10-Q - SDSYA - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NO. 000-50253

South Dakota Soybean Processors, LLC
(Exact name of registrant as specified in its charter)		South Dakota	46-0462968
---	---
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
100 Caspian Avenue; PO Box 500<br>Volga, South Dakota	57071
(Address of Principal Executive Offices	(Zip Code)		(605) 627-9240
---
(Registrant's telephone number, including area code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

¨ Large Accelerated Filer	¨ Accelerated Filer	x Non-Accelerated Filer	¨ Smaller Reporting Company	¨ Emerging Growth Company
		(do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for company with an 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 x No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On August 7, 2020, the registrant had 30,419,000 capital units outstanding.

Table of Contents

			Page
Part I.	FINANCIAL INFORMATION		3
	Item I.	Financial Statements (Unaudited)	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
	Item 4.	Controls and Procedures	23
Part II.	OTHER INFORMATION		24
	Item 1.	Legal Proceedings	24
	Item 1A.	Risk Factors	24
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
	Item 3.	Defaults among Senior Securities	24
	Item 4.	Mine Safety Disclosures	24
	Item 5.	Other Information	24
	Item 6.	Exhibits	24
Signatures			25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

South Dakota Soybean Processors, LLC

Condensed Financial Statements

June 30, 2020 and 2019

South Dakota Soybean Processors, LLC

Condensed Balance Sheets

	June 30, 2020			December 31, 2019
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	3,814,872		$	624,681
Trade accounts receivable	21,199,077			24,420,557
Inventories	58,781,838			44,470,052
Margin deposits	3,492,375			6,772,160
Prepaid expenses	1,596,402			1,884,742
Total current assets	88,884,564			78,172,192
Property and equipment	121,117,799			118,363,393
Less accumulated depreciation	(56,074,844		)	(53,846,189		)
Total property and equipment, net	65,042,955			64,517,204
Other assets
Investments in related parties	8,331,703			7,873,727
Investments in cooperatives	1,539,293			1,562,098
Right-of-use lease asset, net	8,012,349			5,979,771
Total other assets	17,883,345			15,415,596
Total assets	$	171,810,864		$	158,104,992

(continued on following page)

South Dakota Soybean Processors, LLC

Condensed Balance Sheets (continued)

	June 30, 2020		December 31, 2019
	(Unaudited)
Liabilities and Members' Equity
Current liabilities
Excess of outstanding checks over bank balance	$	4,804,508	$	8,164,752
Current maturities of long-term debt	4,534,595		4,603,342
Note payable - seasonal loan	13,154,794		1,743,029
Current operating lease liabilities	5,569,687		2,663,967
Accounts payable	2,084,334		4,904,963
Accrued commodity purchases	30,204,052		31,346,533
Accrued expenses	2,912,028		2,900,118
Accrued interest	85,664		74,770
Deferred liabilities - current	388,449		448,458
Total current liabilities	63,738,111		56,849,932
Long-term liabilities
Long-term debt, net of current maturities and unamortized debt<br><br>issuance costs	20,665,241		11,991,923
Long-term operating lease liabilities	2,442,662		3,315,804
Total long-term liabilities	23,107,903		15,307,727
Commitments and contingencies (Notes 6, 7, 8, and 13)
Members' equity
Class A Units, no par value, 30,419,000 units issued and<br><br>outstanding at June 30, 2020 and December 31, 2019	84,964,850		85,947,333
Total liabilities and members' equity	$	171,810,864	$	158,104,992

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

South Dakota Soybean Processors, LLC

Condensed Statements of Operations (Unaudited)

For the Three and Six-Month Periods Ended June 30, 2020 and 2019

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net revenues	$	93,268,093		$	100,331,589		$	191,991,505		$	192,298,396
Cost of revenues:
Cost of product sold	69,602,276			76,330,505			149,802,782			147,679,055
Production	7,406,999			6,821,032			14,830,369			13,694,012
Freight and rail	9,431,150			10,143,954			18,642,985			18,259,881
Brokerage fees	154,818			159,151			318,056			329,087
Total cost of revenues	86,595,243			93,454,642			183,594,192			179,962,035
Gross profit (loss)	6,672,850			6,876,947			8,397,313			12,336,361
Operating expenses:
Administration	898,767			927,314			1,923,496			1,932,515
Operating income (loss)	5,774,083			5,949,633			6,473,817			10,403,846
Other income (expense):
Interest expense	(308,354		)	(267,730		)	(658,341		)	(460,289		)
Other non-operating income (expense)	20,885			100,099			(301,332		)	419,466
Patronage dividend income	—			—			195,553			169,456
Total other income (expense)	(287,469		)	(167,631		)	(764,120		)	128,633
Income (loss) before income taxes	5,486,614			5,782,002			5,709,697			10,532,479
Income tax benefit (expense)	—			—			—			(600		)
Net income (loss)	$	5,486,614		$	5,782,002		$	5,709,697		$	10,531,879
Basic and diluted earnings (loss) per capital unit	$	0.18		$	0.19		$	0.19		$	0.35
Weighted average number of capital units outstanding for calculation of basic and diluted earnings (loss) per capital unit	30,419,000			30,419,000			30,419,000			30,419,000

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

South Dakota Soybean Processors, LLC

Condensed Statements of Changes in Members' Equity (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

	Class A Units
	Units	Amount
Balances, December 31, 2018	30,419,000	$	90,177,248
Net income	—	10,531,879
Distribution to members	—	(15,209,500		)
Balances, June 30, 2019	30,419,000	$	85,499,627
Balances, December 31, 2019	30,419,000	$	85,947,333
Net income	—	5,709,697
Distribution to members	—	(6,692,180		)
Balances, June 30, 2020	30,419,000	$	84,964,850

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

South Dakota Soybean Processors, LLC

Condensed Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

	2020			2019
Operating activities
Net income (loss)	$	5,709,697		$	10,531,879
Charges and credits to net income not affecting cash:
Depreciation and amortization	2,433,310			2,131,494
Net (gain) loss recognized on derivative activities	(6,851,092		)	(898,101		)
Gain on sales of property and equipment	—			(6,687		)
Loss on equity method investment	—			99,489
Non-cash patronage dividends	(43,405		)	(42,364		)
Change in current assets and liabilities	(4,725,051		)	(12,731,135		)
Net cash provided by (used for) operating activities	(3,476,541		)	(915,425		)
Investing activities
Purchase of investments	(404,329		)	—
Retirement of patronage dividends	66,210			32,288
Proceeds from sales of property and equipment	—			64,800
Purchase of property and equipment	(2,956,848		)	(3,207,332		)
Net cash provided by (used for) investing activities	(3,294,967		)	(3,110,244		)
Financing activities
Change in excess of outstanding checks over bank balances	(3,360,244		)	2,215,874
Net proceeds (payments) from seasonal borrowings	11,411,765			—
Distributions to members	(6,692,180		)	(15,209,500		)
Payments for debt issue costs	(10,000		)	—
Proceeds from long-term debt	11,215,700			44,091,300
Principal payments on long-term debt	(2,603,342		)	(33,267,415		)
Net cash provided by (used for) financing activities	9,961,699			(2,169,741		)
Net change in cash and cash equivalents	3,190,191			(6,195,410		)
Cash and cash equivalents, beginning of period	624,681			7,197,082
Cash and cash equivalents, end of period	$	3,814,872		$	1,001,672
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	647,447		$	419,781
Income taxes	$	—		$	—
Noncash investing activities:
Soybean meal contributed as investment in related party	$	53,647		$	—

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

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

Note 1 - Principal Activity and Significant Accounting Policies

The unaudited condensed financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although South Dakota Soybean Processors, LLC (the “Company”, “LLC”, “we”, “our”, or “us”) believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the accompanying condensed financial statements. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full year due in part to the seasonal nature of some of the Company’s businesses. The balance sheet data as of December 31, 2019 has been derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2020.

Use of estimates

The preparation of 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue

The Company accounts for all of its revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers.

The Company principally generates revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Payments received in advance to the transfer of goods, or "contract liabilities", are included in "Deferred liabilities - current" on the Company's condensed balance sheets. These customer prepayments totaled $83,768 and $313,347 as of June 30, 2020 and December 31, 2019, respectively. Of the $313,347 balance as of December 31, 2019, contract liabilities recognized as revenues were $88,692 and $313,347 for the three and six months ended June 30, 2020, respectively. Of the $15,042 customer prepayments as of December 31, 2018, the Company recognized $0 and $15,042 of contract liabilities as revenues during the three and six months ended June 30, 2019, respectively.

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

The following table presents a disaggregation of revenue from contracts with customers for the three and six month periods ended June 30, 2020 and 2019, by product type:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Soybean meal and hulls	$	61,332,072	$	64,538,123	$	124,024,952	$	124,200,926
Soybean oil and oil byproducts	31,936,021		35,793,466		67,966,553		68,097,470
Totals	$	93,268,093	$	100,331,589	$	191,991,505	$	192,298,396

Recent accounting pronouncements

Any recent accounting pronouncements are not expected to have a material impact on our condensed financial statements.

Note 2 - Accounts Receivable

Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms, which is generally 30 days from invoice date. Accounts considered uncollectible are written off. The Company’s estimate of the allowance for doubtful accounts is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any.

The following table presents the aging analysis of trade receivables as of June 30, 2020 and December 31, 2019:

	June 30, <br>2020		December 31, <br>2019
Past due:
Less than 30 days past due	$	3,385,867	$	4,306,064
30-60 days past due	282,520		341,956
60-90 days past due	87,905		10,302
Greater than 90 days past due	18,660		14,162
Total past due	3,774,952		4,672,484
Current	17,424,125		19,748,073
Totals	$	21,199,077	$	24,420,557

In general, cash is applied to the oldest outstanding invoice first, unless payment is for a specified invoice. The Company, on a case by case basis, may charge a late fee of 1.5% per month on past due receivables.

Note 3 - Inventories

The Company’s inventories consist of the following at June 30, 2020 and December 31, 2019:

	June 30, <br>2020		December 31, <br>2019
Finished goods	$	32,212,243	$	26,559,194
Raw materials	26,201,294		17,641,335
Supplies & miscellaneous	368,301		269,523
Totals	$	58,781,838	$	44,470,052

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

Finished goods and raw materials are valued at estimated market value, which approximates net realizable value. In addition, futures and option contracts are marked to market through cost of revenues, with unrealized gains and losses recorded in the above inventory amounts. Supplies and other inventories are stated at the lower of cost or net realizable value.

Note 4 - Investments in Related Parties

The Company accounts for the investments in Prairie AquaTech, LLC, Prairie AquaTech Investments, LLC and Prairie AquaTech Manufacturing, LLC using the fair value method in ASU No. 2016-01. The Company has elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at their cost less any impairment plus or minus any observable price changes in orderly transactions.

Prior to October 2019, the Company accounted for its investment in Prairie AquaTech, LLC using the equity method due to the Company's ability to exercise significant influence based on its board position. The Company recognized losses of $0 and $3,261 during the three months ended June 30, 2020 and 2019, respectively, and $0 and $99,489 during the six months ended June 30, 2020 and 2019, respectively, which is included in other non-operating income (expense). In October 2019, the Company ceased the accounting for its investment in Prairie AquaTech, LLC under the equity method, and began accounting for the investment at fair value as a result of its decreased ability to exercise significant influence due to an increased quantity of board positions.

On March 27, 2020, the Company invested in Prairie AquaTech Manufacturing, LLC another $404,329 in cash. The Company also agreed to invest into Prairie AquaTech Manufacturing, LLC an additional $500,000 of soybean meal to be used in the entity's operations. During the three and six months ended June 30, 2020, the Company contributed $53,647 of soybean meal under this agreement.

Note 5 - Property and Equipment

The following is a summary of the Company's property and equipment at June 30, 2020 and December 31, 2019:

	2020							2019
	Cost		Accumulated Depreciation			Net		Net
Land	$	516,326	$	—		$	516,326	$	516,326
Land improvements	2,353,237		(686,430		)	1,666,807		1,545,088
Buildings and improvements	22,369,519		(9,768,446		)	12,601,073		12,807,844
Machinery and equipment	85,386,613		(44,471,445		)	40,915,168		41,480,121
Railroad cars	5,777,579		(88,739		)	5,688,840		1,207,545
Company vehicles	146,754		(118,095		)	28,659		36,032
Furniture and fixtures	1,363,744		(941,689		)	422,055		459,153
Construction in progress	3,204,027		—			3,204,027		6,465,095
Totals	$	121,117,799	$	(56,074,844	)	$	65,042,955	$	64,517,204

Depreciation of property and equipment was $1,243,780 and $1,063,365 for the three months ended June 30, 2020 and 2019, respectively, and $2,431,096 and $2,130,417 for the six months ended June 30, 2020 and 2019, respectively.

