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Document and Entity Information

v2.4.0.8
Document and Entity Information (USD $)
12 Months Ended
May 31, 2015
Aug. 26, 2015
Nov. 30, 2014
Document And Entity Information      
Entity Registrant Name GREYSTONE LOGISTICS, INC.    
Entity Central Index Key 0001088413    
Document Type 10-K    
Document Period End Date May 31, 2015    
Amendment Flag false    
Current Fiscal Year End Date --05-31    
Entity Filer Category Smaller Reporting Company    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 5,386,626
Entity Common Stock, Shares Outstanding   27,411,201  
Trading Symbol GLGI    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2015    

Consolidated Balance Sheets

v2.4.0.8
Consolidated Balance Sheets (USD $)
May 31, 2015
May 31, 2014
Current Assets:    
Cash $ 598,887 $ 661,263
Accounts receivable - Trade, net of allowance for doubtful accounts of $13,260 and $71,462, respectively 1,453,416 2,023,563
Accounts receivable - Related party receivables 519,659 219,505
Inventory 1,429,344 1,616,165
Deferred tax asset - current 1,222,110 1,077,000
Prepaid expenses 20,249 97,170
Total Current Assets 5,243,665 5,694,666
Property and Equipment, net of accumulated depreciation 8,509,315 8,776,137
Deferred Tax Asset - non-current 557,127 1,133,000
Other Assets 129,634 163,188
Total Assets 14,439,741 15,766,991
Current Liabilities:    
Current portion of long-term debt 2,278,164 3,979,376
Accounts payable and accrued expenses 798,470 782,591
Accrued expenses - related parties 2,143,275 1,835,999
Preferred dividends payable 54,315 27,603
Total Current Liabilities 5,274,224 6,625,569
Long-Term Debt, net of current portion 10,300,847 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 53,503,435 53,336,106
Accumulated deficit (55,657,638) (55,715,203)
Total Greystone Stockholders' Deficit (2,151,457) (2,376,446)
Non-controlling interest 1,016,127 993,123
Total Deficit (1,135,330) (1,383,323)
Total Liabilities and Deficit $ 14,439,741 $ 15,766,991

Consolidated Balance Sheets (Parenthetical)

v2.4.0.8
Consolidated Balance Sheets (Parenthetical) (USD $)
May 31, 2015
May 31, 2014
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 13,260 $ 71,462
Preferred stock par value $ 0.0001 $ 0.0001
Preferred stock shares authorized 20,750,000 20,750,000
Preferred stock shares issued 50,000 50,000
Preferred stock shares outstanding 50,000 50,000
Liquidation preference $ 5,000,000 $ 5,000,000
Common stock par value $ 0.0001 $ 0.0001
Common stock shares authorized 5,000,000,000 5,000,000,000
Common stock shares issued 27,411,201 26,461,201
Common stock shares outstanding 27,411,201 26,461,201

Consolidated Statements of Income

v2.4.0.8
Consolidated Statements of Income (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Income Statement [Abstract]    
Sales $ 22,293,922 $ 23,449,936
Cost of Sales 18,269,192 18,107,627
Gross Profit 4,024,730 5,342,309
General, Selling and Administrative Expenses 2,168,762 2,409,115
Operating Income 1,855,968 2,933,194
Other Income (Expense):    
Other income 2,500 5,000
Interest expense (818,136) (846,568)
Total Other Expense, net (815,636) (841,568)
Income before Income Taxes 1,040,332 2,091,626
(Provision for) Benefit from Income Taxes (430,763) 1,040,000
Net Income 609,569 3,131,626
Income Attributable to Variable Interest Entity (227,004) (200,563)
Preferred Dividends (325,000) (325,000)
Net Income Attributable to Common Stockholders $ 57,565 $ 2,606,063
Income Per Share of Common Stock -    
Basic $ 0.00 $ 0.10
Diluted $ 0.00 $ 0.09
Weighted Average Shares of Common Stock Outstanding -    
Basic 26,975,312 26,198,701
Diluted 27,771,466 27,674,939

Consolidated Statements of Changes in Deficit

v2.4.0.8
Consolidated Statements of Changes in Deficit (USD $)
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Total Greystone Stockholders' Deficit [Member]
Variable Interest Entity [Member]
Total
Balance at May. 31, 2013 $ 5 $ 2,611 $ 53,142,717 $ (58,321,266) $ (5,175,933) $ 1,139,878 $ (4,036,055)
Balance, Shares at May. 31, 2013 50,000 26,111,201          
Common stock options exercised   35 139,965   140,000   140,000
Common stock options exercised, Shares   350,000         (350,000)
Stock based compensation     53,424   53,424   53,424
Cash distributions           (347,318) (347,318)
Preferred dividends       (325,000) (325,000)   (325,000)
Net income       2,931,063 2,931,063 200,563 3,131,626
Balance at May. 31, 2014 5 2,646 53,336,106 (55,715,203) (2,376,446) 993,123 (1,383,323)
Balance, Shares at May. 31, 2014 50,000 26,461,201          
Common stock options exercised   95 113,905   114,000   114,000
Common stock options exercised, Shares   950,000         (950,000)
Stock based compensation     53,424   53,424   53,424
Cash distributions           (204,000) (204,000)
Preferred dividends       (325,000) (325,000)   (325,000)
Net income       382,565 382,565 227,004 609,569
Balance at May. 31, 2015 $ 5 $ 2,741 $ 53,503,435 $ (55,657,638) $ (2,151,457) $ 1,016,127 $ (1,135,330)
Balance, Shares at May. 31, 2015 50,000 27,411,201          

Consolidated Statements of Cash Flows

v2.4.0.8
Consolidated Statements of Cash Flows (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Cash Flows from Operating Activities:    
Net income $ 609,569 $ 3,131,626
Adjustments to reconcile net income to net cash provided by operating activities -    
Depreciation and amortization 1,431,823 1,309,573
Decrease (increase) in deferred tax asset 430,763 (1,051,000)
Stock based compensation 53,424 53,424
Changes in trade accounts receivable 501,236 216,031
Changes in related party receivable (306,243) (491,682)
Changes in inventory 186,821 (571,786)
Changes in prepaid expenses 76,921 22,028
Changes in accounts payable and accrued expenses 323,155 (459,814)
Other    2,785
Net cash provided by operating activities 3,307,469 2,161,185
Cash Flows from Investing Activities:    
Purchase of property and equipment (991,950) (2,246,101)
Cash Flows from Financing Activities:    
Proceeds from long-term debt    12,612,500
Proceeds from revolving loan 850,000 885,000
Payments on long-term debt and capitalized lease (1,904,607) (8,640,891)
Payments on revolving loan (935,000) (500,000)
Payments on notes and advances payable to related parties    (92,000)
Issuance cost of long-term debt    (129,722)
Proceeds from exercised stock options 114,000 140,000
Dividends paid on preferred stock (298,288) (3,548,286)
Dividends paid by variable interest entity (204,000) (347,318)
Net cash provided by (used in) financing activities (2,377,895) 379,283
Net Increase (Decrease) in Cash (62,376) 294,367
Cash, beginning of year 661,263 366,896
Cash, end of year $ 598,887 $ 661,263

