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** **

 

** **

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

**(Mark One)**

 
| **x** | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|--------------------------------------------------------------------------------------------------------|

 

**FOR THEQUARTERLY PERIOD ENDED SEPTEMBER 30, 2010.**

 

**OR**

 
| **o** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|---------------------------------------------------------------------------------------------------------|

 

**FOR THETRANSITION PERIOD FROM           TO          .**

 

**Commission File Number: 001-31569**

 

****

 

**CANTERBURY PARK HOLDING CORPORATION**

(Exact Name of Registrant as Specified in ItsCharter)

 
| **Minnesota**                                                    | **41-1775532**                        |
|------------------------------------------------------------------|---------------------------------------|
| (State or Other Jurisdiction  of Incorporation or  Organization) | (I.R.S. Employer  Identification No.) |

 

**1100 Canterbury RoadShakopee, MN 55379**

(Address of principal executive offices and zip code)

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

YES x                  NO o

 

Indicateby check mark whether the Registrant has submitted electronically and posted onits corporate Website, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during thepreceding 12 months (or for such shorter period that the Registrant wasrequired to submit and post such files).

YES o                  NO o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany (as defined in Exchange Act Rule 12b-2).

 
| Large accelerated filer o | Accelerated filer o         |
|--------------------------------|----------------------------------|
|                           |                             |
| Non-accelerated filer o   | Smaller reporting company x |

 

Indicate by check mark whether the registrant is a shell company (asdefined in Exchange Act Rule 12b-2).

YES o                  NO x

 

TheCompany had 4,044,472 shares of common stock, $.01 par value, outstanding as ofNovember 12, 2010.

 

 

 

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Table of Contents

 

Canterbury Park Holding Corporation

 

**INDEX**

 
| ** **        | ** **                 | **Page**                                                                                                 |
|-------------------|----------------------------|----------------------------------------------------------------------------------------------------------|
|              |                       |                                                                                                     |
| **PART I.**  | **FINANCIAL  INFORMATION** |                                                                                                     |
|              |                       |                                                                                                     |
|              | Item  1.                   | Financial  Statements                                                                                    |   |
|              |                       |                                                                                                     |   |
|              |                       | Condensed  Consolidated Balance Sheets as of September 30, 2010 and  December 31, 2009         | 3 |
|              |                       |                                                                                                     |   |
|              |                       | Condensed  Consolidated Statements of Operations for the periods Ended  September 30, 2010 and 2009 | 4 |
|              |                       |                                                                                                     |   |
|              |                       | Condensed  Consolidated Statements of Cash Flows for the periods Ended  September 30, 2010 and 2009 | 5 |
|              |                       |                                                                                                     |   |
|              |                       | Notes to Condensed Consolidated Financial Statements                                                     | 6 |
|              |                       |                                                                                                     |   |
|              | Item 2.                    | Management’s Discussion and Analysis of  Financial Condition and Results of Operations              | 15 |
|              |                       |                                                                                                     |   |
|              | Item 3.                    | Quantitative and Qualitative  Disclosures about Market Risk                                              | 22 |
|              |                       |                                                                                                     |   |
|              | Item 4.                    | Controls and Procedures                                                                                  | 22 |
|              |                       |                                                                                                     |   |
| **PART II.** | **OTHER INFORMATION**      |                                                                                                     |
|              |                       |                                                                                                     |   |
|              | Item 1.                    | Legal Proceedings                                                                                        | 23 |
|              |                       |                                                                                                     |   |
|              | Item 1A.                   | Risk Factors                                                                                             | 23 |
|              |                       |                                                                                                     |   |
|              | Item 2.                    | Unregistered  Sales of Equity Securities and Use of Proceeds                                             | 23 |
|              |                       |                                                                                                     |   |
|              | Item 3.                    | Defaults  Upon Senior Securities                                                                         | 23 |
|              |                       |                                                                                                     |   |
|              | Item 4.                    | Removed and Reserved                                                                                     | 23 |
|              |                       |                                                                                                     |   |
|              | Item 5.                    | Other Information                                                                                        | 23 |
|              |                       |                                                                                                     |   |
|              | Item 6.                    | Exhibits                                                                                                 | 23 |
|              |                       |                                                                                                     |   |
|              | Signatures                 | 24                                                                                                       |
|              |                       |                                                                                                     |
|              | Certifications             |                                                                                                     |

 

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**PART 1- FINANCIAL INFORMATION**

 

**CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 (Unaudited)**

 
| ** **                                                                                                                         | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                         | ** ** | **2010**               | ** ** | **2009**              | ** ** |
| **ASSETS**                                                                                                                         |       |                   |       |                  |       |
| CURRENT  ASSETS                                                                                                                    |       |                   |       |                  |       |
| Cash                                                                                                                               |       | $                      | 2,578,321  |                  | $          | 4,741,197 |   |
| Restricted  cash                                                                                                                   |       | 1,233,771              |       | 949,994               |       |
| Short-term  investments                                                                                                            |       | 116,928                |       | 365,894               |       |
| Accounts  receivable, net of allowance of $6,500                                                                                   |       | 832,580                |       | 405,192               |       |
| Inventory                                                                                                                          |       | 201,561                |       | 178,512               |       |
| Prepaid  expenses                                                                                                                  |       | 942,044                |       | 465,084               |       |
| Income  taxes receivable                                                                                                           |       | 1,323,434              |       | 168,979               |       |
| Deferred  income taxes                                                                                                             |       | 373,200                |       | 296,500               |       |
| Due  from Minnesota horsemen associations                                                                                          |       | 1,165,997              |       | 32,353                |       |
| Total  current assets                                                                                                              |       | 8,767,836              |       | 7,603,705             |       |
|                                                                                                                               |       |                   |       |                  |       |
| LONG-TERM  ASSETS                                                                                                                  |       |                   |       |                  |       |
| Deposits                                                                                                                           |       | 20,000                 |       | 20,000                |       |
| Deferred  income taxes                                                                                                             |       | —                 |       | 28,850                |       |
| Long-term  investments                                                                                                             |       | —                 |       | 250,000               |       |
| Land,  buildings and equipment, net of accumulated depreciation of $18,481,237 and  $18,623,780, respectively                      |       | 24,266,288             |       | 23,849,672            |       |
|                                                                                                                               |       | $                      | 33,054,124 |                  | $          | 31,752,227 |   |
|                                                                                                                               |       |                   |       |                  |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                      |       |                   |       |                  |       |
|                                                                                                                               |       |                   |       |                  |       |
| CURRENT  LIABILITIES                                                                                                               |       |                   |       |                  |       |
| Accounts  payable                                                                                                                  |       | $                      | 2,598,699  |                  | $          | 2,061,658 |   |
| Card  Casino accruals                                                                                                              |       | 1,614,797              |       | 1,175,383             |       |
| Accrued  wages and payroll taxes                                                                                                   |       | 910,329                |       | 635,182               |       |
| Due  to MHBPA                                                                                                                      |       | —                 |       | 35,422                |       |
| Accrued  property taxes                                                                                                            |       | 640,891                |       | 511,136               |       |
| Payable  to horsepersons                                                                                                           |       | 29,141                 |       | 31,444                |       |
| Total  current liabilities                                                                                                         |       | 5,793,857              |       | 4,450,225             |       |
|                                                                                                                               |       |                   |       |                  |       |
| LONG-TERM  LIABILITIES                                                                                                             |       |                   |       |                  |       |
| Deferred  income taxes                                                                                                             |       | 929,600                |       | —                |       |
|                                                                                                                               |       |                   |       |                  |       |
| COMMITMENTS  AND CONTINGENCIES (Note 6)                                                                                            |       | —                 |       | —                |       |
|                                                                                                                               |       |                   |       |                  |       |
| STOCKHOLDERS’  EQUITY                                                                                                         |       |                   |       |                  |       |
| Common  stock, $.01 par value, 10,000,000 shares authorized, 4,037,615 and 4,021,702,  respectively, shares issued and outstanding |       | 40,376                 |       | 40,217                |       |
| Additional  paid-in capital                                                                                                        |       | 15,829,838             |       | 15,648,200            |       |
| Retained  earnings                                                                                                                 |       | 10,460,453             |       | 11,613,585            |       |
| Total  stockholders’ equity                                                                                                   |       | 26,330,667             |       | 27,302,002            |       |
|                                                                                                                               |       | $                      | 33,054,124 |                  | $          | 31,752,227 |   |

 

See notes to condensed consolidated financialstatements.

