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 November 30, 2019

 

[  ]	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 every Interactive Data File required to be submitted 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [X]	Smaller reporting company [X]
	Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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: January 10, 2020 - 28,361,201

 

 

 

GREYSTONE LOGISTICS, INC.

FORM 10-Q

For the Period Ended November 30, 2019

 

			Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited) As of November 30, 2019 and May 31, 2019		1
	Consolidated Statements of Income (Unaudited) For the Six Months Ended November 30, 2019 and 2018		2
	Consolidated Statements of Income (Unaudited) For the Three Months Ended November 30, 2019 and 2018		3
	Consolidated Statements of Changes in Equity (Unaudited) For the Six Months Ended November 30, 2019 and 2018		4
	Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended November 30, 2019 and 2018		5
	Notes to Consolidated Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.	Controls and Procedures		21
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		21
Item 1A.	Risk Factors		21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3.	Defaults Upon Senior Securities		21
Item 4.	Mine Safety Disclosures		21
Item 5.	Other Information		22
Item 6.	Exhibits		22
SIGNATURES			23

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Greystone Logistics, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

		November 30, 2019				May 31, 2019
Assets
Current Assets:
Cash		$	1,580,845			$	1,255,408
Accounts receivable -
Trade			4,391,278				6,320,875
Related parties			103,834				50,320
Inventory			3,692,991				2,620,991
Prepaid expenses			99,978				239,146
Total Current Assets			9,868,926				10,486,740
Property, Plant and Equipment, net			32,413,476				32,680,472
Total Assets		$	42,282,402			$	43,167,212
Liabilities and Equity
Current Liabilities:
Current portion of long-term debt		$	3,442,269			$	3,030,630
Current portion of financing leases			2,111,028				1,516,629
Current portion of operating leases			72,144				58,236
Accounts payable and accrued liabilities			7,442,317				6,520,721
Deferred revenue			1,514,495				2,201,067
Preferred dividends payable			102,637				112,192
Total Current Liabilities			14,684,890				13,439,475
Long-Term Debt, net of current portion			17,905,736				19,629,148
Financing Leases, net of current portion			3,732,262				5,238,190
Operating Leases, net of current portion			146,489				122,558
Deferred Tax Liability			1,246,642				926,642
Equity:
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, 28,361,201 shares issued and outstanding			2,836				2,836
Additional paid-in capital			53,790,764				53,790,764
Accumulated deficit			(50,361,999	)			(51,108,677	)
Total Greystone Stockholders’ Equity			3,431,606				2,684,928
Non-controlling interest			1,134,777				1,126,271
Total Equity			4,566,383				3,811,199
Total Liabilities and Equity		$	42,282,402			$	43,167,212

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Greystone Logistics, Inc.

Consolidated Statements of Income

(Unaudited)

 

		For the Six Months Ended November 30,
		2019				2018
Sales		$	38,167,971			$	32,939,240
Cost of Sales			33,656,973				28,801,518
Gross Profit			4,510,998				4,137,722
Selling, General and Administrative Expenses			2,190,228				1,792,741
Operating Income			2,320,770				2,344,981
Other Income (Expense):
Other income			4,913				5,290
Interest expense			(913,699	)			(848,318	)
Income before Income Taxes			1,411,984				1,501,953
Provision for Income Taxes			320,000				440,100
Net Income			1,091,984				1,061,853
Income Attributable to Non-controlling Interest			(130,306	)			(123,527	)
Preferred Dividends			(215,000	)			(208,045	)
Net Income Attributable to Common Stockholders		$	746,678			$	730,281
Income Per Share of Common Stock -
Basic and Diluted		$	0.03			$	0.03
Weighted Average Shares of Common Stock Outstanding -
Basic			28,361,201				28,361,201
Diluted			29,005,432				29,009,949

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Greystone Logistics, Inc.

