~~CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~(~~continued)~~

~~(Unaudited)~~

2017 2016
Schedule of non-cash investing and financing activities
Additions to buildings and equipment funded through accounts payable $ 41,000 $ 65,000
Dividend declared 264,000 215,000
Issuance of promissory notes receivable - 3,191,000
Insurance recoveries proceeds receivable - 592,000

Proceeds from land sale remitted to qualified intermediary $ - $ 1,051,000
Principal payments of capital lease obligation remitted from qualified intermediary - 1,051,000

Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds $ 1,141,000 $ 2,121,000

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2021			2020
OPERATING REVENUES:
Pari-mutuel	$	1,153,844		$	1,296,026
Card Casino		6,864,294			7,561,172
Food and beverage		374,471			1,118,995
Other		832,933			972,766
Total Net Revenues		9,225,542			10,948,959

OPERATING EXPENSES:
Purse expense		976,360			1,103,394
Minnesota Breeders’ Fund		175,140			189,744
Other pari-mutuel expenses		185,295			220,849
Salaries and benefits		3,967,348			5,577,893
Cost of food and beverage and other sales		205,637			564,151
Depreciation and amortization		689,585			716,853
Utilities		275,730			290,611
Advertising and marketing		56,452			183,988
Professional and Contracted Services		735,847			972,324
Other operating expenses		686,037			987,457
Total Operating Expenses		7,953,431			10,807,264
INCOME FROM OPERATIONS		1,272,111			141,695
OTHER (LOSS) INCOME
Loss from equity investment		(637,704	)		—
Interest income, net		169,310			163,690
Net Other (Loss) Income		(468,394	)		163,690
INCOME BEFORE INCOME TAXES		803,717			305,385
INCOME TAX EXPENSE		(252,224	)		(50,164	)
NET INCOME	$	551,493		$	255,221

Basic earnings per share	$	0.12		$	0.05
Diluted earnings per share	$	0.12		$	0.05
Weighted Average Basic Shares Outstanding		4,754,496			4,659,579
Weighted Average Diluted Shares		4,754,504			4,662,675
Cash dividends declared per share	$	0.00		$	0.00

See notes to condensed consolidated financial statements.

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the three months ended March 31, 2021

	Number of		Common		Additional			Retained
	Shares		Stock		Paid-in Capital			Earnings			Total
Balance at December 31, 2020		4,748,012	$	47,480	$	23,631,618		$	27,614,087		$	51,293,185

Exercise of stock options		3,654		36		48,562			—			48,598
Stock-based compensation				—		103,130			—			103,130
Dividend distribution		—		—		—			(494	)		(494	)
401(K) stock match		6,575		66		90,341			—			90,407
Issuance of deferred stock awards		6,701		67		(26,015	)		—			(25,948	)
Net income		—		—		—			551,493			551,493

Balance at March 31, 2021		4,764,942	$	47,649	$	23,847,636		$	28,165,086		$	52,060,371

For the three months ended March 31, 2020

	Number of			Common			Additional			Retained
	Shares			Stock			Paid-in Capital			Earnings			Total
Balance at December 31, 2019		4,644,522		$	46,445		$	22,733,933		$	26,635,732		$	49,416,110

Exercise of stock options		24,250			242			200,548			—			200,790
Other share retirements		(9,920	)		(99	)		(44,587	)		(79,512	)		(124,198	)
Stock-based compensation		—			—			57,606			—			57,606
401(K) stock match		17,179			172			160,795			—			160,967
Issuance of deferred stock awards		18,107			181			(72,560	)		—			(72,379	)
Net Income		—			—			—			255,221			255,221

Balance at March 31, 2020		4,694,138		$	46,941		$	23,035,735		$	26,811,441		$	49,894,117

See notes to condensed consolidated financial statements.

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Operating Activities:
Net income	$	551,493		$	255,221
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		689,585			716,853
Stock-based compensation expense		103,130			57,606
Stock-based employee match contribution		90,407			160,967
Deferred income taxes		—			259,200
Loss from equity investment		637,704			—
Changes in operating assets and liabilities:
Accounts receivable		(90,880	)		(67,218	)
Other current assets		(291,132	)		74,733
Income taxes receivable/payable		474,706			(645,771	)
Operating lease right-of-use assets		—			1,921
Operating lease liabilities		—			(1,921	)
Accounts payable		(1,084,383	)		960,781
Deferred revenue		47,288			(127,309	)
Card Casino accruals		561,291			(512,051	)
Accrued wages and payroll taxes		996,379			(1,364,320	)
Accrued property taxes		193,318			254,913
Payable to horsepersons		(1,035,350	)		327,215
Net cash provided by operating activities		1,843,556			350,820

Investing Activities:
Additions to property, plant, and equipment		(129,251	)		(825,937	)
Increase in TIF receivable		(152,587	)		(148,557	)
Decrease in related party receivable		77,327			—
Proceeds from sale of investments		—			103,886
Net cash used in investing activities		(204,511	)		(870,608	)

Financing Activities:
Proceeds from issuance of common stock		48,598			76,592
Payments against line of credit		—			(1,450,000	)
Borrowings on line of credit		—			1,450,000
Cash dividend paid to shareholders		(494	)		(324,439	)
Payments for taxes related to net share settlement of equity awards		(25,948	)		(72,379	)
Principal payments on finance lease		(6,318	)		(6,011	)
Net cash provided by (used in) financing activities		15,838			(326,237	)

Net increase in cash, cash equivalents, and restricted cash		1,654,883			(846,025	)

Cash, cash equivalents, and restricted cash at beginning of period		4,471,712			3,927,098

Cash, cash equivalents, and restricted cash at end of period	$	6,126,595		$	3,081,073

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

Schedule of non-cash investing and financing activities
Additions to buildings and equipment funded through accounts payable	$	68,000	$	298,000
Transfer of future TIF reimbursed costs from PP&E		153,000		149,000

Supplemental disclosure of cash flow information:
Income taxes paid	$	100,000	$	—
Interest paid		1,000		11,000

See notes to condensed consolidated financial statements.

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Overview; Reorganization~~ - Canterbury Park Holding Corporation (the “Company”) was incorporated as a Minnesota corporation in October 2015. The Company is a successor corporation to another corporation, also named Canterbury Park Holding Corporation, that was incorporated in 1994 (“CPHC”). Effective as of the close of business on June 30, 2016 CPHC’s business and operations were reorganized into a holding company structure (the “Reorganization”) pursuant to an Agreement and Plan of Merger dated as of March 1, 2016 that was approved by CPHC’s shareholders on June 28, 2016. Pursuant to the Reorganization:

●

The Company replaced CPHC as the public company owned by CPHC’s shareholders, with each shareholder at June 30, 2016 owning the same number of shares and having the same percentage ownership in the Company (and, indirectly, in all property and other assets then owned by CPHC) immediately after the Reorganization as that shareholder had in CPHC immediately before the Reorganization.

●

~~The Company became the holding company for and parent company of two subsidiaries, Canterbury Park Entertainment LLC (“EntertainmentCo”) and Canterbury Development LLC (“DevelopmentCo”).~~

●

EntertainmentCo is the surviving business entity in a merger with CPHC pursuant to the Reorganization and it became the direct owner of all land, facilities, and substantially all other assets related to the CPHC’s pari-mutuel wagering, Card Casino, concessions and other related businesses (“Racetrack Operations”), and EntertainmentCo continues to conduct these businesses consistent with CPHC’s past practices and will continue to be subject to direct regulation by the Minnesota Racing Commission (“MRC”).

●

DevelopmentCo will continue CPHC’s efforts to commercially develop approximately 140 acres of land currently owned or controlled that is not needed for our Racetrack Operations. DevelopmentCo is not subject to direct regulation by the MRC.

●

~~On July 1, 2016 the shares of the Company’s common stock began trading on the NASDAQ Global Market under the symbol “CPHC.”~~

For purposes of this Report on Form 10-Q, when the term “Company” is used with reference to information covering or related to periods up to and including June 30, 2016, such term refers to the operations of CPHC prior to the Reorganization.

Business– ~~The Company’s~~Canterbury Park Holding Corporation’s (the “Company,” “we,” “our,” or “us”) Racetrack operations are conducted at facilities located in Shakopee, Minnesota, approximately 25 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 typically 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 Card Casino typically 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 Card Casino currently offers a variety of poker and table games. The Company’s three largest sources of revenues ~~include:~~are from Card 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 is developing underutilized land surrounding the Racetrack in a project known as Canterbury Commons^TM, with approximately 140 acres originally designated as underutilized. The Company is pursuing several mixed-use development opportunities for this land, directly and through joint ventures.

In January 2020, an outbreak of a respiratory illness caused by a new strain of coronavirus was identified. The disease has since spread rapidly across the world, causing the World Health Organization to declare the outbreak a pandemic (the “COVID-19 Pandemic”) on March 12, 2020. Since that time, governments and businesses have taken measures to limit the impact of the COVID-19 Pandemic, including the issuance of shelter-in-place orders, social distancing measures, travel bans and restrictions and business shutdowns.

On March 16, 2020, the Company announced that, based on the advice of Minnesota state and regulatory bodies, it was temporarily suspending all card casino, simulcast, and special events operations at Canterbury Park in response to concerns about the COVID-19 Pandemic. Canterbury Park determined this voluntary suspension of activities was in the best interest of the health and safety of its guests and team members and would provide the Company an opportunity to review and update operational best practices and strategies based on what was currently known about this public health situation and future developments. On June 10, 2020, the Company reopened and resumed simulcast, live racing, and food and beverage operations. The Company also resumed table games and poker operations in the Company’s Card Casino on June 15, 2020 and July 9, 2020, respectively. These reopenings were done in compliance with Minnesota state guidelines on capacity limitations.

