x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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South Dakota Soybean Processors, LLC
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(Exact name of registrant as specified in its charter)
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South Dakota
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46-0462968
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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100 Caspian Avenue; PO Box 500
Volga, South Dakota |
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57071
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(Address of Principal Executive Offices
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(Zip Code)
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(605) 627-9240
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(Registrant's telephone number, including area code)
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¨
Large Accelerated Filer
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¨
Accelerated Filer
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x
Non-Accelerated Filer
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¨
Smaller Reporting Company
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(do not check if a smaller reporting company)
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Page
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March 31, 2017
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December 31, 2016
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(Unaudited)
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Assets
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Current assets
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Cash and cash equivalents
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$
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124,144
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$
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11,654,648
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Trade accounts receivable
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19,339,368
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20,352,581
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Inventories
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28,160,253
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32,393,421
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Margin deposits
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4,291,809
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2,400,892
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Prepaid expenses
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1,164,771
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1,456,642
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Convertible notes receivable
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2,000,000
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2,000,000
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Total current assets
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55,080,345
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70,258,184
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Property and equipment
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91,628,220
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89,832,688
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Less accumulated depreciation
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(45,884,959
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)
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(45,081,548
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)
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Total property and equipment, net
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45,743,261
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44,751,140
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Other assets
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Investments in cooperatives
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6,238,049
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6,231,233
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Total assets
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$
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107,061,655
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$
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121,240,557
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Liabilities and Members' Equity
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Current liabilities
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Excess of outstanding checks over bank balance
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$
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4,192,383
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$
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6,643,226
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Current maturities of long-term debt
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59,558
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59,558
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Accounts payable
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1,080,535
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1,456,802
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Accrued commodity purchases
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20,948,070
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35,688,152
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Accrued expenses
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1,972,907
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2,380,947
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Accrued interest
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157,237
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201,465
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Deferred liabilities - current
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266,646
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2,033,445
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Total current liabilities
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28,677,336
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48,463,595
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Long-term debt, net of current maturities and unamortized debt issuance costs
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13,499,206
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724,035
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Commitments and contingencies (Notes 6, 7,11 and 12)
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Members' equity
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Class A Units, no par value, 30,419,000 units issued and
outstanding at March 31, 2017 and December 31, 2016
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64,885,113
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72,052,927
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Total liabilities and members' equity
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$
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107,061,655
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$
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121,240,557
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2017
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2016
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Net revenues
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$
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94,759,341
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$
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84,697,915
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Cost of revenues:
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Cost of product sold
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77,723,855
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66,835,902
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Production
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5,978,442
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5,622,852
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Freight and rail
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8,295,972
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8,763,936
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Brokerage fees
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185,437
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163,348
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Total cost of revenues
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92,183,706
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81,386,038
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Gross profit
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2,575,635
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3,311,877
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Operating expenses:
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Administration
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856,251
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808,047
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Operating income
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1,719,384
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2,503,830
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Other income (expense):
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Interest expense
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(152,110
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)
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(70,155
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)
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Other non-operating income
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216,500
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455,855
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Patronage dividend income
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493,201
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860,846
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Total other income (expense)
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557,591
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1,246,546
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Income before income taxes
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2,276,975
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3,750,376
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Income tax benefit (expense)
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—
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6,209
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Net income
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$
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2,276,975
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$
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3,756,585
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Basic and diluted earnings per capital unit
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$
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0.07
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$
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0.12
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Weighted average number of capital units outstanding for calculation of basic and diluted earnings per capital unit
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30,419,000
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30,419,000
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2017
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2016
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Operating activities
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Net income
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$
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2,276,975
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$
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3,756,585
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Charges and credits to net income not affecting cash:
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Depreciation and amortization
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853,578
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787,622
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Gain on sales of property and equipment
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(20,100
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)
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(130,000
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)
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Non-cash patronage dividends
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(6,816
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)
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(6,225
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)
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Change in current assets and liabilities
