6.8. IntangiblesCapital Resources and GoodwillLiquidity   On June 30, 2006,The Company is a party to an Amended and Restated Credit Agreement, as amended, with Metropolitan Life Insurance Company as lender and CoBank, ACB as lender and administrative agent (the “Credit Agreement”).  The Company has had limited access to capital under the Credit Agreement and the lenders under the Credit Agreement have modified certain financial covenants in order to allow compliance with these covenants by the Company.  As part of its efforts to obtain a refinancing of the Credit Agreement, the Company has completed the MoArk Acquisition.  The purchase price consisted of $38,000 paid in cash, the issuance by the Company of a $17,000 promissory note, and $5,000 paid by the issuance of 697,350 newly-created Class B Units. The $17,000 promissory note contains a contingent warrant provision which allows the note holder, at the Holder’s option, to exercise that number of units of membership interests equal to ten (10%) of the issued and outstanding units of the Company, if the note has not been paid in full on or before the Maturity Date. Also on June 30, 2006,following steps:

On March 11, 2008, the Company entered into an amendedextension and restated creditamendment agreement as described in Liquiditywith the lenders under the Credit Agreement that extends the termination date of a $2,500 short-term revolving note issued under our Restated and Capital Resources.Amended Credit Agreement from February 29, 2008 to July 31, 2008.  The Company has allocated the purchase price in accordance with SFAS 141 “Business Combinations” and recorded $19,000 of intangible assets to be amortized over the relevant lifecommencement of the underlying assets, and $22,800 in goodwill that is not amortized, but will be tested at least annually for impairmenteffective date of financial covenants under SFAS 142, “Goodwill and Other Intangible Assets.”  During the quarter ended MayCredit Agreement has also been delayed from March 1, 2008 to July 31, 2007, the Company considered whether an event had occurred or circumstances had changed that more likely than not would reduce the fair value of the Company below its carrying amount. Examples of such events or circumstances include:2008.

a.             A significant adverse change in legal factors or in the business climate;

b.             An adverse action or assessment by a regulator;

c.             Unanticipated competition;

d.             A loss of key personnel; or

e.             A more-likely-than-not expectation that a significant portion of the Company will be sold or otherwise disposed of.

After such consideration, Management concluded that circumstances and events did not indicate that an interim test of goodwill recoverability was required.

7.9. ContingenciesLegal Proceedings   On March 29, 2007 theThe Attorney General of Iowa files ahas filed suit in relation to the Thompson, Iowa Waste Water Facility.wastewater facility.  Please refer to Item 1. Legal Proceedings under Part IIII. of this Quarterly Report on Form 10-Qfiling for a fullermore detailed description of this and other legal proceedings involving the Company.

8.             Credit Agreement   Effective April 30, 2007, Golden Oval Eggs, LLC (the “Company”) and its two subsidiaries, GOECA, LP and Midwest Investors of Iowa, a cooperative (collectively, the “Borrowers”) entered into a First Amendment to Amended and Restated Credit Agreement (the “Amendment”) with Metropolitan Life Insurance Company, as a bank, CoBank, ACB and the other financial institutions or entities that are signatories thereto (the “Lenders”).  CoBank, ACB is also the administrative agent for the Lenders.matters

The Lenders and the Borrowers entered into an Amended and Restated Credit Agreement dated as of June 30, 2006 (the “Credit Agreement”).  The Amendment amends certain provisions of the Credit Agreement, including covenants relating to net worth, current ratios, working capital, leverage ratios, fixed charge coverage ratios.  By the Amendment, the Lenders also waived defaults of these covenants for the period ending February 28, 2007, as well as certain other covenants relating to compliance with laws and environmental matters.  Further, the Amendment extended the termination date of the Credit Agreement from April 30, 2007 to March 1, 2008. Please refer to 8K filed May 9, 2007 for details on Credit Agreement. 8K filed May 9, 2007 for details on Credit.

7

markets. Agricultural commodity prices influence purchased eggs and open market liquid egg prices although not necessarily in the same direction, to the same degree or at the same time.

Results of Operations

Results of Operations — Third Quarter Fiscal Year 20072008 Compared to Third Quarter Fiscal Year 20062007

Net SalesNet sales for the third quarter of fiscal 20072008 were $53.0$56.6 million, an increase of $33.8$3.6 million, or 176%6.8% over the third quarter ofin the prior fiscal year.  Business acquired in the MoArk acquisition accounted for $33.3 million, or 98% of the increase.  The remainder of the increase or $0.5 million is from the Company’s interest in United Mills, which is consolidated in the financial statements, and is due to an increase in United Mills’ sales because of higher feed costs .  Sales of liquid unpasteurized eggs from the facilities in place prior to the MoArk acquisition were unchanged. Sales pounds from those facilities to outside parties declined by 20%, caused by increased utilization of output in company owned facilities, offset by an increase in average selling prices of 25.2%. Pounds sold in the third quarter were 66.5 million, a decrease of fiscal 2007 were 94.1 million, an increase of 39.627.5 million, or 73% over41.4%, less than the same period year ago.  The decrease is due to a significant reduction of the Millersburg, Ohio facility egg supply (15.9 million pounds) which resulted in an impairment charge in the prior year.  Pounds from the facilities acquired from MoArk accounted for 50.8 millionfiscal year ended August 31, 2007.  Additional causes of the increase, offsetting an 11.2 million pound decline include a decrease in pounds soldavailable to outside partiessell from production at the Renville Minnesota and Thompson Iowa facilities as total production declined approximately 9% due to reduced bird numbers, and more production is used internally asa result of reductions in flock sizes associated with an ingredientincrease in the further processed plants.  Shipmentsamount of space allotted to company facilities are not accounted foreach bird in compliance with animal care guidelines promulgated by industry groups (2.0 million pounds), and a decrease in pounds available to sell as sales on a consolidated basis.result of us exiting certain low margin businesses (9.6 million pounds).  The average selling price per pound for the quartersold increased from $0.353$0.541 to $0.564,$0.779, an increase of $0.211,$0.238, or 59.8% over the prior year same period, with $0.157 due to the inclusion44.0%, as a result of further processed products which command a higher selling price per poundprices executed in the marketplace, as well as overall strengthening inan environment of sharply increased liquid whole egg prices at the Renville and Thompson locations, which accounted for $0.054 of the increase.markets.

Cost of Goods Soldgoods sold.Cost of goods sold for the third quarter of fiscal 20072008 was $47.0$47.4 million, an increase of $30.8$0.4 million, or 190% of cost of goods sold for0.9%, as compared to the third quarter of fiscal 2006.2007.  The majority of the increase was associated with the acquired businesses.  Gross profit for the period doubled from $3.0 million a year ago to $6.0 million in the current period.  Since the Company does not produce all of its liquid egg needs from its own birds, it is a purchaser of eggs and liquid eggs in the market.  An increase in egg and liquid egg pricing that increases sales also increases cost of goods, although not proportionately.  Costs did grow faster than sales, resulting in a decline in gross margin as a percentage of sales from 15.6% in the third quarter 2006 to 11.3% in the current quarter.  Feed prices rose by more than 50% per ton, driven by higher corn and soybean meal costs.  This impact of the increase was mitigated somewhat by the fact that asprimarily a result of the MoArk acquisition on June 30, 2006, feed alone has dropped from 34% of sales for the third quarter of 2006 to 19% for the current quarter.  The impact of higher feed costs at the Renville and Thompson facilities was $2.4 million unfavorable variance for the quarter. In the acquired businesses, prices for carton eggs rose to very high levels, and with them,increases in the cost of feed, purchased eggs purchased for breaking as eggs were diverted to supermarkets and other users of carton eggs.  In contrast to the second quarter, the price ofpurchased liquid eggs did moveexceeding the reduction in relation to the cost of purchased eggs, allowing the acquired facilities to capture the margin to cover the costs of converting the eggs into liquid, significantly improving profitability.pounds needed for production.

Operating Expensesexpenses. Operating expenses for the third quarter of fiscal 20072008 were $4.7$4.8 million, an increase of $2.8$.04 million, or 144%.7%, fromas compared to the third quarter of fiscal 2006.  As2007. The slight increase was due to increased discretionary spending.

Total other income(expense). Total other income(expense) for the casethird quarter of fiscal 2008 was $(1.7) million, an improvement of $.6 million from the prior year period. Interest expense decreased $0.6 million primarily as a result of the elimination of interest on the $17.0 million subordinated debt that was forgiven in the second quarter of fiscal 2008.

Income Taxes.  As a limited liability company, the Company expects to be treated as a partnership for federal income tax purposes. Therefore, the Company will pay no federal income tax and instead, the Company’s members will include their pro-rata share of the Company’s net income or loss as an item of income for the purposes of their own federal income tax returns.

Net Income(Loss).  Operations for the third quarter ended May 31, 2008 resulted in a profit of $2.8 million, or a profit of $.51 per basic members’ unit and $.44 per diluted members’ unit, as compared to a loss of $(1.0) million, or $(0.19) per basic and diluted members’ unit for the quarter ended May 31, 2007.

The Company’s financial performance in the current quarter may not be indicative of future quarters due to seasonal factors and volatility in both selling prices and cost of materials purchased, as well as industry factors in an intensely competitive industry.

Results of Operations — Nine Months ended May 31, 2008 Compared to Nine Months ended May 31, 2007

Net Sales.Net sales for the first twonine months of fiscal 2007 were $165.2 million, an increase of $18.1 million, or 12.3% over the first nine months of the prior fiscal year. The average selling price per pound increased from $0.478 to $0.729, an increase of $0.251, or 52.5% over the prior year same period. Total pounds shipped to customers for the first nine months of fiscal 2008 were 214.8 million, a decrease of 77.8 million pounds or 26.6%. The increase in average selling price was enough to offset the sales pounds decrease caused by the reduction in supply from the Millersburg facility (47.7 million pounds), compliance with animal care guidelines promulgated by industry groups (6 million pounds), and a decrease in pounds

9

available to sell as a result of us exiting certain low margin business lines and the seasonality of the business (24.1 million pounds).

Cost of Goods Sold.  Cost of goods sold for the first three quarters of fiscal 2008 was $148.5 million, an increase of $14.5 million or 10.8% of the figure for same period of fiscal 2007 and less than the percentage increase in sales dollars, resulting in an increase of $3.6 million in gross profit. Significant unfavorable cost pressures were experienced in the period.  Feed prices have risen substantially, driven by higher corn and soybean meal costs, resulting in $7.6 million of additional feed expense at the Renville and Thompson facilities.  The cost of purchased liquid and eggs increased by $11.0 million, or 21.9%, driven by the same pricing environment reflected in the increase in selling prices.  Improvements in operations resulted in reductions in direct and indirect operating costs of $4.1 million.

Operating Expenses.Operating expenses for the first three quarters of fiscal 2008 were $18.1 million, an increase of $2.3 million, or 14.4%, from the same period of fiscal 2007. The increase is primarily due to additional sales, management and administrative expenses associated with the MoArk acquisition, as the majorityimpairment of the employees of the acquired facilities became Golden Oval employees.  Additionally, marketing expenses, including the Land O’ Lakes licensed products test market costs, are incrementaltrademark of $3.2 million recorded in the current period. Amortization of intangible assets and deferred financing costs associated with the MoArk Acquisition accounted for $0.4 million for the period.  Operating expenses decreased as a percent of net sales from 10.1% from third quarter of fiscal 2006 to 9.0% in the third quarter of fiscal 2007.

Income from Operations     The cumulative effect of the events described above was to produce positive income from operations of $1.3 million, and increase of $0.2 million, or 20% over same quarter last year. This is also the firstsecond quarter of the current fiscal year with additional impairment expense and reserves relating to report anthe termination of the Land O’ Lakes license and withdrawal from certain unprofitable market segments of $.5 million.   Other operating profit.expenses, primarily marketing, were reduced by $1.4 million.

Total Other ExpenseIncome (Expense).Total other expenseincome increased from $0.5$(6.7) million to $2.3$10.7 million, an increase of $1.8$17.4 million for the period.  Nearly all of theThe increase is due almost exclusively to the forgiveness of the $17.0 subordinated note.  Interest expense decreased $0.4 million, primarily reflecting the elimination of interest expenses on higher debt levels associated with the acquisition.forgiven note for the fiscal third quarter.

Income TaxesTaxes. As a limited liability company, the Company expects to be treated as a partnership for federal income tax purposes.  Therefore, the Company will pay no federal income tax and instead, the Company’s members will include their pro-rata share of the Company’s net income as an item of income for the purposes of their own federal income tax returns.

Net Income (loss).  Net income for the quarternine months ended May 31, 20072008 resulted in a lossprofit of $(1.0)$9.3 million, or $(0.19)$1.71 per basicweighted average units and diluted members’ unit of $1.61, as compared to a profitloss of $0.5$(9.4) million, or $0.11$(1.74)  per members’ unit weighted average and diluted unit for the same period a year ago.

Results of Operations — Nine Months ended May 31, 2007 Compared to Nine Months ended May 31, 2006

Net SalesNet sales for the first nine months of fiscal 2007 were $147.1 million, an increase of $89.8 million, or 157% over the first nine months of the prior fiscal year.  Business acquired in the MoArk acquisition accounted for $89.8 million, or 100% of the increase.  A  $2.8 million  increase in sales attributable to the Company’s interest in United Mills, which is consolidated in the financial statements, due to an increase in United Mills’ sales because of higher feed costs , is offset by a $2.8 million decrease in sales of liquid unpasteurized eggs from the facilities in place prior to the acquisition. The decline in sales pounds to outside parties of 14.3%, caused by increased utilization of output in company owned facilities, is partially offset by an increase in average selling prices of 10.5%. Pounds sold in the first nine months of fiscal 2007 were 292.6 million, an increase of 132.9 million, or 83.2% over the same period year ago.  Pounds from the facilities acquired from MoArk accounted for 155.7 million of the increase, offsetting a 22.8 million pound decline in pounds sold to outside parties from the Renville, Minnesota and Thompson, Iowa facilities as total production declined approximately 14.3% due to reduced bird numbers, and more production being used internally as an ingredient in the further processed plants.  Shipments to company facilities are not accounted for as sales on a consolidated basis.  The average selling price per pound for the first nine months of fiscal 2007 increased from $0.359 to $0.503, an increase of $0.144, or 40.1% over the prior year same period, with $0.137 due to the inclusion of further processed products which command a higher selling price per pound in the marketplace, as well as overall strengthening in liquid whole egg prices at the Renville and Thompson locations, which accounted for $0.007 of the increase.

Cost of Goods Sold             Cost of goods sold for the first three quarters of fiscal 2007 was $134.0 million, an increase of $86.8 million or 184% of the figure for same of fiscal 2006 and slightly less than the amount that sales increased, resulting in an increase of $3.0 million in gross profit on increased sales.  The majority of the increase was associated with the acquired businesses.  Significant unfavorable cost pressures were experienced in the period.  Feed prices have risen by more than 33% per ton, driven by higher corn and soybean meal costs, resulting in $5.5 million of additional feed expense at the Renville and Thompson facilities.  In the acquired businesses, two factors had a negative impact on results. First, prices for carton eggs rose to very high levels, and with them, the cost of eggs purchased for breaking as eggs were diverted to supermarkets and other users of carton eggs.  Secondly, in the first half of the year the value of the liquid eggs did not move simultaneously higher, thereby substantially reducing or eliminating the margin to cover the costs of converting the eggs into liquid.  The acquired facilities typically captured this margin to break an egg before adding value, and as this margin shrank, results in the acquired facilities were adversely affected.  The decline in gross profit as a result of the cost pressures effectively accounted for the loss for the period.

Operating ExpensesOperating expenses for the first three quarters of fiscal 2007 were $15.8 million, an increase of $9.6 million, or 156%, from the same of fiscal 2006. The increase is primarily due

to additional sales, management and administrative expenses associated with the MoArk Acquisition, as the majority of the employees of the acquired facilities became Golden Oval employees.  Additionally, marketing expenses, including the Land O’ Lakes licensed products test market costs, are incremental in the current period. Amortization of intangible assets and deferred financing costs associated with the MoArk Acquisition accounted for $1.3 million for the period.  Operating expenses were constant as a percent of net sales at 10.8%.

Total Other ExpenseTotal other expense increased from $1.3 million to $6.7 million, an increase of $5.4 million for the period.  Interest expenses on higher debt levels associated with the acquisition accounted for the entire $5.4 million.

Income Taxes                        As a limited liability company, the Company expects to be treated as a partnership for federal income tax purposes.  Therefore, the Company will pay no federal income tax and instead, the Company’s members will include their pro-rata share of the Company’s net income as an item of income for the purposes of their own federal income tax returns.

Net Income (loss)                 Net income for the nine months ended May 31, 2007 resulted in a loss of $(9.4) million, or $(1.74) per basic and diluted members’ unit, as compared to a profit of $2.7 million, or $0.57 per unit for the same period a year ago.

Liquidity and Capital Resources

The Company’s working capital at May 31, 20072008 was $0.1$2.3 million compared to $6.8$(4.3) million at August 31, 2006.2007.   The Company’s current ratio was 1.001.06 at May 31, 20072008 compared to 1.260.90 at August 31, 2006.2007. On June 30, 2006,March 11, 2008, the Company entered into an amendedExtension and restated credit agreementAmendment Agreement with CoBank ACBits lenders that extended the termination date of all revolving loans from March 1, 2008 to July 31, 2008.  Additionally, the principal payments for the Tranche A and Tranche B term loans were deferred for the Metropolitan Life Insurance Company.months of March, April, May, June and July of 2008 until the maturity date of the applicable loan.  The Company is current on all interest and principal payments as required for the quarter ending May 31, 2008 and complied with its minimum monthly EBITDA requirement for all three months of the third quarter of fiscal 2008. The amended and restated credit agreement providedprovides for a $93.0 million$95.5 line of credit, consisting of a $15.0 million revolving note terminatingthat terminates on April 30, 2007March 1, 2008, a short term revolving note of $2.5 million that also terminates on March 1, 2008 and $78.0 million in term notes duewith principal repayment schedules resulting in retirement beginning in 2014.  The amendedCertain financial benchmarks and restated credit agreement provided $38.0 million in new debt to finance the MoArk acquisition and amended certain restrictive covenantsratios contained in the prior agreement, as amended.    On April 30, 2007, the Company entered into a first amendment to the existing credit agreement which renewed the $15.0 million revolving note through March 1, 2008 and amended certain covenants.  For the third quarter of 2007, the Company was current on all interest and principal payments.  Further, for the quarter ending May 31, 2007 the Company is required by certain provisions of its credit agreements to maintain a minimum tangible net worth of not less than $28.0 million plus 40% of earnings plus 100% of equity contributed after Augusthave had their effective dates extended until July 31, 2006.  The Company met this covenant for2008.  In the third quarter of 2007.  For the subsequent quarters of the term of the revolving line of credit,interim period, the Company must meet the tangible net worth covenant described above, as well as covenants requiringproduce a minimum current ratioEBITDA of not less than 1.0$1.0 million per month.  To the extent that EBITDA exceeds $1.0 million in any month, up to 1.0; working capital of no less than zero; a leverage ratio of less than 5.0$0.2 million is to 1.0; a fixed charge coverage ratio no less than 1.00be placed in an interest bearing escrow account to 1.

Whilebe used for the Thompson wastewater project.  The Company has agreed to explore strategic alternatives on terms, conditions and time frames mutually agreed between the Company has collateral in excess of the cap used to determine availability on the revolving loan portion ofand its facility, thelenders.

The Company may require significant additional capital resources in order to proceed with potential future expansions or to otherwise respond to competitive pressures in the industry.   In addition, the Company may seek additional capital from an offering of itsour equity securities or by incurring additional

10

PART II.    OTHER INFORMATION

Item 1. Legal Proceedings

As previously disclosed, three notices of violation were issued against us by the Iowa Department of Natural Resources regarding alleged violations at our

Our Thompson, Iowa facility ofhas an industrial wastewater treatment facility designed to treat wastewater from egg breaking.  The Thompson facility also has an associated National Pollution Discharge and Elimination System (“NPDES”) permit limits for biochemical oxygen demand, total suspended solids, and ammonia nitrogen.  Two additional notices of violation have since been issued on the same matter.  On December 5, 2006,from the Iowa Environmental Protection Commission referredDepartment of Natural Resources (“IDNR”) that governs the matterquality of the wastewater influent to and effluent from the Iowa Attorney General.treatment facility.

On March 29, 2007, the Iowa Attorney General’s office filed suit against Golden Oval Eggs, LLCus requesting civil penalties for and injunctive relief from furtheragainst alleged NPDES permit violations. violations for exceeding discharge limits for biochemical oxygen demand, total suspended solids, and ammonia nitrogen.

We have received an extension from the Iowa District Court for Winnebago County until August 31, 2007 to submit our answer, which will allow time for us to negotiate a consent decree with the State of Iowa. We are currentlybeen negotiating the terms of the consent decreea Consent Decree with the Iowa Attorney General’s office, and weoffice.  We expect the terms of the Consent Decree to enjoin us from further violations, include an obligation by us to make improvements to the Thompson wastewater treatment system to prevent further permit violations on an agreed-upon timeline, as well as the amountand make payment of a $200,000 civil penalties. penalty.

In addition, management has begunFebruary 2008, we received from IDNR a competitive bidding processpermit for construction of permanent improvements to the Thompson wastewater treatment system, and our Boardwe are in the process of Managers has established a preliminary budgetpreparing for capitalconstruction of the improvements, spending.  which we anticipate will be completed no later than April 30, 2009.  In addition, operational changes have been made at the wastewater facility that have achieved significant improvement in compliance with the NPDES permit requirements.

At this time, the cost associated with the interim solution, permanent improvement to the wastewater treatment facility complianceis estimated to be approximately $2.5 million. The Company is securing bids to determine final costs for the project.

On March 27, 2008, we received a subpoena from the U.S. Department of Justice, through the U.S. Attorney for the Eastern District of Pennsylvania, requesting documents for the period of January 1, 2002 through March 27, 2008 relating primarily to the pricing, marketing, and sales of our egg products. We intend to fully cooperate with the NPDES permit,Department of Justice request. We cannot predict what, if any, impact this inquiry and the amountany results from this inquiry could have on our current or future operations or results of penalty or fine imposed by the Iowa Attorney General cannot be estimated, however they may be significant, both individually and in the aggregate.operations.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

The Company’s Annual Meeting of Members was held on April 4, 2007. Of the 4,721,527 Class A Units and 697,350 Class B Units outstanding and entitled to vote at the meeting as of February 28, 2007,

2,198,651 Class A Units and no Class B Units were present, either in person or by ballot. The following describes the maters considered by the Company’s members at the Annual Meeting, as well as the results of the votes cast at the Annual Meeting.

Proposal 1: Election of two managers to serve on the Company’s Board of Managers for terms expiring at the Annual Meeting of the Company’s Members to be held in 2010 or until such manager’s successor is elected and shall qualify.None.

The terms of Messrs. Chris Edgington, Marvin Breitkreutz, Mark Chan, Howard Dahlager and James N. Reith continued after the Annual Meeting although Mr. Reith resigned as a manager effective April 19, 2007.

Item 5. Other Information

None.

14