{"url_path":"/sec/ggrou/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 of the Cooperative’s Annual Report on Form 10-K for the fiscal year ended","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1489874/0001826466-26-000035-index.html","accession_number":"0001826466-26-000035","cik":"0001489874","ticker":"GGROU","issuer_name":"Golden Growers Cooperative","edgar_url":"https://www.sec.gov/Archives/edgar/data/1489874/0001826466-26-000035-index.html","primary_entity_key":"0001489874","primary_entity_name":"Golden Growers Cooperative"},"word_count":2235,"has_tables":true,"body_markdown":"Item 1 of the Cooperative’s Annual Report on Form 10-K for the fiscal year ended\nDecember 31, 2025.\n\n*ProGold Facility Lease.*\nProGold LLC leases its corn wet milling facility to Cargill, which uses the\nfacility to process corn into high fructose corn syrup. ProGold LLC and Cargill\nentered into that certain First Amendment to Second Amended and Restated\nFacility Lease, effective March 1, 2022, which extended the term of the Facility\nLease through December 31, 2026.\n\n*Membership and Delivery\nObligations.* Any person residing in the United States can own membership\nunits of the Cooperative (“Units”) as long as that person delivers or provides\nfor the delivery of corn for processing at the ProGold LLC facility. Ownership of Units requires members to\ndeliver bushels of corn to the Cooperative for processing in proportion to the\nnumber of Units each member holds. Currently, 15,490,480 Units are issued and\noutstanding. The Cooperative’s income and losses are allocated to its members\nbased on the volume of corn they deliver. Subject to certain limitations, as\nlong as a member patronizes the Cooperative by delivering one (1) bushel of corn\nfor each Unit held by the member, the member will be allocated a corresponding\nportion of the Cooperative’s income (or loss). In this way, the Cooperative\noperates on a cooperative basis.\n\nTo hold Units, a member is\nrequired to execute a Uniform Member Agreement that obligates the member to\ndeliver corn to the Cooperative and an Annual Delivery Agreement by which each\nmember annually elects the member’s method to deliver corn - either Method A or\nMethod B, or a combination of both. Under Method A, a member is required to\nphysically deliver the required bushels of corn to the Cooperative either at the\nfacility or another location designated by the Cooperative. Under Method B, a\nmember appoints the Cooperative as its agent to arrange for the acquisition and\ndelivery of the required bushels of corn on the member’s behalf. The Cooperative\nappoints Cargill as its agent to arrange for the delivery of the corn by members\nwho elect to deliver corn using Method A, and the Cooperative appoints Cargill\nas its agent to acquire corn on the Cooperative’s behalf for members who elect\nto deliver corn using Method B. If a member elects to deliver corn using Method B,\nthe price per bushel the Cooperative pays to the member is equal to the price\nper bushel paid by Cargill to acquire the corn as its agent. Members who deliver\ncorn under Method A are paid the market price or contracted price for their corn\nat the time of delivery. Members who deliver corn under Method A also receive\nfrom the Cooperative an incentive payment of $.05 per bushel on the corn that\nthey deliver while members who elect Method B to deliver corn pay to the\nCooperative a $.02 per bushel agency fee for the cost of having the Cooperative\ndeliver corn on their behalf. The incentive payment for Method A deliveries and\nthe agency fee for Method B deliveries are subject to annual adjustment at the\nsole discretion of the Cooperative’s Board of Directors. While the Cooperative is financially responsible for the\nvarious payments to the members for corn, Cargill, serving as the Cooperative’s\nadministrative agent, issues payments to members for corn on the Cooperative’s\nbehalf.\n\nAnnually, the Cooperative\nnotifies Cargill of the number of bushels of Method A corn to be delivered by\neach member who has elected to deliver corn by Method A. Once the Cooperative\nprovides notification to Cargill of the number of bushels of corn, Cargill then\nconfirms the amount of corn with each member and notifies that member with\nrespect to quality specifications, allowances, deductions and premiums to be\napplicable to that corn. The member with a Method A corn commitment then\ndirectly contracts with Cargill for corn delivered by Method A. At the end of\neach month, Cargill reports the number of Method A bushels delivered and the\naverage daily price paid for corn that Cargill purchased from members on the\nCooperative’s behalf. The product of the number of bushels delivered multiplied\nby the average monthly market price is reported as