What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-13 · 342 added, 176 removed, 929 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

As of June 30, 2024

As of September 30, 2024

As of December 31, 2023

21 unchanged sentences

53,256 58,523

Line of credit

Accounts payable and accrued expenses

10,874 14,666

Accrued preferred distributions

Accrued preferred distributions and redemptions

Earn-Out Liability

3 unchanged sentences

Mobile Infrastructure Corporation Stockholders’ Equity

Preferred stock Series A, $ 0.0001 par value, 50,000 shares authorized, 2,281 and 2,812 shares issued and outstanding, with a stated liquidation value of $ 2,281,000 and $ 2,812,000 as of June 30, 2024 and December 31, 2023, respectively

Preferred stock Series 1, $ 0.0001 par value, 97,000 shares authorized, 31,501 and 36,677 shares issued and outstanding, with a stated liquidation value of $ 31,501,000 and $ 36,677,000 as of June 30, 2024 and December 31, 2023, respectively

Preferred stock Series 2, $ 0.0001 par value, 60,000 shares authorized, 46,000 issued and converted (stated liquidation value of zero as of June 30, 2024 and December 31, 2023)

Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 29,763,475 and 27,858,539 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Warrants issued and outstanding – 2,553,192 warrants as of June 30, 2024 and December 31, 2023

Preferred stock Series A, $ 0.0001 par value, 50,000 shares authorized, 2,229 and 2,812 shares issued and outstanding, with a stated liquidation value of $ 2,229,000 and $ 2,812,000 as of September 30, 2024 and December 31, 2023, respectively

Preferred stock Series 1, $ 0.0001 par value, 97,000 shares authorized, 27,426 and 36,677 shares issued and outstanding, with a stated liquidation value of $ 27,426,000 and $ 36,677,000 as of September 30, 2024 and December 31, 2023, respectively

Preferred stock Series 2, $ 0.0001 par value, 60,000 shares authorized, 46,000 issued and converted (stated liquidation value of zero as of September 30, 2024 and December 31, 2023)

Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 31,724,535 and 27,858,539 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Warrants issued and outstanding – 2,553,192 warrants as of September 30, 2024 and December 31, 2023

Additional paid-in capital

13 unchanged sentences

(In thousands, except share and per share amounts, unaudited)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Managed property revenue

$ 7,226 $ — $ 12,727 $ —

Base rent income

1,523 1,951 3,166 4,031

Percentage rental income

517 5,263 2,200 10,286

Total revenues

9,266 7,214 18,093 14,317

Operating expenses

Property taxes

1,809 1,742 3,713 3,498

Property operating expense

1,824 533 3,345 1,051

Depreciation and amortization

2,096 2,130 4,189 4,256

General and administrative

2,909 2,444 5,926 5,063

Preferred Series 2 - issuance expense

Professional fees

260 327 949 795

Organizational, offering and other costs

Total expenses

8,898 7,260 18,279 14,780

Interest expense

( 3,087 ) ( 3,676 ) ( 6,066 ) ( 7,276 )

(Loss) Gain on sale of real estate

— — ( 42 ) 660

Other (expense) income, net

( 60 ) 15 ( 128 ) 30

Other income, net

Change in fair value of Earn-Out liability

Total other expense

( 2,837 ) ( 3,661 ) ( 5,272 ) ( 6,586 )

( 2,469 ) ( 3,707 ) ( 5,458 ) ( 7,049 )

Net loss attributable to non-controlling interest

( 1,112 ) ( 1,989 ) ( 2,003 ) ( 3,784 )

Net loss attributable to Mobile Infrastructure Corporation’s stockholders

$ ( 1,357 ) $ ( 1,718 ) $ ( 3,455 ) $ ( 3,265 )

Preferred stock distributions declared - Series A

( 34 ) ( 54 ) ( 71 ) ( 108 )

Preferred stock distributions declared - Series 1

( 452 ) ( 696 ) ( 943 ) ( 1,392 )

