## QuickLinks

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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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(Mark One)

|/x/ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|/ / | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  TO .             

Commission File Number 0-24554

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Canterbury Park Holding Corporation(Exact name of business issuer as specified in its charter)

|Minnesota(State or other jurisdiction of
incorporation or organization)           |  | 41-1775532(IRS Employer
Identification No.)
|--------------------------------------------------------------------------------- |  | -------------------------------------------
|1100 Canterbury Road, Shakopee, Minnesota(Address of principal executive offices) |  | 55379(Zip Code)                            

(612) 445-7223(Issuer's Telephone Number)

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Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past
90 days. YES /x/  NO / /

The
Company had 3,319,499 shares of common stock, $.01 par value per share, outstanding as of November 10, 1999.

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Canterbury Park Holding Corporation

INDEX

|         |  |                       |  |                                                                                                   |  | Page
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------- |  | ----
|PART 1.  |  | FINANCIAL INFORMATION |  |                                                                                                  
|         |  | Item 1.               |  | Financial Statements                                                                              |  |     
|         |  |                       |  | Unaudited Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998              |  | 3   
|         |  |                       |  | Unaudited Consolidated Statements of Operations for the periods ended September 30, 1999 and 1998 |  | 4   
|         |  |                       |  | Unaudited Consolidated Statements of Cash Flows for the periods ended September 30, 1999 and 1998 |  | 5   
|         |  |                       |  | Notes to Unaudited Consolidated Financial Statements                                              |  | 6   
|         |  | Item 2.               |  | Management's Discussion and Analysis                                                              |  | 9   
|PART II. |  | OTHER INFORMATION     |  | 14                                                                                               
|         |  | Signatures            |  | 15                                                                                               



CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998

|                                                                                                                                 |  | September 30,
1999 |            | December 31,
1998 |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ----------------- | -
|ASSETS                                                                                                                           | 
|CURRENT ASSETS                                                                                                                   |  |                    |            |                   |  
|Cash                                                                                                                             |  | $                  | 804,244    |                   | $
|Accounts receivable, net of allowance for uncollectible accounts                                                                 |  |                    | 359,487    |                   |  
|Inventory                                                                                                                        |  |                    | 87,823     |                   |  
|Deposits                                                                                                                         |  |                    | 20,000     |                   |  
|Prepaid expenses                                                                                                                 |  |                    | 136,761    |                   |  
|                                                                                                                                 |  |                    |            |                   |  
|Total current assets                                                                                                             |  |                    | 1,408,315  |                   |  
|PROPERTY AND EQUIPMENT, net of accumulated depreciation of $4,255,040 and $3,704,242, respectively                               |  |                    | 8,242,705  |                   |  
|DEFERRED TAX ASSET                                                                                                               |  |                    | 292,620    |                   |  
|INTANGIBLE ASSETS, net of accumulated amortization of $24,025 and $20,113, respectively                                          |  |                    | 344        |                   |  
|                                                                                                                                 |  |                    |            |                   |  
|                                                                                                                                 |  | $                  | 9,943,984  |                   | $
|                                                                                                                                 |  |                    |            |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                             | 
|CURRENT LIABILITIES                                                                                                              |  |                    |            |                   |  
|Accounts payable                                                                                                                 |  | $                  | 1,308,144  |                   | $
|Accrued wages and payroll taxes                                                                                                  |  |                    | 218,430    |                   |  
|Accrued interest                                                                                                                 |  |                    | 87         |                   |  
|Advance from MHBPA                                                                                                               |  |                    | 90,046     |                   |  
|Borrowings under credit agreement (Note 2)                                                                                       |  |                    |            |                   |  
|Accrued property taxes                                                                                                           |  |                    | 234,360    |                   |  
|Income taxes payable                                                                                                             |  |                    |            |                   |  
|Payable to horsepersons                                                                                                          |  |                    | 86,685     |                   |  
|                                                                                                                                 |  |                    |            |                   |  
|Total current liabilities                                                                                                        |  |                    | 1,937,752  |                   |  
|COMMITMENTS AND CONTINGENCIES (Note 4)                                                                                           |  |                    |            |                   |  
|STOCKHOLDERS' EQUITY                                                                                                             |  |                    |            |                   |  
|Common stock, $.01 par value, 10,000,000 shares authorized, 3,300,717 and 3,020,167, respectively, shares issued and outstanding |  |                    | 33,007     |                   |  
|Additional paid-in capital                                                                                                       |  |                    | 9,203,858  |                   |  
|Accumulated deficit                                                                                                              |  |                    | (1,230,633 | )                 |  
|                                                                                                                                 |  |                    |            |                   |  
|Total stockholders' equity                                                                                                       |  |                    | 8,006,232  |                   |  
|                                                                                                                                 |  |                    |            |                   |  
|                                                                                                                                 |  | $                  | 9,943,984  |                   | $
|                                                                                                                                 |  |                    |            |                   |  

See
notes to consolidated financial statements.

