Canterbury Park Holding Corp 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (a) Financial Statements The following financial statements of the Company are set forth on pages 24 through 41 of the Form 10-K: Page Report of Independent Registered Public Accounting Firm (PCAOB ID 344 ) 24 Consolidated Balance Sheets as of December 31, 2025 and 2024 25 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 26 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024 27 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 28 Notes to Consolidated Financial Statements for the years ended December 31, 2025 and 2024 30 23 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders Canterbury Park Holding Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Canterbury Park Holding Corporation and Subsidiaries (the “Company”) as of December 31, 2025 and 2024 , and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024 , and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financials are the responsibility of Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined there are no critical audit matters. /s/ Wipfli LLP We have served as the Company's auditor since 2014. Minneapolis, Minnesota March 10, 2026 24 CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2025 and 2024 2025 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 12,064,854 $ 10,075,642 Restricted cash 3,759,248 3,611,776 Short-term investments 5,000,000 5,000,000 Accounts receivable, net of allowance of $ 7,670 at December 31, 2025 and 2024 342,866 439,121 Inventory 269,419 250,658 Prepaid expenses 1,180,025 1,849,015 Income taxes receivable and prepaid income taxes 2,426,857 3,186,465 Total Current Assets 25,043,269 24,412,677 LONG-TERM ASSETS Deposits 99,147 19,650 Other prepaid expenses 15,972 19,951 TIF receivable 19,986,287 18,898,445 Related party receivable (Note 12) 5,959,601 4,743,913 Operating lease right-of-use assets — 27,674 Equity investment (Note 11) 5,155,644 6,976,091 Other long-term receivables (Note 9) 2,097,463 1,597,463 Land held for development 2,659,257 2,183,930 Land, buildings, and equipment, net (Note 3) 51,564,440 51,042,988 Total Long-term Assets 87,537,811 85,510,105 TOTAL ASSETS $ 112,581,080 $ 109,922,782 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 2,218,679 $ 3,665,155 Casino accruals 2,424,310 2,159,249 Accrued wages and payroll taxes 2,007,174 2,151,524 Cash dividend payable 356,949 351,373 Accrued property taxes 1,171,974 1,103,784 Deferred revenue 541,236 311,244 Payable to horsepersons 873,065 870,775 Current portion of finance lease obligations 35,862 32,950 Current portion of operating lease obligations — 27,674 Total Current Liabilities 9,629,249 10,673,728 LONG-TERM LIABILITIES Deferred income taxes (Note 4) 10,471,000 9,846,000 Investee losses in excess of equity investment 8,521,464 5,016,198 Finance lease obligations, net of current portion 81,319 117,182 Operating lease obligations, net of current portion — — Other long-term liabilities — 181,000 Total Long-term Liabilities 19,073,783 15,160,380 TOTAL LIABILITIES 28,703,032 25,834,108 STOCKHOLDERS’ EQUITY (Note 5) Common stock, $ .01 par value, 10,000,000 shares authorized, 5,121,331 and 5,036,717 , respectively, shares issued and outstanding 51,213 50,367 Additional paid-in capital 30,690,660 28,940,887 Retained earnings 53,136,175 55,097,420 Total Stockholders’ Equity 83,878,048 84,088,674 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 112,581,080 $ 109,922,782 See notes to consolidated financial statements. 25 CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED December 31, 2025 and 2024 2025 2024 OPERATING REVENUES: Casino $ 37,086,757 $ 38,774,702 Pari-mutuel 7,686,348 8,226,047 Food and beverage 8,244,692 7,968,157 Other 6,549,788 6,593,382 Total Net Revenues 59,567,585 61,562,288 OPERATING EXPENSES: Purse expense 7,063,430 7,908,404 Minnesota Breeders’ Fund 981,583 1,027,609 Other pari-mutuel expenses 832,506 910,843 Salaries and benefits 26,456,624 26,142,046 Cost of food and beverage and other sales 3,157,600 3,195,767 Depreciation and amortization 3,998,041 3,620,899 Utilities 1,660,958 1,489,576 Advertising and marketing 1,725,700 1,349,656 Professional and contracted services 5,851,341 5,660,993 Loss on disposal of assets 56,248 49,214 Other operating expenses 5,321,936 5,506,647 Total Operating Expenses 57,105,967 56,861,654 Gain on transfer of land (Note 11) — 1,732,353 INCOME FROM OPERATIONS 2,461,618 6,432,987 OTHER INCOME (LOSS) Loss from equity investment ( 5,242,852 ) ( 5,467,771 ) Interest income, net 1,966,803 2,071,511 Net Other Loss ( 3,276,049 ) ( 3,396,260 ) (LOSS) INCOME BEFORE INCOME TAXES ( 814,431 ) 3,036,727 INCOME TAX BENEFIT (EXPENSE) (Note 4) 285,000 ( 923,885 ) NET (LOSS) INCOME $ ( 529,431 ) $ 2,112,842 Basic earnings (loss) per share $ ( 0.10 ) $ 0.42 Diluted earnings (loss) per share $ ( 0.10 ) $ 0.42 Weighted average basic shares outstanding 5,071,423 4,994,905 Weighted average diluted shares 5,071,423 5,032,210 See notes to consolidated financial statements. 26 CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY YEARS ENDED December 31, 2025 and 2024 Number of Common Additional Retained Shares Stock Paid-in Capital Earnings Total Balance at December 31, 2023 4,962,573 49,626 27,351,509 54,395,462 $ 81,796,597 Stock-based compensation — — 571,632 — 571,632 Dividend distribution — — — ( 1,410,884 ) ( 1,410,884 ) 401(K) stock match 42,086 421 875,377 — 875,798 Issuance of deferred stock awards 17,475 175 ( 109,062 ) — ( 108,887 ) Shares issued under Employee Stock Purchase Plan 14,583 146 251,431 — 251,577 Net income — — — 2,112,842 2,112,842 Balance at December 31, 2024 5,036,717 50,367 28,940,887 55,097,420 84,088,674 Stock-based compensation — — 687,970 — 687,970 Dividend distribution — — — ( 1,431,814 ) ( 1,431,814 ) 401(K) stock match 52,846 527 913,059 — 913,586 Issuance of deferred stock awards 17,089 171 ( 63,901 ) — ( 63,730 ) Shares issued under Employee Stock Purchase Plan 14,679 147 212,645 — 212,792 Net loss — — — ( 529,431 ) ( 529,431 ) Balance at December 31, 2025 5,121,331 $ 51,213 $ 30,690,660 $ 53,136,175 $ 83,878,048 See notes to consolidated financial statements. 