Summary of Significant Accounting Policies

v2.4.0.8
Summary of Significant Accounting Policies
12 Months Ended
May 31, 2015
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Greystone Logistics, Inc. (“Greystone”), through its two wholly-owned subsidiaries, Greystone Manufacturing, LLC (“GSM”) and Plastic Pallet Production, Inc. (“PPP”), is engaged in the manufacture and marketing of plastic pallets and pelletized recycled plastic resin.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Greystone, its subsidiaries and entities required to be consolidated by the accounting guidance for variable interest entities (“VIE”). All material intercompany accounts and transactions have been eliminated.

 

Greystone consolidates its VIE, Greystone Real Estate, L.L.C. (“GRE”), which owns the manufacturing facilities which are occupied by Greystone. GRE is owned by Warren F. Kruger, President and CEO, and Robert B. Rosene, Jr., a member of Greystone’s board of directors.

 

Use of Estimates

 

The preparation of Greystone’s financial statements in conformity with accounting principles generally accepted in the United States of America requires Greystone’s management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ materially from those estimates.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Greystone carries its accounts receivable at their face value less an allowance for doubtful accounts. On a periodic basis, Greystone evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions and history of collections. Based on periodic reviews of outstanding accounts receivable, Greystone writes off balances deemed to be uncollectible against the allowance for doubtful accounts.

 

Inventory

 

Inventory consists of finished pallets and raw materials and is stated at the lower of average cost or market value.

 

Property, Plant and Equipment

 

Greystone’s property, plant and equipment is stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives, as follows:

 

Plant buildings 39 years
Production machinery and equipment 5-10 years
Leasehold improvements 5-7 years
Furniture & fixtures 3-5 years

 

Upon sale, retirement or other disposal, the related costs and accumulated depreciation of items of property, plant or equipment are removed from the related accounts and any gain or loss is recognized. When events or changes in circumstances indicate that assets may be impaired, an evaluation is performed comparing the estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the asset’s carrying amount exceeds the cash flows, a write-down to fair value is required.

 

Other Assets

 

Other assets includes certain intangible costs as follows:

 

  (1) Patents on the modular pallet system and accessories which are being amortized using the straight-line method over the estimated useful life of 15 years.
     
  (2) Debt issue costs which are being amortized over the term of the underlying note payable or five years.

 

Stock Options

 

The grant-date fair value of stock options and other equity-based compensation issued to employees is amortized on the straight-line basis over the vesting period of the award as compensation cost. The fair value of new option grants is estimated using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility, dividend yields and expected holding periods.

 

Recognition of Revenues

 

Greystone’s sales agreements to customers other than its primary customer generally provide for risk of loss to pass to the customers upon shipment from Greystone’s plant in Bettendorf, Iowa. Revenue is recognized for these customers at the date of shipment.

 

Greystone’s agreement with its major customer provides that (1) risk of loss or damages for product in transit remain with Greystone and (2) the product is subject to approval and acceptance at the buyer’s premises. Accordingly, Greystone recognizes revenue when product has been delivered to the customer’s sites and risk of loss has passed to the customer.

 

For sales to all customers, cost of goods sold is recognized when the related revenue is recognized.

 

Income Taxes

 

Greystone accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax bases of assets and liabilities and tax loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

 

Earnings Per Share

 

Basic earnings per share is computed by dividing the earnings available to common stockholders by the weighted average number of common shares outstanding for the year. In arriving at income available to common stockholders, preferred stock dividends are deducted from net income for the year. For fiscal years 2015 and 2014, convertible preferred stock and stock options are not considered as their effect is antidilutive.

 

The following securities were not included in the computation of diluted earnings per share for the fiscal years ended May 31, 2015 and 2014 as their effect would have been antidilutive:

 

    2015     2014  
Convertible preferred stock     3,333,333       3,333,333  
                 

 

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 2014-09”) 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 2014-09 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. On July 9, 2015, FASB voted to approve a one-year deferral of the effective date such that the effective date for Greystone’s interim and annual periods begins June 1, 2018.

 

On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”) which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The requirement of ASU 2015-03 is effective for fiscal years beginning after December 15, 2015. Greystone does not believe that the impact of this ASU will have a material impact on our financial position and results of operations.

Inventory

v2.4.0.8
Inventory
12 Months Ended
May 31, 2015
Inventory Disclosure [Abstract]  
Inventory

Note 2. INVENTORY

 

Inventory consists of the following as of May 31:

 

    2015     2014  
Raw materials   $ 665,702     $ 1,043,411  
Finished pallets     763,642       572,754  
                 
Total Inventory   $ 1,429,344     $ 1,616,165  

Property and Equipment

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Property and Equipment
12 Months Ended
May 31, 2015
Property, Plant and Equipment [Abstract]  
Property and Equipment

Note 3. PROPERTY AND EQUIPMENT

 

A summary of the property and equipment for Greystone is as follows, as of May 31:

 

    2015     2014  
Production machinery and equipment   $ 13,120,285     $ 12,826,529  
Plant buildings and land     4,663,339       4,663,339  
Leasehold improvements     198,568       203,034  
Furniture and fixtures     90,280       210,196  
      18,072,472       17,903,098  
                 
Less: Accumulated depreciation     (9,563,157 )     (9,126,961 )
                 
Net Property and Equipment   $ 8,509,315     $ 8,776,137  

 

Production machinery and equipment includes equipment in the amount of $157,396 that had not been placed into service as of May 31, 2015. The plant buildings and land are owned by GRE, a VIE, and have a net book value of $3,360,037 at May 31, 2015.

 

Depreciation expense for the years ended May 31, 2015 and 2014 is $1,398,269 and $1,274,453, respectively.

Other Assets

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Other Assets
12 Months Ended
May 31, 2015
Other Assets [Abstract]  
Other Assets

Note 4. OTHER ASSETS

 

Other assets consist of the following as of May 31:

 

    2015     2014  
Patents   $ 190,739     $ 190,739  
Debt issue costs     129,722       129,722  
Accumulated amortization     (190,827 )     (157,273 )
Total Other Assets   $ 129,634     $ 163,188  

 

Amortization of intangibles was $33,554 and $35,120 for 2015 and 2014, respectively. Future amortization for the next five years will be $37,380, $36,467, $35,982, $19,805 and $-0-.

