10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934

For the quarterly period ended September 30, 2020 Commission file number: 000-53957

Golden Growers Cooperative (Exact name of registrant as specified in its charter)

Minnesota	27-1312571
(State or other jurisdiction of incorporation or<br> organization)	(I.R.S. Employer Identification No.)

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: None

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.

Yes [X]	No [   ]

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).

Yes [X]	No [   ]

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.

Large accelerated filer [   ]	Accelerated filer [   ]
Non-accelerated filer  [X]	Smaller reporting company [X]
Emerging growth company [   ]

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).

YES [   ]	NO [X]
As of November 5,<br> 2020 the Cooperative had 15,490,480 Units issued and outstanding.
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GOLDEN GROWERS COOPERATIVE
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FORM 10-Q
INDEX
PART I. FINANCIAL<br> INFORMATION		1
---	---	---
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and<br> Analysis of Financial Condition and Results of Operations	7
Item 3.	Quantitative and Qualitative<br> Disclosures About Market Risk	11
Item 4.	Controls and Procedures	11
PART II. OTHER<br> INFORMATION		11
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity<br> Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior<br> Securities	11
Item 4.	Mine Safety Disclosures	11
Item 5.	Other Information	11
Item 6.	Exhibits	12
SIGNATURES		13

Item 1. Financial Statements

GOLDEN GROWERS COOPERATIVE
CONDENSED BALANCE SHEETS
(In Thousands)
		September 30, 2020		December 31, 2019
---	---	---	---	---
		(Unaudited)		(Audited)
ASSETS
Current Assets:
Cash and<br> Cash Equivalents	$	3,676	$	3,228
Short-Term Investments		2,268		1,807
Other<br> Current Assets		59		275
Total Current Assets		6,003		5,310
Long-Term Investments		2,867		3,220
Investment in ProGold Limited<br> Liability Company		17,578		18,059
Total Assets	$	26,448	$	26,589
LIABILITIES AND MEMBERS’<br> EQUITY
Current Liabilities
Accounts Payable	$	—	$	2
Accrued<br> Liabilities		2,015		208
Total Current Liabilities		2,015		210
Members' Equity:
Members’<br> Equity		24,433		26,379
Membership<br> Units, Authorized 60,000,000 Units, Issued<br> and <br>     Outstanding 15,490,480 as of<br> September 30, 2020 and <br>     December 31, 2019
Total Members’ Equity		24,433		26,379
Total Liabilities and Members’ Equity	$	26,448	$	26,589

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)
		Three Months Ended						Nine Months Ended
---	---	---	---	---	---	---	---	---	---	---	---	---
		September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
OPERATIONS
Corn Revenue	$	10,236		$	12,081		$	36,162		$	42,425
Corn Expense		(10,252	)		(12,097	)		(36,207	)		(42,470	)
Net Income from ProGold Limited Liability<br> Company		1,523			1,642			4,550			5,954
General & Administrative<br> Expenses		(111	)		(122	)		(397	)		(437	)
Net Income from Operations		1,396			1,504			4,108			5,472
Other Income		45			46			142			132
Net Income Before Income Tax	$	1,441		$	1,550		$	4,250		$	5,604
Net Income	$	1,441		$	1,550		$	4,250		$	5,604
Weighted Average Shares/Units<br> Outstanding		15,490,480			15,490,480			15,490,480			15,490,480
Earnings per Share/Membership<br> Unit
Primary and Fully Diluted	$	0.09		$	0.10		$	0.27		$	0.36
		Three Months Ended				Nine Months Ended
---	---	---	---	---	---	---	---	---
		September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
COMPREHENSIVE INCOME
Net Income	$	1,441	$	1,550	$	4,250	$	5,604
Comprehensive Income	$	1,441	$	1,550	$	4,250	$	5,604
GOLDEN GROWERS COOPERATIVE
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STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
(In Thousands)
(Unaudited)
		Three Months Ended						Nine Months Ended
---	---	---	---	---	---	---	---	---	---	---	---	---
		September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Changes in Members' Equity
Balance, Beginning of the<br> Period	$	25,006		$	25,366		$	26,379		$	25,836
Net<br> Income		1,441			1,550			4,250			5,604
Distributions to Members		(2,014	)		(2,168	)		(6,196	)		(6,692	)
Balance,<br> End of the Period	$	24,433		$	24,748		$	24,433		$	24,748

See Notes to Condensed Financial Statements

GOLDEN GROWERS COOPERATIVE
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
		September 30, 2020			September 30, 2019
---	---	---	---	---	---	---
Cash Flows from Operating<br> Activities
Net Income	$	4,250		$	5,604
Net<br> (Income) from ProGold Limited Liability Company		(4,550	)		(5,954	)
Changes in assets and liabilities
Other Current Assets		216			186
Accrued<br> liabilities and payables		(209	)		(211	)
Net Cash Used in Operating<br> Activities		(293	)		(375	)
Cash Flows from Investing<br> Activities
(Purchase) Sale of<br> investments		(108	)		(72	)
Distribution received from ProGold LLC		5,031			6,076
Net Cash Provided in<br> Investing Activities		4,923			6,004
Cash Flows from Financing<br> Activities
Member distributions paid		(4,182	)		(4,524	)
Net Cash Used by Financing<br> Activities		(4,182	)		(4,524	)
Increase (Decrease) in Cash<br> and Cash Equivalents		448			1,105
Cash and Cash Equivalents,<br> Beginning of Period		3,228			2,403
Cash and Cash Equivalents,<br> End of Period	$	3,676		$	3,508
Non-Cash Financing Activity
Accrued Distributions Payable to Members	$	2,014		$	2,168

See Notes to Condensed Financial Statements

GOLDEN GROWERS COOPERATIVE
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

NOTE 1 – BASIS OF PRESENTATION

The condensed financial statements of Golden Growers Cooperative (the “Cooperative”) for the three and nine months ended September 30, 2020 and 2019 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, 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results for the entire fiscal year ending December 31, 2020.

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 monthly unaudited financial statements of ProGold LLC:

		September 30,				December 31,
(In Thousands)		2020		2019		2019
Current Assets	$	236	$	248	$	230
Long-Term Assets		40,123		39,316		38,962
Total Assets	$	40,359	$	39,564	$	39,192
Current Liabilities	$	263	$	54	$	5
Long-Term Liabilities		4,224		2,042		2,333
Total<br> Liabilities		4,487		2,096		2,338
Members’ Equity		35,872		37,468		36,854
Total Liabilities and<br> Members’ Equity	$	40,359	$	39,564	$	39,192
Rent Revenue on Operating<br> Lease	$	12,037	$	14,768	$	19,085
Expenses		2,751		2,617		3,455
Net Income	$	9,286	$	12,151	$	15,630

NOTE 4 – INVESTMENTS

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

September 30, 2020:		Level 1		Level 2		Level 3		Total
Corporate Bonds	$	**** —	$	**** 5,126	$	**** —	$	**** 5,126
Money Market & CD’s		—		126		—		126
	$	—	$	5,252	$	—	$	5,252
December 31, 2019:
Corporate Bonds	$	**** —	$	**** 4,772	$	**** —	$	**** 4,772
Money Market & CD’s		—		336		—		336
	$	—	$	5,108	$	—	$	5,108

Maturities are as follows as of September 30, 2020:

		Net Carrying		Fair
		Amount		Value
Due in 1 year or less	$	2,143	$	2,150
Due in 2 to 5 years		2,660		2,772
Due in 6 to 10 years		207		204
	$	5,010	$	5,126

The Coopertive’s investments held to maturity are as follows as of September 30, 2020 and December 31, 2019:

		Amortized		Unrealized		Unrealized
		Cost		Gains		Losses			Fair Value
September 30, 2020:
Corporate Bonds	$	**** 5,010	$	**** 121	$	**** (5	)	$	**** 5,126
Money Market & CD’s		126		—		—			126
	$	**** 5,136	$	**** 121	$	**** (5	)	$	5,252
December 31, 2019:
Corporate Bonds	$	**** 4,691	$	**** 81	$	**** —		$	**** 4,772
Money Market & CD’s		336		—		—			336
	$	**** 5,027	$	**** 81	$	**** —		$	5,108

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 plan’s fair value and benefit obligation will vary over time as a result of changes in market interest rates, the life expectancy of plan participants, and benefit payments. As of December 31, 2019, the plan had a total fair value of $844,000 and a benefit obligation of $784,000. For the same period in 2018, the plan had a total fair value of $734,000 and a benefit obligation of $766,000.

