Golden Growers Cooperative - Quarter Report: 2019 September (Form 10-Q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2019

Commission file number:  000-53957

 

Golden Growers Cooperative

(Exact name of registrant as specified in its charter)

 

 

1002 Main Avenue West, Suite 5

West Fargo, ND 58078

(Address of principal executive offices)

 

Telephone Number 701-281-0468

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  

 

 

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

 

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act).

 

 

As of November 7, 2019 the Cooperative had 15,490,480 Units issued and outstanding.

 

 

 

 

GOLDEN GROWERS COOPERATIVE

 

FORM 10-Q

 

INDEX

 

 

 

 

                  PART I.  FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

GOLDEN GROWERS COOPERATIVE

CONDENSED BALANCE SHEETS

(In Thousands)

 

 

 

 

See Notes to Condensed Financial Statements

 

 

 

GOLDEN GROWERS COOPERATIVE

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In Thousands, Other Than Share and Per-Share Data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOLDEN GROWERS COOPERATIVE

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Condensed Financial Statements

 

GOLDEN GROWERS COOPERATIVE

CONDENSED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

 

 

 

See Notes to Condensed Financial Statements

 

 

 

 

 

GOLDEN GROWERS COOPERATIVE

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

 

NOTE 1 – BASIS OF PRESENTATION

 

The condensed financial statements of Golden Growers Cooperative (the “Cooperative”) for the three and nine-month periods ended September 30, 2019 and 2018 are unaudited and reflect all adjustments consisting of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed financial statements should be read in conjunction with the financial statements and notes thereto, contained in the Cooperative’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The results of operations for the three and nine-month periods ended September 30, 2019 are not necessarily indicative of the results for the entire fiscal year ending December 31, 2019.

 

NOTE 2 – EXPENSES

 

The Cooperative contracts with Cargill, Incorporated (“Cargill”) in connection with the procurement of corn and other agency services for an annual fee of $60,000, which is paid by the Cooperative to Cargill in quarterly installments.  The agreements between Cargill and the Cooperative terminate concurrently with Cargill’s Second Amended and Restated Facility Lease with ProGold Limited Liability Company (“ProGold LLC”), which terminates on December 31, 2022, but may be extended through 2023 under certain conditions.

 

NOTE 3 – PROGOLD LIMITED LIABILITY COMPANY

 

The Cooperative has a 49% ownership interest in ProGold LLC.  Following is summary financial information for ProGold LLC, which was derived from the interim September 30 and year end December 31 financial statements of ProGold LLC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 4 – INVESTMENTS

 

The Cooperative has determined fair value of its investments held to maturity based on Level 2 inputs. 

 

 

 

 

The Coopertive’s investments held to maturity are as follows as of September 30, 2019 and December 31, 2018:

 

 

Maturities are as follows as of September 30, 2019:

 

 

 

 

 

NOTE 5 – EMPLOYEE BENEFIT PLANS

 

Pension Plan – In December 2012, the Cooperative approved a change to freeze the Cooperative’s defined benefit plan. As a result, no additional benefits will accrue to participants in the plan and no new employees are eligible for the plan.

 

The following schedules provide the components of Net Periodic Benefit Cost for the nine months ended September 30, 2019 and September 30, 2018 (in thousands):  

 

 

 

Through the nine months ended September 30, 2019, the Cooperative has made $0 in contributions as compared to $4,000 through the nine months ended September 30, 2018.  The Cooperative does not anticipate making a contribution in 2019. Contributions in 2018 totaled $4,000.

 

 

 

NOTE 6 – CHANGE IN ACCOUNTING STANDARDS

 

Leases - In February 2016, the Financial Accounting Standards Board (“FASB”) issued a standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use assets and lease liabilities on the balance sheet. The standard was effective for the Cooperative beginning January 1, 2019. The standard did not have a significant impact on the Cooperative’s financial statements.