Preferred stock distributions declared - Series 2

Net loss attributable to Mobile Infrastructure Corporation’s common stockholders

$ ( 1,843 ) $ ( 2,468 ) $ ( 4,469 ) $ ( 4,765 )

Basic and diluted loss per weighted average common share:

Net loss per share attributable to Mobile Infrastructure Corporation’s common stockholders - basic and diluted

$ ( 0.06 ) $ ( 0.19 ) $ ( 0.16 ) $ ( 0.36 )

Weighted average common shares outstanding, basic and diluted

29,225,378 13,089,848 28,731,365 13,089,848

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE and six months ended june 30, 2024 and 2023

FOR THE THREE and NINE months ended SEPTEMBER 30, 2024 and 2023

(In thousands, except share amounts, unaudited)

19 unchanged sentences

( 329 ) — 99,372 — — 94 — — 94

Allocation of equity to non-controlling interest

— — — — — 3,087 — ( 3,087 ) —

— — — — — — ( 2,098 ) ( 891 ) ( 2,989 )

Balance, March 31, 2024

12 unchanged sentences

( 202 ) — 72,578 — — 61 — — 61

Allocation of equity to non-controlling interest

— — — — — 2,183 — ( 2,183 ) —

— — — — — — ( 1,357 ) ( 1,112 ) ( 2,469 )

Balance, June 30, 2024

33,782 $ — 29,763,475 $ 2 $ 3,319 $ 268,909 $ ( 137,746 ) $ 68,230 $ 202,714

Equity based compensation

— — 73,609 — — 252 — 958 1,210

Distributions to Non-controlling Interest Holders

— — — — — — — ( 42 ) ( 42 )

Issuance of common stock

— — 500,000 — — 1,750 — — 1,750

Repurchase of common stock

— — ( 26,925 ) — — ( 90 ) — — ( 90 )

Redemptions - Series 1

( 1,293 ) — — — — ( 6,759 ) — — ( 6,759 )

Declared distributions – Series A ($ 14.38 per share)

— — — — — ( 33 ) — — ( 33 )

Declared distributions – Series 1 ($ 13.75 per share)

— — — — — ( 407 ) — — ( 407 )

Conversions - Series 1

( 2,782 ) — 1,056,914 — — 823 — — 823

Conversions - Series A

( 52 ) — 20,706 — — 16 — — 16

Allocation of equity to non-controlling interest

— — 336,756 — — 6,043 — ( 6,054 ) ( 11 )

— — — — — — ( 1,311 ) ( 579 ) ( 1,890 )

Balance, September 30, 2024

29,655 $ — 31,724,535 $ 2 $ 3,319 $ 270,504 $ ( 139,057 ) $ 62,513 $ 197,281

Preferred stock

32 unchanged sentences

42,673 $ — 13,089,848 $ — $ 3,319 $ 191,676 $ ( 112,434 ) $ 98,270 $ 180,831

Equity Based Payments

— — — — — — — 2,789 2,789

Distributions to non-controlling interest holders

— — — — — — — ( 48 ) ( 48 )

Declared distributions – Series A ($ 16.77 per share)

— — — — — ( 48 ) — — ( 48 )

Declared distributions – Series 1 ($ 16.13 per share)

— — — — — ( 642 ) — — ( 642 )

Declared distributions - Series 2 ( 0.1 shares per share)

— — — — — ( 4,600 ) — — ( 4,600 )

Reverse Recapitalization, net of issuance costs

46,000 — — — — 53,903 — — 53,903

— — — — — — ( 17,835 ) ( 6,807 ) ( 24,642 )

Balance, September 30, 2023

88,673 $ — 13,089,848 $ — $ 3,319 $ 240,289 $ ( 130,269 ) $ 94,204 $ 207,543

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(In thousands, unaudited)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Amortization of loan costs

Loss on extinguishment of debt

Gain on settlement of liability

( 636 ) ( 1,155 )

