Financial Analysis

NOTE 11. COMITMENT AND CONTINGENCIES On August 30, 2019, PCL Construction Services, Inc. (PCL) filed a complaint in District Court, City and County of Denver, Colorado, against the Company and its Colorado subsidiaries, in connection with the Companys now completed expansion of the Monarch Casino Resort Spa Black Hawk (the Project). The case is captioned PCL Construction Services, Inc. v. Monarch Growth Inc., et al. , Case No. 2019CV33368 (the First Denver Lawsuit). On December 5, 2019, the Company filed its answer and counterclaim, which alleges, among other items, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, made fraudulent or negligent misrepresentations on which the Company and its Colorado subsidiaries relied, and included claims for monetary damages as well as equitable and declaratory relief. On March 26, 2021, PCL filed a mechanics lien foreclosure action in the District Court, County of Gilpin, Colorado, against the Company and its Colorado subsidiaries, in connection with the Companys now completed expansion of the Monarch Casino Resort Spa Black Hawk. The case is captioned PCL Construction Services, Inc., v. Monarch Growth Inc., et al., Case No. 2021CV30006 (the Gilpin Lawsuit). The complaint essentially mirrors the claims and allegations made by PCL in the First Denver Lawsuit. The Gilpin Lawsuit includes an additional claim, however, for foreclosure of PCLs purported mechanics lien against …

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NOTE 6. LONG-TERM DEBT On December 31, 2024, the Company entered into the Sixth Amended and Restated Credit Agreement (the Amended Credit Facility) with Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Facility amends and restates the Companys $100.0 million credit facility, dated as of February 1, 2023 (the Prior Facility). The Amended Credit Facility extends the maturity date to January 1, 2028 and removes the lien on real property under the Prior Facility. Additionally, the interest rate under the Amended Credit Facility is either SOFR (the Secured Overnight Financing Rate) plus a margin of 1.25% or the Base Rate (as defined in the Amended Credit Facility) plus a margin of 0.25% . The Commitment Fee Percentage (as defined in the Amended Credit Facility) was revised to be 0.25% per annum . In addition to other customary covenants for a facility of this nature, as of December 31, 2025, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 1.5:1.0 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1:1.0. As of December 31, 2025, the Companys Total Leverage Ratio and Fixed Charge Coverage Ratio associated with the credit facility was 0.0:1.0 and 149.7:1.0. On February 24, 2025, Wells Fargo Bank agreed to waive its right to declaring an event of default under the Amended Credit Facility arising out of the Judgment (as defined in NOTE 11. COMITMENT AND CONTI …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 9. STOCK-BASED COMPENSATION On May 21, 2014, we adopted the 2014 Equity Incentive Plan (as amended, the 2014 Plan). The purposes of the 2014 Plan are to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of the Companys business. In 2024, Monarch stockholders extended the 2014 Plan for additional 10 years. The 2014 Plan, as amended (the 2014 Plan), is an omnibus plan under which stock options, stock appreciation rights, performance awards, dividend equivalents, restricted stock, and restricted stock units can be awarded to employees, directors and consultants of the Company. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, the Amendment No. 1, Amendment No. 2 and Amendment No. 3 to the 2014 Plan is 4,400,000 shares plus the shares available for grant or subject to outstanding awards under the predecessor plans. The share reserve as of December 31, 2025 is 1,036,747. By its terms, the 2014 Plan will expire in May 2034 after which no options may be granted unless the 2014 Plan is amended or replaced. Pursuant to the terms of the 2014 Plan, either the Board of Directors or a committee designated by the Board of Directors is authorized to administer the plan. The administrator has the authority, in its discretion, to select employees, consultants and directors to whom awards under the 2014 Plan may be granted from time to tim …

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NOTE 3. GOODWILL AND INTANGIBLE ASSETS Goodwill was $25.1 million at December 31, 2025 and 2024. The Companys goodwill is related to the acquisition of the Monarch Black Hawk in 2012. There are no accumulated impairment losses or any other adjustments to the goodwill as defined in ASC 350-20-50-1. The Companys finite-lived intangible assets at December 31, 2025 consist of assets related to a cloud computing arrangement related to a hotel management system that is being amortized over 5 years and other software contracts covering more than one year. Estimated amortization expenses for the 5 years ending December 31, 2030 are as follows (in thousands): Year Expense 2026 $ 94 2027 313 2028 127 2029 128 2030 18 Total $ 680 The Company periodically evaluates the remaining useful lives of its finite-lived intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. …