 

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**CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTSOF OPERATIONS**

**PERIODS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)**

 
| ** **                                              | ** ** | **Three Months Ended Sept. 30,** | ** ** | **Nine Months Ended Sept. 30,** | ** ** |
|---------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                              | ** ** | **2010**                                             | ** ** | **2009**                                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| OPERATING  REVENUES:                                    |       |                                                 |       |                                                |       |   |   |   |   |
| Pari-mutuel                                             |       | $                                                    | 3,541,551  |                                                | $          | 3,934,950 |   | $ | 8,486,800 |   | $ | 9,449,671 |   |
| Card  Casino                                            |       | 5,501,295                                            |       | 4,998,890                                           |       | 16,428,378 |   | 15,213,489 |   |
| Concessions                                             |       | 2,154,659                                            |       | 2,119,612                                           |       | 4,518,855 |   | 4,594,317 |   |
| Other                                                   |       | 873,327                                              |       | 1,178,847                                           |       | 1,954,139 |   | 2,443,920 |   |
| Total  Revenues                                         |       | 12,070,832                                           |       | 12,232,299                                          |       | 31,388,172 |   | 31,701,397 |   |
| Less:  Promotional Allowances                           |       | (59,466                                              | )          | (73,078                                             | )          | (134,314 | ) | (156,063 | ) |
| Net  Revenues                                           |       | 12,011,366                                           |       | 12,159,221                                          |       | 31,253,858 |   | 31,545,334 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| OPERATING  EXPENSES:                                    |       |                                                 |       |                                                |       |   |   |   |   |
| Purse  expense                                          |       | 2,166,090                                            |       | 2,258,067                                           |       | 4,695,464 |   | 4,817,770 |   |
| Minnesota  Breeders’ Fund                          |       | 240,824                                              |       | 247,653                                             |       | 610,993 |   | 642,535 |   |
| Other  pari-mutuel expenses                             |       | 341,026                                              |       | 362,922                                             |       | 1,110,540 |   | 1,196,775 |   |
| Salaries  and benefits                                  |       | 4,926,466                                            |       | 4,780,410                                           |       | 13,927,758 |   | 13,255,700 |   |
| Cost  of sales                                          |       | 1,166,987                                            |       | 1,064,499                                           |       | 2,589,883 |   | 2,442,659 |   |
| Depreciation                                            |       | 485,641                                              |       | 505,950                                             |       | 1,473,616 |   | 1,584,240 |   |
| (Gain)  loss on disposal of assets                      |       | (2,600                                               | )          | —                                              |       | 906,940 |   | — |   |
| Utilities                                               |       | 396,970                                              |       | 379,251                                             |       | 924,016 |   | 896,843 |   |
| Advertising  and marketing                              |       | 420,891                                              |       | 529,973                                             |       | 1,129,327 |   | 1,193,048 |   |
| Other                                                   |       | 2,017,083                                            |       | 1,991,269                                           |       | 5,358,567 |   | 5,192,767 |   |
|                                                    |       | 12,159,378                                           |       | 12,119,994                                          |       | 32,727,104 |   | 31,222,337 |   |
| NONOPERATING  (EXPENSES)                                |       |                                                 |       |                                                |       |   |   |   |   |
| REVENUES:                                               |       |                                                 |       |                                                |       |   |   |   |   |
| Interest  expense                                       |       | (173                                                 | )          | (150                                                | )          | (4,017 | ) | (4,585 | ) |
| Other,  net                                             |       | 8,610                                                |       | 12,118                                              |       | 16,878 |   | 24,358 |   |
|                                                    |       | 8,437                                                |       | 11,968                                              |       | 12,861 |   | 19,773 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| (LOSS)  INCOME BEFORE INCOME TAX BENEFIT (EXPENSE)      |       | (139,575                                             | )          | 51,195                                              |       | (1,460,385 | ) | 342,770 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| INCOME  TAX BENEFIT (EXPENSE) (Note 1)                  |       | 6,700                                                |       | (34,800                                             | )          | 306,900 |   | (182,700 | ) |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| NET  (LOSS) INCOME                                      |       | $                                                    | (132,875   | )                                                   | $          | 16,395 |   | $ | (1,153,485 | ) | $ | 160,070 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| WEIGHTED  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   |       | 4,037,615                                            |       | 3,994,352                                           |       | 4,035,431 |   | 3,987,714 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| WEIGHTED  AVERAGE NUMBER OF DILUTIVE SHARES OUTSTANDING |       | 4,037,615                                            |       | 4,011,360                                           |       | 4,035,431 |   | 3,997,456 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| BASIC  NET (LOSS) INCOME PER COMMON SHARE (Note 1)      |       | $                                                    | (.03       | )                                                   | $          | .00 |   | $ | (.29 | ) | $ | .04 |   |
|                                                    |       |                                                 |       |                                                |       |   |   |   |   |
| DILUTED  NET (LOSS) INCOME PER COMMON SHARE (Note 1)    |       | $                                                    | (.03       | )                                                   | $          | .00 |   | $ | (.29 | ) | $ | .04 |   |

 

See notes to condensed consolidated financialstatements.

 

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**CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**PERIODS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)**

 
| ** **                                                                      | ** ** | **Nine Months Ended September 30,** | ** ** |
|---------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                      | ** ** | **2010**                                                | ** ** | **2009** | ** ** |
| **Operating Activities:**                                                       |       |                                                    |       |   |   |
| Net  (loss) income                                                              |       | $                                                       | (1,153,485 | ) | $ | 160,070 |   |
| Adjustments  to reconcile net (loss) income to net cash provided by operations: |       |                                                    |       |   |   |
| Depreciation                                                                    |       | 1,473,616                                               |       | 1,584,240 |   |
| Loss  on disposal of assets                                                     |       | 906,940                                                 |       | — |   |
| Stock-based  compensation expense                                               |       | 145,650                                                 |       | 103,692 |   |
| Increase  (decrease) in deferred income tax liability                           |       | 884,210                                                 |       | (227,364 | ) |
| Changes  in operating assets and liabilities:                                   |       |                                                    |       |   |   |
| Increase  in restricted cash                                                    |       | (283,777                                                | )          | (7,760 | ) |
| Increase  in accounts receivable                                                |       | (427,388                                                | )          | (332,647 | ) |
| Increase  in other current assets                                               |       | (500,009                                                | )          | (256,377 | ) |
| Increase  (decrease) in income taxes receivable                                 |       | (1,154,455                                              | )          | 410,064 |   |
| Increase  in accounts payable and accrued wages and payroll taxes               |       | 815,149                                                 |       | 562,963 |   |
| Increase  (decrease) in Card Casino accruals                                    |       | 439,414                                                 |       | (96,872 | ) |
| Increase  in accrued property taxes                                             |       | 129,755                                                 |       | 139,692 |   |
| Decrease  in payable to horsepersons                                            |       | (2,303                                                  | )          | (25,627 | ) |
| Increase  in due from MHBPA                                                     |       | (1,169,066                                              | )          | (1,353,173 | ) |
| Net  cash provided by operations                                                |       | 104,251                                                 |       | 660,901 |   |
|                                                                            |       |                                                    |       |   |   |
| **Investing Activities:**                                                       |       |                                                    |       |   |   |
| Additions  to buildings and equipment                                           |       | (2,804,058                                              | )          | (807,716 | ) |
| Proceeds  from sale of assets                                                   |       | 2,600                                                   |       | — |   |
| Proceeds  from redemption of investments                                        |       | 527,459                                                 |       | 342,605 |   |
| Purchase  of investments                                                        |       | (28,493                                                 | )          | (57,615 | ) |
| Net  cash used in investing activities                                          |       | (2,302,492                                              | )          | (522,726 | ) |
|                                                                            |       |                                                    |       |   |   |
| **Financing Activities**                                                        |       |                                                    |       |   |   |
| Proceeds  from issuance of common stock                                         |       | 34,499                                                  |       | 245,495 |   |
| Excess  tax benefit from exercise of stock options                              |       | 866                                                     |       | — |   |
| Net  cash provided by financing activities                                      |       | 35,365                                                  |       | 245,495 |   |
|                                                                            |       |                                                    |       |   |   |
| Net  (decrease) increase in cash                                                |       | (2,162,876                                              | )          | 383,670 |   |
|                                                                            |       |                                                    |       |   |   |
| Cash  at beginning of period                                                    |       | 4,741,197                                               |       | 3,745,731 |   |
|                                                                            |       |                                                    |       |   |   |
| Cash  at end of period                                                          |       | $                                                       | 2,578,321  |   | $ | 4,129,401 |   |
|                                                                            |       |                                                    |       |   |   |
| Supplemental  disclosure of noncash investing activities:                       |       |                                                    |       |   |   |
| Additions  to buildings and equipment funded through accounts payable           |       | $                                                       | 8,526      |   | $ | 21,279 |   |
| Proceeds  from issuance of common stock funded through shares swapped           |       | $                                                       | 251,530    |   | $ | 15,880 |   |
|                                                                            |       |                                                    |       |   |   |
| Supplemental  disclosure of cash flow information:                              |       |                                                    |       |   |   |
| Income  taxes refunded, net of amount paid                                      |       | $                                                       | 30,385     |   | $ | — |   |

 

See notes to condensed consolidated financialstatements.