On November 18, 2020, Minnesota state and regulatory bodies issued an executive order requiring closure of places of public accommodation as a measure to slow the spread of COVID-19. As a result, the Company temporarily suspended all card casino, simulcast, and food and beverage operations from November 21, 2020 through January 10, 2021.

The disruptions arising from the COVID-19 Pandemic had a significant impact on the Company's financial condition and operations during the three months ended March 31, 2021. The duration and intensity of this global health emergency and related disruptions is uncertain. Given the dynamic nature of these circumstances, the impact on the Company’s consolidated results of operations, cash flows and financial condition in both 2020 and the first quarter of 2021 has been material, and the Company expects it will continue to be material in the balance of 2021. The Company cannot reasonably estimate at this time when the COVID-19 Pandemic will end, or when or how quickly the current travel restrictions and capacity restrictions will be modified or cease to be necessary, or to what extent visitors will feel comfortable returning to the Company's Card Casino, simulcast, and special events operations. As a result, it is difficult to predict the continuing and future impact on the Company’s business and the willingness of customers to spend on entertainment in venues such as ours.

The Company has no long-term debt and a $10,000,000 credit line, of which $8,750,000 is available as of March 31, 2021. The Company anticipates that its existing cash balance, any cash generated from operations and availability under its credit line will provide the Company with the necessary liquidity and financial flexibility to manage through this challenging operating environment. We have taken significant actions to mitigate the effects of the COVID-19 Pandemic on our operations, including initiating workforce reductions and furloughs, implementing reductions in executive pay and board cash retainer, suspending the Company’s quarterly cash dividend, postponing non-essential capital expenditures, reducing operating costs, and substantially reducing discretionary spending. We expect these countermeasures to partially mitigate the impact of COVID-19 on our full year 2021 financial results. As the impact of the COVID-19 Pandemic on the economy and our operations evolves, we will continue to assess the impact on the Company and respond accordingly.

Basis of Presentation and Preparation – The accompanying condensed consolidated financial statements include the accounts of the Company (Canterbury Park Holding Corporation and its direct and indirect subsidiaries Canterbury Park Entertainment, ~~LLC,~~LLC; Canterbury Park ~~Concession,~~Concessions, Inc.; and Canterbury Development, LLC). Intercompany accounts and transactions have been eliminated. The preparation of these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto for the fiscal year ended December 31, ~~2016,~~2020, included in its Annual Report on Form 10-K (the ~~“2016~~“2020 Form 10-K”).

The condensed consolidated balance sheets and the related condensed consolidated statements of operations, stockholders’ equity, and the cash flows for the periods ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 have been prepared by Company management. In the opinion of management, all adjustments (which include only normal recurring adjustments, except where noted) necessary to present fairly the financial position, results of operations, statement of stockholders’ equity, and cash flows at ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 and for the periods then ended have been made.

Summary of Significant Accounting Policies –A detailed description of our significant accounting policies can be found in our most recent Annual Report ~~filed~~ on the 2020Form ~~10-K for the fiscal year ended December 31, 2016.~~10-K. There were no material changes in significant accounting policies during the ~~quarter~~three months ended ~~September 30, 2017.~~March 31, 2021.

Restricted Cash – Restricted cash represents refundable deposits and amounts due to horsemen for purses, stakes and awards, 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.

Deferred Revenue –Deferred revenue includes advance sales related to racing, events and corporate partnerships.Revenue from these advance billings ~~are~~is recognized when the related event occurs or services have been performed. Deferred revenue also includes advanced Cooperative Marketing Agreement (“CMA”) promotional funds, ~~and~~for which revenue is recognized when expenses are incurred. ~~The Company maintains a deferred gain on sale of land of $240,000 due to a repurchase right.~~

~~Reclassifications –~~~~Prior period financial statement amounts have been reclassified~~Payable to ~~conform to current period presentations. Deferred revenue amounts have been reclassified on the December 31, 2016~~~~Consolidated Balance Sheets~~Horsepersons to~~Deferred revenue~~- ~~from~~~~Accounts payable~~ in the amount of approximately $569,000. Also, certain amounts due to horsepersons have been reclassified from accounts payable to payable to horsepersons and certain amounts have been reclassified from card casino accruals to accrued wages and payroll taxes, which impacted the changes of these items on the~~Consolidated Statements of Cash Flows~~.

~~Due to Minnesota Horsemen’s Benevolent and Protective Association, Inc. (“MHBPA”)~~ – The Minnesota Pari-mutuel Horse Racing Act ~~specifies that~~requires the Company ~~is required~~ to segregate a portion of funds (recorded as purse expense in the statements of operations), received from Card 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’ association. Pursuant to an agreement with the ~~MHBPA,~~Minnesota Horsemen’s Benevolent and Protective Association (“MHBPA”), the Company transferred into a trust account or paid directly to the MHBPA, ~~$5,313,888~~$2,000,000 and ~~$6,273,000~~$1,185,000 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively, related to thoroughbred races. Minnesota Statutes ~~specify~~provide that amounts transferred into the trust account are the property of the trust and not of the Company, and therefore these amounts are not recorded on the Company’s Condensed Consolidated Balance Sheet.

~~Recent Accounting Pronouncement~~Revenue Recognition –~~In November 2016,~~ The Company’s primary revenues with customers consist of Card Casino operations, pari-mutuel wagering on simulcast and live horse races, and food and beverage transactions. We determine revenue recognition through the ~~FASB issued ASU No. 2016-18, Statement~~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 Card Casino contract is a set percentage of ~~Cash Flows: Restricted Cash. The new standard requires~~wagers and is recognized at the time that the ~~statement~~wagering process is complete. The transaction price for pari-mutuel wagering is the commission received on a wager, exclusive of ~~cash flows explain~~any track fees and is recognized upon occurrence of the ~~change during~~live race that is presented for wagering and after that live race is made official by the ~~period of cash, cash equivalents,~~respective state’s racing regulatory body. The transaction price for food and ~~amounts generally described~~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 ~~restricted cash. Entities will also be required to reconcile~~revenue as the good is transferred to the ~~balance sheet~~customer when delivery is made.

Contracts for Card Casino operations and ~~disclose~~pari-mutuel wagering involve two performance obligations for those customers earning points under the ~~nature~~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 would not differ materially from what would result if the guidance were applied on 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 ~~restrictions.~~ 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. Therefore, there are no further performance obligations by the Company.

We have two general types of liabilities related to contracts with customers: (1) our MVP Loyalty Program and (2) outstanding chip liability. These are included in the line item Card Casino accruals on the consolidated balance sheet. We defer the full retail value of these complimentary reward items until the future revenue transaction occurs.

The ~~guidance will become effective~~Company offers certain promotional allowances at no charge to patrons who participate in ~~2018. While~~its player rewards program.

We evaluate our on-track revenue, export revenue (as described below), and import revenue (as described below) contracts to determine whether we are ~~continuing~~acting as the principal or as the agent when providing services, to ~~assess all potential impacts of~~determine if we should report revenue on a gross or net basis. An entity acts as a principal if it controls a specified service before that service is transferred to a customer.

For on-track revenue and “import revenue,” that is revenue we generate for racing held elsewhere that our patrons wager on, we are entitled to retain a commission for providing a wagering service to our customers. For these arrangements, we are the ~~standard,~~principal because we ~~believe~~control the ~~most significant impact relates~~wagering service; therefore, any charges, including simulcast fees, we incur for delivering the wagering service are presented as operating expenses.

For “export revenue,” when the wagering occurs outside our premises, our customer is the third party wagering site such as a racetrack, Off Track Betting (“OTB”), or advance deposit wagering (“ADW”) provider. Therefore, the revenue we recognize for export revenue is the simulcast host fee we earn for exporting our racing signal to the presentation of our statement of cash flows where we will be required to reconcile to total cash, cash equivalents, and restricted cash. Currently, our statement of cash flows reconciles to total cash and cash equivalents.third party wagering site.

In ~~August 2016,~~ the ~~FASB issued ASU No. 2016-15, Statement~~quarter ended March 31, 2021, the Company recorded as other revenue $515,000 of ~~Cash Flows: Classification~~COVID-19 relief grants, including a lump sum grant of ~~Certain Cash Receipts~~$500,000 from the Convention Center Relief Grant Program, which is overseen by the Minnesota Department of Employment and ~~Cash Payments. The new guidance is intended to reduce diversity in practice in how certain transactions are classified~~Economic Development. There were no grants in the statement of cash flows. The guidance will become effective in 2018. We are assessing the impact of the new accounting guidance and currently cannot estimate the financial statement impact of adoption.quarter ended March 31, 2020.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. ASU 2016-02 is effective in our first quarter of fiscal 2019 on a modified retrospective basis and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2016-02 on our Condensed Consolidated Financial Statements.

2. STOCK-BASED COMPENSATION

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~,which provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revised guidance will become effective in 2018 and will be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. During 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net); and ASU No. 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients; which clarified the guidance on certain items such as reporting revenue gross versus net and presentation of sales tax, among other things.~~We are assessing the impact of the new accounting guidance and currently cannot estimate the financial statement impact of adoption.~~

~~STOCK-BASED COMPENSATION~~

Long Term Incentive Plan and Award of Deferred Stock

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. Currently, there is one award outstanding for the three-year period ending December 31, 2021. Beginning in 2020, and as a result of the COVID-19 Pandemic, the Company temporarily suspended the granting of performance awards under its LTI Plan until there is more certainty about the Company’s future operations, and instead granted deferred stock awards designed to retain NEOs and other Senior Executives.

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

The Company’s Stock Plan currently authorizes annual grants of restricted stock, deferred stock, ~~and~~ 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~~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 Board of ~~Directors’~~Directors' unvested ~~restricted~~deferred stock awards as of ~~September 30, 2017 was 11,264~~March 31, 2021 consisted of 20,073 shares with a weighted average fair value per share of ~~$10.65.~~$11.17. There were no unvested restricted stock or stock options outstanding at ~~September 30, 2017 or December~~March 31, ~~2016.~~2021.