For the nine month periods ended September 30, 2020 and 2019, the Cooperative made $0 in contributions. The Cooperative does not anticipate making a contribution in 2020. Contributions in 2019 totaled $0.

NOTE 6 – RECENTLY ADOPTED 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. In the event a member who has elected to deliver corn by Method A delivers to Cargill less than its committed amount of corn, the quantity of the shortfall is then purchased and delivered by Cargill on the Cooperative’s behalf. The purchase price is equal to the average price reported for Method A corn for the final month of the year. In addition, the Method A member with a shortfall will be charged a purchased corn fee and agency fee determined by the Cooperative’s Board of Directors.

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. Method B revenue will be equal to the price paid. TheCooperative has determined Corn Expense for Method B deliveries will be the weighted average price for Method A corn during the quarter multiplied by the number of Method B bushels purchased during the quarter.

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 nine month periods ended September 30, 2020 and 2019, the Cooperative recognized corn revenue of $36.2 million and $42.4 million, respectively. Disaggregated revenue for the nine month periods ended September 30, 2020 and 2019 is as follows: revenue from Method A deliveries totaled $10.4 million and $12.2 million, respectively; and revenue from Method B deliveries totaled $25.8 million and $30.2 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 14, 2020, the Cooperative made distributions to its members totaling $2,168,667, or $0.14 per outstanding membership unit. On June 24, 2020, the Cooperative made distributions to its members totaling $2,013,762 or $0.13 per outstanding membership unit. At its September meeting, the Cooperative’s Board of Directors authorized a distribution to its members totaling $2,013,762, or $0.13 per outstanding membership unit, to be paid in October 2020. On October 15, 2020 the Cooperative made the distribution to its members.

NOTE 8 – LINE OF CREDIT

In 2018, the Cooperative established a $2,000,000 line of credit with a variable interest rate. This line of credit was scheduled to terminate on October 16, 2020, but has been extended to October 16, 2022. The line of credit is secured by the investment management agency account for the Cooperative maintained by Bell Bank. There was no outstanding balance as of September 30, 2020 or December 31, 2019.

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, 2020 financial statements and concluded that no subsequent events have occurred that would require recognition in the September 30, 2020 financial statements.

Item 2. Management’s Discussion and Analysis of FinancialCondition 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 on Form 10-K for the fiscal year ended December 31, 2019. 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; (iii) the unknown impact of the novel coronavirus (COVID-19); and (iv) other factors described from time to time in the Cooperative’s 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 1,521 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 number of bushels of Method A corn to be delivered by each member who has elected to deliver corn by Method A. Once the Cooperative provides notification to Cargill of the number of bushels 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 member with a Method A corn commitment then directly contracts with Cargill for corn delivered by Method A. At the end of each month, Cargill reports the number of Method A bushels delivered and the average daily price paid for corn that Cargill purchased from members on the Cooperative’s behalf. The product of the number of bushels delivered multiplied by the average monthly market price is reported as Method A corn expense. In the event a member who has elected to deliver corn by Method A 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. In the event a member who has elected to deliver corn by Method A delivers to Cargill less than its committed amount of corn, the quantity of the shortfall is then purchased and delivered by Cargill on our behalf. The purchase price is equal to the average price reported for Method A corn for the final month of the year. In addition, the Method A member with a shortfall will be charged a purchased corn fee and agency fee determined by the Cooperative’s Board of Directors.

Cargill then purchases the remainder of the corn to be delivered by the Cooperative on behalf of the Method B delivering members at such time and in such quantities as it deems appropriate and in the best interest of the Cooperative and Cargill. The Cooperative notifies Cargill of the number of Method B bushels to be purchased during the quarter. Cargill will certify to the Cooperative that it has purchased the necessary Method B bushels. The price paid will be the weighted average price for Method A corn during the quarter multiplied by the number of Method B bushels. Method B corn revenue will be equal to the price paid.

The Cooperative’s Second Amended and Restated Bylaws (“Bylaws”) establish a Method A delivery pool and a Method B delivery pool. Generally, The Cooprative’s income and/or losses are allocated annually based on the percentage of bushels of corn the 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 our 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 members using Method A.

For fiscal year 2020, 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 2020, 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.

Impact of COVID-19

The Cooperative continues to monitor the global outbreak of the novel coronavirus (COVID-19) and its impact on the Cooperative’s results of operations and financial condition. Demand for high fructose corn syrup in food service and entertainment sectors has declined. Corn millers have also idled ethanol plants in response to a depressed demand for ethanol. The ProGold plant currently continues to operate in the ordinary course and the Cooperative’s overall business has not been impacted; however, the Cooperative is unable to predict the duration of the outbreak and the resulting long-term impact of COVID-19 on its business or the impact on the future operations of the ProGold plant.

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, 2020, the Cooperative sold approximately 3.4 and 11.9 million bushels of corn compared to approximately 3.2 and 12.0 million bushels of corn sold during the three and nine-month periods ended September 30, 2019. For the three and nine-month periods ended September 30, 2020, the members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility approximately 0.6 and 3.4 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 2019, its members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility 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.

For the three and nine-month periods ended September 30, 2020, the Cooperative recognized corn revenue of $10,236,000 and $36,162,000 compared to $12,081,000 and $42,425,000, during the same respective periods in 2019, a decrease of 15% for the second quarter and a decrease of 15% year to date due primarily to a decrease in the price per bushel of corn sold year to date in 2020 compared to 2019.

Expenses. The Cooperative recognized corn expense of $10,252,000 and $36,207,000 for the three and nine-month periods ended September 30, 2020, respectively, compared to $12,097,000 and $42,470,000 during the same respective periods in 2019, a decrease of 15% for the second quarter, and a decrease of 15% year to date due primarily to a decrease in the price per bushel of corn purchased in 2020 compared to 2019.

The Cooperative recognized expense of $15,000 and $45,000 for the three and nine-month periods ended September 30, 2020, respectively, and during the same respective periods in 2019 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, 2020 of $1,523,000 and $4,550,000, respectively, compared to $1,642,000 and $5,954,000 during the same respective periods in 2019, a decrease of 7% for the second quarter and a decrease of 24% year to date due primarily to a reduction in ProGold LLC’s lease income and higher depreciation expenses in 2020 compared to 2019.

General and AdministrativeExpenses. 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, 2020 were $111,000 and $397,000, respectively, compared to $122,000 and $437,000 during the same respective periods in 2019. The decrease in administrative expenses for the nine month period ended September 30, 2020 compared to the nine month period ended September 30, 2019 is primarily due to the reduced board of directors expenses and reduced annual meeting expenses.

Other Income. Interest income for the three and nine-month periods ended September 30, 2020 was $44,000 and $141,000 compared to $40,000 and $124,000 during the same respective periods in 2019. The increase is primarily due to larger interest-earning investments. Realized gain on investments for the three and nine month periods ended September 30, 2020 was $1,000 and $1,000, respectively, compared to $6,000 and $8,000 during the same respective periods in 2019.

Liquidity and Capital Resources

The Cooperative’s working capital at September 30, 2020 was $3,988,000 compared to $1,884,000 at September 30, 2019. The increased working capital at the end of the third quarter of 2020 as compared to the same period in 2019 was the result of changes in the timing of maturities of the Cooperative’s investments. The Cooperative received cash distributions from ProGold LLC totaling $5,031,000 for the nine-month period ended September 30, 2020 compared $6,076,000 for the nine-month period ended September 30, 2019. Reduced ProGold LLC distributions are related primarily to reduced lease income and increased capital expense.

In fiscal year 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. The line of credit was scheduled to terminate on October 16, 2020, but was extended to October 16, 2022. The line of credit is secured by the investment management agency account for the Cooperative maintained by Bell Bank. There was no outstanding balance as of September 30, 2020 or December 31, 2019.

The Cooperative had no long-term debt as of September 30, 2020 and September 30, 2019 and used operating cash flows of $293,000 for the nine-month period ended September 30, 2020 compared to $375,000 for the nine-month period ended September 30, 2019. The decrease in operating cash flows for the nine month period ended September 30, 2020 compared to the nine month period ended September 30, 2019 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 twelve months. Management expects that the Cooperative’s cash and cash equivalents, together with available borrowings under the line of credit, 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, 2020. 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, 2019. The Cooperative’s critical accounting estimates are discussed in Item 7, Management’s Discussion and Analysis of FinancialConditions and Results of Operations, in the Cooperative’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. There have been no other significant changes in the Cooperative’s significant accounting policies or critical accounting estimates since December 31, 2019.

