Note 6. LONG-TERM DEBT

Long-term debt consists of the following as of May 31, 2026 and 2025:

As of May 31, 2026, the prime rate of interest was 6.75%.

The revolving loan and term loans contain financial covenant requirements and cross-default provisions. The Company was not in compliance with certain financial covenants as of May 31, 2026. On July 5, 2026, the Company entered into a Fifth Amendment to its Amended and Restated Loan Agreement with International Bank of Commerce (“IBC”), pursuant to which IBC waived existing covenant violations through the amendment date and suspended testing of certain financial covenants through November 30, 2026. As of the issuance date of these consolidated financial statements, IBC had not exercised its rights to accelerate the indebtedness and the Company remained in compliance with the terms of the amended agreement. Management’s forecasts indicate that compliance with certain financial covenants upon the resumption of covenant testing may require additional amendments, waivers, or other accommodations from the lender. While IBC has waived specified covenant violations through the amendment date and suspended covenant testing through November 30, 2026, management has determined it is not probable the covenant violations will be cured when testing resumes after November 30, 2026. As such, all of the long-term debt has been classified as current.

Debt issuance costs consists of the amounts paid to third parties in connection with the issuance and modification of debt instruments. These costs are shown on the consolidated balance sheets as a direct reduction to the related debt instrument. Amortization of these costs is included in interest expense. Greystone recorded amortization of debt issuance costs of $29,851 and $5,159 for the years ended May 31, 2026 and 2025, respectively.

Restated and Amended Loan Agreement between Greystone and IBC

On July 29, 2022, Greystone and GSM (collectively, the “Borrowers”) entered into an Amended and Restated Loan Agreement with IBC (the “IBC Restated Loan Agreement”), which consolidated all existing term loans, provided additional funding for equipment purchases and renewed the revolving loan in the aggregate principal amount of $6,000,000 (the “Revolving Loan”), subject to borrowing base limitations. The Revolving Loan bore interest at the greater of 7.50% through February 4, 2025 and 6.50% beginning February 5, 2025, or the prime rate of interest plus 0.50%, and initially matured on February 5, 2024.

On February 5, 2024, Greystone and IBC entered into a Second Amendment to the IBC Restated Loan Agreement, which, among other things, extended the maturity date of the Revolving Loan from July 29, 2024 to February 5, 2026, increased the permitted distributions to holders of preferred stock to $1,000,000 and authorized Greystone’s stock repurchase plan not to exceed $1,000,000. On January 14, 2025, Greystone and IBC entered into a Third Amendment to the IBC Restated Loan Agreement, which limited repurchases of Greystone equity instruments to an aggregate amount not exceeding $1,000,000 through the period ended May 31, 2026. Effective February 5, 2026, the Revolving Loan was modified to extend the final maturity date to May 5, 2026. Effective April 28, 2026, the Revolving Loan was further modified to extend the maturity date to July 5, 2026. As of May 31, 2026, Greystone’s available revolving loan borrowing capacity was approximately $1.3 million.

Note 6. LONG-TERM DEBT (cont.)

Prior to January 9, 2026, the IBC term loans required equal monthly payments of principal and interest in amounts sufficient to amortize the principal balance of the loans over their remaining lives. The monthly payments of principal and interest on the IBC term loans may vary due to changes in the prime rate of interest. Aggregate payments for the IBC term loans were approximately $250,000 per month. On January 9, 2026, Greystone and IBC entered into a Fourth Amendment to the IBC Restated Loan Agreement, which adjusted the interest rate floor on the term loans to 6.25% and allowed interest-only payments through December 29, 2026. Beginning January 29, 2027 and continuing thereafter until the notes are paid in full, the aggregate payments for the IBC term loans will be approximately $245,000 per month and the maturity date was modified to be July 29, 2030.

On July 5, 2026, subsequent to year-end, Greystone and IBC entered into a Fifth Amendment to the IBC Restated Loan Agreement for the term loans and revolving loan. Under the Fifth Amendment, IBC waived existing covenant defaults and events of default related to specified financial covenants through the amendment date and suspended testing of certain financial covenants through November 30, 2026, after which covenant compliance testing resumes. The Fifth Amendment also extended the maturity date of the Revolving Loan from July 5, 2026 to February 5, 2027 and reduced the aggregate available borrowing to $3.5 million. In addition, the Fifth Amendment modified certain borrowing base and reporting requirements, imposed additional restrictions on capital expenditures and equity distributions, and expanded IBC’s collateral and guaranty support. All other material terms of the credit facility remain in effect.

The IBC Restated Loan Agreement is secured by a lien on substantially all assets of the Company. Warren F. Kruger, the Company’s President, Chief Executive Officer, Chief Financial Officer, and Chairman of the Board and Robert B. Rosene, Jr., a member of the Company’s Board of Directors and a member of the board for IBC, provided limited guaranties of the Borrowers’ obligations under the IBC Restated Loan Agreement. During the year ended May 31, 2025, Mr. Rosene was released from his guaranty in accordance with the IBC Restated Loan Agreement. In connection with the Fifth Amendment described above, Warren F. Kruger’s prior limited guaranty was replaced with an unlimited guaranty and the Warren F. Kruger Trust also signed a new unlimited guaranty.

The IBC Restated Loan Agreement contains customary representations, warranties, and affirmative and negative covenants. Among other requirements, the Borrowers must maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum debt-to-EBITDA ratio of 3.00:1.00 at each fiscal quarter-end and year-end. The agreement also limits annual capital expenditures to $2.0 million, annual dividends and distributions to $1.0 million, and annual interest payments on related-party debt to $500,000.As of May 31, 2026, the Company was not in compliance with the financial covenants described above. Pursuant to the amendment dated July 5, 2026, IBC waived all existing covenant violations and suspended testing of the financial covenants through November 30, 2026. However, management has concluded that it is not probable the Company will be in compliance with the financial covenants when testing resumes. Accordingly, all outstanding long-term debt has been classified as current as of May 31, 2026.

Loan Agreement with First Interstate Bank

On August 23, 2021, Greystone and First Interstate Bank entered into a loan agreement (the “FIB Loan Agreement”) in connection with certain prior loans and a mortgage loan to refinance certain land and buildings located in Bettendorf, IA.

The FIB 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 as of the end of each fiscal year end and debt to tangible net worth ratio of 4:00 to 1:00 as of the end of each fiscal year end with a decrease of 0.50 in the ratio each year thereafter until reaching a minimum ratio of 3:00 to 1:00. In addition, the FIB Loan Agreement provides that Greystone shall not, without prior consent of the bank, incur or assume additional indebtedness or capital leases. The Company was not in compliance with required certain financial covenants as of May 31, 2026. As such, all outstanding debt has been classified as current.

The FIB Loan Agreement is secured by a mortgage on one of Greystone’s warehouses.

Maturities

Greystone was not in compliance with certain financial covenants as of May 31, 2026. Therefore, all of the long-term debt has been classified as current.