Loss on interest rate cap

1 unchanged sentence

Equity based payment

Issuance of Preferred Series 2 Stock

Change in fair value of Earn-Out liability

( 1,143 ) ( 4,628 )

Changes in operating assets and liabilities

2 unchanged sentences

( 1,794 ) 3,060

Indemnification liability

( 350 ) ( 750 )

( 253 ) ( 152 )

Deferred offering costs

7 unchanged sentences

Capitalized technology

(Payments) proceeds on sale of investment in real estate

Proceeds on sale of investment in real estate

Net cash (used in) investing activities

( 174 ) ( 172 )

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from Line of Credit

Payments on notes payable

( 7,926 ) ( 13,291 )

Payments on Revolving Credit Facility

( 5,444 ) ( 15,000 )

Proceeds from notes payable

Proceeds from reverse recap, net of payment of equity issuance costs

Payment of transaction costs for reverse recapitalization

Payment on interest rate cap

Distributions to non-controlling interest holders

( 134 ) ( 373 )

Net cash (used in) financing activities

Share repurchase plan

Shares repurchased for vesting of employee awards

Preferred redemption payments

Preferred dividend payments

Net cash (used in) provided by financing activities

( 1,226 ) 9,286

20 unchanged sentences

Non-cash investing and financing activities:

Dividends declared not yet paid

Distributions declared not yet paid

Accrued preferred distributions paid in common stock

Right of use asset obtained in exchange for lease obligation

Right of use asset and lease liability

Note receivable related to disposition of property

Requested preferred redemptions not yet paid

Common stock issued as loan fees

Equity shares issued in exchange for accrued compensation

Series 2 Preferred Stock dividend paid-in-kind

Accrued capital expenditures

2 unchanged sentences

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note A — Organization and Business Operations

4 unchanged sentences

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 June 30, 2024, we own 42 parking facilities in 21 separate markets throughout the United States, with a total of approximately 15,400 parking spaces and approximately 5.2 million square feet.

As of September 30, 2024, we own 41 parking facilities in 20 separate markets throughout the United States, with a total of approximately 15,300 parking spaces and approximately 5.2 million square feet.

We also own approximately 0.2 million square feet of retail/commercial space adjacent to our parking facilities.

45 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current period presentation.

Operating results for the three and six months ended June 30, 2024 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

There were no significant changes to our significant accounting policies during the six months ended June 30, 2024 other than those noted below.

Operating results for the three and nine months ended September 30, 2024 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

There were no significant changes to our significant accounting policies during the nine months ended September 30, 2024 other than those noted below.

For a full summary of our accounting policies, refer to our Annual Report on Form 10 -K for the fiscal year ended December 31, 2023 filed with the SEC on March 22, 2024.

3 unchanged sentences

We have incurred net losses since our inception and anticipate net losses for the near future.

We have $ 93.1 million of debt maturing within twelve months of the date of the issuance of the Quarterly Report which is comprised of $ 58.7 million related to the Revolving Credit Facility and $ 34.4 million of notes payable.

We do not currently have sufficient cash on hand, liquidity or projected future cash flows to repay these outstanding amounts upon maturity.

We have $ 111.1 million of debt due within twelve months of the date of the issuance of the Quarterly Report which is comprised of $ 53.3 million related to the Revolving Credit Facility (as defined herein), $ 23.6 million related to the Line of Credit (as defined herein) and $ 34.2 million of notes payable.

We do not currently have sufficient cash on hand, liquidity or projected future cash flows to repay these outstanding amounts and interest due upon maturity.

These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

3 unchanged sentences

We expect to execute on available options in 2024.

We are also evaluating refinancing options for the Line of Credit and expect to refinance prior to maturity.

However, the finalization of the refinancing under these options are not fully within our control and therefore cannot be deemed probable and thus our plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

7 unchanged sentences

The revenue from locations where Metropolis Technologies, Inc.

