OTC: SDSYA

We strive to maintain a competitive position in the marketplace by producing high quality products, operating highly efficient operations, and adding value to our core products to capture larger margins. We continue to research ways to improve overall efficiency by analyzing new methods of vertical integration, adding value to our products through additional processing investment, and studying applications of our products in the food and energy industries. Although a primary objective is to maximize cash distributions to our members from profits generated by operations, we recognize the need to maintain our financial strength through continued investment in, and capital improvements to, our business and facilities.

General Development of Business

In 1993, we were organized and operated as a South Dakota cooperative. In 2002, we reorganized and converted our legal form from a South Dakota cooperative to a South Dakota limited liability company. As a limited liability company, we are taxed as a partnership for U.S. tax purposes, meaning we are not subject to U.S. income tax but file information returns and report our income annually, and all of our income is passed through to and included in the taxable income of our members.

After completion of construction of our first facility in Volga in 1996, we commenced operations and processing of soybeans into soybean meal and hulls, and crude soybean oil. Since 1996, we have invested heavily internally by making significant capital improvements and expanding our business to include vertically integrated product lines and services. In 2002, we completed the construction of a refining facility and began refining crude soybean oil. In 2011, we completed the construction of a deodorizer and began selling deodorized oil directly to customers in the food industry. In 2014, we purchased the Miller oilseed processing plant, which has permitted expansion into new markets through the processing of identity-preserved soybeans, including non-genetically modified organisms (GMO) and organic soybeans.

In 2019, we invested into Prairie AquaTech, LLC and its affiliates, which are engaged in the research, development and production of high-quality protein feed derived from soybeans. Following our investment, Prairie AquaTech constructed and now operates a 45,000 square foot production facility immediately adjacent to our Volga facility. The facility has the capacity to produce up to 30,000 tons of feed annually, which is currently being marketed and sold to the fish and pet industries.

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In 2023, we took major steps toward developing and operating a new oilseed processing facility near Mitchell, South Dakota. We formed a subsidiary, High Plains Partners, LLC, a South Dakota limited liability company, to help finance and develop the Mitchell facility and made a large investment of approximately $86.4 million into it. High Plains Partners then formed its own subsidiary, HPP SD Holdings, LLC, a Delaware limited liability company, of which it owns and controls a majority interest, to hold a one-hundred percent ownership interest in High Plains Processing, LLC, a Delaware limited liability company, which is the owner-operating company of the Mitchell facility. The Mitchell facility is a switch-processing facility, making it capable of processing soybeans and other oilseed varieties. The facility has the capacity to process 35 million bushels of soybeans annually. Storage capacity at the facility includes approximately 4 million bushels of soybeans and other oilseeds, 8,000 metric tons of meal and hulls, 12.3 million gallons of crude oil, and 3.52 million gallons of refined oil. Construction of the facility commenced in September 2023 and was completed during the fourth quarter of 2025. We manage the operations of the facility pursuant to a management services agreement.

Industry Information

Globally, soybean production is concentrated in three principal countries: the U.S., Brazil, and Argentina. The United States Department of Agriculture (“USDA”) reports that, for the 2025 crop year, the U.S. produced approximately 4.26 billion bushels of soybeans, or approximately 27% of estimated world production; Brazil produced 6.5 billion bushels, or 42% of estimated world production; and Argentina produced 1.8 billion bushels, or 11% of estimated world production.

Soybean production fluctuates annually due to various factors, including weather, government policy, economic conditions, and prices of other commodities. Soybean consumption, by contrast, fluctuates less because soybeans are a staple commodity and are used globally. Yet, consumption fluctuates from time-to-time due to various factors, including general economic conditions, health concerns, population growth and trade policy.

Soybean processing generally involves the conversion of soybeans into three principal products: soybean meal, soybean hulls, and soybean oil. A bushel of soybeans, weighing approximately 60 pounds, yields, approximately forty-four pounds of meal, four pounds of hulls, and eleven pounds of crude oil. Approximately 80% of a soybean bushel is processed and sold as soybean meal or hulls, with the remaining 20% extracted as crude soybean oil. Soybean meal and hulls are sold and used as feed by livestock producers and fish farms. Soybean oil, which is produced in multiple grades, is sold to and used in the food, petroleum and chemical industries. The food industry typically integrates soybean oil in cooking and salad dressings, baking and frying fats, and butter substitutes.

Soybean processing facilities are generally located in areas where there are adequate sources of soybeans and a strong demand for soybean meal. In the U.S., soybean meal is predominantly fed to and consumed by the poultry and swine industries. On average, exports of soybean meal from the U.S. account for 25% to 35% of total production. The USDA estimates that approximately 60% of soybeans produced in the U.S. are processed domestically, 37% are exported as whole soybeans, and 3% are retained for seed and residual use. Historically, the U.S. exports more soybeans to China than any other country, followed usually by the European Union, Mexico, and Japan.

Soybean oil refineries are generally located adjacent to soybean processing facilities. Refined and crude soybean oil is shipped throughout the U.S. and for export. The USDA estimates that approximately 47% of domestic soybean oil production is used in food, feed and industrial applications, 49% in biofuels production, and 4% for export for various uses.

The soybean industry continues to introduce soy-based products as substitutes for various petroleum-based products including lubricants, plastics, ink, crayons and candles. Soybean oil is increasingly being used for conversion into biofuels, including biodiesel or renewable diesel. Biodiesel and renewable diesel, substitutes for standard, petroleum-based diesel fuel, has experienced rapid growth the past five years following the expansion of the Renewable Fuel Standard (RFS) program and resumption of the biodiesel blenders’ tax credit.

Soybean crushing and refining margins are generally cyclical in nature. The price of soybeans may fluctuate substantially from year to year, whereas the price of meal and oil generally tracks that of soybeans although not necessarily on a one-for-one basis; therefore, margins can be variable.

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Raw Materials and Suppliers

The principal raw material used in our production process is soybeans. We primarily purchase soybeans for our facilities from soybean producers and elevators located within approximately 50 miles of such facilities. The State of South Dakota and the upper Midwest, historically, has produced an adequate supply of soybean for our procurement and the soybean processing industry. In 2025, agricultural producers in South Dakota grew and harvested approximately 243 million bushels of soybeans, ranking it eighth among the top producing states in the U.S., as illustrated in the following table:

State Production (bushels)

Illinois
663 million

Iowa
610 million

Minnesota
361 million

Indiana
320 million

Nebraska
307 million

Missouri
277 million

Ohio
259 million

South Dakota
243 million

North Dakota
221 million

Arkansas
139 million

Producers in South Dakota, comparatively to previous years, grew and harvested approximately 232 million bushels in 2024, 222 million bushels in 2023, 197 million bushels in 2022, and 223 million bushels in 2021. Of this amount, we purchased and processed 40.8 million bushels in 2025, compared to 33.3 million bushels in 2024, 33.3 million bushels in 2023, 34.5 million bushels in 2022, and 34.9 million bushels in 2021.

We control the flow of soybeans into our facilities with a combination of pricing and contracting options. Threats to our soybean supply include weather (especially drought), changes in government programs, and competition from other processors and export markets.

Products and Services

The principal products produced at our Volga, Mitchell, and Miller facilities are soybean meal and hulls, and soybean oil and oil byproducts.

Sales, Marketing and Customers

Our meal and hulls are primarily sold to resellers, feed mills, and livestock producers as livestock feed. The meal is primarily sold to customers in the local area (typically within 200 miles of our facilities), Western U.S., and Canada. Our crude oil is sold to refining companies for further processing, refined at our facilities, and sold directly to the food industry for human consumption, or to the biofuel industry as transportation fuel.

In 2025, our percentage of sales by quantity of product sold within various markets is illustrated by the following table:

Market
Meal and Hulls

Oil

Local57%26%

Other U.S. States28%64%

Export15%10%

Over half of our products are shipped by rail. Deliveries to distant markets are shipped using U.S. rail carriers that can switch cars to other major railroads, allowing our facilities to ship product throughout the U.S. and to international export terminals.

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Dependence upon a Single Customer

None.

Competition

We are in direct competition with several other soybean processing companies in the U.S., many of which have significantly greater resources. The U.S. soybean processing industry is comprised primarily of approximately 20 different companies which operate approximately 70 facilities in the U.S. The industry is generally characterized as mature, consolidated and vertically-integrated, with four companies - Archer Daniels Midland (ADM), Bunge, Cargill and Ag Processing (AGP) - controlling nearly 85% of the processing industry.

We are one of two soybean processing companies operating in South Dakota. AGP operates a processing facility in Aberdeen, South Dakota, approximately 160 miles from our Volga facility. Our processing facilities represent approximately 2.7% of the total soybean processing capacity in the United States. Despite our size, we strive to maintain a competitive position in the market by producing high quality products, operating highly efficient operations at the lowest possible cost, and investing into value-add projects and companies.

Utilities

Volga Facility

We use natural gas and electricity to operate the crushing and refining facility in Volga, South Dakota. Natural gas is used for processing heat and drying soybeans. Our natural gas provider is NorthWestern Energy, Sioux Falls, South Dakota. We are at risk to adverse price fluctuations in the natural gas market but have the capability to use fuel oil and biofuel as a backup to natural gas in the event of delivery interruption or market conditions dictate. We also employ forward contracting to offset some of this risk. Our electricity provider is the City of Volga, South Dakota.

Miller Facility

We use electricity and propane to operate the mechanical press facility in Miller, South Dakota, as natural gas distribution lines are not located in the area. Our electricity provider is NorthWestern Energy, Sioux Falls, South Dakota, and CHS Farmers Alliance, Mitchell, South Dakota, is our propane provider.

Mitchell Facility

We use natural gas and electricity to operate the crushing and refining facility in Mitchell, South Dakota. Our natural gas provider is Northwestern Energy, Sioux Falls, South Dakota and our electricity provider is Central Electric Cooperative, Mitchell, South Dakota.

Employees

At December 31, 2025, we employed approximately 209 individuals, all but nine of whom are full-time. We have no unions or other collective bargaining agreements.

Government Regulation and Environmental Matters

Our business is subject to various laws and regulations that are designed to protect the environment, which are administered by the U.S. Environmental Protection Agency, the South Dakota Department of Agriculture and Natural Resources, and local government agencies. These laws and regulations govern the discharge of materials to the environment, air and water; reporting storage of hazardous wastes; transporting, handling and disposition of wastes; and the labeling of pesticides and similar substances. Our business is also subject to laws and regulations administered by other federal, state, local and foreign governmental agencies which govern the processing, storage, distribution, advertising, labeling, quality and safety of feed and grain products. Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of products.

The sale of soybean oil for human consumption is impacted by the regulation of trans-fat, which results from the hydrogenation process of products such as soybean oil and plant oils. The U.S. Food and Drug Administration

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requires that food processors disclose the level of trans-fatty acids contained in their products. In addition, various local governments in the U.S. have enacted, or are considering enacting, restrictions on the use of trans-fats in restaurants. As a result, many food manufacturers have reduced the amount of hydrogenated soybean oil included in their products or switched to other oils containing lower amounts of trans-fat.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to the Securities Exchange Act of 1934, as amended, are filed with the SEC. These reports and other information filed by us with the SEC are available on the SEC website (www.sec.gov). The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Our website is at www.sdsbp.com.