Off Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures AboutMarket 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, 2020. 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 ofProceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information.

None.

Item 6 . Exhibits

Exhibit No.	Exhibit Description
31.1	Certification of<br> Chief Executive Officer and Chief Financial Officer pursuant to Securities<br> Exchange Act Rule 17 CFR 13a-14(a) – filed herewith.
32.1	Certification of<br> Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.<br> Section 1350 – filed herewith.
99.1	Audited Financial<br> Statements of ProGold Limited Liability Company for the years ended August<br> 31, 2020 and 2019 – filed herewith.
101	The following<br> materials from this report, formatted in XBRL (Extensible Business<br> Reporting Language) are filed herewith: (i) balance sheets, (ii)<br> statements of operations and comprehensive income, (iii) statements of<br> cash flows, and (iv) the notes to the financial statements.

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.

	GOLDEN GROWERS COOPERATIVE
	(Registrant)
Date: November 6, 2020	/s/<br> Scott Stofferahn
	Scott Stofferahn
	Executive Vice President,
	Chief Financial Officer
	Duly Authorized Officer

Golden Growers Cooperative: Exhibit 31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 17 CFR 240.13(a) -14(a)

(SECTION 302 CERTIFICATION)

I, Scott Stofferahn, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of<br> Golden Growers Cooperative (the registrant);
2.	Based on my knowledge, this report does not contain any<br> untrue statement of a material fact or omit to state a material fact<br> necessary to make the statements made, in light of the circumstances under<br> which such statements were made, not misleading with respect to the period<br> covered by this report;
3.	Based on my knowledge, the financial statements, and<br> other financial information included in this report, fairly present in all<br> material respects the financial condition, results of operations and cash<br> flows of the registrant as of, and for, the periods presented in this<br> report;
4.	I am responsible for establishing and maintaining<br> disclosure controls and procedures (as defined in Exchange Act Rules 13a-<br> 15(e) and 15d-15(e)) and internal control over financial reporting (as<br> defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant<br> and have:
a)	designed such disclosure controls and procedures, or<br> caused such disclosure controls and procedures to be designed under my<br> supervision, to ensure that material information relating to the<br> registrant, including its consolidated subsidiaries, is made known to me<br> by others within those entities, particularly during the period in which<br> this report is being prepared;
---	---
b)	designed such internal control over financial reporting,<br> or caused such internal control over financial reporting to be designed<br> under my supervision, to provide reasonable assurance regarding the<br> reliability of financial reporting and the preparation of financial<br> statements for external purposes in accordance with generally accepted<br> accounting principles;
c)	evaluated the effectiveness of the registrant’s<br> disclosure controls and procedures and presented in this report my<br> conclusions about the effectiveness of the disclosure controls and<br> procedures, as of the end of the period covered by this report based on<br> such evaluation; and
d)	disclosed in this report any changes in the registrant’s<br> internal control over financial reporting that occurred during the<br> registrant’s most recent fiscal quarter (the registrant’s fourth fiscal<br> quarter in the case of an annual report) that has materially affected, or<br> is reasonably likely to materially affect, the registrant’s internal<br> control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of<br> internal control over financial reporting, to the registrant’s audito rs<br> and the audit committee of the registrant’s board of directors (or persons<br> performing the equivalent functions):
---	---
a)	all significant deficiencies and material weaknesses in<br> the design or operation of internal control over financial reporting which<br> are reasonably likely to adversely affect the registrant’s ability to<br> record, process, summarize and report financial information; and
---	---
b)	any fraud, whether or not material, that involves<br> management or other employees who have a significant role in the<br> registrant’s internal control over financial<br>reporting.
	GOLDEN GROWERS COOPERATIVE
---	---
November 6, 2020	/s/<br> Scott Stofferahn
	Scott Stofferahn
	Executive Vice President, Chief Executive<br> Officer and
	Chief Financial Officer

Golden Growers Cooperative: Exhibit 32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Golden Growers Cooperative (the “Company”) for the fiscal quarter ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Stofferahn, Executive Vice President, serving as Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of<br> Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;<br> and
2.	The information contained in the Report fairly presents,<br> in all material respects, the financial condition and results of<br> operations of the Company.
	GOLDEN GROWERS COOPERATIVE
---	---
November 6, 2020	/s/<br> Scott Stofferahn
	Scott Stofferahn
	Executive Vice President, Chief Executive<br> Officer and
	Chief Financial Officer

Golden Growers Cooperative: Exhibit 99.1

Exhibit 99.1

INDEPENDENT AUDITORS’ REPORT ****

Board of Governors ProGold Limited Liability Company

Moorhead, Minnesota

We have audited the accompanying financial statements of ProGold Limited Liability Company, which comprise the balance sheets as of August 31, 2020 and 2019, and the related statements of operations, cash flows and changes in members’ equity for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the FinancialStatements **** Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility **** Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ProGold Limited Liability Company as of August 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in accordance with the accounting principles generally accepted in the United States of America.

/s/ CliftonLarsonAllen LLP

CliftonLarsonAllen LLP

Stevens Point, Wisconsin September 28, 2020

Exhibit 99.1

PROGOLD LIMITED LIABILITY COMPANY
FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2020 AND 2019

Exhibit 99.1

ProGold Limited Liability Company Balance Sheets August 31 (In Thousands)

		2020			2019
Assets
Current Assets:
Cash and Cash Equivalents	$	1,999		$	171
Accounts Receivable		-			1
Prepaid Expenses		43			55
Total Current Assets		2,042			227
Property and Equipment Held for Lease:
Land and Land Improvements		9,128			9,108
Buildings and Equipment		257,470			255,755
Construction in Progress		2,123			748
Less Accumulated Depreciation		(228,685	)		(226,357	)
Net Property and Equipment<br> Held for Lease		40,036			39,254
Total Assets	$	42,078		$	39,481
Liabilities and Members' E quity
Liabilities:
Current Liabilities:
Other Accrued Liabilities	$	1,654		$	455
Deferred Revenues		222			-
Total Current Liabilities		1,876			455
Long Term Liabilites:
Other Long Term Liabilites		1,883			-
Deferred Revenues		2,223			1,944
Total Long Term Liabilities		4,106			1,944
Total Liabilities		5,982			2,399
Members' Equity:
Investments		36,096			37,082
Retained Earnings		-			-
Total Members' Equity		36,096			37,082
Total Liabilities and<br> Members' Equity	$	42,078		$	39,481

The Accompanying Notes are an Integral Part of TheseFinancial Statements.

Exhibit 99.1

ProGold Limited Liability Company Statements ofOperations For the Years Ended August 31 (InThousands)

		2020		2019
Rental Revenue on Operating Lease	$	16,461	$	18,870
Expenses:
Depreciation		2,621		2,621
Maintenance		785		418
General and Administrative		117		167
Loss<br> on Disposition of Property and Equipment Held for Lease		67		74
Total Expenses		3,590		3,280
Net Income	$	12,871	$	15,590

The Accompanying Notes are an Integral Part of TheseFinancial Statements.

Exhibit 99.1

ProGold Limited Liability Company Statements ofCash Flows For the Years Ended August 31 (InThousands)

		2020			2019
Cash Provided By (Used In) Operating Activities:
Net Income	$	12,871		$	15,590
Add (Deduct)<br> Non-Cash Items:
Depreciation		2,621			2,621
Loss on Disposition of Property and Equipment Held for Lease		67			74
Changes in Assets and<br> Liabilities:
Accounts Receivable		1			-
Prepaid<br> Expenses		12			15
Other Accrued Liabilities		11			(28	)
Deferred<br> Revenues		501			1,166
Net Cash Provided By<br> Operating Activities		16,084			19,438
Cash Provided By (Used In) Investing Activities:
Expenditures for Property and<br> Equipment Held For Lease		(399	)		(2,808	)
Net Cash (Used In) Investing<br> Activities		(399	)		(2,808	)
Cash Provided By (Used In) Financing Activities:
Distributions to Members		(13,857	)		(16,959	)
Net Cash (Used In) Financing<br> Activities		(13,857	)		(16,959	)
Increase (Decrease) in Cash<br> and Cash Equivalents		1,828			(329	)
Cash and Cash Equivalents,<br> Beginning of Year		171			500
Cash and Cash Equivalents,<br> End of Year	$	1,999		$	171

Non-Cash Investing Activities: Expenditures for Property and Equipment Held for Lease include changes in Other Accrued Liabilities of $1,189 and changes in Other Long Term Liabilites of $1,883 related to these purchases and $0 for the year ended August 31, 2020 and 2019, respectively.

The Accompanying Notes are an Integral Part of TheseFinancial Statements.

Exhibit 99.1

ProGold Limited Liability Company Statements ofChanges in Members' Equity For the Years Ended August 31 (InThousands)

		American
		Crystal			Golden						Total
		Sugar			Growers			Retained			Members'
		Company			Cooperative			Earnings			Equity
Balance, August 31, 2018	$	19,610		$	18,841		$	-		$	38,451
Net Income		-			-			15,590			15,590
Distributions to Members		(698	)		(671	)		(15,590	)		(16,959	)
Balance, August 31, 2019		18,912			18,170			-			37,082
Net Income		-			-			12,871			12,871
Distributions to Members		(503	)		(483	)		(12,871	)		(13,857	)
Balance, August 31, 2020	$	18,409		$	17,687		$	-		$	36,096

The Accompanying Notes are an Integral Part of TheseFinancial Statements.

Exhibit 99.1

ProGold Limited Liability Company

Notes to the Financial Statements

(1) NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTINGPOLICIES:

Organization

ProGold Limited Liability Company (ProGold) is organized as a Minnesota limited liability company. ProGold is owned by American Crystal Sugar Company (51%) and Golden Growers Cooperative (49%). Transfer of ownership in ProGold to another party not already a member is allowed only with the consent of the other Members and the plant’s lessee, Cargill, Incorporated. ProGold has been organized with a life of 50 years and its legal existence will terminate on July 13, 2044, absent a business continuation agreement.

Operating Lease

ProGold leases a corn wet milling facility to Cargill, Incorporated under an operating lease which runs through December 31, 2022 with an automatic one year extension if certain conditions are not met. Payments are to be received monthly under the lease. The operating lease revenue is recognized as earned ratably over the term of the lease and to the extent that amounts received exceed amounts earned, deferred revenue is recorded. The Company generates lease revenue which is recognized under ACS Topic 840, Leases, which falls outside the the scope of ACS topic 606. Expenses (including depreciation and interest) are charged against such revenue as incurred. The lease contains provisions for increased payments to be received during the lease period related to the plant’s capital additions and also requires ProGold to pay at least $750,000 annually, on a calendar year basis, to fund infrastructure maintenance.

Included in the lease agreement, there is an option agreement allowing Cargill to purchase a 50% interest in ProGold from American Crystal Sugar Company. If this option is exercised, American Crystal Sugar Company also agrees to sell the remaining 1% interest to Golden Growers Cooperative, resulting in a 50/50 venture between Cargill and Golden Growers Cooperative.

Cash and Cash Equivalents

ProGold considers all highly liquid debt and equity instruments purchased with a maturity of three months or less to be cash equivalents. ProGold places its temporary cash investments with high-credit-quality financial institutions. At times, such investments may be in excess of the applicable insurance limit.

Exhibit 99.1

Property and Equipment Held for Lease

Property and equipment held for lease are stated at cost. Depreciation on assets placed in service is provided using the straight-line method over the estimated useful lives of the individual assets, ranging from 5 to 40 years.

Impairment of Long Lived Assets

ProGold reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. There were no impairment losses incurred for the years ended August 31, 2020 or 2019.

Related Parties

American Crystal Sugar Company and Golden Growers Cooperative are considered related parties for financial reporting purposes.

Income Taxes

ProGold is treated in a manner similar to a partnership for federal and state income tax purposes, based upon its current organization. Accordingly, the financial statements do not include any provision for income taxes.

Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued an update to the authoritative guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance provided by this update becomes effective for ProGold in fiscal 2023. The effect on the Company’s financial statements has not been evaluated as of the issuance date.

