Liquidity and Capital Resources

The Company’s working capital at February 29,May 31, 2008 was $(3.4)$2.3 million compared to $(4.3) million at August 31, 2007.   The Company’s current ratio was 0.921.06 at February 29,May 31, 2008 compared to 0.90 at August 31, 2007. On March 11, 2008, the Company entered into an Extension and Amendment Agreement with its 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 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 February 29,May 31, 2008 and complied with its minimum monthly EBITDA requirement for all three months but one as of the end of the secondthird quarter of fiscal 2008. The amended and restated credit agreement provides for a $95.5 line of credit, consisting of a $15.0 million revolving note that terminates on March 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 with principal repayment schedules resulting in retirement beginning in 2014.  Certain financial benchmarks and ratios contained in the credit agreements have had their effective dates extended until July 31, 2008.  In the interim period, the Company must produce a minimum EBITDA of $1.0 million per month.  To the extent that EBITDA exceeds $1.0 million in any month, up to $200$0.2 million is to be placed in an interest bearing escrow account to be 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 and its lenders.

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 our equity securities or by incurring additional

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indebtedness, or both.  No assurance can be given that additional working capital will be obtained in an amount that is sufficient for the Company’s needs, in a timely manner or on terms and conditions acceptable to the Company or its members.  The Company’s financing needs are based upon management estimates as to future revenue and expense. Our business plan and our financing needs are also subject to change based upon, among other factors, market and industry conditions, our ability to increase cash flow from operations and our ability to control costs and expenses.  Our efforts to raise additional funds from the sale of equity may be hampered by the fact that our securities are illiquid and are subject to restrictions on transfer. Our efforts to raise additional funds from incurring additional indebtedness may be hampered by the fact that the Company has significant outstanding indebtedness and all of the Company’s assets are pledged to its lenders to secure existing debt.

The Company was unable to meet all of the terms and conditions associated with the commitment from a new lender received on December 13, 2007, and the commitment has expired.

The Company’s long-term debt at February 29,May 31, 2008, including current maturities, was $75.8$75.7 million compared to $94.2 million at August 31, 2007. As of February 29,May 31, 2008, $14.7$13.5 million has been drawn against the $17.5 revolving line of credit including the $2.5 million short term revolving note, compared to $11.9 million as of August 31, 2007. Substantially all trade receivables and inventories collateralize the Company’s line of credit and property, plant and equipment collateralize the Company’s long-term debt under its credit agreement.

With respect the improvements that will be required to the Thompson, Iowa wastewater system (see Part II, Item 1 “Legal Proceedings”), the Company is currently estimatingsecuring bids to establish the cost of these improvements.

On February 15, 2008, the Company and Land O’ Lakes executed an agreement whereby the purchase price of the Egg Products Division of MoArk was reduced by $17.0 million and an equal amount of the subordinated note used to finance the acquisition was reduced.  Additionally, the Company issued a Warrant for the purchase of up to 880,492 newly authorized convertible preferred units in exchange for the forgiveness of accrued interest on the subordinated note of $3.2 million. The 697,350 Class B units held by Land O’ Lakes were converted to Class A units per the agreement.

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Net cash flow from operations was $(0.7)$1.6 million for the first twothree quarters of fiscal 2008 compared to $(0.3)$1.0 million in the first halfthree quarters of fiscal 2007. Principal payments on long-term debt were $1.5 million and additions to fixed assets were $0.2 million.  There were no distributions to unit holders during the first two quarters of fiscal 2008.  An additional $0.4$0.6 million was added to restricted cash to provide for the principal paymentand interest payments on the 1999 and 2001 bonds due in July 2008.

Critical Accounting Policies and Estimates

The above discussion and analysis of our results of operations and financial condition are based upon our consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events may change and even the best estimates and judgments may require adjustment. For a complete description of the Company’s significant accounting policies, please see Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended August 31, 2007. There have been no changes to critical accounting policies identified in our Annual Report on Form 10-K for the year ended August 31, 2007.

Tangible Assets

We continually evaluate the carrying value of our tangible assets for events or changes in circumstances that indicate that the carrying value may not be recoverable. As part of this reevaluation, if impairment

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indicators are present, we estimate the future cash flows expected to result from the use of this asset and its eventual disposal. During the secondthird quarter of Fiscalfiscal year 2008, no triggering events were identified that would have resulted in the Company recognizedcarrying value of any asset to be deemed unrecoverable. As a result, no impairment tested was initiated.

 Recorded impairment of tangible assets for two discontinued operations and the decision to exit the Retail test market. We determined that an impairment of  $0.2 million had occurred at the Vernon facility in California. The Vernon facility has ceased all production operations due to a decrease of egg supply and excess production capacity. The Abbeville facility incurred a loss of egg supply and has terminated the breaking of shell eggs. This resulted in impairment of $0.2nine months ending May 31, 2008 is $.5 million. With the conclusion of the test marketing of retail sales in the Northeast, the Company has cancelled license agreements with Land O’Lakes (Form 8K filed 2/20/2008) and has determined that the company will exit the retail test market. Impairment charges of $0.5 million were incurred. All impairment charges were recorded in the operations section of the Statement of Operations.

Intangible Assets

As a result of the MoArk Acquisition that was completed June 30, 2006, we acquired intangible assets consisting of licenses to use certain brand names and trademarks, licenses of certain product technology and certain patents and patent applications.  We have recorded the excess of consideration paid over assets acquired.  Financial Accounting Standard No. 141 “Business Combinations” dictates that values be assigned to certain intangible assets.  We have accordingly made estimates of the values to be carried on our books for intangible assets acquired, including registered and unregistered trade names and trademarks, licensing agreements, and patents and patent applications.  The values of these assets are determined by forecasting future cash flows and assessing the risk of achieving the forecast.  Those intangible assets with finite lives will be amortized over a period matching the life of the underlying intellectual property, for example, the term of the license agreement or the remaining life of the patent. With the termination of the retail test market and the cancelling of Land O’Lakes licensing agreements (Form 8K filed 2/20/2008), impairment was recognized for the intangible Land O’Lakes license agreement of $3.2 million. This was recorded in the operations section of the Statement of Operations. For the third quarter ending May 31, 2008, no triggering events were identified that would have resulted in the carrying value of any intangible asset to be deemed unrecoverable. As a result, no impairment testing was initiated.

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Those intangibles with indefinite lives have been recorded as goodwill, and will not be amortized over a fixed time period.  Rather, they will be tested for impairment when impairment indicators are deemed present.  As of February 29, 2008 we tested for impairment under the provisions of SFAS No. 142. The results of the impairment test indicated that the fair value of the single entity reporting unit exceeded the carrying value of the reporting unit. As a result, no provision for impairment was required.required for the first two quarters of fiscal 2008. No impairment testing was done in the third quarter ending May 31, 2008 due to no triggering events being present.

Impact of Recently Issued Accounting Pronouncements

Please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in our Annual Report form 10-K for the year ended August 31, 2007 for a discussion of the impact of recently issued accounting pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157, Fair Value Measurements (“FAS 157”).  FAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement.  The effective date of FAS 157 has been deferred one year which means the company effective date will be September 1, 2009.  The provisions of FAS 157 are not expected to have a material impact on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option for Financial Assets and Liabilities,” to permit all entities to choose to elect to measure eligible financial instruments at fair value.  SFAS No. 159 applies to fiscal years beginning after November 15, 2007 with early adoption permitted for an entity that has also elected to apply the provisions of SFAS No. 157, “Fair Value Measurements.”  An entity is prohibited from retrospectively applying SFAS No. 159, unless it chooses early adoption.  Management is currently evaluating the impact of SFAS No. 159 on its consolidated financial statements.

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In December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements (“FAS 160”). FAS 160 establishes accounting and reporting standards for the4the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The effective date of FAS 160 is for fiscal years beginning on or after December 15, 2008. Golden Oval is reviewing FAS 160  to determine what impact it may have to the consolidated financial statements.

In March 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities, an Amendment to FASB Statement No. 133. FAS 161 establishes the disclosure requirements for derivative instruments and hedging activities and expands the disclosure requirements of statement 133. The effective date for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Golden Oval is reviewing FASB 161 but anticipates very little impact to the Company.

13The FASB issued two new statements in May 2008, FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles and FASB Statements No. 163, Accounting for Financial Guaranty Insurance Contract, an interpretation of FASB 60. FASB 162 identifies sources of accounting principles and establishes a hierarchy of accounting principles to be used in preparation of financial statements in conformity with GAAP for non governmental entities. FASB 162 is effective 60 days following SEC approval of Public Company Accounting Oversight Board (PCAOB) amendments to AU section 411. The Company does not anticipate any impact with the enactment of FASB 162. FASB 163 clarifies the recognition and measurement of claim liabilities in an insured financial obligation by insurance enterprises. FASB 163 is not applicable to the Company.

Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk

There have been no material changes in the market risk reported in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2007.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer, Dana Persson, and Chief Financial Officer, Thomas A. Powell, have reviewed the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon this review, they have concluded that there is a continuing deficiency in the Company’s disclosure controls and procedures as described in Part II, Item 9A “Controls and Procedures” of the Company’s Annual Report on Form 10-K for the year ended August 31, 2007.  During the first quarter, the Company secured additional personnel resources to assist with the consolidation and financial reporting process, which resulted in significant progress toward addressing the deficiency in our disclosure controls and procedures.  The Company continues, however, to evaluate other possible remedial actions to improve our disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

Except for the addition of personnel resources to address the deficiency in disclosure controls and procedures as described above, thereThere have been no changes in internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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completed in 2008.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 compliance withis estimated to be approximately $2.5 million. The Company is securing bids to determine final costs for the NPDES permit, and the amount of penalty or fine imposed by the Iowa Attorney General cannot be estimated, however they may be significant, both individually and in the aggregate.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 Department of Justice request. We cannot predict what, if any, impact this inquiry and any results from this inquiry could have on our current or future operations or results of operations.

Item 1A. Risk Factors

We are a party to an Amended and Restated Credit Agreement dated June 30, 2006, which has been amended by a First Amendment to the Amended and Restated Credit Agreement dated April 30, 2007, by a Second Amendment to the Amended and Restated Credit Agreement dated October 19, 2007 and an “Extension Agreement” dated December 13, 2007.  The Amended and Restated Credit Agreement as amended by the various amendments and the extension agreement is referred to herein as the “Amended Credit Agreement”.  On March 11, 2008, the Company, COBANK ACB (the “Administrative Agent”) and the banks and other financial institutions or entities, including COBANK ACB, which are parties to the Amended Credit Agreement entered into an “Extension and Amendment Agreement”.  Pursuant to the Extension and Amendment Agreement, the lenders granted the Company’s request for certain accommodations under the Amended Credit Agreement.Not applicable.

Pursuant to the Extension and Amendment Agreement, the “Termination Date” as it applies to the Company’s Revolving Loans under the Amended Credit Agreement is extended to July 31, 2008.  In addition, the due dates for principal payments with respect to the Company’s Tranche A and Tranche B Loans have been extended.  Those payments which were due on March 20, 2008, April 20, 2008, May 20, 2008, June 20, 2008 and July 20, 2008 are deferred until the Maturity Date of the applicable Tranche Loan.  Finally, the date for the Company to meet certain financial benchmarks and ratios pursuant to the Amended Credit Agreement was extended from March 1, 2008 to the Termination Date of July 31, 2008.  Commencing with the month of March, 2008, the Company is required to maintain a monthly minimum EBITDA of One Million Dollars ($1,000,000).  The Company must also escrow certain amounts each month to provide for the costs and expenses of associated with remedying certain regulatory violations at the Company’s facility in Thompson, Iowa.

Under the Extension and Amendment Agreement, the Company is obligated to explore strategic alternatives upon such terms and conditions and within such time frames as may be mutually agreed by the Company and the lenders under the Amended Credit Agreement.  The Company will seek alternatives that provide for the mutual benefit of the Company and its lenders.  The Company is required to regularly report to the lenders regarding the status of its efforts.

An Event of Default will occur under the Extension and Amendment Agreement if the Company fails to comply with any of the requirements of the Amended Credit Agreement or the Extension and Amendment Agreement.   In addition, the lender may declare an Event of Default upon three days written notice if the lenders reasonably believe that the Company will be unable to comply with any mutually agreed-upon arrangements regarding the Company’s strategic alternatives.

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No assurance can be given that we will be able to identify or consummate a strategic alternative upon terms and conditions or within such time frames as may be mutually agreed to by us and the lenders.  Our efforts to identify or negotiate an acceptable strategic alternative may be hampered by economic conditions related to credit markets, egg markets, commodity markets, or the U.S.  economy, or our inability to successfully execute the Company’s plans.  If we do not consummate an acceptable strategic alternative or if we otherwise default upon our Amended Credit Agreement and the obligations there under were to become accelerated and due, we may be required to curtail significantly or stop our business activities.

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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

None.

Item 5. Other Information

None.

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Item 6. Exhibits

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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