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 August 31,
      2008








o
                TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE 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
              (State or other jurisdiction
      of incorporation or organization)
            75-2954680
              (I.R.S.
      Employer Identification No.)











1613
East 15thStreet,
Tulsa, Oklahoma 74120


(Address
of principal executive offices)     (Zip
Code)





(918) 583-7441


(Registrant's
telephone number)









(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 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  o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large accelerated
      filer  o
            Accelerated filer
      oNon-accelerated
      filer o
              (Do not
      check if a smaller reporting company)
            Smaller reporting
      company x




Indicate
by checkmark whether the registrant is a shell company (as defined in rule 12b-2
of the Exchange Act). Yes o   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: October 10, 2008 -
26,111,201














GREYSTONE
LOGISTICS, INC.


FORM
10-Q


For
the Period Ended August 31, 2008





PART
I.  FINANCIAL INFORMATION





Item
      1.  Financial Statements
            PageConsolidated
      Balance Sheets as of August 31, 2008 (Unaudited) and May 31,
      2008
            1Consolidated
      Statement of Operations (Unaudited) For the Three Month Periods Ended
      August 31, 2008 and 2007
            2Consolidated
      Statement of Cash Flows (Unaudited) For the Three Month Periods Ended
      August 31, 2008 and 2007
            3Notes
      to Consolidated Financial Statements (Unaudited)
            4Item
      2.  Management's Discussion and Analysis of Financial ConditionAnd Results of Operations
            7Item
      4.  Controls and Procedures
            10PART
      II.  OTHER INFORMATIONItem
      6.  Exhibits
            11SIGNATURES
            12







ITEM
1.  FINANCIAL INFORMATION




Greystone
Logistics, Inc. and Subsidiaries


Consolidated
Balance Sheets







August
      31,
            
            
            May
      31,2008
            
            
            2008Assets
            
            (Unaudited)Current
      Assets:Cash
            
            $
            573,160
            
            
            $
            201,301Accounts
      receivable
            
            
            1,115,319
            
            
            
            1,286,948Inventory
            
            
            671,286
            
            
            
            899,485Prepaid
      expenses
            
            
            41,115
            
            
            
            61,114Total
      Current Assets
            
            
            2,400,880
            
            
            
            2,448,848Property, Plant and Equipment,net of accumulated depreciationof
      $3,929,499 and $3,061,073, respectively
            
            
            8,853,310
            
            
            
            8,878,716Other
      Assets
            
            
            113,308
            
            
            
            118,440Total
      Assets
            
            $
            11,367,498
            
            
            $
            11,446,004Liabilities and
      Stockholders' DeficitCurrent
      Liabilities:Current
      portion of long-term debt
            
            $
            8,831,209
            
            
            $
            9,013,395Advances
      payable - related party
            
            
            1,204,482
            
            
            
            1,231,499Accounts
      payable and accrued expenses
            
            
            1,558,774
            
            
            
            1,138,735Accounts
      payable and accrued expenses - related parties
            
            
            2,236,476
            
            
            
            2,490,080Preferred
      dividends payable
            
            
            1,701,471
            
            
            
            1,597,499Total
      Current Liabilities
            
            
            15,532,412
            
            
            
            15,471,208Long-Term Debt, net of
      current portion
            
            
            4,352,333
            
            
            
            4,465,291Deferred
      Income
            
            
            64,000
            
            
            
            80,000Minority
      Interest
            
            
            728,379
            
            
            
            708,872Stockholders'
      Deficit:Preferred
      stock, $0.0001 par value, 20,750,000 shares authorized,50,000
      shares  issued and outstanding, liquidation
      preferenceof
      $5,000,000
            
            
            5
            
            
            
            5Common
      stock, $0.0001 par value, 5,000,000,000 sharesauthorized,
      26,111,201 issued and outstanding
            
            
            2,611
            
            
            
            2,611Additional
      paid-in capital
            
            
            52,849,373
            
            
            
            52,825,381Accumulated
      deficit
            
            
            (62,161,615
            )
            
            
            (62,107,364
            )Total
      Stockholders' Deficit
            
            
            (9,309,626
            )
            
            
            (9,279,367
            )Total
      Liabilities and Stockholders' Deficit
            
            $
            11,367,498
            
            
            $
            11,446,004




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




- 1
-
 
 Greystone
Logistics, Inc. and Subsidiaries
 Consolidated
Statements of Operations
 (Unaudited)


Three
      Months Ended August 31,2008
            
            
            2007Sales
            
            $
            4,173,057
            
            
            $
            5,597,211Cost
      of Sales
            
            
            3,431,927
            
            
            
            4,687,120Gross
      Profit
            
            
            741,130
            
            
            
            910,091General,
      selling and administration expenses
            
            
            410,184
            
            
            
            412,207Operating
      Income
            
            
            330,946
            
            
            
            497,884Other
      Income (Expense):Other
      income
            
            
            16,000
            
            
            
            52,151Interest
      expense
            
            
            (296,980
            )
            
            
            (354,993
            )Total
      Other Expense
            
            
            (280,980
            )
            
            
            (302,842
            )Income
      Attributable to Minority Interest
            
            
            (245
            )
            
            
            (18,438
            )Net
      Income
            
            
            49,721
            
            
            
            176,604Preferred
      Dividends
            
            
            103,972
            
            
            
            144,932Net
      Income (Loss) Available to Common Stockholders
            
            $
            (54,251
            )
            
            $
            31,672Income
      (Loss) Available to Common StockholdersPer
      Share of Common Stock - Basic and Diluted
            
            $
            (0.00
            )
            
            $
            0.00Weighted
      Average Shares of Common Stock Outstanding -Basic
            
            
            26,111,000
            
            
            
            26,061,000Dilutive
      effect of warrants outstanding
            
            
            -
            
            
            
            121,000Diluted
            
            
            26,111,000
            
            
            
            26,182,000




The
accompanying notes are an integral part of these consolidated financial
statements
   - 2
-


Greystone
Logistics, Inc. and Subsidiaries


Consolidated
Statements of Cash Flows


(Unaudited)


Three
      Months Ended August 31,2008
            
            
            2007Cash
      Flows from Operating Activities:Net
      Income
            
            $
            49,721
            
            
            $
            176,604Adjustments
      to reconcile net income to net cashprovided
      by operating activitiesDepreciation
      and amortization
            
            
            241,233
            
            
            
            208,289Stock-based
      compensation
            
            
            23,992
            
            
            
            -Recognition
      of deferred income
            
            
            (16,000
            )
            
            
            (16,000
            )Change
      in minority interest
            
            
            19,507
            
            
            
            (1,347
            )Changes
      in receivables
            
            
            171,629
            
            
            
            (430,365
            )Changes
      in inventory
            
            
            228,199
            
            
            
            31,861Changes
      in prepaid expenses
            
            
            19,999
            
            
            
            31,651Change
      in other assets
            
            
            -
            
            
            
            (5,680
            )Changes
      in accounts payable and accrued expenses
            
            
            104,083
            
            
            
            187,026Net
      cash provided by operating activities
            
            
            842,363
            
            
            
            182,039Cash
      Flows from Investing Activities:Purchase
      of property and equipment
            
            
            (210,695
            )
            
            
            (87,622
            )Cash
      Flows from Financing Activities:Payments
      on long-term debt and advances to related parties
            
            
            (259,809
            )
            
            
            (160,682
            )Net
      Increase (Decrease) in Cash
            
            
            371,859
            
            
            
            (66,265
            )Cash,
      beginning of period
            
            
            201,301
            
            
            
            340,334Cash,
      end of period
            
            $
            573,160
            
            
            $
            274,069Supplemental
      DataNon-cash
      transactions:Preferred
      dividend accrual
            
            $
            103,972
            
            
            $
            144,932Interest
      paid
            
            $
            203,724
            
            
            $
            296,562




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






- 3
-


GREYSTONE
LOGISTICS, INC.


Notes
to  Consolidated Financial Statements


(Unaudited)





1.           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 August 31, 2008, and the results of its
operations and its cash flows for the three month periods ended August 31, 2008
and 2007.  These consolidated financial statements should be read in
conjunction with the consolidated financial statements as of and for the year
ended May 31, 2008 and the notes thereto included in Greystone's Form
10-KSB.  The financial statements have been prepared assuming that
Greystone will continue as a going concern.  The working capital
deficit of $13,131,532, a stockholders' deficiency of $9,309,626 and its ability
to obtain additional long term financing, if necessary, raises questions about
Greystone’s ability to continue as a going concern. The accompanying financial
statements have been prepared assuming that Greystone will continue as a going
concern and do not reflect the possible effects of any adjustments that might
result from Greystone’s inability to continue as a going concern.





2.           The
results of operations for the three month periods ended August 31, 2008 and 2007
are not necessarily indicative of the results to be expected for the full
year.