Consolidated Statements of Income

(Unaudited)

 

		For the Three Months Ended November 30,
		2019				2018
Sales		$	19,503,462			$	14,733,130
Cost of Sales			17,353,239				13,041,366
Gross Profit			2,150,223				1,691,764
Selling, General and Administrative Expenses			1,112,630				853,650
Operating Income			1,037,593				838,114
Other Income (Expense):
Other income			2,880				3,021
Interest expense			(432,788	)			(435,690	)
Income before Income Taxes			607,685				405,445
Provision for Income Taxes			135,000				108,500
Net Income			472,685				296,945
Income Attributable to Non-controlling Interest			(65,620	)			(62,952	)
Preferred Dividends			(102,637	)			(105,100	)
Net Income Attributable to Common Stockholders		$	304,428			$	128,893
Income Per Share of Common Stock -
Basic and Diluted		$	0.01			$	0.00
Weighted Average Shares of Common Stock Outstanding -
Basic			28,361,201				28,361,201
Diluted			29,001,160				29,018,262

 

The accompanying notes are an integral part of these consolidated financial

 

 

Greystone Logistics, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

For the Six Months Ended November 30, 2019 and 2018

(Unaudited)

 

																										Total
																		Additional								Greystone				Non-
		Preferred Stock								Common Stock								Paid-in				Accumulated				Stockholders’				controlling				Total
		Shares				Amount				Shares				Amount				Capital				Deficit				Equity				Interest				Equity
Balances, May 31, 2019			50,000			$	5				28,361,201			$	2,836			$	53,790,764			$	(51,108,677	)		$	2,684,928			$	1,126,271			$	3,811,199
Cash distributions			-				-				-				-				-				-				-				(52,200	)			(52,200	)
Preferred dividends, $2.25/share			-				-				-				-				-				(112,363	)			(112,363	)			-				(112,363	)
Net income			-				-				-				-				-				554,613				554,613				64,686				619,299
Balances, August 31, 2019			50,000				5				28,361,201				2,836				53,790,764				(50,666,427	)			3,127,178				1,138,757				4,265,935
Cash distributions			-				-				-				-				-				-				-				(69,600	)			(69,600	)
Preferred dividends, $2.05/share			-				-				-				-				-				(102,637	)			(102,637	)			-				(215,000	)
Net income			-				-				-				-				-				407,065				407,065				65,620				472,685
Balances, November 30, 2019			50,000			$	5				28,361,201			$	2,836			$	53,790,764			$	(50,361,999	)		$	3,431,606			$	1,134,777			$	4,566,383
Balances, May 31, 2018			50,000			$	5				28,361,201			$	2,836			$	53,790,764			$	(52,485,313	)		$	1,308,292			$	1,085,155			$	2,393,447
Cash distributions			-				-				-				-				-				-				-				(51,000	)			(51,000	)
Preferred dividends, $2.06/share			-				-				-				-				-				(102,945	)			(102,945	)			-				(102,945	)
Net income			-				-				-				-				-				704,333				704,333				60,575				764,908
Balances, August 31, 2018			50,000				5				28,361,201				2,836				53,790,764				(51,883,925	)			1,909,680				1,094,730				3,004,410
Cash distributions			-				-				-				-				-				-				-				(51,000	)			(51,000	)
Preferred dividends, $2.10/share			-				-				-				-				-				(105,100	)			(105,100	)			-				(105,100	)
Net income			-				-				-				-				-				233,993				233,993				62,952				296,945
Balances, November 30, 2018			50,000			$	5				28,361,201			$	2,836			$	53,790,764			$	(51,755,032	)		$	2,038,573			$	1,106,682			$	3,145,255

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Greystone Logistics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

		For the Six Months Ended November 30,
		2019				2018
Cash Flows from Operating Activities:
Net income		$	1,091,984			$	1,061,853
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization			2,560,516				2,178,499
Deferred tax expense			320,000				440,100
Decrease in trade accounts receivable			1,929,597				2,591,083
Increase in related party receivables			(53,514	)			(41,262	)
Increase in inventory			(1,072,000	)			(2,298,739	)
Decrease in prepaid expenses			139,168				159,246
Increase in accounts payable and accrued liabilities			687,310				2,272,400
Decrease in deferred revenue			(686,572	)			(2,846,745	)
Net cash provided by operating activities			4,916,489				3,516,435
Cash Flows from Investing Activities:
Purchases of property and equipment			(2,018,815	)			(5,308,802	)
Cash Flows from Financing Activities:
Proceeds from long-term debt			672,000				3,514,265
Principal payments on long-term debt and financing leases			(2,390,138	)			(2,321,590	)
Proceeds from revolving loan			690,000				2,421,000
Principal payments on revolving loan			(972,000	)			(1,300,000	)
Principal payments on related party note payable and financing lease			(222,384	)			(122,501	)
Payments for debt issuance costs			(3,360	)			-
Dividends paid on preferred stock			(224,555	)			(102,945	)
Distributions paid by non-controlling interest			(121,800	)			(102,000	)
Net cash provided by (used in) financing activities			(2,572,237	)			1,986,229
Net Increase in Cash			325,437				193,862
Cash, beginning of period			1,255,408				379,632
Cash, end of period		$	1,580,845			$	573,494
Non-cash Activities:
Acquisition of equipment by capital lease		$	-			$	2,333,333
Capital expenditures in accounts payable		$	507,851			$	110,182
Preferred dividend accrual		$	102,637			$	105,100
Supplemental information:
Interest paid		$	913,992			$	828,706

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

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 November 30, 2019 and the results of its operations and cash flows for the six months and three months ended November 30, 2019 and 2018. 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, 2019 and the notes thereto included in Greystone’s Form 10-K for such period. The results of operations for the six months and three months ended November 30, 2019 and 2018 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. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

 

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 attributable to common stockholders by the weighted-average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable 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. Instruments which have an anti-dilutive effect for the six months and three months ended November 30 are as follows:

 

		2019				2018
Preferred stock convertible into common stock			3,333,333				3,333,333

 

 

The following tables set forth the computation of basic and diluted earnings per share:

 

For the six months ended November 30, 2019 and 2018:

 

		2019				2018
Numerator -
Net income attributable to common stockholders		$	746,678			$	730,281
Denominator -
Weighted-average shares outstanding - basic			28,361,201				28,361,201
Incremental shares from assumed conversion of options and warrants			644,231				648,748
Diluted shares			29,005,432				29,009,949
Income per share -
Basic and Diluted		$	0.03			$	0.03

 

For the three months ended November 30, 2019 and 2018:

 

		2019				2018
Numerator -
Net income attributable to common stockholders		$	304,428			$	128,893
Denominator -
Weighted-average shares outstanding - basic			28,361,201				28,361,201
Incremental shares from assumed conversion of options and warrants			639,959				657,061
Diluted shares			29,001,160				29,018,262
Income per share -
Basic and Diluted		$	0.01			$	0.00

 

 

Note 3. Inventory

 

Inventory consists of the following:

 

		November 30, 2019				May 31, 2019
Raw materials		$	1,701,839			$	1,295,991
Finished goods			1,991,152				1,325,000
Total inventory		$	3,692,991			$	2,620,991

 

Note 4. Property, Plant and Equipment

 

A summary of property, plant and equipment for Greystone is as follows:

 

		November 30, 2019				May 31, 2019
Production machinery and equipment		$	47,323,256			$	45,645,910
Plant buildings and land			6,724,513				6,336,855
Leasehold improvements			1,129,474				979,890
Furniture and fixtures			601,586				563,074
Right-to-use assets under operating leases			218,634				180,794
			55,997,463				53,706,523
Less: Accumulated depreciation and amortization			(23,583,987	)			(21,026,051	)
Net Property, Plant and Equipment		$	32,413,476			$	32,680,472

 

Production machinery and equipment includes right-to-use equipment capitalized pursuant to financing leases in the amount of $7,861,233 at November 30, 2019 and May 31, 2019. The financing leases all include an option to purchase which management anticipates exercising and, accordingly, the related equipment is being amortized over the estimated useful life using the straight-line method over 3.5 years for pallet molds and 12 years for injection molding machines.

 

Production machinery includes deposits on equipment in the amount of $923,063 at November 30, 2019 which have not been placed into service. Two plant buildings and land are owned by GRE, a variable interest entity (“VIE”), having a net book value of $2,838,613 at November 30, 2019.

 

Depreciation expense, including amortization expense related to right-to-use assets under financing leases, for the six months ended November 30, 2019 and 2018 was $2,557,936 and $2,131,971, respectively.

 

Note 5. Related Party Transactions/Activity

 

Yorktown Management & Financial Services, LLC

 

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. GSM pays weekly rental fees to Yorktown of $27,500 for use of Yorktown’s grinding equipment and pelletizing equipment. Rental fees were $715,000 for the each of the six months ended November 30, 2019 and 2018.

 

 

Effective January 1, 2017, Greystone and Yorktown entered into a five-year lease for office space at a monthly rental of $4,000 per month. Total rent expense was $24,000 for each of the six months ended November 30, 2019 and 2018. At November 30, 2019, future minimum payments under the non-cancelable operating lease for the remaining three years are $48,000, $48,000, and $4,000.

 

TriEnda Holdings, L.L.C.

 

TriEnda Holdings, L.L.C. (“TriEnda”) is a manufacturer of plastic pallets, protective packing and dunnage utilizing thermoform processing for which Warren Kruger, Greystone’s President and CEO, serves TriEnda as the non-executive Chairman of the Board and is a partner in a partnership which has a majority ownership interest in TriEnda. Greystone periodically purchases material and pallets from TriEnda. Purchases for the six months ended November 30, 2019 and 2018 totaled $5,400 and $42,349, respectively.

 

Green Plastic Pallets

 

Greystone sells plastic pallets to Green Plastic Pallets (“Green”), an entity that is owned by James Kruger, brother to Warren Kruger, Greystone’s President and CEO. Greystone had sales to Green of $271,320 and $167,400 for the six months ended November 30, 2019 and 2018, respectively. The account receivable due from Green at November 30, 2019 was $96,900.

 

Note 6. Long-term Debt

 

Debt as of November 30, 2019 and May 31, 2019 is as follows:

 

		November 30, 2019				May 31, 2019
Term loan A payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, maturing April 30, 2023		$	2,861,716			$	3,234,947
Term loan C payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.0%, maturing August 4, 2024			1,287,485				1,399,490
Term loan D payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, maturing January 10, 2022			1,447,506				1,744,235
Term loan E payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4.75%, maturing January 10, 2022			814,945				927,199
Term loan F payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 5.25%, maturing February 8, 2021			3,082,407				3,398,247
Term loan G payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 5.25%, maturing April 30, 2024			858,375				876,934
Term loan H payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 5.25%, maturing January 1, 2022			564,067				-
Revolving loan payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 5.5%, due January 31, 2021			2,923,000				3,205,000
Note payable to First Bank, prime rate of interest plus 1.45% but not less than 4.95%, monthly principal and interest payment of $30,628, due August 21, 2021, secured by production equipment			643,089				800,488
Term loan payable by GRE to International Bank of Commerce, interest rate of 5.5%, monthly principal and interest payment of $27,688, due April 30, 2023			2,362,662				2,461,116
Note payable to Robert Rosene, 7.5% interest, due January 15, 2021			4,340,285				4,426,631
Other			200,934				223,177
Total long-term debt			21,386,471				22,697,464
Debt issuance costs, net of amortization			(38,466	)			(37,686	)
Total debt, net of debt issuance costs			21,348,005				22,659,778
Less: Current portion of long-term debt			(3,442,269	)			(3,030,630	)
Long-term debt, net of current portion		$	17,905,736			$	19,629,148

 

The prime rate of interest as of November 30, 2019 was 4.75%.

 

 

Loan Agreement between Greystone and IBC

 

The Loan Agreement (“IBC Loan Agreement”), dated January 31, 2014 and as amended from time to time, among Greystone and GSM (the “Borrowers”) and International Bank of Commerce (“IBC”) provides for certain term loans and a revolver loan.

 

Effective July 1, 2019, the Borrowers and IBC entered into the Tenth Amendment to the IBC Loan Agreement providing for Term Loan H in the amount of $672,000 with a maturity date of January 1, 2022, for the procurement of production equipment.

 

The IBC term loans make equal monthly payments of principal and interest in such amounts sufficient to amortize the principal balance as follows: (i) Term Loan A over a seven-year period beginning February 29, 2016 (currently $77,550 per month), (ii) Term Loan C over a seven-year period beginning November 30, 2017 (currently $25,205 per month) and (iii) Term Loan D over a four-year period beginning February 10, 2019 (currently $57,469 per month), (iv) Term Loan E over a four-year period beginning February 10, 2019 (currently $23,060 per month), (v) Term Loan F over a five-year period beginning February 28, 2019 (currently $68,849 per month), (vi) Term Loan G over a fifteen-year period beginning April 30, 2019 (currently $7,466 per month) and (vii) Term Loan H over 30 months beginning August 1, 2019 (currently $24,203 per month). The monthly payments of principal and interest on the IBC term loans may vary as a result of changes in the prime rate of interest.

 

The IBC Loan Agreement, as amended, provides a revolving loan in an aggregate principal amount of up to $4,000,000 (the “Revolving Loan”). The amount which can be borrowed from time to time is dependent upon the amount of the borrowing base not to exceed $4,000,000. The Revolving Loan bears interest at the greater of the prime rate of interest plus 0.5%, or 5.50% and matures January 31, 2021. 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 does not reduce the original amount available to the Borrowers.