Employee Deferred Stock Awards

~~Prior~~The Company's Stock Plan permits its Compensation Committee to ~~January 1, 2016 the Company’s Board awarded deferred compensation to executive officers and key employees that were not performance-based, in the form of Deferred Stock~~grant stock-based awards, ~~under the Company’s Stock Plan. Such~~including deferred stock awards, ~~are subject~~ to ~~forfeiture if an employee terminates employment prior~~key employees and non-employee directors. The Company has made deferred stock grants that vest over one to three years.

During the ~~vesting. Generally,~~three months ended March 31, 2021, the Company granted employees deferred stock awards vest ratably over a four-year period and compensation costs are recognized over the vesting period. Compensation costs are recorded in “Salaries and benefits” on the Condensed Consolidated Statementstotaling 27,900 shares of ~~Operations. As of September 30, 2017, 4,500 shares were not vested~~common stock, with a ~~weighted average~~vesting term of approximately three years and a fair value of ~~$10.46~~$13.33 per share. There were no deferred stock awards granted during the three months ended March 31, 2020.

Deferred stock transactions during the three months ended March 31, 2021 are summarized as follows:

				Weighted
				Average
	Deferred			Fair Value
	Stock			Per Share
Non-Vested Balance, December 31, 2020		18,800		$	11.07
Granted		27,900			13.33
Vested		—			—
Forfeited		(1,050	)		11.43
Non-Vested Balance, March 31, 2021		45,650		$	12.43

Stock-based compensation expense related to the LTI Plan, deferred stock awards, and restricted stock awards ~~are~~is included on theCondensed Consolidated Statements of Operations and totaled ~~$264,000~~$103,000 and ~~$179,000~~$58,000 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, respectively.~~2020.

~~Employee~~ Stock Option Grants

The Company has granted incentive stock options to employees pursuant to the Company’s Stock Plan with an exercise price equal to the market price on the date of grant. The options vest over a 42-month period and expire in 10 years.

A summary of stock option activity as of ~~September 30, 2017~~March 31, 2021 and changes during the ~~nine~~three months then ended is presented below:

						Weighted									Weighted
				Weighted		Average							Weighted		Average
				Average		Remaining		Aggregate					Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Grant Date		Number of			Exercise		Contractual		Grant Date
Stock Options	Options			Price		Term		Fair Value		Options			Price		Term (in years)		Fair Value

Outstanding at January 1, 2017		191,002		$	9.08
Outstanding at January 1, 2021											9,000		$	13.30
Granted		-			-						-			-
Exercised		(18,500	)		7.23						(3,654	)		13.30
Expired/Forfeited		(15,000	)		13.76						(5,346	)		13.30
Outstanding at September 30, 2017		157,502		$	8.17		2.0 Years	$	1,286,382
Outstanding at March 31, 2021											-		$	-		-	$	-

Exercisable at September 30, 2017		157,502		$	8.17		2.0 Years	$	1,286,382
Exercisable at March 31, 2021											-		$	-		-	$	-

3. NET INCOME PER SHARE COMPUTATIONS

~~NET INCOME PER SHARE COMPUTATIONS~~

The following is a reconciliation of the numerator and denominator of the earnings per common share computations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016:~~2020:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2021		2020
Net income (numerator) amounts used for basic and diluted per share computations:	$	952,635	$	925,837	$	2,182,218	$	3,511,490	$	551,493	$	255,221

Weighted average shares (denominator) of common stock outstanding:
Basic		4,393,523		4,296,581		4,369,489		4,276,387		4,754,496		4,659,579
Plus dilutive effect of stock options		25,913		26,220		26,045		17,766		8		3,096
Diluted		4,419,436		4,322,801		4,395,534		4,294,153		4,754,504		4,662,675

Net income per common share:
Basic	$	.22	$	.22	$	.50	$	.82	$	0.12	$	0.05
Diluted		.22		.21		.50		.82		0.12		0.05

Options to purchase ~~30,000~~9,000 shares of common stock at an average price of ~~$12.33~~$13.30 per share were outstanding but not included in the computation of diluted net income per share for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 because the exercise price of the options exceeded the market price of the Company’s common stock at ~~September 30, 2017.~~March 31, 2020. There were no out-of-the money stock options at March 31, 2021.

Options to purchase 45,000 shares of common stock at an average price of $12.80 per share were outstanding but not included in the computation of diluted net income per share for the three and nine months ended September 30, 2016 because the exercise price of the options exceeded the market price of the Company’s common stock at September 30, 2016.

~~PROMISSORY NOTES RECEIVABLE~~

In May 2016, the Company sold approximately 24 acres of land adjacent to the Racetrack for a total consideration of approximately $4.3 million. Promissory notes receivable consist of two promissory notes totaling $3,191,000 bearing interest at 1.43%. On May 31, 2017, the Company signed an amendment extending the maturity date of the notes to May 2020. Payments totaling $1,094,000 are due annually until the notes mature. The promissory notes are secured by the mortgage on approximately 24 acres and management believes no allowance for doubtful accounts is necessary.

4. GENERAL CREDIT AGREEMENT

~~GENERAL CREDIT AGREEMENT~~

The Company has a general credit and security agreement with ~~Bremer Bank,~~a financial institution, which provides a revolving credit line up to $10,000,000 and allows for letters of credit in the aggregate amount of up to ~~$6,000,000. This agreement was amended~~$2,000,000 to be issued under the credit agreement. As of March 31, 2021, the bank issued a $1,250,000 letter of credit on ~~September 30, 2017~~behalf of the Company and therefore, the Company has an available credit line up to ~~extend the maturity date to September 30, 2018.~~$8,750,000. The line of credit is collateralized by all receivables, inventory, equipment, and general intangibles of the Company. The ~~Company had no borrowings under~~line of credit also includes collateral in the form of a Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents. As of March 31, 2021, the outstanding balance on the line of credit ~~line during the nine months ended September 30, 2017.~~was $0.

~~OPERATING SEGMENTS~~

8. REAL ESTATE DEVELOPMENT

Equity Investments

On April 2, 2018, the Company’s subsidiary Canterbury Development LLC, entered into an Operating Agreement (“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 (the “Project”). Doran Canterbury I is developing Phase I of the Project, which will include 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.

In ~~March 2016,~~connection with the ~~FASB issued ASU 2016-09, “Improvements~~execution of the Amended Doran Canterbury I Agreement, 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 300 apartment units. Canterbury Development’s equity contribution to ~~Employee Share-Based Payment Accounting”,~~Doran Canterbury II for Phase II was approximately 10 acres of land, which ~~requires companies~~were contributed to ~~recognize additional tax benefits or expenses related 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 vesting or settlement of employee share based awards as income tax provision or benefit in the income statement in the reporting period in which they occur. In addition, ASU 2016-09 requires that all tax related cash flows resulting from share-based payments, including the excess tax benefits related to settlement of stock-based awards, be classified as cash flows from operating activities in the statement of cash flows. The Company adopted this ASU at March 31, 2017. The adoption of ASU 2016-09 required no retrospective adjustments to the financial statements. In addition there was no material cumulative-effect adjustment to retained earnings. Upon adoption,remaining 72.6%. As the Company is ~~required~~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.

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.

Tax Increment Financing

On August 8, 2018, the City Council of the City of Shakopee, Minnesota approved a Contract for Private Redevelopment (“Redevelopment 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 Redevelopment Agreement, 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 its expense in constructing public infrastructure improvements. The total estimated cost of TIF eligible improvements to be borne by the Company is $23,336,500. A detailed Schedule of the Public Improvements under the Redevelopment Agreement, the timeline for their construction and the source and amount of funding is set forth on Exhibit C of the Redevelopment Agreement, which was filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2018. The total amount of funding that Canterbury will be paid as reimbursement under the TIF program for these improvements is not guaranteed, however, and will depend on future tax revenues generated from the developed property. As of March 31, 2021, the Company recorded a TIF receivable of approximately $12,041,000, which represents $11,193,000 of principal and $848,000 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, 2020, the Company recorded a TIF receivable of approximately $11,889,000, which represented $11,191,000 of principal and $698,000 of interest.

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.

The City of Shakopee has authorized changes to the Redevelopment Agreement and the responsibilities of the Company, but the Company, the City of Shakopee and other parties have not formally entered into an agreement that memorializes these changes. The Company will provide updated disclosure when the parties enter into a new agreement. As part of the authorized changes regarding the responsibilities of the Company and the city of Shakopee, improvements on Unbridled Avenue will be primarily constructed by the City of Shakopee. As a result, should Canterbury enter into the agreement that memorializes these changes, the total estimated cost of TIF eligible improvements to be borne by the Company will be reduced by $7,670,000. These improvements were substantially complete as of the date of this filing.

Development Agreements

On April 7, 2020, the Company entered into an agreement to sell approximately 11.3 acres of land on the west side of the Racetrack to a third party for total consideration of approximately $2,400,000. The Company closed on the first phase of this transaction in April 2021, which totaled 7.8 acres of land. The closing of phase two is subject to the satisfaction of certain conditions, and we expect this to occur in 2022.

On April 15, 2020, the Company entered into an agreement to sell approximately 2.4 acres of land on the west side of the Racetrack to a third party for total consideration of approximately $1,100,000. The Company closed on this transaction in April 2021.

ITEM2:MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand Canterbury Park Holding Corporation, our operations, our financial results and financial condition and our present business environment. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes to the financial statements (the “Notes”).

Canterbury Park Holding Corporation (the “Company,” “we,” “our,” or “us”) conducts pari-mutuel wagering operations and hosts “unbanked” card games at its Canterbury Park Racetrack and Card Casino facility (the “Racetrack”) in Shakopee, Minnesota, which is approximately 25 miles southwest of downtown Minneapolis. The Racetrack is the only facility in the State of Minnesota that offers live pari-mutuel thoroughbred and quarter horse racing.

