What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-11 compared with 2024-03-12 · 231 added, 100 removed, 594 unchanged (36% of the section changed)

46 unchanged sentences

5,000,000 5,000,000

Accounts receivable, net of allowance of $ 7,670 and $ 19,250 at December 31, 2023 and 2022, respectively

Accounts receivable, net of allowance of $ 7,670 at December 31, 2024 and 2023

439,121 484,092

Employee retention credit receivable

250,658 249,370

13 unchanged sentences

Operating lease right-of-use assets

27,674 53,026

Equity investment (Note 11)

6,976,091 6,612,712

Other long-term receivables (Note 9)

Land held for development

23 unchanged sentences

Current portion of operating lease obligations

27,674 25,352

Total Current Liabilities

6 unchanged sentences

Finance lease obligations, net of current portion

117,182 7,770

Operating lease obligations, net of current portion

Other long-term liabilities

Total Long-term Liabilities

18 unchanged sentences

OPERATING REVENUES:

$ 38,774,702 $ 39,781,166

8,226,047 8,253,615

Food and beverage

7,968,157 7,828,980

6,593,382 5,573,097

Total Net Revenues

61,562,288 61,436,858

OPERATING EXPENSES:

Purse expense

7,908,404 7,600,059

Minnesota Breeders’ Fund

1,027,609 1,053,790

Other pari-mutuel expenses

910,843 915,714

Salaries and benefits

26,142,046 25,490,790

Cost of food and beverage and other sales

3,195,767 3,062,974

Depreciation and amortization

3,620,899 3,145,372

1,489,576 1,680,885

Advertising and marketing

1,349,656 2,068,846

Professional and contracted services

5,660,993 5,981,480

Loss on disposal of assets

49,214 157,160

Other operating expenses

5,506,647 5,268,905

Total Operating Expenses

Gain on sale of land (Note 12)

56,861,654 56,425,975

Gain on transfer/sale of land (Note 11)

1,732,353 6,489,976

INCOME FROM OPERATIONS

6,432,987 11,500,859

OTHER INCOME (LOSS)

Income (loss) from equity investment

(Loss) income from equity investment

( 5,467,771 ) 1,501,268

Interest income, net

Net Other Income (Loss)

2,071,511 1,978,122

Net Other (Loss) Income

( 3,396,260 ) 3,479,390

INCOME BEFORE INCOME TAXES

3,036,727 14,980,249

INCOME TAX EXPENSE (Note 4)

( 923,885 ) ( 4,417,000 )

$ 2,112,842 $ 10,563,249

Basic earnings per share

$ 0.42 $ 2.15

Diluted earnings per share

$ 0.42 $ 2.13

Weighted average basic shares outstanding

4,994,905 4,921,379

Weighted average diluted shares

5,032,210 4,949,182

See notes to consolidated financial statements.

36 unchanged sentences

Operating Activities:

$ 2,112,842 $ 10,563,249

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

3,620,899 3,145,372

Stock-based compensation expense

571,632 527,762

Stock-based employee match contribution

875,798 850,998

Deferred income taxes

( 454,015 ) 2,826,000

Loss on disposal of assets

(Gain) loss from equity investment

49,214 157,160

Loss (gain) from equity investment

5,467,771 ( 1,501,268 )

Gain on sale of land

— ( 6,489,976 )

Gain on transfer of land

( 1,732,353 ) —

Changes in operating assets and liabilities:

Accounts receivable

44,971 134,273

Employee retention credit

Increase in TIF receivable

( 681,332 ) ( 674,378 )

Inventory, prepaid expenses and deposits

Income taxes receivable/payable and prepaid income taxes

( 1,233,504 ) ( 17,403 )

Income taxes receivable and prepaid income taxes

896,899 ( 2,031,000 )

Other long-term receivables

( 1,597,463 ) —

Operating lease right-of-use assets

25,352 24,524

Operating lease liabilities

( 25,352 ) ( 24,524 )

Accounts payable

( 2,121,199 ) ( 1,465,498 )

Deferred revenue

36,346 ( 138,544 )

Casino accruals

( 508,250 ) ( 16,945 )

Accrued wages and payroll taxes

488,597 ( 151,952 )

Accrued property taxes

362,569 ( 54,431 )

Other long-term liabilities

Payable to horsepersons

107,392 ( 230,146 )

Net cash provided by operating activities

6,487,814 11,536,509

Investing Activities:

Additions to land, buildings, and equipment

( 11,984,131 ) ( 7,907,963 )

Proceeds from disposal of assets

60,800 60,800

Proceeds from sale of land

Additions for TIF eligible improvements

( 4,244,238 ) ( 4,160 )

Proceeds from sale of short-term investments

7,000,000 5,000,000

Purchase of short-term investments

( 7,000,000 ) ( 5,000,000 )