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)

|                                             |  | Three Months
Ended
September 30,
1999 |           | Three Months
Ended
September 30,
1998 |   | Nine Months
Ended
September 30,
1999 |   | Nine Months
Ended
September 30,
1998 |           
|-------------------------------------------- |  | ------------------------------------- | --------- | ------------------------------------- | - | ------------------------------------ | - | ------------------------------------ | ----------
|OPERATING REVENUES:                          |  |                                       |           |                                       |   |                                      |   |                                      |           
|Pari-mutuel                                  |  | $                                     | 4,880,562 |                                       | $ | 4,557,745                            |   | $                                    | 12,470,123
|Concessions                                  |  |                                       | 1,394,934 |                                       |   | 1,102,773                            |   |                                      | 2,657,951 
|Admissions and parking                       |  |                                       | 234,931   |                                       |   | 220,960                              |   |                                      | 461,784   
|Programs and racing forms                    |  |                                       | 202,976   |                                       |   | 249,324                              |   |                                      | 551,867   
|Other operating revenue                      |  |                                       | 211,651   |                                       |   | 137,686                              |   |                                      | 589,925   
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|                                             |  |                                       | 6,925,054 |                                       |   | 6,268,488                            |   |                                      | 16,731,650
|OPERATING EXPENSES:                          |  |                                       |           |                                       |   |                                      |   |                                      |           
|Pari-mutuel expenses                         |  |                                       |           |                                       |   |                                      |   |                                      |           
|Statutory purses                             |  |                                       | 2,133,489 |                                       |   | 1,745,479                            |   |                                      | 3,907,222 
|Host track fees                              |  |                                       | 466,093   |                                       |   | 482,814                              |   |                                      | 1,499,705 
|Pari-mutuel taxes                            |  |                                       | 42,478    |                                       |   | 24,276                               |   |                                      | 119,518   
|Minnesota breeders' fund                     |  |                                       | 234,380   |                                       |   | 220,940                              |   |                                      | 620,981   
|Salaries and benefits                        |  |                                       | 1,584,525 |                                       |   | 1,463,103                            |   |                                      | 4,056,858 
|Cost of concession sales                     |  |                                       | 363,800   |                                       |   | 298,620                              |   |                                      | 726,892   
|Cost of publication sales                    |  |                                       | 254,239   |                                       |   | 261,645                              |   |                                      | 661,140   
|Depreciation and amortization                |  |                                       | 188,605   |                                       |   | 233,199                              |   |                                      | 554,710   
|Utilities                                    |  |                                       | 229,835   |                                       |   | 238,070                              |   |                                      | 587,173   
|Repairs, maintenance and supplies            |  |                                       | 208,667   |                                       |   | 229,068                              |   |                                      | 579,289   
|Property taxes                               |  |                                       | 58,186    |                                       |   | 105,652                              |   |                                      | 172,884   
|Advertising and marketing                    |  |                                       | 396,401   |                                       |   | 217,972                              |   |                                      | 1,047,978 
|Other operating expenses                     |  |                                       | 776,668   |                                       |   | 714,407                              |   |                                      | 1,876,871 
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|                                             |  |                                       | 6,937,366 |                                       |   | 6,235,245                            |   |                                      | 16,411,221
|NONOPERATING REVENUES (EXPENSES):            |  |                                       |           |                                       |   |                                      |   |                                      |           
|Interest expense                             |  |                                       | (5,575    | )                                     |   | (23,346                              | ) |                                      | (26,836   
|Other, net                                   |  |                                       | 7,351     |                                       |   |                                      |   |                                      | 11,086    
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|                                             |  |                                       | 1,776     |                                       |   | (23,346                              | ) |                                      | (15,750   
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|(LOSS) INCOME BEFORE INCOME TAX              |  |                                       | (10,536   | )                                     |   | 9,897                                |   |                                      | 304,679   
|INCOME TAX BENEFIT (EXPENSE)                 |  |                                       | 28,000    |                                       |   |                                      |   |                                      | (22,000   
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|NET INCOME                                   |  | $                                     | 17,464    |                                       | $ | 9,897                                |   | $                                    | 282,679   
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|BASIC NET INCOME PER COMMON SHARE (Note 1)   |  | $                                     | .01       |                                       | $ | .00                                  |   | $                                    | .09       
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           
|DILUTED NET INCOME PER COMMON SHARE (Note 1) |  | $                                     | .01       |                                       | $ | .00                                  |   | $                                    | .09       
|                                             |  |                                       |           |                                       |   |                                      |   |                                      |           

See
notes to consolidated financial statements.



CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)

|                                                                        |  | Nine Months
Ended
September 30,
1999 |           | Nine Months
Ended
September 30,
1998 |  
|----------------------------------------------------------------------- |  | ------------------------------------ | --------- | ------------------------------------ | -
|CASH FLOWS FROM OPERATING ACTIVITIES:                                   |  |                                      |           |                                      |  
|Net Income                                                              |  | $                                    | 282,679   |                                      | $
|Adjustments to reconcile net income to net cash provided by operations: |  |                                      |           |                                      |  
|Depreciation and amortization                                           |  |                                      | 554,710   |                                      |  
|Stock options issued for consulting services                            |  |                                      |           |                                      |  
|Increase in accounts receivable                                         |  |                                      | (144,191  | )                                    |  
|(Increase) decrease in other current assets                             |  |                                      | (13,085   | )                                    |  
|Decrease in income taxes payable                                        |  |                                      | (160,875  | )                                    |  
|Increase in accounts payable and accrued expenses                       |  |                                      | 599,544   |                                      |  
|Decrease in accrued interest                                            |  |                                      | (100,280  | )                                    |  
|Increase in deferred tax asset                                          |  |                                      | (84,620   | )                                    |  
|(Decrease) increase in accrued property taxes                           |  |                                      | (119,662  | )                                    |  
|Increase in payable to horsepersons                                     |  |                                      | 15,880    |                                      |  
|                                                                        |  |                                      |           |                                      |  
|Net cash provided by operations                                         |  |                                      | 830,100   |                                      |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                   |  |                                      |           |                                      |  
|Additions to property and equipment                                     |  |                                      | (407,064  | )                                    |  
|Proceeds from sale of property and equipment                            |  |                                      |           |                                      |  
|                                                                        |  |                                      |           |                                      |  
|Net cash used in investing activities                                   |  |                                      | (407,064  | )                                    |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                   |  |                                      |           |                                      |  
|Proceeds on issuance of common stock                                    |  |                                      | 1,073,854 |                                      |  
|Payments on advance from MHBPA, net                                     |  |                                      | (456,368  | )                                    |  
|Payments on advance from shareholder, net                               |  |                                      |           |                                      |  
|(Payments on) proceeds from borrowings under credit agreement, net      |  |                                      | (608,449  | )                                    |  
|                                                                        |  |                                      |           |                                      |  
|Net cash provided by (used in) financing activities                     |  |                                      | 9,037     |                                      |  
|NET INCREASE (DECREASE) IN CASH                                         |  |                                      | 432,073   |                                      |  
|CASH AT BEGINNING OF PERIOD                                             |  |                                      | 372,171   |                                      |  
|                                                                        |  |                                      |           |                                      |  
|CASH AT END OF PERIOD                                                   |  | $                                    | 804,244   |                                      | $
|                                                                        |  |                                      |           |                                      |  

See
notes to consolidated financial statements.



CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies is included in the notes to consolidated financial statements in the 1998 Annual Report on
Form 10-KSB.

Income TaxesIncome tax expense is computed by applying the estimated annual effective tax rate to the
year-to-date income, without recording the effect of reducing a previously established valuation allowance. For the periods ending September 30, 1999 and 1998, income
tax expense of approximately $153,000 and $83,000, respectively, is offset by a reduction in the valuation allowance recorded on the deferred tax asset related to the Company's net operating loss
carryforward.

Unaudited Financial StatementsThe consolidated balance sheet as of September 30, 1999, the consolidated statements
of operations for the three and nine months ended September 30, 1999 and 1998, the consolidated statements of cash flows for the nine months ended September 30, 1999 and 1998, and the
related information contained in these notes have been prepared by management without audit. In the opinion of management, all accruals (consisting of normal recurring accruals) which are necessary
for a fair presentation of financial position and results of operations for such periods have been made. Results for an interim period should not be considered as indicative of results for a full
year.