Long-Term Debt

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Long-Term Debt
12 Months Ended
May 31, 2015
Debt Disclosure [Abstract]  
Long-Term Debt

Note 5. LONG-TERM DEBT

 

Long-term debt consists of the following as of May 31:

 

    2015     2014  
Note payable to International Bank of Commence, interest rate of 4.5%, monthly principal and interest payments of $171,760, maturing January 31, 2019   $ 6,945,884     $ 8,647,777  
                 
Revolving note payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4%, due January 31, 2016     300,000       385,000  
                 
Term note payable by GRE to International Bank of Commerce, interest rate of 4.5%, monthly principal and interest payments of $26,215, due January 31, 2019     3,207,553       3,371,660  
                 
Note payable to Robert Rosene, 7.5% interest, due January 15, 2017     2,066,000       2,066,000  
                 
Other     59,574       33,684  
      12,579,011       14,504,121  
Less: Current portion     (2,278,164 )     (3,979,376 )
Long-term debt   $ 10,300,847     $ 10,524,745  

 

The prime rate of interest as of May 31, 2015 was 3.25%.

 

Loan Agreement between Greystone and International Bank of Commerce (“IBC”)

 

On January 31, 2014, Greystone and GSM (the “Borrowers”) and 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 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 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. As of May 31, 2015, the interest rate on the Revolving Loan was 4%. 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 payments of principal and interest in an amount sufficient to amortize the principal balance of the Term Loan over five years. The proceeds from the Term Loan were primarily used to repay the Borrowers’ obligations to The F&M Bank & Trust Company in the amount of $3,992,083, to pay accrued preferred dividends of $3,469,040 and to pay $1,312,697 to Yorktown for the acquisition of equipment.

 

The IBC Loan Agreement required the Borrowers to pay a fee in the amount of $100,000 to IBC on January 31, 2014.

 

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 (A) a one-time payment of accrued preferred dividends to holders of its preferred stock in an amount not to exceed $3,470,000 within 10 days of the date of the IBC Loan Agreement, and (B) 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 May 31, 2015 was 0.54 to 1:00 which was less than the required minimum as discussed above. IBC has issued a waiver 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.

 

As discussed in Note 6, Related Party Transactions, Greystone paid a fee to Robert B. Rosene, Jr., a member of Greystone’s board of directors, in connection with procuring the loan with IBC including providing a personal guarantee.

 

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. The loan is secured by a mortgage on the property. In addition, the mortgaged property is cross collateralized pursuant to the IBC Loan Agreement with Greystone. The proceeds of the loan were used to pay the outstanding obligation with The F&M Bank & Trust Company in the amount of $3,197,682.

 

Maturities

 

Maturities of Greystone’s long-term debt for the five years after May 31, 2015 are $2,278,164, $4,122,957, $2,152,726, $4,016,603 and $8,561.

Related Party Transactions

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Related Party Transactions
12 Months Ended
May 31, 2015
Related Party Transactions [Abstract]  
Related Party Transactions

Note 6. RELATED PARTY TRANSACTIONS

 

Transactions with Warren F. Kruger, Chairman

 

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. Greystone compensates Yorktown for the use of equipment as discussed below. In addition, Yorktown provides office space for Greystone in Tulsa, Oklahoma at a monthly rental of $2,200 ($2,000 prior to April 1, 2015).

 

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 May 31, 2015, Mr. Kruger and Yorktown owe Greystone $450,748 primarily from the aforementioned labor costs incurred by Greystone on behalf of Yorktown.

 

Rental fees. GSM pays weekly rental fees to Yorktown of $22,500 and $5,000 for grinding equipment and pelletizing equipment. Total equipment rental fees were approximately $1,430,000 in each of the fiscal years 2015 and 2014.

 

Acquisition of equipment. On and effective January 31, 2014, Greystone, GSM, Warren Kruger, Greystone’s President and CEO, and Yorktown entered into a Bill of Sale and Assignment (the “Bill of Sale”) providing for the acquisition of an injection molding machine, a lift crane and several injection molds by GSM from Yorktown for $2,400,000. Immediately prior to the acquisition, Yorktown owed GSM $3,750,085 and Greystone owed Mr. Kruger $2,662,782. The Bill of Sale provided for the offset of GSM’s receivable and Greystone’s payable, on a dollar-for-dollar basis, leaving a balance of $1,087,303 owed by Yorktown. The purchase price of $2,400,000 was offset by the balance of $1,087,303 owed by Yorktown resulting in a cash payment to Yorktown of $1,312,697. Greystone made payments to Yorktown of $84,983 for use of this equipment in fiscal year 2014 through the date of acquisition.

 

Other transactions. Effective December 15, 2005, Greystone entered into a loan agreement with Warren Kruger to convert $527,716 of advances due him into a note payable at 7.5% interest and Mr. Kruger has waived payment of interest and principal thereon until January 15, 2015. As discussed above effective January 31, 2014, Mr. Kruger applied this note and advances and accrued interest of $1,318,295 as an offset against certain balances which Yorktown owed to Greystone. Through January 31, 2014, Greystone accrued interest on advances and note payable to Mr. Kruger at the rate of 7.5% per year which totaled $93,729 for fiscal year 2014.

 

Transactions with TriEnda Holdings, L.L.C.

 

Warren F. Kruger, Greystone’s President and CEO, has a majority ownership interest in and serves as the non-executive Chairman of the Board of TriEnda Holdings, L.L.C. (“TriEnda”), a manufacturer of plastic pallets. Beginning in fiscal year 2015, Greystone blends and pelletizes plastic resin using TriEnda’s equipment and raw materials. Revenue from TriEnda totaled $220,692 in fiscal year 2015. The account receivable from TriEnda at May 31, 2015 was $22,344.

 

Transactions with Robert B. Rosene, Jr., Director

 

Effective December 15, 2005, Greystone entered into an agreement with Mr. Rosene to convert $2,066,000 of the advances into a note payable at 7.5% interest and Mr. Rosene has waived the payment of principal until January 15, 2017. Greystone has accrued interest on the loans in the amounts of $307,276 and $284,845 in fiscal years 2015 and 2014, respectively. Accrued interest due to Mr. Rosene at May 31, 2015 is $2,143,275.

 

In connection with services provided by Robert B. Rosene, Jr., a member of Greystone’s board of directors, in assisting Greystone in procuring its loan with International Bank of Commerce including providing a corresponding personal guarantee, Greystone’s board of directors approved the payment of a fee in fiscal year 2014 of $65,000 to Mr. Rosene.

 

Transactions with Larry J. LeBarre, Director

 

Effective January 1, 2009, Greystone entered into a lease agreement with an entity owned by Mr. LeBarre to rent certain equipment to produce mid-duty pallets with a minimum monthly commitment of $25,000. The lease was amended March 31, 2015 to extend the lease through September 30, 2015. Lease payments were $300,000 for each of fiscal years 2015 and 2014.

 

Transactions with Green Plastic Pallets

 

During fiscal year 2015, Greystone had sales totaling $333,253 to Green Plastic Pallets (“Green”). Green is an entity that is owned by James Kruger, brother to Warren Kruger, Greystone’s president and CEO. Fiscal year 2015 is the first year that Greystone had sales to Green.

Federal Income Taxes

v2.4.0.8
Federal Income Taxes
12 Months Ended
May 31, 2015
Income Tax Disclosure [Abstract]  
Federal Income Taxes

Note 7. FEDERAL INCOME TAXES

 

Deferred taxes as of May 31, 2015 and 2014 are as follows:

 

    2015     2014  
Deferred tax asset:                
Net operating loss carryforward   $ 1,892,673     $ 1,936,834  
Depreciation and amortization, financial reporting in excess of tax     -       219,838  
Stock compensation costs     21,632       36,328  
Allowance for doubtful accounts     4,508       17,000  
Other     13,429       -  
Total deferred tax asset     1,932,242       2,210,000  
Deferred tax liability:                
Depreciation and amortization, tax reporting in excess of financial     (153,005 )     -  
Net deferred tax asset   $ 1,779,237     $ 2,210,000  

 

Deferred tax assets were classified in the consolidated balance sheets at May 31, as follows:

 

    2015     2014  
Deferred tax assets - current   $ 1,222,110     $ 1,077,000  
Deferred tax assets - non-current     557,127       1,133,000  
Deferred tax assets - total   $ 1,779,237     $ 2,210,000  

 

In assessing the reliability 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 has reduced the valuation allowance which allows for recognition of the tax benefits as deferred tax assets for May 31, 2015 and 2014, respectively.

 

The net change in deferred taxes for the year ended May 31, 2015 and 2014 is as follows:

 

    2015     2014  
Net operating loss carryforward   $ (44,121 )   $ (28,536 )
Depreciation and amortization, financial reporting in excess of tax     (372,843 )     (223,339 )
Stock compensation costs     (14,696 )     18,164  
Deferred compensation accrual     -       (244,800 )
Allowance for doubtful accounts     (12,532 )     (17,000 )
Valuation allowance     -       1,546,511  
Other     13,429       -  
Total   $ (430,763 )   $ 1,051,000  

 

The provision (benefit) for income taxes at May 31 consists of the following:

 

    2015     2014  
Current income tax – Federal and State   $ -     $ 11,000  
Deferred income tax provision (benefit)     430,763       (1,051,000 )
Provision for (benefit from) income taxes   $ 430,763     $ (1,040,000 )

 

Greystone’s provision (benefit) for income taxes for the years ended May 31, 2015 and 2014 differs from the federal statutory rate as follows:

 

    2015     2014  
Tax provision using statutory rates     34 %     34 %
Net operating loss expiration     7       -  
Net change in valuation allowance     -       (75 )
Other     1       (9 )
Tax provision (benefit) per financial statements     42 %     (50 )%

 

At May 31, 2015, Greystone had a net operating loss (NOL) for Federal income tax purposes from inception through May 31, 2005 of $17,242,600 expiring in fiscal year 2015 through fiscal year 2025 of which $2,250,000 is management’s estimate of the usable amount pursuant to Internal Revenue Code Section 382. The limitation is due to a change in control of Greystone during the fiscal year ended May 31, 2005. The utilization of NOL’s accumulated through fiscal year 2005 is limited to approximately $225,000 per year.

 

    NOL Carryforward     Year Expiring  
Cumulative through May 31, 2005   $ 2,250,000       2016 - 2025  
Year ended May 31, 2006     237,364       2026  
Year ended May 31, 2007     2,151,837       2027  
Year ended May 31, 2011     746,484       2031  
Year ended May 31, 2015     266,095       2035  

 

Greystone is no longer subject to income tax examinations by tax authorities for years prior to fiscal year 2006.

 

Greystone does not have any uncertain tax positions that could result in a material change to its financial position.

Stockholders' Equity

v2.4.0.8
Stockholders' Equity
12 Months Ended
May 31, 2015
Equity [Abstract]  
Stockholders' Equity

Note 8. STOCKHOLDERS’ EQUITY

 

Convertible Preferred Stock

 

In September 2003, Greystone issued 50,000 shares of Series 2003, cumulative, convertible preferred stock, par value $0.0001, for a total purchase price of $5,000,000. Each share of the preferred stock has a stated value of $100 and a dividend rate equal to the prime rate of interest plus 3.25% and may be converted into common stock at the conversion rate of $1.50 per share or an aggregate of 3,333,333 shares of common stock. The holder of the preferred stock has been granted certain voting rights so that such holder has the right to elect a majority of the Board of Directors of Greystone. Preferred stock dividends must be fully paid before a dividend on the common stock may be paid.

Stock Options

v2.4.0.8
Stock Options
12 Months Ended
May 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options

Note 9. STOCK OPTIONS

 

Greystone has a stock option plan that provides for the granting of options to key employees and non-employee directors. The options are to purchase common stock at not less than fair market value at the date of the grant. Effective May 5, 2012, Greystone’s board of directors approved the renewal and extension of Greystone’s stock option plan through May 11, 2021 and increased the maximum number of shares of common stock for which options may be granted to 2,500,000 of which none were available for grant at May 31, 2015. Stock options generally expire in ten years from date of grant or upon termination of employment and are generally exercisable one year from date of grant in cumulative annual installments of 25%. Following is a summary of option activity for the two years ended May 31, 2015:

  

    Number     Weighted Average Exercise Price     Remaining Contractual Life (years)     Intrinsic Value  
Total outstanding, May 31, 2013     2,450,000     $ 0.16                  
Exercised during fiscal year 2014     (350,000 )   $ 0.40                  
Total outstanding May 31, 2014     2,100,000     $ 0.12       7.0          
Exercised during fiscal year 2015     (950,000 )   $ 0.12                  
Total outstanding May 31, 2015     1,150,000     $ 0.12       7.0          
Exercisable as of May 31, 2015     100,000     $ 0.12       7.0     $ 18,000  
Non-vested as of May 31, 2015     1,050,000     $ 0.12       7.0     $ 189,000  

 

Share-based compensation cost was $53,424 for fiscal years 2015 and 2014, respectively. As of May 31, 2015, the unrecognized compensation expense related to non-vested share-based options was $53,424 which will be fully amortized during fiscal year 2016.

Financial Instruments

v2.4.0.8
Financial Instruments
12 Months Ended
May 31, 2015
Financial Instruments, Owned, at Fair Value [Abstract]  
Financial Instruments

Note 10. FINANCIAL INSTRUMENTS

 

The following methods and assumptions are used in estimating the fair-value disclosures for financial instruments:

 

Cash, Accounts Receivable and Accounts Payable: The carrying amounts reported in the balance sheet for cash, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments.

 

Long-Term Debt: The carrying amount of loans with floating rates of interest approximate fair value. Fixed rate loans are valued based on cash flows using estimated rates for comparable loans. As of May 31, 2015 and 2014, the carrying amounts reported in the balance sheet approximate fair value.

Supplemental Information of Cash Flows

v2.4.0.8
Supplemental Information of Cash Flows
12 Months Ended
May 31, 2015
Supplemental Cash Flow Information [Abstract]  
Supplemental Information of Cash Flows

Note 11. SUPPLEMENTAL INFORMATION OF CASH FLOWS

 

Supplemental information of cash flows for the years ended May 31:

 

    2015     2014  
Non-cash investing and financing activities:                
Acquisition of equipment through capital lease   $ 64,497     $ -  
Acquisition of equipment in exchange for net related party receivable   $ 75,000     $ 1,087,302  
Reduction in net carrying value of equipment resulting from capital lease termination   $ -     $ 212,311  
Settlement of related party note payable in acquisition of equipment   $ -     $ 527,716  
Preferred dividend accrual   $ 26,712     $ 27,603  
                 
Supplemental information:                
Interest paid   $ 511,496     $ 567,507  
Taxes paid   $ -     $ 26,045  

Concentrations

v2.4.0.8
Concentrations
12 Months Ended
May 31, 2015
Risks and Uncertainties [Abstract]  
Concentrations

Note 12. CONCENTRATIONS

 

For the fiscal years ended May 31, 2015 and 2014, one customer accounted for approximately 51% and 56% of total sales, respectively.

 

Greystone purchases damaged pallets from its customers at a price based on the value of the raw material content of the pallet. A majority of these purchases are from Greystone’s major customer which were approximately $1,582,000 and $1,499,000 in fiscal years 2015 and 2014, respectively.

Variable Interest Entities (VIE)

v2.4.0.8
Variable Interest Entities (VIE)
12 Months Ended
May 31, 2015
Variable Interest Entity, Measure of Activity [Abstract]  
Variable Interest Entities (VIE)

Note 13. VARIABLE INTEREST ENTITIES (VIE)

 

Greystone Real Estate, L.L.C.

 

GRE, is owned by Warren Kruger, President and CEO, and Robert Rosene, a member of the Board of Directors. GRE was created solely to own and lease one of the buildings that GSM occupies at 2600 Shoreline Drive, Bettendorf, Iowa. In fiscal year 2012, GRE purchased the second building occupied by Greystone, 2601 Shoreline Drive, Bettendorf, Iowa, in a sale and leaseback transaction with Greystone.

 

The buildings, having a carrying value of $3,360,037 and $3,475,909 at May 31, 2015 and 2014, respectively, serve as collateral for GRE’s debt. The debt had a carrying value of $3,207,553 and $3,371,660 at May 31, 2015 and 2014, respectively.

Commitments

v2.4.0.8
Commitments
12 Months Ended
May 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
Commitments

Note 14. COMMITMENTS

 

At May 31, 2015, Greystone had commitments totaling $104,000 for the acquisition of equipment.

Summary of Significant Accounting Policies (Policies)

v2.4.0.8
Summary of Significant Accounting Policies (Policies)
12 Months Ended
May 31, 2015
Accounting Policies [Abstract]  
Organization

Organization

 

Greystone Logistics, Inc. (“Greystone”), through its two wholly-owned subsidiaries, Greystone Manufacturing, LLC (“GSM”) and Plastic Pallet Production, Inc. (“PPP”), is engaged in the manufacture and marketing of plastic pallets and pelletized recycled plastic resin.

Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of Greystone, its subsidiaries and entities required to be consolidated by the accounting guidance for variable interest entities (“VIE”). All material intercompany accounts and transactions have been eliminated.

 

Greystone consolidates its VIE, Greystone Real Estate, L.L.C. (“GRE”), which owns the manufacturing facilities which are occupied by Greystone. GRE is owned by Warren F. Kruger, President and CEO, and Robert B. Rosene, Jr., a member of Greystone’s board of directors.

Use of Estimates

Use of Estimates

 

The preparation of Greystone’s financial statements in conformity with accounting principles generally accepted in the United States of America requires Greystone’s management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ materially from those estimates.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

 

Greystone carries its accounts receivable at their face value less an allowance for doubtful accounts. On a periodic basis, Greystone evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions and history of collections. Based on periodic reviews of outstanding accounts receivable, Greystone writes off balances deemed to be uncollectible against the allowance for doubtful accounts.

Inventory

Inventory

 

Inventory consists of finished pallets and raw materials and is stated at the lower of average cost or market value.

Property, Plant and Equipment

Property, Plant and Equipment

 

Greystone’s property, plant and equipment is stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives, as follows:

 

Plant buildings 39 years
Production machinery and equipment 5-10 years
Leasehold improvements 5-7 years
Furniture & fixtures 3-5 years

 

Upon sale, retirement or other disposal, the related costs and accumulated depreciation of items of property, plant or equipment are removed from the related accounts and any gain or loss is recognized. When events or changes in circumstances indicate that assets may be impaired, an evaluation is performed comparing the estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the asset’s carrying amount exceeds the cash flows, a write-down to fair value is required.

Other Assets

Other Assets

 

Other assets includes certain intangible costs as follows:

 

  (1) Patents on the modular pallet system and accessories which are being amortized using the straight-line method over the estimated useful life of 15 years.
     
  (2) Debt issue costs which are being amortized over the term of the underlying note payable or five years.

Stock Options

Stock Options

 

The grant-date fair value of stock options and other equity-based compensation issued to employees is amortized on the straight-line basis over the vesting period of the award as compensation cost. The fair value of new option grants is estimated using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility, dividend yields and expected holding periods.

Recognition of Revenues

Recognition of Revenues

 

Greystone’s sales agreements to customers other than its primary customer generally provide for risk of loss to pass to the customers upon shipment from Greystone’s plant in Bettendorf, Iowa. Revenue is recognized for these customers at the date of shipment.

 

Greystone’s agreement with its major customer provides that (1) risk of loss or damages for product in transit remain with Greystone and (2) the product is subject to approval and acceptance at the buyer’s premises. Accordingly, Greystone recognizes revenue when product has been delivered to the customer’s sites and risk of loss has passed to the customer.

 

For sales to all customers, cost of goods sold is recognized when the related revenue is recognized.

Income Taxes

Income Taxes

 

Greystone accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax bases of assets and liabilities and tax loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

Earnings Per Share

Earnings Per Share

 

Basic earnings per share is computed by dividing the earnings available to common stockholders by the weighted average number of common shares outstanding for the year. In arriving at income available to common stockholders, preferred stock dividends are deducted from net income for the year. For fiscal years 2015 and 2014, convertible preferred stock and stock options are not considered as their effect is antidilutive.

 

The following securities were not included in the computation of diluted earnings per share for the fiscal years ended May 31, 2015 and 2014 as their effect would have been antidilutive:

 

    2015     2014  
Convertible preferred stock     3,333,333       3,333,333  
                 

Recent Accounting Pronouncement

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 2014-09”) 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 2014-09 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. On July 9, 2015, FASB voted to approve a one-year deferral of the effective date such that the effective date for Greystone’s interim and annual periods begins June 1, 2018.

 

On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”) which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The requirement of ASU 2015-03 is effective for fiscal years beginning after December 15, 2015. Greystone does not believe that the impact of this ASU will have a material impact on our financial position and results of operations.

Summary of Significant Accounting Policies (Tables)

v2.4.0.8
Summary of Significant Accounting Policies (Tables)
12 Months Ended
May 31, 2015
Accounting Policies [Abstract]  
Schedule of Useful Life of Property Plant and Equipment

Greystone’s property, plant and equipment is stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives, as follows:

 

Plant buildings 39 years
Production machinery and equipment 5-10 years
Leasehold improvements 5-7 years
Furniture & fixtures 3-5 years

Schedule of Antidilutive Securities

The following securities were not included in the computation of diluted earnings per share for the fiscal years ended May 31, 2015 and 2014 as their effect would have been antidilutive:

 

    2015     2014  
Convertible preferred stock     3,333,333       3,333,333  
                 

Inventory (Tables)

v2.4.0.8
Inventory (Tables)
12 Months Ended
May 31, 2015
Inventory Disclosure [Abstract]  
Schedule of Inventory

Inventory consists of the following as of May 31:

 

    2015     2014  
Raw materials   $ 665,702     $ 1,043,411  
Finished pallets     763,642       572,754  
                 
Total Inventory   $ 1,429,344     $ 1,616,165  

Property and Equipment (Tables)

v2.4.0.8
Property and Equipment (Tables)
12 Months Ended
May 31, 2015
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

A summary of the property and equipment for Greystone is as follows, as of May 31:

 

    2015     2014  
Production machinery and equipment   $ 13,120,285     $ 12,826,529  
Plant buildings and land     4,663,339       4,663,339  
Leasehold improvements     198,568       203,034  
Furniture and fixtures     90,280       210,196  
      18,072,472       17,903,098  
                 
Less: Accumulated depreciation     (9,563,157 )     (9,126,961 )
                 
Net Property and Equipment   $ 8,509,315     $ 8,776,137  

Other Assets (Tables)

v2.4.0.8
Other Assets (Tables)
12 Months Ended
May 31, 2015
Other Assets [Abstract]  
Schedule of Other Assets

Other assets consist of the following as of May 31:

 

    2015     2014  
Patents   $ 190,739     $ 190,739  
Debt issue costs     129,722       129,722  
Accumulated amortization     (190,827 )     (157,273 )
Total Other Assets   $ 129,634     $ 163,188  

Long-Term Debt (Tables)

v2.4.0.8
Long-Term Debt (Tables)
12 Months Ended
May 31, 2015
Debt Disclosure [Abstract]  
Schedule of Debt

Long-term debt consists of the following as of May 31:

 

    2015     2014  
Note payable to International Bank of Commence, interest rate of 4.5%, monthly principal and interest payments of $171,760, maturing January 31, 2019   $ 6,945,884     $ 8,647,777  
                 
Revolving note payable to International Bank of Commerce, prime rate of interest plus 0.5% but not less than 4%, due January 31, 2016     300,000       385,000  
                 
Term note payable by GRE to International Bank of Commerce, interest rate of 4.5%, monthly principal and interest payments of $26,215, due January 31, 2019     3,207,553       3,371,660  
                 
Note payable to Robert Rosene, 7.5% interest, due January 15, 2017     2,066,000       2,066,000  
                 
Other     59,574       33,684  
      12,579,011       14,504,121  
Less: Current portion     (2,278,164 )     (3,979,376 )
Long-term debt   $ 10,300,847     $ 10,524,745  

Federal Income Taxes (Tables)

v2.4.0.8
Federal Income Taxes (Tables)
12 Months Ended
May 31, 2015
Income Tax Disclosure [Abstract]  
Summary of Deferred Taxes

Deferred taxes as of May 31, 2015 and 2014 are as follows:

 

    2015     2014  
Deferred tax asset:                
Net operating loss carryforward   $ 1,892,673     $ 1,936,834  
Depreciation and amortization, financial reporting in excess of tax     -       219,838  
Stock compensation costs     21,632       36,328  
Allowance for doubtful accounts     4,508       17,000  
Other     13,429       -  
Total deferred tax asset     1,932,242       2,210,000  
Deferred tax liability:                
Depreciation and amortization, tax reporting in excess of financial     (153,005 )     -  
Net deferred tax asset   $ 1,779,237     $ 2,210,000  

Summary of Deferred Tax Assets Classified

Deferred tax assets were classified in the consolidated balance sheets at May 31, as follows:

 

    2015     2014  
Deferred tax assets - current   $ 1,222,110     $ 1,077,000  
Deferred tax assets - non-current     557,127       1,133,000  
Deferred tax assets - total   $ 1,779,237     $ 2,210,000  

Summary of Net Change in Deferred Taxes

The net change in deferred taxes for the year ended May 31, 2015 and 2014 is as follows:

 

    2015     2014  
Net operating loss carryforward   $ (44,121 )   $ (28,536 )
Depreciation and amortization, financial reporting in excess of tax     (372,843 )     (223,339 )
Stock compensation costs     (14,696 )     18,164  
Deferred compensation accrual     -       (244,800 )
Allowance for doubtful accounts     (12,532 )     (17,000 )
Valuation allowance     -       1,546,511  
Other     13,429       -  
Total   $ (430,763 )   $ 1,051,000  

Summary of Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes at May 31 consists of the following:

 

    2015     2014  
Current income tax – Federal and State   $ -     $ 11,000  
Deferred income tax provision (benefit)     430,763       (1,051,000 )
Provision for (benefit from) income taxes   $ 430,763     $ (1,040,000 )

Summary of Provision (Benefit) for Income Taxes for Federal Statutory Rate

Greystone’s provision (benefit) for income taxes for the years ended May 31, 2015 and 2014 differs from the federal statutory rate as follows:

 

    2015     2014  
Tax provision using statutory rates     34 %     34 %
Net operating loss expiration     7       -  
Net change in valuation allowance     -       (75 )
Other     1       (9 )
Tax provision (benefit) per financial statements     42 %     (50 )%

Summary of Net Operating Loss for Federal Income Tax

    NOL Carryforward     Year Expiring  
Cumulative through May 31, 2005   $ 2,250,000       2016 - 2025  
Year ended May 31, 2006     237,364       2026  
Year ended May 31, 2007     2,151,837       2027  
Year ended May 31, 2011     746,484       2031  
Year ended May 31, 2015     266,095       2035  

Stock Options (Tables)

v2.4.0.8
Stock Options (Tables)
12 Months Ended
May 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Summary of Option Activity

Following is a summary of option activity for the two years ended May 31, 2015:

  

    Number     Weighted Average Exercise Price     Remaining Contractual Life (years)     Intrinsic Value  
Total outstanding, May 31, 2013     2,450,000     $ 0.16                  
Exercised during fiscal year 2014     (350,000 )   $ 0.40                  
Total outstanding May 31, 2014     2,100,000     $ 0.12       7.0          
Exercised during fiscal year 2015     (950,000 )   $ 0.12                  
Total outstanding May 31, 2015     1,150,000     $ 0.12       7.0          
Exercisable as of May 31, 2015     100,000     $ 0.12       7.0     $ 18,000  
Non-vested as of May 31, 2015     1,050,000     $ 0.12       7.0     $ 189,000  

Supplemental Information of Cash Flows (Tables)

v2.4.0.8
Supplemental Information of Cash Flows (Tables)
12 Months Ended
May 31, 2015
Supplemental Cash Flow Information [Abstract]  
Summary of Supplemental Information of Cash Flows

Supplemental information of cash flows for the years ended May 31:

 

    2015     2014  
Non-cash investing and financing activities:                
Acquisition of equipment through capital lease   $ 64,497     $ -  
Acquisition of equipment in exchange for net related party receivable   $ 75,000     $ 1,087,302  
Reduction in net carrying value of equipment resulting from capital lease termination   $ -     $ 212,311  
Settlement of related party note payable in acquisition of equipment   $ -     $ 527,716  
Preferred dividend accrual   $ 26,712     $ 27,603  
                 
Supplemental information:                
Interest paid   $ 511,496     $ 567,507  
Taxes paid   $ -     $ 26,045  

Summary of Significant Accounting Policies (Details Narrative)

v2.4.0.8
Summary of Significant Accounting Policies (Details Narrative)
12 Months Ended
May 31, 2015
Debt issue costs amortized over term of underlying note payable 5 years
Patents [Member]
 
Estimated life 15 years

Summary of Significant Accounting Policies - Schedule of Useful Life of Property Plant and Equipment (Details)

v2.4.0.8
Summary of Significant Accounting Policies - Schedule of Useful Life of Property Plant and Equipment (Details)
12 Months Ended
May 31, 2015
Plant Buildings [Member]
 
Estimated useful lives 39 years
Production Machinery and Equipment [Member] | Minimum [Member]
 
Estimated useful lives 5 years
Production Machinery and Equipment [Member] | Maximum [Member]
 
Estimated useful lives 10 years
Leasehold Improvements [Member] | Minimum [Member]
 
Estimated useful lives 5 years
Leasehold Improvements [Member] | Maximum [Member]
 
Estimated useful lives 7 years
Furniture & Fixtures [Member] | Minimum [Member]
 
Estimated useful lives 3 years
Furniture & Fixtures [Member] | Maximum [Member]
 
Estimated useful lives 5 years

Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details)

v2.4.0.8
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) (Convertible Preferred Stock [Member])
12 Months Ended
May 31, 2015
May 31, 2014
Convertible Preferred Stock [Member]
   
Antidilutive Securities Excluded from Computation of Earnings Per Share 3,333,333 3,333,333

Inventory - Schedule of Inventory (Details)

v2.4.0.8
Inventory - Schedule of Inventory (Details) (USD $)
May 31, 2015
May 31, 2014
Inventory Disclosure [Abstract]    
Raw materials $ 665,702 $ 1,043,411
Finished pallets 763,642 572,754
Total Inventory $ 1,429,344 $ 1,616,165

Property and Equipment (Details Narrative)

v2.4.0.8
Property and Equipment (Details Narrative) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Property, Plant and Equipment [Abstract]    
Production machinery and equipment $ 157,396  
Plant buildings and land net book value 3,360,037  
Depreciation expense $ 1,398,269 $ 1,274,453

Property and Equipment - Schedule of Property and Equipment (Details)

v2.4.0.8
Property and Equipment - Schedule of Property and Equipment (Details) (USD $)
May 31, 2015
May 31, 2014
Property, Plant and Equipment [Abstract]    
Production machinery and equipment $ 13,120,285 $ 12,826,529
Plant buildings and land 4,663,339 4,663,339
Leasehold improvements 198,568 203,034
Furniture and fixtures 90,280 210,196
Property and Equipment gross 18,072,472 17,903,098
Less: Accumulated depreciation (9,563,157) (9,126,961)
Net Property and Equipment $ 8,509,315 $ 8,776,137

Other Assets (Details Narrative)

v2.4.0.8
Other Assets (Details Narrative) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Other Assets [Abstract]    
Amortization of intangibles $ 33,554 $ 35,120
Future amortization year one 37,380  
Future amortization year two 36,467  
Future amortization year three 35,982  
Future amortization year four 19,805  
Future amortization year five $ 0  

Other Assets - Schedule of Other Assets (Details)

v2.4.0.8
Other Assets - Schedule of Other Assets (Details) (USD $)
May 31, 2015
May 31, 2014
Other Assets [Abstract]    
Patents $ 190,739 $ 190,739
Debt issue costs 129,722 129,722
Accumulated amortization (190,827) (157,273)
Total Other Assets $ 129,634 $ 163,188

Long-Term Debt (Details Narrative)

v2.4.0.8
Long-Term Debt (Details Narrative) (USD $)
12 Months Ended 1 Months Ended 0 Months Ended 1 Months Ended 0 Months Ended 0 Months Ended
May 31, 2015
May 31, 2014
Jan. 31, 2014
Yorktown [Member]
Jan. 31, 2014
Term Loan [Member]
F&M Bank & Trust [Member]
Jan. 31, 2014
Greystone and GSM [Member]
May 31, 2015
Greystone and GSM [Member]
Jan. 31, 2014
Greystone and GSM [Member]
Minimum [Member]
Jan. 31, 2014
Greystone and GSM [Member]
Maximum [Member]
Jan. 31, 2014
Greystone and GSM [Member]
Revolving Loan [Member]
Jan. 31, 2014
Greystone and GSM [Member]
Term Loan [Member]
Jan. 31, 2014
GRE And F&M Bank & Trust [Member]
Mortgage Loan [Member]
Jan. 31, 2014
IBC Loan Agreement [Member]
Jan. 31, 2014
IBC Loan Agreement [Member]
Guaranty [Member]
Jan. 31, 2014
GRE And IBC [Member]
Mortgage Loan [Member]
May 31, 2015
Prime Rate [Member]
Debt instrument interest rate           4.00% 0.50% 4.00%   4.50%       4.50% 3.25%
Debt instrument principal amount                 $ 2,500,000 $ 9,200,000       $ 3,412,500  
Borrowed loans         2,500,000                    
Debt instrument maturity date         Jan. 31, 2016         Jan. 31, 2019       Jan. 31, 2019  
Payments on loan       3,992,083             3,197,682        
Pay accrued preferred dividends (325,000) (325,000)   3,469,040                      
Pay to acquisition equipment     1,312,697                        
Borrowers to pay a fee                       100,000      
Borrowers maintain coverage ratio description 0.54 to 1:00 which was less than the required minimum                     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      
Capital expenditure on fixed assets                       1,000,000      
Preferred stock amount 5 5                   500,000      
Borrowings combined amount                         9,200,000    
Maturities long term debt current 2,278,164                            
Maturities long term debt year two 4,122,957                            
Maturities long term debt year three 2,152,726                            
Maturities long term debt year four 4,016,603                            
Maturities long term debt year five $ 8,561                            

Long-Term Debt - Schedule of Debt (Details)

v2.4.0.8
Long-Term Debt - Schedule of Debt (Details) (USD $)
May 31, 2015
May 31, 2014
Total Notes Payable $ 12,579,011 $ 14,504,121
Less: Current portion (2,278,164) (3,979,376)
Long-term Debt 10,300,847 10,524,745
Notes Payable One [Member]
   
Total Notes Payable 6,945,884 8,647,777
Notes Payable Two [Member]
   
Total Notes Payable 300,000 385,000
Notes Payable Three [Member]
   
Total Notes Payable 3,207,553 3,371,660
Notes Payable Four [Member]
   
Total Notes Payable 2,066,000 2,066,000
Other Notes Payable [Member]
   
Total Notes Payable $ 59,574 $ 33,684

Long-Term Debt - Schedule of Debt (Details) (Parenthetical)

v2.4.0.8
Long-Term Debt - Schedule of Debt (Details) (Parenthetical) (USD $)
12 Months Ended
May 31, 2015
May 31, 2014
Notes Payable One [Member]
   
Debt instrument interest rate 4.50% 4.50%
Debt instrument maturity date Jan. 31, 2019 Jan. 31, 2019
Debt instrument principal amount $ 171,760 $ 171,760
Notes Payable Two [Member]
   
Debt instrument maturity date Jan. 31, 2016 Jan. 31, 2016
Notes Payable Two [Member] | Minimum [Member]
   
Debt instrument interest rate 0.50% 0.50%
Notes Payable Two [Member] | Maximum [Member]
   
Debt instrument interest rate 4.00% 4.00%
Notes Payable Three [Member]
   
Debt instrument interest rate 4.50% 4.50%
Debt instrument maturity date Jan. 31, 2019 Jan. 31, 2019
Debt instrument principal amount $ 26,215 $ 26,215
Notes Payable Four [Member]
   
Debt instrument interest rate 7.50% 7.50%
Debt instrument maturity date Jan. 15, 2017 Jan. 15, 2017

Related Party Transactions (Details Narrative)

v2.4.0.8
Related Party Transactions (Details Narrative) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
May 31, 2015
Jan. 31, 2014
Mr Kruger [Member]
Dec. 15, 2005
Mr. Rosene [Member]
May 31, 2015
Mr. Rosene [Member]
May 31, 2014
Mr. Rosene [Member]
Jan. 02, 2009
Mr LeBarre [Member]
May 31, 2015
Mr LeBarre [Member]
May 31, 2014
Mr LeBarre [Member]
Apr. 02, 2015
Oklahoma [Member]
May 31, 2015
Oklahoma [Member]
Jan. 31, 2014
Yorktown [Member]
May 31, 2015
Yorktown [Member]
May 31, 2014
Yorktown [Member]
May 31, 2015
Yorktown's Pelletizing Equipment [Member]
May 31, 2015
Yorktown's Grinding Equipment [Member]
May 31, 2014
Yorktown's Grinding Equipment [Member]
Jan. 31, 2014
Realted Party Other Transactions [Member]
Mr Kruger [Member]
Dec. 15, 2005
Realted Party Other Transactions [Member]
Mr Kruger [Member]
May 31, 2014
Realted Party Other Transactions [Member]
Mr Kruger [Member]
May 31, 2015
Trienda Holdings, LLC [Member]
May 31, 2015
Green Plastic Pallets [Member]
Operating Lease rental fees                 $ 2,000 $ 2,200     $ 84,983   $ 1,430,000 $ 1,430,000          
Payments of rental fees             300,000 300,000       22,500   5,000              
Labor costs                       450,748                  
Payment to acquire injection molding machine 104,000                   2,400,000                    
Due to related parties amount   2,662,782                                      
Account receivable                     3,750,085                 22,344  
Payment of cash                     1,312,697                    
Notes payable to related parties     2,066,000                             527,716      
Debt instruments interest rate     7.50%                             7.50% 7.50%    
Debt instrument maturity date     Jan. 15, 2017                             Jan. 15, 2015      
Note and advances and accrued interest       307,276 284,845                       1,318,295   93,729    
Revenue from related parties                                       220,692  
Interest payable       2,143,275                                  
Payment of fee         65,000                                
Purchase commitments amount           25,000                              
Lease maturity descriptions           lease was amended March 31, 2015 to extend the lease through September 30, 2015                              
Sales                                         $ 333,253