3.           Greystone
calculates and discloses earnings per share (EPS) in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share(SFAS
128). SFAS 128 requires dual presentation of Basic and Diluted EPS on the face
of the statements of operations and requires a reconciliation of the numerator
and denominator of the Basic EPS computation to the numerator and denominator of
the Diluted EPS computation. Basic EPS excludes dilution and is computed by
dividing income (loss) available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of
Greystone.





In
computing Diluted EPS, only potential common shares that are dilutive—those that
reduce earnings per share or increase loss per share—are included. Exercise of
options and warrants or conversion of convertible securities is not assumed if
the result would be antidilutive, such as when a loss from continuing operations
is reported. The “control number” for determining whether including potential
common shares in the diluted EPS computation would be antidilutive is income
from continuing operations. As a result, if there were a loss from continuing
operations, Diluted EPS would be computed in the same manner as Basic EPS is
computed, even if an entity has net income after adjusting for discontinued
operations, an extraordinary item or the cumulative effect of an accounting
change.  As shown in the following table, the number of shares for
calculating the Basic and Diluted EPS is the same for the three month period
ending August




- 4
-


31, 2008
due to the net loss to common shareholders, and the number of shares for
calculating Basic and Diluted EPS for the three month period ending August 31,
2007 is:





Three Months
      ended August 31,2008
            
            
            2007(Unaudited)
            
            
            (Unaudited)Basic:Weighted
      average common shares outstanding
            
            
            26,111,000
            
            
            
            26,061,000Dilutive
      effect:Assumed
      exercise of warrants
            
            
            —
            
            
            
            250,000Application
      of assumed proceeds towardrepurchase
      of  treasury stock
            
            
            —
            
            
            
            (129,000
            )Net
      additional shares issuable
            
            
            —
            
            
            
            121,000Adjusted
      common shares outstanding for computing dilutive EPS
            
            
            26,111,000
            
            
            
            26,182,000




4.          
Inventory consists of the following:




August
      31,
            
            
            May
      31,2008
            
            
            2008(Unaudited)Raw
      materials
            
            $
            413,286
            
            
            $
            341,937Finished
      goods
            
            
            258,000
            
            
            
            557,548Total
      inventory
            
            $
            671,286
            
            
            $
            899,485




5.          
Recent Accounting Pronouncements.





In September 2006, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 157, Fair Value Measurements(SFAS
157). SFAS 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. The issuance of this standard is
meant to increase consistency and comparability in fair value measurements. SFAS
157 is effective for fiscal years beginning after November 15, 2007. In
February 2008, the FASB issued FASB Staff Position 157-1, Application of FASB Statement
No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13(FSP 157-1) and FASB Staff Position 157-2,
Effective Date of FASB
Statement No. 157(FSP 157-2). FSP 157-1 amends SFAS 157 to remove
certain leasing transactions from its scope. FSP 157-2 delays until
January 1, 2009 the effective date of SFAS 157 for all non-financial assets
and liabilities, except for items that are recognized or disclosed at fair value
in the financial statements




- 5
-


on a
recurring basis.  Effective June 1, 2008, Greystone adopted SFAS 157
which does not have a material effect on its consolidated financial statements
and related disclosures.





In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial
Assets and Financial Liabilities(SFAS 159). SFAS 159 permits entities to
choose to measure many financial instruments and certain other items at fair
value, and establishes presentation and disclosure requirements designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. SFAS 159 is effective
for fiscal years beginning after November 15, 2007.  Effective June 1,
2008, Greystone adopted SFAS 159 which does not have a material effect on its
consolidated financial statements and related disclosures.





In December 2007, the FASB issued SFAS
No. 160, Noncontrolling
Interests in Consolidated Financial Statements (SFAS 160). SFAS 160 was
issued to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary (formerly called minority interests) and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. FAS No. 160 is
effective for us in our fiscal year beginning after December 15,
2008.  Greystone does not expect the adoption of SFAS 160 to have a
material effect on its consolidated financial statements and related
disclosures, except for the presentation of non-controlling interests in the
financial statements.




In December 2007, the FASB issued SFAS
No. 141 (revised 2007), Business Combinations(SFAS
141R). SFAS 141R was issued to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about a business combination and its
effects.  This Statement is effective prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008. Greystone does not expect the adoption of SFAS 141R to have a
material effect on its consolidated financial statements and related
disclosures.





