MONARCH CASINO & RESORT INC

Previous wording

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) regarding our expectations and beliefs concerning the cost, financing and impact of our Monarch Black Hawk Expansion; future expansion and acquisition opportunities; positioning of our properties to benefit from future macro and local economic growth; business prospects; business strategies and outlook; competitive advantages and sources of competition; marketing strategy; approvals and licensing requirements; employee relations; capital requirements; anticipated source of funds and adequacy of such funds to meet our debt obligations and capital requirements; financial condition, legal matters and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. We note that many factors could cause our actual results and experience to change significantly from the anticipated results or expectations expressed in our forward-looking statements. When words and expressions such as “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions are used in this Form 10-K, as well as statements containing phrases such as “in our view,” “we cannot assure you,” “although no assurance can be given,” or “there is no way to anticipate with certainty,” forward-looking statements are being made. Example of forward-looking statements include, among others, statements we make regarding: (i) our belief that we have sufficient liquidity to fund our operations and any remaining renovation projects, litigation costs and ongoing capital expenditures; (ii) our belief that our business is well-positioned to benefit from the continued gaming industry expansion after the pandemic; (iii) our expectation regarding the availability of future acquisition opportunities; (iv) our beliefs regarding the quality of our products and guest services in Reno and Black Hawk; (v) our expectations regarding our guests' acceptance of the casino, hotel and related amenities at Monarch Casino Resort Spa Black Hawk and Atlantis; (vi) our expectations regarding our future position in, and share of, the high-end segment of the market and the quality of service we provide to our guests; (vii) our expectations regarding the litigation and any appeal relating to the construction of the Monarch Black Hawk expansion and related liens recorded by the general contractor and certain subcontractors against the Monarch Black Hawk; (viii) our belief regarding the proximity that the Reno-Sparks Convention Center will have on the Atlantis; (ix) the continuing strength of our balance sheet and our expected free cash flow; (x) our expectations regarding continuing our dividend payments in the future; (xi) our…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) regarding our expectations and beliefs concerning future expansion and acquisition opportunities; positioning of our properties to benefit from future macro and local economic growth; business prospects; business strategies and outlook; competitive advantages and sources of competition; marketing strategy; approvals and licensing requirements; employee relations; capital requirements; anticipated source of funds and adequacy of such funds to meet our debt obligations and capital requirements; financial condition, legal matters and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. We note that many factors could cause our actual results and experience to change significantly from the anticipated results or expectations expressed in our forward-looking statements. When words and expressions such as “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions are used in this Form 10-K, as well as statements containing phrases such as “in our view,” “we cannot assure you,” “although no assurance can be given,” or “there is no way to anticipate with certainty,” forward-looking statements are being made. Example of forward-looking statements include, among others, statements we make regarding: (i) our belief that we have sufficient liquidity to fund our operations and any remaining renovation projects, litigation costs and ongoing capital expenditures; (ii) our expectation regarding the availability of future acquisition opportunities; (iii) our beliefs regarding the quality of our products and guest services in Reno and Black Hawk; (iv) our expectations regarding our guests' acceptance of the casino, hotel and related amenities at Monarch Casino Resort Spa Black Hawk and Atlantis; (v) our expectations regarding our future position in, and share of, the high-end segment of the market and the quality of service we provide to our guests; (vi) our expectations regarding the litigation and any appeal relating to the construction of the Monarch Black Hawk expansion and related liens recorded by the general contractor and certain subcontractors against the Monarch Black Hawk; (vii) our belief regarding the proximity that the Reno-Sparks Convention Center will have on the Atlantis; (viii) the continuing strength of our balance sheet and our expected free cash flow; (ix) our expectations regarding continuing our dividend payments in the future; (x) our belief regarding the appeal of the locations of our properties to certain segments of our customers; (xi) our expectations regarding broad-based employment growth in the Reno market; and (xii) our…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”) and Monarch Casino Resort Spa Black Hawk, a hotel and casino in Black Hawk, Colorado (the “Monarch Black Hawk”). In addition, we own separate parcels of land located next to the Atlantis and a parcel of land with an industrial warehouse located between Denver, Colorado and the Monarch Black Hawk. We also own Chicago Dogs Eatery, Inc. and Monarch Promotional Association, both of which were formed in relation to licensure requirements for extended hours of liquor operation in Black Hawk, Colorado.

Current wording

Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”) and Monarch Casino Resort Spa Black Hawk, a hotel and casino in Black Hawk, Colorado (the “Monarch Black Hawk”). In addition, we own separate parcels of land located next to the Atlantis and a parcel of land with an industrial warehouse located between Denver, Colorado and the Monarch Black Hawk. We also own Chicago Dogs Eatery, Inc. and Monarch Promotional Association, Inc., both of which were formed in relation to licensure requirements for extended hours of liquor operation in Black Hawk, Colorado.

Previous wording

Monarch Casino Resort Spa Black Hawk: Monarch Black Hawk is the first property encountered by visitors arriving from Denver and other major population centers via Highway 119. The Denver metro economy remains strong with higher than the national average per capita personal income. At the beginning of 2022, we completed the master planned renovation and expansion, transforming the property into a world-class resort. Monarch Black Hawk is positioned to leverage from the expanded operation, and take advantage of the elimination of betting limits and allowance of new game types in Black Hawk, Colorado, as well as to benefit from the growing state-wide online and retail sports betting. Monarch Black Hawk also is experiencing labor challenges, resulting from the distance to the staffing filter markets of Golden, Colorado and the Denver Metro area and low unemployment at those markets. We continue to attract high value players from across Colorado’s Front Range, who had previously tended to travel to other markets, such as Las Vegas, for a high-end casino entertainment experience. We believe that the quality of our expanded product and exceptional guest service will meet the demand of the high-end segment of the market and will grow revenue and accelerate market share.

Current wording

Monarch Casino Resort Spa Black Hawk: Monarch Black Hawk is the first property encountered by visitors arriving from Denver and other major population centers via Highway 119. The Denver metro economy remains strong with higher than the national average per capita personal income. Monarch Black Hawk has been developed into a world-class resort, is positioned to leverage its expanded operations, and take advantage of the elimination of betting limits several years ago and allowance of new game types in Black Hawk, Colorado, as well as to benefit from the growing state-wide online and retail sports betting. Monarch Black Hawk also is experiencing labor challenges, resulting from the distance to the staffing filter markets of Golden, Colorado and the Denver metro area and low unemployment at those markets. We continue to attract high value players from across Colorado’s Front Range, who had previously tended to travel to other markets, such as Las Vegas, for a high-end casino entertainment experience. We believe that the quality of our expanded product and exceptional guest service will meet the demand of the high-end segment of the market and will grow revenue and accelerate market share.

Previous wording

Gaming revenue KPI: Our management reviews on a consistent basis the volume metrics and hold percentage metrics for each gaming area. The main volume measurements are slot coin-in, table games drop, sportsbook write and keno write. Slot coin-in represents the dollar amount wagered in slot machines, including free promotional wagers. Table games drop represents the total amount of cash and net markers deposited in the table drop box. Keno write and sportsbook write represents the dollar amount wagered at our counters, along with sportsbook write made through our mobile wagering system. Volume metrics are important in managing the business, as our gaming win is affected by actual hold percentage, which in general varies from the expected hold percentage and historical hold percentage. Gaming win represents the amount of wagers retained by us. Hold percentage represents win as a percentage of slot coin-in, table game drop, sportsbook write, or keno write. Our win and hold percentages are calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis.

Current wording

Gaming revenue KPI: Our management regularly the volume metrics and hold percentage metrics for each gaming area. The main volume measurements are slot coin-in, table games drop, sportsbook write and keno write. Slot coin-in represents the dollar amount wagered in slot machines, including free promotional wagers. Table games drop represents the total amount of cash and net markers deposited in the table drop box. Keno write and sportsbook write represents the dollar amount wagered at our counters, along with sportsbook write made through our mobile wagering system. Volume metrics are important in managing the business, as our gaming win is affected by actual hold percentage, which in general varies from the expected hold percentage and historical hold percentage. Gaming win represents the amount of wagers retained by us. Hold percentage represents win as a percentage of slot coin-in, table game drop, sportsbook write, or keno write. Our win and hold percentages are calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis.

Previous wording

Operating margins: Our management is consistently focused on controlling expenses and finding cost savings, without affecting the quality of the product we offer and our guests’ services and experience. We measure our performance using expense margin, which is a percentage of direct expenses, including labor, cost of product and any other operating expenses related to the gaming, food and beverage, or hotel operation to the net gaming, food and beverage, or hotel revenues. Selling, general and administrative (“SG&A”) margin represents SG&A expenses for a period as a percentage of total net revenue for a period. In managing the food and beverage operation we use Cost Of Goods Sold (“COGS”) percentage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices.

Current wording

Operating margins: Our management is consistently focused on controlling expenses and finding cost savings, without affecting the quality of the product we offer and the quality of our guests’ services and experience. We measure our performance using expense margin, which is a percentage of direct expenses, including labor, cost of product and any other operating expenses related to the gaming, food and beverage, or hotel operation to the net gaming, food and beverage, or hotel revenues. Selling, general and administrative (“SG&A”) margin represents SG&A expenses for a period as a percentage of total net revenue for a period. In managing the food and beverage operation we use cost of goods sold (“COGS”) percentage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices.

Previous wording

For the year ended December 31, 2024, our net income totaled $72.8 million, or $3.84 per diluted share, compared to net income of $82.4 million, or $4.20 per diluted share for the same period of 2023, reflecting a 11.7% decrease in net income and 8.6% decrease in diluted EPS (“Earnings Per Share”). Net income and diluted EPS for the years ended December 31, 2024 and 2023, were impacted by: i) $27.6 million loss on litigation between Monarch and PCL recognized in the year ended December 31, 2024; ii) higher depreciation expense ($51.4 million and $47.3 million in 2024 and 2023, respectively); offset by i) the effective tax rate (21.6% in 2024 and 24.0% in 2023), based primarily on the amount of the excess tax benefit on stock compensation; ii) lower legal and consulting costs related to the litigation between Monarch and PCL ($0.8 million and $6.9 million in 2024 and 2023, respectively). Net revenue for the years ended December 31, 2024 and 2023 were $522.2 million and $501.5 million, respectively, reflecting an increase of $20.7 million, or 4.1%.

Current wording

For the year ended December 31, 2025, our net income totaled $101.4 million, or $5.43 per diluted share, compared to net income of $72.8 million, or $3.84 per diluted share for the same period of 2024, reflecting a 39.3% increase in net income and 41.4% increase in diluted EPS (“Earnings Per Share”). Net income and diluted EPS for the years ended December 31, 2025 and 2024, were impacted by: (i) $27.6 million, or $1.14 per diluted EPS, of accrued loss relating to the principal judgment on the litigation between the Company and the Monarch Black Hawk’s general contractor, PCL Construction Services, Inc. recorded in 2024; (ii) $2.75 million, or $0.12 per diluted EPS, from accrued interest expense relating to the principal judgment on the litigation between the Company and Monarch Black Hawk’s general contractor, PCL Construction Services, Inc., recorded in 2025; (iii) $1.6 million, or $0.07 per diluted EPS, from higher legal and consulting costs relating to the same litigation and the Company’s ongoing appeal of the related judgment; and (iv) $3.9 million, or $0.17 per diluted EPS, from accrual for other litigation expenses. Net revenue for the years ended December 31, 2025 and 2024 were $545.1 million and $522.2 million, respectively, reflecting an increase of $22.9 million, or 4.4%.

Previous wording

Casino revenue increased 4.1% in the year ended December 31, 2024, compared to the same period of 2023. Casino operating expense as a percentage of casino revenue increased to 37.2% for the year ended December 31, 2024, compared to 36.4% for the same period in 2023, primarily due to increases in labor expense and technology related expense.

Current wording

Casino revenue increased 6.8% in the year ended December 31, 2025, compared to the same period of 2024. Casino operating expense as a percentage of casino revenue decreased to 36.2% for the year ended December 31, 2025, compared to 37.2% for the same period in 2024, primarily due to increase in gaming revenue resulted from increase in market share at both locations and decreases in labor expense.

Previous wording

Food and beverage revenue increased 0.7% in the year ended December 31, 2024 over the same period in 2023, due to a 1.6% increase in average revenue per cover partially offset by a 0.9% decrease in covers. Food and beverage operating expense as a percentage of food and beverage revenue in the year ended December 31, 2024 was 73.7% compared to 72.4% for the same period in 2023. Food and beverage operating expense as a percentage of food and beverage revenue increased as a result of increase in cost of goods sold.

Current wording

Food and beverage revenue increased 2.1% in the year ended December 31, 2025 over the same period in 2024, due to a 3.8% increase in average revenue per cover partially offset by a 1.6% decrease in covers. Food and beverage operating expense as a percentage of food and beverage revenue in the year ended December 31, 2025 was 71.0% compared to 73.7% for the same period in 2024. Food and beverage operating expense as a percentage of food and beverage revenue decreased as a result of decrease in labor expense and cost of goods sold.

Previous wording

Hotel revenue increased 7.6% in the year ended December 31, 2024 over the same period in 2023 due to an increase in ADR from $172.62 for the year ended December 31, 2023 to $182.48 for the year ended December 31, 2024, combined with slightly higher hotel occupancy of 84.8% in the year ended December 31, 2024 compared to 84.7% for the same period in 2023. RevPAR was $220.28 in the year ended December 31, 2024 and $209.71 for the same period in 2023. Hotel operating expense as a percent of the hotel revenue for the year ended December 31, 2024 was 34.3% compared to 37.2% for the same period in 2023. The decrease in the hotel expense margin was primarily due to the increase in ADR and effective cost management.

Current wording

Hotel revenue decreased 0.2% in the year ended December 31, 2025 over the same period in 2024 due to a decrease in hotel occupancy to 81.6% in the year ended December 31, 2025 from 82.8% for the same period in 2024. The decrease in occupancy is primarily result of low mid-week occupancy, as the competitors are offering very low daily rates. ADR increased to $188.13 for the year ended December 31, 2025 from $183.80 for the year ended December 31, 2024. RevPAR was $164.72 in the year ended December 31, 2025 and $164.80 for the same period in 2024. Hotel operating expense as a percent of the hotel revenue for the year ended December 31, 2025 was 34.6% compared to 34.3% for the same period in 2024. The increase in the hotel expense margin was primarily due to the increase in hotel operating supplies expense.

Previous wording

Other revenue increased 13.8% in the year ended December 31, 2024 compared to the same period in 2023 driven primarily by increases in spa and commission revenues.

Current wording

Other revenue increased 1.6% in the year ended December 31, 2025 compared to the same period in 2024 driven primarily by increases in spa and commission revenues.

Previous wording

SG&A expense increased to $108.3 million in the year ended December 31, 2024 from $105.8 million in the same period of 2023 due to: i) a $2.6 million increase in salaries, wages and related employee benefits expense; ii) a $0.8 million increase in repairs and maintenance expense; offset by a $0.7 million decrease in utility expense. As a percentage of net revenue, SG&A expense decreased to 20.7% in the year ended December 31, 2024 from 21.1% in the corresponding prior year period 2023.

Current wording

SG&A expense increased to $109.4 million in the year ended December 31, 2025 from $108.3 million in the same period of 2024 due to: i) a $1.2 million increase in repairs and maintenance expense; ii) a $0.7 million increase in property taxes, offset by iii) a $0.5 million decrease in salaries, wages, employee benefits and other employee related expenses; and iv) a $0.3 million decrease in utility expense. As a percentage of net revenue, SG&A expense decreased to 20.1% in the year ended December 31, 2025 from 20.7% in the corresponding prior year period of 2024.

Previous wording

Depreciation and amortization expense increased to $51.4 million for the year ended December 31, 2024, as compared to $47.3 million for the same period in 2023 primarily due to the addition of assets related to the redesign and upgrade of the hotel rooms at Atlantis, as well as ongoing maintenance capital expenditures at both properties.

Current wording

Depreciation and amortization expense increased to $54.0 million for the year ended December 31, 2025, as compared to $51.4 million for the same period in 2024 primarily due to the addition of assets related to the redesign and upgrade of the hotel rooms at Atlantis, as well as ongoing maintenance capital expenditures at both properties.

Previous wording

During the year ended December 31, 2024, we recognized $27.6 million loss relating to the principal judgment on the litigation between Monarch and PCL, $0.8 million in construction litigation expense related to the litigation between Monarch and PCL and $0.2 million in loss on disposal of assets. During the year ended December 31, 2023, we recognized, $6.9 million in construction litigation expense related to the lawsuit filed by the Monarch Black Hawk Expansion construction project general contractor against the Company and our countersuit against the general contractor and $0.2 million in loss on disposal of assets, offset by $1.2 million net proceeds from a sale of a corona virus (“COVID”) closure related insurance claim. These expenses are included in Other operating items, net in the Consolidated Statements of Operations.

Current wording

During the year ended December 31, 2025, we recognized, $2.7 million in accrued interest expense relating to the principal judgment on the litigation between the Company and Monarch Black Hawk’s general contractor, PCL Construction Services, Inc., $2.4 million in professional service fees relating to appeal of the principal judgment on the same litigation, $3.9 million in joint stipulation of settlement filed with court in a class action case in which the Company is a defendant $0.1 million in lobbying and other expense to oppose the expansion of iGaming, and $0.1 million in loss on disposal of assets. During the year ended December 31, 2024, we recognized $27.6 million loss relating to the principal judgment on the litigation between the Company and Monarch Black Hawk’s general contractor, PCL Construction Services, Inc., $0.8 million in professional service fees relating to the same litigation, and $0.2 million in loss on disposal of assets.

Previous wording

During the year ended December 31, 2024, we decreased the outstanding principal balance under our Amended Credit Facility by $5.5 million to no balance outstanding as of December 31, 2024. During 2024 and 2023, we recognized $0.1 million and $1.6 million, respectively, in interest expense, net of interest income. See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below.

Current wording

During the year ended December 31, 2025, we had no borrowings under the credit facility. During the year ended December 31, 2024, we decreased the outstanding principal balance under our Amended Credit Facility by $5.5 million to no balance outstanding as of December 31, 2024. During 2025, we recognized $1.9 million in interest income. During 2024, we recognized $0.1 million in interest expense, net of interest income. See further discussion of our Amended Credit Facility in the Liquidity And Capital Recourses section below.

Previous wording

During the years ended December 31, 2024 and 2023, capital expenditures related primarily to the major redesign and upgrade of all hotel rooms at Atlantis, the redesign and upgrade of the Oyster and Sushi Bar Restaurant located in the Sky Terrace at Atlantis and the acquisition of gaming equipment at both of our properties.

Current wording

During the years ended December 31, 2025 and 2024, capital expenditures related primarily to the redesign and upgrade of all hotel rooms at Atlantis, properties maintenance capital expenditures and the acquisition of gaming equipment at both of our properties.

Previous wording

Net cash used in investing activities totaled $43.8 million and $51.2 million in the years ended December 31, 2024 and 2023, respectively. Net cash used in investing activities during the years ended December 31, 2024 and 2023 consisted primarily of cash used for hotel rooms redesign and upgrade project at Atlantis, and for the acquisition of gaming and other equipment at both properties.

Current wording

Net cash used in investing activities totaled $37.2 million and $43.8 million in the years ended December 31, 2025 and 2024, respectively. Net cash used in investing activities during the years ended December 31, 2025 and 2024 consisted primarily of cash used for hotel rooms redesign and upgrade project at Atlantis, properties maintenance capital expenditures and for the acquisition of gaming and other equipment at both properties.

Previous wording

Net cash used in financing activities of $81.5 million in the year ended December 31, 2024 represented $60.0 million used for the repurchase of Company common stock under the Repurchase Plan, $22.3 million used for payment of dividends, and $5.5 million principal payments under the Amended Credit Facility, offset by $6.2 million of proceeds from stock options exercise, net of payroll taxes from net exercises. Net cash used in financing activities of $117.2 million in the year ended December 31, 2023 represented $112.8 million used for payment of dividends, $5.0 million used for the repurchase of Company common stock under the Repurchase Plan and $1.5 million principal payments under the Amended Credit Facility, offset by $2.1 million of processed from stock options exercise, net of payroll taxes from net exercises.

Current wording

Net cash used in financing activities of $89.9 million in the year ended December 31, 2025 represented $72.7 million used for the repurchase of Company common stock under the Repurchase Plan and $21.9 million used for payment of dividends, offset by $4.7 million of proceeds from stock options exercise, net of payroll taxes from net exercises. Net cash used in financing activities of $81.5 million in the year ended December 31, 2024 represented $60.0 million used for the repurchase of Company common stock under the Repurchase Plan, $22.2 million used for payment of dividends, and $5.5 million principal payments under the Amended Credit Facility, offset by $6.2 million of proceeds from stock options exercise, net of payroll taxes from net exercises.

Previous wording

We expect that the Company’s cash position in the next quarters may be negatively impacted by the outstanding payments related to the Monarch Black Hawk Expansion project litigation and the judgment of $74.6 million issued February 14, 2025, which are included in the Current Liability on the balance sheet as of December 31, 2024.

Current wording

We expect that the Company’s cash position in the next quarters may be negatively impacted by the outstanding payments related to the Monarch Black Hawk Expansion project litigation and the judgment of $74.6 million issued February 14, 2025, which are included in Current Liabilities on the balance sheet as of December 31, 2025 and December 31,2024.

Previous wording

Purchase obligations of materials and supplies used in the normal operation of our business represent approximately $18.3 million as of December 31, 2024 and all are cancelable by us upon providing a 30-day notice.

Current wording

Purchase obligations of materials and supplies used in the normal operation of our business represent approximately $19.2 million as of December 31, 2025 and all are cancelable by us upon providing a 30-day notice.

Previous wording

On December 31, 2024, the Company entered into the Sixth Amended and Restated Credit Agreement (the “Sixth Amended Credit Facility”) with Wells Fargo Bank, N.A., as administrative agent. The Sixth Amended Credit Facility amends and restates the Company’s $100.0 million credit facility, dated as of February 1, 2023 (the “Prior Facility”).

Current wording

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 Company’s $100.0 million credit facility, dated as of February 1, 2023 (the “Prior Facility”).

Previous wording

The Sixth 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 Sixth 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 Sixth Amended Credit Facility) plus a margin of 0.25%. The Commitment Fee Percentage (as defined in the Sixth Amended Credit Facility) was revised to be 0.25% per annum. As of December 31, 2024, the Company had no outstanding principal balance under the Amended Credit Facility, a $0.6 million standby letter of credit and $99.4 million remained available for borrowing.

Current wording

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.

Previous wording

In addition to other customary covenants for a facility of this nature, as of December 31, 2024, the Company is required to maintain a Total Leverage Ratio (as defined in the Sixth Amended Credit Facility) of no more than 1.5:1.0 and Fixed Charge Coverage Ratio (as defined in the Sixth Amended Credit Facility) of at least 1.1:1.0. As of December 31, 2024, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio associated with the Prior Facility was 0.0:1.0 and 84.4:1.0.

Current wording

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 Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio associated with the Prior Facility was 0.0:1.0 and 149.7:1.0.

Previous wording

On February 24, 2025, Wells Fargo Bank agreed to waive its right to declaring an event of default under the Sixth Amended Credit Facility arising out of the February 14, 2025 judgment on the litigation between Monarch and PCL, so long as we strictly comply with each and every other provision of the Credit Facility. We believe that we are in full compliance.

Current wording

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 February 14, 2025 judgment on the litigation between Monarch and PCL, so long as we strictly comply with each and every other provision of the Credit Facility. We believe that we are in full compliance.

Previous wording

As of December 31, 2024, the Company had no outstanding principal balance under the Sixth Amended Credit Facility, a $0.6 million standby letter of credit and $99.4 million remained available for borrowing.

Current wording

As of December 31, 2025, the Company had no outstanding principal balance under the Amended Credit Facility, a $0.6 million standby letter of credit and $99.4 million remained available for borrowing.

Previous wording

We believe that the expected cash flows from operating activities and the $99.4 million available under our Amended Credit Facility as of December 31, 2024 will be sufficient to support our current operations, meet our debt obligations and fulfill our capital expenditure plans for the twelve months from the filing of Form 10-K for the year ended December 31, 2024; however, we are surrounded by uncertainty about financial, economic, competitive, regulatory, and other factors, many of which are beyond our control. If we are unable to generate sufficient cash flow in the upcoming months or if our cash needs exceed the Company’s borrowing capacity under the Amended Credit Facility, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity.

Current wording

We believe that the available cash in bank, expected cash flows from operating activities and the $99.4 million available under our Amended Credit Facility as of December 31, 2025 will be sufficient to support our current operations, meet our debt obligations and fulfill our capital expenditure plans for the twelve months from the filing of Form 10-K for the year ended December 31, 2025; however, we are surrounded by uncertainty about financial, economic, competitive, regulatory, and other factors, many of which are beyond our control. If we are unable to generate sufficient cash flow in the upcoming months or if our cash needs exceed the Company’s available cash and borrowing capacity under the Amended Credit Facility, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, or issuing additional equity.