 

The IBC Loan Agreement, among other things, requires a quarterly affirmation that the Borrowers have maintained a debt service coverage ratio of 1:25 to 1:00. As of November 30, 2019, Greystone was not in compliance with this debt service coverage ratio. IBC has issued a waiver, dated January 14, 2020, with respect to this event 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 notes 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 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 August 10, 2018, GRE and IBC entered into an amended agreement to extend the maturity of the note to April 30, 2023 and increase the interest rate to 5.5%. The note 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 an unsecured note payable at 7.5% interest.

 

Effective June 1, 2016, the note was restated (the “Restated Note”) to combine the outstanding principal, $2,066,000, and accrued interest, $2,475,690, into an unsecured note payable of $4,541,690 with an extended maturity date of January 15, 2021. The Restated Note provides that accrued interest is payable monthly and allows Greystone to use commercially reasonable efforts to pay such amounts as allowed by the IBC Loan Agreement against the interest accrued prior to the restatement. The balance of the note at November 30, 2019 was $4,340,285.

 

Maturities

 

Maturities of Greystone’s long-term debt for the five years subsequent to November 30, 2019 are $3,442,269, $12,683,643, $1,919,583, $2,416,434 and $924,542.

 

Note 7. Leases

 

Financing Leases

 

Financing leases as of November 30, 2019 and May 31, 2019:

 

		November 30, 2019				May 31, 2019
Non-cancellable financing leases		$	5,843,290			$	6,754,819
Less: Current portion			(2,111,028	)			(1,516,629	)
Non-cancellable financing leases, net of current portion		$	3,732,262			$	5,238,190

 

 

Greystone and an unrelated private company entered into three lease agreements for certain production equipment with a total cost of approximately $6.9 million which were effective February 24, 2018, August 2, 2018 and December 21, 2018, respectively, with five-year terms and a capitalized interest rate of 7.4%. Each of the lease agreements include a bargain purchase option to acquire the production equipment at the end of the lease term. The leased equipment is principally used to produce pallets for the private company. Lease payments are made as a credit on the sales invoice at the rate of $3.32 for each pallet produced and shipped from the respective leased equipment. The estimated aggregate monthly rental payments are approximately $178,000. The rent payments can vary each month depending on the quantity of pallets produced from each machine. Due to improvements in the production process, pallet production has increased since May 31, 2019 thereby resulting in an increase in the estimated aggregate future rental payments. The lease agreements provide for minimum monthly lease rental payments based upon the total pallets sold in excess of a specified amount not to exceed the monthly productive capacity of the leased machines.

 

Effective December 28, 2018, Yorktown purchased certain production equipment from Greystone at net book value of $968,168 and entered into a lease agreement with Greystone for the equipment with a monthly rent of $27,915 for the initial thirty-six months and $7,695 for the following twelve months and maturing December 27, 2022. The lease agreement has a $10,000 purchase option at the end of the lease.

 

The production equipment under the non-cancelable financing leases has a gross carrying amount of $7,861,233 at November 30, 2019. Amortization of the carrying amount of approximately $416,000 and $449,000 was included in depreciation expense for the six months ended November 30, 2019 and 2018, respectively.

 

Operating Leases

 

Greystone recognize a lease liability for each lease based on the present value of remaining minimum fixed rental payments, using a discount rate that approximates the rate of interest for a collateralized loan over a similar term. A right-of-use asset, reported in property, plant and equipment on the consolidated balance sheets, is recognized for each lease, valued at the lease liability. Minimum fixed rental payments are recognized on a straight-line basis over the life of the lease as costs and expenses on the consolidated statement of income. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.

 

Greystone has three non-cancellable operating leases for (i) equipment with a fifty-two month term and a forty-eight month term and a discount rate of 5.40% and (ii) office space on a sixty month term and a discount rate of 5.0%. The leases are single-term with constant monthly rental rates.

 

 

Lease Summary Information

 

For the six months ended November 30, 2019 and 2018:

 

		2019				2018
Lease Expense
Financing lease expense -
Amortization of right-of-use assets		$	416,000			$	449,000
Interest on lease liabilities			220,255				126,514
Operating lease expense			39,650				24,000
Short-term lease expense			797,835				749,843
Total		$	1,473,740			$	1,349,357
Other Information
Cash paid for amounts included in the measurement of lease liabilities for finance leases -
Operating cash flows		$	220,255			$	126,514
Financing cash flows		$	911,529			$	1,333,699
Cash paid for amounts included in the measurement of lease liabilities for operating leases -
Operating cash flows		$	39,650			$	24,000
Right-of-use assets obtained in exchange for lease liabilities -
Financing leases		$	-			$	2,333,333
Operating leases		$	67,750			$	-
Weighted-average remaining lease term (in years) -
Financing leases			3.2				3.4
Operating leases			3.5				3.1
Weighted-average discount rate -
Financing leases			7.1	%			7.0	%
Operating leases			5.3	%			5.0	%

 

Future minimum lease payments under non-cancelable leases as of November 30, 2019, are approximately:

 

		Financing Leases				Operating Leases
Twelve months ended November 30, 2020		$	2,471,000			$	81,881
Twelve months ended November 30, 2021			2,471,000				81,881
Twelve months ended November 30, 2022			1,506,000				37,881
Twelve months ended November 30, 2023			-				27,751
Twelve months ended November 30, 2024			-				9,037
Total future minimum lease payments			6,448,000				238,431
Present value discount			604,710				19,798
Present value of minimum lease payments		$	5,843,290			$	218,633

 

 

Note 8. Deferred Revenue

 

Advances from a customer pursuant to a contract for the sale of plastic pallets is recognized as deferred revenue. Revenue is recognized by Greystone as pallets are shipped to the customer(s). Customer advances totaled $-0- and $3,280,500 during the six months ended November 30, 2019 and 2018, respectively. Revenue recognition from customer advances during the six months ended November 30, 2019 was $686,572. The unrecognized balance of deferred revenue at November 30, 2019 and May 31, 2019, was $1,514,495 and $2,201,067, respectively.

 

Note 9. Revenue and Revenue Recognition

 

Revenue is recognized at the time a good or service is transferred to a customer and the customer obtains control of that good or receives the service performed. Sales arrangements with customers are short-term in nature involving single performance obligations related to the delivery of goods and generally provide for transfer of control at the time of shipment. In limited circumstances, where acceptance of the goods is subject to approval by the customer, revenue is recognized upon approval by the customer unless, historically, there have been insignificant rejections of goods by the customer. Contract liabilities associated with sales arrangements primarily relate to deferred revenue on prepaid sales of goods. Greystone generally permits returns of product due to defects; however, product returns are historically insignificant.

 

Greystone’s principal product is plastic pallets produced from recycled plastic resin. Sales are primarily to customers in the continental United States of America. International sales are made to customers in Canada and Mexico which totaled approximately $1,803,000 and $291,000 in fiscal years 2020 and 2019, respectively.

 

Greystone’s customers include stocking and non-stocking distributors and direct sales to end-user customers. Sales to the following categories of customers for the six months ended November 30, 2019 and 2018, respectively, were as follows:

 

Category		2019				2018
End Users – Major Customers			88	%			84	%
End Users - Other			1	%			2	%
Distributors			11	%			14	%

 

 

Note 10. 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 notes with floating rates of interest approximate fair value. Fixed rate notes are valued based on cash flows using estimated rates of comparable notes. The carrying amounts reported on the balance sheets approximate fair value.

 

Note 11. Concentrations, Risks and Uncertainties

 

Greystone derived approximately 88% and 84% of its total sales from four customers (three in fiscal year 2019) in fiscal years 2020 and 2019, respectively. The loss of a material amount of business from one or more of these customers could have a material adverse effect on Greystone.

 

Greystone purchases damaged pallets from its customers at a price based on the value of the raw material content in the pallet. A majority of these purchases, totaling $1,019,279 and $814,764 in fiscal years 2020 and 2019, respectively, is from one of its major customers.

 

Robert B. Rosene, Jr., a Greystone director, has provided financing and guarantees on Greystone’s bank debt. As of November 30, 2019, Greystone is indebted to Mr. Rosene in the amount of $4,340,285 for a note payable due January 15, 2021. There is no assurance that Mr. Rosene will renew the note as of the maturity date.

 

Note 12. Commitments

 

At November 30, 2019, Greystone had commitments totaling $2,468,000 toward the purchase of production equipment.

 

 

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., and 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 2020 refer to the six months and three months ended November 30, 2019. References to fiscal year 2019 refer to the six months and three months ended November 30, 2018.

 

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.

 

Personnel

 

Greystone personnel includes both full-time employees and temporary contract personnel. Temporary personnel train for ninety days and, if appropriate, hired as full-time. Greystone had approximately 268 and 185 full-time employees as of November 30, 2019 and 2018, respectively. In addition, temporary personnel totaled 145 and 107 as of November 30, 2019 and 2018, respectively.