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(13,688,081
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)
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(10,743,740
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Net cash (used for) operating activities
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(10,584,444
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)
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(6,335,758
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Investing activities
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Purchase of convertible note receivable
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—
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(750,000
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)
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Proceeds from sales of property and equipment
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20,100
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130,000
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Purchase of property and equipment
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(1,843,916
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)
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(654,931
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)
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Net cash (used for) investing activities
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(1,823,816
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)
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(1,274,931
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)
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Financing activities
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Change in excess of outstanding checks over bank balances
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(2,450,843
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)
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(3,649,553
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)
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Distributions to members
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(9,444,789
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)
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(15,048,481
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)
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Payments for debt issue costs
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(14,000
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)
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—
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Proceeds from long-term debt
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20,467,170
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26,283,229
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Principal payments on long-term debt
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(7,679,782
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)
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(17,978,968
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)
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Net cash provided by (used for) financing activities
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877,756
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(10,393,773
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)
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Net change in cash and cash equivalents
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(11,530,504
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)
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(18,004,462
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)
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Cash and cash equivalents, beginning of period
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11,654,648
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18,392,462
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Cash and cash equivalents, end of period
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$
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124,144
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$
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388,000
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Supplemental disclosures of cash flow information
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Cash paid during the period for:
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Interest
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$
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196,338
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$
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202,592
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Income taxes
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$
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—
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$
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27,770
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March 31,
2017 |
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December 31,
2016 |
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Past due:
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Less than 30 days past due
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$
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2,920,917
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$
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3,537,380
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30-60 days past due
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96,195
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109,345
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60-90 days past due
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—
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—
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Greater than 90 days past due
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—
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—
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Total past due
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3,017,112
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3,646,725
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Current
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16,322,256
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16,705,856
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Totals
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$
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19,339,368
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$
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20,352,581
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March 31,
2017 |
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December 31,
2016 |
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Balances, beginning of period
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$
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—
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$
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495,000
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Amounts charged (credited) to costs and expenses
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—
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322,065
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Additions (deductions)
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—
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(817,065
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)
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Balances, end of period
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$
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—
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$
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—
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March 31,
2017 |
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December 31,
2016 |
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Finished goods
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$
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22,372,362
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$
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19,740,287
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Raw materials
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5,541,413
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12,406,656
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Supplies & miscellaneous
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246,478
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246,478
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Totals
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$
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28,160,253
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$
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32,393,421
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2017
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2016
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Cost
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Accumulated Depreciation
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Net
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Net
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Land
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$
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543,816
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$
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—
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$
|
543,816
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$
|
543,816
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Land improvements
|
1,512,308
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(308,722
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)
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1,203,586
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1,226,137
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Buildings and improvements
|
18,919,718
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(8,035,905
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)
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10,883,813
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11,001,370
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|
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Machinery and equipment
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65,561,951
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(36,438,716
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)
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29,123,235
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|
|
28,746,321
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Company vehicles
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127,965
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(78,546
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)
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49,419
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|
54,513
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Furniture and fixtures
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1,572,634
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(1,023,070
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)
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|
549,564
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|
579,195
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|
||||
Construction in progress
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3,389,828
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—
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3,389,828
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2,599,788
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Totals
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$
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91,628,220
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|
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$
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(45,884,959
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)
|
|
$
|
45,743,261
|
|
|
$
|
44,751,140
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|
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March 31,
2017 |
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December 31,
2016 |
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Revolving term loan from CoBank, interest at variable rates (3.44% and 3.23% at March 31, 2017 and December 31, 2016, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.
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$
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12,787,388
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|
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$
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—
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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 matures June 1, 2020.