(“Metropolis”) acts as either a lease tenant or an operator agent represented 56.9 % and 61.0 % of our revenue, excluding commercial revenue, for the six months ended June 30, 2024 and 2023, respectively.

In addition, we had concentrations in Cincinnati ( 18.7 % and 19.4 %), Detroit ( 10.4 % and 10.3 %), and Chicago ( 9.2 % and 9.1 %) based on gross book value of real estate as of June 30, 2024 and December 31, 2023, respectively.

We had concentrations of our outstanding accounts receivable balance with Metropolis of 32.2 % and 60.1 % as of June 30, 2024 and December 31, 2023, respectively.

During the six months ended June 30, 2024, the majority of these receivable balances represent cash paid by parkers that was collected on our behalf by these operators.

(“Metropolis”) acts as either a lease tenant or an operator agent represented 56.2 % and 61.6 % of our revenue, excluding commercial revenue, for the nine months ended September 30, 2024 and 2023, respectively.

Revenue from locations where LAZ Parking ("LAZ") acts as either a lease tenant or an operator agent represented 15.3 % and 3.2 % of our revenue, excluding commercial revenue, for the nine months ended September 30, 2024 and 2023, respectively.

In addition, we had concentrations in Cincinnati ( 18.7 % and 19.4 %), Detroit ( 10.4 % and 10.3 %), and Chicago ( 9.2 % and 9.1 %) based on gross book value of real estate as of September 30, 2024 and December 31, 2023, respectively.

We had concentrations of our outstanding accounts receivable balance with Metropolis of 28.8 % and 60.1 % as of September 30, 2024 and December 31, 2023, respectively and with LAZ of 11.8 % and 2.7 % as of September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024, the majority of these receivable balances represent cash paid by parkers that was collected on our behalf by these operators.

Revenue Recognition

During the first half of 2024, 27 of our parking facilities converted from lease arrangements with operators to contracts with the operator to provide services for a set fee.

During 2024, 29 of our parking facilities converted from lease arrangements with operators to contracts with the operator to provide services for a set fee.

Under these contracts, the operators will run the day-to-day activities at the facilities under our direction.

6 unchanged sentences

We apply judgment in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts based on various factors, such as the aging of our receivables, historical experience, and the financial condition of our obligors.

Allowance for doubtful accounts was immaterial as of June 30, 2024 and December 31, 2023.

Allowance for doubtful accounts was approximately $ 0.2 million as of September 30, 2024 and immaterial as of December 31, 2023.

Legacy MIC previously elected to be taxed as a REIT for federal income tax purposes and operated in a manner that allowed Legacy MIC to qualify as a REIT through December 31, 2019.

3 unchanged sentences

A full valuation allowance for deferred tax assets was historically provided each year since we 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, we have evaluated our deferred tax assets for the six months ended June 30, 2024 , which consist primarily of net operating losses and our investment in the Operating Company.

As a taxable C Corporation, we have evaluated our deferred tax assets for the nine months ended September 30, 2024 , which consist primarily of net operating losses and our investment in the Operating Company.

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 June 30, 2024.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three -year period ended September 30, 2024.

Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

We have continued to generate a net loss and as such have determined that we will continue to record a full valuation allowance against our deferred tax assets for the six months ended June 30, 2024 .

We have continued to generate a net loss and as such have determined that we will continue to record a full valuation allowance against our deferred tax assets for the nine months ended September 30, 2024 .

A change in circumstances may cause us to change our judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely than not be realized.

84 unchanged sentences

The transaction price is determined using the parking fee agreed upon and paid prior to use, with no variability or concession based on usage level, and the full transaction price is allocated to the single performance obligation.

Revenue is recognized over the month the parking fee is related to.

Revenue is recognized over the month the parking fee relates.

Disaggregation of revenue

1 unchanged sentence

We have concluded that such disaggregation of revenue best depicts the overall nature and timing of our revenue and cash flows affected by the economic factors of the respective contractual arrangement.