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NOTE 7. INCOME TAXES In December 2023, the Financial Accounting Standards Board issued updated accounting guidance, ASU 2023-09, on disclosure for income taxes which the Company adopted prospectively as of January 1, 2025. Foreign pretax income, income tax expense, and income taxes paid were immaterial for all periods presented. As a result, foreign amounts have not been separately disaggregated. All pretax income was related to domestic, continuing operations for all periods presented. The Companys income tax provision (benefit) consists of the following (in thousands): Years ended December 31, 2025 2024 2023 Federal $ 26,840 $ 26,441 $ 23,312 State 2,922 2,925 2,699 Current tax provision 29,762 29,366 26,011 Federal (1,520) (8,737) (21) State (202) (999) 89 Deferred tax provision (1,722) (9,736) 68 Total tax provision $ 28,040 $ 19,630 $ 26,079 In conformity with the ASC Topic 718, Compensation-Stock Compensation: Improvements to Employee Share-based Payment Accounting (ASU 2016-09), all excess tax benefits and deficiencies are recognized as income tax expense (income tax benefit) in the Companys Consolidated Statement of Income. This may result in increased volatility in the Companys effective tax rate. The Company adopted ASU 2023-09 for the year ended December 31, 2025 and applied the new disclosure requirements prospectively to the current annual period. The income tax provision differs from that computed at the federal statutory rate. A reconciliation of the federal in …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 5. ACCOUNTING FOR LEASES In conformity with ASU No. 2016-02, Leases (Topic 842), (ASC 842) leases with durations greater than twelve months are recognized on the balance sheet. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of the lease payments over the lease term. Certain of the Companys leases include rental escalation clauses, renewal options and/or termination options that are factored into its determination of lease payments when appropriate. As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components. As of December 31, 2025, the Companys right of use assets consisted of the Parking Lot Lease, the Driveway Lease (both as defined and discussed in Note 12. Related Party Transactions), as well as certain billboard leases. The table below presents information related to the lease costs for operating leases during 2025, 2024 and 2023 (in thousands): Year ended December 31, 2025 2024 2023 Short-term lease costs $ 167 $ $ 297 Long-term lease costs 1,579 1,559 1,546 Total lease costs $ 1,746 $ 1,559 $ 1,843 When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement. …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Impact of Recently Issued Accounting Standards In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) the new guidance amends the existing standard to remove references to various stages of a software development project to better align with current software development methods such as agile programming. The types of costs required to be capitalized has not significantly changed. In addition, the new standard requires the capitalization of costs when (1) management has authorized and committed to funding the project and (2) it is probable that the project will be completed and the software will be used to perform its intended function. The ASU is effective for annual reporting periods beginning after December 15, 2027, with early adoption perm …

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NOTE 8. BENEFIT PLANS Effective November 1, 1995, the Company adopted a savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. Under the plan, participating employees may defer up to 100% of their pre-tax compensation, but not more than the statutory limits. The Companys matching contributions were approximately $1,035 thousand, $857 thousand, and $860 thousand for years ended December 31, 2025, 2024 and 2023, respectively. …

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NOTE 12. RELATED PARTY TRANSACTIONS The shopping center adjacent to the Atlantis is owned by BLI. John Farahi and Bob Farahi, Co-Chairmen of the Board of Directors and executive officers of the Company, and Ben Farahi each of whom has significant holdings in Monarch and each also beneficially owns limited partnership interests in BLI. Maxum LLC is the sole general partner of BLI, and Ben Farahi is the sole managing member of Maxum LLC. Neither John Farahi nor Bob Farahi has any management or operational control over BLI or the Shopping Center. Until May 2006, Ben Farahi held the positions of Co-Chairman of the Board of Directors, Secretary, Treasurer and Chief Financial Officer of the Company. On August 28, 2015, Monarch, through its subsidiary Golden Road Motor Inn, Inc., entered into a 20-year lease agreement with BLI for a portion of the Shopping Center (the Parking Lot Lease). This lease gives the Atlantis the right to use a parcel, approximately 4.2 acres, adjacent to the Atlantis. The primary purpose of the Parking Lot Lease is to provide additional, convenient, Atlantis surface parking. The minimum annual rent under the Parking Lot Lease is $695 thousand commencing on November 17, 2015. The minimum annual rent is subject to a cost of living adjustment increase on each five-year anniversary. In addition, the Company is responsible for the payment of property taxes, utilities and maintenance expenses related to the leased property. The Company has an option to renew the …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 6. LONG-TERM DEBT On December 31, 2024, the Company entered into the Sixth Amended and Restated Credit Agreement (the Amended Credit Facility) with Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Facility amends and restates the Companys $100.0 million credit facility, dated as of February 1, 2023 (the Prior Facility). The Amended Credit Facility extends the maturity date to January 1, 2028 and removes the lien on real property under the Prior Facility. Additionally, the interest rate under the Amended Credit Facility is either SOFR (the Secured Overnight Financing Rate) plus a margin of 1.25% or the Base Rate (as defined in the Amended Credit Facility) plus a margin of 0.25% . The Commitment Fee Percentage (as defined in the Amended Credit Facility) was revised to be 0.25% per annum . In addition to other customary covenants for a facility of this nature, as of June 30, 2026, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 1.5:1.0 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1:1.0. As of June 30, 2026, the Companys Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.0:1.0 and 257.5:1.0, respectively. On February 24, 2025, Wells Fargo Bank agreed to waive its right to declare an event of default under the Amended Credit Facility arising out of the February 14, 2025 judgment on the litigation between Monarch and PCL, so long as we …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 3. STOCK-BASED COMPENSATION In accordance with ASC 718, the Company records any excess tax benefits or deficiencies from its equity awards in its Consolidated Statements of Income in the reporting periods in which vesting occurs. As a result, the Companys income tax expense and associated effective tax rate are impacted by fluctuations in stock price between the grant dates and vesting dates of equity awards. Reported stock-based compensation expense was classified as follows (in thousands): Three months ended Six months ended June 30, June 30, 2026 2025 2026 2025 Casino $ 58 $ 25 $ 204 $ 200 Food and beverage 81 61 104 140 Hotel 59 (45) 117 34 Selling, general and administrative 1,923 1,834 3,649 3,628 Total stock-based compensation, before taxes 2,121 1,875 4,074 4,002 Tax benefit (445) (394) (855) (841) Total stock-based compensation, net of tax $ 1,676 $ 1,481 $ 3,219 $ 3,161 …

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NOTE 7. TAXES The excess tax benefits and deficiencies are recognized as income tax expense (income tax benefit) in the Companys Consolidated Statement of Income. This may result in increased volatility in the Companys effective tax rate. For the six months ended June 30, 2026 and 2025, the Companys effective tax rate was 19.7% and 23.1%, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was impacted by excess tax benefit on stock option exercises, which were $2.9 million and $0.2 million, respectively. Deferred tax assets were evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. As of June 30, 2026, we have recognized an uncertain tax position, inclusive of accrued interest, of $739 thousand, which is included in other long-term liabilities. The total amount of the unrecognized tax benefits that, if recognized, would affect the effective tax rate is $10 thousand. The uncertain tax position results from depreciation taken on property and equipment relating to the ongoing litigation with PCL Construction Services, Inc . No uncertain tax positions were recorded as of June 30, 2025. On July 4, 2025, the One Big Beautiful Bill Act (the Act) was enacted into law, making permanent certain key elements of the Tax Cuts and Jobs Act that are applicable to the Company, including 100% bonus depreciation. The Company is in the process of evaluating the impact of the Act to th …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 2. ACCOUNTING FOR LEASES For operating leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of the lease payments over the lease term. Certain of the Companys leases include rental escalation clauses, renewal options and/or termination options that are factored into its determination of lease payments when appropriate. As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components. As of June 30, 2026, the Companys right of use assets consisted of the Parking Lot Lease, the Driveway Lease (each as defined and discussed in NOTE 5. RELATED PARTY TRANSACTIONS) , as well as certain billboard leases. The weighted-average incremental borrowing rate of the leases presented in the lease liability as of June 30, 2026, was 4.34%. There were no new leases entered into in the second quarter of 2026. The weighted-average remaining lease term of the leases presented in the lease liability as of June 30, 2026, was 15.51 years. Cash paid related to the operating leases presented in the lease liability for each of the six months ended June 30, 2026 and 2025, was $0.8 million. …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Impact of Recently Issued Accounting Standards: In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) . The new guidance amends the existing standard to remove references to various stages of a software development project to better align with current software development methods such as agile programming. The types of costs required to be capitalized has not significantly changed. In addition, the new standard requires the capitalization of costs when (1) management has authorized and committed to funding the project and (2) it is probable that the project will be completed and the software will be used to perform its intended function. ASU 2025-06 is effective for annual reporting periods, be …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

NOTE 5. RELATED PARTY TRANSACTIONS The shopping center adjacent to the Atlantis (the Shopping Center) is owned by Biggest Little Investments, L.P. (BLI). John Farahi and Bob Farahi, Co-Chairmen of the Board and executive officers of the Company, and Ben Farahi have significant holdings (the Farahi Family Stockholders) in Monarch and each also beneficially owns limited partnership interests in BLI. Maxum LLC is the sole general partner of BLI, and Ben Farahi is the sole managing member of Maxum LLC. Neither John Farahi nor Bob Farahi has any management or operational control over BLI or the Shopping Center. Until May 2006, Ben Farahi held the positions of Co-Chairman of the Board, Secretary, Treasurer and Chief Financial Officer of the Company. On August 28, 2015, Monarch, through its subsidiary Golden Road Motor Inn, Inc., entered into a 20-year lease agreement with BLI for a portion of the Shopping Center (the Parking Lot Lease). This lease gives the Atlantis the right to use a parcel, approximately 4.2 acres, adjacent to the Atlantis. The primary purpose of the Parking Lot Lease is to provide additional, convenient, Atlantis surface parking. The minimum annual rent under the Parking Lot Lease is $695 thousand commencing on November 17, 2015. The minimum annual rent is subject to a cost of living adjustment increase on each five-year anniversary. In addition, the Company is responsible for the payment of property taxes, utilities and maintenance expenses related to the lease …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing