2026-09-23T09:04:06-05:00 2025-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2025-01-01 730274135 HARMON ELECTRIC ASSOCIATION INC HARM 5806883342 114 N FIRST HOLLIS OK 73550 AARON PAXTON GENERAL MANAGER/CEO 5806883342 2026-09-22 1 PATRICK COOPER P00856177 8067473806 2026-09-22 X 2025 AARON PAXTON 114 N FIRST HOLLIS OK 73550 12724087 0 X WWW.HARMONELECTRIC.COM X 1938 OK TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 7 31 0 225516 0 0 0 12184206 12482911 18510 14929 180858 219741 12383574 12717581 14365 15244 716816 684878 1995160 1968141 0 0 0 9635894 10102426 12362235 12770689 21339 -53108 39862441 46467989 28942419 34916184 10920022 11551805 NONE 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 3,669 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 0 0 1 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 18 0 1 31 1 1 1 0 0 0 0 12603927 254685 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 0 0 0 1 0 0 OK X AARON PAXTON GENERAL MANAGERCEO 5806883342 114 N FIRST HOLLIS OK 73550 X BURK BULLINGTON PRESIDENT 0.50 X X 2900 0 0 LEE SPARKMAN VICE PRESIDENT 0.75 X X 3100 0 0 JAMES REEVES SECRETARY/TREASURER 3.30 X X 13300 0 0 JEAN PENCE TRUSTEE 0.50 X 2700 0 0 JAMES CONLEY ASST. SECRETARY/TREASURER 2.50 X X 7100 0 0 BRADEN CUNNINGHAM TRUSTEE 0.50 X 2500 0 0 KATHLEEN FAUGHN TRUSTEE 2.50 X 6900 0 0 AARON PAXTON GENERAL MANAGER/CEO 50.00 X 209749 0 62035 TOMMY CASWELL FOREMAN 50.00 X 127308 0 103705 BRAD WHISENANT SAFETY MANAGER 40.00 X 115642 0 95725 CHAD SHOTTS OPERATIONS MANAGER 50.00 X 110507 0 63154 ALEXANDER VELASQUEZ CONSTRUCTION FOREMAN 46.00 X 125882 0 53073 MONTY WORTHEN OPERATIONS DIRECTOR (JAN-NOV) 45.00 X 136874 0 27684 864462 0 405376 11 0 1 0 R&R POWERLINE INC PO BOX 246 SAYRE OK 73662 CONSTRUCTION 198883 1 X SALES OF ELECTRICITY 221000 12233617 12233617 PATRONAGE DIVIDENDS 221000 196100 196100 SERVICE FEES 221000 53194 53194 12482911 14929 14929 731 6506 -5775 -5775 HESTER WATER DIVISION 221000 167658 167658 WATER MANAGEMENT CONTRACT 561000 57858 57858 225516 12717581 12477136 225516 14929 X 15244 684878 310284 1081930 232896 250208 92823 1136227 1597553 PURCHASED POWER 5752358 DISTRIBUTION EXPENSE 621719 ADMIN & GENERAL EXPENSE 478782 WATER DIVISION OPERATIN 140666 375121 12770689 566334 7658028 52458 52507 670769 564232 7096 1589 462400 57577 4871324 4707410 46184845 18239686 27874300 27945159 4873245 5022312 484515 459175 39862441 46467989 524665 500635 26554319 33947576 1863435 467973 28942419 34916184 X 7735 7680 0 0 10912287 11544125 10920022 11551805 39862441 46467989 X -53108 684891 X X 0 1 X 0 0 45938 45938 585580 457941 127639 45391145 17781745 27609400 162182 162182 27945159 PATRONAGE CAPITAL-WFEC 3893474 C PATRONAGE CAPITAL-CFC 304351 C PATRONAGE CAPITAL-TEC 307371 C PATRONAGE CAPITAL-NISC 48731 C PATRONAGE CAPITAL-FEDERATED 127141 C PATRONAGE CAPITAL-PIONEER 19915 C CAPITAL TERM CERTIFICATES-CFC 236911 C OTHER INVESTMENTS IN ASSOC. ORGANIZATIONS 84418 C 5022312 CONSUMER DEPOSITS 220730 ACCRUED TAXES 15550 POWER COST RECOVERY FACTOR 136090 DEFERRED CREDITS 93942 OTHER CURRENT LIABILITIES 1661 467973 X 12516253 0 12516253 201328 201328 12717581 11884483 0 11884483 886206 886206 12770689 PART X, LINE 2: ON JANUARY 1, 2009, THE ASSOCIATION