Mobile Infrastructure Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES Controls and Procedures The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. 37 Table of Contents The Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023, the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded, as of that time, the disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below. Notwithstanding the identified material weaknesses, management, including our Chief Executive Officer and Chief Financial Officer, believes the consolidated financial statements included in this Annual Report fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. Generally Accepted Accounting Principles. Previously Disclosed Material Weaknesses As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, we identified material weaknesses in our internal control over financial reporting. During fiscal years 2021, 2022 and 2023, the Company began implementing a remediation plan to address the material weaknesses identified as of December 31, 2021. The Company has designed, implemented, and operated controls over user access to certain information systems to ensure adequate restriction of users and privileged access to transaction processing applications. Therefore, management has concluded that this material weakness was remediated as of December 31, 2023. Further, the Company expanded its finance and accounting team, including hiring a number of additional individuals with the requisite technical accounting and finance knowledge and experience to assist with the enhancement and implementation of internal control policies and procedures related to the accounting matters in our business. While progress has been made to enhance our internal control over financial reporting, the root cause of the material weaknesses related to the appropriate review and documentation of controls has not yet been addressed. While the Company has designed, implemented, and operated certain of the necessary controls, we have not been able to consistently document the execution of such controls at an appropriate level of detail and precision. While we believe that our efforts have improved our internal control over financial reporting and resulted in the remediation of certain of the material weaknesses previously identified, remediation of the remaining material weaknesses existing as of December 31, 2023, as described below will require further validation and testing of design and operating effectiveness over a sustained period of financial reporting cycles. Additionally, as previously described in Part II, Item 9A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed by FWAC, prior to the Merger, FWAC’s management identified that FWAC’s control around the interpretation and accounting for extinguishment of a significant contingent obligation was not effectively designed or maintained. That material weakness resulted in the restatement of FWAC’s interim financial statements for the quarters ended June 30, 2022, and September 30, 2022. In connection with our evaluation of internal control over financial reporting for the year ended December 31, 2023, management concluded this material weakness was remediated. Management ’ s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for our Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting consists of policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) are designed and operated to provide reasonable assurance regarding the reliability of the Company's financial reporting and the Company's process for the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Management has conducted an assessment, including testing, of the effectiveness of our internal control over financial reporting as of December 31, 2023. In making our assessment of internal control over financial reporting, management used the criteria in Internal Control -- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2023, the Company’s internal control over financial reporting was not effective due to the material weaknesses in internal control over financial reporting described below. Material Weaknesses in Internal Control over Financial Reporting Management identified material weaknesses in our internal control over financial reporting in connection with our assessment as of and for the year ended December 31, 2023. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) the lack of appropriate segregation of duties within the accounting and finance groups and (ii) the ineffective design, implementation, and operation of controls relevant to the financial reporting process, specifically related to the documentation of the review of controls. Management ’ s Remediation Plan The following remedial actions have been identified and initiated as of December 31, 2023: ● We will continue to hire and train additional accounting resources that have the requisite levels of experience. ● We will reallocate responsibilities across the finance organization to allow for the appropriate segregation of duties to be applied. ● We will re-evaluate the permissions of user roles within our accounting system in order to establish more appropriate segregation of duties. ● We will continue to enhance our internal control documentation for key controls to ensure the appropriate assignment of preparers and reviewers and the establishment of policies and procedures that would require control performers to document the execution of controls with the appropriate level of precision and supporting evidence. As we continue to evaluate our internal control over financial reporting, we may determine that additional or different measures to address control deficiencies or modifications to our remediation plan are necessary. The material weaknesses cannot be considered remediated until the applicable controls are fully implemented, have operated for a sufficient period of time and management has concluded that these controls are operating effectively through testing. 38 Table of Contents Changes in Internal Control Over Financial Reporting Aside from the above items, there has not been any change in our internal control over financial reporting during the three months ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION Insider Trading Arrangements On December 15, 2023 , Manuel Chavez, III , our Chief Executive Officer , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) under the Exchange Act. The trading plan provides for the purchase of an aggregate of up to 142,000 shares of Common Stock. The trading plan will terminate on September 30, 2024, subject to early termination for certain specified events set forth in the trading plan. During the fiscal quarter ended December 31, 2023, no other directors or officers (as defined in Rule 16a - 1 (f) under the Exchange Act) adopted or terminated a "Rule 10b5 - 1 trading arrangement" or "non-Rule 10b5 - 1 trading arrangement," as those terms are defined in Regulation S-K, Item 408. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item will be included in our definitive proxy statement to be filed with the SEC within 120 days after December 31, 2023 in connection with the Company's 2024 Annual Meeting of Stockholders, and is hereby incorporated by reference into this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item will be included in our definitive proxy statement to be filed with the SEC within 120 days after December 31, 2023 in connection with the Company's 2024 Annual Meeting of Stockholders, and is hereby incorporated by reference into this Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item will be included in our definitive proxy statement to be filed with the SEC within 120 days after December 31, 2023 in connection with the Company's 2024 Annual Meeting of Stockholders, and is hereby incorporated by reference into this Form 10-K. 39 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item will be included in our definitive proxy statement to be filed with the SEC within 120 days after December 31, 2023 in connection with the Company's 2024 Annual Meeting of Stockholders, and is hereby incorporated by reference into this Form 10-K. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this Item will be included in our definitive proxy statement to be filed with the SEC within 120 days after December 31, 2023 in connection with the Company's 2024 Annual Meeting of Stockholders, and is hereby incorporated by reference into this Form 10-K. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Financial Statement Schedules See the Index to Consolidated Financial Statements on page F-1 of this report. (b) Exhibits Exhibit No . Description of Exhibit Form Exhibit of Annex Filing Date File Number 2.1† Agreement and Plan of Merger, dated as of December 13, 2022, by and among FWAC, Merger Sub and Legacy MIC 424B3 A-1 July 11, 2023 333-269231 2.2† First Amendment to the Agreement and Plan of Merger, dated as of March 23, 2023, by and among FWAC, Merger Sub and Legacy MIC 424B3 A-2 July 11, 2023 333-269231 3.1 Articles of Incorporation of MIC 8-K 3.1 August 31, 2023 001-40415 3.2 Articles of Merger (effecting the change of the name of MIC to “Mobile Infrastructure Corporation”) 8-K 3.2 August 31, 2023 001-40415 3.3 Bylaws of MIC 8-K 3.3 August 31, 2023 001-40415 4.1 Specimen Common Stock Certificate of MIC S-4/A 4.2 April 11, 2023 333-269231 4.2 Warrant Agreement, dated as of August 25, 2021, by and between Legacy MIC and Color Up, LLC 8-K 10.14 August 31, 2023 000-55760 4.3 Warrant Assumption and Amendment Agreement, dated as of August 25, 2023, by and among Legacy MIC, MIC, and Color Up, LLC 8-K 10.15 August 31, 2023 001-40415 4.4 Amended and Restated Warrant Agreement, dated as of August 29, 2023, by and between MIC and Color Up, LLC 8-K 10.16 August 31, 2023 001-40415 4.6* Description of Securities 10.1 Amended and Restated Letter Agreement, dated as of May 11, 2023, by and among FWAC, its executive officers, its directors, and the Sponsor S-4/A 10.1 May 11, 2023 333-269231 10.2 MVP REIT II, Inc. Long-Term Incentive Plan S-11/A 10.3 September 24, 2015 333-205893 10.3 Loan Agreement, dated as of January 10, 2017, by and between MVP Detroit Center Garage, LLC and Bank of America, N.A. 8-K 10.1 January 12, 2017 333-205893 10.4 Loan Agreement, dated as of November 30, 2018, by and among certain subsidiaries of Legacy MIC named as borrowers party thereto and LoanCore Capital Credit REIT LLC as lender 8-K 10.1 December 6, 2018 000-55760 10-5 Contribution Agreement, dated as of March 29, 2019, and effective as of April 1, 2019, among Legacy MIC, MVP Realty Advisors, LLC, dba The Parking REIT Advisors, Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., and Michael V. Shustek 8-K 2.1 April 3,2019 000-55760 10.6 Services Agreement, dated as of March 29, 2019, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., MVP Realty Advisors, LLC, dba The Parking REIT Advisors, and Michael V. Shustek 8-K 10.1 April 3, 2019 000-55760 10.7 First Amendment to Loan Agreement, dated as of July 9, 2020, by and among certain subsidiaries of Legacy MIC named as borrowers party thereto and LLC Warehouse V LLC as lender and successor-in-interest to LoanCore Capital Credit REIT LLC 10-Q 10.1 November 16, 2020 000-55760 10.8 Second Amendment to Loan Agreement, dated as of December 8, 2020, by and among certain subsidiaries of Legacy MIC as borrowers party thereto and LLC Warehouse V LLC as lender and successor-in-interest to LoanCore Capital Credit REIT LLC 10-K 10.15 March 31, 2021 000-55760 10.9 Third Amendment to Loan Agreement, dated as of December 8, 2021, by and among Legacy MIC as guarantor, certain subsidiaries of Legacy MIC as borrowers party thereto, and LoanCore 2021-CRE4 Issuer Ltd. as lender and successor-in-interest to LoanCore Capital Credit REIT LLC 10-K 10.14 March 30, 2022 000-55760 10.10 Equity Purchase and Contribution Agreement, dated as of January 8, 2021, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., Michael V. Shustek, Vestin Realty Mortgage II, Inc., Vestin Realty Mortgage I, Inc., and Color Up, LLC 8-K 10.1 January 14, 2021 000-55760 10.11 Tax Matters Agreement, dated as of August 25, 2021, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and each Protected Partner identified as a signatory on Schedule I thereto 8-K 10.1 August 31, 2021 000-55760 10.12 Stockholders Agreement, dated as of August 25, 2021, by and between Legacy MIC and the Investors identified on the signature pages thereto 8-K 10.2 August 31, 2021 000-55760 10.13 Assignment of Claims, Causes of Action, and Proceeds, dated as of August 25, 2021, by Legacy MIC in favor of Michael V. Shustek, MVP Realty Advisors, LLC, Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., and their designees, successors, representatives, heirs, and assigns 8-K 10.3 August 31, 2021 000-55760 10.14 Software License and Development Agreement, dated as of August 25, 2021, by and between Legacy MIC and DIA Land Co., LLC 8-K 10.7 August 31, 2021 000-55760 10.15 First Amendment to Services Agreement, dated as of August 25, 2021, by and among Legacy MIC, MVP REIT II Operating Partnership, L.P., Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., MVP Realty Advisors, LLC, and Michael V. Shustek 8-K 10.8 August 31, 2021 000-55760 10.16 First Amendment to Contribution Agreement, dated as of August 25, 2021, by and among Legacy MIC, Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., MVP Realty Advisors, LLC, and Michael V. Shustek 8-K 10.9 August 31, 2021 000-55760 10.17 Securities Purchase Agreement, dated as of November 2, 2021, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and HSCP Strategic III, L.P. 8-K 10.1 November 4, 2021 000-55760 10.18 Class A Unit Agreement, dated as of November 2, 2021, by and between Mobile Infra Operating Partnership, L.P. and HSCP Strategic III, L.P. 8-K 10.2 November 4, 2021 000-55760 10.19 Amended and Restated Registration Rights Agreement, dated as of November 2, 2021, by and among Legacy MIC, Color Up, LLC and HSCP Strategic III, L.P. 8-K 10.3 November 4, 2021 000-55760 10.20 Credit Agreement, dated as of March 29, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., certain subsidiaries of Legacy MIC, as borrowers party thereto, KeyBanc Capital Markets and KeyBank, National Association, as administrative agent and lender 8-K 10.1 April 1, 2022 000-55760 10.21 First Amendment to Credit Agreement, dated as of November 17, 2022, by and among Mobile Infra Operating Partnership, L.P., KeyBank National Association, and the other financial institutions party thereto 8-K 10.1 November 22, 2023 000-55760 10.22† Waiver and Second Amendment to Credit Agreement, dated as of August 25, 2023, by and among