Note 6 - Note Payable – Seasonal Loan

The Company has entered into a revolving credit agreement with CoBank which expires December 1, 2020. The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement, the Company may borrow up to $28 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (2.38% at June 30, 2020). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were advances outstanding of $13,154,794 and $1,743,029 at June 30, 2020 and December 31, 2019, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were $14.8 million as of June 30, 2020.

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

Note 7 - Long-Term Debt

The following is a summary of the Company's long-term debt at June 30, 2020 and December 31, 2019:

	June 30, <br>2020			December 31, <br>2019
Revolving term loan from CoBank, interest at variable rates (2.63% and 4.24% at June 30, 2020 and December 31, 2019, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.	$	24,000,000		$	16,000,000
Note payable to U.S. Small Business Authority, due in monthly principal and interest installments of $68,428, interest rate at 1.00%, unsecured. Note matures April 20, 2022.	1,215,700			—
Note payable to Brookings Regional Railroad Authority, due in annual principal and interest installments of $75,500, interest rate at 2.00%, secured by railroad track assets. Note matured June 1, 2020.	—			603,342
Total debt before debt issuance costs	25,215,700			16,603,342
Less current maturities	(4,534,595		)	(4,603,342		)
Less debt issuance costs, net of amortization of $8,136 and $5,923 as of June 30, 2020 and December 31, 2019, respectively	(15,864		)	(8,077		)
Total long-term debt	$	20,665,241		$	11,991,923

The Company entered into an agreement as of January 28, 2020 with CoBank to amend and restate its Credit Agreement, which includes both the revolving term and seasonal loans. Under the terms and conditions of the Credit Agreement, CoBank agreed to make advances to the Company for up to $26,000,000 on the revolving term loan with a variable effective interest rate of 2.63%. The amount available for borrowing on the revolving term loan, however, will decrease by $2,000,000 every six months beginning on March 20, 2020, with a scheduled balloon payment for the remaining balance on the loan's maturity date of September 20, 2023. The Company pays a 0.40% annual commitment fee on any funds not borrowed. The debt issuance costs of $24,000 paid by the Company on this amendment will be amortized over the term of loan. The principal balance outstanding on the revolving term loan was $24,000,000 and $16,000,000 as of June 30, 2020 and December 31, 2019, respectively. There were no remaining commitments available to borrow on the revolving term loan as of June 30, 2020.

Under this agreement, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios. One of those loan covenants restricts the Company's borrowings from entities other than CoBank to $300,000. As of June 30, 2020, the Company had debt from others totaling $1,215,700, or well in excess of the covenant, due to the PPP loan entered into on April 20, 2020 discussed below. The Company obtained CoBank's consent prior to entering into the new loan and subsequently received a waiver that is in effect as of June 30, 2020. The Company was in compliance with all other covenants and conditions with CoBank as of June 30, 2020.

Effective March 1, 2013, the State of South Dakota Department of Transportation agreed to loan the Brookings County Regional Railway Authority $964,070 for purposes of making improvements to the railway infrastructure near the Company’s soybean processing facility in Volga, South Dakota. In consideration of this secured loan, the Company agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus interest. This guaranty was converted into a direct obligation of the Company’s on October 16, 2013, when the Company received the entire loan proceeds and assumed responsibility for paying the annual principal and interest payments.

On April 20, 2020, the Company entered into an unsecured promissory note for $1,215,700 under the Paycheck Protection Program (“PPP Loan“). The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act“) and is administered by the U.S. Small Business Administration. The PPP Loan is being made through First Bank & Trust, N.A. The PPP Loan is scheduled to mature on April 20, 2022 and has a 1% interest rate. No payments are due on the PPP Loan until November 20, 2020, although interest will continue to accrue during the deferment period. Beginning November 20, 2020, the Company will pay 18 equal monthly installments of principal and interest in the amount necessary to fully amortize the PPP Loan through the maturity date. Under the terms of the CARES Act, all or a portion of the PPP Loan may be forgiven. Such forgiveness will be determined,

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

The following are minimum principal payments on long-term debt obligations for the twelve-month periods ended June 30:

2021	$	4,534,595
2022	4,681,105
2023	4,000,000
2024	12,000,000
Total	$	25,215,700

Note 8 - Operating Leases

The Company has several operating leases for railcars. These leases have terms ranging from 3-18 years and do not have renewal terms provided. The leases require the Company to maintain the condition of the railcars, restrict the use of the railcars to specified products, such as soybean meal, hulls or oil, limit usage to the continental United States, Canada or Mexico, require approval to sublease to other entities, and require the Company's submission of its financial statements. Lease expense for all railcars was $740,705 and $756,871 for the three months ended June 30, 2020 and 2019, respectively, and $1,523,915 and $1,535,990 for the six months ended June 30, 2020 and 2019, respectively.

The following is a schedule of the Company's operating leases for railcars as of June 30, 2020:

Lessor	Quantity of<br><br>Railcars	Commencement<br><br>Date	Maturity<br><br>Date	Monthly<br><br>Payment
American Railcar Leasing	30	7/1/2015	6/30/2021	$	30,780
Andersons Railcar Leasing Co.	10	7/1/2018	6/30/2023	5,000
Andersons Railcar Leasing Co.	20	7/1/2019	6/30/2026	11,300
GATX Corporation	14	7/1/2020	6/30/2024	4,200
Midwest Railcar Corporation	64	1/1/2015	12/31/2021	27,200
Trinity Capital	88	8/1/2002	7/31/2020	33,704
Trinity Capital	29	12/1/2015	11/30/2020	28,536
Trinity Capital	20	10/1/2015	9/30/2020	13,600
Wells Fargo Rail	112	8/1/2017	7/31/2022	52,557
Wells Fargo Rail	107	1/1/2018	12/31/2022	35,845
Wells Fargo Rail	7	1/1/2004	12/31/2021	2,926
Wells Fargo Rail	15	1/1/2004	12/31/2021	5,850
Wells Fargo Rail	8	1/1/2015	12/31/2021	3,600
	524			$	255,098

The Company also has a number of other operating leases for machinery and equipment. These leases have terms ranging from 3-7 years; however, most of these leases have automatic renewal terms. These leases require monthly payments of $3,649. Rental expense under these other operating leases was $11,394 and $12,719 for the three months ended June 30, 2020 and 2019, respectively, and $19,075 and $20,642 for the six-month periods ended June 30, 2020 and 2019, respectively.

On March 19, 2020, the Company entered into an agreement with an entity in the western United States to provide storage and handling services for the Company's soybean meal. The Company will pay the entity $3,300,000, which

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

is included in current operating lease liabilities on the Company's balance sheet, after the entity's construction of additional storage and handling facilities. The agreement will mature seven years after completion of the construction but includes an additional seven-year renewal period at the sole discretion of the Company.

Operating leases are included in right-to-use lease assets, current operating lease liabilities, and long-term lease liabilities on the condensed balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company's secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the condensed balance sheet.

Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our condensed statements of operations for the three-month and six-month periods ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenues - Freight and rail	$	740,705	$	756,871	$	1,523,915	$	1,535,990
Cost of revenues - Production	9,009		9,714		13,373		14,633
Administration expenses	2,385		3,005		5,702		6,009
Total operating lease costs	$	752,099	$	769,590	$	1,542,990	$	1,556,632

The following summarizes the supplemental cash flow information for the three and six-month periods ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cash paid for amounts included in measurement of lease liabilities	$	777,143	$	742,911	$	1,554,286	$	1,485,822
Supplemental non-cash information:
Right-of-use assets obtained in exchange for lease liabilities	$	185,750	$	796,358	$	3,485,750	$	796,358

The following summarizes the weighted-average remaining lease term and weighted-average discount rate:

	June 30, 2020
Weighted-average remaining lease-term - operating leases (in years)	7.4
Weighted-average discount rate - operating leases	3.7	%

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of June 30, 2020:

	Railcars			Other			Total
Twelve-month periods ended June 30:
2021	$	2,315,724		$	3,341,841		$	5,657,565
2022	1,544,281			40,284			1,584,565
2023	566,184			39,182			605,366
2024	173,400			24,236			197,636
2025	135,600			9,991			145,591
Thereafter	148,200			—			148,200
Total lease payments	4,883,389			3,455,534			8,338,923
Less amount of lease payments representing interest	(311,842		)	(14,732		)	(326,574		)
Total present value of lease payments	$	4,571,547		$	3,440,802		$	8,012,349

Note 9 - Member Distribution

On January 21, 2020, the Company’s Board of Managers approved a cash distribution of approximately $6.7 million, or 22.0¢ per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy on February 6, 2020.

Note 10 - Derivative Instruments and Hedging Activities

In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices and, occasionally, foreign exchange and interest rates. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts, and interest rate swaps, caps and floors. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. These contracts are recorded on the Company’s condensed balance sheets at fair value as discussed in Note 11, Fair Value.

As of June 30, 2020 and December 31, 2019, the value of the Company’s open futures, options and forward contracts was approximately $4,468,174 and $(5,955,928), respectively.

		As of June 30, 2020
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	8,388,189	$	3,289,830
Foreign exchange contracts	Current Assets	230,943		46,503
Interest rate caps and floors	Current Liabilities	—		814,625
Totals		$	8,619,132	$	4,150,958	As of December 31, 2019
---	---	---	---	---	---
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,320,161	$	8,930,683
Foreign exchange contracts	Current Assets	29,696		27,582
Interest rate caps and floors	Current Liabilities	—		347,520
Totals		$	3,349,857	$	9,305,785

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

During the three and six-month periods ended June 30, 2020 and 2019, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed statements of operations as follows:

	Net Gain (Loss) Recognized <br>on Derivative Activities for the						Net Gain (Loss) Recognized <br>on Derivative Activities for the
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Derivatives not designated as hedging instruments:
Commodity contracts	$	1,504,942		$	266,869		$	7,131,171		$	1,008,821
Foreign exchange contracts	246,656			8,347			178,659			44,829
Interest rate swaps, caps and floors	(39,256		)	(125,483		)	(458,738		)	(155,549		)
Totals	$	1,712,342		$	149,733		$	6,851,092		$	898,101

Note 11 - Fair Value

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The three levels of hierarchy and examples are as follows:

•	Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Board of Trade (“CBOT”).
•	Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs, such as commodity prices using forward future prices.
---	---
•	Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
---	---

The following tables set forth financial assets and liabilities measured at fair value in the condensed balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of June 30, 2020 and December 31, 2019:

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	5,098,359	$	53,230,827	$	—	$	58,329,186
Margin deposits (deficits)	$	3,492,375	$	—	$	—	$	3,492,375		Fair Value as of December 31, 2019
---	---	---	---	---	---	---	---	---	---
	Level 1			Level 2		Level 3		Total
Financial assets:
Inventory	$	(5,610,521	)	$	49,717,733	$	—	$	44,107,212
Margin deposits	$	6,772,160		$	—	$	—	$	6,772,160

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

The Company enters into various commodity derivative instruments, including futures, options, swaps and other agreements. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the CBOT. The Company estimates the fair market value of their finished goods and raw materials inventories using the market price quotations of similar forward future contracts listed on the CBOT and adjusts for the local market adjustments derived from other grain terminals in our area. This market adjustment caused a negative balance in the Level 1 inventory amount as of December 31, 2019.

The Company considers the carrying amount of significant classes of financial instruments on the balance sheets, including cash, accounts receivable, and accounts payable, to be reasonable estimates of fair value due to their length or maturity. The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.

The Company has patronage investments in other cooperatives and common and preferred stock holdings in privately held entities. There is no market for their patronage credits or the entity’s common and preferred holdings, and it is impracticable to estimate the fair value of the Company’s investments. These investments are carried on the balance sheet at original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.

Note 12 - Related Party Transactions

The Company sold soybean products to Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC totaling $56,453 and $185,923 during the three months ended June 30, 2020 and 2019, respectively, and $59,259 and $293,980 during the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 and December 31, 2019, Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC owed the Company $250 and $104,947, respectively.

The Company has entered into agreements with Prairie AquaTech Manufacturing, LLC to perform various management services and to serve as the owner's representative during the construction of its new manufacturing facility adjacent to the Company's plant in Volga, South Dakota. The Company received a total of $1.72 million in compensation for those services, which was recorded in deferred liabilities on the Company's condensed balance sheet. As of June 30, 2020 and December 31, 2019, the balance remaining in deferred liabilities was $0 and $101,111, respectively. The Company recognized revenues from management services of $35,278 and $220,841 during the three months ended June 30, 2020 and 2019, respectively, and $121,111 and $565,597 during the six months ended June 30, 2020 and 2019, respectively.

Note 13 - Contingencies

From time to time in the ordinary course of our business, the Company may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual dispute. The Company carries insurance that provides protection against general commercial liability claims, claims against our directors, officer and employees, business interruption, automobile liability, and workers' compensation. The Company is not currently involved in any material legal proceedings and are not aware of any potential claims.

Note 14 - Subsequent Event

The Company evaluated all of its activities and concluded that no subsequent events have occurred that would require recognition in its financial statements or disclosed in the notes to its financial statements.

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

Forward-Looking Statements

The information in this quarterly report on Form 10-Q for the six-month period ended June 30, 2020, (including reports filed with the Securities and Exchange Commission (the “SEC” or “Commission”), contains “forward-looking statements” that deal with future results, expectations, plans and performance, and should be read in conjunction with the financial statements and Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements may include statements which use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “predict,” “hope,” “will,” “should,” “could,” “may,” “future,” “potential,” or the negatives of these words, and all similar expressions. Forward-looking statements involve numerous assumptions, risks and uncertainties. Actual results or actual business or other conditions may differ materially from those contemplated by any forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements are identified in our Form 10-K for the year ended December 31, 2019.

We are not under any duty to update the forward-looking statements contained in this report, nor do we guarantee future results or performance or what future business conditions will be like. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report.

Executive Overview and Summary

Going into 2020, we knew we would face challenges on several fronts. Yet some of these challenges, as is the case for the U.S. and the world, were impossible to foresee.

One challenge which we were keenly aware of, however, was the adverse impact from a significantly reduced soybean crop in our region in 2019. Instead of an anticipated 250 million bushel soybean harvest in South Dakota, only 146 million bushels were harvested in 2019 due to the highest number of prevent-plant acres in the nation, inclement weather and reduced yields in some areas. With 2019 being the second wettest in our region's history, we experienced processing issues and higher dryer costs as well. The protein levels in soybeans were also in the lower third of all crops that we have received historically, making it difficult for us to meet our protein guarantees on our soybean meal sold to customers.

On a second front, we were aware that two large-scale processing plants would be coming online in the U.S. in 2019, one located approximately 150 miles to the north in Aberdeen, South Dakota. Yet, we did not know the extent of impact on us arising from the increased capacity, particularly from the Aberdeen plant. To date, the Aberdeen facility has not materially impacted our margins, but the addition of capacity going forward is likely to have a negative impact.

Of course, the COVID-19 pandemic has adversely affected our business. Much of our oil is purchased and used by restaurants and other customers in the food industry. When this industry shut down in March and during the second quarter of 2020, it significantly reduced demand for oil. Similarly, our soybean meal is purchased and used by hog producers as feed. When meat processing facilities shut down, hogs backed up on farms leading to a sharp drop in demand for soybean meal.

The positive news is that we were able to endure this unprecedented time while generating a profit of $5.7 million during the first half of 2020. Although our profitability is down approximately $4.8 million from the same period in 2019, we are proud of our results given the circumstances, which is owed to an exceptional management and operational team.

Looking forward, our margins will not be as good as hoped, but there is reason for optimism. Demand for our products is slowly returning. Oil demand from both the food and bioenergy sectors continues to increase as restaurants re-open and commercial traffic picks up on highways. Our recent refinery expansion has allowed us to take advantage of strengthening demand by turning more of our inventory into products the market is seeking. Hog slaughter rates are picking up, and dairy margins are stronger than they have been for some time which will help improve soybean meal demand. Finally, the 2020 soybean harvest looks promising. Soybeans were planted on time this past spring, and the crop throughout our region looks very good.

RESULTS OF OPERATIONS

Comparison of the three months ended June 30, 2020 and 2019

	Three Months Ended June 30, 2020				Three Months Ended June 30, 2019
			% Revenue				% Revenue
Revenue			100.0				100.0
Cost of revenues	(86,595,243	)	(92.8	)	(93,454,642	)	(93.1	)
Operating expenses	(898,767	)	(1.0	)	(927,314	)	(0.9	)
Interest expense	(308,354	)	(0.3	)	(267,730	)	(0.3	)
Other non-operating income (expense)	20,885		—		100,099		0.1
Income tax benefit (expense)	—		—		—		—
Net income			5.9				5.8

All values are in US Dollars.

Revenue - Revenue decreased $7.1 million, or 7.0%, for the three-month periods ended June 30, 2020, compared to the same period in 2019. The decrease in revenues is primarily due to a decrease in the quantity of soybeans processed, which decreased the volume of our soybean products available for sale to customers. As restaurants and customers in the food industry closed or modified operations due to the COVID-19 pandemic, demand for our oil products decreased as well. Demand for soybean meal decreased during periods as COVID-19 shut down meat processing facilities which caused a back-up of hogs on producer farms.

Gross Profit/Loss – Gross profit decreased $204,000, or 3.0%, for the three months ended June 30, 2020, compared to the same period in 2019.The decrease in gross profit is primarily due to adverse weather in our soybean procurement area and increased soybean processing in the U.S. Severe flooding from heavy snow and rainfall in the spring of 2019 caused local farmers to delay or reduce planting, or elect not to plant at all. Consequently, soybean production in South Dakota decreased by nearly 50% from 2018 to 2019, which increased soybean prices and reduced our soybean crush margins. Crush margins were also adversely affected by increased production capacity from soybean processors throughout the U.S. which, after experiencing decent crush margins, increased their production capacity.

Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, decreased $29,000, or 3.1%, for the three-month period ended June 30, 2020, compared to the same period in 2019. The decrease in operating expenses is primarily due to travel restrictions related to the COVID-19 pandemic. Many meetings, conferences and conventions were canceled, postponed or held virtually due to the pandemic.

Interest Expense – Interest expense increased $41,000, or 15.2%, for the three months ended June 30, 2020, compared to the same period in 2019. The increase in interest expense is due primarily to an increase in borrowings from our lines of credit, as we borrowed more to pay for capital improvements. The average debt level during the three-month period ended June 30, 2020 was approximately $39.2 million, compared to $20.6 million for the same period in 2019. Partially offsetting the increase in borrowings is a decrease in interest rates on our senior debt with CoBank. As of June 30, 2020, the interest rate on our revolving long-term loan was 2.63%, compared to 4.88% as of June 30, 2019.

Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, decreased $79,000 during the three months ended June 30, 2020, compared to the same period in 2019. The decrease in other non-operating income is due to a decrease in compensation from management services. Compensation from management services decreased from 2019 to 2020 due to the completion of construction services performed for Prairie AquaTech Manufacturing, LLC in 2019.

Net Income/Loss – During the three-month period ended June 30, 2020, we generated a net income of $5.5 million, compared to $5.8 million for the same period in 2019. The $300,000 decrease is primarily attributable to decreases in gross profit and other non-operating income.

Comparison of the six months ended June 30, 2020 and 2019

	Six Months Ended June 30, 2020				Six Months Ended June 30, 2019
			% of Revenue				% of Revenue
Revenue			100.0				100.0
Cost of revenues	(183,594,192	)	(95.6	)	(179,962,035	)	(93.6	)
Operating expenses	(1,923,496	)	(1.0	)	(1,932,515	)	(1.0	)
Interest expense	(658,341	)	(0.3	)	(460,289	)	(0.2	)
Other non-operating income (expense)	(105,779	)	(0.1	)	588,922		0.3
Income tax benefit (expense)	—		—		(600	)	—
Net income			3.0				5.5

All values are in US Dollars.

Revenue – Revenue decreased $0.3 million, or 0.2%, for the six-month period ended June 30, 2020, compared to the same period in 2019. The decrease in revenues is primarily due to a 1.4% decrease in the quantity of soybeans processed, which decreased the volume of our soybean products available for sale to customers. As restaurants and customers in the food industry closed or modified operations due to the COVID-19 pandemic, demand for our products decreased as well. Demand for soybean meal decreased during periods as COVID-19 shut down meat processing facilities which caused a back-up of hogs on producer farms.

Gross Profit/Loss – Gross profit decreased $3.9 million for the six months ended June 30, 2020, compared to the same period in 2019. The decrease in gross profit is primarily due to adverse weather in our soybean procurement area and deteriorating conditions related to the COVID-19 pandemic. Severe flooding from heavy snow and rainfall in the spring of 2019 caused local farmers to delay or reduce planting, or elect not to plant at all. Consequently, soybean production in South Dakota decreased by nearly 50% from 2018 to 2019, which increased soybean prices and reduced our soybean crush margins. Crush margins were also adversely affected by the COVID-19 pandemic as restaurants and other retailers were closed or modified their operations.

Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, remained relatively constant for the six-month period ended June 30, 2020, compared to the same period in 2019.

Interest Expense – Interest expense increased $198,000, or 43.0%, during the six months ended June 30, 2020, compared to the same period in 2019. The increase in interest expense is due primarily to an increase in borrowings from our lines of credit, as we borrowed more to pay for capital improvements. The average debt level during the six-month period ended June 30, 2020 was approximately $37.9 million, compared to $18.0 million for the same period in 2019. Partially offsetting the increase in borrowings is a decrease in interest rates on our senior debt with CoBank. As of June 30, 2020, the interest rate on our revolving long-term loan was 2.63%, compared to 4.88% as of June 30, 2019.

Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, decreased $695,000 during the six-month period ended June 30, 2020, compared to the same period in 2019. The decrease in other non-operating income is due to a $444,000 decrease in compensation from management services and a $303,000 increase in losses on our interest rate hedges. Compensation from management services decreased from 2019 to 2020 due to the completion of construction services performed for Prairie AquaTech Manufacturing, LLC in 2019. During the six-month period ended June 30, 2020, losses on interest rate caps and floors totaled $459,000, compared to $156,000 during the same period in 2019.

Net Income/Loss – During the six-month period ended June 30, 2020, we generated a net income of $5.7 million, compared to $10.5 million for the same period in 2019. The $4.8 million decrease is primarily attributable to decreases in gross profit and other non-operating income.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash provided by operations and borrowings under our two lines of credit which are discussed below under “Indebtedness.” On June 30, 2020, we had working capital, defined as current assets less current liabilities, of approximately $25.1 million, compared to $23.9 million on June 30, 2019. Working capital increased $1.2 million between periods primarily due to $10.0 million in new borrowings and $6.0 million in net profit. These increase in working capital were partially offset by capital expenditures of $9.8 million and a $6.7 million distribution to members. Based on our current plans, we believe that we will continue funding our capital and operating needs from cash from operations and revolving lines of credit.

Comparison of the Six Months Ended June 30, 2020 and 2019

	2020			2019
Net cash provided by (used for) operating activities	$	(3,476,541	)	$	(915,425	)
Net cash provided by (used for) investing activities	(3,294,967		)	(3,110,244		)
Net cash provided by (used for) financing activities	9,961,699			(2,169,741		)

Cash Flows Used For Operations

The $2.6 million increase in cash flows used for operating activities is due to a $15.2 million increase in inventories in 2020, compared to the same period in 2019. We increased inventories by $14.3 million during the six months ended June 30, 2020, compared to a $0.9 million decrease during the same period in 2019. Partially offsetting the increase in inventories was an $11.8 million decrease in the reduction of accrued commodity purchases. During the six-month period ended June 30, 2020, we reduced accrued commodity purchases by $1.1 million, compared to $12.9 million during the same period in 2019.

Cash Flows Used For Investing Activities

The $0.2 million increase in cash flows used for investing activities during the six-month period ended June 30, 2020, compared to the same period in 2019, is due to an increase in investment purchases. During the six months ended June 30, 2020, we invested an additional $0.4 million in cash in Prairie AquaTech Manufacturing, LLC, compared to $0 during the same period in 2019.

Cash Flows Provided By (Used For) Financing Activities

The $12.1 million change in cash flows provided by (used for) financing activities is principally due to a $9.2 million increase in net proceeds on borrowings and an $8.5 million decrease in cash distributions to members. During the six months ended June 30, 2020, net proceeds on borrowings increased $20.0 million, compared to $10.8 million during the same period in 2019. Cash distributions to our members totaled approximately $6.7 million during the six-month period ended June 30, 2020, compared to $15.2 million during the same period in 2019.

Indebtedness

We have two lines of credit with CoBank, our primary lender, to meet the short and long-term needs of our operations. The first credit line is a revolving long-term loan. Under the terms of this loan, we may borrow funds as needed up to the credit line maximum, or $26.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. On March 20, 2020, the available credit line decreased by $2.0 million, and decreases continually by the same amount every six months until the credit line’s maturity on September 20, 2023 at which time there will be a balloon payment for the remaining balance. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan is $24.0 million and $16.0 million as of June 30, 2020 and December 31, 2019. Under this loan, there were no additional funds available to be borrowed as of June 30, 2020.

The second credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. The maximum we may borrow under this credit line is $28 million until the loan's maturity on December 1, 2020. We pay a 0.20% annual commitment fee on any funds not borrowed; however, we have the option to reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment

fee. As of June 30, 2020 and December 31, 2019, there were advances outstanding on the seasonal loan of $13.2 million and $1.7 million, respectively. Under this loan, there was $14.8 million in available funds to borrow as of June 30, 2020.

Both loans with CoBank are set up with a variable rate option. The variable rate is set by CoBank and changes weekly on the first business day of each week. We also have a fixed rate option on both loans, allowing us to fix rates for any period between one day and the entire commitment period. The annual interest rate on the revolving term loan is 2.63% and 4.24% as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020 and December 31, 2019, the interest rate on the seasonal loan is 2.38% and 3.99%, respectively. Under these loans, we are subject to compliance with standard financial covenants and the maintenance of certain financial ratios. One of those loan covenants restricts the borrowings from entities other than CoBank to $300,000. As of June 30, 2020, we had debt from others totaling $1,215,700, or well in excess of the covenant, due to the new PPP loan entered into on April 20, 2020 discussed immediately below. We obtained CoBank's consent prior to entering into the new loan and subsequently received a waiver that is in effect as of June 30, 2020. We were in compliance with all other covenants and conditions with CoBank as of June 30, 2020.

On April 20, 2020, we entered into an unsecured promissory note for $1,215,700 under the Paycheck Protection Program (“PPP Loan“). The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act“) and is administered by the U.S. Small Business Administration. The PPP Loan is scheduled to mature on April 20, 2022 and has a 1% interest rate. No payments are due on the PPP Loan until November 20, 2020, although interest will continue to accrue during the deferment period. Beginning November 20, 2020, we are obligated to pay 18 equal monthly installments of principal and interest in the amount necessary to fully amortize the PPP Loan through the maturity date, unless all or a portion of the PPP Loan is forgiven under the terms and conditions of the CARES Act. Forgiveness of the PPP Loan is determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs. We believe all or a significant portion of the PPP Loan will be forgiven.

We also had a loan with the State of South Dakota Department of Transportation in connection with previous improvements made to the railway infrastructure near our soybean processing facility in Volga, South Dakota. Under this loan, which matured on June 1, 2020, we made annual principal and interest payments of $75,500. The principal balance outstanding on this loan was $0 and $603,342 as of June 30, 2020 and December 31, 2019.

OFF BALANCE SHEET FINANCING ARRANGEMENTS

We do not utilize variable interest entities or other off-balance sheet financial arrangements.

Contractual Obligations

The following table shows our contractual obligations for the periods presented:

	Payment due by period
CONTRACTUAL<br><br>OBLIGATIONS	Total		Less than<br><br>1 year		1-3 years		3-5 years		More than<br><br>5 years
Long-Term Debt Obligations (1)	$	26,931,000	$	5,152,000	$	9,599,000	$	12,180,000	$	—
Operating Lease Obligations	8,339,000		5,658,000		2,190,000		343,000		148,000
Totals	$	35,270,000	$	10,810,000	$	11,789,000	$	12,523,000	$	148,000
(1)	Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.
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RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of our Financial Statements under Part I, Item 1, for a discussion on the impact, if any, of the recently pronounced accounting standards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies and estimates from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2019.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Commodities Risk & Risk Management. To reduce the price change risks associated with holding fixed price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight or options futures contract) on a regulated commodity futures exchange, the Chicago Board of Trade. While hedging activities reduce the risk of loss from changing market prices, such activities also limit the gain potential which otherwise could result from these significant fluctuations in market prices. Our policy is generally to maintain a hedged position within limits, but we can be long or short at any time. Our profitability is primarily derived from margins on soybeans processed, not from hedging transactions. Our management does not anticipate that hedging activities will have a significant impact on future operating results or liquidity. Hedging arrangements do not protect against nonperformance of a cash contract.

At any one time, our inventory and purchase contracts for delivery to our facility may be substantial. We have risk management policies and procedures that include net position limits. They are defined by commodity, and include both trader and management limits. This policy and procedure triggers a review by management when any trader is outside of position limits. The position limits are reviewed at least annually with the board of managers. We monitor current market conditions and may expand or reduce the limits in response to changes in those conditions.

An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.

Foreign Currency Risk. We conduct essentially all of our business in U.S. dollars and have minimal direct risk regarding foreign currency fluctuations. Foreign currency fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of and demand for U.S. agricultural products compared to the same products offered by foreign suppliers.

Interest Rate Risk. We manage exposure to interest rate changes by using variable rate loan agreements with fixed rate options. Long-term loan agreements can utilize the fixed option through maturity; however, the revolving ability to pay down and borrow back would be eliminated once the funds were fixed.

As of June 30, 2020, we had $1.2 million in fixed rate debt outstanding and $52 million of variable rate lines of credit. Interest rate changes impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other variables remain constant, a 1.0% increase in interest rates on our variable rate debt could have an estimated impact on profitability of approximately $520,000 per year.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control Over Financial Reporting. There were no changes to our internal controls over financial reporting that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting during the quarter ended June 30, 2020.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time in the ordinary course of our business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual dispute. We carry insurance that provides protection against general commercial liability claims, claims against our directors, officer and employees, business interruption, automobile liability, and workers' compensation. We are not currently involved in any material legal proceedings and are not aware of any potential claims.

Item 1A. Risk Factors.

During the quarter ended June 30, 2020, there were no material changes to the Risk Factors disclosed in Item 1A (Part I) of our 2019 Annual Report on Form 10-K.

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.

Exhibit<br><br>Number	Description
3.1(i)	Articles of Organization (1)
3.1(ii)	Operating Agreement, as amended (2)
3.1(iii)	Articles of Amendment to Articles of Organization (3)
4.1	Form of Class A Unit Certificate (4)
10.1	Promissory Note (U.S. Small Business Administration's Paycheck Protection Program)
31.1	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer
32.1	Section 1350 Certification by Chief Executive Officer
32.2	Section 1350 Certification by Chief Financial Officer

____________________________________________________________________________

(1) Incorporated by reference from Appendix B to the information statement/prospectus filed as a part of the issuer’s Registration Statement on Form S-4 (File No. 333-75804).

(2) Incorporated by reference from the same numbered exhibit to the issuer’s Form 8-K filed on June 22, 2017.

(3) Incorporated by reference from the same numbered exhibit to the issuer’s Form 10-Q filed on August 14, 2002.

(4) Incorporated by reference from the same numbered exhibit to the issuer’s Registration Statement on Form S-4 (File No. 333-75804).

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Dated:	August 7, 2020	By	/s/ Thomas Kersting
			Thomas Kersting, Chief Executive Officer
			(Principal Executive Officer)
Dated:	August 7, 2020	By	/s/ Mark Hyde
			Mark Hyde, Chief Financial Officer
			(Principal Financial Officer)

		Exhibit

Exhibit 10.1

PROMISSORY NOTE

Principal	Loan Date	Maturity	Loan No	Call / Coll	Account	Officer
$1,215,700.00	4/20/2020	4/20/2022	4683937107	025 / 001	S004409	SSH
Reference in the boxes are for Lender's use only and do not limit the applicability of this document to any particular loan or item.<br><br>Any item above containing "***" has been omitted due to text length limitations.
Borrower:	Lender:	First Bank & Trust
---	---	---
		Brookings
		520 8th St
		PO Box 5057
		Brookings, SD 57006
Principal Amount: 1,215,700.00		Date of Note: April 20, 2020

All values are in US Dollars.

PROMISE TO PAY. SD SOYBEAN PROCESSORS LLC ("Borrower") promises to pay to First Bank & Trust ("Lender"),or order, in lawful money of the United States of America, the principal amount of One Million Two Hundred Fifteen Thousand Seven Hundred & 00/100 Dollars ($1,215,700.00), together with Interest on the unpaid principal balance from April 20, 2020, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an Interest rate of 1.000% per annum based on a year of 360 days,until paid in full. The Interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.

PAYMENT. Borrower will pay this loan in 17 payments of $68,428.16 each payment and an irregular last payment estimated at $68,428.20. Borrower's first payment Is due November 20, 2020, and all subsequent payments are due on the same day of each month after that. Borrower's final payment will be due on April 20, 2022, and will be for all principal and all accrued interest not yet paid. Payments Include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid Interest; then to principal; then to any escrow or reserve account payments as required under any mortgage, deed of trust, or other security Instrument or security agreement securing this Note; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate In writing.

INTEREST CALCULATION METHOD. Interest on this Note Is computed on a 365/360 basis; that Is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance Is outstanding. All interest payable under this Note Is computed using this method.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send Lender payments marked paid in full". "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, Including any check or other payment instrument that Indicates that the payment constitutes "payment In full" of the amount owed or that Is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be malled or delivered to: First Bank & Trust, Attn:Loan Operations, PO Box 5057, Brookings, SD 57006.

INTEREST AFTER DEFAULT. Upon default.including failure to pay upon final maturity, the total sum due under this Note will continue to accrue interest at the Interest rate under this Note.

DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default. Borrower falls to make any payment when due under this Note.

Other Defaults. Borrower fails to comply with or to perform any other term, obligation.covenant or condition contained In this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained In any other agreement between Lender and Borrower.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading In any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Death or Insolvency. The dissolution of Borrower (regardless of whether election to continue Is made), any member withdraws from Borrower, or any other termination of Borrower's existence as a going business or the death of any member, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help. repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which Is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond

Exhibit 10.1

for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the Indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the Indebtedness evidenced by this Note.

Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity. Lender In good faith believes Itself insecure.

Cure Provisions. If any default, other than a default in payment, Is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, It may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiates steps which Lender deems In Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due,and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit,including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of South Dakota without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of South Dakota.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Brookings County, State of South Dakota.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking,savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However , this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender,to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts.

COLLATERAL. This loan is unsecured.

SBA NOTICES. When SBA is the holder, this Note will be interpreted and enforced under Federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any Federal immunity from state or local control, penalty,tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA,or preempt Federal law.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns,and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. If any part of th s Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note.and unless otherwise expressly staled in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fall to realize upon or perfect Lender's security interest in the collateral;and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE,BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER:
SD SOYBEAN PROCESSORS LLC
By:	/s/ Thomas Kersting	April 20, 2020	By:	/s/ Mark Hyde	April 20, 2020
	THOMAS KERSTING, CEO of SD SOYBEAN PROCESSORS LLC			MARK E HYDE, CFO of SD SOYBEAN PROCESSORS LLC
LENDER:
FIRST BANK & TRUST
X	/s/ Steven Hogie	April 19, 2020
	Steven Hogie, Vice President

Exhibit 10.1

		Exhibit

Exhibit 31.1

Certification

I, Thomas Kersting, certify that:

1.	I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended June 30, 2020;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
---	---
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and
---	---
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---

Date: August 7, 2020

/s/ Thomas Kersting
Thomas Kersting
Chief Executive Officer
(Principal Executive Officer)

		Exhibit

Exhibit 31.2

Certification

I, Mark Hyde, certify that:

1.	I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended June 30, 2020;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
---	---
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and
---	---
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---

Date: August 7, 2020

/s/ Mark Hyde
Mark Hyde
Chief Financial Officer
(Principal Financial and Accounting Officer)

		Exhibit

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 of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-Q for the quarter ending June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas Kersting, the Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of June 30, 2020 (the last date of the period covered by the Report).

Dated:	August 7, 2020	By	/s/ Thomas Kersting
			Thomas Kersting, Chief Executive Officer
			(Principal Executive Officer)

		Exhibit

Exhibit 32.2

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 of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-Q for the quarter ending June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Hyde, the Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

Dated:	August 7, 2020	By	/s/ Mark Hyde
			Mark Hyde, Chief Financial Officer
			(Principal Financial and Accounting Officer)