Method A corn expense. In the\nevent a member who has elected to deliver corn by Method A delivers to Cargill\nmore than its delivery commitment, any corn delivered in excess of that\ncommitment is handled as a direct sale of corn to Cargill. In the event a member\nwho has elected to deliver corn by Method A delivers to Cargill less than its\ncommitted amount of corn, the quantity of the shortfall is then purchased and\ndelivered by Cargill on the Cooperative’s behalf. The purchase price is equal to\nthe average price reported for Method A corn for the final month of the year. In\naddition, the Method A member with a shortfall will be charged a purchased corn\nfee and agency fee determined by the Cooperative’s Board of Directors.\n\nCargill then purchases the\nremainder of the corn to be delivered by the Cooperative on behalf of the Method\nB delivering members at such time and in such quantities as it deems appropriate\nand in the best interest of the Cooperative and Cargill. The Cooperative\nnotifies Cargill of the number of Method B bushels to be purchased during the\nquarter. Cargill will certify to the Cooperative that it has purchased\nthe necessary Method B bushels. The price paid is the weighted average price for\nMethod A corn during the quarter multiplied by the number of Method B bushels.\nMethod B corn revenue is equal to the price paid.\n\n9\n\n \n\nThe Cooperative’s Fourth Amended and Restated Bylaws (“Bylaws”)\nestablish a Method A delivery pool and a Method B delivery pool. Generally, the Cooperative’s income\nand/or losses are allocated annually based on the percentage of bushels of corn\nthe members elect to deliver using either Method A or Method B. Regardless of\nthe actual percentage allocation between the members who deliver bushels of corn\nusing Method A or Method B, the Bylaws require the Cooperative to annually\nallocate at least 15% of its income and/or losses to the Method A pool. The\namount of our income and/or losses actually allocated to the Method A pool is a\npercentage equal to the greater of 15% or the actual percentage of bushels of\ncorn delivered by members using Method A.\n\nFor fiscal year 2026, members\nelected to deliver 24.4% of their corn by Method A and 75.6% of their corn by\nMethod B. This election will result in 24.4% of the Cooperative’s income and/or\nlosses and 23.4% of any cash distributions being allocated to the Method A pool\nin fiscal year 2026, which reflects the actual percentage of corn members\nelected to deliver using Method A and does not result in reallocation to meet\nthe 15% requirement set forth in the Cooperative’s Bylaws.\n\n**Results of Operations**\n\n*Revenues*. The Cooperative\nderives revenue from two sources: operations related to the marketing of\nmembers’ corn and income derived from the Cooperative’s membership interest in\nProGold LLC. The corn marketing operations generate revenue for the Cooperative\nequal to the value of the corn that is delivered to Cargill. The Cooperative\nrecognizes expense equal to this same amount, which results in the corn\nmarketing operations being revenue neutral to the Cooperative, except for\nrevenue from the Method B agency fee and expenses related to the Method A\nincentive payments and the service fee paid to Cargill.\n\nFor the three-month period ended\nMarch 31, 2026, the Cooperative sold approximately 4.6 million bushels of corn\ncompared to approximately 4.7 million bushels of corn sold during the\nthree-month period ended March 31, 2025. For the three-month period ended March\n31, 2026, the members, on the Cooperative’s behalf, delivered to Cargill for\nprocessing at the facility approximately 1.7 million bushels of corn using\nMethod A and 2.9 million bushels of corn using Method B. In the same period in\n2025, its members, on the Cooperative’s behalf, delivered to Cargill for\nprocessing at the facility 1.8 million bushels of corn using Method A and 2.9\nmillion bushels of corn using Method B.\n\nFor the three-month period ended\nMarch 31, 2026, the Cooperative recognized corn revenue of $17,902,000 compared\nto $20,088,000 during the same period in 2025, a decrease of 11% for the first\nquarter due primarily to a decrease in the price per bushel of corn sold year to\ndate in 2026 compared to 2025.\n\n*Expenses.* The Cooperative\nrecognized corn expense of $17,918,000 and $20,105,000 for the three-month\nperiod ended March 31, 2026 and 2025 respectively, a decrease of 11% for the\nfirst quarter due primarily to a decrease in the price per bushel of corn\npurchased in 2026 compared to 2025.\n\nThe Cooperative recognized\nexpense of $15,000 for the three-month periods ended March 31, 2026 and 2025 in\nconnection with costs incurred to Cargill related to the Cooperative’s corn\nmarketing operation.\n\n*Income from ProGold LLC*.