Proceeds from exercised stock options | 114,000 | - | ||||||
| Dividends paid on preferred stock | (218,151 | ) | (3,469,039 | ) | ||||
| Dividends paid by variable interest entity | (153,000 | ) | (256,318 | ) | ||||
| Net cash provided by (used in) financing activities | (1,467,769 | ) | 1,218,629 | |||||
| Net Increase (Decrease) in Cash | (455,952 | ) | 15,928 | |||||
| Cash, beginning of period | 661,263 | 366,896 | ||||||
| Cash, end of period | $ | 205,311 | $ | 382,824 | ||||
| Non-Cash Activities: | ||||||||
| Acquisition of equipment from related party | $ | 75,000 | $ | 1,087,302 | ||||
| Capitalized equipment lease | $ | 32,249 | $ | - | ||||
| Reduction in carrying value of equipment resulting from capital lease termination | $ | - | $ | 212,312 | ||||
| Preferred dividend accrual | $ | 24,931 | $ | 24,932 | ||||
| Supplemental Information: | ||||||||
| Interest paid | $ | 385,638 | $ | 322,631 | ||||
The accompanying notes are an integral part of these consolidated financial statements
| F-4 |
GREYSTONE LOGISTICS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
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 February 28, 2015 and May 31, 2014, the results of its operations for the nine-month and three-month periods ended February 28, 2015 and 2014, and its cash flows for the nine-month periods ended February 28, 2015 and 2014. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended May 31, 2014 and the notes thereto included in Greystone’s Form 10-K for such period. The results of operations for the nine-months and three-month periods ended February 28, 2015 and 2014 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 the variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). GRE owns two buildings located in Bettendorf, Iowa which are leased to GSM.
Note 2. 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 (loss) available to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income (loss) 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, as follows:
| 2015 | 2014 | |||||||
| Nine-month periods ended February 28: | ||||||||
| Options to purchase common stock | 1,150,000 | 350,000 | ||||||
| Preferred stock convertible into common stock | 3,333,334 | 3,333,334 | ||||||
| Total | 4,483,334 | 3,683,334 | ||||||
| Three-month periods ended February 28: | ||||||||
| Options to purchase common stock | - | 2,450,000 | ||||||
| Preferred stock convertible into common stock | 3,333,334 | 3,333,334 | ||||||
| Total | 3,333,334 | 5,783,334 | ||||||
| F-5 |
The following tables set forth the computation of basic and diluted earnings per share for the nine-month and three-month periods ended February 28, 2015 and 2014:
| 2015 | 2014 | |||||||
| Nine-month periods ended February 28: | ||||||||
| Numerator - | ||||||||
| Net income (loss) available to common stockholders | $ | (382,764 | ) | $ | 1,084,473 | |||
| Denominator - | ||||||||
| Weighted-average shares outstanding - basic | 26,828,417 | 26,111,201 | ||||||
| Incremental shares from assumed conversion of options | - | 1,441,008 | ||||||
| Diluted shares | 26,828,417 | 27,552,209 | ||||||
| Earnings (Loss) per share - | ||||||||
| Basic | $ | (0.01 | ) | $ | 0.04 | |||
| Diluted | $ | (0.01 | ) | $ | 0.04 | |||
| Three-month periods ended February 28: | ||||||||
| Numerator - | ||||||||
| Net income (loss) available to common stockholders | $ | 198,859 | $ | (213,553 | ) | |||
| Denominator - | ||||||||
| Weighted-average shares outstanding - basic | 27,309,812 | 26,111,201 | ||||||
| Incremental shares from assumed conversion of options | 704,839 | - | ||||||
| Diluted shares | 28,014,651 | 26,111,201 | ||||||
| Earnings (Loss) per share - | ||||||||
| Basic | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Note 3. Inventory
Inventory consists of the following:
| February 28, 2015 | May 31, 2014 | |||||||
| Raw materials | $ | 804,122 | $ | 1,043,411 | ||||
| Finished goods | 2,134,744 | 572,754 | ||||||
| Total inventory | $ | 2,938,866 | $ | 1,616,165 | ||||
| F-6 |
Note 4. Related Party Transactions
Yorktown Management & Financial Services, L.L.C.
Yorktown Management & Financial Services, LLC (“Yorktown”), an entity wholly owned by Greystone’s CEO and President, owns and rents to Greystone (1) grinding equipment used to grind raw materials for Greystone’s pallet production and (2) extruders for pelletizing recycled plastic into pellets for resale and for use as raw material in the manufacture of pallets. Yorktown also owns a plastic grinding and wash line facility used to recycle plastic into usable raw material which Greystone may purchase at market prices. Greystone compensates Yorktown for the use of this equipment as discussed below. In addition, Yorktown provides office space for Greystone in Tulsa, Oklahoma at a monthly rental of $2,000.
GSM pays weekly rental fees to Yorktown of $22,500 for use of Yorktown’s grinding equipment and $5,000 for the use of Yorktown’s pelletizing equipment. GSM paid Yorktown total equipment rental fees of $1,072,650 and $1,072,500 for the nine months ended February 28, 2015 and 2014, respectively.
Greystone pays the labor on behalf of Yorktown’s Tulsa, Oklahoma grinding operation. These costs are invoiced to Yorktown on a monthly basis. As of February 28, 2015, Yorktown owes Greystone $327,486 primarily from the aforementioned labor costs incurred by Greystone on behalf of Yorktown.
Trienda Holdings, L.L.C.
Trienda Holdings, L.L.C. (“Trienda”) is a manufacturer of plastic pallets of which Warren F. Kruger, Greystone’s President and CEO, has a major ownership interest and serves Trienda as the non-executive Chairman of the Board. Greystone blends and pelletizes plastic resin for Trienda using equipment and raw materials owned by Trienda. Greystone services for Trienda for the nine-month period ended Febuary 28, 2015 total $177,241. The account receivable from Trienda at February 28, 2015 was $73,444.
| F-7 |
Note 5. Debt
Debt as of February 28, 2015 and May 31, 2014 is as follows:
| February 28, 2015 | May 31, 2014 | |||||||
| Term note payable to International Bank of Commerce, interest rate of 4.5%, due January 31, 2019, monthly principal and interest payments of $171,760 | $ | 7,378,162 | $ | 8,647,777 | ||||
| Revolving note payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, due January 31, 2016 | 600,000 | 385,000 | ||||||
| Term note payable by GRE to International Bank of Commerce, interest rate of 4.5%, due January 31, 2019, monthly principal and interest payments of $26,215 | 3,250,190 | 3,371,660 | ||||||
| Note payable to Robert Rosene, 7.5% interest, due January 15, 2015 | 2,066,000 | 2,066,000 | ||||||
| Other notes payable | 31,400 | 33,684 | ||||||
| 13,325,752 | 14,504,121 | |||||||
| Less: Current portion | (2,550,923 | ) | (3,979,376 | ) | ||||
| Long-term debt | $ | 10,774,829 | $ | 10,524,745 | ||||
The prime rate of interest as of February 28, 2015 was 3.25%.
Loan Agreement between Greystone and IBC
On January 31, 2014, Greystone and GSM (the “Borrowers”) and International Bank of Commerce (“IBC”) entered into a Loan Agreement (the “IBC Loan Agreement”). The IBC Loan Agreement provides for a revolving loan in an aggregate principal amount of up to $2,500,000 (the “Revolving Loan”) and a term loan in the aggregate principal amount of $9,200,000 (the “Term 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 $2,500,000.
The Revolving Loan bears interest at the New York Prime Rate plus 0.5% but not less than 4.0% and matures January 31, 2016. The Borrowers are required to pay all interest accrued on the outstanding principal balance of the Revolving Loan on a monthly basis. Any principal on the Revolving Loan that is prepaid by the Borrowers may be reborrowed by the Borrowers. The proceeds from the Revolving Loan will be used for general working capital purposes.
The Term Loan bears interest at 4.5% per annum and matures January 31, 2019. The Borrowers are required to make equal monthly payments $171,760 towards principal and interest to amortize the principal balance over the term of the loan.
| F-8 |
The IBC Loan Agreement includes customary representations and warranties and affirmative and negative covenants which include (i) requiring the Borrowers to maintain a debt service coverage ratio of 1:25 to 1:00 and a funded debt to EBIDA ratio not exceeding 3:00 to 1:00, (ii) subject to certain exceptions, limiting the Borrowers’ combined capital expenditures on fixed assets to $1,000,000 per year, (iii) prohibiting Greystone, without IBC’s prior written consent, from declaring or paying any dividends, redemptions of stock or membership interests, distributions and withdrawals (as applicable) in respect of its capital stock or any other equity interest, other than additional payments to holders of its preferred stock in an amount not to exceed $500,000 in any fiscal year, (iv) subject to certain exceptions, prohibiting the incurrence of additional indebtedness by the Borrowers, and (v) requiring the Borrowers to prevent (A) any change in capital ownership such that there is a material change in the direct or indirect ownership of (1) Greystone’s outstanding preferred stock, and (2) any equity interest in GSM, or (B) Warren Kruger from ceasing to be actively involved in the management of Greystone as President and/or Chief Executive Officer. The foregoing list of covenants is not exhaustive and there are several other covenants contained in the IBC Loan Agreement.
Greystone’s debt service coverage ratio as of February 28, 2015 was 0.89 to 1:00 which was less than the required minimum as discussed above. Greystone has requested a waiver from IBC with respect to this occurrence of noncompliance.
The IBC Loan Agreement includes customary events of default, including events of default relating to non-payment of principal and other amounts owing under the IBC Loan Agreement from time to time, inaccuracy of representations, violation of covenants, defaults under other agreements, bankruptcy and similar events, the death of a guarantor, certain material adverse changes relating to a Borrower or guarantor, certain judgments or awards against a Borrower, or government action affecting a Borrower’s or guarantor’s ability to perform under the IBC Loan Agreement or the related loan documents. Among other things, a default under the IBC Loan Agreement would permit IBC to cease lending funds under the IBC Loan Agreement, and require immediate repayment of any outstanding loans with interest and any unpaid accrued fees.
The IBC Loan Agreement is secured by a lien on substantially all of the assets of the Borrowers. In addition, the IBC Loan Agreement is secured by a mortgage granted by GRE on the real property owned by GRE in Bettendorf, Iowa (the “Mortgage”). GRE is owned by Warren F. Kruger, Greystone’s President and CEO, and Robert B. Rosene, Jr., a director of Greystone. Messrs. Kruger and Rosene have provided a combined limited guaranty of the Borrowers’ obligations under the IBC Loan Agreement, with such guaranty being limited to a combined amount of $6,500,000 (the “Guaranty”). The Mortgage and the Guaranty also secure or guaranty, as applicable, the obligations of GRE under the Loan Agreement between GRE and IBC dated January 31, 2014 as discussed in the following paragraph.
Loan Agreement between GRE and IBC
On January 31, 2014, GRE and IBC entered into a Loan Agreement which provided for a mortgage loan to GRE of $3,412,500. The loan provides for a 4.5% interest rate and a maturity of January 31, 2019 and is secured by a mortgage on the two buildings in Bettendorf, Iowa which are leased to Greystone.
Note Payable between Greystone and Robert B. Rosene, Jr.
Effective December 15, 2005, Greystone entered into an agreement with Robert B. Rosene, Jr., a member of Greystone’s board of directors, to convert $2,066,000 of advances into a note payable at 7.5% interest. Mr. Rosene has waived payment of principal until January 15, 2017. Greystone has accrued interest on the note and unpaid interest in the amounts of $227,619 and $211,002 for the nine-month periods ended February 28, 2015 and 2014, respectively. Accrued interest due to Mr. Rosene at February 28, 2015 is $2,063,618.
| F-9 |
Note 6. Stock Compensation Costs
Stock compensation costs, resulting from stock options issued June 1, 2012, were $40,068 for the nine-month periods ended February 28, 2015 and 2014, respectively. The unexpensed cost at February 28, 2015 totaled $66,780.
Note 7. Fair Value of Financial Instruments
The following methods and assumptions are used in estimating the fair-value disclosures for financial instruments:
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 consolidated balance sheet approximate fair value.
Note 8. Risks and Uncertainties
Greystone derives a substantial portion of its revenue from a national brewer. This customer accounted for approximately 44% and 50% of Greystone’s pallet sales and 40% and 47% of Greystone’s total sales for the nine months ended February 28, 2015 and 2014, 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.
Robert B. Rosene, Jr., a Greystone director, has provided financing and guarantees on Greystone’s bank debt. As of February 28, 2015, Greystone is indebted to Mr. Rosene in the amount of $4,053,146 for a note payable and related accrued interest due January 15, 2017. There is no assurance that Mr. Rosene will continue to provide extensions or guarantees in the future.
Note 9. Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 14-09”) which creates a comprehensive set of guidelines for the recognition of revenue under the principle: “Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The requirements of ASU 14-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and will require either retrospective application to each prior period presented or retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. Greystone is currently evaluating the impact this ASU will have on our financial position and results of operations.
| F-10 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
General to All Periods
The unaudited consolidated statements include Greystone Logistics, Inc., its two wholly-owned subsidiaries, Greystone Manufacturing, L.L.C. (“GSM”) and Plastic Pallet Production, Inc. (“PPP”). Greystone also consolidates its variable interest entity, Greystone Real Estate, L.L.C. (“GRE”). All material intercompany accounts and transactions have been eliminated.
References to fiscal year 2015 refer to the nine and three month periods ended February 28, 2015. References to fiscal year 2014 refer to the nine and three month period ended February 28, 2014.
Sales
Greystone’s primary focus is to provide quality plastic pallets to its existing customers while continuing its marketing efforts to broaden its customer base. Greystone’s existing customers are primarily located in the United States and engaged in the beverage, pharmaceutical and other industries. Greystone has generated and plans to continue to generate interest in its pallets by attending trade shows sponsored by industry segments that would benefit from Greystone’s products. Greystone hopes to gain wider product acceptance by marketing the concept that the widespread use of plastic pallets could greatly reduce the destruction of trees on a worldwide basis. Greystone’s marketing is conducted through contract distributors, its President and other employees.
Greystone derives a substantial portion of its revenue from a national brewer. This customer accounted for approximately 44% and 50% of Greystone’s pallet sales and 40% and 47% of Greystone’s total sales for the nine month-periods ended February 28, 2015 and 2014, respectively.
Personnel
Greystone had approximately 67 and 81 full-time employees as of February 28, 2015 and 2014, respectively. As necessary, Greystone utilizes temporary employment agencies to supplement its labor force.
Nine-month Period Ended February 28, 2015 Compared to Nine-month Period Ended February 28, 2014
Sales
Sales for fiscal year 2015 were $13,676,492 compared to $15,405,169 in fiscal year 2014 for a decrease of $1,728,677. Pallet sales were $12,466,944, or 91% of total sales, in fiscal year 2015 compared to $14,536,499, or 94% of total sales, in fiscal year 2014 for a decrease of $2,069,555. Other sales were $1,209,548 in fiscal year 2015 compared to $868,670 in fiscal year 2014 for an increase of $340,878.
| 3 |
A decrease in pallet sales to Greystone’s major customer is the primary reason for the decline in pallet sales in fiscal year 2015 from fiscal year 2014. Greystone’s sales to its major customer in fiscal year 2015 were 44% of pallet sales compared to 50% of pallet sales in fiscal year 2014. Additionally, there were non-recurring sales of approximately $711,000 in fiscal year 2014 which for the most part were offset by increased sales in Greystone’s other product lines.
Pallet sales to Greystone’s major customer are generally based on the customer’s need to maintain its pallet inventory and may vary by period. Greystone cannot predict the major customer’s future needs to maintain or grow its pallet inventory but has been able to grow sales to new pallet customers developed through Greystone’s marketing efforts to broaden its customer base.
Other sales included sales of recycled-pelletized plastic resin and tolling services for grinding and pelletizing material. During fiscal year 2015, Greystone began providing tolling services to customers to grind and/or pelletize a customer’s plastic material. However, substantially all of the sales during fiscal year 2015 and all of the sales in fiscal year 2014 resulted from sales of pelletized plastic resin. Plastic resin sales generally vary from period to period depending on availability of product at prices which allow Greystone to resell at reasonable margins.
Cost of Sales
Cost of sales in fiscal year 2015 was $11,428,901, or 84% of sales, compared to $11,804,150, or 77% of sales, in fiscal year 2014. The increase in the ratio of cost of sales to sales from fiscal year 2015 over fiscal year 2014 is primarily due to Greystone’s inflexible pallet production costs.
General, Selling and Administrative Expenses
General, selling and administrative expenses were $1,679,041 in fiscal year 2015 compared to $1,782,411 in fiscal year 2014 for a decrease of $103,370. The decrease is primarily due to a $106,713 decrease in commission expense. This variation between the two periods is not necessarily indicative of the commission expense to be expected for future periods.
Benefit from Income Taxes
The benefit from income taxes was $71,955 and $290,000 in fiscal years 2015 and 2014, respectively. The benefit from income taxes for fiscal year 2014 was the result of a decrease in the amount of valuation allowance management considered necessary in determining the amount of tax benefit that will be utilized from net operating losses (NOLs) originating from prior years. For fiscal year 2015, the tax benefit was the direct result of net loss before taxes. The effective tax rate differs from federal statutory rates due to net income from GRE which, as a limited liability company, is not taxed at the corporate level.
Until the NOLs are fully realized for income tax purposes, management will continue to evaluate the extent that a valuation allowance is needed. Factors that management will consider, among others, are continued diversity in Greystone’s customer base and stability in its sales volumes.
| 4 |
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
Greystone recorded net income of $31,437 in fiscal year 2015 compared to $1,474,078 in fiscal year 2014 primarily for the reasons discussed above.
Net Income (Loss) Attributable to Common Stockholders
Net loss attributable to common stockholders for fiscal year 2015 was $(382,764), or $(0.01) per share, compared to net income of $1,084,473, or $0.04 per share, in fiscal year 2014 primarily for the reasons discussed above.
Three-Month Period Ended February 28, 2015 Compared to Three-Month Period Ended February 28, 2014
Sales
Sales for fiscal year 2015 were $3,685,044 compared to $4,532,762 in fiscal year 2014 for a decrease of $847,718. Pallet sales were $3,520,056, or 96% of total sales, in fiscal year 2015 compared to $4,035,532, or 89% of total sales, in fiscal year 2014 for a decrease of $515,476. Other sales were $164,988 in fiscal year 2015 compared to $497,230 in fiscal year 2014 for a decrease of $332,242.
During fiscal year 2014, Greystone had non-recurring sales of approximately $460,000. The decrease in pallet sales from fiscal year 2014 to fiscal year 2015 is principally due to these non-recurring sales in fiscal year 2014.
Greystone’s sales to its major customer in fiscal year 2015 were 33% of pallet sales compared to 30% of pallet sales in fiscal year 2014. While the percentage to pallet sales increased from fiscal year 2014 to 2015, the sales in dollar amounts was comparable for the two periods. Pallet sales to Greystone’s major customer are generally based on the customer’s need to maintain its pallet inventory and may vary by period. Greystone cannot predict the major customer’s future needs to maintain or grow its pallet inventory but has been able to grow sales to new pallet customers developed through Greystone’s marketing efforts to broaden its customer base.
Other sales included sales of recycled-pelletized plastic resin and tolling services for grinding and pelletizing material. During fiscal year 2015, Greystone began providing tolling services to customers to grind and/or pelletize a customer’s plastic material. Substantially all of the sales in fiscal year 2015 resulted from providing tolling services. All of the sales in fiscal year 2014 were from sales of pelletized plastic resin. Plastic resin sales generally vary from period to period depending on availability of product at prices which allow Greystone to resell at reasonable margins.
| 5 |
Cost of Sales
Cost of sales in fiscal year 2015 was $2,431,250, or 66% of sales, compared to $3,803,454, or 84% of sales, in fiscal year 2014. The ratio of cost of sales to sales in fiscal year 2014 is higher than the ratio for fiscal year 2015 primarily due to certain charges incurred in fiscal year 2014 due to the recall of certain pallets that failed to meet customer specifications.
General, Selling and Administrative Expenses
General, selling and administrative expenses were $573,099 in fiscal year 2015 compared to $640,529 in fiscal year 2014 for a decrease of $67,430. The decrease is primarily due to a $39,438 decrease in commission expense. This variation between the two periods is not necessarily indicative of the commission expense to be expected for future periods.
Provision for (Benefit from) Income Taxes
The provision for (benefit from) income taxes was $143,728 and $(53,000) in fiscal years 2015 and 2014, respectively. The provision for (benefit from) recognized in fiscal years 2015 and 2014 is directly related to the income (loss) before income taxes. The effective tax rate differs from federal statutory rates due to net income from GRE which, as a limited liability company, is not taxed at the corporate level.
Greystone has net operating losses (“NOL’s”) for tax purpose, and until the NOLs are fully realized, management will continue to evaluate the extent that a valuation allowance is needed. Factors that management will consider, among others, are continued diversity in Greystone’s customer base and stability in its sales volumes.
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 (Loss)
Greystone recorded net income of $336,816 in fiscal year 2015 compared to a net loss of $(98,076) in fiscal year 2014 primarily for the reasons discussed above.
Net Income (Loss) Attributable to Common Stockholders
The net income attributable to common stockholders for fiscal year 2015 was $198,859, or $0.01 per share, compared to a net loss of $(213,553), or $(0.01) per share, in fiscal year 2014 primarily for the reasons discussed above.
Liquidity and Capital Resources
A summary of cash flows for the nine-month period ended February 28, 2015 is as follows:
| Cash provided by operating activities | $ | 1,832,181 | ||
| Cash used in investing activities | (820,364 | ) | ||
| Cash used in financing activities | (1,467,769 | ) |
| 6 |
The contractual obligations of Greystone are as follows:
Total | Less
than | 1-3 years | 4-5 years | More
than | ||||||||||||||||
| Long-term debt | $ | 13,325,752 | $ | 2,550,923 | $ | 6,215,147 | $ | 4,559,682 | $ | -0- | ||||||||||
Greystone had a working capital deficit of $(583,846) at February 28, 2015. Excluding the accrued interest payable to Robert B. Rosene, Jr., a member of Greystone’s board of directors, Greystone’s working capital at February 28, 2015 was $1,479,772. To provide for the funding to meet Greystone’s operating activities and contractual obligations as of February 28, 2015, 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.
Substantially all of the financing that Greystone has received through the last few fiscal years resulted from loans provided by certain officers and directors of Greystone and bank loans which are guaranteed by certain 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. As such, there is no assurance that funding will be available for Greystone to continue operations.
Greystone has 50,000 outstanding shares of cumulative 2003 Preferred Stock with a liquidation preference of $5,000,000 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 Loan Agreement, as discussed in Note 5 to the consolidated financial statements, Greystone may pay dividends on its preferred stock in an amount not to exceed $500,000 per year.
Forward Looking Statements and Material Risks
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. These forward-looking statements are made in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. 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 Form 10-K for the fiscal year ended May 31, 2014, which was filed on August 29, 2014. Actual results may vary materially from the forward-looking statements. Greystone undertakes no duty to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q.
| 7 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, Greystone carried out an evaluation under the supervision of Greystone’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of Greystone’s disclosure controls and procedures pursuant to the Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based on an evaluation as of May 31, 2014, Warren F. Kruger, Greystone’s Chief Executive Officer, and William W. Rahhal, Greystone’s Chief Financial Officer, identified two material weaknesses in Greystone’s internal control over financial reporting. As of the end of the period covered by this Quarterly Report on Form 10-Q, such material weaknesses had not been rectified. As a result of the continuation of these two material weaknesses, Greystone’s CEO and Chief Financial Officer concluded that Greystone’s disclosure controls and procedures were not effective at February 28, 2015.
During the nine-month period ended February 28, 2015, there were no changes in Greystone’s internal controls over financial reporting that have materially affected, or that are reasonably likely to materially affect, Greystone’s internal control over financial reporting.
None.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
| 8 |
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
| 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 (submitted herewith). | |
| 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 (submitted herewith). | |
| 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 (submitted herewith). | |
| 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 (submitted herewith). | |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at February 28, 2015 and May 31, 2014, (ii) the Consolidated Statements of Operations for the nine months and three months ended February 28, 2015 and 2014, (iii) the Consolidated Statements of Cash Flows for the nine-month periods ended February 28, 2015 and 2014, and (iv) the Notes to the Consolidated Financial Statements (submitted herewith). |
| 9 |
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: April 14, 2015 | /s/ Warren F. Kruger |
| Warren F. Kruger, President and Chief | |
| Executive Officer (Principal Executive Officer) | |
| Date: April 14, 2015 | /s/ William W. Rahhal |
| William W. Rahhal, Chief Financial Officer | |
| (Principal Financial Officer and Principal Accounting Officer) |
| 10 |
Index to Exhibits
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
| 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 (submitted herewith). | |
| 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 (submitted herewith). | |
| 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 (submitted herewith). | |
| 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 (submitted herewith). | |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at February 28, 2015 and May 31, 2014, (ii) the Consolidated Statements Operations for the nine months and three months ended February 28, 2015 and 2014, (iii) the Consolidated Statements of Cash Flows for the nine months ended February 28, 2015 and 2014, and (iv) the Notes to the Consolidated Financial Statements (submitted herewith). |
| 11 |
Exhibit 31.1
CERTIFICATION
I, Warren F. Kruger, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Greystone Logistics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| April 14, 2015 | /s/ Warren F. Kruger |
| Warren F. Kruger | |
| President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, William W. Rahhal, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Greystone Logistics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| April 14, 2015 | /s/ William W. Rahhal |
| William W. Rahhal | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Greystone Logistics, Inc. (the “Company”) on Form 10-Q for the period ending February 28, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Warren F. Kruger, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| April 14, 2015 | /s/ Warren F. Kruger |
| Warren F. Kruger | |
| President and Chief Executive Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Greystone Logistics, Inc. (the “Company”) on Form 10-Q for the period ending February 28, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William W. Rahhal, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| April 14, 2015 | /s/ William W. Rahhal |
| William W. Rahhal | |
| Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.
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