 

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**CANTERBURY PARK HOLDINGCORPORATION AND SUBSIDIARIES**

**NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS**

**PERIODS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)**

 

Theaccompanying unaudited condensed consolidated financial statements have beenprepared pursuant to the rules and regulations of the Securities andExchange Commission and in the opinion of management, contain all adjustmentsnecessary to present fairly, in accordance with accounting principles generallyaccepted in the United States of America (GAAP), the financial position ofCanterbury Park Holding Corporation as of September 30, 2010 andDecember 31, 2009; the results of its operations for the three and ninemonths ended September 30, 2010 and 2009; and its cash flows for the ninemonths ended September 30, 2010 and 2009. The condensed consolidated balance sheet as of December 31, 2009was derived from the audited financial statements.  All adjustments are of a normal, recurringnature, except as otherwise disclosed. Results for an interim period are not necessarily indicative of resultsfor a full year.

 

Thecomplete summary of significant accounting policies is included in the notes toconsolidated financial statements in the Company’s Annual Report on Form 10-Kfor the fiscal year ended December 31, 2009 (the “2009 Form 10-K”).

 

1.               SUMMARY OF SIGNIFICANTACCOUNTING POLICIES

 

*Business* — Canterbury Park HoldingCorporation (the “Company”) was incorporated under the laws of Minnesota andacquired land and buildings to conduct pari-mutuel horse racing operations (the“Racetrack”) in March 1994.  TheRacetrack is located in Shakopee, Minnesota, approximately 25 miles southwestof downtown Minneapolis.  In May 1994,we commenced year-round horse racing simulcast operations and hosted the firstannual live race meet during the summer of 1995.  Our live racing operations are a seasonalbusiness as we host live race meets each year from May until August.  We earn additional pari-mutuel revenue bytelevising our live racing to out-of-state racetracks around the country.  The Company began hosting unbanked card gamesin 2000.  This segment, now called theCanterbury Park Card Casino, operates 24 hours a day, seven days a week.  The Card Casino is limited by Minnesota Statelaw to hosting unbanked card games at a maximum of 50 tables at any onetime.  The Card Casino currently offers avariety of poker and table games.  Ourthree largest sources of revenues, Card Casino operations, pari-mutueloperations and concessions sales, generate cash revenues.  We also derive revenues from related servicesand activities, such as advertising, parking and publication sales and fromother entertainment events and activities held at the Racetrack.

 

*Presentation—*The Condensed Consolidated Statement of Operations and CondensedConsolidated Statement of Cash Flows from the prior-period have been conformedto the 2010 presentation.  This presentation change had no effect on netincome, earnings per share, or stockholders’ equity.

 

*Revenue Recognition —*Our revenues arederived primarily from the operations of a Card Casino, pari-mutuel wagering onsimulcast and live horse races, concession sales, and related activities.  Collection revenue from Card Casinooperations is recognized at the time that the wagering process iscomplete.  Pari-mutuel revenues arerecognized upon occurrence of the live race that is presented for wagering andafter that live race is made official by the respective state’s racingregulatory body.  Revenues related toconcession sales are recognized as revenue when the service has been performedor the product has been delivered.

 

*Estimates* — The preparation of the condensed consolidatedfinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the condensedconsolidated financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from these estimates.

 

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*Short-term Investments* — Short-term investmentsconsist of certificates of deposit held by the Company.  The maturity dates of these investments varybut are less than one year in length.

 

*Restricted Cash* — Restricted cashrepresents refundable deposits and amounts due to horsemen for purses, stakesand awards, and amounts accumulated in the player pool and jackpot pools to beused to repay Card Casino players in the form of promotions, giveaways, prizes,or by other means.

 

*IncomeTaxes*— Income tax expense is computed by applying the estimated annualeffective tax rate to the year-to-date income. Income taxes are accounted for under the asset and liabilitymethod.  Deferred tax assets andliabilities are recognized for the estimated future tax consequencesattributable to differences between the financial statement carrying amounts ofexisting assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities aremeasured using enacted tax rates in effect for the year in which thosetemporary differences are expected to reverse. During the third quarter of 2010, the Company engaged a third party toperform a cost segregation study on assets currently in use in conjunction withpreparing its 2009 tax returns.  As aresult of the study, numerous assets’ tax lives were reduced to more adequatelyreflect the current tax code. The significantly higher depreciation deductionfor the 2009 tax year increased income taxes receivable by $1,135,452 and thedeferred tax liability by $1,137,309.

 

The Company and its consolidated subsidiaries file income tax returnsin the United States (“U.S.”) federal jurisdiction.  The Company is no longer subject to U.S.federal examinations by tax authorities for years prior to 2007 or by State ofMinnesota tax authorities for years prior to 2003.  We do not believe there will be any materialchanges in our unrecognized tax positions over the next twelve months.

 

*Net Income (Loss) Per Share*—Basic net income (loss) per common share is based on the weightedaverage number of common shares outstanding during each period.  The weighted average number of common sharesoutstanding for the three and nine-month period ended September 30, 2010were 4,037,615 and 4,035,431, respectively. The weighted average number of common shares outstanding for the threeand nine-month period ended September 30, 2009 were 3,994,352 and3,987,714, respectively.  Diluted netincome per common share takes into effect the dilutive effect of potentialcommon shares outstanding.  The Company’spotential common shares outstanding are stock options.  After considering the dilutive effect ofstock options outstanding, the weighted average shares used to calculatediluted earnings per share for the three and nine-month periods ended September 30,2010 were 4,037,615 and 4,035,431, respectively.  Weighted average shares of 11,062 wereconsidered anti-dilutive and excluded from the computation of common equivalentshares for the nine-month period ended September 30, 2010, as the Companyreported a net loss for that period.  Theweighted average shares used to calculate diluted earnings per share for thethree and nine-month periods ended September 30, 2009 were 4,011,360 and3,997,456, respectively.

 

*Recent Accounting Pronouncements —*In January 2010,the FASB issued Accounting Standards Update No. 2010-06 (“ASU 2010-06”) —“Fair Value Measurements and Disclosures.” ASU 2010-06 amends Accounting Standards Codification (“ASC”) 820-10,“Fair Value Measurements and Disclosures”, and requires new disclosuressurrounding certain fair value measurements. ASU 2010-06 was effective for the first interim or annual reportingperiod beginning on or after December 15, 2009, except for certaindisclosures about purchases, sales, issuances and settlements in therollforward of activity in Level 3 fair value measurements, which are effectivefor the first interim and annual reporting periods beginning on or afterDecember 15, 2010. The adoption of ASU 2010-06 did not have a materialeffect on the Company’s consolidated financial statements.

 

In April 2010, the FASB issued Accounting Standards UpdateNo. 2010-16 (“ASU 2010-16”) “Entertainment—Casinos(Topic 924): Accruals for Casino Jackpot Liabilities.”  ASU 2010-16 codifies the consensus reached inEmerging Issues Task Force Issue No. 09-F, “Casino Base JackpotLiabilities.”  ASU 2010-16 amends the ASCto clarify that an entity should not accrue jackpot liabilities, or portionsthereof, before a jackpot is won if the entity can avoid paying the jackpot.Jackpots should be accrued and charged to revenue when an entity has theobligation to pay the jackpot. The guidance in this ASU applies to both baseand progressive jackpots. The amendments in this ASU are effective for fiscalyears, and interim periods within those fiscal years, beginning on or afterDecember 15, 2010. The amendments 

 

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should be applied by recording a cumulative-effect adjustment toopening retained earnings in the period of adoption. We are currentlyevaluating the requirements of ASU 2010-16 and have not yet determined the impacton our consolidated financial statements.

 

2.               STOCK BASED COMPENSATION

 

Stock based compensation is recorded at fair value as of the date ofgrant and included in the salaries and benefits expense line item on theconsolidated statements of operations. Stock based compensation was, respectively, $145,650 and $103,692 duringthe nine months ended September 30, 2010 and 2009.

 

Each non-employee member of the Board of Directors receives an annualrecurring grant of 3,000 non-qualified stock options on the first business dayin February.  On February 1, 2010,15,000 options were granted to the five non-employee board members with anexercise price per share equal to the market price on the date of grant of$7.05.  The stock options vested over asix-month period and expire in ten years. The compensation cost associatedwith this grant of Board of Director options is $45,450 and will be recognizedas expense over the six-month vesting period. On February 2, 2009, 15,000 options were granted to the fivenon-employee board members with an exercise price per share equal to the marketprice on the date of grant of $6.66.

 

In addition, on February 25, 2010, 86,500 options were granted toemployees with an exercise price per share equal to the market price on thedate of grant of $8.28.  The stockoptions vest over a 42-month period and expire in ten years.  The compensation cost associated with thisgrant of employee options is $282,355 to be recognized as expense over the42-month vesting period.  On April 23,2009, 100,000 options were granted to employees with an exercise price pershare equal to the market price on the date of grant of $6.00.

