GLGI 10-K & 10-Q changes, risk factors and insider trading

WeHistorically, areGreystone was dependent on a few large customers.

Greystone relies upon a combination of patents and trade secrets to protect its proprietary technology, rights and know-how.knowledge. There can be no assurance that such patent rights will not be infringed upon, that Greystone'sGreystone’s trade secrets will not otherwise become known to or independently developed by competitors, that non-disclosure agreements will not be breached, or that Greystone would have adequate remedies for any such infringement or breach. Litigation may be necessary to enforce Greystone'sGreystone’s proprietary rights or to defend Greystone against third-party claims of infringement. Such litigation could result in substantial cost to, and a diversion of effort by, Greystone and its management and may have a material adverse effect on Greystone. Greystone'sGreystone’s success and potential competitive advantage is dependent upon its ability to exploit the technology under these patents. There can be no assurance that Greystone will be able to exploit the technology covered by these patents or that Greystone will be able to do so exclusively.

The testing, manufacturing and marketing of Greystone'sGreystone’s products and proposed products involve inherent risks related to product liability claims or similar legal theories that may be asserted against Greystone, some of which may cause Greystone to incur significant defense costs. Although Greystone currently maintains product liability insurance coverage that it believes is adequate, there can be no assurance that the coverage limits of its insurance will be adequate under all circumstances or that all such claims will be covered by insurance. In addition, these policies generally must be renewed every year. While Greystone has been able to obtain product liability insurance in the past, there can be no assurance it will be able to obtain such insurance in the future on all of its existing or future products. A successful product liability claim or other judgment against Greystone in excess of its insurance coverage, or the loss of Greystone'sGreystone’s product liability insurance coverage could have a material adverse effect upon Greystone.

Greystone is dependent on the experience, abilities and continued services of its current management. In particular, Warren F. Kruger, Greystone'sGreystone’s PresidentPresident, Chief Executive Officer, Chief Financial Officer, and CEO,Chairman of the Board has played a significant role in the development, management and financing of Greystone. The loss or reduction of services of Warren F. Kruger or any other key employee could have a material adverse effect on Greystone. In addition, there is no assurance that additional managerial assistance will not be required, or that Greystone will be able to attract or retain such personnel.

Greystone'sGreystone’s executive officers and directors control a large percentage of Greystone'sGreystone’s outstanding common stock and all of Greystone's 2003 preferred stock (as of May 31, 2025, all preferred stock has been retired) , which entitles them to certain voting rights, including the right to elect a majority of Greystone'sGreystone’s Board of Directors.

Greystone'sGreystone’s executive officers and directors (and their affiliates), in the aggregate, own approximately 47.2%46.69% of Greystone'sGreystone’s outstanding common stock and have approximately 47.2%46.69% of the voting power. Therefore, Greystone'sGreystone’s executive officers and directors can have significant influence with respect to the outcome of matters submitted to Greystone'sGreystone’s shareholders for approval (including the election and removal of directors and any merger, consolidation or sale of all or substantially all of Greystone'sGreystone’s assets) and to control Greystone'sGreystone’s management and affairs. InDuring addition,fiscal twoyear 2025, Greystone redeemed all $5,000,000 of Greystone's directors (including one who also serves as Greystone’s chief executive officer) own all of Greystone'sits outstanding 2003 preferred stock, with each owning 50%. The terms and conditions of Greystone's 2003no preferred stock provideremained thatoutstanding suchas holder hasof the right to elect a majorityend of Greystone'sthe Boardfiscal of Directors. Effective March 31, 2025, all preferred stock has been retired.year. Such concentration of ownership may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover or other business combination or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, which in turn could have an adverse effect on the market price of Greystone'sGreystone’s common stock.

Greystone has not declared or paid any dividends on its common stock. Greystone currently intends to retain future earnings to fund the development and growth of its business, to repay indebtedness and for general corporate purposes, and, therefore, does not anticipate paying any cash dividends on its common stock in the foreseeable future. Pursuant to the terms and conditions of certain loan documentation with International Bank of Commerce and the terms and conditions of Greystone's 2003 preferred stock,Commerce, Greystone is restricted in its ability to pay dividends to holders of its common stock.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers an attestation of this assessment by the issuer’s independent registered public accounting firm. The standards that must be met for management to assess the internal control over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or PrincipalChief Financial Officer determines that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected.

We do not have any long-term contracts with our suppliers or with our customers, and we do not have many written contracts with our customers, and if we can’tcannot maintain these relationships or if we or our suppliers experience manufacturing problems or delays, our financial results will be negatively affected.

We store products in our warehouses that we then ship to customers or distributors. If we run out of capacity, we won’twill not be able to store as many products and may not be able to maintain all products in an efficient manner. Additionally, if there is any unexpected interruption to our warehousing facilities, for any reason, such as loss of certifications or licenses, as a result of weather, terrorism or acts of war, fire, earthquake, or other national disaster, a work stoppage or other labor-related disruption, electrical outages, or other events, it could result in significant reductions to our sales and margins and could have a material adverse effect on our business, financial condition or results of operations.

As of May 31, 20252026 and 2024,2025, Greystone had FTE’s of approximately 80 and 190 employees. Temporary personnel from a personnel service entity are utilized as needed. At any point in time, the Company can have between 65-8016-80 temporary employees. Greystone'sGreystone’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.

Sales were $27,536,343 for fiscal year 2026 compared to $57,869,480 for fiscal year 2025 compared to $61,780,715 for fiscal year 2024 representing a decrease of $3,911,235,$30,333,137, or about 6%.52%. The reduction in sales, compared to the prior periodperiod, is primarily attributable to an approximateapproximately 24%60-65% decrease in demand from onetwo of its significant customers, which was offset somewhat by an increase in demand from another of its significantmajor customers. The increase in demand from the latter customer was due to a newly designed plastic pallet to specifically meet the customer’s needs.

Selling, general and administrative (SGA) expenses were $5,906,804,$6,051,426 (10%22% of sales) for fiscal year 20252026 compared to $5,168,607,$6,478,151, (8.4%11% of sales) for fiscal year 2024,2025, representing ana increasedecrease of $738,197.$426,725. The increasedecrease iswas primarily dueattributable to bonusestighter paidexpense duringcontrols implemented after the yearloss endedof Maya 31,major 2025.customer.

Benefit (Provision) for Income Taxes

The provisionbenefit for income taxes was $1,106,465$439,519 in fiscal year 20252026 compared to $1,031,204a provision of $(1,106,465) in fiscal year 2024.2025. 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.

Net Income (Loss)

Net loss was $(8,235,576) in fiscal year 2026 compared to net income wasof $2,351,010 in fiscal year 2025 compared to $5,027,491 in fiscal year 2024 for a decrease of $2,676,481$10,586,586 for the reasons discussed above.

Net Income (Loss) Attributable to Common Stockholders

After deducting preferred dividends and income attributable to non-controlling interests,dividends, the net incomeloss attributable to common stockholders was $(8,235,576), or $(0.30) per share, in fiscal year 2026 compared to $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 futherfurther dividend payments are anticipated.

Greystone had a working capital deficit of $4,230,393$(7,860,055) as of May 31, 2025.2026.

Greystone’s principal long-term debt obligations include a $6,000,000$3,000,000 revolving lineloan, ofsubject creditto borrowing base limitations, and several term notesnotes. Greystone was not in compliance with variouscertain maturities.financial covenants as well as cross default provisions as of May 31, 2026; therefore, all of the long term debt has been classified as current. To provide for the funding to meet Greystone'sGreystone’s operating activities and contractual obligations as of May 31, 2025,2026, 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.

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 hashad 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 20252026 and 20242025 of $427,103$1,610 and $721,640,$427,103, 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'sGreystone’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.stock.

Transactions with Warren F. Kruger and Related Entities

Yorktown Management & Financial Services, LLC (“Yorktown”), an entity wholly owned by Mr. Kruger, Greystone’s CEOPresident, Chief Executive Officer, Chief Financial Officer, and President,Chairman of the Board 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 $1,430,000 and $1,457,200 for both fiscal years 20252026 and 2024.2025, respectively.

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 sixnine months ended NovemberFebruary 30,28, 2025,2026, 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.

Greystone had full-time equivalents of approximately 82 and 161181 regular employees as of NovemberFebruary 30,28, 20252026 and 2024,2025, respectively. As of NovemberFebruary 30,28, 2025,2026 with the reduction in the production schedule due to loss of a major customer, the Company has stopped using temporary employees, prior to the reduction in production, at any point in time, the Company cancould have between 65-70 temporary employees. Full-time equivalent is a measure based on time worked.

SixNine months Ended NovemberFebruary 30,28, 20252026 Compared to SixNine months Ended NovemberFebruary 30,28, 20242025

During fiscal year 2026, the Company lost a major customer. Based on historical sales to this customer, management expects a total loss of sales of approximately $30 million for fiscal year 2026. During the sixnine months ended NovemberFebruary 30,28, 2025,2026, total sales decreased $7,094,277,$17,938,676, or 28%.45%. Sales decreased primarily due to reductions of approximately $3.3$11 million from the lost major customer. The Company also experienced additional reductions in sales of $3.1$4.3 million from another major customer,customer; howeverhowever, this loss is due to delays in construction of specific production equipment related to this customers’ orders. Sales for this customer are projected to return to normal in the fourth quarter. Additional miscellaneous fluctuations among other existing customers contributed to the overall change. No significant new or other lost customers were reported during the period.

Greystone’s two major customers accounted for approximately 68%60% and 72%71% of total sales during the sixnine months ended NovemberFebruary 30,28, 20252026 and 2024,2025, 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.

The cost of sales for the sixnine months ended NovemberFebruary 30,28, 2025,2026, was $18,430,156$23,360,699 or 100%106% of sales, compared to $22,312,466,$33,890,446, or 87%85% of sales, for the sixnine months ended NovemberFebruary 30,28, 2024.2025. The increase in the ratio of cost of sales to sales for the sixnine months ended NovemberFebruary 30,28, 2025,2026, over the prior period was primarily the result of reduced production during the sixnine months ended NovemberFebruary 30,28, 2025.2026, Specifically,specifically, the Company capitalized less overhead costs as fewer pallets were produced.produced due to loss of customers described above. 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 $2 million for the period.

Gross profit (loss) for the sixnine months ended NovemberFebruary 30,28, 2025,2026, was $71,461,$(1,387,683), or .4%.(6.3%) of sales, compared to $3,283,428,$6,021,246, or 13%15% of sales, for the sixnine months ended NovemberFebruary 30,28, 2024.2025. The principal reason for decrease in gross profit margin for the sixnine months ended NovemberFebruary 30,28, 2025,2026, over the prior period was the decline in production as discussed above.

Selling, general and administrative expenses were $ 2,987,681,4,190,611, or 16%19% of sales, for the sixnine months ended NovemberFebruary 30,28, 20252026 compared to $3,181,148,$4,556,062, or 12%11% of sales, for the sixnine months ended NovemberFebruary 30,28, 2024,2025, representing a decrease of $193,467.$365,451. 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.

During the sixnine months ended NovemberFebruary 30,28, 2024,2025, the Company and the insurer agreed on the amount of settlements on certain casualty losses occurring in fiscal years 2024 and 2023. The payments resulted in a gain of $741,821 recorded in the first quarter of fiscal year 2025, this did not reoccur in fiscal year 2026.

Other income, generally from interest income and the sale of scrap material, was $9,388$12,400 and $70,470$115,956 for the sixnine months ended NovemberFebruary 30,28, 20252026 and 2024.2025, respectively.

Interest expense was $468,517$712,473 for the sixnine months ended NovemberFebruary 30,28, 2025,2026, compared to $570,081$818,786 for the sixnine months ended NovemberFebruary 30,28, 2024,2025, representing a decrease of $101,564.$106,313. 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%6.75% at NovemberFebruary 30,28, 2025,2026, compared to 7.75%7.50% at NovemberFebruary 30,28, 2024.2025.

The benefit (provision) for income taxes was $212,232$313,172 and $(213,750407,770) for the sixnine months ended NovemberFebruary 30,28, 20252026 and 2024,2025, respectively. The significant change in provision primarily reflects a shift from taxable income in 20242025 to a pretax loss in 2025.2026. 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.

Greystone recorded net loss of $3,163,117$(5,965,195) for the sixnine months ended NovemberFebruary 30,28, 2025,2026, compared to net income of $130,740$1,096,405 for sixnine months ended NovemberFebruary 30,28, 2024,2025, primarily for the reasons discussed above.

The net loss attributable to common stockholders for the sixnine months ended NovemberFebruary 30,28, 2025,2026, was $3,163,117$(5,965,195) or $0.12$(0.22) per share, compared to net lossincome attributable to common stockholders of $157,295,$691,942, or $0.01$0.02 per share, for the sixnine months ended NovemberFebruary 30,28, 2024,2025, primarily for the reasons discussed above.

Three months Ended NovemberFebruary 30,28, 20252026 Compared to Three months Ended NovemberFebruary 30,28, 20242025

During fiscal year 2026, the Company lost a major customer. Based on historical sales to this customer, management expects a total loss of sales of approximately $30 million for fiscal year 2026. During the three months ended NovemberFebruary 30,28, 2025,2026, total sales decreased $4,366,203,$10,844,399, or 36%.76%. Sales decreased primarily due to reductions of approximately $2.6$7.6 million from the lost major customer. The Company also experienced additional reductions in sales of $1.3$1.7 million from another major customer.customer; Howeverhowever this loss is due to delays in construction of specific production equipment related to this customers’ orders. Sales for this customer are projected to return to normal in the fourth quarter. Additional miscellaneous fluctuations among other existing customers contributed to the overall change. No significant new or other lost customers were reported during the period.

Greystone’s two major customers discussed above accounted for approximately 66%22% and 75%71% of total sales during the three months ended NovemberFebruary 30,28, 20252026 and 2024,2025, respectively. Additionally, Greystone has one other major customer that accounted for approximately 13% and 4% of total sales during the three months ended February 28, 2026 and 2025, 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.

The cost of sales for the three months ended NovemberFebruary 30,28, 2025,2026, was $8,119,543$4,930,543 or 105%142% of sales, compared to $10,754,713,$11,577,980, or 89%81% of sales, for the three months ended NovemberFebruary 30,28, 2024.2025. The increase in the ratio of cost of sales to sales for the three months ended NovemberFebruary 30,28, 2025,2026, over the prior period was primarily the result of reduced production during the three months ended NovemberFebruary 30,28, 2025.2026, Specificallyspecifically, 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.

Gross profit (loss) for the three months ended NovemberFebruary 30,28, 2025,2026, was $(350,4991,459,144), or -5%.(42%). of sales, compared to $1,380,534,$2,737,818, or 11%19% of sales, for the three months ended NovemberFebruary 30,28, 2024.2025. The principal reason for decrease in gross profit margin for the three months ended NovemberFebruary 30,28, 2025,2026, over the prior period was the decline in production as discussed above.

Selling, general and administrative expenses were $1,340,737,$1,202,930, or 17%35% of sales, for the three months ended NovemberFebruary 30,28, 20252026 compared to $1,360,957,$1,374,914, or 11%10% of sales, for the three months ended NovemberFebruary 30,28, 2024,2025, representing a decrease of $20,220.$171,984. SG&AThe costsdecrease duringis primarily due to continued tight control of other expenses given the currentloss periodof compareda tomajor the prior period were consistent with past performance.customer.

Other income, generally from interest income and the sale of scrap material, was $4,269$3,012 and $51,081$45,486 for the three months ended NovemberFebruary 30,28, 20252026 and 2024.2025.

Interest expense was $238,688$243,956 for the three months ended NovemberFebruary 30,28, 2025,2026, compared to $275,372$248,705 for the three months ended NovemberFebruary 30,28, 2024,2025, representing a decrease of $36,684.$4,749. 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%6.75% at NovemberFebruary 30,28, 2025,2026, compared to 7.75%7.50% at NovemberFebruary 30,28, 2024.2025.

The benefit (provision) for income taxes was $(138,440)$100,940 and $0$(194,020) for the three months ended NovemberFebruary 30,28, 20252026 and 2024,2025, respectively. The significant change in provision primarily reflects a shift from taxable income in 20242025 to a pretax loss in 2025 which has triggered consideration for a valuation allowance against future deferred tax assets.2026. As a result, the current year provision reflects an expenseincome tax benefit associated with athe fullpretax valuationloss, allowancewhereas onthe previouslyprior recordedyear deferredincluded income tax assets.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.

Net Income (Loss)

Greystone recorded net loss of $2,064,095$(2,802,078) for the three months ended NovemberFebruary 30,28, 2025,2026, compared to net lossincome of $204,714$965,665 for three months ended NovemberFebruary 30,28, 2024,2025, primarily for the reasons discussed above.

The net loss attributable to common stockholders for the sixthree months ended NovemberFebruary 30,28, 2025,2026, was $2,064,095$(2,802,078) or $0.08$(0.10) per share, compared to net lossincome attributable to common stockholders of $345,297,$849,867, or $0.01$0.03 per share, for the three months ended NovemberFebruary 30,28, 2024,2025, primarily for the reasons discussed above.

A summary of cash flows for the sixnine months ended NovemberFebruary 30,28, 2025,2026, was as follows:

The contractual obligations and rents of Greystone as of NovemberFebruary 30,28, 20252026 were as follows:

Greystone had a working capital of $994,387$1,196,903 as of NovemberFebruary 30,28, 2025.2026.

Greystone’s principal debt obligations include $900,000 borrowed under a $6,000,000 revolverrevolving loan, subject to borrowing base computation,limitations, and several term notesnotes. Greystone was not in compliance with variouscertain maturities.financial covenants as of February 28, 2026. Therefore, all of the long term debt has been classified as current. To provide for the funding to meet Greystone's operating activities and contractual obligations as of NovemberFebruary 30,28, 2025,2026, 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.

A substantial portion of debt financing that Greystone has received through NovemberFebruary 30,28, 2025,2026, has been provided by loans or through bank loan guarantees from anthe officerofficers 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.

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 hashad 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 sixnine months ended NovemberFebruary 30,28, 20252026 and 20242025 of $1,610 and $96,575,$378,938, 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.

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 quarteror third quarters 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.

During fiscal year 2026, the Company lost a major customer, which represented a significant portion of consolidated revenues. This change is expected to impact future sales values and will reduce operating cash flows in both the current and subsequent periods. In response, management plans to continue its efforts to expand the present market area and increase sales to its existing customers and seek new customer opportunities. Management also intends to continue tight control over all expenditures and an increased emphasis on inventory and production management. This will lead to decreased labor needs and the discontinued use of temporary labor. Management plans to make sales price adjustments in the future as necessary to correspond with current contribution margins. Subsequent toDuring the quarter ended NovemberFebruary 30,28, 2025,2026, the Company was able to modify terms of its'its debt to extend the maturity and require interest only payments for the next 1210 months. Management believes that the successful execution of its business plan coupled with the debt modifications will be sufficient to meet its funding requirements for the foreseeable future.

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.

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 NovemberFebruary 30,28, 2025,2026, Greystone will not be able to realize the full effect of the deferred tax assets so a valuation allowance of $631,980$1,293,139 has been recorded. As of May 31, 2025, no valuation allowance was recorded. As of NovemberFebruary 30,28, 20252026 and May 31, 20252025, there was $692,035 and $263,935,$268,935, respectively of prepaid tax expenses related to fiscal year 2025.