The Company’s pari-mutuel wagering operations include both wagering on thoroughbred and quarter horse races during live meets at the Racetrack each year from May through September, and year-round wagering on races held at out-of-state racetracks that are televised simultaneously at the Racetrack (“simulcasting”). Unbanked card games, in which patrons compete against each other, are hosted in the Card Casino at the Racetrack. The Card Casino typically operates 24 hours a day, seven days a week. The Card Casino offers both poker and table games at up to 80 tables. The Company also derives revenues from related services and activities, such as concessions, parking, advertising signage, publication sales, and from other entertainment events and activities held at the Racetrack.

On March 16, 2020, the Company announced that, based on the advice of Minnesota state and regulatory bodies, it was temporarily suspending all card casino, simulcast, and special events operations at Canterbury Park in response to concerns about the COVID-19 Pandemic. Canterbury Park determined this voluntary suspension of activities was in the best interest of the health and safety of its guests and team members and would provide the Company an opportunity to review and update operational best practices and strategies based on what was currently known about this public health situation and future developments. On June 10, 2020, the Company reopened and resumed simulcast, live racing, and food and beverage operations. The Company ~~was incorporated as a Minnesota corporation in October 2015. The Company is a successor corporation to another corporation,~~ also ~~named Canterbury Park Holding Corporation, that was incorporated in 1994 (“CPHC”). Effective as of the close of business on June 30, 2016, CPHC’s business~~resumed table games and poker operations were reorganized into a holding company structure (the “Reorganization”) pursuant to an Agreement and Plan of Merger dated as of March 1, 2016 that was approved by CPHC’s shareholders on June 28, 2016.

~~Further information regarding the Reorganization is set forth at Note 1 in the Notes to Condensed Consolidated Financial Statements under Part I above and~~ in the Company’s ~~Registration Statement~~Card Casino on ~~Form S-4 (File No. 333-210877) filed~~June 15, 2020 and July 9, 2020, respectively. These reopenings were done in compliance with Minnesota state guidelines on capacity limitations.

In connection with reopening our pari-mutuel, food and beverage, and Card Casino operations, we are adhering to social distancing requirements, which include reduced seating at table games and poker and capacity limitations to follow Minnesota state guidelines. Additionally, there is uncertainty around the impact the COVID-19 Pandemic will have on operations in the months that follow reopening, including the impact to changes in attendance driven by concerns about COVID-19.

The disruptions arising from the COVID-19 Pandemic had a significant impact on the Company's financial condition and operations during the three months ended March 31, 2021 and 2020. The duration and intensity of this global health emergency and related disruptions is uncertain. Given the dynamic nature of these circumstances, the impact on the Company’s consolidated results of operations, cash flows and financial condition in 2021 will be material, but cannot be reasonably estimated at this time as it is unknown when the COVID-19 Pandemic will end, when or how quickly the current restrictions will be modified or cease to be necessary and the resulting impact on the Company’s business and the willingness of customers to spend on entertainment in venues such as ours.

We are mitigating negative impacts to our operating results by taking signification actions, as discussed below.

During the temporary closures and suspension of the Company’s operations described above, all Canterbury Park employees, except for a limited number of key personnel required for basic ongoing maintenance, security, and management needs, were placed on an unpaid furlough. The Company also implemented a salary reduction for all remaining non-furloughed employees based on a combination of the employee’s salary and the employee’s responsibilities during the temporary shutdown. The Company also implemented a salary reduction for the management team during the majority of 2020. Additionally, pandemic-related restrictions on our special events and group sales operations will impact our non-gaming business for at least the next several months. To address this near-term challenge, the Company made the very difficult decision to align staffing levels with the ~~SEC on April 22, 2016, which information is incorporated herein by reference.~~current level of our non-gaming business. These actions included leaving vacant positions unfilled, furloughing team members, pay reductions for senior leadership and some job eliminations.

~~For purposes~~On March 16, 2020, the Company announced that the Company’s Board of Directors had suspended the Company’s quarterly cash dividend until the Company’s business operations return to normal.

Other additional measures taken by the Company include postponing non-essential capital expenditures, reducing operating costs, and substantially reducing discretionary spending.

We expect these measures to partially mitigate the impacts of the COVID-19 Pandemic on our full year 2021 financial results. The Company has no long-term debt and a $10.0 million credit line that, when combined with the Company’s existing cash and any cash generated from operations, is anticipated to provide the Company with the necessary liquidity and financial flexibility to manage through this ~~Report~~challenging operating environment. As the impact of the COVID-19 Pandemic on ~~Form 10-Q, when~~ the ~~term “Company” is used with reference~~economy and our operations evolves, we will continue to ~~information covering or related to periods up to~~assess the impact on the Company and ~~including June 30, 2016, such term refers to the operations of CPHC prior to the Reorganization.~~respond accordingly.

Total net revenues for the three months ended March 31, 2021 were $9,226,000, a decrease of $1,723,000, or 15.7%, compared to total net revenues of $10,949,000 for the three months ended March 31, 2020. This decrease consists of decreases in pari-mutuel, Card Casino, food and beverage, and other revenues driven by the COVID-19 Pandemic. See below for a further discussion of our sources of revenues.

Total pari-mutuel revenue for the three months ended March 31, 2021 was $1,154,000, a decrease of $142,000, or 11%, from $1,296,000 for the three months ended March 31, 2020. Simulcast revenue decreased $176,000, or 17.3% in 2021 compared to 2020 primarily due to the COVID-19 Pandemic described above, including the fact that these operations were operating in a limited capacity in the first quarter of 2021. Other revenue increased $34,000, or 12.1% compared to 2020 primarily due to an increase in Advanced Deposit Wagering (ADW) revenue.

The primary source of Card Casino revenue is a percentage of the wagers received from players as compensation for providing the Card Casino facility and services, which is referred to as “collection revenue.” Other Revenue presented above includes fees collected for the administration of tournaments, amounts earned as reimbursement of the administrative costs of maintaining jackpot funds, and amounts related to the outstanding chip liability that we expect will not be redeemed in the future.

As indicated by the table above, total Card Casino revenue for the three months ended March 31, 2021 was $6,864,000, a decrease of $697,000, or 9.2%, from $7,561,000 for the three months ended March 31, 2020. The decrease is due to the COVID-19 Pandemic described above. When the Company reopened its Card Casino operations on January 11, 2021, this included reduced seating at tables and capacity limitations to follow Minnesota state guidelines.

Food and beverage revenue for the three months ended March 31, 2021 was $374,000, a decrease of $745,000, or 66.5%, from $1,119,000 for the three months ended March 31, 2020. The decrease is primarily due to decreased attendance and special events, primarily due to capacity limitations mandated across the Company’s operations as a result of the COVID-19 Pandemic described above.

Other revenue for the three months ended March 31, 2021 was $833,000, a decrease of $140,000, or 14.4%, from $973,000 for the three months ended March 31, 2020. The decrease is primarily related to limited special event operations due to capacity limitations mandated across the Company’s operations as a result of the COVID-19 Pandemic described above. Offsetting this decrease is the receipt of $515,000 of COVID-19 relief grants that the Company recorded as other revenue in the 2021 first quarter.

Total operating expenses for the three months ended March 31, 2021 were $7,953,000, a decrease of $2,854,000, or 26.4%, compared to total operating expenses of $10,807,000 for the three months ended March 31, 2020. The decrease in operating expenses reflect reductions in all of the Company’s operating expense line items, primarily as a result of the Company’s limited operations and efforts to manage expenses in light of revenue declines due to the COVID-19 Pandemic. The following paragraphs provide further detail regarding certain operating expenses.

Purse expense for the three months ended March 31, 2021 was $976,000, a decrease of $127,000, or 11.5%, from $1,103,000 for the three months ended March 31, 2020. The decrease is due to a reduction in pari-mutuel and Card Casino revenues.

Salaries and benefits for the three months ended March 31, 2021 was $3,967,000, a decrease of $1,611,000, or 28.9%, from $5,578,000 for the three months ended March 31, 2020. The decrease is due to the COVID-19 Pandemic, which resulted in the majority of Company employees being placed on an unpaid furlough during the temporary suspension of operations through January 10, 2021. Labor costs have also significantly declined upon reopening in January due to the Company’s limited operations requiring significantly reduced number of personnel.

Cost of food and beverage sales for the three months ended March 31, 2021 was $206,000, a decrease of $359,000, or 63.5%, from $564,000 for the three months ended March 31, 2020. The decrease is due to lower food and beverage revenues due to decreased attendance and special events, primarily due to capacity limitations mandated across the Company’s operations as a result of the COVID-19 Pandemic.

Advertising and marketing for the three months ended March 31, 2021 was $56,000, a decrease of $128,000, or 69.3%, from $184,000 for the three months ended March 31, 2020. The decrease is due to a reduction in advertising and marketing spend due to capacity limitations mandated across the Company’s operations as a result of the COVID-19 Pandemic.

The Company recorded a provision for income taxes of $252,000 and $50,000 for the three months ended March 31, 2021 and 2020, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The increase in our tax expense of $202,000 during the quarter ended March 31, 2021 over the quarter ended March 31, 2020 is primarily due to an increase in income before taxes from operations. The increase in the effective tax rate to 31.4% for the quarter ended March 31, 2021 from 16.4% for the quarter ended March 31, 2020 is primarily due to the discrete benefit realized from the estimated NOL carryback calculated in the 2020 tax provision, which resulted in a lower effective tax rate for the quarter ended March 31, 2020.

Net income for the three months ended March 31, 2021 and 2020 was $551,000 and $255,000, respectively.

To supplement our financial statements, we also provide investors with information about our EBITDA ~~represents~~and Adjusted EBITDA, each of which is a non-GAAP measure, which excludes certain items from net income (loss), a GAAP measure. We define EBITDA as earnings before interest, income tax (benefit) expense, and depreciation and amortization. We also compute Adjusted EBITDA, which reflects additional adjustments to Net Income to eliminate unusual or non-recurring items, as well as items relating to our real estate development operations and we believe the exclusion of these items allows for better comparability of our performance between periods. For the three months ended March 31, 2021, Adjusted EBITDA excluded depreciation, amortization, and interest expense related to equity investments, as well as $515,000 of COVID-19 relief grants included in other revenue. Neither EBITDA nor adjusted EBITDA is ~~not~~ a measure of performance ~~or liquidity~~ calculated in accordance with ~~generally accepted accounting principles in the United States of America (“GAAP”),~~GAAP and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating ~~performance or cash flows from operating activities as a measure of liquidity.~~performance. EBITDA is presented as a supplemental disclosure because it is a widely used measure of performance and a basis for valuation of companies in our industry. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. Adjusted EBITDA reflects additional adjustments to net income to eliminate unusual items. For the three months ended September 30, 2016, adjusted EBITDA excluded the gain on insurance recoveries. For the nine months ended September 30, 2016, adjusted EBITDA excluded the gain on sale of land and gain on insurance recoveries.

Adjusted EBITDA increased ~~$544,000~~$563,000, or ~~33.2%~~65.6%, ~~and increased as a percentage of net revenues to 12.4% from 9.9%~~ for the three months ended ~~September 30, 2017~~March 31, 2021 as compared to the same period in ~~2016.~~2020. The increase is a result of increased labor efficiencies and overall reduction in operating expenses to help mitigate the effects of the COVID-19 Pandemic. For the three months ended March 31, 2021, Adjusted EBITDA ~~increased $2,195,000, or 67.3%, and increased~~ as a percentage of net ~~revenues~~revenue, excluding $515,000 other revenue from COVID-19 relief grants, was 16.3%. This compares to ~~12.2% from 8.0% for the nine months ended September 30, 2017~~Adjusted EBITDA as ~~compared to the same period in 2016. The increase for the three and nine months ended September 30, 2017 is primarily due to the increase in revenues compared to the same periods in 2016.~~

~~Total~~a percentage of net ~~revenues~~revenue calculated on a GAAP basis for the three months ended ~~September 30, 2017 were $17,667,000, an increase~~March 31, 2020 of $1,036,000, or 6.2%, compared to total net revenues of $16,630,000 for the three months ended September 30, 2016. This increase primarily consists of increases in pari-mutuel and card casino revenue of 8.8% and 8.9%, respectively, partially offset by a decrease in food and beverage revenue of 7.6%7.8%. Total net revenues for the nine months ended September 30, 2017 were $44,956,000, an increase of $4,094,000, or 10.0%, compared to total net revenues of $40,863,000 for the nine months ended September 30, 2016. This increase primarily consists of increases in pari-mutuel, food and beverage and card casino revenue of 11.7%, 2.1% and 11.0%, respectively. See below for a further discussion of our sources of revenues.

~~1 – Includes source market fees received pursuant to Advanced Deposit Wagering (ADW) legislation effective November 1, 2016.~~

Total pari-mutuel revenue increased $311,000, or 8.8%, for the three months ended September 30, 2017, compared to the same period in 2016. The increase in other pari-mutuel revenue is due to receipt of $155,000 in source market fees received under Advanced Deposit Wagering (ADW) legislation that took effect on November 1, 2016. The ADW legislation allows Minnesota residents to engage in pari-mutuel wagering on out-of-state horse races online with a prefunded account through an ADW provider. The Company receives a percentage of monies wagered (generally 3.25% to 5.0%) by Minnesota residents through the ADW provider as a source market fee. The Company receives 72% of the gross source market fees less the amount of at least 50% for purses and breeders’ awards. The percentage of source marketing fee retained by the Company is recorded as operating revenue and the percentage to the purses and breeders’ awards are recorded as operating expenses. Simulcast revenue increased $92,000 primarily due to a small group of individual players who placed a significantly high volume of bets in the quarter. Total pari-mutuel revenue increased $931,000, or 11.7%, for the nine months ended September 30, 2017 compared to the same period in 2016 primarily due to $655,000 received in ADW source market fees in the first nine months of 2017. Additionally, on-track live racing revenue increased $249,000 primarily due to an increase in statutory take-out levels as compared to 2016 when the Company reduced the take-out on its live races as a promotion to increase wagering dollars (“handle”), but also resulted in substantially reduced revenue.

The primary source of Card Casino revenue is a percentage of the wagers received from the players as compensation for providing the Card Casino facility and services, which is referred to as “collection revenue.” Other Revenue presented above includes fees collected for the administration of tournaments and amounts earned as reimbursement of the administrative costs of maintaining jackpot funds.

As indicated in the table above, total Card Casino revenue increased $655,000, or 8.9%, and $2,352,000 or 11.0%, for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. The increases are a result of increased play on table games. In management’s judgement, increased play is attributable to players spending more money due to a stronger economy, as well as an overall increase in card casino marketing initiatives. Also, higher jackpots on certain games drove increased play.

Food and beverage revenue decreased $262,000, or 7.6%, for the three months ended September 30, 2017 compared to the same period in 2016. The decrease is attributable to six less live racing days compared to the 2016 third quarter. Additionally, there was a decline in attendance for a concert conducted in the 2017 third quarter compared to the 2016 third quarter. Food and beverage revenue increased $143,000, or 2.1%, for the nine months ended September 30, 2017 compared to the same period in 2016 due to hosting more special events in the nine months ended September 30, 2017 compared to the same period in 2016.

Compared to the same periods in 2016, other revenue increased $335,000, or 14.3%, and $682,000, or 14.2% for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. The increases are due to increased admission revenue from a greater number of premium priced live racing days during 2017 and event admission revenue from a greater number of special events hosted. Also, the Company received higher payments under the CMA for joint marketing efforts with the SMSC. See “Cooperative Marketing Agreement” below. The amounts earned from the marketing payments are offset by an increase in other expenses related to RiverSouth, which is an area wide marketing association that promotes Shakopee entertainment venues.

The Company’s operating expenses during the 2017 third quarter were $16,130,000, an increase of $1,058,000, or 7.0%, from the third quarter 2016 expenses of $15,072,000, and the Company’s operating expenses during the nine months ended September 30, 2017 were $41,367,000, an increase of $6,483,000, or 18.6%, from $34,883,000 in the nine months ended September 30, 2016. Operating expenses in the 2016 third quarter included an insurance recovery of $592,276 related to storm damage in 2014 that was accounted for as a reduction in operating expense. The 2016 year-to-date operating expenses reflect the previously reported $3,990,519 pretax gain on sale of land in the 2016 second quarter that was also accounted for as a reduction in operating expense. Excluding insurance recoveries from 2016, operating expenses for the third quarter 2017 increased $396,000 or 2.5%. Excluding insurance recoveries and gain on sale of land from 2016, operating expenses for the nine month period ended September 30, 2017 increased $1,781,000 or 4.5%. The following paragraphs provide further detail regarding certain operating expenses.

Purse expense increased $97,000, or 4.5%, and $427,000, or 8.5% for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. Also, Minnesota Breeders’ Fund expense increased $33,000, or 13.1%, and $169,000, or 26.6%, for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. The increases are primarily due to increased Card Casino revenues and increased purse fund payments due to ADW source market arrangements.

Salaries and benefits increased $330,000, or 5.3%, and $739,000, or 4.3%, for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. The increases are partially due to the State of Minnesota mandated increase of $0.50 in the minimum wage effective August 2016, as well as an increase in employee incentive compensation resulting from an increase in performance from operations.

~~The gain on sale of land is due to the sale of approximately 24 acres of land adjacent to the Racetrack for a total consideration of $4.3 million.~~

During 2014, the Company incurred damage to buildings from multiple severe storms at the Racetrack. As of September 30, 2016, the Company recognized a $592,000 insurance recoveries gain in the Consolidated Statements of Operations as “Gain on insurance recoveries.”

Professional and contracted services increased $20,000, or 1.3%, and $237,000, or 7.1%, for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. The nine month increase is primarily due to increased live racing contracted services as a result of additional live racing weeks and increased consulting fees, primarily related to development initiatives.

Advertising and marketing increased $286,000, or 28.2% and other expenses decreased $165,000, or 11.4%, for the three months ended September 30, 2017 compared to the same period in 2016. This is due to a reclassification of expenses associated with RiverSouth.

Income tax expense decreased $36,000, or 5.7%, and $975,000, or 40.3% for the three and nine months, respectively, ended September 30, 2017 compared to the same periods in 2016. The decreases related to tax expense associated with the gain on sale of land and gain on insurance recoveries in 2016 that did not recur in 2017. The effective rate was approximately 41% for both periods ended September 30, 2017 and 2016.

Net income for the three months ended September 30, 2017 and 2016 was $953,000 and $926,000, respectively. Net income for the nine months ended September 30, 2017 and 2016 was $2,182,000 and $3,511,000, respectively.

The Company entered into a Cooperative Marketing Agreement (the “CMA”) with the Shakopee Mdewakanton Sioux Community, which became effective on ~~June~~March 4, 2012, and was amended in ~~January~~the respective first quarters of 2015, 2016, 2017, 2018, and ~~2017,~~June 2020 and will expire December 31, 2022. The CMA contains ~~certain~~specific covenants ~~which,~~that, if breached, would trigger an obligation to repay a specified amount related to ~~such covenant.~~these covenants. At this time, management believes that the likelihood that the breach of a covenant would occur and that the Company would be required to pay the specified amount related to ~~such~~a covenant is remote.

The Company continues to analyze the feasibility of various options related to the development of our underutilized land. The Company may incur substantial costs during the feasibility and predevelopment process, but the Company believes available funds are sufficient to cover the near-term costs. See Liquidity and Capital Resources for more information on liquidity and capital resource requirements.

Net cash provided by operating activities for the nine months ended September 30, 2017 was $5,104,000 primarily from net income of $2,182,000, depreciation of $1,869,000, and stock-based compensation and 401(k) match totaling $614,000. The Company also experienced an increase in accounts payable and deferred revenue of $623,000 and a decrease in income taxes receivable of $511,000. This was partially offset by an increase in restricted cash of $769,000.

Net cash provided by operating activities for the nine months ended September 30, 2016 was $2,543,000 primarily as a result of the following: The Company reported net income of $3,511,000, depreciation of $1,867,000, and deferred income taxes of $973,000. The Company also experienced an increase in accounts payable and deferred revenue of $1,634,000 and Card Casino accruals of $621,000. This was partially offset by an increase in restricted cash of $574,000 and due from Minnesota horsemen associations of $1,101,000, and partially offset by the gain on disposal of assets relating to the sale of land of $3,990,000 and gain on insurance recoveries of $592,000.

Net cash used in investing activities for the first nine months of 2017 was $3,219,000, primarily for building remodel projects. Net cash used in investing activities for the first nine months of 2016 was $3,777,000, primarily for building remodel projects and the purchase of land.

Net cash used in financing activities during the first nine months of 2017 was $499,000, primarily for cash dividends to shareholders, partially offset by proceeds from purchases of stock through the Employee Stock Purchase Plan and proceeds received upon the exercise of stock options. Net cash used in financing activities during the first nine months of 2016 was $2,589,000, primarily for principal payments of capital lease obligations and payment of cash dividends to shareholders.

The Company has a general credit and security agreement with ~~Bremer Bank,~~a financial institution, which provides a revolving credit line up to $10,000,000 and allows for letters of credit in the aggregate amount of up to ~~$6,000,000. This agreement was amended~~$2,000,000 to be issued under the credit agreement. As of March 31, 2021, the bank issued a $1,250,000 letter of credit on ~~September 30, 2017~~behalf of the Company and therefore, the Company has an available credit line up to ~~extend the maturity date to September 30, 2018.~~$8,750,000. The line of credit is collateralized by all receivables, inventory, equipment, and general intangibles of the Company. The line of credit also includes collateral in the form of a Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents. As of ~~September 30, 2017, there were no borrowings under this agreement~~March 31, 2021, the outstanding balance on the line of credit was $0. As of March 31, 2021, the Company was in compliance with the financial covenants of the general credit and security agreement.

The Company’s cash, cash equivalents, and restricted cash ~~equivalent~~ balance at ~~September 30, 2017~~March 31, 2021 was ~~$7,685,000~~$6,127,000 compared to ~~$6,299,000 at~~ $4,472,000 as of December 31, ~~2016.~~2020. The Company believes that unrestricted funds available in its cash accounts, amounts available under its revolving line of credit, along with funds generated from operations and future land sales, will be sufficient to satisfy its liquidity and capital resource requirements for regular operations, as well as ~~predevelopment~~its planned development expenses during ~~2017.~~2021. However, if the Company engages in any additional significant real estate development, additional financing would more than likely be ~~required.~~required and the Company may seek this additional financing through joint venture arrangements, through incurring debt, or through an equity financing, or a combination of any of these.

Net cash provided by operating activities for the three months ended March 31, 2021 was $1,844,000 primarily as a result of the following: The Company reported net income of $551,000, depreciation of $690,000, loss from equity investment of $638,000, and stock-based compensation and 401(k) match totaling $194,000. The Company also experienced an increase in accrued wages and payroll taxes of $996,000 for the three months ended March 31, 2021 due to the timing of our payroll dates as well as the fact the Company's operations were temporarily suspended as of December 31, 2020 resulting in a reduction in payroll costs. This was partially offset by a decrease in payables to horsemen of $1,035,000.

Net cash provided by operating activities for the three months ended March 31, 2020 was $351,000 primarily as a result of the following: The Company reported net income of $255,000, depreciation of $717,000, and stock-based compensation and 401(k) match totaling $219,000. The Company also experienced an increase in accounts payable of $961,000 for the three months ended March 31, 2020. This was partially offset by a decrease in accrued wages and payroll taxes of $1,400,000 and Card Casino accruals of $512,000.

Net cash used in investing activities for the first three months of 2021 and 2020 was $205,000 and $871,000, respectively, primarily for additions to property, plant, and equipment and additions for TIF eligible improvements. This is partially offset by a decrease in related party receivables in the first quarter of 2021 of $77,000 and proceeds from sale of investments in the first quarter of 2020 of $104,000.

Net cash provided by financing activities during the first three months of 2021 was $16,000, primarily due proceeds from the issuance of common stock, partially offset by payments for taxes of equity awards. Net cash used in financing activities during the first three months of 2020 was $326,000, relating primarily to cash dividends paid to shareholders.

In March 2020, the Company’s Board of Directors suspended the Company’s quarterly cash dividend, beginning with the cash dividend that would normally have been paid in April 2020.

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time the consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are included in Note 12 to our consolidated financial statements in our ~~2016~~2020 Annual Report on Form 10-K. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Property and Equipment - We have significant capital invested in our property and equipment, which represents ~~68.9%~~47.6% of our total assets at ~~September 30, 2017.~~March 31, 2021. We ~~utilize~~use our judgment in various ways including: determining whether an expenditure is considered a maintenance expense or a capital asset; determining the estimated useful lives of assets; and determining if or when an asset has been impaired or has been disposed. Management periodically reviews the carrying value of property and equipment for potential impairment by comparing the carrying value of these assets with their related expected undiscounted future net cash flows. If the sum of the related expected future net cash flows is less than the carrying value, management would determine how much of an impairment loss would be measured by the amount by which the carrying value of the asset exceeds the fair value of the asset. ~~To date, we~~We have determined that no impairment of these assets ~~exists.~~exists at March 31, 2021.

Stock-Based Compensation –Accounting guidance requires measurement of services provided in exchange for a share-based payment based on the grant date fair market value. We ~~utilize~~use our judgment in determining the assumptions used to determine the fair value of equity instruments granted using a Black-Scholes model. The Company also has historically granted Long Term Incentive Awards under the Long Term Incentive Plan (the “LTI Plan”) under which Company executive officers and other senior executives have had the opportunity to receive a payout of shares of the Company’s common stock at the end of a three-year period. Management must make a number of assumptions to estimate future results to determine the compensation expense of the LTI Plan. As a result of the COVID-19 Pandemic, the Company has temporarily suspended its LTI Plan until there is more certainty about the Company’s future operations. Currently, awards are outstanding under the LTI Plan only for the three-year period ending December 31, 2021.

The Company entered into the CMA with the SMSC on June 4, 2012, that was amended in January 2015, 2016, 2017, March 2018, and ~~2017~~June 2020 and expires December 31, 2022. See “Cooperative Marketing Agreement” below.

Legislation that was enacted into law in 2014 increased the minimum wage that must be paid to most company employees from $7.25 to $8.00 on August 1, 2014, and from $8.00 to $9.00 per hour on August 1, 2015. A further increase from $9.00 to $9.50 per hour went into effect on August 1, 2016. In addition, starting January 1, 2018, the minimum wage will increase at the beginning of each year by the rate of inflation with a maximum increase of up to 2.5% per year. Prior to August 1, 2014, the Company employed a large number of individuals who received an hourly wage equal to or slightly above $7.25 per hour. As a result, this legislation has had an adverse financial impact in 2016 and 2017 and will continue to have an adverse impact. We have implemented measures to partially mitigate the impact of this increase by raising our prices and/or reducing our employee count. However, these measures could themselves have an adverse effect because higher prices and diminished service levels may discourage customers from visiting the Racetrack.

On June 4, 2012, the Company entered into the CMA with the SMSC. The primary purpose of the CMA is to increase purses paid during live horse racing at Canterbury Park’s Racetrack in order to strengthen Minnesota’s thoroughbred and quarter horse industry. Under the CMA, as amended, this is achieved through “Purse Enhancement Payments to Horsemen” paid directly to the MHBPA. ~~Such~~These payments have no direct impact on the Company’s consolidated financial statements or operations.

Because the Company conducted a more limited 2020 live race meet due to the COVID-19 Pandemic, the Company and SMSC entered into the Fifth Amendment Agreement (“Fifth Amendment”) to the CMA effective June 8, 2020. Under the ~~terms of~~Fifth Amendment, the SMSC agreed to provide up to $5,620,000 for the annual purse enhancement for the year 2021. The annual purse enhancement that the SMSC is obligated to pay under the CMA ~~as amended, the SMSC paid the horsemen $7.2 million~~for 2021 and ~~$6.7 million in the first nine months of 2017~~2022 was not changed and ~~2016, respectively, primarily for purse enhancements for the live race meets in the respective years.~~remains at $7,380,000 per year.

Under the CMA, as amended, SMSC also agreed to make “Marketing Payments” to the Company relating to joint marketing efforts for the mutual benefit of the Company and SMSC, including signage, joint promotions, player benefits, and events. ~~Under the CMA, the SMSC paid the Company $1,581,000 and $1,197,000 for marketing purposes during the three months ended September 30, 2017 and 2016, respectively.~~

~~In each of January 2015, 2016,~~As noted above and ~~2017~~affirmed in the ~~CMA was amended three times to adjust the payment amounts between the “Purse Enhancement Payments to Horsemen” and “Marketing Payments to Canterbury Park.”~~Fifth Amendment, SMSC is ~~currently~~ obligated to make ~~the following~~an annual purse enhancement of $7,380,000 and annual marketing ~~payments~~payment of $1,620,000 for ~~2018 through 2022:~~2022.

The amounts earned from the marketing payments are recorded as a component of other revenue and the related expenses are recorded as a component of advertising and marketing expense and depreciation in the Company’s condensed consolidated statements of operations. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021, the Company recorded ~~$672,000 and $1,298,000~~$47,000 in other revenue, ~~and~~ incurred ~~$569,000 and $1,128,000~~$23,000 in advertising and marketing expense, and ~~$57,000 and $170,000~~incurred $24,000 in depreciation related to the SMSC marketing ~~payment.~~funds. For the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2020, the Company recorded ~~$366,000 and $610,000~~$68,000 in other revenue, ~~and~~ incurred ~~$312,000 and $440,000~~$30,000 in advertising and marketing expense, and ~~$57,000 and $170,000~~incurred $38,000 in depreciation related to the SMSC marketing ~~payment. The excess of amounts received over revenue is reflected as deferred revenue which is included on the consolidated balance sheets.~~funds.

Under the CMA, the Company has agreed for the ~~10 ½ year~~10-year term of the CMA expiring December 31, 2022 that it will not promote or lobby the Minnesota legislature for expanded gambling authority and will support the SMSC’s lobbying efforts against expanding gambling authority.

As mentioned above in note 8 of Notes to Financial Statements, on August 10, 2018, the City of Shakopee, the City of Shakopee Economic Development Authority, and the Company entered into a Redevelopment Agreement in connection with a Tax Increment Financing District (“TIF District”) that the City had approved in April 2018. Under the Redevelopment Agreement, the Company has agreed to undertake a number of specific infrastructure improvements within the TIF District, including the development of public streets, utilities, sidewalks, and other public infrastructure and the City of Shakopee 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. 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.

From time-to-time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, prospective business activities or plans ~~which~~that are typically preceded by words such as “believes,” “expects,” “anticipates,” “intends” or similar expressions. For ~~such~~these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in federal securities laws. Shareholders and the investing public should understand that ~~such~~these forward-looking statements are subject to risks and uncertainties ~~which~~that could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. ~~Such~~These risks and uncertainties include, but are not limited to: material fluctuations in attendance at the Racetrack, decline in interest in wagering on horse races at the Racetrack, at other tracks, or on unbanked card games offered at the Card Casino, competition from other venues offering unbanked card games or other forms of wagering, greater than anticipated expenses or a lower than anticipated return on the development of our underutilized land, competition from other sports and entertainment options, increases in compensation and employee benefit costs, increases in the percentage of revenues allocated for purse fund payments, higher than expected expenses related to new marketing initiatives, the impact of wagering products and technologies introduced by competitors, legislative and regulatory decisions and changes, the general health of the gaming sector,

~~Canterbury Park is not required to provide the information requested by this Item as it qualifies as a smaller reporting company.~~ Not Applicable.

The Company’s President and Chief Executive Officer, Randall D. Sampson and Chief Financial Officer, Randy J. Dehmer, have reviewed the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon this review, these officers have concluded that the Company’s disclosure controls and procedures are effective.

There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during our fiscal quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PARTII

OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable.

Item 1A. Risk Factors

There have been no changes to the Risk Factors listed in our Annual Report on Form 10-K for the year ended December 31, 2020, as updated by our subsequently filed Quarterly Reports on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In the three months ending March 31, 2021, the Company repurchased shares of stock as follows:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Shares That May Yet Be Purchased Under the Program (1)
January 1-31, 2021		-	$	-		-		128,781
February 1-28, 2021		-	$	-		-		128,781
March 1-31, 2021		1,894	$	13.70		-		128,781
Total		1,894	$	13.70		-		128,781

(1) Amount remaining from the aggregate 350,000 repurchase authorizations approved by the Company's Board of Directors in August 2012.

In the three months ending March 31, 2021, the Company repurchased a total of 1,894 shares in connection with payment of taxes upon issuance of deferred stock awards issued to employees.

Item 3. Defaults upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

~~PART II~~

~~OTHER INFORMATION~~ Item 6. Exhibits

~~Item 1.~~			~~Legal Proceedings~~

			~~Not Applicable.~~

~~Item 1A.~~			~~Risk Factors~~

			There have been no material changes to the Risk Factors reported under Item 1A in the Form 10-K for the year ended December 31, 2016, and the risk factors presented therein are incorporated by reference herein.

~~Item 2.~~			~~Unregistered Sales of Equity Securities and Use of Proceeds~~

	~~(a)~~		~~Not Applicable.~~
	~~(b)~~		~~Not Applicable.~~
31.1	~~(c)~~		On December 17, 2007, the Company’s Board of Directors adopted a plan that authorized the repurchase of up to 250,000 shares of the Company’s common stock pursuant to Exchange Act Rule 12b-18 in open market transactions, block purchases of privately negotiated transactions (the “2008 Stock Repurchase Plan”). From its adoption until August 13, 2012, the Company repurchased 216,543 shares under the 2008 Stock Repurchase Plan and, on such date, authorized the repurchase of an additional 100,000 shares of the Company’s common stock. The Company did not repurchase any shares during the third quarter of 2017. The maximum number of shares that may yet be purchased under the above authorizations is 128,781 as of September 30, 2017.

~~Item 3.~~			~~Defaults upon Senior Securities~~

			~~Not Applicable.~~

~~Item 4.~~			~~Mine Safety Disclosures~~

			~~Not Applicable.~~

~~Item 5.~~			~~Other Information~~

			~~Not Applicable.~~

~~Item 6.~~			~~Exhibits~~

		11	~~Statement re computation of per share earnings – See Net Income Per Share under Note 3 of Notes to Consolidated Financial Statements under Part 1, Item 1, which is incorporated herein by reference.~~

		~~31.1~~	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (rules 13a-14 and 15d-14 of the Exchange Act).

	31.2	~~31.2~~	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (rules 13a-14 and 15d-14 of the Exchange Act).

32		32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
		~~101~~
99.1	Press Release dated May 10, 2021 announcing 2021 First Quarter Results.

101	The following financial information from Canterbury Park Holding Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2017,~~March 31, 2021, formatted in eXtensible Business Reporting Language XBRL: (i) Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, (ii) Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021and ~~Nine~~March 31, 2020, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the Three Months ~~ended September 30, 2017~~Ended March 31, 2021 and ~~September 30, 2016, (iii)~~March 31, 2020, (iv) Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months ~~ended September 30, 2017~~Ended March 31, 2021 and ~~September 30, 2016,~~March 31, 2020, and ~~(iv)~~(v) Notes to Financial Statements.

SIGNATURES

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


	Canterbury Park Holding Corporation

Dated: May 11, 2021	/s/ Randall D. Sampson
	Randall D. Sampson
	President and Chief Executive Officer (principal executive officer)

	~~Canterbury Park Holding Corporation~~
Dated: May 11, 2021	/s/ Randy J. Dehmer
	Randy J. Dehmer
	Chief Financial Officer (principal financial officer, principal accounting officer)


~~Dated: November 14, 2017~~	~~/s/ Randall D. Sampson~~

	~~Randall D. Sampson,~~
	~~President and Chief Executive Officer~~


~~Dated: November 14, 2017~~	~~/s/ Robert M. Wolf~~
	~~Robert M. Wolf,~~
	~~Chief Financial Officer~~

Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock Common stock, $.01 par value	CPHC	Nasdaq

	Large accelerated filer	¨☐	Accelerated filer	¨☐
	Non-accelerated filer	¨☒	Smaller reporting company	x
☒	Emerging growth company	¨	☐


			Page
~~PART I.~~	~~FINANCIAL INFORMATION~~

PARTI.	~~Item 1.~~ FINANCIAL INFORMATION		~~Financial Statements (unaudited)~~

	Item 1.	Financial Statements (unaudited)

		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020	32

		Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	43

		Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	4

		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	5

		Notes to Condensed Consolidated Financial Statements	7


	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14 19

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20 27

	Item 4.	Controls and Procedures	20 27

PARTII.	OTHER INFORMATION

	Item 1.	Legal Proceedings	2128

	Item 1A.	Risk Factors	2128

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2128

	Item 3.	Defaults Upon Senior Securities	2128

	Item 4.	Mine Safety Disclosures	2128

	Item 5.	Other Information	2128

	Item 6.	Exhibits	2129

	Signatures		2229

	~~Certifications~~

	(Unaudited)
	September 30,		December 31,
	2017		2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	7,685,291	$	6,298,807
Restricted cash		2,758,635		1,990,013
Short-term investments		205,944		205,649
Accounts receivable, net of allowance of $28,000 for both periods		1,508,532		1,309,453
Current portion of notes receivable		1,048,654		1,048,654
Inventory		280,744		247,786
Prepaid expenses		439,960		466,993
Income taxes receivable		-		511,170
Due from Minnesota horsemen associations		463,081		-
Total current assets		14,390,841		12,078,525

LONG-TERM ASSETS
Deposits		25,000		25,000
Notes receivable - long term portion		2,142,512		2,142,512
Land, buildings and equipment, net of accumulated depreciation of $29,112,870 and $27,642,027, respectively		36,767,333		35,378,917
	$	53,325,686	$	49,624,954

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		2,719,813		2,518,791
Card Casino accruals		3,101,959		2,231,907
Accrued wages and payroll taxes		1,505,297		2,034,550
Cash dividend payable		263,898		216,411
Due to MHBPA		-		38,145
Accrued property taxes		1,052,558		932,030
Deferred revenue		1,031,685		568,921
Income taxes payable		355,583		-
Payable to horsepersons		185,215		176,652
Total current liabilities		10,216,008		8,717,407

LONG-TERM LIABILITIES
Deferred income taxes		4,310,000		4,357,000
Total long-term liabilities		4,310,000		4,357,000
TOTAL LIABILITIES		14,526,008		13,074,407

STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, 10,000,000 shares authorized, 4,398,303 and 4,325,154, respectively, shares issued and outstanding		43,983		43,252
Additional paid-in capital		19,591,467		18,780,070
Retained earnings		19,164,228		17,727,225
Total stockholders’ equity		38,799,678		36,550,547
	$	53,325,686	$	49,624,954

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
OPERATING REVENUES:
Pari-mutuel	$	3,866,158		$	3,554,975		$	8,901,920		$	7,971,295
Card Casino		7,979,614			7,324,936			23,796,820			21,445,127
Food and beverage		3,184,125			3,446,063			6,894,686			6,751,260
Other		2,682,434			2,347,464			5,483,541			4,801,471
Total Revenues		17,712,331			16,673,438			45,076,967			40,969,153
Less: Promotional allowances		(45,490	)		(43,030	)		(120,577	)		(106,451	)
Net Revenues		17,666,841			16,630,408			44,956,390			40,862,702

OPERATING EXPENSES:
Purse expense		2,252,618			2,155,361			5,430,102			5,003,159
Minnesota Breeders’ Fund		285,577			252,465			805,748			636,268
Other pari-mutuel expenses		310,334			300,635			1,034,805			1,061,019
Salaries and benefits		6,549,250			6,218,896			17,806,828			17,068,272
Cost of food and beverage and other sales		1,420,725			1,537,438			3,130,105			3,180,245
Depreciation		646,050			672,465			1,869,048			1,866,975
Utilities		539,018			540,468			1,157,783			1,134,365
Advertising and marketing		1,298,818			1,012,905			2,191,197			1,950,611
Professional and contracted services		1,537,311			1,517,417			3,551,738			3,314,792
Gain on sale of land		-			-			-			(3,990,519	)
Gain on insurance recoveries		-			(592,276	)		-			(592,276	)
Other operating expenses		1,290,327			1,455,729			4,389,243			4,250,366
Total Operating Expenses		16,130,028			15,071,503			41,366,597			34,883,277
INCOME FROM OPERATIONS		1,536,813			1,558,905			3,589,793			5,979,425
OTHER INCOME (EXPENSE):
Interest income (expense), net		13,575			538			37,178			(48,488	)
Net Other Income (Expense)		13,575			538			37,178			(48,488	)
INCOME BEFORE INCOME TAXES		1,550,388			1,559,443			3,626,971			5,930,937
INCOME TAX EXPENSE		(597,753	)		(633,606	)		(1,444,753	)		(2,419,447	)
NET INCOME	$	952,635		$	925,837		$	2,182,218		$	3,511,490

Basic earnings per share	$	.22		$	.22		$	.50		$	.82
Diluted earnings per share	$	.22		$	.21		$	.50		$	.82
Weighted Average Basic Shares Outstanding		4,393,523			4,296,581			4,369,489			4,276,387
Weighted Average Diluted Shares Outstanding		4,419,436			4,322,801			4,395,534			4,294,153
Cash dividends declared per share	$	.06		$	.05		$	.17		$	.30

	(Unaudited)
	March 31,		December 31,
	2021		2020
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	2,271,227	$	—
Restricted cash		3,855,368		4,471,712
Accounts receivable, net of allowance of $19,250 for both periods		322,135		231,255
Inventory		220,693		218,791
Prepaid expenses		711,149		498,642
Income taxes receivable		3,556,915		4,031,621
Total current assets		10,937,487		9,452,021

LONG-TERM ASSETS
Deposits		49,500		49,500
Other prepaid expenses		76,723		—
TIF receivable		12,041,157		11,888,570
Related party receivable		1,464,583		1,541,910
Operating lease right-of-use assets		45,057		45,057
Equity investment		6,877,405		7,515,108
Land held for development		4,805,417		4,805,417
Property, plant, and equipment, net		33,014,705		33,507,204
TOTAL ASSETS	$	69,312,034	$	68,804,787

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable		1,937,039		2,953,586
Card Casino accruals		2,889,285		2,327,994
Accrued wages and payroll taxes		2,146,481		1,150,102
Accrued property taxes		998,135		804,817
Deferred revenue		483,154		435,866
Payable to horsepersons		1,339,346		2,374,696
Current portion of finance lease obligations		26,071		25,749
Current portion of operating lease obligations		22,271		22,271
Total current liabilities		9,841,782		10,095,081

LONG-TERM LIABILITIES
Deferred income taxes		7,347,700		7,347,700
Finance lease obligations, net of current portion		39,395		46,035
Operating lease obligations, net of current portion		22,786		22,786
Total long-term liabilities		7,409,881		7,416,521
TOTAL LIABILITIES		17,251,663		17,511,602

STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, 10,000,000 shares authorized, 4,764,942 and 4,748,012 respectively, shares issued and outstanding		47,649		47,480
Additional paid-in capital		23,847,636		23,631,618
Retained earnings		28,165,086		27,614,087
Total stockholders’ equity		52,060,371		51,293,185
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	69,312,034	$	68,804,787

	Nine Months Ended September 30, 2017
	Horse Racing			Card Casino		Food and Beverage		Total

Net revenues from external customers	$	13,952		$	23,797	$	7,207	$	44,956

Intersegment revenues		682					1,106		1,788

Net interest income (expense)		37							37

Depreciation		1,428			317		124		1,869

Segment (loss) income before income taxes		(801	)		4,828		1,407		5,434

	Nine Months Ended September 30, 2016
	Horse Racing			Card Casino		Food and Beverage		Total

Net revenues from external customers	$	12,389		$	21,445	$	7,029	$	40,863

Intersegment revenues		653			-		1,015		1,668

Net interest income		(48	)		-		-		(48	)

Depreciation		1,430			317		120		1,867

Segment (loss) income before income taxes (1)		1,229			5,317		890		7,436

	Three Months Ended March 31, 2021
	Horse Racing			Card Casino		Food and Beverage			Development			Total
Net revenues from external customers	$	1,972		$	6,864	$	390		$	—		$	9,226
Intersegment revenues		1			—		95			—			96
Net interest (expense) income		2			—		—			167			169
Depreciation		564			75		51			—			690
Segment (loss) income before income taxes		(430	)		1,135		(203	)		(527	)		(25	)
Segment tax expense (benefit)		125			356		(64	)		(165	)		252

		March 31, 2021
Segment Assets		$	36,455			$	2,951			$	24,824			$	28,433			$	92,663

	Three Months Ended March 31, 2020
	Horse Racing			Card Casino		Food and Beverage			Development		Total
Net revenues from external customers	$	2,197		$	7,561	$	1,182		$	9	$	10,949
Intersegment revenues		70			—		262			—		332
Net interest (expense) income		(9	)		—		—			173		164
Depreciation		398			261		58			—		717
Segment (loss) income before income taxes		(896	)		965		(160	)		74		(17	)
Segment tax expense (benefit)		(94	)		158		(26	)		12		50

		December 31, 2020
Segment Assets		$	35,620			$	3,027			$	24,862			$	29,475			$	92,984

Income before income taxes
Total segment income before income taxes	$	5,434		$	7,436		$	(25	)	$	(17	)
Elimination of intersegment income before income taxes		(1,807	)		(1,505	)
Elimination of intersegment loss before income taxes								829			322
Total consolidated income before income taxes	$	3,627		$	5,931		$	804		$	305

Year	Purse Enhancement Payments to Horsemen		1	Marketing Payments to Canterbury Park
2018	$	7,380,000		$	1,620,000
2019		7,380,000			1,620,000
2020		7,380,000			1,620,000
2021		7,380,000			1,620,000
2022		7,380,000			1,620,000


1 ~~Includes $100,000 each year payable to various horsemen associations~~

		March 31,		December 31,
	Balance Sheet Location	2021		2020
Assets
Finance	Land, buildings and equipment, net (1)	$	65,466	$	71,784
Operating	Operating lease right-of-use assets		45,057		45,057
Total Leased Assets		$	110,523	$	116,841

Three Months Ended March 31, 2021	Operating leases			Finance leases
2021 remaining	$	23,100		$	21,557
2022		23,100			28,743
2023		—			19,332
Total minimum lease obligations		46,200			69,632
Less: amounts representing interest		(1,143	)		(4,166	)
Present value of minimum lease payments		45,057			65,466
Less: current portion		(22,271	)		(26,071	)
Lease obligations, net of current portion	$	22,786		$	39,395

~~ITEM 2:~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL~~
	~~CONDITION AND RESULTS OF OPERATIONS~~

Summary of EBITDA Data
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
NET INCOME	$	952,635		$	925,837		$	2,182,218		$	3,511,490
Interest (income) expense, net		(13,575	)		(538	)		(37,178	)		48,488
Income tax expense		597,753			633,606			1,444,753			2,419,447
Depreciation		646,050			672,465			1,869,048			1,866,975
EBITDA		2,182,863			2,231,370			5,458,841			7,846,400
Gain on insurance recoveries		0			(592,276	)		0			(592,276	)
Gain on sale of land		0			0			0			(3,990,519	)
ADJUSTED EBITDA	$	2,182,863		$	1,639,094		$	5,458,841		$	3,263,605

Pari-Mutuel Data Revenue:
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016

Simulcast	$	1,407,000	$	1,315,000	$	4,386,000	$	4,422,000
Live Racing		1,392,000		1,349,000		2,335,000		2,086,000
Guest Fees		783,000		772,000		1,279,000		1,210,000
Other Revenue (1)		284,000		119,000		902,000		253,000
Total Pari-Mutuel Revenue	$	3,866,000	$	3,555,000	$	8,902,000	$	7,971,000

Racing Days
Simulcast only racing days		52		46		206		205
Live and simulcast racing days		40		46		67		69
Total Number of Racing Days		92		92		273		274

~~(a)~~	(a)	Evaluation of Disclosure Controls and Procedures:

	The Company’s President and Chief Executive Officer, Randall D. Sampson and Chief Financial Officer, Robert M. Wolf, have reviewed the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon this review, these officers have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that the disclosure controls are also effective to ensure that information required to be disclosed in the Company’s Exchange Act reports is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

~~(b)~~	(b)	Changes in Internal Control over Financial Reporting:

	There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during our fiscal quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.