Mobile Infra Operating Partnership, L.P., Legacy MIC, each subsidiary of Legacy MIC party thereto, KeyBank National Association, and the other financial institutions party thereto 8-K 10.25 August 31, 2023 001-40415 10.23†* Third Amendment to Credit Agreement, dated as of March 1, 2024, by and among Mobile Infra Operating Partnership, L.P., Legacy MIC, each subsidiary of Legacy MIC party thereto, KeyBank National Association, and the other financial institutions party thereto 8-K 10.1 March 5, 2024 001-40415 10.24# Employment Agreement, dated as of August 25, 2021, by and between Legacy MIC and Manuel Chavez 8-K 10.10 August 31, 2021 000-55760 10.25# Employment Agreement, dated as of August 25, 2021, by and between Legacy MIC and Stephanie Hogue 8-K 10.11 August 31, 2021 000-55760 10.26# First Amendment to Employment Agreement, dated as of August 23, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and Manuel Chavez 8-K 10.1 August 26, 2022 000-55760 10.27# First Amendment to Employment Agreement, dated as of August 23, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and Stephanie Hogue 8-K 10.2 August 26, 2022 000-55760 10.28# Second Amendment to Employment Agreement, dated as of December 13, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and Manuel Chavez 8-K 10.4 December 14, 2022 000-55760 10.29# Second Amendment to Employment Agreement, dated as of December 13, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and Stephanie Hogue 8-K 10.5 December 14, 2022 000-55760 10.30# Form of Performance Unit Award Agreement 10-Q 10.1 August 15, 2022 000-55760 10.31# Form of First Amendment to Performance Unit Agreement S-4/A 10.39 April 11, 2023 333-269231 10.32# Form of LTIP Unit Agreement (Director Grants) 10-Q 10.2 August 15, 2022 000-55760 10.33# Form of LTIP Unit Agreement (Liquidity Event) 8-K 10.3 August 26, 2022 000-55760 10.34# First Amendment to LTIP Unit Agreement, dated as of December 13, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and Manuel Chavez 8-K 10.6 December 14, 2022 000-55760 10.35# First Amendment to LTIP Unit Agreement, dated as of December 13, 2022, by and among Legacy MIC, Mobile Infra Operating Partnership, L.P., and Stephanie Hogue 8-K 10.7 December 14, 2023 000-55760 10.36# Form of First Amendment to LTIP Unit Agreement S-4/A 10.44 April 11, 2023 333-269231 10.37# Form of Mobile Infrastructure Corporation and Mobile Infra Operating Company, LLC Performance Unit Award Agreement S-4/A 10.45 April 11, 2023 333-269231 10.38# Form of Mobile Infrastructure Corporation and Mobile Infra Operating Company, LLC LTIP Unit Award Agreement S-4/A 10.46 April 11, 2023 333-269231 10.39# Mobile Infrastructure Corporation and Mobile Infra Operating Company, LLC 2023 Incentive Award Plan 424B3 N July 11, 2023 333-269231 10.40 Registration Rights Agreement, dated as of August 25, 2023, by and among MIC, FWAC, the FWAC Sponsor Holders identified on Schedule A thereto, the MIC Holders identified on Scheduled B thereto, and the Preferred Holders identified on Schedule C thereto 8-K 10.42 August 31, 2023 001-40415 10.41 Sponsor Lock-Up Agreement, dated as of December 13, 2022, by and among the Sponsor, FWAC, and Legacy MIC 8-K 10.1 December 14, 2022 001-40415 10.42 Seller Lock-up Agreement, dated as of December 13, 2022, by and among FWAC, Legacy MIC, and certain security holders of Legacy MIC 8-K 10.2 December 14, 2022 001-40415 10.43 Second Amended and Restated Sponsor Agreement, dated as of June 15, 2023, by and among FWAC, Legacy MIC, Sponsor, and certain holders of FWAC Class B Shares 424B3 F July 11, 2023 333-269231 10.44 Letter Agreement, dated as of August 25, 2023, by and among FWAC, Sponsor, and Legacy MIC 8-K 10.46 August 31, 2023 001-40415 10.45 Form of Preferred Subscription Agreement 424B3 K July 11, 2023 333-269231 10.46 Support Agreement, dated as of December 13, 2022, by and between FWAC and Color Up, LLC 8-K 10.5 December 14, 2022 001-40415 10.47 Amended and Restated Support Agreement, dated as of March 23, 2023, by and between FWAC and HSCP Strategic III, L.P 8-K 10.1 March 23, 2023 001-40415 10.48 Limited Liability Company Agreement of Mobile Infra Operating Company, LLC 8-K 10.50 August 31, 2023 001-40415 10.49 Form of Indemnification Agreement of MIC S-4/A 10.60 April 11, 2023 333-269231 21.1 List of subsidiaries of MIC 8-K 21.1 August 31, 2023 001-40415 23.1* Consent of Deloitte & Touche LLP, independent registered public accounting firm of MIC 31.1* Certification of Principal Executive Officer Required Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended 31.2* Certification of Principal Financial Officer Required Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended 32* Certification of Chief Executive Officer and Chief Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. §1350 97.1* Policy for the Recovery of Erroneously Awarded Compensation 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Linkbase Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document101.DEF* 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed concurrently herewith. ** Management compensatory agreement # Indicates a management or compensatory plan † Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon request. ITEM 16. Form 10-K Summary None. 40 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Mobile Infrastructure Corporation By: /s/ Manuel Chavez Manuel Chavez Chief Executive Officer Date: March 22, 2024 By: /s/ Stephanie Hogue Stephanie Hogue President and Chief Financial Officer Date: March 22, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Capacity Date /s/ Manuel Chavez Chief Executive Officer and Director March 22, 2024 Manuel Chavez (Principal Executive Officer) /s/ Stephanie Hogue President and Chief Financial Officer March 22, 2024 Stephanie Hogue (Principal Financial Officer and Principal Accounting Officer) /s/ David Garfinkle Director March 22, 2024 David Garfinkle /s/ Brad Greiwe Director March 22, 2024 Brad Greiwe /s/ Danica Holley Director March 22, 2024 Danica Holley /s/ Damon Jones Director March 22, 2024 Damon Jones /s/ Jeffrey B. Osher Director March 22, 2024 Jeffrey B. Osher 41 Table of Contents INDEX TO FINANCIAL STATEMENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID No. 34 ) F-2 FINANCIAL STATEMENTS Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Changes in Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to the Consolidated Financial Statements F-7 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Mobile Infrastructure Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Mobile Infrastructure Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Cincinnati, OH March 22, 2024 We have served as the Company's auditor since 2021. F-2 Table of Contents MOBILE INFRASTRUCTURE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) As of December 31, 2023 2022 ASSETS Investments in real estate Land and improvements $ 161,291 $ 166,225 Buildings and improvements 260,966 272,605 Construction in progress 273 1,206 Intangible assets 10,187 10,106 432,717 450,142 Accumulated depreciation and amortization ( 29,838 ) ( 31,052 ) Total investments in real estate, net 402,879 419,090 Cash 11,134 5,758 Cash – restricted 5,577 5,216 Accounts receivable, net 2,269 1,849 Other assets, net 1,378 1,262 Deferred offering costs — 2,086 Assets held for sale — 696 Due from related parties — 156 Total assets $ 423,237 $ 436,113 LIABILITIES AND EQUITY Liabilities Notes payable, net $ 134,380 $ 146,948 Revolving credit facility, net 58,523 72,731 Accounts payable and accrued expenses 14,666 19,484 Accrued preferred distributions 10,464 8,504 Earn-out Liability 1,779 — Due to related parties 470 470 Liabilities held for sale — 968 Total liabilities 220,282 249,105 Equity Mobile Infrastructure Corporation Stockholders’ Equity Preferred stock Series A, $ 0.0001 par value, 50,000 shares authorized, 2,812 and 2,862 shares issued and outstanding, with a stated liquidation value of $ 2,812,000 and $ 2,862,000 as of December 31, 2023 and December 31, 2022, respectively — — Preferred stock Series 1, $ 0.0001 par value, 97,000 shares authorized, 36,677 and 39,811 shares issued and outstanding, with a stated liquidation value of $ 36,677,000 and $ 39,811,000 as of December 31, 2023 and December 31, 2022, respectively — — Preferred stock Series 2, $ 0.0001 par value, 60,000 shares authorized, 46,000 shares issued and converted, with a stated liquidation value of zero as of December 31, 2023 and December 31, 2022 — — Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 27,858,539 and 13,089,848 shares issued and outstanding as of December 31, 2023 and December 31, 2022 respectively 2 — Warrants issued and outstanding – 2,553,192 warrants as of December 31, 2023 and December 31, 2022 3,319 3,319 Additional paid-in capital 240,357 193,176 Accumulated deficit ( 134,291 ) ( 109,168 ) Total Mobile Infrastructure Corporation Stockholders’ Equity 109,387 87,327 Non-controlling interest 93,568 99,681 Total equity 202,955 187,008 Total liabilities and equity $ 423,237 $ 436,113 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents MOBILE INFRASTRUCTURE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) For the Years Ended December 31, 2023 2022 Revenues Base rental income $ 8,165 $ 8,345 Management income — 427 Percentage rental income 22,107 20,329 Total revenues 30,272 29,101 Operating Expenses Property taxes 7,178 6,885 Property operating expense 1,985 2,947 Depreciation and amortization 8,512 8,248 General and administrative 13,160 8,535 Preferred Series 2 - issuance expense 16,101 — Professional fees 1,724 2,690 Organizational, offering and other costs 2,862 5,592 Impairment 8,982 — Total operating expenses 60,504 34,897 Other Interest expense, net ( 13,910 ) ( 12,912 ) Gain (loss) on sale of real estate 660 ( 52 ) Other income, net 1,179 106 Change in fair value of Earn-out Liability 4,065 — PPP loan forgiveness — 328 Total other, net ( 8,006 ) ( 12,530 ) Net loss ( 38,238 ) ( 18,326 ) Net loss attributable to non-controlling interest ( 13,115 ) ( 10,207 ) Net loss attributable to stockholders $ ( 25,123 ) $ ( 8,119 ) Preferred stock distributions declared - Series A ( 197 ) ( 216 ) Preferred stock distributions declared - Series 1 ( 2,555 ) ( 2,784 ) Preferred stock distributions declared - Series 2 ( 4,600 ) — Net loss attributable to common stockholders $ ( 32,475 ) $ ( 11,119 ) Basic and diluted loss per weighted average common share: Net loss per share attributable to stockholders - basic and diluted $ ( 2.45 ) $ ( 0.85 ) Weighted average common shares outstanding, basic and diluted 13,244,388 13,089,848 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents MOBILE INFRASTRUCTURE CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In thousands) Preferred stock Common stock Additional Non- Number of Number of Paid-in Accumulated controlling Shares Par Value Shares Par Value Warrants Capital Deficit interest Total Balance, December 31, 2021 (as previously reported) 42,673 $ — 7,762,375 $ — $ 3,319 $ 196,176 $ ( 101,049 ) $ 107,378 $ 205,824 Retroactive application of the recapitalization 5,327,473 Balance, December 31, 2021 (as adjusted) 42,673 $ — 13,089,848 $ — $ 3,319 $ 196,176 $ ( 101,049 ) $ 107,378 $ 205,824 Equity-based compensation — — — — — — — 2,510 2,510 Declared distributions – Series A ($ 75.00 per share) — — — — — ( 216 ) — — ( 216 ) Declared distributions – Series 1 ($ 70.00 per share) — — — — — ( 2,784 ) — — ( 2,784 ) Net loss — — — — — — ( 8,119 ) ( 10,207 ) ( 18,326 ) Balance, December 31, 2022 42,673 $ — 13,089,848 $ — $ 3,319 $ 193,176 $ ( 109,168 ) $ 99,681 $ 187,008 Equity based payments — — — — — 19 — 7,465 7,484 Distributions to non-controlling interest holders — — — — — — — ( 463 ) ( 463 ) Declared distributions – Series A ($ 75.00 per share) — — — — — ( 197 ) — — ( 197 ) Declared distributions – Series 1 ($ 70.00 per share) — — — — — ( 2,555 ) — — ( 2,555 ) Declared distributions – Series 2 ($ 0.10 ) per share) — — — — — ( 4,600 ) — — ( 4,600 ) Conversions - Series 1 ( 3,134 ) — 967,346 — — 778 — — 778 Conversions - Series A ( 50 ) — 13,883 — — 13 — — 13 Conversions - Series 2 ( 46,000 ) — 13,787,462 2 — — — — 2 Reverse Recapitalization, net of issuance costs 46,000 — — — — 53,723 — — 53,723 Net income (loss) — — — — — — ( 25,123 ) ( 13,115 ) ( 38,238 ) Balance, December 31, 2023 39,489 $ — 27,858,539 $ 2 $ 3,319 $ 240,357 $ ( 134,291 ) $ 93,568 $ 202,955 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents MOBILE INFRASTRUCTURE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Years Ended December 31 2023 2022 Cash flows from operating activities: Net Loss $ ( 38,238 ) $ ( 18,326 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization expense 8,512 8,248 Amortization of loan costs 1,236 1,733 Loss on extinguishment of debt 105 — Gain on settlement of indemnification liability ( 1,155 ) — PPP loan forgiveness — ( 328 ) Loss on interest rate cap 151 — (Gain)/Loss on sale of real estate ( 660 ) 52 Equity based payment 7,484 2,510 Impairment 8,982 — Issuance of Preferred Series 2 Stock 16,101 — Change in fair value of Earn-out liability ( 4,065 ) — Changes in operating assets and liabilities Due to and from related parties 156 470 Accounts payable and accrued expenses 2,687 7,100 Deferred offering costs ( 3,022 ) ( 2,086 ) Other assets, net ( 101 ) ( 267 ) Deferred revenue 122 221 Accounts receivable ( 420 ) 2,182 Net cash provided by (used in) operating activities ( 2,125 ) 1,509 Cash flows from investing activities: Capital expenditures ( 1,821 ) ( 2,408 ) Capitalized technology — ( 171 ) Purchase of investment in real estate — ( 17,513 ) Proceeds from sale of investment in real estate 1,475 650 Net cash (used in) investing activities ( 346 ) ( 19,442 ) Cash flows from financing activities Proceeds from line of credit — 73,700 Payments on notes payable ( 14,085 ) ( 58,755 ) Payments on line of credit ( 15,000 ) — Proceeds from reverse recap, net of payment of equity issuance costs 38,866 — Payment of transaction costs for reverse recapitalization ( 905 ) — Payment on interest rate cap ( 205 ) — Distributions to non-controlling interest holders ( 463 ) — Loan fees — ( 2,734 ) Net cash provided by financing activities 8,208 12,211 Net change in cash, cash equivalents and restricted cash 5,737 ( 5,722 ) Cash, cash equivalents and restricted cash, beginning of period 10,974 16,696 Cash, cash equivalents and restricted cash, end of period $ 16,711 $ 10,974 Reconciliation of Cash, Cash Equivalents and Restricted Cash: Cash, cash equivalents at beginning of period 5,758 11,805 Restricted cash at beginning of period 5,216 4,891 Cash, cash equivalents and restricted at beginning of period $ 10,974 $ 16,696 Cash