Cash dividends received from equity investments

36,480 30,368

Increase in related party receivable

Equity investment contribution

( 1,217,842 ) ( 970,751 )

Net cash used in investing activities

( 17,348,931 ) ( 455,347 )

Financing Activities:

Proceeds from issuance of common stock

251,577 230,589

Cash dividend paid to shareholders

( 1,405,636 ) ( 1,384,773 )

Payments for taxes related to net share settlement of equity awards

( 108,887 ) ( 171,748 )

Principal payments on finance lease

( 30,272 ) ( 19,479 )

Net cash used in financing activities

Net increase in cash, cash equivalents, and restricted cash

( 1,293,218 ) ( 1,345,411 )

Net (decrease) increase in cash, cash equivalents, and restricted cash

( 12,154,336 ) 9,735,751

Cash, cash equivalents, and restricted cash at beginning of year

25,841,754 16,106,003

Cash, cash equivalents, and restricted cash at end of year

$ 13,687,418 $ 25,841,754

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

3 unchanged sentences

Additions to land, buildings, and equipment funded through accounts payable

$ 1,187,000 $ 2,696,000

Dividend declared but not yet paid

351,000 346,125

Change in investee losses in excess of equity investments

3,552,000 ( 1,722,000 )

ROU assets obtained in exchange for operating lease obligations

171,030 87,430

Transfer of assets to Trackside Investments, LLC

Supplemental disclosure of cash flow information:

Income taxes paid, net of refunds

$ 300,000 $ 3,622,000

Interest paid

51 unchanged sentences

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash – Restrict ed cash represents refundable deposits and amounts due to horsemen for purses, stakes and awards, collateral needed for joint venture operations, and amounts accumulated in card game progressive jackpot pools, the player pool, and poker promotional fund to be used to repay card players in the form of promotions, giveaways, prizes, or by other means.

Restricted Cash – Restricted cash represents refundable deposits and amounts due to horsemen for purses, stakes and awards, collateral needed for joint venture operations, and amounts accumulated in card game progressive jackpot pools, the player pool, and poker promotional fund to be used to repay card players in the form of promotions, giveaways, prizes, or by other means.

Short-Term Investments – Short-term investments include cash investments into short to intermediate-term fixed income securities.

Such investments are not included as “Cash and cash equivalents” as the original maturities are greater than three months and are intended to be held until maturity.

Employee Retention Credit ("ERC") – The Company qualified for federal government assistance through ERC provisions of the CARES Act passed in 2020, for the 2020 second, third, and fourth quarters, as well as the 2021 first and second quarters.

The purpose of the ERC is to encourage employers to keep employees on the payroll, even if they are not working during the covered period because of the coronavirus outbreak.

We recognize government grants for which there is a reasonable assurance of compliance with grant condition s and receipt of credits.

The Company's outstanding receivable as of December 31, 2022 was $ 6,103,236 , and is included on the Consolidated Balance Sheets as an employee retention credit receivable.

During 2023, the Company received the payments in full.

Accounts Receivable – Accounts receivable are initially recorded for amounts due from other tracks for simulcast revenue, net of amounts due to other tracks, and for amounts due from customers related to catering and events.

6 unchanged sentences

The allowance for credit losses and activity as of December 31, 2024 and 2023 , was not material.

Inventory – Inventory consists primarily of food and beverages, small wares and supplies and retail goods and is recorded at the lower of cost ( first -in, first -out) or net realizable value.

Property Tax Increment Financing (TIF) Receivable – In connection with the Contract for Private Redevelopment (“Redevelopment Agreement”) and First Amendment to the Contract for Private Redevelopment (the “First Amendment”) between the City of Shakopee Economic Development Authority and Canterbury Development LLC signed in August 2018 and amended in September 2021, the City of Shakopee has agreed that a portion of the tax increment revenue generated from the developed property will be paid to the Company to reimburse it for expenses in constructing public infrastructure improvements.

The interest rate on the TIF Receivable is 6%.

Inventory – Inventory consists primarily of food and beverages, small wares and supplies and retail goods and is recorded at the lower of cost ( first -in, first -out) or net realizable value.

Unredeemed Pari-mutuel Tickets – The Company records a liability for winning tickets and vouchers upon the completion of a race and when a voucher is printed, respectively.

As uncashed winning tickets and vouchers are redeemed, this liability is reduced for the respective cash payment.

The Company recognizes revenue associated with the uncashed winning tickets and vouchers when the likelihood of redemption, based on historical experience, is remote.

While the Company continues to honor all winning tickets and vouchers presented for payment, management may determine the likelihood of redemption to be remote due to the length of time that has elapsed since the ticket was issued.

In these circumstances, if management also determines there is no requirement for remitting balances to government agencies under unclaimed property laws, uncashed winning tickets and vouchers may then be recognized as revenue in the Company’s Consolidated Statement of Operations.