ADOPTED THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE ASSOCIATION IS ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE ASSOCIATION DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT THEIR TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE (IRS), OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XI, LINE 4B - OTHER ADJUSTMENTS: EXPENSES RECLASSIFIED FROM NON-OPERATING MARGINS 201,328. PART XII, LINE 4B - OTHER ADJUSTMENTS: EXPENSES RECLASSIFIED FROM NON-OPERATING MARGINS 201,328. PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 684,878. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5% OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. CONSEQUENTLY, IN ACCORDANCE WITH IRS INSTRUCTIONS, SCHEDULE D, PART IX HAS BEEN LEFT BLANK. PART XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED AS AN INCREASE IN EQUITY AND NOT AS AN EXPENSE. THEREFORE, NET INCOME PER THE AUDITED FINANCIAL STATEMENTS IS REPORTED GROSS OF THE AMOUNT OF PATRONAGE DIVIDENDS THAT ARE EITHER ALLOCATED OR TO BE ALLOCATED AT THE TIME THE AUDITED FINANCIAL STATEMENTS ARE PREPARED. HOWEVER, BECAUSE THE ALLOCATION OF PATRONAGE DIVIDENDS IS ONE ASPECT OF HOW THE COOPERATIVE FULFILLS ITS TAX EXEMPT PURPOSE OF OPERATING ON A COOPERATIVE BASIS, THE AMOUNT OF PATRONAGE DIVIDENDS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED ON FORM 990, PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". X 0 0 0 AARON PAXTON GENERAL MANAGER/CEO 204029 0 500 0 5220 0 35626 0 26409 0 271784 0 0 0 TOMMY CASWELL FOREMAN 124998 0 500 0 1810 0 77296 0 26409 0 231013 0 0 0 BRAD WHISENANT SAFETY MANAGER 113884 0 500 0 1258 0 69316 0 26409 0 211367 0 0 0 ALEXANDER VELASQUEZ CONSTRUCTION FOREMAN 124896 0 500 0 486 0 26664 0 26409 0 178955 0 0 0 CHAD SHOTTS OPERATIONS MANAGER 108489 0 500 0 1518 0 36745 0 26409 0 173661 0 0 0 MONTY WORTHEN OPERATIONS DIRECTOR (JAN-NOV) 127490 0 0 0 9384 0 1275 0 26409 0 164558 0 0 0 PART II, COLUMN C: INCLUDED IN THIS AMOUNT IS THE INCREASE IN ACTUARIAL VALUE OF BENEFITS PAYABLE UNDER A DEFINED BENEFIT RETIREMENT PLAN (NRECA RS PLAN). THE CONTRIBUTION RATE FOR PARTICIPANTS IN THE PLAN ARE THE SAME FOR ALL INDIVIDUALS IN THIS MULTI-EMPLOYER PLAN. THE CHANGE IN ACTUARIAL VALUE FOR EACH PARTICIPANT, HOWEVER, VARIES WITH AGE. IN OTHER WORDS, THE OLDER A PLAN PARTICIPANT IS, THE GREATER THE INCREASE IN THAT INDIVIDUAL'S CHANGE IN ACTUARIAL VALUE, ALL OTHER THINGS BEING EQUAL. BECAUSE THIS RELATES TO A MULTI-EMPLOYER PLAN, CASH CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. AARON PAXTON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 33,586 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,040 TOTAL REPORTED IN COLUMN C $ 35,626 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (33,586) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 61,427 EXPENSE TO THE COOPERATIVE $ 63,467 TOMMY CASWELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 76,271 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,025 TOTAL REPORTED IN COLUMN C $ 77,296 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (76,271) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,893 EXPENSE TO THE COOPERATIVE $ 31,918 BRAD WHISENANT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 68,181 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,135 TOTAL REPORTED IN COLUMN C $ 69,316 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (68,181) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,225 EXPENSE TO THE COOPERATIVE $ 35,360 ALEXANDER VELASQUEZ: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 25,644 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,020 TOTAL REPORTED IN COLUMN C $ 26,664 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (25,644) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,733 EXPENSE TO THE COOPERATIVE $ 31,753 CHAD SHOTTS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 35,822 EMPLOYER CONTRIBUTION TO 401(K) PLAN 923 TOTAL REPORTED IN COLUMN C $ 36,745 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (35,822) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 27,311 EXPENSE TO THE COOPERATIVE $ 28,234 MONTY WORTHEN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ -0- EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,275 TOTAL REPORTED IN COLUMN C $ 1,275 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (-0-) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 38,689 EXPENSE TO THE COOPERATIVE $ 39,964 FORM 990, PART I: IN GENERAL, WHEN AN ELECTRIC COOPERATIVE BASES THE PATRONAGE DIVIDEND CALCULATION ON ITS NET BOOK INCOME/(LOSS), PAGE 1, PART I, LINE 19 - REVENUE LESS EXPENSES - WILL BE $0. FOR THE CURRENT YEAR, PAGE 1, PART I, LINE 19 REPORTS NET LOSS OF ($53,108), WHICH IS THE INCOME STATEMENT EFFECT OF TRANSFER LOSSES TO OTHER EQUITIES. THE GAAP BASIS FINANCIAL STATEMENTS INCLUDE AN ACCRUAL FOR UNBILLED REVENUE BECAUSE THE COOPERATIVE'S BILLING CYCLE DOES NOT END ON THE LAST DAY OF THE MONTH. THEREFORE, IT HAS REVENUE IN DECEMBER OF EACH YEAR THAT IT HAS EARNED BUT WILL NOT BILL UNTIL THE FIRST BILLING CYCLE OF THE FOLLOWING YEAR. THE COOPERATIVE ESTIMATES THIS REVENUE AND RECORDS IT AS ACCRUED UNBILLED REVENUE IN ORDER TO MATCH THE REVENUE WITH THE YEAR EARNED. HOWEVER, THE COOPERATIVE ALLOCATES THE REVENUE TO MEMBERS IN THE YEAR IT IS BILLED RATHER THAN WHEN ACCRUED. THIS TIMING DIFFERENCE IS FAIR AND EQUITABLE BECAUSE IT MATCHES THE PATRONAGE DIVIDEND ALLOCATED WITH THE BILLING RECORDS USED TO ALLOCATE THE MARGINS. DUE TO THE TIMING OF WHEN THE COOPERATIVE ALLOCATES ACCRUED UNBILLED REVENUE, PAGE 1, PART I, LINE 19 ANNUALLY REPORTS NET INCOME EQUAL TO THE NET INCREASE IN ACCRUED UNBILLED REVENUE OR A NET LOSS EQUAL TO THE NET DECREASE IN UNBILLED REVENUE. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: PAGE 1, PART I, LINE 19 - TRANSFERRED TO OTHER EQUITIES $ (53,108) BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $ 684,878 TOTAL 2025 NET MARGIN PER FINANCIAL STATEMENTS $ 631,770 FORM 990, PART VI, SECTION A, LINE 6 THE COOPERATIVE WAS FORMED BY THE MEMBERS TO PROVIDE ELECTRIC SERVICE AT COST ON A COOPERATIVE BASIS. FORM 990, PART VI, SECTION A, LINE 7A THE MEMBERS OF THE COOPERATIVE VOTE ON THE BOARD OF TRUSTEES. ELECTIONS ARE DONE ON A ONE MEMBER ONE VOTE BASIS. FORM 990, PART VI, SECTION A, LINE 7B THE FOLLOWING ACTS REQUIRE APPROVAL OF THE MEMBERS OF THE COOPERATIVE: 1. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE 2. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION 3. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS 4. AMENDMENT TO THE ARTICLES OF INCORPORATION 5. AMENDMENT TO THE BYLAWS FORM 990, PART VI, SECTION A, LINE 8B THE COOPERATIVE HAS NO COMMITTEES WITH AUTHORITY TO ACT ON BEHALF OF THE GOVERNING BODY. THEREFORE, AND PURSUANT TO FORM 990 INSTRUCTIONS, THE QUESTION HAS BEEN ANSWERED "NO". FORM 990, PART VI, SECTION B, LINE 11B MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 15A OTHER THAN THE GENERAL MANAGER/CEO, THE COOPERATIVE DID NOT HAVE ANY EMPLOYEES MEETING THE DEFINITION OF OFFICER OR KEY EMPLOYEE. THEREFORE, AND PURSUANT TO FORM 990 INSTRUCTIONS, LINE 15B HAS BEEN ANSWERED "NO". FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO THE MEMBERS OF THE COOPERATIVE IN THE ANNUAL REPORT. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS OR GOVERNING DOCUMENTS TO ANY MEMBER WHO REQUESTS A COPY. FORM 990, PART VII, COLUMN F: IN ORDER TO PROVIDE RETIREMENT BENEFITS TO ITS EMPLOYEES, THE COOPERATIVE HAS ESTABLISHED A DEFINED CONTRIBUTION PLAN UNDER SECTION 401(K) OF THE INTERNAL REVENUE CODE. EMPLOYER CONTRIBUTIONS TO THE PLAN ARE MADE PURSUANT TO THE PLAN DOCUMENT. ADDITIONALLY, THE COOPERATIVE PARTICIPATES IN A MULTI-EMPLOYER DEFINED BENEFIT PLAN. CONTRIBUTIONS TO THIS PLAN ARE BASED ON THE FULL FUNDING LIMITATION OF SUCH PLAN. EMPLOYER CONTRIBUTIONS FOR BOTH PLANS ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN AND INSURANCE PAID ON BEHALF OF AND FOR THEIR BENEFIT. FORM 990, PART VII, SECTION A: THE BOARD OF TRUSTEES CONSIDERS THE GENERAL MANAGER/CEO TO BE BOTH THE TOP MANAGEMENT OFFICIAL AND THE TOP FINANCIAL OFFICIAL. THEREFORE, ONLY THE GENERAL MANAGER/CEO IS LISTED AS AN EMPLOYEE OFFICER. FORM 990, PART VIII, LINE 2: PATRONAGE DIVIDENDS RESULT FROM THE PURCHASE OF WHOLESALE POWER FROM A GENERATION & TRANSMISSION COOPERATIVE. PATRONAGE DIVIDENDS ALSO RESULT FROM THE PAYMENT OF INTEREST FROM COOPERATIVE BANKS AND THE PURCHASE OF SUPPLIES AND SERVICES FROM OTHER COOPERATIVE ORGANIZATIONS. THE EXPENSES ASSOCIATED WITH PURCHASES FROM AND PAYMENTS TO SUCH COOPERATIVE ORGANIZATIONS ARE A DIRECT COMPONENT OF COST OF THE ELECTRIC SERVICE PROVIDED BY THE COOPERATIVE TO ITS MEMBERS. FORM 990, PART IX: THE ACCOUNTING RECORDS OF THE ASSOCIATION ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES MODIFIED FOR ELECTRIC BORROWERS OF THE RURAL UTILITIES SERVICE. THE USOA DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1-23. THE COOPERATIVE SEPARATELY REPORTS SALARIES AND WAGES, EMPLOYEE BENEFITS AND PAYROLL TAXES THAT ARE ALLOCATED IN ACCORDANCE WITH THEIR ACCOUNTING SYSTEM, BUT OTHER EXPENSES THAT ARE DESCRIBED IN LINES 1-23 ARE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE USOA. FORM 990, PART IX, LINES 5-7: SALARIES AND WAGES ARE ALLOCATED TO ASSET, LIABILITY, AND EXPENSE ACCOUNTS BASED ON THE ACCOUNTING SYSTEM DESCRIBED ABOVE. THE FOLLOWING SCHEDULE RECONCILES AMOUNTS REPORTED ON LINES 5-7 TO TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $ 1,392,214 LESS: TRUSTEE FEES REPORTED ON FORMS 1099-NEC (38,500) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (62,035) PLUS: SALARIES & WAGES ALLOCATED TO NONOPERATING MARGINS 15,525 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 441,536 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 173,425 TOTAL WAGES ACCRUED AND/OR PAID: $ 1,922,165 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 301,766 OFFICE SUPPLIES 113,051 OUTSIDE SERVICES EMPLOYED 62,287 OTHER INSURANCE 2,786 EMPLOYEE BENEFITS 20,265 TRUSTEES 77,467 ANNUAL MEETING 37,408 DUES TO ASSOCIATED ORGANIZATIONS 19,874 MISCELLANEOUS GENERAL 513,886 MAINTENANCE OF GENERAL PLANT (23,241) TOTAL ADMIN & GENERAL EXPENSE PER FINANCIAL STATEMENTS $ 1,125,549 LESS: RECLASS OF TRUSTEE FEES TO PART IX, LINE 5 (38,500) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (407,165) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (201,102) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 478,782 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: OTHER DEDUCTIONS $ 200,730 CONSUMER EXPENSES 115,061 MANAGEMENT CONTRACT 48,305 TAXES 6,539 SALES 4,486 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $ 375,121 FORM 990, PART IX, LINE 4: PURSUANT TO THE FORM 990 INSTRUCTIONS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS (HEREINAFTER REFERRED TO AS "PATRONS") SHOULD BE REPORTED ON PART IX, LINE 4. THE PHRASE "PATRONAGE DIVIDENDS PAID" REFERS TO THE PROCESS, SUBSEQUENT TO YEAR-END, BY WHICH THE COOPERATIVE ALLOCATES PATRONAGE CAPITAL TO AND, THEREFORE, OPERATES AT COST WITH ITS PATRONS. THE COOPERATIVE'S TAX EXEMPT PURPOSE IS TO PROVIDE ELECTRICITY TO ITS PATRONS AND TO DO SO ON A COOPERATIVE BASIS. TAX LAW DEFINES "OPERATING ON A COOPERATIVE BASIS" AS SUBORDINATION OF CAPITAL, DEMOCRATIC CONTROL, AND OPERATION AT COST. THE COOPERATIVE OPERATES AT COST THROUGH THE ALLOCATION OF TRUE PATRONAGE DIVIDENDS (ALSO REFERRED TO AS ALLOCATIONS OF PATRONAGE CAPITAL) TO ITS PATRONS. PATRONAGE DIVIDENDS ARE CONSIDERED PAID IF THE ALLOCATION IS MADE (1) PURSUANT TO A PRE-EXISTING OBLIGATION, (2) FROM THE MARGINS PRODUCED FROM THE TRANSACTIONS DONE WITH OR FOR PATRONS, AND (3) IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). ADDITIONALLY, THE ALLOCATION OF PATRONAGE DIVIDENDS SHOULD BE MADE WITHIN A REASONABLE TIME PERIOD AFTER THE CLOSE OF THE COOPERATIVE'S YEAR-END OF DECEMBER 31. EACH ONE OF THESE REQUIREMENTS FOR A TRUE PATRONAGE DIVIDEND IS PROVIDED FOR IN THE NON-PROFIT OPERATION ARTICLE OF THE BYLAWS. THE AMOUNT REPORTED ON PART IX, LINE 4 REPRESENTS THE AMOUNT OF PATRONAGE CAPITAL THAT IS EITHER ALLOCATED OR TO BE ALLOCATED TO THE PATRONS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2025 CALENDAR YEAR. BECAUSE PATRONAGE DIVIDENDS ARE THE PROCESS BY WHICH THE COOPERATIVE OPERATES AT COST WITH ITS PATRONS AND THEREBY A KEY COMPONENT TO ACCOMPLISHING ITS EXEMPT PURPOSE, THE COOPERATIVE HAS REPORTED SUCH AMOUNTS AS AN EXPENSE FOR FORM 990 REPORTING. PATRONAGE DIVIDENDS ARE NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GAAP, HOWEVER. FORM 990, PART IX, LINE 1: ALL GRANTS, SPONSORSHIPS, AND/OR DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA, AND ARE INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH GRANT, SPONSORSHIP, AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 684,878. NET CHANGE IN MEMBERSHIPS -55. PRIOR PERIOD ADJUSTMENT 68. FORM 990, PART XII, LINE 2C: THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.