 

The number of shares granted and the weighted average fair value pershare during the periods presented were:

 
| ** **              | ** ** | **Nine Months Ended**  | ** ** |
|-------------------------|------------|----------------------------------|------------|
| ** **              | ** ** | **September 30, 2010** | ** ** | **September 30, 2009** | ** ** |
| ** **              | ** ** | ** **                       | ** ** | **Weighted** | ** ** | ** ** | ** ** | **Weighted** | ** ** |
| ** **              | ** ** | ** **                       | ** ** | **Average** | ** ** | ** ** | ** ** | **Average** | ** ** |
| ** **              | ** ** | ** **                       | ** ** | **Fair Value** | ** ** | ** ** | ** ** | **Fair Value** | ** ** |
| ** **              | ** ** | **Grant**                        | ** ** | **Per Share** | ** ** | **Grant** | ** ** | **Per Share** | ** ** |
|                    |       |                             |       |   |   |   |   |   |   |
| Board  stock options    |       | 15,000                           |       | $ | 3.03 |   | 15,000 |   | $ | 1.26 |   |
| Employee  stock options |       | 86,500                           |       | $ | 3.79 |   | 100,000 |   | $ | 1.07 |   |
|                    |       |                             |       |   |   |   |   |   |   |
| Total  shares           |       | 101,500                          |       |   |   | 115,000 |   |   |   |

 

The fair value of stock options granted under the Company’s 1994 StockPlan during the first nine months of 2010 and 2009 were estimated on the dateof grant using the Black-Scholes option-pricing model with the followingweighted average assumptions and results:

 

| ** **                                | ** ** | **2010** | ** ** | **2009** | ** ** |
|-------------------------------------------|------------|----------|------------|----------|------------|
| Dividend yield                            |       | 0.00     | %          | 4.12     | %          |
| Weighted-average volatility               |       | 43       | %          | 26       | %          |
| Risk-free interest rate                   |       | 2.66     | %          | 2.93     | %          |
| Expected term of stock options in years   |       | 6.0      |       | 6.3      |       |
| Fair value of stock options on grant date |       | $        | 327,805    |     | $          | 111,455 |   |
|                                           |            |          |            |          |            |  |  |

 

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A summary of stock option activity as of September 30, 2010 andchanges during the nine months then ended is presented below:

 
| ** **                              | ** ** | ** **         | ** ** | ** **   | ** ** | **Weighted**    | ** ** | ** **          | ** ** |
|-----------------------------------------|------------|--------------------|------------|--------------|------------|-----------------|------------|---------------------|------------|
| ** **                              | ** ** | ** **         | ** ** | **Weighted** | ** ** | **Average**     | ** ** | ** **          | ** ** |
| ** **                              | ** ** | ** **         | ** ** | **Average**  | ** ** | **Remaining**   | ** ** | **Aggregate**       | ** ** |
| ** **                              | ** ** | **Number of** | ** ** | **Exercise** | ** ** | **Contractual** | ** ** | **Grant Date** | ** ** |
| **Stock Options**                  | ** ** | **Shares**         | ** ** | **Price**    | ** ** | **Term**        | ** ** | **Fair Value** | ** ** |
|                                    |       |               |       |         |       |            |       |                |       |
| Outstanding  at January 1, 2010    |       | 403,244            |       | $            | 10.15      |            |       |                |       |   |
|                                    |       |               |       |         |       |            |       |                |       |
| Granted                                 |       | 101,500            |       | $            | 8.10       |            |       |                |       |   |
| Exercised                               |       | (50,369            | )          | $            | 5.68       |            |       |                |       |   |
| Expired/Forfeited                       |       | (75,000            | )          | $            | 15.57      |            |       |                |       |   |
|                                    |       |               |       |         |       |            |       |                |       |
| Outstanding  at September 30, 2010 |       | 379,375            |       | $            | 9.10       |            | 6.2  Years |                | $          | 3,454,094 |   |
|                                    |       |               |       |         |       |            |       |                |       |
| Exercisable  at September 30, 2010 |       | 252,625            |       | $            | 10.08      |            | 4.9  Years |                | $          | 2,545,679 |   |

 

A summary of stock option activity as of September 30, 2009 andchanges during the nine months then ended is presented below:

 
| ** **                              | ** ** | ** **         | ** ** | ** **   | ** ** | **Weighted**    | ** ** | ** **          | ** ** |
|-----------------------------------------|------------|--------------------|------------|--------------|------------|-----------------|------------|---------------------|------------|
| ** **                              | ** ** | ** **         | ** ** | **Weighted** | ** ** | **Average**     | ** ** | ** **          | ** ** |
| ** **                              | ** ** | ** **         | ** ** | **Average**  | ** ** | **Remaining**   | ** ** | **Aggregate**       | ** ** |
| ** **                              | ** ** | **Number of** | ** ** | **Exercise** | ** ** | **Contractual** | ** ** | **Grant Date** | ** ** |
| **Stock Options**                  | ** ** | **Shares**         | ** ** | **Price**    | ** ** | **Term**        | ** ** | **Fair Value** | ** ** |
|                                    |       |               |       |         |       |            |       |                |       |
| Outstanding  at January 1, 2009    |       | 470,000            |       | $            | 11.12      |            |       |                |       |   |
|                                    |       |               |       |         |       |            |       |                |       |
| Granted                                 |       | 115,000            |       | $            | 6.09       |            |       |                |       |   |
| Exercised                               |       | (59,000            | )          | $            | 4.43       |            |       |                |       |   |
| Expired/Forfeited                       |       | (85,000            | )          | $            | 15.57      |            |       |                |       |   |
|                                    |       |               |       |         |       |            |       |                |       |
| Outstanding  at September 30, 2009 |       | 441,000            |       | $            | 9.85       |            | 4.3  Years |                | $          | 4,342,630 |   |
|                                    |       |               |       |         |       |            |       |                |       |
| Exercisable  at September 30, 2009 |       | 337,250            |       | $            | 10.94      |            | 2.7  Years |                | $          | 3,688,068 |   |

 

*Employee Stock Ownership Plan* — Prior to2008, the Company contributed shares of its common stock to its Employee StockOwnership Plan (“ESOP”).  However, onOctober 24, 2008, the Company announced it would not contribute shares tothe ESOP for fiscal 2008.  Since then,the Company has not taken any action to reinstate contributions to the ESOP.

 

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3.     FAIR VALUE

 

ASC 820 defines fair value as the exchange price that would be receivedfor an asset or paid to transfer a liability (an exit price) in the principalor most advantageous market for the asset or liability in an orderly transactionbetween market participants on the measurement date.  ASC 820 also establishes a fair valuehierarchy which requires an entity to maximize the use of observable inputs andminimize the use of unobservable inputs when measuring fair value.  The standard describes three levels of inputsthat may be used to measure fair value:

 

*Level 1* — Quoted prices in activemarkets for identical assets or liabilities.

 

*Level 2* — Observable inputs otherthan Level 1 prices such as quoted prices for similar assets or liabilities;quoted prices in markets that are not active; or other inputs that areobservable or can be corroborated by observable market data for substantiallythe full term of the assets or liabilities.

 

*Level 3* — Unobservable inputs thatare supported by little or no market activity and that are significant to thefair value of the assets or liabilities.

 

TheCompany utilizes the market approach to measure fair value for its financialassets and liabilities.  The market approach uses prices and otherrelevant information generated by market transactions involving identical orcomparable assets or liabilities.

 

Assetsand liabilities measured at fair value on a recurring basis for September 30,2010 and December 31, 2009 are summarized below:

 
| ** **                                       | ** ** | **Fair Value Measurements as of** | ** ** |
|--------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                       | ** ** | **September 30, 2010**                      | ** ** |
| **Description**                                  | ** ** | **Total**                                             | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** |
|                                             |       |                                                  |       |   |   |   |   |   |   |
| Short-term investments (Certificates of Deposit) |       | $                                                     | 116,928    |   | $ | — |   | $ | 116,928 |   | $ | — |   |
|                                             |       |                                                  |       |   |   |   |   |   |   |
| Total                                            |       | $                                                     | 116,928    |   | $ | — |   | $ | 116,928 |   | $ | — |   |

 
| ** **                                       | ** ** | **Fair Value Measurements as of** | ** ** |
|--------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                       | ** ** | **December 31, 2009**                       | ** ** |
| **Description**                                  | ** ** | **Total**                                             | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** |
|                                             |       |                                                  |       |   |   |   |   |   |   |
| Short-term investments (Certificates of Deposit) |       | $                                                     | 365,894    |   | $ | — |   | $ | 365,894 |   | $ | — |   |
| Long-term investments (Certificates of Deposit)  |       | $                                                     | 250,000    |   | $ | — |   | $ | 250,000 |   | $ | — |   |
|                                             |       |                                                  |       |   |   |   |   |   |   |
| Total                                            |       | $                                                     | 615,894    |   | $ | — |   | $ | 615,894 |   | $ | — |   |

 

4.               GENERAL CREDIT AGREEMENT

 

The Company has a general credit agreement with Bremer Bank, whichprovides a revolving credit line of up to $3,000,000.  On May 8, 2010, the Company signed anamendment with Bremer Bank extending the expiration date from June 30,2010 to May 8, 2011, while keeping previous provisions intact.  The Company had no borrowings under thiscredit line at September 30, 2010 and December 31, 2009.  The credit agreement contains certaincovenants requiring the Company to maintain certain financial ratios.  The Company was in compliance with theserequirements as of September 30, 2010. The Company believes that unrestricted funds available in its cashaccounts, funds available under this line of credit, along with funds generatedfrom operations, will be sufficient to satisfy its liquidity and capitalresource requirements during 2010.