Deferred Revenue – Deferred revenue includes advance sales related to racing, events, and corporate partnerships.

Revenue from these advance billings is recognized when the related event occurs or services have been performed.

Due to Minnesota Horsemen’s Benevolent and Protective Association, Inc.

(“MHBPA”) – The Minnesota Pari-mutuel Horse Racing Act specifies that the Company is required to segregate a portion of funds (recorded as purse expense in the statements of operations), received from Casino operations and wagering on simulcast and live horse races, for future payment as purses for live horse races or other uses of the horsepersons’ associations.

Pursuant to an agreement with the MHBPA, the Company transferred into a trust account or paid directly to the MHBPA, approximately $ 7,133,000 and $ 7,846,000 for the years ended December 31, 2023 and 2022 , respectively, related to thoroughbred races.

Minnesota Statutes specify that amounts transferred into the trust account are the property of the trust and not of the Company.

Other long-term receivables - In connection with the 2024 live race meet and purse fund contribution agreement with the MNHBPA and the MQHRA, the Company recorded an overpayment of purses.

This overpayment was intended to create a short-term bridge until additional purse supplements can be obtained from other sources.

In the event that additional purse revenue is secured within the five years following the 2025 live race meet through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company will be eligible for reimbursement of the actual 2024 overpayment amount from those purse supplements.

For more information on the Company’s overpayment of purses related to the 2024 live race agreement, see Note 9.

Impairment of Long-Lived Assets – The Company reviews its long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

2 unchanged sentences

During 2024 and 2023 , the Company determined that no evaluations of recoverability were necessary.

Advertising and Marketing – Advertising and marketing costs are charged to expense as incurred.

The related amounts are presented separately in the Company’s Consolidated Statements of Operations.

Land, Buildings, and Equipment – Land, buildings, equipment, and building improvements are capitalized at a level of $ 2,000 or greater and are recorded at cost.

9 unchanged sentences

Land Held for Development – Land held for development consists of land owned for potential real estate development.

Unredeemed Pari-mutuel Tickets – The Company records a liability for winning tickets and vouchers upon the completion of a race and when a voucher is printed, respectively.

As uncashed winning tickets and vouchers are redeemed, this liability is reduced for the respective cash payment.

The Company recognizes revenue associated with the uncashed winning tickets and vouchers when the likelihood of redemption, based on historical experience, is remote.

Deferred Revenue – Deferred revenue includes advance sales related to racing, events, and corporate partnerships.

Revenue from these advance billings is recognized when the related event occurs or services have been performed.

Due to Minnesota Horsemen’s Benevolent and Protective Association, Inc.

(“MNHBPA”) – The Minnesota Pari-mutuel Horse Racing Act specifies that the Company is required to segregate a portion of funds (recorded as purse expense in the statements of operations), received from Casino operations and wagering on simulcast and live horse races, for future payment as purses for live horse races or other uses of the horsepersons’ associations.

Pursuant to an agreement with the MNHBPA, the Company transferred into a trust account or paid directly to the MNHBPA, approximately $ 8,288,000 and $ 7,133,000 for the years ended

December 31, 2024 and 2023

, respectively, related to thoroughbred races.

Minnesota Statutes specify that amounts transferred into the trust account are the property of the trust and not of the Company.

Casino Accruals – Minnesota law allows the Company to collect amounts from patrons to fund progressive jackpot pools in the Casino.

These amounts, along with amounts earned by the player pool, promotional pools, and the outstanding chip liability, are accrued as short-term liabilities at each balance sheet date.

Advertising and Marketing – Advertising and marketing costs are charged to expense as incurred.

The related amounts are presented separately in the Company’s Consolidated Statements of Operations.

Income Taxes – Income taxes are accounted for under the asset and liability method.

13 unchanged sentences

For more information on the Company’s stock-based compensation plans, see Note 5.

New Accounting Pronouncement

Accounting Standards Update (ASU) No.

2016 - 13, Measurement of Credit Losses on Financial Instruments, requires the Company to present financial assets measured at amortized cost (including trade receivables) at the net amount expected to be collected over their remaining contractual lives.

Estimated credit losses are based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts.

The Company adopted ASU No.

2016 - 13 on January 1, 2023.

The net impact to retained earnings would have been immaterial, thus no adjustment was made to retained earnings.

Results for the year ended December 31, 2023, are presented under Accounting Standards Codification (ASC) 326 while prior period amounts continue to be reported in accordance with previously applicable US GAAP.

See Accounts Receivable for changes to accounting policies.

LAND, BUILDINGS AND EQUIPMENT

Land, buildings and equipment, at cost, consist of the following at December 31, 2024 and 2023 :

$ 2,835,655 $ 2,878,308

Buildings and building improvements

55,620,120 45,338,216

Furniture and equipment

21,102,057 20,805,643

Construction in progress

6,586,250 6,892,192

86,144,082 75,914,359

Accumulated depreciation

( 35,101,094 ) ( 33,472,269 )

Total land, buildings, and equipment, net

$ 51,042,988 $ 42,442,090

The Company has included land held for development as a separate line on the consolidated balance sheet.

This amount represents land owned for potential real estate development and totaled approximately $ 1,229,475 and $ 2,303,010 at December 31, 2023 and 2022, respectively.

This represents land owned for potential real estate development and totaled $ 2,183,930 and $ 1,756,914 as of December 31, 2024 and 2023 , respectively.

A reconciliation between income taxes computed at the statutory federal income tax rate and the effective tax rate for the years ended December 31, 2024 and 2023 is as follows:

7 unchanged sentences

4,900 ( 52,500 )

Long term incentive and restricted stock unit expense

( 26,415 ) 89,200

Total income tax expense

$ 923,885 $ 4,417,000

7 unchanged sentences

( 325,000 ) 864,300

Total income tax expense

$ 923,885 $ 4,417,000

15 unchanged sentences

( 3,468,100 ) ( 4,314,400 )

Deferred gain

( 1,214,300 ) —

Prepaid expenses

9 unchanged sentences

The Company is no longer subject to U.S.

federal, state, or local examinations by tax authorities for years before 2019.

federal or state by tax authorities for years before 2021 and 2020, respectively.

Unrecognized tax benefits — January 1, 2024

Gross increases — tax positions taken during the prior period

Gross decreases — tax positions taken during the current period

Unrecognized tax benefits — December 31, 2024

The balances of unrecognized tax benefits as of December 31, 2024 and December 31, 2023 are $ 181,000 and $ 0 , respectively, and if recognized, would result in adjustments to deferred taxes and would not impact the effective tax rate.

It is reasonably expected that the total amounts of unrecognized tax benefits will fully reverse within 12 months of the reporting period.

STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

3 unchanged sentences

Shares of the Company’s common stock may be purchased by employees at six -month intervals at 85 % of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase.

Employees purch ased 12,700 and 9,135 shares in 2023 and 2022 , respectively.

As of December 31, 2023 , a total o f 366,834 sh ares have been issued from the 450,000 shares authorized.

Employees purchased 14,583 and 12,700 shares in 2024 and 2023 , respectively.

As of December 31, 2024 , a total of 381,417 shares have been issued from the 450,000 shares authorized.

The Company offers a KSOP Plan (the “KSOP”) that includes the Employee Stock Ownership Plan (the “ESOP”) and the 401 (k) Plan.

2 unchanged sentences

Beginning January 1, 2016, the matching of employee contributions were issued in Company stock.

Employer contributions charged to operations for stock matching of employee contributions for the year ended December 31, 2023 and 2022 totaled approximat ely $ 851,000 and $ 619,000 , respectively.

Stock Repurchase Plan:

In 2007, the Company’s Board of Directors adopted a plan that authorized the repurchase of up to 250,000 shares of the Company’s common stock in open market transactions or block purchases of privately negotiated transactions.

The Company repurchased 216,543 shares under the 2008 Stock Repurchase Plan and in 2012, authorized the repurchase of an additional 100,000 shares of the Company’s common stock.

No shares were repurchased in 2023 or 2022 .

In March 2022, the Board of Directors determined to terminate the stock repurchase plan.

Employer contributions charged to operations for stock matching of employee contributions for the year ended December 31, 2024 and 2023 totaled approximately $ 876,000 and $ 851,000 , respectively.

Stock-Based Compensation

2 unchanged sentences

The Company’s Stock Plan, as amended, (the “Plan”) provides for the granting of awards in the form of stock options, restricted stock, stock appreciation rights, and deferred stock to key employees and non-employees, including directors of and consultants to the Company and any subsidiary, to purchase up to a maximum of 1,650,000 shares of common stock.

The Company currently h as 168,072 sh ares available for grant under the Plan.

The Company currently has 135,238 shares available for grant under the Plan.

The Plan is administered by the Board of Directors which determines the persons who are to receive awards under the Plan, the type of award to be granted, the number of shares subject to each award and, if an option, the exercise price of each option.

14 unchanged sentences

Board of Directors Stock Option, Deferred Stock Awards, and Restricted Stock Grants

The Company’s Stock Plan was amended to authorize annual grants of restricted stock, deferred stock, stock options, or any combination of the three, to non-employee members of the Board of Directors at the time of the Company’s annual shareholders’ meeting as determined by the Board prior to each such m eeting.

Options granted under the Plan generally expire 10 years after the grant date.

9 unchanged sentences

In 2024, the Company granted employees deferred stock awards totaling 22,100 shares of common stock, with a vesting term of approximately four years and a fair value of $ 21.08 per share.

During 2022, the Company granted employees deferred stock awards totaling 18,600 shares of common stock with a fair value of $ 21.62 per share.

In 2023, the Company granted employees deferred stock awards totaling 19,020 shares of common stock, with a vesting term of approximately four years and a fair value of $ 25.52 per share.

The vesting schedule of the awards is as follows:

5 unchanged sentences

( 15,230 ) 19.15

( 3,250 ) 21.84

Non-Vested Balance, December 31, 2024

43,790 $ 22.52

At December 31, 2023 , there was approximat ely $ 618,000 of total unrecognized stock-based compensation expense related to unvested employee and board of director deferred stock awards that is expected to be recognized over a period of approximately 2.1 years.

At December 31, 2024 , there was approximately $ 770,000 of total unrecognized stock-based compensation expense related to unvested employee and board of director deferred stock awards that is expected to be recognized over a period of approximately 2.3 years.

NET INCOME PER SHARE COMPUTATIONS

17 unchanged sentences

As of December 31, 2024 , the outstanding balance on the line of credit was $ 0 .

In the event that the Company borrowed under the agreement, the annual interest rate paid by the Company would be equal to the greater of the Prime Rate or 3.0 %.

The credit agreement contains covenants requiring the Company to maintain certain financial ratios.

16 unchanged sentences

Land, buildings and equipment, net (1)

$ 150,132 $ 9,374

Operating lease right-of-use assets

27,674 53,026

Total Leased Assets

$ 177,806 $ 62,400

1 – Finance lease assets are net of accumulated amortization of $ 30,779 and $ 118,424 for the years ended December 31, 2024 and 2023 , respectively.

7 unchanged sentences

Finance Leases

$ 28,228 $ 44,447

2028 and beyond

Total minimum lease obligations

28,228 177,593

amounts representing interest

( 554 ) ( 27,461 )

Present value of minimum lease payments

27,674 150,132

current portion

( 27,674 ) ( 32,950 )

Lease obligations, net of current portion

$ — $ 117,182

Purchase Obligations

In March 2014, the Company entered into a seven -year agreement with a totalizator provider.

In March 2022, the Company entered into a five -year agreement with a totalizator provider.

Pursuant to the agreement, the vendor provides totalizator equipment and related software which records and processes all wagers and calculates odds and payoffs.

The amounts charged to operations for totalizator expenses for the years ended December 31, 2023 and 2022 wer e $ 205,000 and $ 253,000 , r espectively.

In March 2022, the Company entered into a five -year agreement with a new totalizator provider.

Under the new agreement, $ 166,400 was charged to operations in 2023.

The future minimum purchase obligations under the new agreement are $ 166,400 per year for each of the next three years.

The future minimum purchase obligations under the new agreement are $ 166,400 per year.

The amounts charged to operations for totalizator expenses for the years ended December 31, 2024 and 2023 w ere $ 200,000 and $ 205,000 , res pectively.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

Effective October 27, 2022, the Indemnity Agreement was amended to increase the maximum indemnification by an additional $ 700,000 .

Effective December 12, 2023, the Indemnity Agreeme nt was amended to increase the maximum indemnification by an additional $ 1,300,000 , bringing the total to a maximum of $ 7,000,000 .

Effective December 21, 2023, the Company entered into its annual live race meet and purse fund contribution agreement with the Minnesota Horsemen’s Benevolent & Protective Association (“MHBPA”) and the Minnesota Quarter Horse Racing Association ("MQHRA") regarding the upcoming 2024 live race meet.

In an effort to increase field size and improve the quality of racing for the 2024 season, the Company has guaranteed purses for overnight races at $ 23,000 per race.

The parties recognize there is likely to be a significant financial cost to the Company in establishing a 2024 thoroughbred purse structure intended to average $ 23,000 per conducted overnight race and that to maintain that average purse structure, the Company will be making an overpayment that may be repaid to the Company through reimbursement in subsequent racing years.

This antici pated overpayment of purses by the Company is intended to create a short-term bridge until additional purse supplements can be obtained from other sources.

In the event that additional purse revenue is secured within the next five years through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company will be eligible for reimbursement of the actual 2024 overpayment amount from those purse supplements.

Effective December 12, 2023, the Indemnity Agreement was amended to increase the maximum indemnification by an additional $ 1,300,000 .

Effective December 18, 2024, the Indemnity Agreement was amended to increase the maximum indemnification by an additional $ 500,000 , bringing the total to a maximum of $ 7,500,000 .

Effective December 18, 2024, the Company entered i nto an Indemnity Agreement with affiliates of Doran relating to debt financing by Doran Canterbury II, LLC as borrower, which is guaranteed by Doran affiliates.

Under the Indemnity Agreement, the Company is obligated to reimburse and indemnify each loan guarantor for any amounts paid by such loan guarantor to the lender on debt financing by Doran Canterbury II, LLC, up to a maximum of $ 1,000,000 .

Effective December 21, 2023, the Company entered into its annual live race meet and purse fund contribution agreement with the Minnesota Horsemen’s Benevolent & Protective Association (“MNHBPA”) and the Minnesota Quarter Horse Racing Association (“MQHRA”) regarding the 2024 live race meet.

In an effort to increase field size and improve the quality of racing for the 2024 season, the Company guaranteed purses for overnight races at $ 23,000 per race.

The parties recognized there was likely to be a significant financial cost to the Company in establishing a 2024 thoroughbred purse structure intended to average $ 23,000 per conducted overnight race and that to maintain that average purse structure, the Company made an overpayment that may be repaid to the Company through reimbursement in subsequent racing years.

This overpayment of purses by the Company was intended to create a short-term bridge until additional purse supplements can be obtained from other sources.

At the conclusion of the 2024 live race meet, the Company recorded a receivable related to the overpayment of 2024 purses in the amount of $ 1,597,463 , which is presented on the Company's balance sheet as of December 31, 2024.

Management believes it is likely that additional purse supplements will ultimately be obtained when considering both the length of time to secure such funds ( five years following the 2025 live race meet) and the fact that legislation has been introduced in both chambers of the Minnesota legislature that would provide those supplements through revenues from taxes paid by sports wagering licenses.

Accordingly, management believes no allowance related to this receivable is necessary at December 31, 2024.

In addition, the Company agreed to allocate approximately $ 400,000 to be used as recruiting and participation incentives to attract thoroughbred trainers, owners, and stables for the 2024 live meet in an effort to generate additional pari-mutuel handle through improved field size.

For the year ended 2024, the Company recognized expenses of $ 418,000 related to these incentives.

Effective January 31, 2025, the Company entered into its annual live race meet and purse fund contribution agreement with the MNHBPA and the MQHRA regarding the upcoming 2025 live race meet.

In an effort to maintain field size and improve the quality of racing for the 2025 season, the Company has guaranteed an additional $ 500,000 of purse monies to be distributed above the minimum amount defined in Minnesota Statutes Chapter 240.

In the event that additional purse revenues are secured throughout the duration of the 2025 live race agreement through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company has agreed to provide additional purse monies of up to $ 1,500,000 , to a total of $ 2,000,000 in potential overpayment of purses to support the 2025 live race meet.

The parties recognize there is likely to be a significant financial cost to the Company in establishing this 2025 thoroughbred purse structure and that to maintain that average purse structure, the Company will be making an overpayment that may be repaid to the Company through reimbursement in subsequent racing years.

This anticipated overpayment of purses by the Company is intended to create a short-term bridge until additional purse supplements can be obtained from other sources.

The Company is periodically involved in various claims and legal actions arising in the normal course of business.

11 unchanged sentences

Depreciation, interest expense, and income taxes are allocated to the segments but no allocation is made to food and beverage for shared facilities.

However, the food and beverage segment pays approximately 25 % of gross revenues earned on live racing and special event days to the horse racing segment for use of the facilities.

Starting in 2020, the food and beverage segment has not paid a commission to the horse racing segment subsequent to the Company's first temporary shutdown of operations starting March 16, 2020.

However, the food and beverage segment pays approximately 25 % of gross revenues earned on special event days to the horse racing segment for use of the facilities.

The following tables represent a disaggregation of revenues from contracts with customers along with the Company’s operating segments (in 000’s ):

2 unchanged sentences

Net revenues from external customers

$ 13,967 $ 38,775 $ 8,820 $ — $ 61,562

Intersegment revenues

281 — 1,325 — 1,606

Net interest income

Segment income (loss) before income taxes

Segment tax expense (benefit)

1,014 — — 1,058 2,072

3,157 301 163 — 3,621

Segment (loss) income before income taxes

( 1,838 ) 5,855 1,891 ( 2,871 ) 3,037

Segment tax (benefit) expense

( 559 ) 1,781 575 ( 873 ) 924

At December 31, 2024

Segment Assets

$ 99,810 $ 1,041 $ 35,679 $ 39,088 $ 175,618

Year Ended December 31, 2023

1 unchanged sentence

Net revenues from external customers

$ 13,198 $ 39,781 $ 8,458 $ — $ 61,437

Intersegment revenues

235 — 1,181 — 1,416

Net interest income

1,058 — — 920 1,978

2,674 301 170 — 3,145

Segment (loss) income before income taxes

( 5,142 ) 9,320 2,132 8,670 14,980

Segment tax (benefit) expense

( 1,516 ) 2,748 629 2,556 4,417

At December 31, 2023

Segment Assets

$ 92,970 $ 2,125 $ 33,175 $ 34,892 $ 163,162

The following are reconciliations of reportable segment revenues, income before income taxes, and assets, to the Company’s consolidated totals for the years ended December 31, 2024 and 2023 (in 000’s ):

1 unchanged sentence

Total net revenue for reportable segments

$ 63,168 $ 62,853

Elimination of intersegment revenues

( 1,606 ) ( 1,416 )

Total consolidated net revenues

$ 61,562 $ 61,437

Income (loss) before income taxes

Total segment income before income taxes

$ 5,661 $ 17,946

Elimination of intersegment loss before income taxes

( 2,624 ) ( 2,966 )

Total consolidated income before income taxes

$ 3,037 $ 14,980

Total assets for reportable segments

$ 175,618 $ 163,162

Elimination of intercompany balances

( 65,695 ) ( 58,483 )

Total consolidated assets

COOPERATIVE MARKETING AGREEMENT

On June 4, 2012, the Company entered into the CMA with the SMSC.

The primary purpose of the CMA was to increase purses paid during live horse racing at Canterbury Park’s Racetrack in order to strengthen Minnesota’s thoroughbred and quarter horse industry.

Under the CMA, as amended, this was achieved through “Purse Enhancement Payments to Horsemen” paid directly to the MHBPA.

Such payments had no direct impact on the Company’s consolidated financial statements or operations.

Because the Company conducted a more limited 2020 live race meet due to the COVID- 19 pandemic, the Company and SMSC entered into the Fifth Amendment Agreement (“Fifth Amendment”) to the CMA effective June 8, 2020.

The annual purse enhancement that the SMSC was obligated to pay under the CMA for 2021 and 2022 was not changed and remained at $ 7,380,000 per year.

Under the CMA, as amended, SMSC also agreed to make “Marketing Payments” to the Company relating to joint marketing efforts for the mutual benefit of the Company and SMSC, including signage, joint promotions, player benefits, and events.

As noted above and affirmed in the Fifth Amendment, SMSC was obligated to make an annual purse enhancement of $ 7,380,000 and annual marketing payment of $ 1,620,000 for 2022.

The amounts received from the marketing payments under the CMA are recorded as a component of other revenue and the related expenses are recorded as a component of advertising and marketing expense and depreciation in the Company’s consolidated statements of operations.

For the year ended December 31, 2022 , the Company recorded $ 1,920,000 in other revenue and incurred $ 1,698,000 in advertising and marketing expense and $ 222,000 in depreciation related to the SMSC marketing payment.

The excess of amounts received over revenue is reflected as deferred revenue on the Company’s consolidated balance sheets.

Under the CMA, the Company agreed for the term of the CMA that it would not promote or lobby the Minnesota legislature for expanded gambling authority and will support the SMSC’s lobbying efforts against expanding gambling authority.

The CMA expired by its terms on December 31, 2022.

Accordingly, for the year ended December 31, 2023, there were no purse enhancement payments or marketing payments under the CMA.

$ 109,923 $ 104,679

REAL ESTATE DEVELOPMENT

7 unchanged sentences

As the Company is able to assert significant influence, but not control, over Doran Canterbury I’s operational and financial policies, the Company accounts for the joint venture as an equity method investment.

For the years ended December 31, 2023 and 2022, the Company recorded income of $ 1,722,000 and a loss $ 1,981,000 , respectively, on equity method investments related to this joint venture.

For the years ended December 31, 2024 and 2023 , the Company recorded a loss of $ 3,552,000 and income of $ 1,722,000 , respectively, on equity method investments related to this joint venture.

The increased income for 2023 is primarily due to a gain recognized on insurance proceeds received by Doran Canterbury I related to an outstanding claim.

11 unchanged sentences

As the Company is able to assert significant influence, but not control, over Doran Canterbury II’s operational and financial policies, the Company accounts for the joint venture as an equity method investment.

As of December 31, 2023 and 2022, the proportionate share of Doran Canterbury II's earnings was immaterial.

During the years ended December 31, 2023 and December 31, 2022, the Company contributed approximately $ 0 and $ 398,000 , respectively, as an equity investment contribution in Doran Canterbury II.

Groundwork on the Doran Canterbury II site began in October 2020, paving the way for the ground-up construction of the second phase of apartments, which began construction in March 2022 with initial occupancy beginning January 2024.

For the year ended December 31, 2024 , the Company recorded a loss of $ 1,923,000 on equity method investments related to this joint venture.

As of December 31, 2023, the proportionate share of Doran Canterbury II's earnings was immaterial.

We are a party to a contribution and indemnity agreement with affiliates of Doran relating to debt financing by Doran Canterbury II as borrower, which is guaranteed by Doran affiliates.

Under the contribution and indemnity agreement, as amended, the Company is obligated to reimburse and indemnify each loan guarantor for any amounts paid by such loan guarantor to the lender on debt financing by Doran Canterbury II, up to a maximum of $ 1,000,000 as of December 31, 2024 .

“Commitments and Contingencies.”

Canterbury DBSV Development, LLC

4 unchanged sentences

As the Company is able to assert significant influence, but not control, over Canterbury DBSV’s operational and financial policies, the Company accounts for the joint venture as an equity method investment.

For the years ended December 31, 2023 and 2022, the Company recorded a loss of $ 223,000 and income of $ 415,000 , respectively, on equity investment related to this joint venture.

For the years ended December 31, 2024 and 2023 , the Company recorded income of $ 8,000 and a loss of $ 223,000 , respectively, on equity investment related to this joint venture.

For the years ended December 31, 2024 and 2023 , the Company also received dividend distributions of $ 36,000 and $ 30,000 , respectively, related to this joint venture.

Trackside Investments, LLC

On September 20, 2023, Canterbury Development, entered into an Operating Agreement with Trackside Hospitality, LLC as the two members of a Minnesota limited liability company named Trackside Investments, LLC ("Trackside Investments").

Trackside Investments was formed as a joint venture for the development of an approximately 16,000 square foot restaurant and entertainment venue.

Canterbury Development, LLC's equity contribution to Trackside Investments was approximately 3.5 acres of land, which were contributed to Trackside Investments on August 20, 2024.

In connection with its contribution, Canterbury Development became a 50 % equity member in Trackside Investments.

In addition, Canterbury Development is guaranteed an annual 6 % preferred return on the balance of Canterbury Development's undistributed base capital.

As the Company is able to assert significant influence, but not control, over Trackside Investments' operational and financial policies, the Company accounts for the joint venture as an equity method investment.

In accordance with ASC 610 - 20, we determined that we do not have a controlling financial interest in the Trackside Investments joint venture and the arrangements meet the criteria to be accounted for as a contract.

Therefore, we derecognized the land and recognized a full gain in 2024 (approximately $ 1,732,000 ) between the carrying amount of the land and the estimated fair value of the land transferred.

In future periods, the Company will recognize its proportionate share of Trackside Investments' earnings as an increase or decrease in its Equity investment and as Income or Loss from Investment in this joint venture.

The following table summarizes changes to the Equity investment and Investee losses in excess of equity investment lines on our consolidated balance sheets for the year ended December 31, 2024 :

3 unchanged sentences

Net Equity Investment Balance at 12/31/22

Q1 Equity investment (loss) income

Q2 Equity investment loss

Q3 Equity investment loss

Q4 Equity investment (loss) income

$ 6,863,517 $ ( 3,185,923 ) $ 3,677,594

Equity investment (loss) income

( 220,437 ) 1,721,705 1,501,268

Dividends received from investments

( 30,368 ) — ( 30,368 )

Net Equity Investment Balance at 12/31/23

$ 6,612,712 $ ( 1,464,218 ) $ 5,148,494

Equity investment loss

( 1,915,791 ) ( 3,551,980 ) ( 5,467,771 )

Contribution to equity investment

2,315,650 — 2,315,650

Dividends received from investments

( 36,480 ) — ( 36,480 )

Net Equity Investment Balance at 12/31/24

$ 6,976,091 $ ( 5,016,198 ) $ 1,959,893

Tax Increment Financing

19 unchanged sentences

Recently Closed Transactions Under Real Estate Agreements

On August 20, 2024, the Company completed the transfer of approximately 3.5 acres of land to the Trackside Investments joint venture for total consideration of $ 2,316,000 .

Trackside Investments, LLC was formed as a joint venture for the development of an approximately 16,000 square foot restaurant and entertainment venue, with the venue opening anticipated to be Summer 2025.

On April 28, 2023, the Company completed the sale of 37 acres of land to Bloomington Investments, LLC, an entity related to Swervo Development (“Swervo”), for total consideration of $ 8,800,000 .

With the land sale and government approvals now complete, Swervo began construction of its planned state-of-the-art amphitheater in 2023, with the venue opening anticipated to be Summer 2025.

On April 7, 2020, the Company entered into an agreement to sell approximately 11.3 acres of land to the west of the Racetrack to a third party for total consideration of approximately $ 2,400,000 .

The Company closed on the first phase of this transaction in April 2021, which totaled approximately 7.4 acres of land for proceeds of approximately $ 1,200,000 .

The Company closed on the second phase of this transaction in May 2022, which totaled approximately 4.2 acres of land for proceeds of approximately $ 1,200,000 .

As a result of these two land sales, the Company recorded a gain of approximately $ 6,490,000 and $ 12,000 on the Consolidated Statements of Operations for the years ended December 31, 2023 and December 31, 2022, respectively.

With the land sale and government approvals now complete, Swervo began construction of its planned state-of-the-art amphitheater in 2023.

As a result of these two land transactions, the Company recorded a gain of approximately $ 1,732,000 and $ 6,490,000 on the Consolidated Statements of Operations for the years ended December 31, 2024 and December 31, 2023 , respectively.

RELATED PARTY RECEIVABLES

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data