 

Revenue Recognition - On January 1, 2018, the Cooperative adopted ASU 2014-09, Revenues from Contracts with Customers. The core principle of the revenue guidance is that an entity should 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 Cooperative determined that the timing, pattern and amount of revenue recognized under the new standard is substantially the same as previously recognized by the Cooperative.

 

Annually, the Cooperative is required to deliver approximately 15,490,480 bushels of corn to Cargill for processing at the ProGold LLC wet-milling facility. To fulfill that requirement, the Cooperative’s members are contractually obligated to annually deliver corn to the Cooperative by either Method A or Method B or a combination of both. Under Method A, a member is required to physically deliver corn to the Cooperative and under Method B a member appoints the Cooperative as its agent to arrange for the acquisition and delivery of corn on the member’s behalf. The Cooperative contractually appoints Cargill as its agent to arrange for the delivery of the corn by its members who elect to deliver corn using Method A and to acquire corn on its behalf for its members who elect to deliver corn using Method B. In exchange for these services, the Cooperative pays an annual fee of $60,000, paid in quarterly installments.

 

Members who deliver corn under Method A are paid the market price or contracted price for their corn at the time of delivery, as well as an incentive payment of $.05 per bushel. Cargill pays the aggregate purchase price for corn purchased from the Cooperative’s members to the Cooperative and then, on the Cooperative’s behalf, makes individual payments for corn and incentive payments directly to the Cooperative’s members. If a Method A member fails to fully satisfy the corn delivery requirement, Cargill purchases replacement corn. If the market price or contracted price for corn at the time delivery was due was less than the price of the replacement corn, the Cooperative reimburses Cargill for the difference. The Method A member who fails to deliver corn is then invoiced by the Cooperative for the price of the replacement corn.

 

Members who elect Method B to deliver corn pay the Cooperative a $.02 per bushel agency fee for the cost of having the Cooperative deliver corn on their behalf. The price per bushel paid to such member is equal to the price per bushel paid by Cargill to acquire the corn as the Cooperative’s agent. Because Cargill purchases the corn on behalf of Method B delivering members, the purchase price for the corn that would be paid to the Cooperative’s members if they actually

delivered the corn offsets against the payment to be made by the Cooperative to Cargill for the cost to purchase the corn, thus no payment is made from Cargill to the Cooperative for corn delivered using Method B.

 

The Cooperative has determined Corn Expense for Method B deliveries based on the average quarterly cost per bushel paid by Cargill to the Cooperative’s members for Method A quarterly deliveries. The incentive payment and agency fee are also a component of Corn Expense. The Cooperative’s Board of Directors has the discretion to change the incentive payment and the agency fee based on the Cooperative’s corn delivery needs.

 

For the three month periods ended September 30, 2019 and 2018, the Cooperative recognized corn revenue of $12.1 million and $11.0 million, respectively. For the nine month periods ended September 30, 2019 and 2018, the Cooperative recognized corn revenue of $42.4 million and $38.7 million, respectively. Disaggregated revenue for the three month periods ended September 30, 2019 and 2018 is as follows: revenue from Method A deliveries totaled $1.4 million and $2.2 million respectively; revenue from Method B deliveries totaled $10.7 million and $8.8 million, respectively. Disaggregated revenue for the nine month periods ended September 30, 2019 and 2018 is as follows: revenue from Method A deliveries totaled $12.2 million and $11.3 million respectively; revenue from Method B deliveries totaled $30.2 million and $27.4 million, respectively.

 

Financial Instruments – Recognition, Measurement, Presentation, and Disclosure – On January 1, 2018, the Cooperative adopted ASU 2016-01 related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of the standard did not have a significant impact on the Cooperative’s financial statements.

 

NOTE 7 – DISTRIBUTIONS TO MEMBERS

 

On February 28, 2019, the Cooperative made distributions to its members totaling $2,354,553, or $0.152 per outstanding membership unit.  On June 18, 2019, the Cooperative made distributions to its members totaling $2,168,667 or $0.14 per outstanding membership unit.  At its September meeting, the Cooperative’s Board of Directors authorized a distribution to its members totaling $2,168,667, or $0.14 per outstanding membership unit, to be paid in October 2019.   On October 10, 2019 the Cooperative made the distribution to its members.

 

 

NOTE 8 – LINE OF CREDIT

 

The Cooperative established a $2,000,000 line of credit with a variable interest rate based on the prime rate that  was scheduled to terminate on October 16, 2019.  This line of credit has been extended to October 16, 2020.  The line of credit is secured by the investment management agency account for Golden Growers maintained by Bell Bank.  There is no outstanding balance as of September 30, 2019 or December 31, 2018.

 

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

The Cooperative contracts with Cargill in connection with the procurement of corn and other agency services for an annual fee of $60,000, which is paid by the Cooperative to Cargill in quarterly installments. The agreements between Cargill and the Cooperative terminate concurrently with Cargill’s Second Amended and Restated Facility Lease with ProGold LLC, which terminates on December 31, 2022, but may be extended through 2023 under certain conditions.

 

NOTE 10 – SUBSEQUENT EVENTS

 

The Cooperative has evaluated events through the date the financial statements were issued for potential recognition or disclosure in the September 30, 2019 financial statements and concluded that no subsequent events have occurred that would require recognition in the September 30, 2019 financial statements.

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes thereto and Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations, included in the Cooperative’s Annual Report Form 10-K for the fiscal year ended December 31, 2018.  This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties.  Such forward-looking statements include, among others, those statements including the words “expect”, “anticipate”,

“believe”, “may” and similar expressions.  The Cooperative’s actual results could differ materially from those indicated in the forward-looking statements for many reasons, including events beyond the Cooperative’s control and assumptions that prove to be inaccurate or unfounded.    The Cooperative’s actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including but not limited to: (i) the impact of the Cooperative’s minority ownership interest in ProGold; (ii) fluctuations in the market price per bushel of corn; and (iii) other factors described from time to time in our Securities and Exchange Commission filings. The Cooperative does not intend to update the forward-looking statements contained in this Quarterly Report on Form 10-Q other than as required by law and qualifies all of its forward-looking statements by these cautionary statements.

 

Overview

 

Golden Growers Cooperative is a value-added agricultural cooperative association governed under Minnesota Statutes Chapter 308B owned by 1,539 members in the business of providing value to its members by facilitating their delivery of corn to the corn wet-milling facility owned by ProGold Limited Liability Company (“ProGold LLC”), a Minnesota limited liability company in which the Cooperative owns a 49% membership interest.  ProGold LLC leases its corn wet milling facility to Cargill Incorporated (“Cargill”), which uses the facility to process corn into high fructose corn syrup.  The Cooperative accomplishes its business on behalf of its members through its contractual relationships with all of the parties involved in the ownership and operation of the facility.  From an income production perspective, the Cooperative’s membership interest in ProGold LLC is its primary asset that, in addition to giving the Cooperative the right to receive distributions from ProGold LLC, also provides the Cooperative’s members with additional value for the delivery of their corn for processing.  Annually, the Cooperative is required to deliver approximately 15,490,480 bushels of corn to Cargill for processing at the ProGold LLC facility.

 

Any person residing in the United States can own membership units of the Cooperative (“Units”) as long as that person delivers or provides for the delivery of corn for processing at the ProGold LLC facility. Ownership of Units requires members to deliver corn to the Cooperative for processing in proportion to the number of Units each member holds. Currently, 15,490,480 Units are issued and outstanding.  The Cooperative’s income and losses are allocated to its members based on the volume of corn they deliver.  Subject to certain limitations, as long as a member patronizes the Cooperative by delivering corn equal to the number of Units held by the member, the member will be allocated a corresponding portion of the Cooperative’s income (or loss).  In this way, the Cooperative operates on a cooperative basis.

 

To hold Units, a member is required to execute a Uniform Member Agreement that obligates the member to deliver corn to the Cooperative and an Annual Delivery Agreement by which each member annually elects the member’s method to deliver corn - either Method A or Method B, or a combination of both.  Under Method A, a member is required to physically deliver the required bushels of corn to the Cooperative either at the facility or another location designated by the Cooperative.  Under Method B, a member appoints the Cooperative as its agent to arrange for the acquisition and delivery of the required bushels of corn on the member’s behalf.  The Cooperative appoints Cargill as its agent to arrange for the delivery of the corn by members who elect to deliver corn using Method A, and the Cooperative appoints Cargill as its agent to acquire corn on the Cooperative’s behalf for members who elect to deliver corn using Method B.  If a member elects to deliver corn using Method B, the price per bushel the Cooperative pays to the member is equal to the price per bushel paid by Cargill to acquire the corn as its agent.  Members who deliver corn under Method A are paid the market price or contracted price for their corn at the time of delivery.  Members who deliver corn under Method A receive from the Cooperative an incentive payment of $.05 per bushel on the corn that they deliver while members who elect Method B to deliver corn pay to the Cooperative a $.02 per bushel agency fee for the cost of having the Cooperative deliver corn on their behalf.  The incentive payment for Method A deliveries and the agency fee for Method B deliveries are subject to annual adjustment at the sole discretion of the Cooperative’s Board of Directors. While the Cooperative is financially responsible for the various payments to the members for corn, Cargill, serving as the Cooperative’s administrative agent, issues payments to members for corn on the Cooperative’s behalf.

 

Annually, the Cooperative notifies Cargill of the volume of Method A corn to be delivered by each Method A member.  Once the Cooperative provides notification to Cargill of the volume of corn, Cargill then confirms the amount of corn with each member and notifies that member with respect to quality specifications, allowances, deductions and premiums to be applicable to that corn.  The Method A member then directly contracts with Cargill for the contract price agreed upon for the corn or, in the absence of an agreed upon price, the market price per bushel for corn delivered on the day on which the corn is delivered and accepted at the facility.  With respect to all Method A corn that is delivered, Cargill pays to the Cooperative the aggregate purchase price for corn purchased from the members, and then, on behalf of the Cooperative, makes individual payments for corn directly to the members.  In the event a Method A member

delivers to Cargill more than its delivery commitment, any corn delivered in excess of that commitment is handled as a direct sale of corn to Cargill and is priced at the current closing delivery corn price established by Cargill at the facility on the day it is unloaded.  In the event a Method A member delivers to Cargill less than its committed amount of corn, the quantity of the shortfall is then purchased and delivered by Cargill on behalf of the Cooperative, but this purchased corn is not credited to the Method A member’s account.  If a Method A member fails to fully satisfy the corn delivery requirement, Cargill purchases replacement corn for which the Cooperative reimburses Cargill the amount by which the underlying contracted corn price is less than the price of buying the replacement corn that was due on the delivery date.  In addition, if a Method A member fails to deliver all of the corn it was obligated to deliver, that member’s allocation of profit or losses and any cash distributions are proportionately reduced, and the Cooperative may terminate the member’s membership.

 

The Cooperative’s Bylaws establish a Method A delivery pool and a Method B delivery pool.  Generally, the Cooperative’s income and/or losses are allocated annually based on the percentage of bushels of corn that members elect to deliver using either Method A or Method B.  Regardless of the actual percentage allocation between the members who deliver bushels of corn using Method A or Method B, the Bylaws require the Cooperative to annually allocate at least 25% of its income and/or losses to the Method A pool.  The amount of income and/or losses actually allocated to the Method A pool is a percentage equal to the greater of 25% or the actual percentage of bushels of corn delivered by the members using Method A.

 

For the 2019 fiscal year, members elected to deliver 27% of their corn by Method A and members elected to deliver 73% of their corn by Method B.  This election will result in 27% of the Cooperative’s income and/or losses and 27% of any cash distributions being allocated to the Method A pool in fiscal year 2019, which reflects the actual percentage of corn members elected to deliver using Method A and does not result in reallocation to meet the 25% requirement set forth in the Cooperative’s Bylaws.

 

Results of Operations

 

Revenues. The Cooperative derives revenue from two sources: operations related to the marketing of members’ corn and income derived from the Cooperative’s membership interest in ProGold LLC.  The corn marketing operations generate revenue for the Cooperative equal to the value of the corn that is delivered to Cargill. The Cooperative recognizes expense equal to this same amount, which results in the corn marketing operations being revenue neutral to the Cooperative, except for revenue from the Method B agency fee and expenses related to the Method A incentive payments and the service fee paid to Cargill.

 

For the three and nine-month periods ended September 30, 2019, the Cooperative sold approximately 3.2 and 12.0 million bushels of corn compared to approximately 3.5 and 11.9 million bushels of corn sold during the three and nine-month periods ended September 30, 2018. For the three and nine-month periods ended September 30, 2019, the members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility approximately 0.4 and 3.5 million bushels of corn using Method A and 2.8 and 8.5 million bushels of corn using Method B. In the same respective periods in 2018, its members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility 0.7 and 3.5 million bushels of corn using Method A and 2.8 and 8.4 million bushels of corn using Method B.

 

For the three and nine-month periods ended September 30, 2019, the Cooperative recognized corn revenue of $12,081,000 and $42,425,000 compared to $10,956,000 and $38,675,000, during the same respective periods in 2018, an increase of 10% for the third quarter and an increase of 10% year to date due primarily to an increase in the price per bushel of corn sold year to date in 2019 compared to 2018.

 

Expenses. The Cooperative recognized corn expense of $12,097,000 and $42,470,000 for the three and nine-month periods ended September 30, 2019 compared to $10,971,000 and $38,720,000 during the same respective periods in 2018, an increase of 10% for the third quarter, and an increase of 10% year to date due primarily to an increase in the price per bushel of corn purchased in 2019 compared to 2018.

 

The Cooperative recognized expense of $15,000 and $45,000 for the three and nine-month periods ended September 30, 2019 compared to $15,000 and $45,000 during the same respective periods in 2018 in connection with costs incurred to Cargill related to the Cooperative’s corn marketing operation.

 

Income from ProGold LLC. The Cooperative derived income from ProGold LLC for the three and nine-month periods ended September 30, 2019 of $1,642,000 and $5,954,000 compared to $1,474,000 and $5,086,000 during the

same respective periods in 2018, an increase of 11% for the third quarter and an increase of 16% year to date due primarily to a reduction in ProGold LLC’s maintenance expenses in 2019 compared to 2018.

 

General and Administrative Expenses. The Cooperative’s general and administrative expenses include salaries and benefits, professional fees and fees paid to its Board of Directors. The general and administrative expenses for the three and nine-month periods ended September 30, 2019 were $122,000 and $437,000 compared to $117,000 and $407,000  during the same respective periods in 2018. The increase in administrative expenses for the nine month period ended September 30, 2019 compared to the nine month period ended September 30, 2018 is primarily due to the timing of expenses and increased bank charges and consulting expense.

 

Other Income. Interest income for the three and nine-month periods ended September 30, 2019 was $46,000 and $132,000 compared to $19,000 and $55,000 during the same respective periods in 2018.  The increase is primarily due to larger interest-earning investments.  Realized gain on investments for the three and nine month periods ended September 30, 2019 was $7,000 and $9,000 compared to $0 and $0 during the same respective periods in 2018.

 

Liquidity and Capital Resources

 

The Cooperative’s working capital at September 30, 2019 was $1,884,000 compared to $5,438,000 at September 30, 2018. The decreased working capital at the end of the third quarter of 2019 as compared to the same period in 2018 was a result of a decision to invest a portion of cash reserves into long term bonds. The Cooperative received cash distributions from ProGold LLC totaling $6,076,000 for the nine-month period ended September 30, 2019 compared $6,193,000 for the nine-month period ended September 30, 2018.

 

In October 2018, the Cooperative invested a portion of its cash reserves in bonds.  To ensure that the Cooperative would have access to cash if needed before the maturity of the bonds, the Cooperative also established a $2,000,000 line of credit at a variable interest rate based on the prime rate that terminates on October 16, 2020.  The line of credit is secured by the investment management agency account for Golden Growers maintained by Bell Bank.  There was no outstanding balance as of September 30, 2019 or December 31, 2018.

 

The Cooperative had no long-term debt as of September 30, 2019 and September 30, 2018 and used operating cash flows of $375,000 for the nine-month period ended September 30, 2019 compared to $416,000 for the nine-month period ended September 30, 2018.  The decrease in operating cash flows for the nine month period ended September 30, 2019 compared to the nine month period ended September 30, 2018 is primarily due to a change in timing of payments.

 

Management believes that non-cash working capital levels, together with the Cooperative’s cash and cash equivalents, are appropriate in the current business environment and does not expect a significant increase or reduction of non-cash working capital in the next 12 months. Management expects that the Cooperative’s cash and cash equivalents, together with available borrowings under a line of credit agreement secured in October 2018, will be sufficient to fund its operations for the foreseeable future, including at least the next twelve months.

 

Significant Accounting Estimates and Policies

 

The Cooperative generally does not pay out Method A incentive payments or collect Method B agency fees until the end of its fiscal year.   The total annual Method B agency fee was determinable once the members completed their delivery method determination prior to January 1, 2019.  The quarterly Method B bushel delivery and agency fee revenue is calculated by allocating the portion of the total annual agency fee for that particular quarter or cumulating it for the particular period.  The Cooperative tracks Method A corn deliveries throughout the year so it can report the bushels of corn delivered by its members as well as the corresponding Method A incentive fees earned.  The final amounts owed by or due to Cargill and/or the Cooperative’s members who elect to deliver using Method A is not calculated until after December 31 in order to account for any failures to deliver or over-deliveries of corn.

 

As indicated in Note 6 to the Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, the Cooperative adopted ASU 2014-09, Revenues from Contracts with Customers and ASU 2016-01 regarding financial instruments beginning January 1, 2018, and adopted ASU 2016-02 regarding accounting for leases beginning January 1, 2019.

 

The remainder of the Cooperative’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, of the Notes to the Financial Statements in the Cooperative’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.  The Cooperative’s critical accounting estimates are discussed

in Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations, in the Cooperative’s Annual Report Form 10-K for the fiscal year ended December 31, 2018.  There have been no other significant changes in the Cooperative’s significant accounting policies or critical accounting estimates since December 31, 2018.

 

Off Balance Sheet Arrangements

 

None.

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, the Cooperative is not required to provide disclosure pursuant to this item.

 

Item 4.  Controls and Procedures

 

The Cooperative’s Chief Executive Officer and Chief Financial Officer has reviewed and evaluated the effectiveness of the Cooperative’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of September 30, 2019.  Based on that review and evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that the Cooperative’s current disclosure controls and procedures, as designed and implemented, are effective and provide reasonable assurance that information relating to the Cooperative required to be disclosed in the reports the Cooperative files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to the Cooperative’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. 

 

There were no changes in the Cooperative’s internal controls over financial reporting that occurred during the Cooperative’s most recent fiscal quarter that may have materially affected, or are reasonably likely to materially affect, the Cooperative’s internal control over financial reporting.

 

PART II.  OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

None.

 

Item 1A.  Risk Factors

 

As a smaller reporting company, the Cooperative is not required to provide disclosure pursuant to this item.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.  Defaults Upon Senior Securities

 

None.

 

Item 4.  Mine Safety Disclosures

 

None.

 

Item 5.  Other Information.

 

None.

 

Item 6.  Exhibits

 

 

 

SIGNATURES

 

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.