 

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5.               OPERATINGSEGMENTS

 

During the first nine months of 2010 and 2009, the Company had threereportable operating segments:  horseracing, Card Casino, and concessions. The horse racing segment primarily represents simulcast and live horseracing operations.  The Card Casinosegment primarily represents operations of Canterbury Park’s Card Casino, andthe concessions segment primarily represents food and beverage operationsprovided during simulcast and live racing, in the Card Casino, and duringspecial events.  The Company’s reportableoperating segments are strategic business units that offer different productsand services.  They are managedseparately because the segments differ in the nature of the products andservices provided as well as processes to produce those products andservices.  The Minnesota RacingCommission (“MRC”) regulates the horse racing and Card Casino segments.

 

The accounting policies of the operating segments are the same as thosedescribed in the summary of significant accounting policies in the 2009 Form 10-K.

 

Depreciation, interest expense and income taxes are allocated to thesegments but no allocation is made to concessions for shared facilities.  However, the concessions segment paysapproximately 25% of gross revenues earned on live racing and special eventdays to the horse racing segment for use of the facilities.

 

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The following tables provideinformation about the Company’s operating segments (in 000’s):

 
| ** **                                                                         | ** ** | **Nine Months Ended September 30, 2010** | ** ** |
|------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **Horse Racing**                                             | ** ** | **Card Casino** | ** ** | **Concessions** | ** ** | **Total** | ** ** |
|                                                                               |       |                                                              |       |   |   |   |   |   |   |
| Net  revenues from external customers                                              |       | $                                                                 | 10,301     |   | $ | 16,428 |   | $ | 4,525 |   | $ | 31,254 |   |
|                                                                               |       |                                                              |       |   |   |   |   |   |   |
| Intersegment  revenues                                                             |       | 550                                                               |       | — |   | 1,168 |   | 1,718 |   |
|                                                                               |       |                                                              |       |   |   |   |   |   |   |
| Net  interest income                                                               |       | 13                                                                |       | — |   | — |   | 13 |   |
|                                                                               |       |                                                              |       |   |   |   |   |   |   |
| Depreciation                                                                       |       | 894                                                               |       | 470 |   | 110 |   | 1,474 |   |
|                                                                               |       |                                                              |       |   |   |   |   |   |   |
| Segment  (loss) income before income taxes                                         |       | (1,987                                                            | )          | 742 |   | 410 |   | (835 | ) |
|                                                                               |       |                                                              |       |   |   |   |   |   |   |
| Segment  (loss) income before income taxes and one-time loss on disposal of assets |       | (1,987                                                            | )          | 1,652 |   | 410 |   | 75 |   |
|                                                                                    |            |                                                                   |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **      | ** ** | **At September 30, 2010** | ** ** |
|-----------------|------------|------------------------------------------|------------|
|            |       |                                     |       |   |   |   |   |   |   |
| Segment  Assets |       | $                                        | 28,650     |   | $ | 3,690 |   | $ | 10,350 |   | $ | 42,690 |   |
|                 |            |                                          |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **                                 | ** ** | **Nine Months Ended September 30, 2009** | ** ** |
|--------------------------------------------|------------|-------------------------------------------------------------------|------------|
| ** **                                 | ** ** | **Horse Racing**                                             | ** ** | **Card Casino** | ** ** | **Concessions** | ** ** | **Total** | ** ** |
|                                       |       |                                                              |       |   |   |   |   |   |   |
| Net  revenues from external customers      |       | $                                                                 | 11,730     |   | $ | 15,213 |   | $ | 4,602 |   | $ | 31,545 |   |
|                                       |       |                                                              |       |   |   |   |   |   |   |
| Intersegment  revenues                     |       | 521                                                               |       | — |   | 1,074 |   | 1,595 |   |
|                                       |       |                                                              |       |   |   |   |   |   |   |
| Net  interest income                       |       | 20                                                                |       | — |   | — |   | 20 |   |
|                                       |       |                                                              |       |   |   |   |   |   |   |
| Depreciation                               |       | 980                                                               |       | 483 |   | 121 |   | 1,584 |   |
|                                       |       |                                                              |       |   |   |   |   |   |   |
| Segment  (loss) income before income taxes |       | (1,455                                                            | )          | 2,086 |   | 767 |   | 1,398 |   |
|                                            |            |                                                                   |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **      | ** ** | **At December 31, 2009** | ** ** |
|-----------------|------------|-----------------------------------------|------------|
|            |       |                                    |       |   |   |   |   |   |   |
| Segment  Assets |       | $                                       | 28,279     |   | $ | 2,841 |   | $ | 9,636 |   | $ | 40,756 |   |
|                 |            |                                         |            |  |  |  |  |  |  |  |  |  |  |

 

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The following are reconciliations of reportable segment revenue, incomebefore income taxes, and assets, to the Company’s consolidated totals (in000’s):

 
| ** **                                              | ** ** | **Nine Months Ended Sept. 30,** | ** ** |
|---------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                              | ** ** | **2010**                                            | ** ** | **2009** | ** ** |
| Revenues                                                |       |                                                |       |   |   |
| Total  net revenue for reportable segments              |       | $                                                   | 32,972     |   | $ | 33,140 |   |
| Elimination  of intersegment revenues                   |       | (1,718                                              | )          | (1,595 | ) |
| Total  consolidated net revenues                        |       | $                                                   | 31,254     |   | $ | 31,545 |   |
|                                                    |       |                                                |       |   |   |
| (Loss)  income before income taxes                      |       |                                                |       |   |   |
| Total  segment (loss) income before income taxes        |       | $                                                   | (835       | ) | $ | 1,398 |   |
| Elimination  of intersegment income before income taxes |       | (625                                                | )          | (1,055 | ) |
| Total  consolidated (loss) income before income taxes   |       | $                                                   | (1,460     | ) | $ | 343 |   |

 
| ** **                               | ** ** | **Sept. 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                               | ** ** | **2010**           | ** ** | **2009**              | ** ** |
| Assets                                   |       |               |       |                  |       |
| Total  assets for reportable segments    |       | $                  | 42,690     |                  | $          | 40,756 |   |
| Elimination  of intercompany receivables |       | (9,636             | )          | (9,004                | )          |
| Total  consolidated assets               |       | $                  | 33,054     |                  | $          | 31,752 |   |

 

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6.               COMMITMENTS ANDCONTINGENCIES

 

In accordance with an Earn Out Note, given to the prior owner of theRacetrack as part of the consideration paid by the Company to acquire theRacetrack in 1994, if (i) off-track betting becomes legally permissible inthe State of Minnesota and (ii) the Company begins to conduct off-trackbetting with respect to or in connection with its operations, the Company willbe required to pay to the IMR Fund, L.P. the greater of $700,000 per operatingyear, as defined, or 20% of the net pretax profit, as defined for each of fiveoperating years.  At this time, managementbelieves that the likelihood that these two conditions will be met, and thatthe Company will be required to pay these amounts is remote.  At the date (if any) that these twoconditions are met, the five minimum payments will be discounted back to theirpresent value and the sum of those discounted payments will be capitalized aspart of the purchase price in accordance with generally accepted accountingprinciples.  The purchase price will befurther increased if payments become due under the “20% of Net Pretax Profit”calculation.  The first payment is to bemade 90 days after the end of the third operating year in which off-trackbetting is conducted by the Company. Remaining payments would be made within 90 days of the end of each ofthe next four operating years.

 

The Company periodically is subject to claims or involved in legalproceedings arising in the normal course of business.  At September 30, 2010, managementbelieves that the resolution of any pending claims or legal proceedings willnot have a material impact on the consolidated financial statements.

 

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7.               LOSS ON DISPOSAL OF ASSETS

 

In January 2010, and in accordance with Minnesota Statute 240, theCompany obtained approval from the MRC to remodel its existing card room.  Construction and architectural contracts withvarious firms were signed shortly thereafter, and the card room was moved to atemporary location on the mezzanine level on January 25, 2010.  The Company used cash on hand to fund theproject and avoided drawing on its line of credit.  As part of the remodeling project, theCompany disposed of assets during the first quarter of 2010 with an originalcost of $2,354,619 and associated accumulated depreciation of $1,445,079,resulting in a loss on disposal of $909,540. The remodeling project was completed during the second quarter of 2010and on April 14, 2010, Canterbury Park opened its new Card Casino.

 
| **ITEM  2:** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|--------------|-------------------------------------------------------------------------------------------------|

 

Thefollowing Management’s Discussion and Analysis of Financial Condition andResults of Operations (“MD&A”) is intended to help the reader understandCanterbury Park Holding Corporation, our operations, financial results, andpresent business environment.  ThisMD&A is provided as a supplement to — and should be read in conjunctionwith — our condensed consolidated financial statements and the accompanyingnotes to the financial statements (the “Notes”).

 

**Overview:**

 

CanterburyPark Holding Corporation (the “Company”) owns and operates the Canterbury ParkRacetrack and Card Casino in Shakopee, Minnesota (the “Racetrack”).  The primary businesses of the Company aresimulcast and live pari-mutuel horse racing, hosting unbanked card games, andfood and beverage operations.

 

TheRacetrack is the only pari-mutuel thoroughbred and quarter horse racingfacility in the State of Minnesota.  TheRacetrack earns revenues from pari-mutuel take-out on races simulcastyear-round to Canterbury Park from racetracks throughout the country and fromlive race meets featuring thoroughbred and quarter horse racing.  Live race meets commence in the month ofMay and conclude in August.  Duringlive race meets, the Company televises its races to out-of-state racetracksaround the country, and earns additional pari-mutuel revenue on wagers placedon races at the out-of-state racetracks.

 

CanterburyPark’s Card Casino (the “Card Casino”) hosts “unbanked” card games in whichplayers compete against each other and not against the house.  The Card Casino is open twenty-four hours aday, seven days a week.  Under Minnesotalaw, the Company is required to pay up to 14% of the gross Card Casino revenuesto the Racetrack’s purse fund and the State of Minnesota Breeders’ Fund.

 

TheCompany also generates revenues from concessions, as well as from otheractivities such as parking fees, program and other racing publication sales,and corporate sponsorships.  Additionalrevenues are derived from the use of the Racetrack facilities for specialevents such as concerts, craft shows and snowmobile racing.

 

**OperationsReview for the****Three and****Nine Months Ended September 30, 2010 andSeptember 30, 2009:**

 

Thefollowing table sets forth a reconciliation of net income, a GAAP financialmeasure, to EBITDA and Adjusted EBITDA (each defined below), which are non-GAAPmeasures, for the periods ended September 30, 2010 and 2009:

 

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| ** **                                | ** ** | **Sept. 30,** | ** ** | **Sept. 30,** | ** ** |
|-------------------------------------------|------------|--------------------|------------|--------------------|------------|
| ** **                                | ** ** | **2010**           | ** ** | **2009**           | ** ** |
| Net (loss) income                         |       | $                  | (1,153,485 | )                  | $          | 160,070 |   |
| Interest income, net of  interest expense |       | (12,861            | )          | (19,773            | )          |
| Income tax (benefit)  expense             |       | (306,900           | )          | 182,700            |       |
| Depreciation                              |       | 1,473,616          |       | 1,584,240          |       |
| EBITDA                                    |       | $                  | 370        |               | $          | 1,907,237 |   |
| Loss on disposal of assets (net)          |       | 906,940            |       | —             |       |
| Adjusted EBITDA                           |       | $                  | 907,310    |               | $          | 1,907,237 |   |

 

EBITDArepresents earnings before interest income, income tax expense, anddepreciation and amortization.  EBITDA isnot a measure of performance or liquidity calculated in accordance withgenerally accepted accounting principles (“GAAP”), and should not be consideredan alternative to, or more meaningful than, net income as an indicator of ouroperating performance, or cash flows from operating activities as a measure ofliquidity.  EBITDA has been presented asa supplemental disclosure because it is a widely used measure of performanceand basis for valuation of companies in our industry.  Moreover, other companies that provide EBITDAinformation may calculate EBITDA differently than we do.  Adjusted EBITDA represents EBITDA plusmaterial, one-time non-cash expenses. During the nine months ended September 30, 2010, Adjusted EBITDAincluded the loss on disposal of assets during the remodel of our card room.

 

AdjustedEBITDA as a percentage of net revenues declined significantly to 2.9% for thefirst nine months ended September 30, 2010 compared to 6.0% for the firstnine months ended September 30, 2009.

 

Totalnet revenues decreased $291,476, or 0.9%, during the nine months endedSeptember 30, 2010 compared to the nine months ended September 30,2009, and decreased $147,855, or 1.2%, for the three months endedSeptember 30, 2010 compared to the three months ended September 30,2009. The nine month variance was due primarily to a reduction of 10.2% inpari-mutuel revenues and an increase in Card Casino revenues of 8.0% for thenine months ended September 30, 2010 compared to the same period in theprior year.  The three month variance wasdue primarily to a reduction of 10.0% in pari-mutuel revenues and an increasein Card Casino revenues of 10.1% for the three months ended September 30,2010 compared to the same period in the prior year.

 

Pari-mutuelrevenues decreased $962,871, or 10.2%, in the nine-month period endedSeptember 30, 2010 compared to the same period in 2009, and decreased$393,399, or 10.0%, for the three-month period ended September 30, 2010compared to the same period in 2009. Total handle wagered for the first nine months of 2010 was down $5.0million, or 9.0%, compared to the same period last year.  The decrease is attributable to the lingeringeffects of the economic recession that has adversely impacted discretionaryspending on entertainment.  In addition,inclement weather during the first half of 2010 resulted in the cancellation ofa significant number of races at racetracks simulcasting their signal to ourracetrack.  Severe weather also resultedin the cancellation of one of the Company’s live race days, further adverselyimpacting handle wagered.  Finally, theCompany believes that an increasing number of Minnesota residents areunlawfully wagering on horse races over the Internet.  See the “Summary of Pari-mutuel Data” below.

 

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**Summary ofPari-mutuel Data:**

 
| ** **                                      | ** ** | **Nine Months Ended Sept. 30,** | ** **     |
|-------------------------------------------------|------------|-----------------------------------------------------|----------------|
| ** **                                      | ** ** | **2010**                                            | ** **     | **2009** | ** ** |
|                                            |       |                                                |           |   |   |
| Racing  Days                                    |       |                                                |           |   |   |
| Simulcast  only                                 |       | 211                                                 |           | 211 |   |
| Live  and Simulcast                             |       | 62                                                  |           | 62 |   |
| **Total Number of Racing Days**                 | ** ** | **273**                                             | ** **     | **273** | ** ** |
| ** **                                      | ** ** | ** **                                          | ** **     | ** ** | ** ** |
| On-Track  Handle                                |       |                                                |           |   |   |
| Simulcast  racing handle on simulcast only days |       | $                                                   | 17,437,000     |   | $ | 19,190,000 |   |
| Live  and Simulcast days:                       |       |                                                |           |   |   |
| Live  racing handle                             |       | 10,581,000                                          |           | 12,181,000 |   |
| Simulcast  racing handle                        |       | 9,204,000                                           |           | 10,482,000 |   |
| Total  On-Track Handle                          |       | 37,222,000                                          |           | 41,853,000 |   |
|                                            |       |                                                |           |   |   |
| Out-of-State  Live Handle                       |       | 13,365,000                                          |           | 13,712,000 |   |
|                                            |       |                                                |           |   |   |
| **Total Handle**                                | ** ** | **$**                                               | **50,587,000** | ** ** | **$** | **55,565,000** | ** ** |
|                                            |       |                                                |           |   |   |
| On-Track  Average Daily Handle                  |       |                                                |           |   |   |
| Simulcast  only racing days                     |       | $                                                   | 82,640         |   | $ | 90,948 |   |
| Live  and simulcast racing days                 |       | $                                                   | 319,113        |   | $ | 365,532 |   |

 

TotalCard Casino revenue increased $1,214,889, or 8.0%, for the first nine months of2010 and $502,405, or 10.1%, for the third quarter of 2010 compared to the sameperiods in 2009.  The primary source ofCard Casino revenue is a percentage of the wagers received from the players ascompensation for providing the Card Casino facility and services, referred toas the “collection revenue.”  Otherrevenue includes fees collected for the administration of tournaments, andamounts earned as reimbursement of the administrative costs of maintainingjackpot funds.  Poker collection revenuefell $235,252, or 2.7%, compared to the first nine months of 2009, but increased$59,460, or 2.2%, for the quarter ended September 30 compared to the sameperiod in 2009.  In addition, Table Gamescollection revenue increased $1,260,531, or 23.5%, compared to the first ninemonths of 2009 and $433,242, or 22.8%, for the quarter ended September 30compared to the same period in 2009.  Theincreases in the third quarter are largely due to the opening of the Company’snew Card Casino on April 14, 2010. While the continued lingering effects of the economic recession andunlawful wagering on poker over the Internet continues to adversely affect CardCasino revenues, the Company believes these factors were more than offset bythe new Card Casino that has provided both an exciting and an invitingatmosphere and sparked an increase in card play by patrons.  Total Card Casino revenues represented 52.6%and 45.8% of net revenues for the nine-month and three-month periods endedSeptember 30, 2010, respectively. See the “Summary of Card Casino Data” below:

 

**Summary of Card Casino Data:**

 
| ** **                 | ** ** | **Nine Months Ended Sept. 30,** | ** ** |
|----------------------------|------------|-----------------------------------------------------|------------|
| ** **                 | ** ** | **2010**                                            | ** ** | **2009** | ** ** |
|                       |       |                                                |       |   |   |
| Poker  Games               |       | $                                                   | 8,430,000  |   | $ | 8,665,000 |   |
| Table  Games               |       | 6,622,000                                           |       | 5,362,000 |   |
| Total  Collection Revenue  |       | 15,052,000                                          |       | 14,027,000 |   |
|                       |       |                                                |       |   |   |
| Other  Revenue             |       | 1,376,000                                           |       | 1,186,000 |   |
| Total  Card Casino Revenue |       | $                                                   | 16,428,000 |   | $ | 15,213,000 |   |
|                       |       |                                                |       |   |   |
| Number  of Days Offered    |       | 273                                                 |       | 273 |   |
| Average  Revenue per Day   |       | $                                                   | 60,176     |   | $ | 55,725 |   |

 

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Concessionsrevenues remained relatively flat, decreasing $75,462, or 1.6%, and increasing$35,047, or 1.7%, for the nine-month and three-month periods endedSeptember 30, 2010, respectively, compared to the same period in the prioryear.

 

Totaloperating expenses increased $1,504,767, or 4.8%, and $39,384, or 0.3%, for thenine-month and three-month periods ended September 30, 2010, respectively,compared to the same period in the prior year. Factors contributing to these increases are discussed in greater detailbelow.

 

Totalexpense for statutory purses and the Minnesota Breeders’ Fund decreased 2.8% to$5,306,457 for the first nine months ended September 30, 2010 compared tothe first nine months ended September 30, 2009.  The decrease was due primarily to a reductionin racing purses and breeders’ fund expenses due to lower live and simulcastrevenues in the first nine months of 2010 compared to the first nine months of2009.

 

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Thefollowing table provides additional information regarding purse and Breeders’Fund Expense:

 
| ** **              | ** ** | ** **                                          | ** ** | ** **                                          | ** ** | **Minnesota** | ** ** |
|-------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------------|------------|---------------|------------|
| ** **              | ** ** | **Purse Expense**                              | ** ** | **Breeders’ Fund Expense**           | ** ** |
| ** **              | ** ** | **Nine Months Ended Sept. 30,** | ** ** | **Nine Months Ended Sept. 30,** | ** ** |
| ** **              | ** ** | **2010**                                            | ** ** | **2009**                                            | ** ** | **2010**      | ** ** | **2009** | ** ** |
|                    |       |                                                |       |                                                |       |          |       |   |   |
| Card  Casino            |       | $                                                   | 1,854,000  |                                                | $          | 1,701,000     |       | $ | 206,000 |   | $ | 189,000 |   |
|                    |       |                                                |       |                                                |       |          |       |   |   |
| Simulcast  Horse Racing |       | 1,650,000                                           |       | 1,770,000                                           |       | 299,000       |       | 331,000 |   |
|                    |       |                                                |       |                                                |       |          |       |   |   |
| Live  Horse Racing      |       | 1,191,000                                           |       | 1,347,000                                           |       | 106,000       |       | 123,000 |   |
|                    |       |                                                |       |                                                |       |          |       |   |   |
|                    |       | $                                                   | 4,695,000  |                                                | $          | 4,818,000     |       | $ | 611,000 |   | $ | 643,000 |   |

 

Salariesand benefits increased $672,058, or 5.1%, in the 2010 nine-month period endedSeptember 30 and $146,056, or 3.1%, in the three-month period endedSeptember 30, 2010 compared to the same periods last year.  The increase is primarily due to an increasein the Federal minimum wage which became effective after the 2009 secondquarter, an increase in hours worked to support the growth in Card Casinorevenues, and an increase in the state unemployment tax rate.

 

Anet loss on disposal of assets in the amount of $906,940 was recorded duringthe first nine months of 2010 and related primarily to the remodeling of ourexisting card room.  There was no loss ondisposal of assets during the nine-month period ended September 30, 2009.

 

Otheroperating expenses increased $165,800, or 3.2%, in the 2010 nine-month periodended September 30, 2010 and $25,814, or 1.3%, in the three-month periodended September 30, 2010 compared to the same periods last year.  The increase is primarily due to increasedexpenditures in support of legislation that would authorize electronic gamingdevices at the Racetrack.

 

Lossbefore income taxes was $1,460,385 for the nine months ended September 30,2010 compared to income before income taxes of $342,770 for the nine monthsended September 30, 2009.  After anincome tax benefit of $306,900 for the nine months ended September 30,2010, net loss was $1,153,485 in 2010 compared to net income of $160,070 in2009.  For the quarter endedSeptember 30, 2010, the Company recorded a $139,575 loss before income taxbenefit compared to income before income tax expense of $51,195 for the quarterended September 30, 2009, a decrease of $190,770.  After an income tax benefit of $6,700 in thethird quarter of 2010, net loss was $132,875 compared to net income of $16,395for the third quarter of 2009, a decrease of $149,270.

 

**Contingencies:**

 

Therehave been no material changes in the contingencies reported under Item 7 in ourAnnual Report on Form 10-K for our year ended December 31, 2009 andsuch information is incorporated herein by reference.

 

**Liquidityand Capital Resources:**

 

Cashprovided by operating activities during the period January 1, 2010 throughSeptember 30, 2010 was $104,251 and was the result of severalfactors.  During the first quarter of2010, the Company incurred a one-time loss on disposal of assets in the amountof $909,540 relating to the remodel of our card room.  In addition, depreciation during the firstnine months of 2010 was $1,473,616, and the Company experienced an increase inaccounts payable and accrued wages and payroll taxes of $815,149, causedprimarily by a timing issue related to payroll payments.  Finally, during the third quarter of 2010, theCompany had a cost segregation study performed on our assets in use.  As a result of the study, our deferred taxliability increased $884,210.  Theseitems were nearly completely offset by a net loss of $1,153,485, an increase indue from Minnesota horsemen associations of $1,169,066, resulting primarilyfrom purse overpayments, and an

 

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increase in income taxesreceivable of $1,154,455 as a result of the aforementioned cost segregationstudy.  Cash provided by operatingactivities during the period January 1, 2009 through September 30,2009 was $660,901, resulting primarily from net income of $160,070,depreciation of $1,584,240, and an increase in accounts payable and accruedwages and payroll taxes of $562,963, caused primarily by a seasonal increase of$396,548 in horse racing payables.  Theseitems were offset by an increase in accounts receivable of $332,647 and anincrease in due from Minnesota horsemen associations of $1,353,173, resultingprimarily from purse overpayments.

 

Pursuantto an agreement with the MHBPA, during the nine months ended September 30,2010 and 2009, the Company transferred into a trust account or paid directly tothe MHBPA approximately $5,200,000 and $5,525,000, respectively.  At September 30, 2010, the Minnesotahorsemen associations owed the Company $1,165,997 resulting from purseoverpayments by the Company during the live race meet that endedAugust 29, 2010.

 

Netcash used in investing activities for the first nine months of 2010 was$2,302,492 due primarily to costs to remodel our card room totalingapproximately $2,296,000.  Net cash usedin investing activities for the first nine months of 2009 of $522,726 resultedprimarily from upgrades to our grandstand for approximately $261,000 and thepurchase of equipment for our backside operations for approximately $167,000,offset by a decrease in our short-term investments of $284,990.

 

Duringthe period January 1, 2010 through September 30, 2010, cash providedby financing activities consisted of proceeds and excess tax benefits receivedupon the exercise of stock options of $35,365. During the period January 1, 2009 through September 30, 2009,cash provided by financing activities consisted solely of proceeds receivedupon the exercise of stock options of $245,495.

 

TheCompany has a general credit agreement with Bremer Bank, which provides arevolving credit line of up to $3,000,000 until May 8, 2011 with interestat the prime rate but not less than 4.5% per annum.  The Company had no borrowings under the lineof credit at September 30, 2010 or December 31, 2009.  The credit agreement contains covenantsrequiring the Company to maintain certain financial ratios.  The Company was in compliance with theserequirements as of September 30, 2010.

 

Unrestrictedcash balances at September 30, 2010 were $2,578,321 compared to $4,741,197at December 31, 2009. The Company believes that unrestricted fundsavailable in its cash accounts, funds available under its line of credit, alongwith funds generated from operations, will be sufficient to satisfy itsliquidity and capital resource requirements during 2010.

 

**Critical Accounting Policies and Estimates:**

 

Thepreparation of consolidated financial statements in conformity with generallyaccepted accounting principles in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the consolidated financial statements and the reported amountsof revenues and expenses during the reporting period.  We base our assumptions, estimates andjudgments on historical experience, current trends and other factors thatmanagement believes to be relevant at the time the consolidated financialstatements are prepared.  On a regularbasis, management reviews the accounting policies, assumptions, estimates andjudgments to ensure that our financial statements are presented fairly and inaccordance with generally accepted accounting principles.  However, because future events and theireffects cannot be determined with certainty, actual results could differ fromour assumptions and estimates, and such differences could be material.

 

Oursignificant accounting policies are included in Note 1 to our consolidatedfinancial statements in our 2009 Annual Report on Form 10-K. We believethe following critical accounting policies affect our more significantjudgments and estimates used in the preparation of our consolidated financialstatements.

 

*Property and Equipment -*We have significant capitalinvested in our property and equipment, which represents approximately 73.4% ofour total assets at September 30, 2010. We utilize our judgment in various 

 

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ways including: determiningwhether an expenditure is considered a maintenance expense or a capital asset;determining the estimated useful lives of assets; and determining if or when anasset has been impaired or has been disposed. Management periodically reviews the carrying value of property andequipment for potential impairment by comparing the carrying value of theseassets with their related expected future net cash flows.  Should the sum of the related expected futurenet cash flows be less than the carrying value, we will determine whether animpairment loss should be recognized.  Animpairment loss would be measured by the amount by which the carrying value ofthe asset exceeds the fair value of the asset. To date, we have determined that no impairment of these assets exists.

 

*Stock Based Employee Compensation* — ASC 718, Compensation— Stock Compensation (“ASC 718”), requires recognition of employee servicesprovided in exchange for a share-based payment based on the grant date fairmarket value.  We utilize our judgment indetermining the assumptions used to determine the fair value of options grantedusing a Black-Scholes model.

 

**Commitments and Contractual Obligations:**

 

Therehave been no material changes in our outstanding commitments and contractualobligations since those reported at December 31, 2009.

 

**Legislation:**

 

Asdiscussed in our previous filings with the SEC, the Company supportedlegislation that would authorize electronic gaming devices at the Racetrack(referred to as a “Racino”) during the 2010 session of the MinnesotaLegislature.  However, the Minnesota Legislatureadjourned without taking action on the proposed Racino legislation.  Based on the success of Racinos in severalother states, we continue to believe that if a Racino was authorized at theRacetrack on similar terms to legislation approved in other states, it wouldstimulate economic growth in the horse racing and related agriculturebusinesses in Minnesota, provide growth and development opportunities thatwould add jobs at the Racetrack, and provide new tax revenues for state andlocal governments facing significant deficit issues.

 

TheCompany believes the results of the November 2010 elections will providean improved political environment for gaining approval of the Company’s Racinoproposal.  While polls have shown a largemajority of Minnesota residents support the Company’s proposal to add videogaming at Canterbury Park, legislative efforts have been unsuccessful in thepast.  However, the major shift in themake-up of the Minnesota Legislature resulting from the November 2 electionsprovides a great opportunity.  As aresult, the Company intends to vigorously advocate for Racino legislation whenthe Minnesota Legislature begins its next session in January 2011.

 

The effort to obtain legislative authority forinitiatives favorable to the Company has required, and will continue torequire, substantial expenditures.   Dueto the inherent uncertainty of the outcome of legislative activities, there canbe no assurance that any bills favorable to the Company’s interests will beenacted into law, and it is possible bills adverse to the Company could beenacted.

 

**Forward-LookingStatements:**

 

From time to time, in reports filed with the Securities and ExchangeCommission, in press releases, and in other communications to shareholders orthe investing public, the Company may make forward-looking statementsconcerning possible or anticipated future financial performance, businessactivities or plans which are typically preceded by the words “believes,”“expects,” “anticipates,” “intends” or similar expressions.  For such forward-looking statements, theCompany claims the protection of the safe harbor for forward-looking statementscontained in federal securities laws. Shareholders and the investing public should understand that suchforward-looking statements are subject to risks and uncertainties which couldcause actual performance, activities or plans to differ significantly fromthose indicated in the forward-looking statements.  Such risks and uncertainties include, but arenot limited to: fluctuations in attendance at the Racetrack, material changesin the level of wagering by patrons, decline in interest in the unbanked cardgames offered in the Card Casino,

 

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legislative and regulatory changes, the impact of wagering products andtechnologies introduced by competitors; increases in the percentage of revenuesallocated for purse fund payments; increase in compensation and employeebenefit costs; the economic health of the gaming sector; higher than expectedexpense related to new marketing initiatives; and other factors discussed underItem 1A in our Annual Report on Form 10-K for the year ended December 31,2009 and in the Company’s other filings with the Securities and ExchangeCommission.

 

**ITEM 3:                 QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK**

 

Canterbury Park is not required to provide the information requested bythis Item as it qualifies as a smaller reporting company.

 

**ITEM 4:                 CONTROLS AND PROCEDURES**

 

(a)                                  Evaluation ofDisclosure Controls and Procedures:

 

TheCompany’s Chief Executive Officer, Randall D. Sampson, and Chief FinancialOfficer, David C. Hansen, have reviewed the Company’s disclosure controls andprocedures pursuant to Exchange Act Rule 13a-15(b) as of the end ofthe period covered by this report.  Basedupon this review, these officers have concluded that the Company’s disclosurecontrols and procedures are effective to ensure that information required to bedisclosed in the reports that the Company files under the Exchange Act isrecorded, processed, summarized and reported within the time periods specifiedin the rules and forms of the SEC and that the disclosure controls arealso effective to ensure that information required to be disclosed in theCompany’s Exchange Act reports is accumulated and communicated to management,including the chief executive officer and chief financial officer, to allowtimely decisions regarding required disclosure.

 

(b)                                 Changes inInternal Control Over Financial Reporting:

 

Therehas been no change in our internal control over financial reporting (as definedin Rules 13a-15(f) under the Securities Exchange Act of 1934) thatoccurred during our fiscal quarter ended September 30, 2010 that havematerially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

 

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**PART II**

**OTHERINFORMATION**

 
| 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, 2009, and the  statement of 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. |
|      | (c)                                                                                                                                                                                                                                           | On  January 16, 2008, the Company announced that its Board of Directors had  authorized a program to repurchase up to an additional 250,000 shares of the  Company’s common stock. During the first nine months of 2010, the Company did  not repurchase any shares of common stock. As of September 30, 2010,  there are 33,457 shares at maximum that the Company may buy back as a result  of this repurchase program. |
|      |                                                                                                                                                                                                                                          |
| Item  3.  | **Defaults  Upon Senior Securities**                                                                                                                                                                                                          |
|      |                                                                                                                                                                                                                                          |
|      | Not  Applicable.                                                                                                                                                                                                                              |
|      |                                                                                                                                                                                                                                          |
| Item  4.  | **Removed  and Reserved**                                                                                                                                                                                                                     |
|      |                                                                                                                                                                                                                                          |
| Item  5.  | **Other  Information**                                                                                                                                                                                                                        |
|      |                                                                                                                                                                                                                                          |
|      | Not  Applicable.                                                                                                                                                                                                                              |
|      |                                                                                                                                                                                                                                          |
| Item  6.  | **Exhibits**                                                                                                                                                                                                                                  |
|      |                                                                                                                                                                                                                                          |
|      | (a)                                                                                                                                                                                                                                           | The  following exhibits are included herein: |
|      |                                                                                                                                                                                                                                          |
|      |                                                                                                                                                                                                                                          | 11 | Statement  re computation of per share earnings — See Net Income Per Share under Note 1  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 | 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 | Certfications  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.  1350). |

 

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**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 theundersigned thereunto duly authorized.

 
|                           | **Canterbury Park Holding Corporation**      |
|--------------------------------|----------------------------------------------|
|                           |                                         |
| Dated:  November 15, 2010 | /s/  Randall D. Sampson                      |
|                           | Randall  D. Sampson,                         |
|                           | President,  and Chief Executive Officer      |
|                           |                                         |
| Dated:  November 15, 2010 | /s/  David C. Hansen                         |
|                           | David  C. Hansen,                            |
|                           | Vice  President, and Chief Financial Officer |

 

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