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785,376
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|
|
785,376
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Total debt before debt issuance costs
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13,572,764
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|
|
785,376
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|
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Less current maturities
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(59,558
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)
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(59,558
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)
|
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Less debt issuance costs, net of amortization of $0 and $4,532 as of March 31, 2017 and December 31, 2016, respectively
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(14,000
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)
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(1,783
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)
|
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|
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|
||||
Total long-term debt
|
$
|
13,499,206
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|
|
$
|
724,035
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2018
|
$
|
59,558
|
|
2019
|
60,749
|
|
|
2020
|
61,964
|
|
|
2021
|
1,390,493
|
|
|
2022
|
4,000,000
|
|
|
Thereafter
|
8,000,000
|
|
|
|
|
|
|
Total
|
$
|
13,572,764
|
|
|
|
|
As of March 31, 2017
|
||||||
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Balance Sheet Classification
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Asset Derivatives
|
|
Liability Derivatives
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||
Commodity contracts
|
Current Assets
|
|
$
|
9,019,601
|
|
|
$
|
10,212,469
|
|
Foreign exchange contracts
|
Current Assets
|
|
189,695
|
|
|
11,985
|
|
||
|
|
|
|
|
|
||||
Totals
|
|
|
$
|
9,209,296
|
|
|
$
|
10,224,454
|
|
|
|
|
As of December 31, 2016
|
||||||
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Balance Sheet Classification
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||
Commodity contracts
|
Current Assets
|
|
$
|
3,451,863
|
|
|
$
|
4,829,001
|
|
Foreign exchange contracts
|
Current Assets
|
|
32,794
|
|
|
20,463
|
|
||
|
|
|
|
|
|
||||
Totals
|
|
|
$
|
3,484,657
|
|
|
$
|
4,849,464
|
|
|
|
|
|
Net Gain (Loss) Recognized
on Derivative Activities for the |
||||||||
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|
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Three Months Ended March 31,
|
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|
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|
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2017
|
|
2016
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||
Commodity contracts
|
|
|
|
|
$
|
2,302,538
|
|
|
$
|
2,018,929
|
|
Foreign exchange contracts
|
|
|
|
|
207,553
|
|
|
(16,996
|
)
|
||
|
|
|
|
|
|
|
|
||||
Totals
|
|
|
|
|
$
|
2,510,091
|
|
|
$
|
2,001,933
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|
•
|
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”).
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•
|
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.
|
|
Fair Value as of March 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Inventory
|
$
|
(1,192,868
|
)
|
|
$
|
28,832,442
|
|
|
$
|
—
|
|
|
$
|
27,639,574
|
|
Margin deposits (deficits)
|
$
|
4,291,809
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,291,809
|
|
|
|
Fair Value as of December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Inventory
|
$
|
(1,377,137
|
)
|
|
$
|
33,159,913
|
|
|
$
|
—
|
|
|
$
|
31,782,776
|
|
Margin deposits
|
$
|
2,400,892
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,400,892
|
|
|
|
Three Months Ended March 31, 2017
|
|
Three Months Ended March 31, 2016
|
||||||||||
|
$
|
|
% of Revenue
|
|
$
|
|
% of Revenue
|
||||||
Revenue
|
$
|
94,759,341
|
|
|
100.0
|
|
|
$
|
84,697,915
|
|
|
100.0
|
|
Cost of revenues
|
(92,183,706
|
)
|
|
(97.3
|
)
|
|
(81,386,038
|
)
|
|
(96.1
|
)
|
||
Operating expenses
|
(856,251
|
)
|
|
(0.9
|
)
|
|
(808,047
|
)
|
|
(1.0
|
)
|
||
Other income (expense)
|
557,591
|
|
|
0.6
|
|
|
1,246,546
|
|
|
1.5
|
|
||
Income tax benefit (expense)
|
—
|
|
|
—
|
|
|
6,209
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
2,276,975
|
|
|
2.4
|
|
|
$
|
3,756,585
|
|
|
4.4
|
|
|
2017
|
|
2016
|
||||
Net cash used for operating activities
|
$
|
(10,584,444
|
)
|
|
$
|
(6,335,758
|
)
|
Net cash used for investing activities
|
(1,823,816
|
)
|
|
(1,274,931
|
)
|
||
Net cash provided by (used for) financing activities
|
877,756
|
|
|
(10,393,773
|
)
|
|
|
Payment due by period
|
||||||||||||||||||
CONTRACTUAL
OBLIGATIONS
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Long-Term Debt Obligations (1)
|
|
$
|
23,756,000
|
|
|
$
|
523,000
|
|
|
$
|
1,046,000
|
|
|
$
|
14,046,000
|
|
|
$
|
8,141,000
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Lease Obligations
|
|
11,000,000
|
|
|
2,772,000
|
|
|
4,851,000
|
|
|
3,009,000
|
|
|
368,000
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Totals
|
|
$
|
34,756,000
|
|
|
$
|
3,295,000
|
|
|
$
|
5,897,000
|
|
|
$
|
17,055,000
|
|
|
$
|
8,509,000
|
|
(1)
|
Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.