\nThe Cooperative derived income from ProGold LLC for the three-month periods\nended March 31, 2026 and 2025 of $1,630,000 and $1,788,000, respectively, a\ndecrease of 9% for the first quarter. The decrease is primarily due to a gain on\na sale of a capital asset in 2025 compared to 2026.\n\n*General and Administrative\nExpenses*. The Cooperative’s general and administrative expenses include\nsalaries and benefits, professional fees and fees paid to its Board of\nDirectors. The general and administrative expenses for the three-month period\nended March 31, 2026 was $232,000, compared to $258,000 during the same\nrespective period in 2025. The decrease in general and administrative expenses\nis due to decreased legal, consulting, and accounting expenses in 2026 compared\nto 2025.\n\n*Other Income*. Interest\nincome for the three-month period ended March 31, 2026 was $40,000 compared to\n$82,000 during the same period in 2025. The decrease in other income relates to\na reduction in the Cooperative’s investments.\n\n10\n\n**Liquidity and Capital Resources**\n\nThe Cooperative’s working capital\nat March 31, 2026 was $4,132,000 compared to $6,855,000 at March 31, 2025. The\ndecreased working capital at the end of the first quarter of fiscal 2026 as\ncompared to the end of the first quarter of 2025 is primarily related to a\nreduction in the Cooperative’s investments. The Cooperative received cash\ndistributions from ProGold LLC totaling $1,979,000 for the three-month period\nended March 31, 2026 compared to $1,994,000 for the three-month period ended\nMarch 31, 2025.\n\nIn fiscal year 2018, the\nCooperative invested a portion of its cash reserves in bonds. To ensure that the\nCooperative would have access to cash if needed before the maturity of the\nbonds, the Cooperative also established a $2,000,000 line of credit at a\nvariable interest rate based on the prime rate. The line of credit will\nterminate on October 16, 2026. The line of credit is secured by the investment\nmanagement agency account for the Cooperative maintained by Bell Bank. There was\nno outstanding balance as of March 31, 2026 or December 31, 2025.\n\nThe Cooperative had no long-term\ndebt as of March 31, 2026 and March 31, 2025 and used operating cash flows of\n$42,000 for the three-month period ended March 31, 2026 compared to used\noperating cash flows of $150,000 for the three-month period ended March 31,\n2025. The decrease in use of operating cash flows for the three-month period\nended March 31, 2026 compared to the three-month period ended March 31, 2025 is\nprimarily due to decreased payments of payables in 2026 compared to 2025.\n\nManagement believes that non-cash\nworking capital levels, together with the Cooperative’s cash and cash\nequivalents, are appropriate in the current business environment and does not\nexpect a significant increase or reduction of non-cash working capital in the\nnext 12 months. Management expects that the Cooperative’s cash and cash\nequivalents, together with available borrowings under the line of credit, will\nbe sufficient to fund its operations for the foreseeable future, including at\nleast the next twelve months.\n\n**Significant Accounting Estimates and Policies**\n\nThe Cooperative generally does\nnot pay out Method A incentive payments or collect Method B agency fees until\nthe end of its fiscal year. The total annual Method B agency fee was\ndeterminable once the members completed their delivery method determination\nprior to January 1, 2026. The quarterly Method B bushel delivery and agency fee\nrevenue is calculated by allocating the portion of the total annual agency fee\nfor that particular quarter or cumulating it for the particular period. The\nCooperative tracks Method A corn deliveries throughout the year so it can report\nthe bushels of corn delivered by its members as well as the corresponding Method\nA incentive fees earned. The final amounts owed by or due to Cargill and/or the\nCooperative’s members who elect to deliver using Method A is not calculated\nuntil after December 31 in order to account for any failures to deliver, or\nover-deliveries, of corn.\n\nThe Cooperative’s significant\naccounting policies are described in Note 2, *Summary of Significant\nAccounting Policies*, of the Notes to the Financial Statements in the\nCooperative’s Annual Report on Form 10-K for the fiscal year ended December 31,\n2025. The Cooperative’s critical accounting estimates are discussed in Item 7,\n*Management’s*\n\n*Discussion and Analysis of Financial Conditions and Results of Operations*, in the Cooperative’s\nAnnual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no other significant changes in the Cooperative’s\nsignificant accounting policies or critical accounting estimates since December 31, 2025."}