2.  BORROWINGS UNDER CREDIT AGREEMENT

Borrowings under the Company's credit agreement with Bremer Bank include a commercial revolving credit line which provides for maximum advances of $2,250,000
with interest at the prime rate (8.25%) at September 30, 1999. Borrowings under the credit line were $608,449 at December 31, 1998. The Company had no borrowings under this credit line
at September 30, 1999. The credit agreement contains certain covenants requiring the Company to maintain certain financial ratios. The Company was in compliance with these requirements as of
September 30, 1999. Management believes that funds available under this line of credit, along with funds generated from simulcast operations, will be sufficient to satisfy its liquidity and
capital resource requirements during 1999.

3.  OPERATING SEGMENTS

The Company has two reportable operating segments: horse racing and concessions. The horse racing segment includes simulcast and live racing operations. The
concessions segment provides concessions during simulcast racing, live racing and special events. The Company's reportable operating segments are strategic business units that offer different products
and services. They are managed separately because the segments differ in the nature of the products and services provided as well as processes to produce those products and services. The horse racing
segment is regulated by the State of Minnesota Racing Commission.

The
accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

All
depreciation, interest expense and income taxes are recorded in the horse racing segment and no allocation is made to concessions for shared facilities. However, the concessions
segment pays approximately 25% of gross revenues to the horse racing segment for use of the facilities.

The
following table provides information about the Company's operating segments (in 000's):

|                                   |  | Nine Months Ended
September 30, 1999 |        | Nine Months Ended
September 30, 1998
|---------------------------------- |  | ------------------------------------ | ------ | ------------------------------------
|
|Revenues from external customers   |  | $                                    | 13,985 |                                     
|Intersegment revenues              |  |                                      | 605    |                                     
|Net interest expense               |  |                                      | 16     |                                     
|Depreciation and amortization      |  |                                      | 555    |                                     
|Segment income before income taxes |  |                                      | 305    |                                     
|Segment Assets                     |  |                                      | 9,833  |                                     
|                                   |  |                                      |        |                                     

The
following are reconciliations of reportable segment revenue, income before income taxes, and assets, to the Company's consolidated totals (in 000's):

|                                                       |  | Nine Months
Ended
September 30,
1999 |        | Nine Months
Ended
September 30,
1998 |  
|------------------------------------------------------ |  | ------------------------------------ | ------ | ------------------------------------ | -
|Revenues                                               |  |                                      |        |                                      |  
|Total revenue for reportable segments                  |  | $                                    | 17,337 |                                      | $
|Elimination of intersegment revenues                   |  |                                      | (605   | )                                    |  
|                                                       |  |                                      |        |                                      |  
|Total consolidated revenues                            |  |                                      | 16,732 |                                      |  
|                                                       |  |                                      |        |                                      |  
|Income before income taxes                             |  |                                      |        |                                      |  
|Total segment income before income taxes               |  | $                                    | 527    |                                      | $
|Elimination of intersegment income before income taxes |  |                                      | (222   | )                                    |  
|                                                       |  |                                      |        |                                      |  
|Total consolidated income before income taxes          |  |                                      | 305    |                                      |  
|                                                       |  |                                      |        |                                      |  

|                                        |  | September 30,
1999 |        | December 31,
1998 |  
|--------------------------------------- |  | ------------------ | ------ | ----------------- | -
|Assets                                  |  |                    |        |                   |  
|Total assets for reportable segments    |  | $                  | 10,394 |                   | $
|Elimination of intercompany receivables |  |                    | (450   | )                 |  
|                                        |  |                    |        |                   |  
|Total consolidated assets               |  |                    | 9,944  |                   |  
|                                        |  |                    |        |                   |  

4.  CONTINGENCIES

In accordance with an Earn Out Note, given to the prior owner of the racetrack as part of the consideration paid by the Company to acquire the racetrack, if
(i) off-track betting becomes legally permissible in the State of Minnesota and (ii) the Company begins to conduct off-track betting with respect to or in
connection with its operations, the Company will be required to pay to the IMR Fund, L.P. the greater of $700,000 per operating year, as defined, or 20% of the net pretax profit, as defined, for each
of five operating years. At the date (if any) that these two conditions are met, the five minimum payments will be discounted back to their present value and the sum of those discounted payments will
be recorded as an increase to the purchase price. The purchase price will be further increased if payments become due under the 20% of Net Pre-Tax Profit calculation. The first payment is
to be made 90 days after the end of the third operating year in which off-track betting is conducted by the Company. Remaining payments would be made within 90 days of the
end of each of the next four operating years.

5.  CURRENT ACCOUNTING PRONOUNCEMENTS

SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities,was issued in
June 1998. SFAS No. 133 provides a comprehensive standard for the recognition and measurement of derivatives and hedging activities. The standard requires all derivatives to be recorded
on the balance sheet at fair value and establishes special accounting for three types of hedges. SFAS No. 133 is effective for the Company year beginning January 1, 2001. The Company
does not have investments in derivatives and does not participate in hedging activities. The Company is currently assessing the impact SFAS No. 133 will have on the Company's financial position
and results of operations.



## 

MANAGEMENT'S DISCUSSION AND ANALYSIS

GENERAL

Canterbury Park Holding Corporation (the "Company") owns and operates Canterbury Park, the only pari-mutuel horse racing facility in the State of
Minnesota (the "Racetrack"). The Company's revenues for the period from January 1, 1999 to September 30, 1999 were derived primarily from pari-mutuel take-out on
races simulcast to Canterbury Park from racetracks throughout the country during 273 days of racing, including 56 days when live racing was also conducted at the Racetrack. In 1999 the
Company intends to have over 360 simulcast racing days. The 56 days of live thoroughbred and quarter horse racing occurred between May 15, 1999 and August 22, 1999. During live
race meets, the Company earns pari-mutuel take-out on wagering on live races at the Racetrack and additional pari-mutuel revenue from broadcasting its live races to
out-of-state racetracks around the country.

In
addition to pari-mutuel revenues, the Company generates revenues from concessions, admissions and parking, publication sales, special events, space rental, advertising
and other sources.

On
May 25, 1999, legislation authorizing new gaming authority for the Company was enacted into law. Refer to additional discussion on page 13 in the Operating Plan
section of this Form 10-Q.

RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998:

Total operating revenues increased approximately 10.5% during the three months ended September 30, 1999, compared to the three months ended
September 30, 1998 and 6.9% for the nine months ended September 30, 1999 compared to the nine months ended September 30, 1998.

Total
pari-mutuel revenues increased 7.1% and 7.9%, respectively, for the three and nine month periods ended September 30, 1999 compared to the same periods in 1998
due to increases in on-track simulcast wagering, on-track live race wagering and out-of-state wagering on the Racetrack's live races. Revenues
recognized related to uncashed winning tickets also increased in the 1999 period, compared to 1998.

As
shown in the table on the following page, during the nine month period ended September 30, 1999, total on-track handle on races simulcast to the Racetrack by
out-of-state racetracks increased $1.7 million or 4.1%, compared to the same period in 1998. Average attendance on days when only simulcast racing is offered was
unchanged. The per capita wager for the nine month period ended September 30, 1999 increased to $341 compared to $323 for the nine month period ended September 30, 1998.

Total
handle wagered on-track on 56 live race days in 1999 was $26.7 million compared to $24.9 million on 55 live race days in 1998, an increase of 7.2%.
This increase is partially attributable to the August 7, 1999 Claiming Crown race day, when on-track wagering on live races totaled $862,000. A 15.7% increase in handle wagered
on-track on live races was partially offset by a .8% decrease in handle wagered on-track on simulcast races on live race days. In addition, total attendance on live race days
increased by 8.5% compared to last year.

In
1999, the Company placed increased emphasis on selling the Racetrack's live race broadcast to out-of-state racetracks. The resulting increase in handle
wagered at out-of-state locations was over $2.4 million or 30.6%. While this represents a favorable change, wagers placed at out-of-state
locations
provide substantially lower margins to the Company than wagers placed on-track.