27 CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED December 31, 2025 and 2024 2025 2024 Operating Activities: Net (loss) income $ ( 529,431 ) $ 2,112,842 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 3,998,041 3,620,899 Stock-based compensation expense 687,970 571,632 Stock-based employee match contribution 913,586 875,798 Deferred income taxes 625,000 ( 454,015 ) Loss on disposal of assets 56,248 49,214 Loss from equity investment 5,242,852 5,467,771 Gain on transfer of land — ( 1,732,353 ) Changes in operating assets and liabilities: Accounts receivable 96,255 44,971 Increase in TIF receivable ( 915,818 ) ( 681,332 ) Inventory, prepaid expenses and deposits ( 151,489 ) ( 1,233,504 ) Income taxes receivable and prepaid income taxes 759,608 896,899 Other long-term receivables ( 500,000 ) ( 1,597,463 ) Operating lease right-of-use assets 27,674 25,352 Operating lease liabilities ( 27,674 ) ( 25,352 ) Accounts payable ( 1,622,796 ) ( 2,121,199 ) Deferred revenue 229,992 36,346 Casino accruals 265,061 ( 508,250 ) Accrued wages and payroll taxes ( 144,350 ) 488,597 Accrued property taxes 68,190 362,569 Other long-term liabilities ( 181,000 ) 181,000 Payable to horsepersons 2,290 107,392 Net cash provided by operating activities 8,900,209 6,487,814 Investing Activities: Additions to land, buildings, and equipment ( 4,182,822 ) ( 11,984,131 ) Proceeds from disposal of assets 34,275 60,800 Additions for TIF eligible improvements ( 754,281 ) ( 4,244,238 ) Proceeds from TIF receivable 582,257 — Proceeds from sale of short-term investments 9,500,000 7,000,000 Purchase of short-term investments ( 9,500,000 ) ( 7,000,000 ) Cash dividends received from equity investments 82,861 36,480 Increase in related party receivable ( 1,215,688 ) ( 1,217,842 ) Net cash used in investing activities ( 5,453,398 ) ( 17,348,931 ) Financing Activities: Proceeds from issuance of common stock 212,792 251,577 Cash dividend paid to shareholders ( 1,426,238 ) ( 1,405,636 ) Payments for taxes related to net share settlement of equity awards ( 63,730 ) ( 108,887 ) Principal payments on finance lease ( 32,951 ) ( 30,272 ) Net cash used in financing activities ( 1,310,127 ) ( 1,293,218 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 2,136,684 ( 12,154,336 ) Cash, cash equivalents, and restricted cash at beginning of year 13,687,418 25,841,754 Cash, cash equivalents, and restricted cash at end of year $ 15,824,102 $ 13,687,418 28 CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED December 31, 2025 and 2024 (continued) Schedule of non-cash investing and financing activities Additions to land, buildings, and equipment funded through accounts payable $ 176,000 $ 1,187,000 Additions to land, buildings, and equipment funded through prepaid expenses 726,000 — Dividend declared but not yet paid 357,000 351,000 Change in investee losses in excess of equity investments 3,505,000 3,552,000 ROU assets obtained in exchange for operating lease obligations — 171,000 Transfer of assets to Trackside Investments, LLC — 583,000 Supplemental disclosure of cash flow information: Income taxes paid, net of refunds $ (1,489,000 ) $ 300,000 Interest paid 11,000 13,000 See notes to consolidated financial statements. 29 CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED December 31, 2025 and 2024 1. OVERVIEW AND BASIS OF PRESENTATION Business – The Company’s Racetrack operations are conducted at facilities located in Shakopee, Minnesota, approximately 20 miles southwest of downtown Minneapolis. In May 1994, the Company commenced year-round horse racing simulcast operations and hosted the first annual live race meet during the summer of 1995. The Company’s live racing operations are a seasonal business as it hosts live race meets each year from May until September. The Company earns additional pari-mutuel revenue by televising its live racing to out-of-state racetracks around the country. Canterbury Park’s Casino operates 24 hours a day, seven days a week and is limited by Minnesota State law to conducting card play on a maximum of 80 tables. The Casino currently offers a variety of poker and table games. The Company’s three largest sources of revenues include: Casino operations, pari-mutuel operations, and food and beverage sales. The Company also derives revenues from related services and activities, such as admissions, advertising signage, publication sales, and from other entertainment events and activities held at the Racetrack. Additionally, the Company continues its ongoing development of approximately 140 acres of underutilized land surrounding the Racetrack in a project known as Canterbury Commons. The Company is pursuing several mixed-use development opportunities for this land, directly and through joint ventures. Basis of Presentation - The consolidated financial statements include the accounts of Canterbury Park Holding Corporation and its direct and indirect subsidiaries Canterbury Park Entertainment, LLC, Canterbury Park Concessions, Inc., and Canterbury Development, LLC (collectively, the “Company”), after elimination of intercompany accounts and transactions. Estimates – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Reclassifications - Certain amounts in prior period financial statements have been reclassified to conform to current period presentations. 2. ACCOUNTING STANDARDS AND SIGNIFICANT ACCOUNTING POLICIES Summary of Significant Accounting Policies Revenue Recognition – The Company’s primary revenues with customers consist of Casino operations, pari-mutuel wagering on simulcast and live horse races, and food and beverage transactions. We determine revenue recognition through the following steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligation in the contract ● Recognition of revenue when, or as, we satisfy a performance obligation The transaction price for a Casino contract is a set percentage of wagers and is recognized at the time that the wagering process is complete. The transaction price for pari-mutuel wagering is the commission received on a wager, exclusive of any track fees and is recognized upon occurrence of the live race that is presented for wagering and after that live race is made official by the respective state’s racing regulatory body. The transaction price for food and beverage contracts is the net amount collected from the customer for these goods. Food and beverage services have been determined to be separate, stand-alone performance obligations and the transaction price is recorded as revenue as the good is transferred to the customer when delivery is made. Contracts for Casino operations and pari-mutuel wagering involve two performance obligations for those customers earning points under the Company’s loyalty program and a single performance obligation for customers who do not participate in the program. The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as these wagers have similar characteristics and the Company reasonably expects the effects on the financial statements of applying the revenue recognition guidance to the portfolio will not differ materially from that which would result if applying the guidance to an individual wagering contract. For purposes of allocating the transaction price in a wagering contract between the wagering performance obligation and the obligation associated with the loyalty points earned, the Company allocates an amount to the loyalty point contract liability based on the stand-alone redemption value of the points earned, which is determined by the value of a point that can be redeemed for a cash voucher, food and beverage voucher, racing admission, valet parking, or racing forms. Based on past experience, the majority of customers redeem their points for cash vouchers. We have two general types of liabilities related to Casino contracts with customers: ( 1 ) our MVP Loyalty Program and ( 2 ) outstanding chip liability. These are included in the line item Casino accruals on the Consolidated Balance Sheets. We defer the full retail value of these complimentary reward items until the future revenue transaction occurs. The Company offers certain promotional allowances at no charge to patrons who participate in its player rewards program. The retail value of these promotional items is included as a deduction from pari-mutuel revenues. We evaluate our on-track revenue (live racing), export revenue (simulcast), and import revenue (guest fees) contracts to determine whether we are acting as the principal or as the agent when providing services, which we consider in determining if revenue should be reported gross or net. An entity is a principal if it controls the specified service before that service is transferred to a customer. 30 The revenue we recognize for on-track revenue and import revenue is the commission we are entitled to retain for providing a wagering service to our customers. For these arrangements, we are the principal as we control the wagering service; therefore, any charges, including simulcast fees, we incur for delivering the wagering service are presented as operating expenses. For export revenue, our customer is the third party wagering site such as a racetrack, OTB, or advance deposit wagering provider. Therefore, the revenue we recognize for export revenue is the simulcast host fee we earn for exporting our racing signal to the third party wagering site. Cash and Cash Equivalents – Cash and cash equivalents include all investments with original maturities of three months or less or which are readily convertible into known amounts of cash and are not legally restricted. 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 – 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. 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. Credit is granted in the normal course of business without collateral. Accounts receivable are stated net of allowances for doubtful accounts, which represent estimated losses resulting from the inability of customers to make the required payments. Accounts that are outstanding longer than the contractual terms are considered past due. We evaluate our allowance for credit losses and estimate collectability of current and non-current accounts receivable based on historical bad debt experience, our assessment of the financial condition of individual companies with which we do business, current market conditions, and reasonable and supportable forecasts of future economic conditions. In times of economic turmoil, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods. The Company does not have accounts receivable with original maturities greater than one year. The allowance for credit losses and activity as of December 31, 2025 and 2024 , 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%. Other long-term receivables - In connection with the 2024 and 2025 live race meet and purse fund contribution agreements 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 and 2025 overpayment amounts from those purse supplements. For more information on the Company’s overpayment of purses related to the 2024 and 2025 live race agreements, 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. In the event that facts and circumstances indicate that the carrying value of any long-lived assets may be impaired, an evaluation of recoverability would be performed. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. During 2025 and 2024 , the Company determined that no evaluations of recoverability were necessary. 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. Repair and maintenance costs are charged to operations when incurred. Furniture, fixtures, and equipment are depreciated using the straight-line method over estimated useful lives ranging from 5 – 7 years, while buildings are depreciated over 15 – 39 years. Building improvements are amortized using the straight-line method over the useful life of the assets. Pre-development costs are incurred prior to vertical construction and for certain land held for development during the due diligence phase. This includes legal, engineering, architecture, and other professional fees incurred in pursuit of new development opportunities for which we believe future development is probable. Future development is dependent upon various factors, including zoning and regulatory approval, rental market conditions, construction costs, and availability of capital. Pre-development costs incurred for which future development is not yet considered probable are expensed as incurred. The Company capitalizes property taxes incurred on its land held for development during periods in which activities necessary to get the property ready for its intended use are in progress. Costs incurred after the property is substantially complete and ready for its intended use are charged to expense as incurred. Land Held for Development – Land held for development consists of land owned for potential real estate development. 31 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. (“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 $ 6,956,000 and $ 8,288,000 for the years ended December 31, 2025 and 2024 , 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. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to reverse. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Interest and penalties associated with uncertain income tax positions are presented in income tax expense. For the years ended December 31, 2025 and 2024 , the Company did not recognize any expense related to interest and penalties. Net Income Per Share – Basic net income per common share is based on the weighted average number of common shares outstanding during each year. Diluted net income per common share takes into effect the dilutive effect of potential common shares outstanding. The Company’s only potential common shares outstanding are stock options and unvested deferred stock awards. Fair Values of Financial Instruments – Due to the current classification of all financial instruments and given the short-term nature of the related account balances, carrying amounts reported in the Consolidated Balance Sheets approximate fair value. Stock-Based Employee Compensation – The Company accounts for share-based compensation awards on a fair value basis. The estimated grant date fair value of each stock-based award is recognized as expense over the requisite service period (generally the vesting period). For more information on the Company’s stock-based compensation plans, see Note 5. New Accounting Pronouncement Accounting Standards Update (ASU) No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures requires enhanced disclosures primarily related to the rate reconciliation and income taxes paid information. The Company adopted ASU 2023 - 09 on January 1, 2025. The adoption resulted in additional disclosures but did not have an impact on the Company's consolidated financial position, results of operations, or cash flows. Results for the year ended December 31, 2025 are presented under ASU 2023 - 09 while prior period amounts continue to be reported in accordance with previously applicable US GAAP. See footnote 4 of the consolidated financial statements for changes to accounting policies. 3. LAND, BUILDINGS AND EQUIPMENT Land, buildings and equipment, at cost, consist of the following at December 31, 2025 and 2024 : 2025 2024 Land $ 2,835,655 $ 2,835,655 Buildings and building improvements 63,087,702 55,620,120 Furniture and equipment 21,557,113 21,102,057 Construction in progress 2,011,560 6,586,250 89,492,030 86,144,082 Accumulated depreciation ( 37,927,590 ) ( 35,101,094 ) Total land, buildings, and equipment, net $ 51,564,440 $ 51,042,988 The Company has included land held for development as a separate line on the consolidated balance sheet. This represents land owned for potential real estate development and totaled $ 2,659,257 and $ 2,183,930 as of December 31, 2025 and 2024 , respectively. 32 4. INCOME TAXES The following table summarizes income (loss) before income taxes for the years ended December 31, 2025 and 2024 : 2025 2024 United States $ ( 814,431 ) $ 3,036,727 Foreign - - The Company's income tax expense (benefit) for the years ended December 31, 2025 and 2024 is as follows: 2025 2024 U.S. Federal $ ( 507,000 ) $ 522,900 State ( 403,000 ) 674,000 Foreign - - Current income tax expense (benefit) ( 910,000 ) 1,196,900 U.S. Federal 238,000 51,985 State 387,000 ( 325,000 ) Foreign - - Deferred income tax expense (benefit) 625,000 ( 273,015 ) Total income tax expense (benefit) $ ( 285,000 ) $ 923,885 The following is a reconciliation from the Company's statutory rate to the effective rate for the year ended December 31, 2025 and 2024 after adoption of ASU 2023 - 09: 2025 Percent United States federal statutory income tax rate $ ( 171,000 ) 21.0 % State income taxes, net of federal tax benefit of state tax ( 13,000 ) 1.6 % Credit for tax on employee tips ( 29,000 ) 3.6 % Nontaxable or nondeductible items Stock based compensation not benefited 27,000 ( 3.3 %) Nondeductible lobbying expenses 38,000 ( 4.7 %) Other 9,000 ( 1.1 %) Changes in unrecognized tax benefits IRS interest refund ( 146,000 ) 17.9 % Provision for income tax benefit $ ( 285,000 ) 35.0 % The following is a reconciliation from the Company's statutory rate to the effective rate for the year ended December 31, 2024 prior to the adoption of ASU 2023 - 09: 2024 Percent Federal tax (benefit) expense at statutory rates $ 637,700 21.0 % State and local income tax, net of federal (national) income tax effect 275,700 9.1 % Nondeductible lobbying expense 32,000 1.1 % Stock-based compensation expense 4,900 0.2 % Other ( 26,415 ) ( 0.9 %) Provision for income tax expense $ 923,885 30.4 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows: 2025 2024 Deferred tax assets: Accrued compensation $ 97,000 $ 82,300 Player rewards program accrual 89,000 94,800 Stock-based compensation 210,700 160,200 Net operating losses 218,600 — Credits 48,000 — Other 155,400 1,700 Net deferred tax assets 818,700 339,000 Deferred tax liabilities: Land, building and equipment 5,982,700 5,523,200 Investment in joint ventures 3,996,900 3,468,100 TIF accrued interest receivable 1,058,000 962,100 Prepaid expenses 252,100 231,600 Net deferred tax liabilities 11,289,700 10,185,000 Net long-term deferred tax liabilities $ ( 10,471,000 ) $ ( 9,846,000 ) For the period ended December 31, 2025, the Company had a federal and state net operating loss carryforwards of $ 460,000 and $ 1,574,000 , respectively. The federal net operating loss carryforward has an indefinite carryforward period. The state post-apportioned net operating loss carryforward will expire in 2040. The Company is subject to U.S. and Minnesota taxation. The Company is no longer subject to U.S. federal or state by tax authorities for years before 2022 and 2021, respectively. 33 The following is a reconciliation of the Company's unrecognized tax benefits for the years ended December 31, 2025 and 2024 : 2025 2024 Unrecognized tax benefits — January 1 $ 181,000 $ — Additions based on tax positions related to the current year — 630,000 Additions for tax positions of prior years — — Reductions for tax positions of prior years — — Reductions for tax positions of current years ( 181,000 ) ( 449,000 ) Unrecognized tax benefits — December 31 $ — $ 181,000 The Company has not accrued interest expense and penalties related to the unrecognized tax benefits for the periods ended December 31, 2025 and December 31, 2024, respectively. The following table summarizes the Company's tax payments and refunds by jurisdiction for the year ended December 31, 2025: Income Tax Paid, Net of Refunds Federal refund $ 1,488,608 State — Foreign — $ 1,488,608 5. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION Stockholders’ Equity Employee Stock Purchase Plan: The Company offers an Employee Stock Purchase Plan (the “ESPP”) that is open to all employees working more than 15 hours per week. 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 purchased 14,679 and 14,583 shares in 2025 and 2024 , respectively. As of December 31, 2025 , a total of 396,096 shares have been issued from the 450,000 shares authorized. KSOP: The Company offers a KSOP Plan (the “KSOP”) that includes the Employee Stock Ownership Plan (the “ESOP”) and the 401 (k) Plan. The KSOP allows the Company to use Company stock to match contributions from its employees should it so choose. The KSOP is available to eligible employees who had completed six months of service. 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, 2025 and 2024 totaled approximately $ 914,000 and $ 876,000 , respectively. Stock-Based Compensation Stock-based compensation is recorded at fair value as of the date of grant, is included in the salaries and benefits expense line item on the consolidated statements of operations and amounted to approximately $ 688,000 and $ 572,000 for the years ended December 31, 2025 and 2024 , respectively. Stock Options: 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 has 99,687 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. There were no options granted in 2025 or 2024. The grant-date fair value of options outstanding and exercisable at December 31, 2025 and 2024 was $ 0 . As of December 31, 2025 , there are no options outstanding. Long Term Incentive Plan The Long Term Incentive Plan (the “LTI Plan”) authorizes the grant of Long Term Incentive Awards that provide an opportunity to Named Executive Officers (“NEOs”) and other Senior Executives to receive a payment in cash or shares of the Company’s common stock to the extent of achievement at the end of a period greater than one year (the “Performance Period”) as compared to Performance Goals established at the beginning of the Performance Period. Beginning in 2020, the Company temporarily suspended the granting of performance awards under its LTI Plan, and instead granted deferred stock awards designed to retain NEOs and other senior executives in lieu of LTI Plan awards from 2020 through 2025. Accordingly, there were no awards outstanding under the LTI Plan during the years ended December 31, 2025 and 2024. 34 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 meeting. Options granted under the Plan generally expire 10 years after the grant date. Restricted stock and deferred stock grants generally vest 100 % one year after the date of the annual meeting at which they were granted, are subject to restrictions on resale for an additional year, and are subject to forfeiture if a board member terminates his or her board service prior to the shares vesting. The unvested deferred stock awards outstanding as of December 31, 2025 to our non-employee directors consists of only a grant of deferred stock on June 5, 2025 of 13,626 shares with a weighted average fair value per share of $ 17.61 . Below is a summary of changes in Board of Directors unvested deferred stock award grants as of December 31, 2025 : Weighted Average Deferred Fair Value Stock Per Share Non-Vested Balance, December 31, 2024 10,734 $ 22.35 Granted 13,626 17.61 Vested ( 10,734 ) 22.35 Forfeited — — Non-Vested Balance, December 31, 2025 13,626 $ 17.61 Employee Deferred Stock Awards In 2025, the Company granted employees deferred stock awards totaling 27,400 shares of common stock, with a vesting term of approximately four years and a fair value of $ 19.43 per share. 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. The vesting schedule of the awards granted in 2025 is as follows: (i) 25 % vesting and being issued in March 2026, ( ii) 25 % vesting and being issued in March 2027, ( iii) 25 % vesting and being issued in March 2028 and (iv) 25 % vesting and being issued in March 2029. The compensation cost associated with these grants of deferred stock awards are recorded in “Salaries and benefits” on the Consolidated Statements of Operations. A summary of the changes in employee unvested deferred stock award grants as of December 31, 2025 , is as follows: Weighted Average Deferred Fair Value Stock Per Share Non-Vested Balance, December 31, 2024 43,790 $ 22.52 Granted 27,400 19.43 Vested ( 12,505 ) 22.61 Forfeited ( 5,475 ) 22.43 Non-Vested Balance, December 31, 2025 53,210 $ 20.92 At December 31, 2025 , there was approximately $ 853,000 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 3.3 years. 6. NET INCOME (LOSS) PER SHARE COMPUTATIONS The following is a reconciliation of the numerator and denominator of the net income (loss) per common share computations for the years ended December 31, 2025 and 2024 . Year Ended December 31, 2025 2024 Net income (loss) (numerator) amounts used for basic and diluted per share computations: $ ( 529,431 ) $ 2,112,842 Weighted average shares (denominator) of common stock outstanding: Basic 5,071,423 4,994,905 Plus dilutive effect of deferred stock awards — 37,305 Diluted $ 5,071,423 $ 5,032,210 Net income (loss) per common share: Basic $ ( 0.10 ) $ 0.42 Diluted ( 0.10 ) 0.42 For the year ended December 31, 2025, 31,893 shares have been excluded from the calculation of diluted weighted average shares outstanding as the inclusion of these shares would have an anti-dilutive effect. 35 7. GENERAL CREDIT AGREEMENT The Company has a general credit and security agreement with a financial institution. The agreement was amended as of February 28, 2021 to extend the maturity date to January 31, 2024 and increase its revolving credit line up to $ 10,000,000 . The line of credit is collateralized by all receivables, inventory, equipment, and general intangibles of the Company, as well as a mortgage on certain real property. The Company had no borrowings under the credit line during the year ended December 31, 2025 . As of December 31, 2025 , 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. The general credit and security agreement was further amended as of January 31, 2024 to extend the maturity date to January 31, 2027 and reduce the maximum borrowing under the line of credit to $ 5,000,000 . In connection with the amendment, the financial institution terminated a mortgage to release certain Company real property as collateral and the parties entered into a negative pledge agreement under which the Company agreed not to create any liens or encumbrances on certain Company real property. 8. LEASES The Company determines if an arrangement is a lease or contains a lease at inception. The Company leases certain office equipment under finance leases. We also lease equipment related to our horse racing operations under operating leases. For lease accounting purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and liabilities for short term leases. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term. The Company’s lease agreements do not contain any variable lease payments, material residual value guarantees or any restrictive covenants. Lease costs related to operating leases were $ 28,228 and $ 26,785 for the years ended December 31, 2025 and 2024 , respectively. The total lease expenses for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or liability was $ 448,231 and $ 457,454 for the years ended December 31, 2025 and 2024 , respectively. Lease costs included in depreciation and amortization related to our finance leases were $ 36,182 and $ 33,332 for the years ended December 31, 2025 and 2024 , respectively. Interest expense related to our finance leases was immaterial. The following table shows the classification of the right of use assets on our Consolidated Balance Sheets at December 31, 2025 and 2024 : Assets Balance Sheet Location 2025 2024 Finance Land, buildings and equipment, net (1) $ 117,181 $ 150,132 Operating Operating lease right-of-use assets - 27,674 Total Leased Assets $ 117,181 $ 177,806 1 – Finance lease assets are net of accumulated amortization of $ 63,729 and $ 30,779 for the years ended December 31, 2025 and 2024 , respectively. The following table shows the lease terms and discount rates related to our leases: Year Ended December 31, 2025 2024 Weighted average remaining lease term (in years): Finance 3.0 4.0 Operating - 0.4 Weighted average discount rate (%): Finance 8.5 % 8.5 % Operating - 8.0 % The maturity of operating leases and finance leases for the year ended December 31, 2025 are as follows: Year Ended December 31, 2025 Finance Leases 2026 $ 44,447 2027 44,447 2028 44,252 2029 and beyond — Total minimum lease obligations 133,146 Less: amounts representing interest ( 15,965 ) Present value of minimum lease payments 117,181 Less: current portion ( 35,862 ) Lease obligations, net of current portion $ 81,319 36 Purchase Obligations 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 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, 2025 and 2024 w ere $ 203,000 and $ 200,000 , res pectively. 9. COMMITMENTS AND CONTINGENCIES Effective December 21, 2021, the Company entered into a Contribution and Indemnity Agreement (“Indemnity Agreement”) with affiliates of Doran Companies (“Doran”) relating to debt financing by Doran Canterbury I, 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 I, LLC, up to a maximum of $ 5,000,000 . 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 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 . Effective December 30, 2025, the Indemnity Agreement was amended to increase the maximum indemnification by an additional $ 250,000 , bringing the total to a maximum of $ 7,750,000 . 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 30, 2025, the Indemnity Agreement was amended to increase the maximum indemnification by an additional $ 1,750,000 , bringing the total to a maximum of $ 2,750,000 . 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 by the MNHBPA 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 as Other long-term receivables on the Company's balance sheet as of 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 2025 live race meet. In an effort to maintain field size and improve the quality of racing for the 2025 season, the Company guaranteed an additional $ 500,000 of purse monies to be distributed above the minimum amount defined in Minnesota Statutes Chapter 240. The parties recognized there was 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 made an overpayment that may be repaid to the Company by the MNHBPA 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 2025 live race meet, the Company recorded a receivable related to the overpayment of 2025 purses in the amount of $ 500,000 . The combined amounts from the 2024 and 2025 live race meet agreements of $ 2,097,463 is presented as Other long-term receivables on the Company's balance sheet as of December 31, 2025. 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 2025 overpayment amount from those purse supplements. As mentioned above, 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 and 2025 overpayment amounts from those purse supplements. Management believes it is likely that additional purse supplements will ultimately be obtained when considering both the length of time to secure such funds 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 both December 31, 2025 and 2024. The Company is periodically involved in various claims and legal actions arising in the normal course of business. Management believes that the resolution of any pending claims and legal actions at December 31, 2025 and as of the date of this report will not have a material impact on the Company’s consolidated financial positions or results of operations. The Company has committed to payment of statutory distributions under a $ 500,000 bond issued to the Minnesota Racing Commission as required by Minnesota statute. The Company was not required to make any payments related to this bond in 2025 or 2024 , and there is no liability related to this bond on the balance sheet as of December 31, 2025 . 37 10. OPERATING SEGMENTS The Company's chief operating decision maker is its Chief Executive Officer and President, Randall D. Sampson. The Company has four reportable operating segments: horse racing, Casino, food and beverage, and development. The horse racing segment primarily represents simulcast and live horse racing operations. The Casino segment represents operations of Canterbury Park’s Casino, the food and beverage segment represents food and beverage operations provided during simulcast and live racing, in the Casino, and during special events, and the development segment represents our real estate development operations. The Company’s reportable operating segments are strategic business units that offer different products and services. They are managed separately because the segments differ in the nature of the products and services provided as well as process to produce those products and services. The Minnesota Racing Commission regulates the horse racing and Casino segments. 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 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 ): Year Ended December 31, 2025 Horse Racing Casino Food and Beverage Development Total Net revenues from external customers $ 13,545 $ 37,087 $ 8,936 $ — $ 59,568 Intersegment revenues 329 — 1,245 — 1,574 Net interest income 596 — — 1,371 1,967 Depreciation 3,563 301 134 — 3,998 Segment (loss) income before income taxes ( 3,319 ) 4,863 1,745 ( 4,103 ) ( 814 ) Segment tax (benefit) expense ( 1,161 ) 1,702 610 ( 1,436 ) ( 285 ) At December 31, 2025 Segment assets $ 106,526 $ 740 $ 38,129 $ 35,949 $ 181,344 Year Ended December 31, 2024 Horse Racing Casino Food and Beverage Development Total Net revenues from external customers $ 13,967 $ 38,775 $ 8,820 $ — $ 61,562 Intersegment revenues 281 — 1,325 — 1,606 Net interest income 1,014 — — 1,058 2,072 Depreciation 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 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, 2025 and 2024 (in 000’s ): Year Ended December 31, 2025 2024 Revenues Total net revenue for reportable segments $ 61,142 $ 63,168 Elimination of intersegment revenues ( 1,574 ) ( 1,606 ) Total consolidated net revenues $ 59,568 $ 61,562 Income (loss) before income taxes Total segment income before income taxes $ 1,710 $ 5,661 Elimination of intersegment loss before income taxes ( 2,524 ) ( 2,624 ) Total consolidated income before income taxes $ ( 814 ) $ 3,037 December 31, December 31, 2025 2024 Assets Total assets for reportable segments $ 181,344 $ 175,618 Elimination of intercompany balances ( 68,763 ) ( 65,695 ) Total consolidated assets $ 112,581 $ 109,923 38 11. REAL ESTATE DEVELOPMENT Equity Investments Doran Canterbury I, LLC On April 2, 2018, the Company’s subsidiary Canterbury Development LLC entered into an operating agreement with an affiliate of Doran Companies (“Doran”), a national commercial and residential real estate developer, as the two members of a Minnesota limited liability company named Doran Canterbury I, LLC (“Doran Canterbury I”). Doran Canterbury I was formed as part of a joint venture between Doran and Canterbury Development LLC to construct an upscale apartment complex on land adjacent to the Company’s Racetrack. Doran Canterbury has developed Phase I of the project, which includes approximately 300 units, a heated parking ramp, and a clubhouse. On September 27, 2018, Canterbury Development LLC contributed approximately 13 acres of land as its equity contribution in the Doran Canterbury I joint venture and became a 27.4 % equity member. On December 20, 2018, financing for Doran Canterbury I was secured. 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, 2025 and 2024 , the Company recorded a loss of $2,739,000 and $3,552,000, respectively, on equity method investments related to this joint venture. The decreased loss for 2025 is primarily due to an increase in leasing rates by Doran Canterbury I year-over-year following repairs related to an insurance claim that occurred in 2023. In accordance with U.S. GAAP, since we are committed to provide future capital contributions to Doran Canterbury I, we also present as a liability in the accompanying Consolidated Balance Sheets for the net balance recorded for our share of Doran Canterbury I's losses in excess of the amount funded into Doran Canterbury I, which was $7,755,000 and $5,016,000 at December 31, 2025 and 2024 , respectively. We are a party to a contribution and indemnity agreement with affiliates of Doran relating to debt financing by Doran Canterbury I 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 I, up to a maximum of $7,750,000 as of December 31, 2025 . See Note 9. “Commitments and Contingencies.” Doran Canterbury II, LLC In connection with the execution of the amended operating agreement for Doran Canterbury I, on August 18, 2018, Canterbury Development LLC entered into an operating agreement with Doran Shakopee, LLC as the two members of a Minnesota limited liability company entitled Doran Canterbury II, LLC (“Doran Canterbury II”). Under the Doran Canterbury II operating agreement, Doran Canterbury II will pursue development of Phase II of the project. Phase II will include an additional 305 apartment units. Canterbury Development’s equity contribution to Doran Canterbury II for Phase II was approximately 10 acres of land, which were contributed to Doran Canterbury II on July 30, 2020. In connection with its contribution, Canterbury Development became a 27.4 % equity member in Doran Canterbury II with Doran owning the remaining 72.6 %. 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. For the years ended December 31, 2025 , the Company recorded a loss of $2,205,000 and $1,923,000, respectively, on equity method investments related to this joint venture. The increased loss for 2025 is primarily due to an increase in non-cash depreciation expense compared to 2024. In accordance with U.S. GAAP, since we are committed to provide future capital contributions to Doran Canterbury II, we also present as a liability in the accompanying Consolidated Balance Sheets for the net balance recorded for our share of Doran Canterbury II's losses in excess of the amount funded into Doran Canterbury II, which was $766,000 and $ 0 at December 31, 2025 and 2024 , respectively. 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 $ 2,750,000 as of December 31, 2025 . See Note 9. “Commitments and Contingencies.” Canterbury DBSV Development, LLC On June 16, 2020, Canterbury Development, entered into an operating agreement with an affiliate of Greystone Construction, as the two members of a Minnesota limited liability company named Canterbury DBSV Development, LLC (“Canterbury DBSV”). Canterbury DBSV was formed as part of a joint venture between Greystone and Canterbury Development LLC for a multi-use development on the 13 -acre land parcel located on the southwest portion of the Company’s racetrack. Canterbury Development’s equity contribution to Canterbury DBSV was approximately 13 acres of land, which were contributed to Canterbury DBSV on July 1, 2020. In connection with its contribution, Canterbury Development became a 61.87 % equity member in Canterbury DBSV. 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, 2025 and 2024 , the Company recorded a loss of $ 252,000 and income of $ 8,000 , respectively, on equity investment related to this joint venture. The decrease in income for 2025 is primarily due to a gain on sale of land that occurred in 2024. For the years ended December 31, 2025 and 2024 , the Company also received dividend distributions of $ 75,000 and $ 36,000 , 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. For the year ended December 31, 2025, the Company recorded a loss of $ 47,000 on equity investments related to this joint venture. As of December 31, 2024, the proportionate share of Trackside Investments, LLC's earnings was immaterial. For the years ended December 31, 2025 and 2024 , the Company also received dividend distributions of $ 8,000 and $ 0 , respectively, related to this joint venture. For the years ended December 31, 2025 and 2024 , the Company also received preferred return payments of $ 69,000 and $ 0 , respectively, related to this joint venture. 39 Financial information from the financial statements of the Company's joint ventures, Doran Canterbury I, LLC (Doran I), Doran Canterbury II, LLC (Doran II), and all the Company's other joint ventures are summarized as follows: As of December 31, 2025 Total Doran I Doran II Other Current assets $ 6,306,889 $ 5,779,528 $ 456,519 $ 70,842 Noncurrent assets 139,607,148 53,053,492 72,925,034 13,628,622 Current liabilities 77,028,627 72,325,450 4,693,064 10,113 Noncurrent liabilities 89,001,340 14,567,290 69,259,050 5,175,000 Joint ventures' equity ( 20,115,930 ) ( 28,059,720 ) ( 570,561 ) 8,514,351 CPHC share of joint ventures' equity ( 3,365,820 ) ( 7,755,253 ) ( 766,211 ) 5,155,644 Fiscal Year Ended December 31, 2025 Total Doran I Doran II Other Net sales $ 8,037,249 $ 1,777,521 $ 5,968,626 $ 291,102 Gross profit (loss) 3,176,376 ( 315,508 ) 3,280,880 211,004 Net income ( 18,545,508 ) ( 9,996,550 ) ( 8,048,678 ) ( 500,280 ) CPHC share of equity in income of joint ventures ( 5,242,852 ) ( 2,739,055 ) ( 2,205,338 ) ( 298,460 ) CPHC's dividends received from joint ventures ( 82,861 ) — — ( 82,861 ) As of December 31, 2024 Total Doran I Doran II Other Current assets $ 14,505,405 $ 11,593,489 $ 411,006 $ 2,500,910 Noncurrent assets 142,521,390 56,250,927 78,755,486 7,514,977 Current liabilities 10,175,889 5,885,368 4,140,521 150,000 Noncurrent liabilities 147,212,092 79,664,237 67,547,855 — Joint ventures' equity ( 361,146 ) ( 17,705,189 ) 7,478,156 9,865,887 CPHC share of joint ventures' equity 1,959,893 ( 5,016,198 ) 1,439,126 5,536,965 Fiscal Year Ended December 31, 2024 Total Doran I Doran II Other Net sales $ 6,208,696 $ 2,172,608 $ 4,015,928 $ 20,160 Gross profit (loss) 1,902,942 ( 310,841 ) 2,299,285 ( 85,502 ) Net income ( 19,972,811 ) ( 12,964,134 ) ( 7,021,446 ) 12,769 CPHC share of equity in income of joint ventures ( 5,467,771 ) ( 3,551,980 ) ( 1,923,491 ) 7,700 CPHC's dividends received from joint ventures ( 36,480 ) — — ( 36,480 ) Tax Increment Financing On August 8, 2018, the City Council of the City of Shakopee, Minnesota approved a Contract for Private Redevelopment (“Original Agreement”) between the City of Shakopee Economic Development Authority (“Shakopee EDA”) and Canterbury Park Holding Corporation and its subsidiary Canterbury Development LLC in connection with a Tax Increment Financing District (“TIF District”) that the City had approved in April 2018. The City of Shakopee, the Shakopee EDA and the Company entered into the Redevelopment Agreement on August 10, 2018. Under the Original Agreement, the Company agreed to undertake a number of specific infrastructure improvements within the TIF District and the City agreed that a portion of the tax revenue generated from the developed property will be paid to the Company to reimburse it for its expense in constructing these improvements. Under the Original Agreement, the total estimated cost of TIF eligible improvements to be borne by the Company was $ 23,336,500 . On January 25, 2022, the Company received the fully executed First Amendment to the Contract for Private Redevelopment (the “First Amendment”) among the Company, the City of Shakopee, and the Shakopee EDA, which is effective as of September 7, 2021. Under the First Amendment and as part of the authorized changes regarding the responsibilities of the Company and the City, improvements on Unbridled Avenue will be primarily constructed by the City of Shakopee. As a result, the total estimated cost of TIF eligible improvements to be borne by the Company will be reduced by $ 5,744,000 to an amount not to exceed $ 17,592,881 . In order to reimburse the Company for the qualified costs related to constructing the developer improvements, the Authority will issue and the Company will receive a TIF Note in the maximum principal amount of $ 17,592,881 . The First Amendment also memorialized that the Company completed the Shenandoah Drive improvements as required prior to December 31, 2019. The City is obligated to issue bonds to finance the portion of the improvements required to be constructed by the City. A detailed Schedule of the Public Improvements under the First Amendment, the timeline for their construction and the source and amount of funding is set forth in Exhibit 10.1 of the Form 8 -K filed on January 31, 2022. The Company expects to substantially complete the remaining Developer Improvements by July 17, 2027 and will be reimbursed for costs of the Developer Improvements incurred by no later than July 17, 2027. The total amount of funding that the Company will be paid as reimbursement under the TIF program for these improvements is not guaranteed, however, and will depend in part on future tax revenues generated from the developed property. As of December 31, 2025 , the Company recorded a TIF receivable of approximately $ 19,986,000 , which represents $ 16,305,000 of principal and $ 3,681,000 of interest. Management believes future tax revenues generated from current development activity will exceed the Company's development costs and thus, management believes no allowance related to this receivable is necessary. As of December 31, 2024 , the Company recorded a TIF receivable of approximately $ 18,898,000 , which represents $ 15,551,000 of principal and $ 3,347,000 of interest. For the year ended December 31, 2025, the Company received its first payment from the City of Shakopee totaling $ 582,000 , fully related to interest on this receivable. The Company expects to finance its improvements under the Redevelopment Agreement with funds from its current operating resources and existing credit facility and, potentially, third -party financing sources. 40 12. RELATED PARTY RECEIVABLES Since 2019, the Company has loaned money to the Doran Canterbury I and II joint ventures in member loans totaling approximately $ 4,657,000 and $ 3,812,000 as of December 31, 2025 and 2024 , respectively. These member loans bear interest at the rate equal to the Prime Rate plus two percent per annum and totaled $ 1,284,000 and $ 898,000 as of December 31, 2025 and 2024 , respectively. The Company evaluates the collectability of the related party receivables from the Doran Canterbury I and II joint ventures on an ongoing basis. In evaluating collectability, management considers the joint ventures' financial condition, liquidity, historical and projected operating performance, and expected future cash flows, as well as the Company's ownership interest and involvement. Based on this evaluation, management determined that the outstanding balances are collectible as of December 31, 2025. Management's assessment considered the joint ventures' forecasted cash flows and expected operating performance, which management believes will enable the joint ventures to meet their payment obligations. Accordingly, no allowance for credit losses has been recorded for this receivable as of December 31, 2025 and 2024. The Company has also recorded related party receivables of approximately $ 19,000 and $ 34,000 as of December 31, 2025 and 2024 , respectively, for various related costs incurred by the Company. The Company expects to be fully reimbursed for these costs by the related parties in the following year. 13. SUBSEQUENT EVENTS On January 8, 2026, Canterbury Development LLC contributed $ 1,466,405 as an equity contribution to its Doran Canterbury II joint venture. This equity contribution was necessary for Doran Canterbury II to complete refinancing of its existing mortgage payable and is expected to reduce future interest expense from this joint venture. The equity contribution and refinancing did not impact the Company's financial statements as of December 31, 2025 or 2024. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable.