SDSYA 10-K & 10-Q changes, risk factors and insider trading

We are affected by changes in commodity prices. Our revenues, earnings and cash flows are affected by market prices for commodities such as crude petroleum oil, natural gas, soybeans, and crude and refined vegetable oils. Commodity prices generally are affected by a wide range of factors beyond our control, including weather, disease, insect damage, drought, the availability and adequacy of soybean supply, government regulation and policies, and general political and economic conditions. In addition, we are exposed to the risk of nonperformance by counterparties to contracts. Risk of nonperformance by counterparties includes the inability to perform because of a counterparty’s financial condition and also the risk the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than the current market prices. Additionally, demand for soybeans is affected by changes in international, national, regional, and local economic conditions, and demographic trends. The increased production of soybean crops in South America and the rising demand for soybeans in emerging nations such as China and India have increased competition in the soybean market.

We are affected by inflation. We have experienced and anticipate continued effects of inflation on costs such as soybeans, materials, labor, natural gas, and electricity. In response to inflationary pressures, the U.S. Federal Reserve has raisedmaintained higher interest rates, which has resulted in continued uncertainty and volatility in financial markets and increased borrowing costs under our revolving credit facilities. Although inflation has subsided the past few months, inflation and its effects, many of which are beyond our control, could escalate in the future. We may be unable to pass on all of our increased costs as a result of inflation to customers. Accordingly, inflationary pressures could have a material and adverse effect on our business.

Current and future geopolitical events outside of our control could adversely impact our business. We face risks related to geopolitical events, international hostility, epidemics, outbreaks and other macroeconomic events that are outside of our control. The occurrence of certain geopolitical events, including those arising from war, military conflicts, terrorist activity, international hostility, public health crises, tariffs, and the economic impact of global trade tensions and the imposition of tariffs,tensions, could significantly disrupt our business and operational plans and adversely affect our results of operations, cash flows, financial condition and liquidity. For example, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.

•Changes in weather patterns and conditions, including changes in rainfall and storm patterns and intensities, droughts, water shortages, and temperature levels, could adversely impact our costs and business operations; the location, cost and competitiveness of commodity agricultural production, related storage and processing facilities; and demand for agricultural commodities. These effects could significantly reduce demand for the products we sell to or buy from agricultural producers and local elevators, and therefore could adversely impact our business.

We face risks related to health epidemics, pandemics, and similar outbreaks. While we have effectively managed through the risks arising from the pandemic caused by COVID-19, we could be materially affectedimpacted in the future if a morehealth severeepidemic, variantpandemic, or othersimilar diseaseoutbreak would arise causingin disruptionsthe far more severe than COVID-19.future. We may be unable to perform fully on our contractual obligations, our supply chain and logistical networks may be affected, and costs and working capital needs may increase. These cost increases may not be fully recoverable or adequately covered by insurance. In addition, demand for certain products, particularly biofuels and ingredients incorporated into food that support the food services channels, could be materially impacted from a prolonged regional or global outbreak, leading to government-imposed lockdowns, quarantines, or other restrictions.

We could be affected by higher than anticipated operating costs, including but not limited to increased prices for soybeans. In addition to general market fluctuations and economic conditions, we could experience significant cost increases associated with the ongoing operation of our soybean processing and refining plantsfacilities caused by a variety of factors, many of which are beyond our control. These cost increases could arise from an inadequate local supply of soybeans and a resulting price increase which is not accompanied by an increase in the price for soybean meal and oil. Labor costs can also increase over time, particularly if there is a shortage of labor, or shortage of persons with the skills necessary to operate our facility. Adequacy and cost of electric and natural gas utilities could also affect our operating costs. Changes in price, operation and availability of truck and rail transportation may affect our profitability with respect to the transportation of soybean meal, oil and other products to our customers.

Our business is not diversified. Our success depends primarily on our ability to profitably operate our soybean processing and soybean oil refining plants.facilities. We do not have any other material lines of business or other material sources of revenue if we are unable to operate our soybean processing and soybean oil refining plants.facilities. This lack of diversification may limit our ability to adapt to changing business conditions and could cause harm to our business.

We operate in an intensely competitive industry, and we may not be able to continue to compete effectively. We may be unable to continue to successfully penetrate the markets for our products. The soybean processing business is highly competitive, and other companies presently in the market, or that could enter the market, could adversely affect prices for the products we sell. We compete with major soybean processors such as Archer-Daniels Midland (ADM), Cargill, Bunge, and Ag Processing (AGP), among others, all of which are capable of producinghave significantly greater quantities of soybean products than we do and may achieve higher operating efficiencies and lower costs due to their scale. AGP's processing facility in Aberdeen, South Dakota, could increase the competition for soybeans and adversely affect our business.

Our profitability is influenced by the protein and moisture content of soybeans in the local area. The northern portion of the western soybean belt, where our two soybean crushing plantsfacilities are located, typically produces a lower protein content soybean, which results in lower protein soybean meal. Because lower protein soybean meal is sold at a lower price, we may not be able to operate as profitably as soybean processing plantsfacilities in other parts of the country. If adverse weather conditions further reduce the protein content of the soybeans grown in our area, our business may be materially harmed because we will be required to sell our soybean meal at discounted prices to our customers.

In addition, the moisture content of the soybeans that are delivered to our plantsfacilities also influences our profitability and the efficiency of our plantfacilities operations. Soybeans with high moisture content require more energy to dry them before they can be processed. While we may recover some of these extra energy costs by paying producers less for high moisture soybeans, these savings may not be sufficient to offset our additional operating expenses.

Because soybean processing and refining is energy intensive, our business will be materially harmed if energy prices increase substantially. The price of electricity, natural gas and propane, the primary sources of energy for our plants,facilities, have steadily increased the last few years. If the trend in electricity, natural gas and propane prices continues, our energy costs will remain high and could adversely affect our profitability and operating results.

Legislative, legal or regulatory developments could adversely affect our profitability. We are subject to extensive air, water and other environmental laws and regulations at the federal and state level. In addition, some of these laws require our plantfacilities to operate under a number of environmental permits. These laws, regulations and permits can often require pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, damages, criminal sanctions, permit revocations and/or plantfacilities shutdowns.

We could face increased operating costs if we are required to segregate genetically modified soybeans and the products generated from these soybeans. Over the last several years, someSome soybean producers in our area have been planting genetically modified, or GMO, soybeans, commonly known as Round-up Ready beans. Neither the U.S. Department of Agriculture nor the FDA currently requires that genetically modified soybeans be segregated from other soybeans. If these agencies or our customers were to require that we process these genetically modified soybeans separately, we would face increased storage and processing costs, and our profitability could be harmed.

Operating Expenses – Administrative expenses, including selling, general and administrative expenses, decreased approximately $0.5 million, or 6.7%, during the year ended December 31, 2024, compared to the same period in 2023, due to a decrease in labor costs. The decrease was partially offset by an increase in professional and related costs associated with the start-up of the HighMitchell Plains Processing plant.facility.

Interest Expense – Interest expense increased $3.6 million, or 126.2%, during the year ended December 31, 2024, compared to the same period in 2023. The increase in interest expense was due to a $28.6 million increase in borrowings from our credit facilities with our senior lender, CoBank. The average debt level was $68.2 million during 2024, compared to $39.6 million in 2023. Debt levels increased mainly to fund our investment commitment into the HighMitchell Plains Processing plantfacility through our subsidiaries.

Other Non-Operating Income (Expense) – Other non-operating income, including patronage dividend income, increased $2.8 million, or 140.2%, for the year ended December 31, 2024, compared to the same period in 2023. The increase in other non-operating income was due to a $2.6 million increase in interest income. Interest income increased from the deposit of investment proceeds which were received by our subsidiaries in connection with their equity financing of the HighMitchell Plains Processing plant.facility.

Our primary sources of liquidity are cash provided by operations and borrowings under our various revolving lines of credit which are discussed below under “Indebtedness.” On December 31, 2024,2025, we had working capital, defined as current assets less current liabilities, of approximately $24.5$25.4 million, compared to working capital of $100.2$24.5 million on December 31, 2023.2024. WorkingThe increase in working capital decreased between periodswas primarily duedriven toby expenditureshigher relatedinventories, tooffset by decreases in cash and cash equivalents, increase in accrued commodity purchases and expenses, and increase in indebtedness associated with the construction and developmentcommencement of operations at the HighMitchell Plains Processing plant, which we have a controlling ownership stake through our subsidiaries.facility.

Cash Flows Provided byfrom Operating Activities

The $71.8 million increase in cash flows used for investing activities was primarily driven by the $71.4 million increase in expenditures for purchasing various property and equipment. During 2024, we spent $175.7 million on property and equipment purchases, largely for the construction and development of the HighMitchell Plains Processing plant,facility, compared to $104.3 million during 2023.

We hold various credit facilities 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 this loan, we may borrow funds, as needed, up to the credit line maximum, or $65.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. The available credit line decreases by $3.25 million every six months until the credit line’s maturity on March 20, 20282030 at which time a balloon payment for the remaining balance is due. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0$19.7 million and $50.5 million as of December 31, 20242025 and 2023,2024, respectively. Approximately $38.8 million in remaining commitments was available to borrow on the revolving term loan as of December 31, 2025.

The thirdsecond credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. We may borrow up to $70.0$20.0 million until the loan's maturity on December 1, 2025.2026. 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 December 31, 20242025 and 2023,2024, thethere was no principal balance outstanding on this credit line was $0 and $0.0 million, respectively.line.

The fourththird line of credit is a delayed-draw term loan. Under this loan, our subsidiary may borrow funds, as needed up to $254.0 million. Principal payments of $4.5 million are made quarterly beginning six months after the completion date of the High Plains ProcessingMitchell facility. The quarterly principal payments will increase $1.0 million on the anniversary date and continue until the maturity date of December 31, 2029. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the delayed-draw term loan was $18.7$221.5 million and $0$18.7 million as of December 31, 20242025 and 2023,2024, respectively. Under this loan, $235.3$32.5 million was available to be borrowed as of December 31, 2024.2025.

The lastfourth line of credit is another revolving term loan. Under this loan, our subsidiary may borrow funds, as needed, up to the credit line maximum, or $40.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line until the credit line’s maturity on December 31, 2029 at which time a balloon payment for the remaining balance is due. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0$— as of December 31, 20242025 and 2023.2024. Under this loan, $40.0 million was available to be borrowed as of December 31, 2024.2025.

The revolving, multiple advance, seasonal and delayed-draw loans with CoBank are set up with a variable rate option. The variable rate is set daily by CoBank. We also have a fixed rate option on all threefive 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 and multiple advance loans was 6.56%between 5.91% and 7.85%7.11% as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the interest rate on the seasonal loan is 6.56% and 2.31%, respectively. As of December 31, 2024, the interest rate on our subsidiary's delayed-draw and revolving term loans was 7.76%.2025. We were in compliance with all covenants and conditions under the loans as of December 31, 2024.2025.

We made a total of $175.7$202.2 million in capital expenditures on various property and equipment in 20242025 compared to approximately $104.3$175.7 million in 2023.2024. Significant purchases of property and equipment were made for the construction and development of the new Mitchell facility, which werewas contributedcompleted toand ourcommenced subsidiariesoperations asduring partthe fourth quarter of our investment into the facility.2025. Additional purchases were made to enhance the quality and efficiency of our Volga and Miller facilities. We anticipate spending approximately $248.0$28.2 million in capital purchases and improvements in 2025,2026, which will be financed from our multiplerevolving advanceterm loan and cash flows from operating activities.

(1)Represents principal and interest payments on our notes payable, which are included on our Consolidated Balance Sheet.Sheets.

See page F-10, Note 1 - Principal Activity and Significant Accounting Policies, of our audited consolidated financial statements for a discussion on the impact, if any, of the recently pronounced accounting standards.

During the quarter ended MarchJune 31,30, 2026, there were no material changes to the Risk Factors disclosed in Item 1A (Part I) of our 2025 Annual Report on Form 10-K.

The information in this quarterly report on Form 10-Q for the three-monthsix-month period ended MarchJune 31,30, 2026, (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, 2025. 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, 2025.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Revenue – Revenue increased by $107.6 million, or 91.3%, for the three months ended MarchJune 31,30, 2026, increased by $216.3 million, or 195.5%, compared to the same period in 2025. This significant growth was primarily driven by a 91.2%125.3% increase in soybean processing volumes,volumes partially offset byand a moderate35.0% declinerise in the average sellingprice prices forof soybean products.oil. The volumeincrease increasein processing volumes was directly attributableattributed to the commencement of operations at our Mitchell facility, which began operations in the fourth quarter of 2025.2025 The completion of this facilityand effectively doubled our total processing capacity,capacity. representingThe a material shiftrise in operationalthe scale.average Thesales increaseprice inof volumesoybean oil was slightly offset by a 2.9% decrease in average soybean meal prices compareddue to the first quarterimplementation of 2025.the Thisupdated pricingRVOs pressure resulted from expanded industry-wide crushing capacity acrossunder the U.S.RFS, thatwhich enteredincluded thereinstated marketprogram in 2024mandates and 2025.increased volume requirements.

Operating Expenses – Administrative expenses, including all selling, general, and administrative expenses, increased by $0.6 millionmillion, or 33.0%, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. The increase was primarily due to higher payroll, professional, and related costs associated with the start-up of the Mitchell facility.

Interest Expense – Interest expense increased by $4,995,000,$5.3 million, or 434.0%,434.5%, during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. The increase in interest expense was principally due to an increase in borrowings under our credit facilities. Additionally, approximatelythere $0.0were million$0 in interest costs capitalized related to the construction of our Mitchell facility were capitalized during the three months ended MarchJune 31,30, 2026, compared to $1.1$2.3 million in the same period of 2025.

Other Non-Operating Income – Other non-operating income (expense), including patronage dividend income, increaseddecreased $0.9$0.2 million during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. ThisThe increasedecline was primarily driventhe result of a decrease of $87,000 in interest income earned on investment proceeds held by aour $1.0 million risesubsidiaries in patronageconnection dividend income from prior investments in cooperatives duringwith the yearequity endedfinancing December 31, 2025, compared toof the yearMitchell ended December 31, 2024.facility.

Net Income/Loss – During the three-month period ended MarchJune 31,30, 2026, we generated a net lossprofit of $4.3$23.7 million compared to a net incomeloss of $4.4$1.0 million for the same period in 2025. The $8.7$24.7 million decreaseincrease was primarily attributable to aan decreaseincrease in gross margins.

Our primary sources of liquidity are cash generated from operations and borrowings from our two revolving lines of credit, which are discussed in the section titled “Indebtedness.” As of MarchJune 31,30, 2026, we had working capital, defined as current assets less current liabilities, of approximately $46.8$78.8 million, compared to $36.9$38.1 million on MarchJune 31,30, 2025. Working capital decreasedincreased primarily due to higher net income and long-term borrowings, partially offset by capital expenditures related to the construction and development of our Mitchell facility, ofin which we have a controlling ownership interest through our subsidiaries.interest.

Comparison of the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

The $42.8$12.9 million increase in cash flows used for operating activities between periods was largely due to a $76.0$72.6 million change in current operating assets and liabilities, offset by a $43.5$34.3 million change in net loss recognized on derivative instruments.instruments and a $14.0 million increase in net income.

The $45.8$105.5 million increasedecrease in cash flows used for investing activities between periods was due to a $45.9$105.3 million decrease in expenditures for purchases of various property and equipment used for the construction and development of our Mitchell facility, which was completed during the fourth quarter of 2025.

The $28.2$62.4 million increasedecrease in cash flows provided by financing activities between periods was principally due to a $26.9$73.6 million increasedecrease in net proceeds from seasonal borrowings with our lender.borrowings.

We hold various credit facilities 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 this loan, we may borrow funds, as needed, up to the credit line maximum, or $65.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. The available credit line decreases by $3.25 million every six months until the credit line’s maturity on March 20, 2030, at which time a balloon payment for the remaining balance is due. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $55.3$50.8 million and $19.7 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. As of MarchJune 31,30, 2026, there were no$4.5 million in additional funds available for borrowing under this loan.

The second credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. We may borrow up to $30.0$45.0 million until the loan's maturity on December 1, 2026. 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. TheThere principalwas no balance outstanding on this note was $17.8 million and $0 as of MarchJune 31,30, 2026 and December 31, 2025, respectively.2025. As of MarchJune 31,30, 2026, an additional $12.2$45.0 million was available for borrowing under this loan.

The third line of credit is a delayed-draw term loan. Under this loan, our subsidiary may borrow funds, as needed, up to $254.0 million until March 31, 2026. Principal payments of $4.5 million are made quarterly beginning six months after the Mitchell facility's completion date. The quarterly principal payments will increase by $1.0 million on the anniversary date and continue until the maturity date of December 31, 2029. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on this note was $254.0 million and $221.5 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. As of MarchJune 31,30, 2026, there were no additional funds available for borrowing under this loan.

The fourth credit line is a revolving long-term loan. Under this loan, our subsidiary may borrow funds, as needed, up to the credit line maximum of $40.0 million and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line until the credit line’s maturity on December 31, 2029, at which time a balloon payment for the remaining balance is due. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on this revolving term loan was $0 as of MarchJune 31,30, 2026 and December 31, 2025. As of MarchJune 31,30, 2026, an additional $40.0 million was available for borrowing under this loan.

The last credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance the operating needs of our Mitchell facility. BeginningSince July 1, 2025, our subsidiary may borrow up to $85.0 million until the loan's maturity on September 1, 2026. A 0.20% annual commitment fee is charged on any funds not borrowed; however, we may reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. The principal balance outstanding on this credit line was $43.9$26.0 million and $27,372,787$27.4 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. As of MarchJune 31,30, 2026, an additional $41.1$59.0 million was available for borrowing under this loan.

The revolving, seasonal, and delayed-draw term loans with CoBank are set up with a variable rate option. The variable rate is set daily by CoBank. We also have a fixed-rate option on all five loans, allowing us to lock in rates for any period between one day and the entire commitment period. The annual interest rate on the loans was between 5.88%5.87% and 6.78%7.07% as of MarchJune 31,30, 2026.

In 2025, the State of South Dakota Department of Transportation agreed to loan the Davison Regional Railroad Authority $18.3 million for purposes of making improvements to the railway infrastructure at our Mitchell facility. In consideration of this secured loan, we agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus interest. This guarantee was converted into a direct obligation of ours in May 2025, when we received the loan proceeds and assumed responsibility for paying the annual principal and interest payments. The note bears interest at a fixed rate of 2% per annum. Beginning in October 2026, we will make annual principal and interest payments of $1.43 million.million, Theseand these payments will continue through maturity on October 1, 2032, at which time a final balloon payment will be due for the remaining unpaid principal and any accrued interest.