|                              |  | Nine Months
Ended
Sept. 30, 1999 |            | Nine Months
Ended
Sept. 30, 1998
|----------------------------- |  | -------------------------------- | ---------- | --------------------------------
|RACING DAYS                   |  |                                  |            |                                 
|Simulcast only days           |  |                                  | 217        |                                 
|Live and simulcast days       |  |                                  | 56         |                                 
|                              |  |                                  |            |                                 
|Total Racing Days             |  |                                  | 273        |                                 
|ATTENDANCE                    |  |                                  |            |                                 
|Simulcast only days           |  |                                  | 92,865     |                                 
|Live and simulcast days       |  |                                  | 209,327    |                                 
|                              |  |                                  |            |                                 
|Total Attendance              |  |                                  | 302,192    |                                 
|ON-TRACK HANDLE               |  |                                  |            |                                 
|Simulcast only days           |  | $                                | 31,665,000 |                                 
|Live and simulcast days       |  |                                  |            |                                 
|Live racing                   |  |                                  | 13,898,000 |                                 
|Simulcast racing              |  |                                  | 12,779,000 |                                 
|OUT-OF-STATE LIVE HANDLE      |  |                                  | 10,427,000 |                                 
|                              |  |                                  |            |                                 
|Total Handle                  |  | $                                | 68,769,000 |                                 
|AVERAGE DAILY ATTENDANCE      |  |                                  |            |                                 
|Simulcast only days           |  |                                  | 428        |                                 
|Live and simulcast days       |  |                                  | 3,738      |                                 
|ON-TRACK PER CAPITA WAGERING  |  |                                  |            |                                 
|Simulcast only days           |  | $                                | 341        |                                 
|Live and simulcast days       |  |                                  | 127        |                                 
|ON-TRACK AVERAGE DAILY HANDLE |  |                                  |            |                                 
|Simulcast only days           |  | $                                | 145,922    |                                 
|Live and simulcast days       |  |                                  | 476,375    |                                 

Concession
revenues increased by $292,000 or 26.5% during the third quarter of 1999 compared to the third quarter of 1998. The increase is due to an additional concert event and
higher attendance on live race days in the third quarter of 1999 compared to 1998. A modest price increase in May also contributed favorably to the change in revenues.
Year-to-date in 1999, concession revenues increased $376,000 or 16.5% compared to the same period in 1998.

Other
operating revenues increased approximately $74,000 or 54% during the three month period ended September 30, 1999, compared to the same period in 1998, due primarily to
increased space rental revenues generated by leasing the facility to promoters for major outdoor concert events. The Racetrack was the site of four major outdoor concerts during the months of July
through September 1999, compared to three concerts during the same months of 1998.

Other
operating revenues decreased $136,000 or 18% in the nine month period ended September 30, 1999, compared to the same period in 1998, due primarily to decreased space
rental revenues generated by leasing underutilized areas of the Racetrack grounds for vehicle storage. Vehicle storage revenues were approximately $177,000 and $395,000 for the nine month periods
ended September 30, 1999 and 1998, respectively. This decrease was partially offset by higher space rental revenues generated by concert events in the third quarter of 1999 as discussed above.

Total
operating expenses for the three month and nine month periods ended September 30, 1999 increased approximately $702,000 or 11.3%, and $1,058,000 or 6.9%, respectively,
over the same periods in 1998. This increase resulted primarily from increases in pari-mutuel expenses, salaries and benefits, and advertising and marketing expenses. These increases were
partially offset by decreases in depreciation and amortization costs and property tax expense.

Pari-mutuel
expenses increased 16.3% and 12.6% for the three month and nine month periods ended September 30, 1999 compared to the same periods in 1998,
respectively. This increase was primarily attributable to the cost of purse guarantees related to the Claiming Crown races, and also to higher handle during the quarter and
year-to-date periods. The Company incurred incremental purse expense due to Claiming Crown purse guarantees of $280,000. While the Company anticipated that the full amounts
incurred for purses and other costs to organize and promote this national event would not be recovered fully through pari-mutuel and other revenues in its inaugural year, management
expects to profit from the event in future years. The Racetrack is the site of the Claiming Crown for the next two years and a total of six of the first ten years the event is held.

Salaries
and benefit expenses increased $121,000 or 8.3% and $304,000 or 8.1%, respectively, for the three month and nine month periods ended September 30, 1999 compared to the
three month and nine
month periods ended September 30, 1998. The increase was attributable to higher labor costs for generating increased concession and pari-mutuel revenues, normal salary increases,
and costs associated with employee benefit and medical plans.

Advertising
and marketing costs increased during the three and nine month periods ending September 30, 1999 compared to the same period in 1998, primarily due to increased
expenditures related to live racing and special events. The Claiming Crown resulted in additional expenditures, particularly in its inaugural year. In addition, the Company held a major outdoor
concert during the live racing season, resulting in the need to alert our patrons to a deviation from the normal live racing schedule. Additional new promotions also contributed to the increased
costs.

Interest
expense decreased by $67,000 or 71.3% for the nine months ended September 30, 1999 compared to the nine months ended September 30, 1998. There were no
borrowings under the Company's line of credit at September 30, 1999, and there were no borrowings on the line of credit during the second or third quarters of 1999.

The
Company incurred a pre-tax loss of $10,536 for the three month period ended September 30, 1999 compared to pre-tax income of $9,897 for the three
months ended September 30, 1998. Income before incomes taxes was $304,679 for the nine months ended September 30, 1999 compared to income before taxes of $210,985 for the comparable
period in 1998.

The
Company recognized net income tax expense of $22,000 for the first nine months of 1999. The income tax expense is the net result of estimated current income tax expense of
$153,000, offset by a reduction in the valuation allowance of $131,000. As of September 30, 1999, management determined that based upon recent and projected profitability, it was more likely
than not, that the remaining deferred tax asset of $131,000 would be utilized in the future and thus reduced it's valuation allowance to zero.

The
Company's net income of $17,464 for the three months ended September 30, 1999 compares to net income of $9,897 for the three months ended September 30, 1998. Net
income of $282,679 for the nine months ended September 30, 1999 compares to net income of $210,985 for the nine months ended September 30, 1998. Despite the additional net costs
associated with the Claiming Crown, the Company achieved quarterly pre-tax results only slightly behind those of 1998 and continues to exceed last years operating results
year-to-date.

LIQUIDITY AND CAPITAL RESOURCES:

During the period January 1, 1999 through September 30, 1999, cash provided by operating activities was $830,100, which resulted principally from
an increase in accounts payable and accrued expenses of $599,544, depreciation and amortization of $554,710 and net income of $282,679. These items were partially offset by a decrease in income taxes
payable of $160,875, a decrease in accrued property taxes of $119,662, and a decrease in accrued interest of $100,280. Net cash provided by operations during the nine months ended September 30,
1998 was $1,131,511 resulting primarily from depreciation and amortization of $683,607, an increase in accounts payable and accrued expenses of $178,445, net income of $210,985, and an increase in
accrued property taxes of $120,349.

Net
cash used in investing activities for the first nine months of 1999 results primarily from acquisitions of property and equipment of $407,064, compared to investments in equipment
and building improvements of $224,474 during the nine month period ended September 30, 1998.

During
the period January 1, 1999 through September 30, 1999, cash provided by financing activities was $9,037. In August 1999, 120,000 underwriter warrants
(issued as part of the initial stock offering in 1994) were exercised at a price of $4.80. In addition, exercises of stock options during the first nine months of 1999 contributed to total cash
inflows from financing activities of $1,073,854. The cash inflows from these exercises allowed the Company to pay off borrowings under its credit agreement of $608,449, and to reduce the net advance
from the MHBPA by $456,368. During the first nine months of 1998, the Company used $1,651,942 to pay off its line of credit with Curtis Sampson, the Chairman of the Board. This use of cash was
partially offset by net proceeds from borrowings under the credit agreement with Bremer Bank of $664,384.

The
Company entered into a general credit and security agreement with Bremer Bank, a financial institution located in South Saint Paul, Minnesota on June 3, 1998. The
commercial revolving credit line provides for maximum advances of $2,250,000 with interest at the prime rate (8.25%) at September 30, 1999.

The
Company is required by statute to segregate purse funds received from wagering on simulcast and live horse races for future payment as purses for live horse races at the Racetrack
or other uses of Minnesota's horsepersons' association. Pursuant to an agreement with the Minnesota Horseman's Benevolent and Protective Association, Inc. ("MHBPA"), during the nine months
ended September 30, 1999 and 1998, the Company transferred into a trust account or paid directly to the MHBPA approximately $3,800,000 and $3,250,000, respectively. At September 30,
1999, the Company had an additional $90,046 liability to the MHBPA which will be paid with interest in 1999 in accordance with the agreement.

The
Company believes that the funds to be generated from operations together with funds available under its $2,250,000 line of credit with Bremer Bank will be sufficient to satisfy
its liquidity and capital resource requirements for the next twelve months. The Company paid down its borrowings under the line of credit agreement with Bremer Bank during the first quarter of 1999.
While the line of credit is available for borrowings, the Company has not utilized the line of credit during the second and third quarters of 1999.

The
Company anticipates it will incur capital investment and start up expenses of approximately $2,000,000 to implement a Card Club which the Company is authorized to establish under
legislation enacted by the State of Minnesota in May 1999. Management anticipates that the Company's line of credit will be used for this purpose. See the Operating Plan section below for further
discussion.



At September 30, 1999, the Company had concluded its 1999 live race meet which consisted of 26 days of mixed thoroughbred and quarter horse
racing and 30 days of thoroughbred-only racing.

On
May 25, 1999, legislation authorizing new gaming authority for the Company was enacted into law. This legislation will allow the Racetrack to host unbanked card games
whereby players compete against each other and not against the house. Under the new gaming authority, frequently referred to as a "Card Club", the Racetrack will receive a percentage of the wagers or
a fee from the players as its revenue for providing the facility and services. The new law specifies that the Racetrack's purse fund and the State of Minnesota Breeders' Fund will receive a total of
10% to 14% of the gross revenue generated by the Card Club. The Card Club operating plan will be submitted to the Minnesota racing Commission in the fourth quarter of 1999 for its review and approval.
The Company anticipates that the Card Club will begin operation in the first quarter of the year 2000.

The
Company has formed a task force of directors, officers and outside experts to develop plans for the Card Club. The task force is currently conducting market studies, analyzing
architectural options, and drafting an operation plan for review by the Minnesota Racing Commission which will regulate the operations of the Card Club. The Company has also hired a manager for the
Card Club operation who will assume duties beginning in November. While levels of expenditures are not yet estimable, management anticipates that expenses incurred to develop the Card Club, including,
but not limited to, market research, architectural analysis and consulting fees, will increase expense levels during the last three months of 1999, compared to the same period in 1998. The Company
also anticipates that certain personnel will be hired in the last quarter of 1999 and expenditures related to acquiring, developing and improving certain internal systems and controls to accommodate
Card Club operations will begin to occur in late 1999.

YEAR 2000:

The Company has identified and evaluated its in-house personal computer systems for year 2000 compliance. These PC based applications are compliant
and are not considered to be critical to the Company's daily operations. The Company replaced its racing office administrative network system with a year 2000 compliant system in the second quarter of
1999.

The
Company has evaluated the impact that the failure of significant suppliers to achieve year 2000 readiness would have on its operations. The Company has a contract, through
April 2004 with Autotote Systems, Inc. ("Autotote") for totalizator services, including equipment and computer programs which record and process all wagers and calculate odds and
payoffs. Autotote has assured the Company, in writing, of their commitment to achieve year 2000 compliance. Should Autotote fail to remediate its own year 2000 issues, pari-mutuel wagering
could be materially adversely affected at the Racetrack beginning January 1, 2000. If material year 2000 problems are experienced, the Company's contingency plan is to terminate its contract
with Autotote for cause, and to enter into a comparable agreement with another of the industry's tote service providers at the earliest possible time. However, there can be no guarantee that the
systems of alternative tote service providers would be year 2000 ready. If Autotote's totalizator equipment fails to achieve year 2000 compliance, and if other potential tote service providers are not
year 2000 ready, the Company's operations could be materially adversely affected.

FACTORS AFFECTING FUTURE PERFORMANCE:

From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the
investing public, the Company may comment on anticipated future financial performance. Such forward-looking statements, including statements contained in this Report on Form 10-QSB,
are subject to risks and uncertainties which may adversely affect future financial performance, including, but not limited to, fluctuations in attendance at the Racetrack, changes in the level of
wagering by patrons, legislative and regulatory changes, the impact of wagering products introduced by competitors, higher than expected expenses, unprofitable operations of new initiatives launched
by the Company in future periods and other risks applicable to the horse racing industry generally.



## 

PART II OTHER INFORMATION

Item 1.  Legal Proceedings

None

Item 2.  Changes in Securities

None

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K



## 

SIGNATURES

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

|                         | CANTERBURY PARK HOLDING CORPORATION                                                     
|------------------------ | ----------------------------------------------------------------------------------------
|Dated: November 11, 1999 | /s/RANDALL D. SAMPSONRandall D. Sampson,President, Chief Executive Officer and Treasurer



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MANAGEMENT'S DISCUSSION AND ANALYSIS

PART II OTHER INFORMATION

SIGNATURES