 

Six Months Ended November 30, 2019 Compared to Six Months Ended November 30, 2018

 

Sales

 

Sales for fiscal year 2020 were $38,167,971 compared to $32,939,240 in fiscal year 2019 for an increase of $5,228,731, or 16%. The increase in pallet sales in fiscal year 2020 over 2019 was primarily attributable to the sales growth within Greystone’s largest customers which included a new customer in fiscal year 2020.

 

Sales to Greystone’s four (three in fiscal year 2019) largest customers accounted for approximately 88% and 84% of sales in fiscal years 2020 and 2019, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to grow sales through the addition of new customers developed through Greystone’s marketing efforts.

 

Cost of Sales

 

Cost of sales in fiscal year 2020 was $33,656,973, or 88% of sales, compared to $28,801,518, or 87% of sales, in fiscal year 2019. During the last two months of the six months ended November 30, 2019, Greystone achieved (i) significant improvements in pallet production as a result of installation of hardware and software to improve the flow of resin into molds on two injection molding machines and (ii) completion of the installation of an additional pelletizing line which increased Greystone’s capacity for pelletizing thereby resulting in a cost savings over purchasing plastic in pelletized form.

 

 

Initiatives to facilitate and continue improvements to the ratio of cost of sales to sales include resolution on production issues on certain machines and molds, hardware and software to improve resin mold flow on remaining injection molding machines, installation of an additional grinding machine allowing the purchase of lower-priced unprocessed recycled plastic, and completion of installation for robotics on two production lines. Greystone plans to complete the remaining initiatives throughout the year ending May 31, 2020.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $2,190,228, or 6% of sales, in fiscal year 2020 compared to $1,792,741, or 5% of sales, for an increase of $397,487 or 22%. The increase in fiscal year 2020 over fiscal year 2019 results principally from increased costs for administrative personnel. The selling, general and administrative are estimated to increase proportionately with increases in sales.

 

Other Income (Expenses)

 

Other income was $4,913 in fiscal year 2020 compared to $5,290 in fiscal year 2019.

 

Interest expense was $913,699 in fiscal year 2020 compared to $848,318 in fiscal year 2019 for an increase of $65,381. The prime rate of interest declined from 5.50% at May 31, 2019 to 4.75% at November 30, 2019. The weighted average prime rate of interest was 5.19% compared to 5.07% for the six months ended November 30, 2019 and 2018, respectively.

 

Provision for Income Taxes

 

The provision for income taxes was $320,000 and $440,100 in fiscal years 2020 and 2019, respectively. The effective tax rate differs from federal statutory rates due to net income from GRE which, as a limited liability company of which Greystone has no equity ownership, is not taxed at the corporate level, charges which have no tax benefit and changes in the valuation allowance.

 

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 $1,091,984 in fiscal year 2020 compared to $1,061,853 in fiscal year 2019 primarily for the reasons discussed above.

 

Net Income Attributable to Common Stockholders

 

The net income attributable to common stockholders for fiscal year 2020 was $746,678, or $0.03 per share, compared $730,281, or $0.03 per share, in fiscal year 2019 primarily for the reasons discussed above.

 

 

Three Months Ended November 30, 2019 Compared to Three Months Ended November 30, 2018

 

Sales

 

Sales for fiscal year 2020 were $19,503,462 compared to $14,733,130 in fiscal year 2019 for an increase of $4,770,332, or 32%. The increase in pallet sales in fiscal year 2020 over 2019 was primarily due to the sales growth within Greystone’s largest customers which included a new customer in fiscal year 2020.

 

Sales to Greystone’s four (three in fiscal year 2019) largest customers accounted for approximately 88% and 85% of sales in fiscal years 2020 and 2019, respectively. Greystone is not able to predict the future needs of these major customers and will continue its efforts to grow sales through the addition of new customers developed through Greystone’s marketing efforts.

 

Cost of Sales

 

Cost of sales in fiscal year 2020 was $17,353,239, or 89% of sales, compared to $13,041,366, or 89% of sales, in fiscal year 2019. During the last two months of the six months ended November 30, 2019, Greystone achieved (i) significant improvement in pallet production per machine as a result of installation of hardware and software to improve the flow of resin into molds on two injection molding machines and (ii) completion of the installation of an additional pelletizing line which increased Greystone’s capacity for pelletizing thereby resulting in a cost savings over purchasing plastic in pelletized form.

 

Initiatives to facilitate and continue improvements to the ratio of cost of sales to sales include resolution on production issues on certain machines and molds, hardware and software to improve resin mold flow on remaining injection molding machines, installation of an additional grinding machine allowing the purchase of lower-priced unprocessed recycled plastic, and completion of installation for robotics on two production lines. Greystone plans to complete the remaining initiatives throughout the year ending May 31, 2020.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $1,112,630, or 6% of sales, in fiscal year 2020 compared to $853,650, or 7% of sales, for an increase of $258,980 or 30%. The increase in fiscal year 2020 over fiscal year 2019 results principally from increased costs for administrative personnel. The selling, general and administrative are estimated to increase proportionately with increases in sales.

 

Other Income (Expenses)

 

Other income was $2,880 in fiscal year 2020 compared to $3,021 in fiscal year 2019.

 

Interest expense was $432,788 in fiscal year 2020 compared to $435,690 in fiscal year 2019 for a decrease of $2,902. The prime rate of interest declined from 5.25% at August 31, 2019 to 4.75% at November 30, 2019. The weighted average prime rate of interest was 4.96% compared to 5.18% for the three months ended November 30, 2018.

 

 

Provision for Income Taxes

 

The provision for income taxes was $135,000 and $108,500 in fiscal years 2020 and 2019, respectively. The effective tax rate differs from federal statutory rates due to net income from GRE which, as a limited liability company of which Greystone has no equity ownership, is not taxed at the corporate level, charges which have no tax benefit and changes in the valuation allowance.

 

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 $472,685 in fiscal year 2020 compared to $296,945 in fiscal year 2019 primarily for the reasons discussed above.

 

Net Income Attributable to Common Stockholders

 

The net income attributable to common stockholders for fiscal year 2020 was $304,428, or $0.01 per share, compared $128,893, or $0.00 per share, in fiscal year 2019 primarily for the reasons discussed above.

 

Liquidity and Capital Resources

 

A summary of cash flows for the six months ended November 30, 2019 is as follows:

 

Cash provided by operating activities		$	4,916,489
Cash used in investing activities		$	(2,018,815	)
Cash used in financing activities		$	(2,572,237	)

 

The contractual obligations of Greystone are as follows:

 

		Total				Less than 1 year				1-3 years				4-5 years				More than 5 years
Long-term debt		$	21,386,471			$	3,442,269			$	14,603,226			$	3,340,976			$	-
Financing lease rent		$	6,448,000			$	2,471,000			$	3,977,000			$	-			$	-
Operating lease rent		$	238,431			$	81,881			$	119,762			$	36,788			$	-
Commitments		$	2,468,000			$	2,468,000			$	-			$	-			$	-

 

 

Greystone had a working capital deficit of $(4,815,964) at November 30, 2019. To provide for the funding to meet Greystone’s operating activities and contractual obligations as of November 30, 2019, 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 primarily from bank notes which are guaranteed by certain officers and directors of Greystone and, formerly, from loans provided 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 6 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, 2019, which was filed on August 29, 2019. 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.

 

 

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, 2019, Warren F. Kruger, Greystone’s Chief Executive Officer, and William W. Rahhal, Greystone’s Chief Financial Officer, identified no material weakness in Greystone’s internal control over financial reporting. As a result, Greystone’s CEO and Chief Financial Officer concluded that the design and operation of Greystone’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) were effective as of November 30, 2019.

 

During the six months ended November 30, 2019, 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.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors.

 

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.

 

 

Item 5. Other Information.

 

None.

 

Item 6. 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 November 30, 2019 and May 31, 2019, (ii) the Consolidated Statements of Income for the Six Months and Three months ended November 30, 2019 and 2018, (iii) the Consolidated Statements of Changes in Equity for the Six Months and Three Months ended November 30, 2019 and 2018, (iv) the Consolidated Statements of Cash Flows for the Six Months ended November 30, 2019 and 2018, and (v) the Notes to the Consolidated Financial Statements (submitted herewith).

 

 

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: January 15, 2020	/s/ Warren F. Kruger
	Warren F. Kruger, President and Chief
	Executive Officer (Principal Executive Officer)
Date: January 15, 2020	/s/ William W. Rahhal
	William W. Rahhal, Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

 

 

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 November 30, 2019 and May 31, 2019, (ii) the Consolidated Statements of Income for the Six Months and Three months ended November 30, 2019 and 2018, (iii) the Consolidated Statements of Changes in Equity for the Six Months and Three months ended November 30, 2019 and 2018, (iv) the Consolidated Statements of Cash Flows for the Six Months ended November 30, 2019 and 2018, and (v) the Notes to the Consolidated Financial Statements (submitted herewith).