What changed in this filing

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Item 1. Financial Statements

2021-11-08 compared with 2021-08-06 · 107 added, 93 removed, 304 unchanged (40% of the section changed)

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

Three months ended

Six months ended

Nine months ended

September 30,

Food and beverage

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Total operating expenses

Income (loss) from operations

Income from operations

Other expense

Interest expense, net of amounts capitalized

Income (loss) before income taxes

(Provision) benefit for income taxes

Net income (loss)

Earnings (losses) per share of common stock

Income before income taxes

Provision for income taxes

Earnings per share of common stock

Weighted average number of common shares and potential common shares outstanding

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(In thousands, except shares)

June 30, 2021

September 30, 2021

December 31, 2020

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19,096,300 shares issued;

18,599,516 outstanding at June 30, 2021;

18,630,776 outstanding at September 30, 2021;

18,426,130 outstanding at December 31, 2020

Additional paid-in capital

Treasury stock, 496,784 shares at June 30, 2021;

Treasury stock, 465,524 shares at September 30, 2021;

670,170 shares at December 31, 2020

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Balance, June 30, 2021

Exercise of stock options, net

Stock-based compensation expense

Balance, September 30, 2021

Balance, January 1, 2020

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Balance, March 31, 2020

Net exercise of stock options

Exercise of stock options, net

Stock-based compensation expense

Balance, June 30, 2020

Exercise of stock options, net

Stock-based compensation expense

Capital contribution

Balance, September 30, 2020

The Notes to the Consolidated Financial Statements are an integral part of these statements.

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(In thousands, Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net income (loss)

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

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Provision for bad debts

(Gain) loss on disposition of assets

Non cash operating lease expense

Loss on disposition of assets

Write off of unamortized debt issuance costs

Deferred income taxes

Changes in operating assets and liabilities:

Income taxes receivable

Prepaid expenses

Right of use asset, net

Accounts payable

Accrued expenses

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from sale of assets

Change in construction payable

Change in construction accounts payable

Acquisition of property and equipment

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Principal payments on long-term debt

Net cash (used in) provided by financing activities

Loan issuance cost

Net cash used in financing activities

Change in cash and cash equivalents

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Cash paid for income taxes

Conversion of long term deposit to short term deposit

The Notes to the Consolidated Financial Statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUARTERLY PERIOD ENDED JUNE 30, 2021

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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and its subsidiaries.

Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”) and Monarch Casino Resort Spa Black Hawk, a casino in Black Hawk, Colorado (the “Monarch Black Hawk”).

Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”) and Monarch Casino Resort Spa Black Hawk, a hotel and casino in Black Hawk, Colorado (the “Monarch Black Hawk”).

In addition, Monarch owns separate parcels of land located next to the Atlantis and a parcel of land with an industrial warehouse located between Denver, Colorado and Monarch Black Hawk.

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In the opinion of the management of the Company, all adjustments considered necessary for a fair presentation are included.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements of the Company at that date, but does not include all of the information and footnotes required by U.S.

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Our Nevada and Colorado properties reopened with limited operations on June 4, 2020 and June 17, 2020, respectively.

During a part of the second quarter of 2021, we continued to operate under limited government-enforced capacity restrictions.

We were consistently adjusting our routine operations to restrictions in occupancy and social distancing requirements, which include reduced seating at table games at and in all restaurants, and a decreased number of active slot machines on the casino floors.

The convention business at Atlantis was adversely affected by the state-mandated gathering limits.

The state of Colorado mandated closure of table games again on November 13, 2020, which lasted until early February, 2021.

Most of the time since the reopening of our properties we have had to operate under government-enforced capacity restrictions and other limitations.

We have been consistently adjusting our routine operations to restrictions in occupancy and social distancing requirements, which include reduced seating at table games and in all restaurants, and a decreased number of active slot machines on the casino floors.

The convention business at Atlantis has been adversely affected by the state-mandated gathering limits.

We have experienced hotel stay and convention booking cancelations, and since the reopening, guest visitation and hotel and convention bookings have been inconsistent.

At the same time, however, our results of operation for the first half of 2021 benefited from pent-up demand with patrons across the gaming industry, particularly in regional gaming markets.

The Company has taken steps to mitigate the effects of the COVID-19 pandemic and uncertainty by reducing the operating expenses taking advantage of federal and state government programs that support companies affected by the COVID-19 pandemic and their employees, and entering into an amended and restated credit agreement with its lender, which extended the maturity date of the Company’s credit facility to September 3, 2023 and increased the aggregated principal amount of the facility from $ 241.3 million to $ 270.0 million (consisting of a $ 200.0 million term loan and a $ 70.0 million revolving credit facility) with an option to increase the facility by up to an additional $ 75.0 million revolving line of credit.

On July 30, 2021, the state of Nevada reinstated indoor mask mandates, which negatively affected our operation and financial results.

At the same time, however, our results of operation for the first nine months of 2021 benefited from pent-up demand with patrons across the gaming industry, particularly in regional gaming markets.

The Company has taken steps to mitigate the effects of the COVID-19 pandemic and the economic uncertainty by reducing operating expenses, taking advantage of federal and state government programs that support companies affected by the COVID-19 pandemic and their employees, and entering into an amended and restated credit agreement with its lender, which extended the maturity date of the Company’s credit facility to September 3, 2023 and increased the aggregate principal amount of the facility from $ 241.3 million to $ 270.0 million (consisting of a $ 200.0 million term loan and a $ 70.0 million revolving credit facility) with an option to increase the facility by up to an additional $ 75.0 million revolving line of credit.

LONG-TERM DEBT.

In addition, we had strongly encouraged team members to obtain the COVID-19 vaccination to ensure the safety of our team members and guests.

In addition, the Company had strongly encouraged team members to obtain the COVID-19 vaccination to ensure the safety of its team members and guests.

The Company believes that its anticipated cash flows from operating activities, combined with the $ 70.0 million available under its Amended Credit Facility (as defined below), will be sufficient to fund its operations, meets its debt obligations and fulfill its capital expenditure plans for the next twelve months.

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ASC Topic 350 gives companies the option to perform a qualitative assessment that may allow them to skip the quantitative test as appropriate.

The Company tests its goodwill for impairment annually during the fourth quarter of each year, or whenever events or circumstances make it more likely than not that impairment may have occurred.

The Company tests its goodwill for impairment annually during the fourth quarter, or whenever events or circumstances make it more likely than not that impairment may have occurred.

Impairment testing for goodwill is performed at the reporting unit level, and each of the Company’s casino properties is considered to be a reporting unit.

Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations in April 2012.

As of June 30, 2021, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

ASC Topic 350 requires that goodwill be tested for impairment between annual tests if an event or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in a business combination in April 2012.

As of September 30, 2021, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

ASC Topic 350 requires that goodwill be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

We performed an assessment to determine whether events or circumstances such as those described in ASC 350-20-35-3C existed and we determined that they did not exist during the interim period;

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Property and Equipment, net:

Property and Equipment, net consist of the following (in thousands):

June 30, 2021

Property and Equipment, net consists of the following (in thousands):

September 30, 2021

December 31, 2020

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Property and equipment are stated at cost, less accumulated depreciation and amortization.

Property and equipment is depreciated principally on a straight line basis over the estimated useful lives as follows:

Property and equipment is depreciated principally on a straight line basis over its estimated useful lives as follows:

Land improvements

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Fair value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model.

For assets to be held and used, the Company reviews fixed assets for impairment annually during the fourth quarter of each year or whenever indicators of impairment exist.

For assets to be held and used, the Company reviews fixed assets for impairment annually during the fourth quarter or whenever indicators of impairment exist.

If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset.

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If the undiscounted cash flows do not exceed the carrying value, the impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparables, when available.

For the three and six months periods ended June 30, 2021 and 2020, there were no impairment charges.

For the three- and nine- month periods ended September 30, 2021 and 2020, there were no impairment charges.

Segment Reporting:

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Unamortized amounts of debt issuance costs are recorded as a reduction of the outstanding debt and included in “Long-term debt, net”.

As of June 30, 2021, debt issuance costs, net of amortization, were $ 2.6 million.

As of September 30, 2021, debt issuance costs, net of amortization, were $ 2.2 million.

Capitalized Interest:

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Interest capitalization is ceased when the project is substantially complete.

No capitalized interest was recognized in the three and six months ending June 30, 2021, as the Monarch Black Hawk expansion project was substantially completed in the fourth quarter of 2020.

The Company capitalized $ 1.4 million and $ 3.2 million during the three and six months ended June 30, 2020, respectively.

No capitalized interest was recognized in the three and nine months ended September 30, 2021, as the Monarch Black Hawk expansion project was substantially completed in the fourth quarter of 2020.

The Company capitalized $ 1.8 million and $ 5.0 million during the three and nine months ended September 30, 2020, respectively.

Revenue Recognition:

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The points estimated SSP is computed as the cash redemption value of the points expected to be redeemed, which is determined through an analysis of all redemption activity over the preceding twelve -month period.

As of June 30, 2021, the Company had estimated the obligations related to the players’ club program at $ 9.9 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

As of September 30, 2021, the Company had estimated the obligations related to the players’ club program at $ 9.7 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

Food and Beverage, Hotel and Other (retail) Revenues:

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When a situation warrants, the Company may create a specific identification reserve for a high collection risk receivables.

As of September 30, 2021, the Company has recorded a reserve of $ 0.2 million for gaming and non-gaming receivables.

The Company writes off its uncollectible receivables once all efforts have been made to collect such receivables.

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Other operating items, net, in general consist of miscellaneous operating charges or proceeds.

For the three months ended June 30, 2021, Other operating items, net, was $ 0.8 million and represents primarily professional services relating to our construction litigation.

For the three months ended June 30, 2020, Other operating items, net, was $ 1.2 million and included:

For the three months ended September 30, 2021, Other operating items, net, was $ 1.2 million and included:

$ 1.5 million of professional services relating to our construction litigation and $ 0.1 million loss on disposal of assets, offset by $ 0.3 million of litigation proceeds and $ 0.1 million of insurance claims proceeds.

For the three months ended September 30, 2020, Other operating items, net, was $ 2.4 million and included:

$ 0.9 million in pre-opening expenses relating to the Monarch Black Hawk Expansion project;

$ 0.2 million in professional services relating to our construction litigation;

$ 0.5 million in professional service fees relating to our construction litigation;

$ 0.5 million in Colorado legislation lobbying expenses;

and $ 0.3 million equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations.

For the six months ended June 30, 2021, Other operating items, net, was $ 1.6 million and represents primarily $ 1.5 million professional services relating to our construction litigation and $ 0.1 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations.

For the six months ended June 30, 2020, Other operating items, net, was $ 2.5 million and included:

$ 0.4 million equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations;

and $ 0.1 million in unamortized debt issuance cost write off.

For the nine months ended September 30, 2021, Other operating items, net, was $ 2.8 million and included:

$ 3.0 million of professional services relating to our construction litigation, $ 0.1 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations and $ 0.1 million loss on disposal of assets, offset by $ 0.3 million of litigation proceeds and $ 0.1 million of insurance claims proceeds.

For the nine months ended September 30, 2020, Other operating items, net, was $ 4.9 million and included:

$ 1.9 million in pre-opening expenses relating to the Monarch Black Hawk Expansion project;

$ 0.3 million in professional services relating to our construction litigation;

$ 0.8 million of professional service fees relating to our construction litigation;

$ 1.4 million in Colorado legislation lobbying expenses;

and $ 0.3 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations.

$ 0.7 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations;

and $ 0.1 million in unamortized debt issuance cost write off.

Impact of Recently Adopted Accounting Standards:

The Company has evaluated the recently issued or proposed by the Financial Accounting Standards Board (“FASB”) or other standards-setting bodies accounting standards and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s Consolidated Financial Statements.

The Company has evaluated the recently issued or proposed by the FASB or other standards-setting bodies accounting standards and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s Consolidated Financial Statements.

In addition, a variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies.

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As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components.

As of June 30, 2021, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (as defined and discussed in NOTE 5.

As of September 30, 2021, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (each as defined and discussed in NOTE 5.

RELATED PARTY TRANSACTIONS) , as well as certain billboard leases.

Upon adoption of the new lease standard, incremental borrowing rates used for existing leases were established using the rates in effect as of the lease inception or modification date.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of June 30, 2021 was 4.33 %.

The weighted-average remaining lease term of the leases presented in the lease liability as of June 30, 2021 was 21.0 years.

Cash paid related to the operating leases presented in the lease liability for each of the six months ended June 30, 2021 and 2020, was $ 0.7 million.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of September 30, 2021, was 4.33 %.

The weighted-average remaining lease term of the leases presented in the lease liability as of September 30, 2021 was 20.9 years.

Cash paid related to the operating leases presented in the lease liability for each of the nine months ended September 30, 2021 and 2020, was $ 1.1 million.

STOCK-BASED COMPENSATION

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Three months ended

Six months ended

Nine months ended

September 30,

Food and beverage

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The following is a reconciliation of the number of shares (denominator) used in the basic and diluted earnings per share computations (shares in thousands):

Three months ended June 30,

Three months ended September 30,

Effect of dilutive stock options

Six months ended June 30,

Nine months ended September 30,

Effect of dilutive stock options

Excluded from the computation of diluted earnings per share are options where the exercise prices are greater than the market price as their effects would be anti-dilutive in the computation of diluted earnings per share.

For the three months ended June 30, 2021 and 2020, options for approximately 235 thousand and 1,122 thousand shares, respectively, were excluded from the computation.

For the six months ended June 30, 2021 and 2020, options for approximately 199 thousand and 1,085 thousand shares, respectively, were excluded from the computation.

For the three months ended September 30, 2021 and 2020, options for approximately 316 thousand and 1,062 thousand shares, respectively, were excluded from the computation.

For the nine months ended September 30, 2021 and 2020, options for approximately 239 thousand and 1,077 thousand shares, respectively, were excluded from the computation.

RELATED PARTY TRANSACTIONS

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If the Company elects not to exercise its renewal option, the Company will be obligated to pay BLI $ 1.6 million.

For each of the three-month periods ended June 30, 2021 and 2020, the Company paid $ 174 thousand in rent, plus $ 1 thousand and $ 0 thousand, respectively, in operating expenses relating to this lease.

For each of the six-month periods ended June 30, 2021 and 2020, the Company paid $ 348 thousand in rent, plus $ 8 thousand and $ 7 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of June 30, 2021, recognized in the Consolidated Balance Sheet, was $ 10.4 million.

For each of the three-month periods ended September 30, 2021 and 2020, the Company paid $ 174 thousand in rent, plus $ 13 thousand in operating expenses relating to this lease.

For each of the nine-month periods ended September 30, 2021 and 2020, the Company paid $ 522 thousand in rent, plus $ 21 thousand and $ 20 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of September 30, 2021, recognized in the Consolidated Balance Sheet, was $ 10.3 million.

In addition, the Atlantis shares a driveway with the Shopping Center and leases approximately 37,400 square feet from BLI (the “Driveway Lease”) for an initial lease term of 15 years , which commenced on September 30, 2004, at an original annual rent of $ 300 thousand plus common area expenses.

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At the end of the renewal terms, the Company has the option to purchase the leased driveway section of the Shopping Center.

For each of the three-month periods ended June 30, 2021 and 2020, the Company paid $ 101 thousand in rent plus $ 5 thousand and $ 1 thousand, respectively, in operating expenses relating to this lease.

For each of the six-month periods ended June 30, 2021 and 2020, the Company paid $ 202 thousand in rent, plus $ 13 thousand and $ 8 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of June 30 , 2021, recognized in the Consolidated Balance Sheet, was $ 3.8 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders and paid $ 52 thousand and $ 38 thousand, respectively, for the three-month periods and $ 94 thousand and $ 74 thousand, respectively, for the six-month periods ended June 30, 2021 and 2020, for such leases.

For each of the three-month periods ended September 30, 2021 and 2020, the Company paid $ 101 thousand in rent plus $ 12 thousand and $ 8 thousand, respectively, in operating expenses relating to this lease.

For each of the nine-month periods ended September 30, 2021 and 2020, the Company paid $ 303 thousand in rent, plus $ 25 thousand and $ 17 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of September 30 , 2021, recognized in the Consolidated Balance Sheet, was $ 3.8 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders, and paid $ 57 thousand and $ 27 thousand, respectively, for the three-month periods and $ 151 thousand and $ 101 thousand, respectively, for the nine-month periods ended September 30, 2021 and 2020, for such leases.

LONG-TERM DEBT

On September 3, 2020, the Company entered into the Fourth Amended and Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent and certain banks (the “Fourth Amended Credit Facility”).

The Fourth Amended Credit Facility amends and restates the Company’s $ 250.0 million credit facility, dated as of July 20, 2016 (the “Prior Credit Facility”).

On April 30, 2021, the Company entered into an amendment to the Fourth Amended Credit Facility (collectively, with all prior amendments, the “Amended Credit Facility”).

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The $ 270 million Amended Credit Facility consists of:

$ 200 million term loan (“Term Loan Facility”) and $ 70 million revolving credit facility (“Revolving Credit Facility”), together with an option to increase the facility by up to an additional $ 75.0 million Revolving Credit Facility.

As of June 30, 2021, the Company had an outstanding principal balance of $ 135.0 million under the Term Loan Facility, from which $ 17.5 million is expected to have a maturity date in next twelve months.

As of June 30, 2021, the Company had no borrowings under the Revolving Credit Facility, therefore all $ 70.0 million remained available for borrowing.

a $ 200 million term loan (“Term Loan Facility”) and a $ 70 million revolving credit facility (“Revolving Credit Facility”), together with an option to increase the facility by up to an additional $ 75 million Revolving Credit Facility.

As of September 30, 2021, the Company had an outstanding principal balance of $ 108 million under the Term Loan Facility, from which $ 20 million is expected to have a maturity date in next twelve months.

As of September 30, 2021, the Company had no borrowings under the Revolving Credit Facility, therefore all $ 70 million remained available for borrowing.

The Company is required to make quarterly principal payments under the Term Loan Facility on each Term Loan Installment Date, commencing on December 31, 2020, in an amount equal to (x) the percentage set forth opposite the applicable period during which such Term Loan Installment Date occurs (i.e., 1.25 % for the period from December 31, 2020 to September 30, 2021, and 2.50 % for the period from December 31, 2021 and thereafter) multiplied by (y) $ 200 million.

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Borrowings are secured by liens on substantially all of the Company’s real and personal property.

In addition to other customary covenants for a facility of this nature, as of June 30, 2021, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 4.0 :1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.15 :1.

As of June 30, 2021, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 1.5 :1 and 5.2 :1.

As of June 30, 2021, the interest rate under the April 30 , 2021 amendment to the Amended Credit Facility is LIBOR plus a margin ranging from 1.00 % to 2.00 %, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00 % to 1.00 %, or the Prime Rate.

In addition to other customary covenants for a facility of this nature, as of September 30, 2021, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 4.0 :1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.15 :1.

As of September 30, 2021, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 1.0 :1 and 5.6 :1.

As of September 30, 2021, the interest rate under the April 30 , 2021 amendment to the Amended Credit Facility is LIBOR plus a margin ranging from 1.00 % to 2.00 %, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00 % to 1.00 %, or the Prime Rate.

The applicable margins vary depending on the Company’s leverage ratio.

Commitment fees are equal to the daily average unused revolving commitment multiplied by the commitment fee percentage, ranging from 0.175 % to 0.325 %, based on our leverage ratio.

On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of Revolving Credit Facility, provided that each such increase is equal to $ 15.0 million or an integral multiple of $ 1.0 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $ 75.0 million.

As of September 30, 2021, the interest rate on the Term Loan Facility was 1.34 %, or LIBOR plus a 1.25 % margin.

On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of the Revolving Credit Facility, provided that each such increase is equal to $ 15 million or an integral multiple of $ 1 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $ 75 million.

The Company may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain conditions and certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period).

Once reduced or cancelled, the Revolving Credit Facility may not be increased or reinstated without the prior written consent of all lenders.

During the first six months of 2021, the Company made a $ 42.5 million optional prepayment on its Term Loan Facility in addition to a $ 5.0 million mandatory payment.

As of June 30, 2021, $ 114.9 million “Long-term debt, net” in the Company’s consolidated balance sheet represents the $ 135.0 million outstanding loan amount under the Amended Credit Facility, net of $ 2.6 million unamortized debt issuance costs and $ 17.5 million mandatory principal payment that are due in next twelve months and are presented as “Current portion of long-term debt” in the Current liabilities section of the Company’s consolidated balance sheets.

The Company believes that the expected cash flows from operating activities and the $ 70.0 million available under its Amended Credit Facility as of June 30, 2021 will be sufficient to support its current operations, meet its debt obligations and fulfill its capital expenditure plans for the twelve months from filing of Form 10-Q for the quarter ended June 30, 2021;

however, the Company is surrounded by uncertainty about COVID-19 future developments, as well as financial, economic, competitive, regulatory, and other factors, many of which are beyond its control.

During the first nine months of 2021, the Company made a $ 67.0 million in optional prepayments on its Term Loan Facility in addition to $ 7.5 million in mandatory payments.

As of September 30, 2021, the $ 85.8 million “Long-term debt, net” in the Company’s consolidated balance sheet represents the $ 108 million outstanding loan amount under the Amended Credit Facility, net of $ 2.2 million unamortized debt issuance costs and $ 20 million mandatory principal payments that are due in the next twelve months and presented as “Current portion of long-term debt” in the Current liabilities section of the Company’s consolidated balance sheets.

The Company believes that the expected cash flows from operating activities and the $ 70 million available under its Amended Credit Facility as of September 30, 2021 will be sufficient to support its current operations, meet its debt obligations and fulfill its capital expenditure plans for the twelve months from filing of the Form 10-Q for the quarter ended September 30, 2021;

however, the Company is surrounded by uncertainty relating to COVID-19 future developments, as well as financial, economic, competitive, regulatory, and other factors, many of which are beyond its control.

If the Company is unable to generate sufficient cash flow in the upcoming months or if its cash needs exceed the Company’s borrowing capacity under the Amended Credit Facility, it could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity.

For the six months ended June 30, 2021 and 2020, the Company’s effective tax rate was 18.2 % and 30.9 %, respectively.

The effective tax rate for the six months ended June 30, 2021 was a result of the excess tax benefit on stock option exercises.

The high effective tax benefit rate for the six months ended June 30, 2020 was a result of the high weight of excess tax benefit on stock option exercises on the provision for income taxes, as the suspension of the operations in mid-March due to the COVID-19 pandemic resulted in a net loss for the three- and six-months ended June 30, 2020.

As of June 30, 2021, $ 25.1 million “Income taxes receivable” in the Company’s consolidated balance sheet represents the expected federal and state tax refund for 2020 tax year.

For the nine months ended September 30, 2021 and 2020, the Company’s effective tax rate was 19.4 % and 16.3 %, respectively.

The effective tax rate for the nine months ended September 30, 2021 and 2020 was impacted by excess tax benefit on stock option exercises.

As of September 30, 2021, the $ 21.3 million “Income taxes receivable” in the Company’s consolidated balance sheet represents the expected federal and state tax refund for 2020 tax year, net of current year federal and state tax payable.

Deferred tax assets were evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies.

No uncertain tax positions were recorded as of June 30, 2021 and 2020.

No uncertain tax positions were recorded as of September 30, 2021 and 2020.

No change in uncertain tax positions is anticipated over the next twelve months.

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The new lawsuit includes an additional claim, however, for foreclosure of PCL’s purported mechanics’ lien against the Monarch Black Hawk Property.

PCL also joined additional parties who may claim a purported lien against the Monarch Black Hawk Property, as defendants.

PCL also joined additional subcontractors as defendants who have claimed a purported lien against the Monarch Black Hawk Property.

Effective May 10, 2021, PCL filed its second amended complaint, joining more such parties as defendants.

Many of the Company’s co-defendants have filed cross claims against Monarch for foreclosure of mechanics’ liens and related claims, including unjust enrichment.

Because the Gilpin Action mirrors the claims and allegations in the Denver Action, the Company and its Colorado subsidiaries filed a motion to consolidate both actions into one action in the County of Gilpin.

The Colorado Panel on Consolidated Multidistrict Litigation held a hearing on the motion on June 11, 2021, and thereafter denied the motion.

Accordingly, the parties are proceeding with both actions simultaneously.

Many of the Company’s co-defendants have filed cross claims against Monarch for foreclosure of mechanics’ liens and related claims, including unjust enrichment, and have also filed counterclaims against PCL.

The Company and its Colorado subsidiaries filed an answer and counterclaims in the Gilpin Action on July 15, 2021.

Various subcontractors have also filed cross claims against certain other defendants, and counterclaims against PCL.

Monarch has also filed answers to all cross claims due to date, denying the claimants’ rights to relief.

Monarch anticipates filing further answers to additional cross claims, also denying the claimants’ rights to relief.

A trial date for the Gilpin Action has not been set.

The Company and its Colorado subsidiaries intend to defend against PCL’s claims, including any crossclaims filed by certain subcontractors, will seek to expunge or reduce the liens, and will vigorously prosecute its counterclaims.

The Company recognized $ 1.5 million and $ 0.3 million in construction litigation expense relating to these lawsuits for the six months ended June 30, 2021 and 2020, respectively, which are included in Other operating items, net on the Consolidated Statements of Operations.

Monarch has also filed answers to all cross claims, denying the claimants’ rights to relief.

The Company and its Colorado subsidiaries intend to defend against PCL’s claims and the cross claims filed by certain subcontractors, and will vigorously prosecute its counterclaims for damages.

The case was recently stayed pending the outcome of the Denver Action.

The Company recognized $ 3.0 million and $ 0.8 million in construction litigation expense relating to these lawsuits for the nine months ended September 30, 2021 and 2020, respectively, which are included in Other operating items, net on the Consolidated Statements of Income.

From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business.

2 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-Q

Item 1. Financial Statements