|
|
|
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
|
|
|
Dated:
|
May 12, 2017
|
By
|
/s/ Thomas Kersting
|
|
|
|
Thomas Kersting, Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated:
|
May 12, 2017
|
By
|
/s/ Mark Hyde
|
|
|
|
Mark Hyde, Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
Exhibit
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
|
|
Amendment to Master Loan Agreement ("Credit Agreement") with CoBank dated March 28, 2017
|
10.2
|
|
Amended and Restated Revolving Term Loan Agreement with CoBank dated March 28, 2017
|
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.
|
Section 7.2 under Article 7 of the Agreement is being added in its entirety and will read as follows:
|
|
COBANK, ACB
|
|
|
By:
|
/s/ Kelli Cholas
|
|
Name:
|
Kelli Cholas
|
|
Title:
|
Assistant Corporate Secretary
|
|
|
|
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
|
By:
|
/s/ Mark Hyde
|
|
Name:
|
Mark Hyde
|
|
Title:
|
CFO
|
Maximum Commitment Amount
|
From
|
Up to and Including
|
$22,000,000.00
|
March 20, 2018
|
September 19, 2018
|
$20,000,000.00
|
September 20, 2018
|
March 19, 2019
|
$18,000,000.00
|
March 20, 2019
|
September 19, 2019
|
$16,000,000.00
|
September 20, 2019
|
March 19, 2020
|
$14,000,000.00
|
March 20, 2020
|
September 19, 2020
|
$12,000,000.00
|
September 20, 2020
|
March 19, 2021
|
$10,000,000.00
|
March 20, 2021
|
September 19, 2021
|
$8,000,000.00
|
September 20, 2021
|
March 19, 2022
|
$6,000,000.00
|
March 20, 2022
|
September 19, 2022
|
$4,000,000.00
|
September 20, 2022
|
March 19, 2023
|
$2,000,000.00
|
March 20, 2023
|
September 20, 2023
|
|
COBANK, ACB
|
|
|
By:
|
/s/ Kelli Cholas
|
|
Name:
|
Kelli Cholas
|
|
Title:
|
Assistant Corporate Secretary
|
|
|
|
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
|
By:
|
/s/ Mark Hyde
|
|
Name:
|
Mark Hyde
|
|
Title:
|
CFO
|
|
|
|
1.
|
I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended
March 31, 2017
;
|
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.
|
/s/ Thomas Kersting
|
|
Thomas Kersting
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended
March 31, 2017
;
|
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.
|
/s/ Mark Hyde
|
|
Mark Hyde
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated:
|
May 12, 2017
|
By
|
/s/ Thomas Kersting
|
|
|
|
Thomas Kersting, Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
Dated:
|
May 12, 2017
|
By
|
/s/ Mark Hyde
|
|
|
|
Mark Hyde, Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|