6.           Effective
May 31, 2008, Greystone corrected an error in the application of accounting
principles as a result of failing to consolidate Greystone Properties, LLC, a
variable interest entity.  As a result, the consolidated statement of
operations for the three month period ended August 31, 2007 did not include the
operations of Greystone Properties, LLC.  Accordingly, the fiscal year
2008 statement of operations has been restated to correct the error as noted in
the following summary of the adjustments that were made:





Cost
      of sales
            
            $
            (39,363
            )Interest
      expense
            
            
            20,925Minority
      interest in income of consolidated subsidiary
            
            
            18,438




- 6
-


7.           A
court action was filed by William Hamilton dba WHACO and dba Greystone Bill
Hamilton Trucking against GSM alleging damages in the amount of $104,390 for
breach of contract involving provision of materials and
services.  William Hamilton is an owner in Greystone Plastics, Inc.
from whom GSM purchased certain manufacturing assets in 2003.  GSM has
denied all allegations and has asserted a counterclaim arising from the sale of
manufacturing assets by Greystone Plastics, Inc. to GSM.  Discovery is
continuing in this action and a trial date has been set in February
2009.  GSM management cannot predict or guarantee the outcome of the
action.




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., or Greystone, and its wholly-owned
subsidiaries, Greystone Manufacturing, LLC, or GSM, and Plastic Pallet
Production, Inc., or PPP and variable interest, Greystone Properties,
LLC.  All material intercompany accounts and transactions have been
eliminated.





Greystone has incurred significant
losses from operations, and there is no assurance that it will continue to
achieve profitability or obtain funds necessary to finance its
operations.





References to fiscal year 2009 refer to
the three month period ended August 31, 2008.  References to fiscal
year 2008 refer to the three month period ended August 31, 2007.





Sales





Greystone's primary business is the
manufacturing and selling of plastic pallets through its wholly owned
subsidiaries, GSM and PPP.  In addition, Greystone sells its excess
recycled resin in pelletized and ground form.  Greystone sells its
pallets through direct sales and a network of independent contractor
distributors.  Greystone also sells its pallets and pallet leasing
services to certain large customers direct through its President, Senior Vice
President of Sales and Marketing and other employees.





Greystone currently derives
approximately 86% of its revenue from two national brewers.





In addition, in July 2006, Greystone
launched a beta test program involving the lease of a small pool of recycled
plastic pallets by Greystone to a customer to be utilized by the customer to




- 7
-


ship a
portion of its manufactured products in a closed loop system. Pursuant to the
agreement with the customer, Greystone delivers and tracks throughout the
logistics cycle sufficient quantities of plastic pallets for use in shipping a
segment of the customer's product.  The pallets stay in a closed loop
environment and are continually sent back for reuse.  If a pallet is
damaged, Greystone grinds the pallet and reutilizes the resin.





Personnel





Greystone had approximately 85
full-time employees as of August 31, 2008 and 2007.





Taxes





For all years presented, Greystone's
effective tax rate is 0%.  Greystone has generated substantial net
operating losses which would normally reflect a tax benefit in the statements of
operations and a deferred asset on the balance sheet.  However,
because of the current uncertainty as to Greystone's ability to achieve
profitability, a valuation reserve has been established that offsets the amount
of any tax benefit available for each period presented in the consolidated
statement of operations.





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. At August 31,
2008, Greystone had no unrecognized tax.





Three
Month Period Ended August 31, 2008 Compared to Three Month Period Ended August
31, 2007





Sales for fiscal year 2009 were
$4,173,057 compared to $5,597,211 in fiscal year 2008, for a decrease of
$1,424,154. The decrease is due to a combining of two of its large brewery
customers; sales to these customers is expected to increase during the second
and third quarters of fiscal 2009.





Cost of sales in fiscal year 2009 was
$3,431,927, or 82% of sales, compared to $4,687,120, or 84% of sales, in fiscal
year 2008.  The improvement in the ratio of cost of sales to sales is
due primarily to increases in sales prices.





Interest expense decreased $58,013 from
$354,993 in fiscal year 2008 to $296,980 in fiscal year
2009.  Greystone’s cost of debt is primarily based upon variable rates
of interest tied to the prime rate of interest.  The average prime
rate of interest was 5% during the three month period ended August 31, 2008
compared to 8.25% during the three month period ended August 31,
2007.





- 8
-


Greystone reported net income of
$49,721 in fiscal year 2009 compared to net income of $176,604 in fiscal year
2008 for the reasons discussed above.





After deducting preferred dividends,
the net loss available to common shareholders was $(54,251), or $0.00 per share,
in fiscal year 2009 compared to a net income available to common shareholders of
$31,672, or $0.00 per share, in fiscal year 2008 for the reasons discussed
above.





Liquidity and Capital
Resources





Greystone's cash requirements for
operating activities consist principally of accounts receivable, inventory,
accounts payable and scheduled payments of interest on outstanding
indebtedness.  Greystone is currently generating positive cash flows
from its operations but continues to be dependent on outside sources of cash to
fund its contractual obligations and capital needs.





A summary of cash flows for the three
months ended August 31, 2008 is as follows:




Cash
      provided by operating activities
            
            $
            842,363Cash
      used in investing activities
            
            
            (210,695
            )Cash
      used in financing activities
            
            
            (259,809
            )




The contractual obligations of
Greystone are as follows:





Total
            
            
            Less
      than
              1 year
            
            
            1-3 years
            
            
            4-5 years
            
            
            Over
              5 yearsLong-term
      debt
            
            $
            13,183,542
            
            
            $
            8,831,209
            
            
            $
            1,839,855
            
            
            $
            625,249
            
            
            $
            1,887,229





To
provide for the additional cash that might be necessary to meet Greystone's
contractual obligations, Greystone is exploring various options including
refinancing long-term debt and equity financing.  However, there is no
guarantee that Greystone will be able to raise sufficient capital to meet these
obligations.





Greystone has accumulated a working
capital deficit of approximately $13,131,532 at August 31, 2008, which includes
current portion of long-term debt of $8,831,209 and $3,795,250 in accounts
payable and accrued liabilities. The working capital deficit reflects the
uncertain financial condition of Greystone resulting from its inability to
obtain long term financing until such time as it is able to maintain
profitability.  There is no assurance that Greystone will secure such
financing or continue to achieve profitability.





- 9
-


Substantially all of the financing that
Greystone has received through August 31, 2008, has been provided by loans or
through loan guarantees from the officers and directors of Greystone, the
offerings of preferred stock to current and former officers and directors of
Greystone in 2001 and 2003 and through a private placement of common stock
completed in March 2005.





Greystone continues to be dependent
upon its officers and directors to provide and/or secure additional financing
and there is no assurance that they will 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 for a total of $5,000,000 with 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 preferred stock or its common stock unless and until the financial position
of Greystone improves through increased revenues, another financing or
otherwise.





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 federal securities
laws.  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-KSB for the fiscal year ended May 31, 2008, which was filed
on September 15, 2008.  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
4.  Controls and Procedures





As of the end of the period covered by
this Current 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 this evaluation as of May 31, 2008,
Greystone's Chief Executive Officer and Chief Financial Officer identified three
material weaknesses.  As a result of these three material weaknesses,
Greystone’s CEO and CFO concluded that Greystone did not maintain effective




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internal
control over financial reporting as of August 31, 2008.





First,
Greystone has not employed individuals with the necessary accounting knowledge
to identify and implement recently issued accounting standards. Until this
material weakness is corrected, material misstatements in the financial
statements could remain undetected.





Second,
Greystone did not maintain proper records to ensure proper cut-off of inventory
and accounts payable at August 31, 2008 specifically with its primary supplier
Yorktown.  In addition, labor and overhead rates are not calculated
and updated as necessary to ensure proper valuation of finished goods
inventory.  Not ensuring inventory and accounts payable are properly
cut-off at period end and not ensuring appropriate labor and overhead rates are
applied to finished goods inventory resulted in adjustments to Greystone’s May
31, 2008 financial statements.





Third,
Greystone lacks the necessary corporate accounting resources to maintain
adequate segregation of duties. Reliance on these limited resources impairs
Greystone’s ability to provide for proper segregation of duties and the ability
to ensure consistently complete and accurate financial reporting, as well as
disclosure controls and procedures.





During the quarter ended August 31,
2008, there was no change in Greystone's internal controls over financial
reporting that has materially affected, or that is reasonably likely to
materially affect, Greystone's internal control over financial
reporting.




PART
II.  OTHER INFORMATION




Item
6.  Exhibits





11.1
            Computation
      of Income (Loss) per Share is in Note 3 in the Notes to the financial
      statements.





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.





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.





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.





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.





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SIGNATURE





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 duly
authorized.




GREYSTONE
      LOGISTICS, INC.
                (Registrant)Date:
      October 20, 2008
              By:
              /s/ Warren
      F. KrugerPresident
      and Chief Executive Officer

























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