and cash equivalents at end of period 11,134 5,758 Restricted cash at end of period 5,577 5,216 Cash, cash equivalents and restricted at end of period $ 16,711 $ 10,974 Supplemental disclosures of cash flow information: Interest Paid $ 12,740 $ 10,613 Non-cash investing and financing activities: Dividends declared not yet paid $ 2,752 $ 3,000 Distributions paid in common stock $ 791 $ — Distributions paid-in-kind - Series 2 $ 4,600 $ — Accrued capital expenditures $ 647 $ 1,371 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents MOBILE INFRASTRUCTURE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 Note A — Organization and Business Operations Mobile Infrastructure Corporation (formerly known as Fifth Wall Acquisition Corp. III or “FWAC”) is a Maryland corporation. We focus on acquiring, owning and leasing parking facilities and related infrastructure, including parking lots, parking garages and other parking structures throughout the United States. We target both parking garage and surface lot properties primarily in the top 50 U.S. Metropolitan Statistical Areas, with proximity to key demand drivers, such as commerce, events and venues, government and institutions, hospitality and multifamily central business districts. As of December 31, 2023, we own 43 parking facilities in 21 separate markets throughout the United States, with a total of approximately 15,700 parking spaces and approximately 5.4 million square feet. We also own approximately 0.2 million square feet of retail/commercial space adjacent to its parking facilities. FWAC was a blank check, Cayman Islands exempted company, incorporated on February 19, 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more business entities. On August 25, 2023 ( the “Closing Date”), we consummated the transactions contemplated by the Agreement and Plan of Merger (the “Merger”), as amended by the First Amendment to the Agreement and Plan of Merger, by and among FWAC, Queen Merger Corp. I, a Maryland corporation and wholly-owned subsidiary of FWAC, and Legacy MIC. As part of the Merger, FWAC was converted to a Maryland corporation and changed its name to Mobile Infrastructure Corporation. Unless otherwise indicated, references in this Annual Report on Form 10 -K to “MIC,” “we,” “us,” “our,” and the “Company” refer to Mobile Infrastructure Corporation and its consolidated subsidiaries prior to the closing of the Merger and to Mobile Infrastructure Corporation (f/k/a Fifth Wall Acquisition Corp. III) and its consolidated subsidiaries following the closing of the Merger, as the context requires. References in this Annual Report on Form 10 -K to “Legacy MIC” refer to Mobile Infrastructure Corporation and its consolidated subsidiaries prior to the closing of the Merger. References in this Annual Report on Form 10 -K to “FWAC” refer to Fifth Wall Acquisition Corp. III. In connection with the Merger, Mobile Infra Operating Partnership, L.P., a Maryland limited partnership (the “Operating Partnership”), converted from a Maryland limited partnership to a Delaware limited liability company, Mobile Infra Operating Company, LLC (following the conversion, the “Operating Company”). In connection with the conversion, each outstanding unit of partnership interest of the Operating Partnership was converted automatically, on a one -for- one basis, into an equal number of identical membership units of the Operating Company. The Company is a member of the Operating Company and owns substantially all of its assets and conducts substantially all of its operations through the Operating Company. The Operating Company is managed by a board of directors, one appointed by the Company and one appointed by the other members of the Operating Company. Currently, the two directors of the Operating Company are Manuel Chavez, III, our Chief Executive Officer and a director, and Stephanie Hogue, our President, Chief Financial Officer and a director. The Company owns approximately 51.0 % of the Common Units of the Operating Company. Color Up, LLC, a Delaware limited liability company (“Color Up”) and HSCP Strategic III, LP, a Delaware limited partnership ( “HS3” ), are also members of the Operating Company and own approximately 39.5 % and 9.5 %, respectively, of the outstanding Common Units. Color Up is our largest stockholder and is controlled by Mr. Chavez, Ms. Hogue and, Jeffrey Osher, a director of the Company. HS3 is controlled by Mr. Osher. The Company is publicly traded on the NYSE American under the ticker “BEEP.” As a result of the Merger: ● Each then issued and outstanding Class A Share and Class B Share of FWAC was converted, on a one -for- one basis, into one share of the Company's common stock; ● Each then issued and outstanding share of Legacy MIC common stock was converted into 1.5 shares of the Company's common stock; ● Each share of Legacy MIC Series 1 Convertible Redeemable Preferred Stock (“Legacy MIC Series 1 Preferred Stock”) and Legacy MIC Series A Convertible Redeemable Preferred Stock (“Legacy MIC Series A Preferred Stock”) issued and outstanding was converted into one share of Series 1 Convertible Redeemable Preferred Stock (the “Series 1 Preferred Stock”) and Series A Convertible Redeemable Preferred Stock (“Series A Preferred Stock”) of the Company, as applicable; and ● The outstanding common stock warrant of Legacy MIC to purchase 1,702,128 shares of Legacy MIC common stock at an exercise price of $ 11.75 per share became a warrant to purchase 2,553,192 shares of common stock of the Company at an exercise price of $ 7.83 per share. Additionally, on June 15, 2023, HS3, Harvest Small Cap Partners, L.P. and Harvest Small Cap Partners Master, Ltd., entities controlled by Mr. Osher, and Bombe-MIC Pref, LLC, an entity controlled by Mr. Chavez and of which Ms. Hogue is a member, (collectively, the “Preferred PIPE Investors”), each entered into a Preferred Subscription Agreement with FWAC pursuant to which, among other things, the Preferred PIPE Investors agreed to subscribe for and purchase, and FWAC agreed to issue and sell to the Preferred PIPE Investors, a total of 46,000 shares of Series 2 Convertible Preferred Stock of the Company, par value $ 0.0001 per share (the “Series 2 Preferred Stock”), at $ 1,000 per share for an aggregate purchase price of $ 46 million (the “Preferred PIPE Financing”). Pursuant to the terms and conditions of the Preferred Subscription Agreement, on December 31, 2023, the Series 2 Preferred Stock converted into 13,787,462 shares of our common stock, inclusive of 1,253,404 shares of our common stock issued as dividends to the Preferred PIPE Investors. On May 27, 2022, the Company entered into an Agreement and Plan of Merger (the “MIT Merger Agreement”) by and between the Company and Mobile Infrastructure Trust, a Maryland real estate investment trust (“MIT”), which is 100% owned by Bombe Asset Management LLC (“Bombe”), an Ohio limited liability company owned by Mr. Chavez and Ms. Hogue. Pursuant to the terms of the MIT Merger Agreement, the Company would merge with and into MIT, with MIT continuing as the surviving entity resulting from the transaction. Prior to and as a condition to the merger with MIT, MIT expected to undertake an initial public offering (the “MIT IPO”) of its common shares of beneficial interest. Also, in March 2022, the Company had entered into an agreement with MIT, requiring the Company to be allocated, bear and (where practicable) pay directly certain costs and expenses related to the merger with MIT and the MIT IPO. In connection with the execution of the Merger Agreement with FWAC, the MIT Merger Agreement and the cost allocation agreement with MIT were terminated. F- 7 Table of Contents During the year ended December 31, 2022, the Company incurred costs of approximately $ 4.6 million pursuant to the cost allocation agreement with MIT. Such amounts are included in organizational, offering and other costs on the Consolidated Statements of Operations. Accounting Treatment of the Merger and Retroactive Equity Application Legacy MIC determined that it was the accounting acquirer in the Merger based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations. The Merger was accounted for as a reverse recapitalization, in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The identification of Legacy MIC as the accounting acquirer was based primarily on evaluation of the following facts and circumstances: ● The business affairs of the Company are controlled by the Board consisting of eight individuals, seven of whom were board members of Legacy MIC and one designated by FWAC (the Board has subsequently reduced to seven individuals); ● The management of the Company is led by Legacy MIC’s Chief Executive Officer, Manuel Chavez, III, and President and Chief Financial Officer, Stephanie Hogue; and ● Legacy MIC was significantly larger than FWAC in terms of revenue, total assets (excluding cash) and employees. Under this method of accounting, FWAC was treated as the acquired company for financial reporting purposes. Accordingly, the Merger was treated as the equivalent of Legacy MIC issuing stock for the net assets of FWAC, accompanied by a recapitalization. The net assets of FWAC were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger are those of Legacy MIC. In accordance with guidance applicable to these circumstances, the equity structure has been retroactively recast in all comparative periods up to the Closing Date, to reflect the equivalent number of shares of our common stock based on the exchange ratio of 1.5 established in the Merger. Note B — Summary of Significant Accounting Policies Basis of Accounting Our consolidated financial statements are prepared on the accrual basis of accounting and in accordance with principles generally accepted in the United States of America (“GAAP”) for financial information as contained in the Financial Accounting Standards Board (“FASB”) ASC, and in conjunction with rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included. Certain prior period amounts have been reclassified to conform to the current period presentation. There was no impact to our financial position as a result of any reclassification. Going Concern Going Concern—The accompanying consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The going concern basis assumes that the Company will be able to meet its obligations and continue its operations one year from the date of the issuance of the Annual Report, which is dependent upon the Company’s ability to effectively implement plans related to the secured debt that matures within one year after the date of the issuance of the Annual Report. The Company has incurred net losses since its inception and anticipates net losses for the near future. As of December 31, 2023, the Company has $ 96.3 million of debt due within twelve months. In February 2024, the Company refinanced $ 5.5 million of notes payable maturing in March 2024 with a new maturity date of March 1, 2029. After the completion of these refinancing transactions, the Company has $ 90.8 million of debt maturing within twelve months of the date of the issuance of the Annual Report which is comprised of $ 58.7 million related to the Revolving Credit Facility and $ 32.1 million of notes payable. The Company is currently analyzing financial and strategic alternatives in order to satisfy these debt maturities. While there can be no assurance that the Company will satisfy the debt prior to or at maturity, management has determined it is probable that it will be able to address these maturities by (i) refinancing the Revolving Credit facility or executing extension options through June 2025 made available under the Third Amendment to the Credit Agreement effective March 1, 2024 and (ii) refinancing the notes payable and/or selling the real estate investments and utilizing the sales proceeds to satisfy the related notes payable. As such the Company has concluded that these plans alleviate substantial doubt about the Company’s ability to continue as a going concern. Consolidation The consolidated financial statements include the accounts of the Company, the Operating Company, each of their wholly owned subsidiaries, and all other entities in which we have a controlling financial interest. For entities that meet the definition of a variable interest entity (“VIE”), we consolidate those entities when we are the primary beneficiary of the entity. We are determined to be the primary beneficiary when we possess both the power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We continually evaluate whether we qualify as the primary beneficiary and reconsider our determination of whether an entity is a VIE upon reconsideration events. All intercompany activity is eliminated in consolidation. Noncontrolling interests on our Consolidated Balance Sheets represent the portion of equity that we do not own in the entities we consolidate. Net income or loss attributable to non-controlling interest in our Consolidated Statements of Operations represents our partners’ share of net income or loss that is generally allocated on a pro-rata basis based on ownership percentage. F- 8 Table of Contents Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding stock issuance, equity compensation, asset impairment, and purchase price allocations to record investments in real estate, as applicable. Concentration We had fourteen and fifteen parking operators during the years ended December 31, 2023 and 2022, respectively. One tenant/operator, SP + Corporation (Nasdaq: SP) (“SP+”), represented 61.3 % and 60.5 % of our revenue, excluding commercial revenue, for the years ended December 31, 2023 and 2022, respectively. Premier Parking Service, LLC represented 12.1 % and 12.4 % of our revenue, excluding commercial revenue, for the years ended December 31, 2023 and 2022, respectively. In addition, we had concentrations in Cincinnati ( 19.4 % and 19.2 %), Detroit ( 10.3 % and 12.5 %), and Chicago ( 9.1 % and 8.7 %) based on gross book value of real estate as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, 60.1 % and 59.2 % of our outstanding accounts receivable balance, respectively, was with SP+. Acquisitions All assets acquired and liabilities assumed in an acquisition of real estate accounted for as a business combination are measured at their acquisition date fair values. For acquisitions of real estate accounted for as an asset acquisition, the fair value of consideration transferred by us (including transaction costs) is allocated to all assets acquired and liabilities assumed on a relative fair value basis. In making estimates of fair values for purposes of allocating purchase price, we will utilize several sources, including independent third -party valuations that may be obtained in connection with the acquisition or financing of the respective property and other market data. We will also consider information obtained about each property as a result of our pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed. We allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their relative fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. We utilize various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on valuations performed by independent third parties or on our analysis of comparable properties in our portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable. The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. In our analysis of the in-place lease intangibles, we consider multiple factors, including an estimate of carrying costs during the expected lease-up period for each property, current market conditions and costs to execute similar leases. In estimating carrying costs, we will include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period. Estimates of costs to execute similar leases including leasing commissions, legal and other related expenses are also utilized. The value of lease intangibles is amortized to Depreciation and Amortization in our Consolidated Statements of Operations over the remaining term of the respective lease. If a tenant terminates its lease with us, the unamortized portion of any lease intangible is recognized over the shortened lease term. Impairment of Long-Lived Assets On a quarterly basis, we employ a multi-step approach to assess our real estate assets for possible impairment and record any impairment charges identified. The first step is the identification of potential triggering events, such as declines in net operating income (“NOI”) and performance compared to internal forecasts. If the results of this first step indicate a triggering event for a property, we proceed to the second step, utilizing an undiscounted cash flow model to identify potential impairment. If the undiscounted cash flows are less than the net book value of the property as of the balance sheet date, we record an impairment charge based on the fair value determined in the third step. In performing the third step, we utilize market data such as sales price per stall on comparable recent real estate transactions to estimate the fair value of the real estate assets. We also utilize expected net sales proceeds to estimate the fair value of any centers that are actively being marketed for sale. See Note O for additional discussion regarding impairment of long-lived assets. At least annually, we review indefinite-lived intangible assets for indicators of impairment. We first evaluate qualitative factors to determine if it is more likely than not that the carrying value of an indefinite-lived intangible asset exceeds its estimated fair value. Such qualitative factors include the impact of macroeconomic conditions, changes in the industry or market, cost factors, and financial performance. If we then conclude that impairment exists, we will recognize a charge to earnings representing the difference between the carrying amount and the estimated fair value of the indefinite-lived intangible asset. Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value and may consist of investments in money market accounts and money market funds. Balances of cash and cash equivalents held at financial institutions may, at times, be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. We mitigate credit risk by placing cash and cash equivalents with major financial institutions. F- 9 Table of Contents Restricted cash primarily consists of escrowed tenant improvement funds, real estate taxes, capital improvement funds, insurance premiums and other amounts required to be escrowed pursuant to loan agreements. Leases The majority of our revenue is rental income derived from leases of our real estate assets. We account for our leases in accordance with ASC Topic 842, Leases (“ASC 842” ). The majority of our leases are structured such that tenants pay base rent and percentage rent in an amount equal to a designated percentage of the amount by which gross revenues at the property during any lease year exceed a negotiated base amount; tenants are also financially responsible for all, or substantially all, property-level operating and maintenance expenses, subject to certain exceptions. We negotiate base rent, percentage rent and the base amount used in the calculation of percentage rent with the applicable tenant based on economic factors applicable to the particular parking facility and geographic market. In general, we expect that the rent received from tenants will constitute the majority of the gross receipts generated at such parking facility above the applicable negotiated threshold. A lease is determined to be an operating, sales-type, or direct financing lease using the criteria established in ASC 842. Leases will be considered either sales-type or direct financing leases if any of the following criteria are met: • if the lease transfers ownership of the underlying asset to the lessee by the end of the term; • if the lease grants the lessee an option to purchase the underlying asset that is reasonably certain to be exercised; • if the lease term is for the major part of the remaining economic life of the underlying asset; or • if the present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset. If none of the criteria listed above are met, the lease is classified as an operating lease. Currently, all of our leases are classified as operating leases. Certain of our lease agreements provide for tenant reimbursements of property taxes and other operating expenses that are variable depending upon the applicable expenses incurred. These reimbursements are accrued as Base Rental Income in our Consolidated Statements of Operations in the period in which the applicable expenses are incurred. Certain assumptions and judgments are made in estimating the reimbursements at the end of each reporting period. We do not expect the actual results to materially differ from the estimated reimbursements. Lease receivables are reviewed each reporting period to determine whether or not it is probable that we will realize substantially all lease payments from our tenants. If we determine it is not probable that we will collect substantially all of the remaining lease payments from a tenant, revenue for that tenant is recorded on a cash basis. Future rental income for that tenant will then be recognized on a cash basis, including any amounts relating to tenant reimbursement of expenses and receivables related to straight-line rent. We will resume recording lease income on an accrual basis for cash-basis tenants once we believe the collection of rent for the remaining lease term is probable, which will generally be after a period of regular payments. Under ASC 842, the aforementioned adjustments as well as any reserve for disputed charges are recorded as a reduction of Base Rental Income on the Consolidated Statements of Operations. Additionally, we may record a general reserve based on a review of operating lease receivables at a company level to ensure they are properly valued based on analysis of historical bad debt, outstanding balances, and the current economic climate. Receivables on our Consolidated Balance Sheets exclude amounts removed related to tenants considered to be non-creditworthy, which were not material as of December 31, 2023 and 2022. Investments in Real Estate Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation is recognized on a straight-line method over the estimated useful lives of each asset type. We periodically assess the reasonableness of useful lives which generally have the following lives, by asset class: up to 40 years for buildings, 15 years for land improvements, five years for fixtures and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests, generally one to 20 years. Stock-Based Compensation Stock-based compensation for equity awards is based on the grant date fair value of the equity awards and is recognized as General and Administrative in our Consolidated Statements of Operations over the requisite service or performance period. Forfeitures are recognized as incurred. Certain equity awards are subject to vesting based upon the satisfaction of various service, market, or performance conditions. Fair value for our performance-based awards is calculated using the Monte Carlo method, which is intended to estimate the fair value of the awards using dividend yields, expected volatilities that are primarily based on available implied data and peer group companies’ historical data, and post-vesting restriction periods. F- 10 Table of Contents Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Valuation allowances are established when management determines that it is more likely than not that all or some portion of the deferred tax asset will not be realized. A full valuation allowance has been recorded for deferred tax assets due to our history of taxable losses. We use a two -step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon ultimate settlement. We believe that our income tax filing positions and deductions would be sustained upon examination; thus, we have not recorded any uncertain tax positions as of December 31, 2023 and 2022 . Reportable Segments Our principal business is the ownership, operation and management of parking facilities at a consolidated level. We do not distinguish our principal business, or group our operations, by geography or size for purposes of measuring performance. Accordingly, we have presented our results as a single reportable segment. Recently Issued Accounting Standards The following table provides a brief description of recent accounting pronouncements that could have a material effect on our consolidated financial statements: Standard Description Planned Date of Adoption Effect on Financial Statements or Other Significant Matters ASU 2023 - 07—Segment Reporting (TOPIC 280 ): Improvements to Reportable Segment Disclosures The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. December 31, 2024 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2023 - 09—Income Taxes (TOPIC 740 ): Improvements to Income Tax Disclosures The amendments require additional categories within the tax rate reconciliation and provide additional information on reconciling items that are 5% or more. December 31, 2024 We are currently evaluating the impact the adoption of this standard will have on our disclosures. Note C – Reverse Recapitalization As described in Note A, the Merger closed on August 25, 2023. In connection with the Merger: ● holders of an aggregate of 27,080,715 FWAC Class A Shares, representing 95.3 % of FWAC’s Class A Shares, exercised their right to redeem their shares for cash for an aggregate redemption amount of $279,018,123; ● Fifth Wall Acquisition Sponsor III LLC, a Cayman Islands limited liability company (the “Sponsor”), forfeited 4,855,000 FWAC Class B Shares held by the Sponsor immediately prior to the Closing for no consideration; ● 46,000 shares of Series 2 Preferred Stock were issued in connection with the Preferred PIPE Financing at a purchase price of $ 1,000 per share for an aggregate purchase price of $46,000,000; ● each then issued and outstanding Class A Share and Class B Share of FWAC was converted, on a one -for- one basis, into one share of the Company’s common stock; ● each then issued and outstanding share of Legacy MIC common stock was converted into 1.5 shares of the Company’s common stock; ● each share of Legacy MIC Series 1 Preferred Stock and Legacy MIC Series A Preferred Stock issued and outstanding was converted into one share of Series 1 Preferred Stock and Series A Preferred Stock, as applicable; ● the outstanding common stock warrant of Legacy MIC to purchase shares of Legacy MIC common stock at an exercise price of $ 11.75 per share became a warrant to purchase 2,553,192 shares of common stock of the Company at an exercise price of $ 7.83 per share; and ● in connection with the conversion of the Operating Partnership into the Operating Company, each outstanding unit of partnership interest of the Operating Partnership converted automatically, on a one -for- one basis, into an equal number of identical membership units of the Operating Company. F- 11 Table of Contents Following the completion of the Merger, the Company had the following outstanding securities: ● 13,089,848 shares of the Company’s common stock; ● 39,811 shares of Series 1 Preferred Stock; ● 2,862 shares of Series A Preferred Stock; ● 46,000 shares of Series 2 Preferred Stock; and ● a warrant to purchase 2,553,192 shares of the Company’s common stock at an exercise price of $ 7.83 per share. Following the completion of the Merger and after giving effect to the cashless conversion of 638,298 Class A Units into 156,138 Common Units by HS3 on August 29, 2023, the Operating Company had the following outstanding securities ● 27,041,813 Common Units outstanding, 13,089,848 of which are owned by the Company, representing approximately 48.4 % of the outstanding Common Units; ● 2,250,000 Performance Units; and ● 660,329 LTIP Units. The following table reconciles the elements of the Merger to the consolidated statements of cash flows and the consolidated statement of changes in stockholder's equity/(deficit) for the twelve months ended December 31, 2023 (in thousands): Fair value of Series 2 Preferred Stock $ 66,700 Common stock issued in exchange for FWAC Class A and B 4,552 Less: Fair value of Earn-Out Shares issued (5,844 ) Less: Equity-allocated offering costs (11,685 ) Impact to Addition-Paid in Capital 53,723 Less: Non-cash Preferred Series 2 issuance expense (16,101 ) Earn-Out liability recognized 5,844 Less: Series 2 Preferred Stock dividend paid-in-kind recognized (4,600 ) Net cash proceeds $ 38,866 1,900,000 FWAC Class B Shares that converted to the Company’s common stock are subject to an earn-out structure (the “Earn-Out Shares”) under terms outlined in the Second Amended and Restated Sponsor Agreement. The Earn-Out Shares vest if certain milestones related to share price are achieved as further described in Footnote I. Because the shares have voting rights but have contingent vesting conditions, we have included the shares as issued but not outstanding on the face of the Consolidated Balance Sheets. The estimated fair value of the Earn-Out Shares was recorded as approximately $ 5.8 million as of the Closing Date and is presented as earnout liability on the Consolidated Balance Sheets. We will estimate the fair value of this liability at each reporting date during the contingency period and record any changes to our Consolidated Statement of Operations. See Footnote O for additional fair value discussion. We allocated $ 0.9 million of offering costs to the Earn-Out Shares, which was recorded as part of Organization, Offering, and Other Costs on the Consolidated Statements of Operations. As part of accounting for the reverse recapitalization, we evaluated the Series 2 Preferred Stock arrangement using the guidance in ASC 820 and 480. We determined the fair value of the Series 2 Preferred Stock, including the dividends to be paid-in-kind, was $ 66.7 million ($ 4.84 per share) at the time of the transaction. We compared the fair value to the implied conversion rate based on a total of 13,787,464 shares of common stock being issued and $ 4.6 million of dividends paid in kind in return for $ 46 million in proceeds. As a result, the excess in fair value was treated as non-cash compensation and was recorded as Preferred Series 2 issuance expense on the Consolidated Statements of Operations. Note D — Acquisitions and Dispositions of Investments in Real Estate 2023 In February 2023, we sold a parking lot located in Wildwood, New Jersey for $ 1.5 million, resulting in a gain on sale of real estate of approximately $ 0.7 million. We received net proceeds of approximately $ 0.3 million after the repayment of the outstanding mortgage loan, interest and transaction costs. In February 2024, we disposed of our Cincinnati Race Street location for $ 3.15 million. As part of the agreement, we entered into a financing arrangement with the buyer. Under the terms of the financing arrangement, the buyer will pay interest of 8 % on a $ 3.15 million dollar note for a term of 24 months, at which time the principal amount of the loan will be due. F- 12 Table of Contents 2022 The following table is a summary of the one parking asset acquisition completed during the year ended December 31, 2022 ( dollars in thousands). Date Property # Size / Commercial Purchase Property Location Acquired Type Spaces Acreage Sq. Ft. Price 222 Sheridan Bricktown Garage LLC Oklahoma City, OK 6/7/2022 Garage 555 0.64 15,628 $ 17,513 The following table is a summary of the allocated acquisition value of the property acquired during the year ended December 31, 2022 ( dollars in thousands). Land and Building and In-Place Lease Total assets Improvements improvements Value acquired 222 Sheridan Bricktown Garage LLC $ 1,314 $ 16,020 $ 179 $ 17,513 In September 2022, we sold a parking lot located in Canton, Ohio for $ 0.7 million, resulting in a loss on sale of real estate of approximately $ 0.1 million. We received net proceeds of approximately $ 0.1 million after the repayment of the outstanding mortgage loan, interest and transaction costs. Note E — Intangible Assets Intangible assets and related accumulated amortization consisted of the following for the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Gross carrying Accumulated Gross carrying Accumulated amount amortization amount amortization Acquired in-place leases $ 2,443 $ 1,845 $ 2,564 $ 1,621 Lease commissions 182 136 165 106 Indefinite lived contract 3,160 — 3,160 — Acquired technology and other 4,402 1,009 4,217 561 Total intangible assets $ 10,187 $ 2,990 $ 10,106 $ 2,288 Amortization of the in-place lease value, lease commissions and acquired technology are included in Depreciation and Amortization in our Consolidated Statements of Operations. Amortization expense associated with intangible assets totaled $0.8 m illion for the years ended December 31, 2023 and 2022 . F- 13 Table of Contents Estimated future amortization of intangible assets as of December 31, 2023 for each of the next five years is as follows (dollars in thousands): Acquired in-place leases Lease commissions Acquired Technology 2024 $ 291 $ 23 $ 481 2025 181 12 481 2026 102 7 481 2027 24 4 452 2028 — — 434 Thereafter — — 1,064 Note F — Notes Payable As of December 31, 2023 and 2022 , the principal balances on notes payable are as follows (dollars in thousands): Original Debt Monthly Balance as Term Interest Loan Loan Amount Payment of 12/31/23 Lender (in Years) Rate Maturity MVP Memphis Poplar (3) $ 1,800 I/O $ 1,800 LoanCore 5 5.38% 3/6/2024 MVP St. Louis (3) $ 3,700 I/O $ 3,700 LoanCore 5 5.38% 3/6/2024 Mabley Place Garage, LLC $ 9,000 $ 44 $ 7,428 Barclays 10 4.25% 12/6/2024 322 Streeter Holdco LLC $ 25,900 $ 130 $ 24,672 American National Insurance Co. 5 * 3.50% 3/1/2025 MVP Houston Saks Garage, LLC $ 3,650 $ 20 $ 2,851 Barclays Bank PLC 10 4.25% 8/6/2025 Minneapolis City Parking, LLC $ 5,250 $ 29 $ 4,223 American National Insurance, of NY 10 4.50% 5/1/2026 MVP Bridgeport Fairfield Garage, LLC $ 4,400 $ 23 $ 3,531 FBL Financial Group, Inc. 10 4.00% 8/1/2026 West 9th Properties II, LLC $ 5,300 $ 30 $ 4,343 American National Insurance Co. 10 4.50% 11/1/2026 MVP Fort Worth Taylor, LLC $ 13,150 $ 73 $ 10,807 American National Insurance, of NY 10 4.50% 12/1/2026 MVP Detroit Center Garage, LLC $ 31,500 $ 194 $ 26,759 Bank of America 10 5.52% 2/1/2027 St. Paul Holiday Garage, LLC (1) $ 4,132 $ 24 $ 3,714 KeyBank 10 * 4.90% 5/1/2027 MVP St. Louis Washington, LLC (1) $ 1,380 $ 8 $ 1,241 KeyBank 10 * 4.90% 5/1/2027 Cleveland Lincoln Garage, LLC (1) $ 3,999 $ 23 $ 3,594 KeyBank 10 * 4.90% 5/1/2027 MVP Denver Sherman, LLC (1) $ 286 $ 2 $ 257 KeyBank 10 * 4.90% 5/1/2027 MVP Milwaukee Arena Lot, LLC (1) $ 2,142 $ 12 $ 1,925 KeyBank 10 * 4.90% 5/1/2027 MVP Denver 1935 Sherman, LLC (1) $ 762 $ 4 $ 684 KeyBank 10 * 4.90% 5/1/2027 MVP Louisville Broadway Station, LLC (2) $ 1,682 I/O $ 1,682 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 MVP Whitefront Garage, LLC (2) $ 6,454 I/O $ 6,454 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 MVP Houston Preston Lot, LLC (2) $ 1,627 I/O $ 1,627 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 MVP Houston San Jacinto Lot, LLC (2) $ 1,820 I/O $ 1,820 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 St. Louis Broadway, LLC (2) $ 1,671 I/O $ 1,671 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 St. Louis Seventh & Cerre, LLC (2) $ 2,057 I/O $ 2,057 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 MVP Indianapolis Meridian Lot, LLC (2) $ 938 I/O $ 938 Cantor Commercial Real Estate 10 ** 5.03% 5/6/2027 St Louis Cardinal Lot DST, LLC $ 6,000 I/O $ 6,000 Cantor Commercial Real Estate 10 5.25% 5/31/2027 MVP Preferred Parking, LLC $ 11,330 $ 66 $ 11,028 Key Bank 10 ** 5.02% 8/1/2027 Less unamortized loan issuance costs $ (426) $ 134,380 ( 1 ) We issued a promissory note to KeyBank for $ 12.7 million secured by the pool of properties. F- 14 Table of Contents ( 2 ) We issued a promissory note to Cantor Commercial Real Estate Lending, L.P. (“CCRE”) for $ 16.25 million secured by the pool of properties. ( 3 ) The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by MVP St. Louis 2013 and MVP Memphis Poplar. * 2 Year Interest Only ** 10 Year Interest Only I/O - Interest Only In September 2023, we paid five notes in full with Vestin Realty Mortgage II, Inc. in the amount of approximately $ 9.9 million. In February 2024, we refinanced the note payable for MVP St. Louis 2013 and MVP Memphis Poplar with a ten year, $ 5.9 million note payable with an interest rate of 7.94 %. Reserve funds are generally required for repairs and replacements, real estate taxes, and insurance premiums. Some notes contain various terms and conditions including debt service coverage ratios and debt yield limits. As of December 31, 2023, borrowers for two of the Company’s loans totaling $ 38.2 million, failed to meet certain loan covenants. As a result, we are subject to additional cash management procedures, which resulted in approximately $ 0.8 million of restricted cash as of December 31, 2023. In order to exit cash management, certain debt service coverage ratios or debt yield tests must be exceeded for two consecutive quarters to return to less restrictive cash management procedures. As of December 31, 2023, future principal payments on notes payable are as follows (dollars in thousands): 2024 $ 10,564 2025 29,166 2026 22,789 2027 67,084 Thereafter 5,603 Total $ 135,206 Note G — Revolving Credit Facility and Interest Rate Cap Revolving Credit Facility In March 2022, we entered into a Credit Agreement (the “Credit Agreement”) with KeyBank Capital Markets, as lead arranger, and KeyBank, National Association, as administrative agent. The Credit Agreement refinanced our then-current loan agreements for certain properties. The Credit Agreement provided for, among other things, a $ 75.0 million revolving credit facility, originally maturing on April 1, 2023 ( the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility bear interest at a Secured Overnight Financing Rate (“SOFR”) benchmark rate or Alternate Base Rate, plus a margin of between 1.75 % and 3.00 %, with respect to SOFR loans, or 0.75 % to 2.00 %, with respect to base rate loans, based on our leverage ratio as calculated under the Credit Agreement. The Credit Agreement is secured by a pool of properties and requires compliance with certain financial covenants. The Credit Agreement also included financial covenants that required us to (i) maintain a total leverage ratio not to exceed 65.0 %, (ii) not to exceed certain fixed charge coverage ratios, and (iii) maintain a certain tangible net worth. During 2022, we drew $ 73.7 million on the Revolving Credit Facility to pay-off certain mortgage loans and fund an acquisition of a single garage. In November 2022, we executed an amendment to the Credit Agreement which extended the maturity of the Revolving Credit Facility to April 1, 2024, amended certain financial covenants through the new term, and added a requirement for us to use diligent efforts to pursue an equity raise or liquidity event by March 31, 2023. On the Closing Date, we entered into a second amendment to the Credit Agreement which reduced the total commitment from $ 75 million to $ 58.7 million, required us to remit $ 15 million of the proceeds from the Preferred PIPE Investment to pay down outstanding borrowings under the Credit Agreement, removed the fixed charge coverage ratio, required a borrowing base interest coverage ratio, required us maintain at least $ 7 million in unencumbered cash and cash equivalents, required contribution of certain real property as collateral, increased the debt pool yield, and established a reserve for certain cash collateral to be used for interest payments. Concurrent with the paydown of $ 15 million, $ 0.1 million of unamortized loan fees were written off to Interest Expense in the Consolidated Statements of Operations. As of December 31, 2023, the balance of unamortized loan fees associated with the Revolving Credit Facility is $ 0.2 million which is being amortized to Interest Expense, Net in the Consolidated Statements of Operations over the remaining term. In March 2024, we executed the Third Amendment to the Credit Agreement, which provided extension options through June 2025 with increased interest rate spreads above SOFR at each extension. We executed one of these options, which extends the maturity through October 2024. Exercising an option following that maturity date would result in an interest rate spread above SOFR of 3.5 %. F- 15 Table of Contents Interest Rate Cap In August 2023, we entered into an interest rate cap agreement with KeyBank with an initial value of approximately $ 0.2 million and a maturity on April 1, 2024. The arrangement was for a notional amount of $ 58.7 million and limited the SOFR to a rate of 4.90 %. Our use of derivative instruments is limited to this interest rate cap to manage interest rate exposure. The principal objective of this arrangement is to minimize the risks and costs associated with our financial structure, which are in part determined by interest rates. We have elected not to use hedge accounting due to the short-term duration of the arrangement and, as such, will reflect changes in fair value of the arrangement within our Consolidated Statements of Operations. The change in the fair value of the interest rate cap from inception through December 31, 2023 was $ 0.2 million and recorded as Other Income, Net on the Statement of Operations. Note H — Leases Lessor All of our leases are classified as operating leases. The following table summarizes the components of operating lease revenue recognized during the years ended December 31, 2023 and 2022 included within the Consolidated Statements of Operations (dollars in thousands): Year Ended December 31, Lease revenue 2023 2022 Fixed contractual payments $ 7,103 $ 7,107 Variable lease payments $ 23,100 $ 21,542 Straight-line rental income $ 70 $ 25 Future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of December 31, 2023 , assuming no new or renegotiated leases or option extensions on lease agreements are executed, are as follows (excluding leases subsequently replaced by asset management contracts, dollars in thousands): Years Ending December 31, Future lease payments due 2024 $ 5,937 2025 $ 5,399 2026 $ 4,568 2027 $ 2,511 2028 $ 1,168 Thereafter $ 1,653 Note I – Equity Prior to the Merger, Legacy MIC had two classes of capital stock outstanding: common stock and preferred stock. Following the Merger, we retain two classes of capital stock authorized for issuance under our Charter: 500,000,000 shares of common stock, par value $ 0.0001 per share, and 100,000,000 shares of preferred stock, par value $ 0.0001 per share, of which 97,000 are designated as shares of Series 1 Preferred Stock, 50,000 are designated as shares of Series A Preferred Stock and 60,000 are designated as shares of Series 2 Preferred Stock. F- 16 Table of Contents By virtue of the consummation of the Merger, the Sponsor owns 1,900,000 Earn-out Shares subject to vesting restrictions and forfeiture under the terms of the Sponsor Agreement, as follows: (a) 950,000 Earnout Shares will vest at such time as the aggregate volume-weighted average price per share of our common stock for any 5 -consecutive trading day period after the Closing Date equals or exceeds $ 13.00 per share (provided that such shares will be cancelled if not vested prior to December 31, 2026) and (b) 950,000 Earn-out Shares will vest at such time as the aggregate volume-weighted average price per share of our common stock for any 5 -consecutive trading day period after the Closing Date equals or exceeds $ 16.00 per share (provided that such shares will be cancelled if they have not vested prior to December 31, 2028). The Earn-out Shares are classified as a liability on the Consolidated Balance Sheet, as certain settlement provisions within the agreement can affect the settlement value of the shares. As described in Note A above, each issued and outstanding share of Legacy MIC Series 1 Preferred Stock and Legacy MIC Series A Preferred Stock converted into the right to receive one share of Series 1 Preferred Stock or one share of Series A Preferred Stock, as applicable, having terms materially the same as the applicable Legacy MIC Preferred Stock, except that the shares of Series 1 Preferred Stock and Series A Preferred Stock will be convertible into shares of our common stock instead of shares of Legacy MIC common stock. Series A Convertible Redeemable Preferred Stock The terms of the Series A Preferred Stock provide that the holders of the Series A Preferred Stock are entitled to receive, when and as authorized by the Board and declared by us out of legally available funds, cumulative cash dividends on each share at an annual rate of 7.50 % of the stated value pari passu with the dividend preference of the Series 1 Preferred Stock and in preference to any payment of any dividend on our common stock until the occurrence of a Listing Event, at which time, the annual dividend rate was reduced to 5.75% on the stated value of the Series A Preferred Stock. The closing of the Merger and the listing of our common stock on the NYSE American constituted a Listing Event under the terms of the Series A Preferred Stock. In March 2020, the Board unanimously authorized the suspension of the payment of distributions on the Series A Preferred Stock; however, such distributions will continue to accrue in accordance with the terms of the Series A Preferred Stock. Since initial issuance, we had declared distributions of approximately $ 1.4 million of which approximately $ 0.6 million had been paid to Series A stockholders. As of December 31, 2023 and 2022, approximat ely $ 0.8 m illion and $ 0.6 million of Series A Preferred Stock distributions that were accrued and unpaid, respectively, are included in Accrued Preferred Distributions on the Consolidated Balance Sheet. Subject to our redemption rights, each share of Series A Preferred Stock is convertible into common stock at the election of the holder thereof by delivery of a written notice, containing the information required by our charter, by a holder of shares of Series A Preferred Stock electing to convert such shares into common stock (the “Series A Preferred Stock Conversion Notice”), containing the information required by the charter, at any time. Subject to our redemption rights, the conversion of Series A Preferred Stock into common stock will occur at the end of the 20th trading day after our receipt of such Series A Preferred Stock Conversion Notice. Each share of Series A Preferred Stock will convert into a number of shares of common stock determined by dividing the sum of (i) 100% of the Series A Preferred Stock stated value, which is $1,000, plus (ii) any accrued but unpaid dividends to, but not including, the date of conversion by the volume weighted average price per share of common stock for the 20 trading days prior to the delivery date of the Series A Preferred Stock Conversion Notice. As of December 31, 2023, approximately 50 shares of Series A Preferred Stock have been converted to approximately 14,000 shares of common stock. Series 1 Convertible Redeemable Preferred Stock The terms of the Series 1 Preferred Stock provide that the holders of the Series 1 Preferred Stock are entitled to receive, when and as authorized by the Board and declared by us out of legally available funds, cumulative cash dividends on each share at an annual rate of 7.00 % of the stated value pari passu with the dividend preference of the Series A Preferred Stock and in preference to any payment of any dividend on our common stock until the occurrence of a Listing Event, at which time, the annual dividend rate was reduced to 5.50 % on the stated value of the Series 1 Preferred Stock. The closing of the Merger and the listing of our common stock on the NYSE American constituted a Listing Event under the terms of the Series 1 Preferred Stock. On March 24, 2020, the Board unanimously authorized the suspension of the payment of distributions on the Series 1 Preferred Stock, however, such distributions will continue to accrue in accordance with the terms of the Series 1 Preferred Stock. Since initial issuance, the Company had declared distributions of approximately $ 16.1 million of which approximately $ 6.4 million had been paid to Series 1 Preferred Stock stockholders. As of December 31, 2023 and 2022, approximately $ 9.7 m illion and $ 7.9 million of Series 1 Preferred Stock distributions that were accrued and unpaid, respectively, are included in Accrued Preferred Distributions on the consolidated balance sheet. Subject to our redemption rights, each share of Series 1 Preferred Stock is convertible into common stock at the election of the holder thereof by delivery of a written notice, containing the information required by our charter, by a holder of shares of Series 1 Preferred Stock electing to convert such shares into common stock (the “Series 1 Preferred Stock Conversion Notice”), containing the information required by the charter, at any time. Subject to our redemption rights, the conversion of Series 1 Preferred Stock into common stock will occur at the end of the 20th trading day after our receipt of such Series 1 Preferred Stock Conversion Notice. Each share of Series 1 Preferred Stock will convert into a number of shares of common stock determined by dividing the sum of (i) 100% of the Series 1 Preferred Stock stated value, which is $1,000, plus (ii) any accrued but unpaid dividends to, but not including, the date of conversion by the volume weighted average price per share of common stock for the 20 trading days prior to the delivery date of the Series 1 Preferred Stock Conversion Notice. As of December 31, 2023, approximately 3,100 shares of Series 1 Preferred Stock have been converted to approximately 1.0 million shares of common stock. Series 2 Convertible Preferred Stock On June 15, 2023, the Preferred PIPE Investors each entered into a Preferred Subscription Agreement with FWAC pursuant to which, among other things, the Preferred PIPE Investors agreed to subscribe for and purchase, and FWAC agreed to issue and sell to the Preferred PIPE Investors, a total of 46,000 shares of Series 2 Preferred Stock at $ 1,000 per share for an aggregate purchase price of $ 46,000,000 , on the terms and subject to the conditions set forth therein. The Series 2 Preferred Stock was entitled to receive dividends at a cumulative annual rate of 10 % during the period between the initial issuance of such shares and the conversion thereof into shares of our common stock; provided that if the date of distribution occurs prior to the first anniversary of the original date of issuance of such share, the holder of such share of Series 2 Preferred Stock shall receive dividends at a cumulative annual rate of 10 % of the $ 1,000.00 per share liquidation preference for a period of one year, and will be paid in full on the conversion date. Dividends were to be paid in kind and also convert into shares of our common stock on the earlier of (a) a change of control of MIC and (b) December 31, 2023. The Series 2 Preferred Stock converted at a conversion price of $ 3.67 per share of common stock, subject to appropriate adjustment in relation to certain events, such as recapitalizations, stock dividends, stock splits, stock combinations, reclassifications or similar events affecting the Series 2 Preferred Stock, as set forth in the Charter. Accordingly, the aggregate of 46,000 shares of Series 2 Preferred Stock converted into a total of 13,787,462 shares of our common stock, which number is comprised of (i) 12,534,058 shares of our common stock issuable upon the conversion of 46,000 shares of Series 2 Preferred Stock based on the stated value of such shares and (ii) 1,253,404 shares of our common stock issuable upon the conversion of the dividends. Because the terms and amount of the dividend are contractually agreed upon, at the time of the Merger we recorded the full $ 4.6 million value of the paid-in-kind dividend. F- 17 Table of Contents Warrants In accordance with its warrant agreement between Legacy MIC and Color Up, dated August 25, 2021 ( the “Warrant Agreement”), Color Up had the right to purchase up to 1,702,128 shares of common stock, at an exercise price of $ 11.75 per share for an aggregate cash purchase price of up to $ 20.0 million (the “Common Stock Warrants”). Each whole Common Stock Warrant entitled the registered holder thereof to purchase one whole share of common stock at a price of $ 11.75 per share, subject to customary adjustments, at any time following a “Liquidity Event,” which was defined as an initial public offering and/or listing of the common stock on the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange. As of the Closing Date, FWAC, Legacy MIC, and Color Up entered into a Warrant Assumption and Amendment Agreement (the “Warrant Assumption and Amendment Agreement”) to the Warrant Agreement, whereby the Company assumed the Common Stock Warrants remaining outstanding and unexpired at that time, and such Common Stock Warrants became the common stock warrants of the Company. Subsequent to the Closing date, on August 29, 2023, New MIC and Color Up entered into an Amended and Restated Warrant Agreement (the “Amended Warrant Agreement”), pursuant to which the Warrant Agreement was amended and restated to (i) reflect the effects of the Merger (including but not limited to the reduction in the exercise price of the Common Stock Warrants from $ 11.75 to $ 7.83 per share and the increase in the number of the underlying shares from 1,702,128 shares of Legacy MIC common stock to 2,553,192 shares of our common stock) and (ii) permit Color Up to exercise the Common Stock Warrants on a cashless basis at Color Up’s option. The Common Stock Warrants expire on August 25, 2026 and are classified as equity and recorded at the issuance date fair value. Securities Purchase Agreement On November 2, 2021, Legacy MIC entered into a securities purchase agreement (the “Securities Purchase Agreement”) by and among the Company, the Operating Partnership, and HS3, pursuant to which the Operating Partnership issued and sold to HS3 (a) 1,702,128 newly issued OP Units; and (b) 425,532 newly-issued Class A units of limited partnership of the Operating Partnership (“Class A Units”) which entitle HS3 to purchase up to 425,532 additional OP Units (the “Additional OP Units”) at an exercise price equal to $ 11.75 per Additional OP Unit, subject to adjustment as provided in the Class A Unit agreement, and HS3 paid to the Operating Partnership cash consideration of $ 20.0 million. The Additional OP Units are available to be exercised only upon completion of a Liquidity Event, as defined in the Securities Purchase Agreement. In connection with the Merger, the number of Class A Units was adjusted to 638,298 and the exercise price for the Class A Units was adjusted to $ 7.83 per Class A Unit. The Common Units generally may be redeemed by the holder thereof for cash or, at the option of the Company, for shares of common stock. Such securities were issued in a private placement transaction exempt from registration pursuant to Section 4 (a)( 2 ) of the Securities Act. On August 29, 2023, the Operating Company issued 156,138 Common Units to HS3 upon the cashless exercise of 638,298 Class A Units based upon a fair market value of $ 10.37 per Common Unit. Convertible Noncontrolling Interests As of December 31, 2023, the Operating Company had approximat ely 42 million Comm on Units outstanding, excluding any equity incentive units granted. Beginning six months after first acquiring Common Units, each member will have the right to redeem the Common Units for either cash or common stock, subject to both the Company's discretion and the terms and conditions set forth in the limited liability company agreement of the Operating Company (the “Operating Agreement”). The Common Units not held by the Company outstanding as of December 31, 2023 are classified as noncontrolling interests within permanent equity on our Consolidated Balance Sheet. Note J - Stock-Based Compensation Long-Term Incentive Plan We issue equity-based awards to promote the success and enhance the value of MIC and the Operating Company, by linking the individual interests of employees, consultants and members of the MIC Board to those of MIC’s stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to MIC’s stockholders. We issue awards under our 2023 Incentive Award plan (the "Plan").The Plan provides for the grant of stock options, including incentive stock options (“ISOs”), and nonqualified stock options (“NSOs”), restricted shares, dividend equivalent awards, share payment awards, restricted share units (“RSUs”), performance awards, performance share awards, other incentive awards, profits interest units (including Performance Units and LTIP Units) and SARs. Going forward, the Board intends to grant awards during the first quarter of each year. Service-based awards will typically follow a multi-year graded vesting schedule and will vest in the form of common stock or LTIP Units. LTIP Units are a class of equity interest in the Operating Company that are intended to qualify as “profits interests” for federal income tax. The value of vested LTIP Units is realized by the holder through conversion of the LTIP Units into Common Units. F- 18 Table of Contents Employee Awards In February 2023, we granted Mr. Chavez and Ms. Hogue 0.2 million LTIP Units, respectively, in lieu of their 2022 target annual bonus. Of these awards granted to Mr. Chavez and Ms. Hogue, approximately 35,600 LTIP Units vested immediately, with the remaining scheduled to vest over a three -year period. The grant date fair value was determined to be $ 8.99 per unit for each of the LTIP Units awarded. In August 2022 we granted 0.4 million LTIP Units to our executives which would vest upon the completion of a Liquidity Event. In December 2022, we amended the award to require a service condition for a period of one year from a Liquidity Event. The modified grant date fair value of these LTIP Units was determined to be $ 15.00 per unit. As a result of the Closing, these LTIP Units achieved their performance hurdle. In September 2023, the Compensation Committee of the Board of Directors approved the cancellation of 0.1 million of these LTIP Units. The expense associated with the cancellation of approximately $ 1.4 million is included in General and Administrative in the accompanying Consolidated Statements of Operations. The cancellation was a result of a plan to reallocate the award shares to non-executive employees. As a result, in December 2023, we granted 0.1 million restricted stock units to non-executive employees which will vest in August 2024. The remaining value of the LTIP awards granted to the executives is being expensed over the one -year service period following the Closing. In May 2022, we granted an aggregate of 2.3 million Performance Units of the Operating Partnership (“PUs”) to the executive officers of the Company. The PUs vest upon the achievement of a 50 % market condition and a 50 % performance condition. The performance period ends in December 2025 for the market condition and in December 2027 for the performance condition. The grant date fair value of the PUs with market conditions was estimated at $ 5.97 per unit using a Monte Carlo simulation of future stock prices for us and our corresponding peer group. The PUs subject to a performance conditions will vest if we achieve a hurdle related to our adjusted funds from operations per share for four consecutive quarters prior to the fourth quarter of 2025 and then for an additional four consecutive quarters prior to December 2027. The PUs subject to a performance condition were deemed not probable of achievement as of December 31, 2023 or 2022, and therefore we did not record any charges related to the awards with a performance condition. The probability of achievement of the performance condition will continue to be assessed throughout the performance period. Director Awards We granted approximately 14,500 and 39,100 LTIP Units in 2022 and 2023, respectively to our independent directors in consideration for their accrued but unpaid director compensation fees from 2021 and 2022. The LTIP Units will vest over a three -year period. Prior to the granting of the Director LTIP Units, the associated compensation was anticipated to be paid in cash, and as such, the expense was accrued as a liability in the Consolidated Balance Sheets. Upon vesting, the Director LTIP Units are redeemable in cash or shares, at the option of the holder. As a result, the Director LTIP Units are classified as a liability within accounts payable and accrued expenses in the Consolidated Balance Sheet as of December 31, 2022. The following table sets forth a roll forward of all incentive equity awards for the years ended December 31, 2023 and 2022: Number of Incentive Equity Awards Weighted-Average Grant Date Fair Value Per Share Nonvested - January 1, 2022 — $ — Granted 2,673,041 8.44 Vested — — Forfeited — — Nonvested - January 1, 2023 2,673,041 $ 8.44 Granted 347,082 7.46 Vested ( 59,681 ) 9.40 Forfeited ( 135,320 ) 10.00 Nonvested - December 31, 2023 2,825,122 $ 8.22 We recognized $ 8.6 million and $ 2.5 million of equity-based compensation expense for the years ended December 31, 2023 and 2022, respectively, which is included in General and Administrative in the Consolidated Statements of Operations. Included in the 2023 expense were equity awards granted in lieu of salary amounts as noted below. The remaining unrecognized compensation cost of approximately $ 3.3 million, which excludes $ 11.6 million related to awards deemed not probable to achieve their performance target, will be recognized over a weighted average term of 1.2 years. F- 19 Table of Contents 2024 Awards In January 2024, the Compensation Committee of the Board of Directors approved the issuance of the following awards: ● 0.3 million LTIP units to Mr. Chavez in lieu of his salary for 2021 and 2023 and for his 2023 short-term incentive award. These awards were issued at a grant date fair value of $ 3.84 and vested upon issuance. At the same time, 0.2 million LTIP units were granted in lieu of his 2024 salary, which will vest in four equal increments each quarter over the next twelve months. ● 0.4 million LTIP units and 0.2 million restricted stock units awarded at a grant date fair value of $ 3.84 to our executives representing the long term incentive awards for 2023 and 2024. These awards will vest on a graded schedule over three years. ● 0.1 million LTIP Units and 0.1 million restricted stock units with a grant date fair value of $ 6.11 to our executives using the Monte Carlo method. These awards will vest based upon the performance of our stock versus the Russell 2000 Index three years from the grant date. ● 0.2 million restricted stock units awarded to the independent directors as consideration for service in 2023 and 2024. These awards have a grant date fair value of $ 3.84 and will vest twelve months on the one year anniversary of the grant date. Note K — Employee Benefit Plan We sponsor a 401 (k) plan that provides benefits for qualified employees. Our match of the employee contributions is discretionary and is equal to 100 % of the first 6% of eligible compensation contributed by each employee. All contributions are funded in cash and vest immediately. Total expense recorded for the matching 401 (k) contribution in the years ended December 31, 2023 and 2022, was approximately $ 109,000 and $ 147,000 , respectively. Note L – Earnings Per Share Basic and diluted loss per weighted average common share (“EPS”) is calculated by dividing net income (loss) attributable to the our common stockholders, including any participating securities, by the weighted average number of shares outstanding for the period. We include the effect of participating securities in basic and diluted earnings per share computations using the two -class method of allocating distributed and undistributed earnings when the two -class method is more dilutive than the treasury stock method. Outstanding warrants and stock-based compensation were antidilutive as a result of the net loss for the twelve months ended December 31, 2023 and 2022 and therefore were excluded from the dilutive calculation. We include unvested PUs as contingently issuable shares in the computation of diluted EPS once the market criteria is met, assuming that the end of the reporting period is the end of the contingency period. We had 2.8 million un vested service-and performance-based awards which are considered antidilutive to the dilutive loss per share calculation for the twelve months ended December 31, 2023 and 2022. The following table reconciles the numerator and denominator used in computing our basic and diluted per-share amounts for net loss attributable to common stockholders for the twelve months ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Numerator: Net loss attributable to MIC $ ( 32,475 ) $ ( 11,119 ) Net loss attributable to participating securities — — Net loss attributable to MIC common stock $ ( 32,475 ) $ ( 11,119 ) Denominator: Basic and dilutive weighted average shares of Common Stock outstanding 13,244,388 13,089,848 Basic and diluted loss per weighted average common share: Basic and dilutive $ ( 2.45 ) $ ( 0.85 ) F- 20 Table of Contents Note M – Variable Interest Entities We, through a wholly owned subsidiary of the Operating Company, own a 51.0 % beneficial interest in MVP St. Louis Cardinal Lot, DST, a Delaware Statutory Trust (“MVP St. Louis”). MVP St. Louis is the owner of a 2.56 -acre, 376 -vehicle commercial parking lot, known as the Cardinal Lot. MVP St. Louis is considered VIE and we conclude that it is the primary beneficiary since the power to direct the activities that most significantly impact the economic performance of MVP St. Louis was held by MVP Parking DST, LLC (the “Manager”) and certain subsidiaries of the Manager, which is controlled by Mr. Chavez. As a result, we consolidate its investment in MVP St. Louis and MVP St. Louis Cardinal Lot Master Tenant, LLC, which had total assets of approximatel y $ 13.0 and $ 12.6 million (substantially all real estate investments) and liabilities of approximately $ 6.6 and $ 6.2 m illion (substantially all mortgage debt) as of December 31, 2023 and 2022, respectively. Note N — Income Taxes The Company previously elected to be taxed as a REIT for federal income tax purposes and operated in a manner that allowed the Company to qualify as a REIT through December 31, 2019. As a consequence of the COVID- 19 pandemic, the Company earned management income in lieu of lease income from a number of distressed tenants, which did not constitute qualifying REIT income for purposes of the annual REIT gross income tests, and, as a result, the Company was not in compliance with the annual REIT income tests for the year ended December 31, 2020. Accordingly, the Company did not qualify for taxation as a REIT in 2020 and continues to be taxed as a C corporation. As a C corporation, the Company is subject to federal income tax on its taxable income at regular corporate rates. A full valuation allowance for deferred tax assets was historically provided each year since the Company believed that as a REIT it was more likely than not that it would not realize the benefits of its deferred tax assets. As a taxable C Corporation, the Company has evaluated its deferred tax assets for the year ended December 31, 2023, which consist primarily of net operating losses and its investment in the Operating Partnership. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three -year period ended December 31, 2023. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Despite substantial growth in property-level operations, the Company has continued to generate a net loss and as such the Company has determined that it will continue to record a full valuation allowance against its deferred tax assets for the year ended December 31, 2023. A change in circumstances may cause the Company to change its judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely than not be realized. The Company would generally report any change in the valuation allowance through its Consolidated Statements of Operations in the period in which such changes in circumstances occur. The provision for income taxes for the years ended December 31, 2023 and 2022 consisted of the following, which is included in general and administrative expense in the Consolidated Statements of Operations (dollars in thousands): 2023 2022 Current Federal — — State 41 29 Total Current $ 41 $ 29 Deferred Federal — — State — — Total Deferred — — Total $ 41 $ 29 F- 21 Table of Contents The following table presents a reconciliation of the statutory corporate U.S. federal income tax rate to the Company’s effective tax rate as of December 31, 2023 : 2023 2022 Tax at U.S. statutory rate 21.00 % 21.00 % State taxes, net of federal effect 2.13 % 2.29 % Non-Deductible Expenses ( 9.85 )% 0.89 % Change in Valuation Allowance ( 13.40 )% ( 24.54 )% Effective income tax rate — — The balances for deferred taxes for the years ended December 31, 2023 and 2022 consisted of the following (dollars in thousands): Year Ended December 31, 2023 2022 Deferred Tax Assets: NOL Carryforward $ 17,522 $ 14,030 Intangible Assets 4,171 4,676 Investment in Operating Partnership 9,631 8,388 Gross deferred tax assets $ 31,324 $ 27,094 Less valuation allowance ( 31,324 ) ( 27,094 ) Total deferred tax assets $ — $ — Deferred Tax Liabilities: Straight-line Rent — — Total net deferred taxes $ — $ — As of December 31, 2023, the Company had federal and various state net operating loss (NOL) carryforwards of $ 73.8 million and $ 44.1 million, respectively. The federal net operating losses generated in 2018 and after of $ 65.2 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year. The federal net operating losses generated prior to 2018 of $ 8.6 million will begin to expire in 2036 unless previously utilized. Note O — Fair Value A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows: Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable. Level 3 – Model-derived valuations with unobservable inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. F- 22 Table of Contents Our financial instruments include cash and cash equivalents, restricted cash, accounts receivable and accounts payable. Due to their short maturities, the carrying amounts of these assets and liabilities approximate fair value. The estimated fair value of our debt (including notes payable and the Revolving Credit Facility) was derived using Level 2 inputs and approxim ates $ 182.9 million and $ 207.4 million as of December 31, 2023 and 2022, respectively. Recurring and Nonrecurring Fair Value Measurements Our Earn-out Shares and interest rate cap are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed. Fair value measurements that occurred as of and during the year ended December 31, 2023 and 2022, were as follows (in thousands): December 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Recurring Earn-out Shares - - 1,779 - - - Interest rate cap - 54 - - - - Nonrecurring Impaired real estate assets - - 50,536 - - - Earn-Out Shares The terms of the Earn-Out Shares allow an additional 1,900,000 shares to vest if certain milestones are achieved: ● 950,000 shares vest if the aggregate volume-weighted average price for any 5 -consecutive trading day period equals or exceeds $ 13.00 per share prior to December 31, 2026 ● 950,000 shares vest if the aggregate volume-weighted average price for any 5 -consecutive trading day period equals or exceeds $ 16.00 per share prior to December 31, 2028 We estimate the fair value of each tranche of shares separately using a Monte Carlo simulation. These estimates require us to make various assumptions about the risk-free rate, expected volatility for each tranche of the Earn-Out Shares, and other items that are unobservable and are considered Level 3 inputs in the fair value hierarchy. Because we are a newly-listed company with limited share activity, we were required to exercise judgment in estimating expected volatility ( 30.0 % to 45.0 %) and in selection of comparable companies. We recognized a gain of approxim ately $ 4.1 million during the year ended December 31, 2023 a s a result of changes in the estimated fair values after the Merger. The gain is recorded as the Change in Fair Value of Earn-out Liability in the Consolidated Statements of Operations. The following table reflects the change in value during the year ended December 31, 2023 (in thousands): Level 3 Liability Balance as of January 1, 2023 $ - Impact of the Merger (initial valuation) (5,844 ) Change in fair value recognized in earnings 4,065 Balance as of December 31, 2023 $ (1,779 ) F- 23 Table of Contents Interest Rate Cap Our interest rate cap is measured at fair value on a recurring basis. The valuation is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the interest rate cap is determined using the market standard methodology of valuing the expected discounted future fixed cash receipts. The variable cash or receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. We evaluated the need for credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements, but believe these impacts are not material. Because we determined that the significant inputs used to value our derivatives are observable, we believe our derivative valuation is classified in Level 2 of the fair value hierarchy. Impairment Our real estate assets are measured and recognized at fair value on a nonrecurring basis when we determine an impairment has occurred. To estimate fair value we may use internally developed valuation models or independent third -parties where available. In either case, the fair value of real estate may be based on a number of approaches including the income capitalization approach, sales comparable approach or discounted cash flow approach. We utilize market data such as sales price per stall on comparable recent real estate transactions to estimate the fair value of the real estate assets. We also utilize expected net sales proceeds to estimate the fair value of any centers that are actively being marketed for sale. Because we use estimates and assumptions regarding an assets’ future performance and cash flows as well as market conditions and discount rates, we determined the impaired assets would fall under Level 3 of the fair value hierarchy. During the year ended December 31, 2023, we impaired approximately $ 9.0 million of our real estate assets as a result of continuing delayed back-to-work trends or other reductions of demand-drivers impacting these assets, as well as disposition of properties. Note P — Commitments and Contingencies The nature of our business exposes our properties, the Company, the Operating Company and our other subsidiaries to the risk of claims and litigation in the normal course of business. Other than as noted below, or routine litigation arising out of the ordinary course of business, we are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us. In March 2023, Michael Shustek filed a complaint against Legacy MIC in the U.S. District Court, District of Maryland (the “Court”), seeking advancement of indemnification expenses related to the SEC investigation against Mr. Shustek, alleging damages (case 1:23 -CV- 00599 ). On September 6, 2023, the parties entered into a settlement agreement (the "Settlement Agreement"), and in September 2023, the Court ordered the case closed. As a result of the Settlement Agreement, we recognized a gain of approximately $ 1.2 million which is recorded as Other Income, Net in the Consolidated Statements of Operations. In August 2021, we also entered into an Assignment of Claims, Causes of Action, and Proceeds Agreement, or the Assignment of Litigation Agreement, pursuant to which we assigned to Vestin Realty Mortgage II, Inc. and Michael V. Shustek certain claims and claim proceeds that we had against Ira S. Levine, Levine Law Group, Inc. (or any other name by which a firm including Ira Levine was known), Edwin Herbert Bentzen IV and Andrew Fenton. In April, 2023, the parties entered into a settlement agreement and mutual release related to the Ira Levine matter. The Settlement Agreement is not related to the Assignment of Litigation Agreement. In January 2023, the 43rd District Court of Parker County, Texas, entered summary judgment against MVP Fort Worth Taylor, LLC, a subsidiary of Legacy MIC, in favor of the plaintiff, John Roy, who alleged that he was due a commission relating to a proposed sale of the Fort Worth Taylor parking facility which was never consummated. Legacy MIC filed an appeal. As a result of the court’s summary judgment, in December 2022 we recognized a charge of $ 0.7 million for the full estimated amount of damages (including legal fees and costs). The $ 0.7 million was recognized within Organizational, Offering and Other Costs in our Consolidated Statements of Operations and Accounts Payable and Accrued Expenses on our Consolidated Balance Sheets. During the first quarter of 2023, and as part of the appeals process, we posted cash collateral of $ 0.7 million for an appeals bond, which is reflected in Cash-Restricted on our Consolidated Balance Sheets. In February 2024 we signed a settlement agreement which would result in the sale of one of our properties to John Roy with the estimated $ 0.7 million of damages being given as a credit at the time of sale. This sale is contingent upon John Roy obtaining a lender commitment for financing by April 15, 2024, as well as normal due diligence contingencies in the purchase contract In September 2023, we entered into arbitration with one vendor regarding disputes over amounts payable. The entire balance in dispute of approximately $ 1.8 million is accrued for in Accounts Payable and Accrued Expenses on the Consolidated Balance Sheets. Note Q — Related Party Transactions and Arrangements Two of our assets, 1W7 Carpark and 222W7, are currently operated by PCA, Inc., dba Park Place Parking. Park Place Parking is a private parking operator that is wholly owned by relatives of our CEO. Our CEO is neither an owner nor beneficiary of Park Place Parking. Park Place Parking has been operating these assets for six and five years, respectively. Both assets were acquired in 2021 with their management agreements in place. As of December 31, 2023 and 2022, we recorded balances of approximatel y $ 0.1 million an d $ 0.1 million, respectively, from Park Place Parking which are included in Accounts Receivable, Net on the Consolidated Balance Sheets and were subsequently paid within terms of the lease agreement. In May 2022, the Company entered into a lease agreement with ProKids, an Ohio not -for-profit. An immediate family member of the Company’s CEO is a member of the Board of Trustees and President-Elect of that organization. ProKids leased 21,000 square feet of vacant unfinished commercial space in a 531,000 square foot building in Cincinnati, Ohio for 120 months. ProKids will invest in the tenant improvements in this space and ultimately use it as their headquarters location. ProKids will have no rent due to the Company throughout the lease term, other than a rental fee on parking spaces used by the ProKids staff and visitors. As of December 31, 2023, ProKids does not owe the Company rental income related to the lease agreement. In connection with our recapitalization transaction in August 2021, we owe approximately $ 0.5 million to certain member entities of Color Up relating to prorated revenues for the month of August 2021 of the three properties contributed by Color Up. The accrual is reflected within Due to Related Parties on the Consolidated Balance Sheets. Additionally, in connection with our recapitalization transaction in August 2021, we were due approximately $ 156,000 from Color Up as consideration for OP Units then issued which was reflected within Due from Related Parties on the Consolidated Balance Sheet as of December 31, 2022. We received all amounts due in March 2023. F- 24 Table of Contents We have agreed to pay for certain tax return preparation services of Color Up and certain member entities of Color Up. We have incurred approximately $ 0.1 million related to these services which is reflected in General and Administrative on the Consolidated Statements of Operations for the year ended December 31, 2023. Total fees are estimated to be approximat ely $ 0.1 m illion. License Agreement On August 25, 2021, we entered into a Software License and Development Agreement with an affiliate of Bombe Asset Management, Ltd., an affiliate of our CEO and CFO (the “Supplier”), pursuant to which the we granted to the Supplier a limited, non-exclusive, non-transferable, worldwide right and license to access certain software and services for a fee of $ 5,000 per month. Tax Matters Agreement On August 25, 2021, the Company, the Operating Partnership and Color Up entered into the Tax Matters Agreement, or the Tax Matters Agreement, pursuant to which the Operating Partnership agreed to indemnify Color Up and certain affiliates and transferees of Color Up (together, the “Protected Partners”), against certain adverse tax consequences in connection with ( 1 ) (i) a taxable disposition of certain specified properties and (ii) certain dispositions of the Protected Partners’ interest in the Operating Partnership, in each case, prior to the tenth anniversary of the completion of the Transaction, as defined in the Tax Matters Agreement, (or earlier, if certain conditions are satisfied); and ( 2 ) the Operating Partnership’s failure to provide the Protected Partners the opportunity to guarantee a specified amount of debt of the Operating Partnership during the period ending on the tenth anniversary of the completion of the Transaction (or earlier, if certain conditions are satisfied). In addition, and for so long as the Protected Partners own at least 20% of the units in the Operating Partnership received in the Transaction, we agreed to use commercially reasonable efforts to provide the Protected Partners with similar guarantee opportunities. Note R — Subsequent Events In preparing the consolidated financial statements, we have evaluated subsequent events through the date of filing of this report on Form 10 -K for recognition and/or disclosure purposes. In addition to the subsequent events discussed in the notes above, in the first quarter of 2024, 26 of our 43 assets converted to management contracts in which revenues and expenses are fully the responsibility of and recognized by us and our operators are paid a set fee. F- 25 Table of Contents SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2023 (dollars in thousands) Costs Capitalized Subsequent to Initial Cost Acquisition Gross Carrying Amount at December 31, 2023 (1) Life on which depr Accumulated in latest Land and Buildings and Carrying Land and Building and Depreciation Date statement is Description ST Encumbrance Improvements Improvements Improvements Costs Improvements Improvements Total (2) Acquired computed West 9th Street (3) OH $ 4,343 $ 5,675 $ — $ 302 -- $ 5,918 $ 59 $ 5,977 $ 79 2016 15 Crown Colony (3) OH — 3,030 — 19 -- 2,954 — 2,954 8 2016 15 Cincinnati Race Street OH — 2,142 2,358 1,900 -- 1,227 1,750 2,977 — 2016 39,15 St Louis Washington MO 1,241 3,000 — 7 -- 1,637 — 1,637 3 2016 15 St Paul Holiday Garage MN 3,714 1,673 6,527 690 -- 1,673 7,217 8,890 1,343 2016 39,15 Louisville Station KY 1,682 3,050 — 57 -- 3,007 — 3,007 25 2016 15 Whitefront Garage TN 6,454 3,116 8,380 199 -- 3,116 8,579 11,695 1,633 2016 39,15 Cleveland Lincoln Garage OH 3,594 2,195 5,122 5,181 -- 1,378 8,395 9,773 2,211 2016 39,15 Houston Preston TX 1,627 2,800 — 20 -- 2,820 — 2,820 9 2016 15 Houston San Jacinto TX 1,820 3,200 — 50 -- 3,250 — 3,250 21 2016 15 MVP Detroit Center Garage MI 26,759 7,000 48,000 1,060 -- 6,497 37,680 44,177 297 2017 39,15 St. Louis Broadway MO 1,671 2,400 — — -- 2,400 — 2,400 — 2017 N/A St. Louis Seventh & Cerre MO 2,057 3,300 — — -- 3,300 — 3,300 — 2017 N/A MVP Preferred Parking TX 11,028 15,800 4,700 720 -- 15,230 5,250 20,480 1,020 2017 39,15 MVP Raider Park Garage TX * 2,005 9,057 3,674 -- 2,005 12,731 14,736 2,182 2017 39,15 MVP PF Memphis Poplar 2013 TN 1,800 3,658 — 24 -- 3,670 12 3,682 21 2017 15 MVP PF St. Louis 2013 MO 3,700 5,041 — — -- 5,041 — 5,041 44 2017 15 Mabley Place Garage OH 7,428 1,585 19,018 1,037 -- 1,360 17,280 18,640 2,819 2017 39,15 MVP Denver Sherman CO 257 705 — — -- 705 — 705 — 2017 N/A MVP Fort Worth Taylor TX 10,807 2,845 24,405 5 -- 2,845 24,410 27,255 3,798 2017 39,15 MVP Milwaukee Old World WI — 2,003 — 8 -- 2,003 8 2,011 29 2017 15 MVP Houston Saks Garage TX 2,851 4,931 5,221 177 -- 3,712 4,116 7,828 713 2017 39,15 MVP Milwaukee Wells WI * 4,994 — — -- 4,374 — 4,374 99 2017 15 MVP Indianapolis City Park IN * 2,056 8,557 114 -- 2,056 8,671 10,727 1,375 2017 39,15 MVP Indianapolis WA Street Lot IN * 5,618 — — -- 1,864 — 1,864 — 2017 15 MVP Minneapolis Venture MN — 4,013 — 109 -- 4,013 108 4,121 8 2017 N/A MVP Indianapolis Meridian Lot IN 938 1,573 — — -- 1,523 — 1,523 8 2017 15 MVP Milwaukee Clybourn WI — 257 — — -- 257 — 257 4 2017 15 MVP Milwaukee Arena WI 1,925 4,631 — 52 -- 4,641 42 4,683 3 2017 N/A MVP Clarksburg Lot WV — 701 — — -- 611 — 611 4 2017 15 MVP Denver 1935 Sherman CO 684 2,533 — — -- 2,533 — 2,533 — 2017 N/A MVP Bridgeport Fairfield Garage CT 3,531 498 7,555 51 -- 498 7,606 8,104 1,232 2017 39,15 Minneapolis City Parking MN 4,223 9,633 — — -- 7,513 — 7,513 120 2017 15 MVP New Orleans Rampart LA * 8,105 — — -- 7,835 — 7,835 — 2018 N/A MVP Hawaii Marks HI * 9,119 11,715 421 -- 8,571 11,435 20,006 1,715 2018 39,15 1W7 Carpark OH * 2,995 28,762 39 -- 2,995 28,801 31,796 1,732 2021 39,15 222W7 OH * 4,391 23,879 99 -- 4,391 23,978 28,369 1,443 2021 39 322 Streeter IL 24,672 11,387 27,035 450 -- 11,387 27,485 38,872 1,665 2021 39 2nd Street FL — 93 — — -- 93 — 93 — 2021 N/A Denver 1725 Champa Street Garage CO * 7,414 8,860 422 -- 7,414 9,282 16,696 529 2021 39 Bricktown OK * 1,314 16,020 32 -- 1,314 16,052 17,366 654 2022 39 MVP St. Louis Cardinal Lot DST MO 6,000 11,660 19 — -- 11,660 19 11,679 2 2017 N/A $ 134,806 $ 174,139 $ 265,190 $ 16,919 $ — $ 161,291 $ 260,966 $ 422,257 $ 26,848 ( 1 ) The aggregate gross cost of property included above for federal income tax purposes approximately $ 418.1 million as of December 31, 2023. ( 2 ) The initial costs of buildings are depreciated over 39 years using a straight-line method of accounting; improvements capitalized subsequent to acquisition are depreciated over the shorter of the lease term or useful life, generally ranging from one to 20 years. F- 26 Table of Contents ( 3 ) These properties are held by West 9 th St. Properties II, LLC * Property financed under the Revolving Credit Facility The following table reconciles the historical cost of total real estate held for investment for the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Balance at beginning of period $ 439,526 $ 420,603 Additions during period: Acquisitions — 17,334 Improvements 1,988 2,289 Deductions during period: Dispositions ( 696 ) ( 700 ) Impairments ( 18,561 ) — Balance at close of period $ 422,257 $ 439,526 ( 1 ) This amount does not include intangible assets and construction in progress totaling approximately $ 10.2 million and $ 0.3 million, respectively, as of December 31, 2023 and approximately $ 10.1 million and $ 1.2 million as of December 31, 2022 , respectively. The following table reconciles the accumulated depreciation for the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Balance at beginning of period $ 28,763 $ 21,348 Deductions during period: — Impairments ( 9,605 ) — Depreciation of real estate 7,690 7,415 Balance at close of period $ 26,848 $ 28,763 F-27