Exhibit 99.1

(2) LEASE WITH CARGILL, INCORPORATED:

Future minimum payments to be received under the lease are as follows:

Fiscal year ending August 31, (In Thousands)
2021	$	15,667
2022		15,500
2023		14,500
2024		4,667
Total	$	50,334

(3) CAPITAL EXPENDITURES AGREEMENT WITH CARGILL,INCORPORATED

ProGold entered into a Capital Expenditures Agreement with Cargill, Incorporated during fiscal 2014 associated with a project to replace certain equipment at the corn wet milling facility. During 2015, ProGold reimbursed Cargill, Incorporated $2.2 million for costs incurred for the project when it was completed. The agreement also provides that ProGold will receive monthly incremental lease payments from Cargill, Incorporated upon completion of the project equal to an amount necessary for the reimbursement amount together with interest to be fully amortized over a period of 12 years. The incremental lease payments total $229,000 per year and will continue during the term of the lease shown in Note 2, including any extension(s) of the lease term but not to exceed 12 years. This incremental lease payment is not included in the amounts in Note 2.

ProGold entered into Capital Expenditure Agreements with Cargill, Incorporated during fiscal 2019 associated with a project to replace the fiber finish dryer at the corn wet milling facility. The project was completed in August 2020 with costs totaling $1.6 million. The Agreement requires ProGold to reimburse Cargill, Incorporated for the costs incurred upon completion and the payment will be completed in September 2020. The agreement also provides that ProGold will receive monthly incremental lease payments from Cargill, Incorporated upon completion of the project equal to an amount necessary for the reimbursement amount together with interest to be fully amortized over a period of 10 years. The incremental lease payments will total $181,000 per year and will continue during the term of the lease shown in Note 2, including any extension(s) of the lease term, but not to exceed 10 years. This incremental lease payment will begin in October 2020 and is not included in the amounts in Note 2.

ProGold entered into Capital Expenditure Agreements with Cargill, Incorporated during fiscal 2019 associated with a project to replace the distributive control system at the corn wet milling facility. The agreement requires ProGold to reimburse Cargill, Incorporated up to $8.3 million for the costs incurred upon completion. The expenditures for this project accrued through August 31, 2020 total $1.9 million and are accrued in construction in process. The agreement also provides that ProGold will receive monthly incremental lease payments from Cargill, Incorporated upon completion of the project equal to an amount necessary for the reimbursement amount together with interest to be fully amortized over a period of 15 years. This is expected to be completed during fiscal 2023.

Exhibit 99.1

(4) RELATED PARTY TRANSACTIONS:

ProGold has an administrative services agreement with American Crystal Sugar Company. Amounts incurred under the terms of the American Crystal Sugar Company agreement totaled approximately $17,000 and $15,000 in the years ended August 31, 2020 and 2019, respectively.

(5) OPERATING LEASES:

ProGold is a party to an operating lease for rail cars, which expires in December 2022. Cargill, Incorporated has assumed responsibility for the payments on the rail car lease for the duration of this lease.

(6) DISTRIBUTIONS TO MEMBERS:

In 2008, ProGold began to make cash distributions to its members. The ProGold Board of Governors has authorized the monthly distribution of cash to the members through December 31, 2020, to the extent that the available cash balance exceeds $200,000.

(7) ENVIRONMENTAL MATTERS:

ProGold is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control. The operating lease with Cargill, Incorporated provides that ProGold may be responsible for claims arising for occurrences prior to the execution of the original operating lease, December 1, 1997. ProGold believes that it was in substantial compliance with applicable environmental laws and regulations prior to that time. The operating lease also provides that Cargill, Incorporated operate the corn wet milling facility in compliance with all applicable federal and state environmental laws and regulations during the term of the lease.

(8) INCOME TAXES:

ProGold conducts an annual analysis of its various tax positions, assessing the likelihood of those positions being upheld upon examination with relevant tax authorities. ProGold has determined that it has no unrecognized tax benefits. No interest or penalties are recognized in the statements of operations. ProGold is no longer subject to U.S. Federal or state income tax examinations by tax authorities for fiscal years 2016 and earlier.****

Exhibit 99.1

(9) SUBSEQUENT EVENTS:

ProGold has evaluated events through the date that the financial statements were available to be issued, September 28, 2020, for potential recognition or disclosure in the August 31, 2020 financial statements.

These notes are an integral part of the accompanyingfinancial statements.