Disaggregated revenue for the three and six months ended June 30, 2024 are as follows (dollars in thousands):

For the Three Months Ended June 30, 2024

For the Six Months Ended June 30, 2024

Disaggregated revenue for the three and nine months ended September 30, 2024 are as follows (dollars in thousands):

For the Three Months Ended September 30, 2024

For the Nine Months Ended September 30, 2024

Transient Parkers

9 unchanged sentences

Receivables may be from parking customers who have a contractual obligation to pay for their usage or from the operators of the facilities who have collected parking fees on our behalf.

As of June 30, 2024, we had $ 3.4 million of outstanding accounts receivable related to our managed property revenue.

As of September 30, 2024, we had $ 3.0 million of outstanding accounts receivable related to our managed property revenue.

It is our standard procedure to bill Contract Parkers in the month prior to when they will be using the facility in accordance with agreed-upon contractual terms.

3 unchanged sentences

No material amounts in deferred revenue represent prepayments longer than a single month.

As of June 30, 2024, we had approximately $ 0.3 million of deferred managed property revenue included in Accounts Payable and Accrued Expenses on the Consolidated Balance Sheets.

As of September 30, 2024, we had approximately $ 0.2 million of deferred managed property revenue included in Accounts Payable and Accrued Expenses on the Consolidated Balance Sheets.

There was no deferred managed property revenue as of December 31, 2023.

4 unchanged sentences

The note is recorded as Note Receivable on the Consolidated Balance Sheets and the interest income is recorded as Other Income on the Consolidated Statements of Operations.

In July 2024, we sold one parking lot in Clarksburg, West Virginia for approximately $ 0.5 million.

In July 2024, we sold one parking lot in Clarksburg, West Virginia for approximately $ 0.5 million, resulting in an immaterial loss on sale of real estate.

We received proceeds of approximately $ 0.4 million, after transaction costs, which were used to pay down a portion of the outstanding balance on the Revolving Credit Facility, as defined below.

In November 2024, we sold a parking lot located in Indianapolis, Indiana for $ 4.6 million.

We received proceeds of approximately $ 4.5 million, after transaction costs, which were used to pay down a portion of the outstanding balance on the Revolving Credit Facility.

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.

2 unchanged sentences

A schedule of our intangible assets and related accumulated amortization as of

June 30, 2024 and

September 30, 2024 and

December 31, 2023 is as follows (dollars in thousands):

As of June 30, 2024

As of September 30, 2024

As of December 31, 2023

14 unchanged sentences

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 a pproximately $ 0.2 million for both the three months ended June 30, 2024 and 2023 and approximately $ 0.4 million for both the six months ended June 30, 2024 and 2023.

Estimated future amortization of intangible assets as of June 30, 2024 for each of the next five years is as follows (dollars in thousands):

Amortization expense associated with intangible assets totaled a pproximately $ 0.2 million for both the three months ended September 30, 2024 and 2023 and approximately $ 0.6 million for both the nine months ended September 30, 2024 and 2023.

Estimated future amortization of intangible assets as of September 30, 2024 for each of the next five years is as follows (dollars in thousands):

In-place lease value

4 unchanged sentences

$ 364 $ 28 $ 3,111

Note G — Notes Payable and Revolving Credit Facility

As of June 30, 2024 , the principal balances on notes payable are as follows (dollars in thousands):

Note G — Debt

As of September 30, 2024 , the principal balances on notes payable are as follows (dollars in thousands):

Original Debt Amount

88 unchanged sentences

Some notes contain various terms and conditions including debt service coverage ratios and debt yield limits.

As of June 30, 2024 , borrowers for one of our loans totaling $ 26.4 million, failed to meet certain loan covenants.

As a result, we are subject to additional cash management procedures, which resulted in approximately $ 0.6 million of restricted cash as of June 30, 2024 .

As of September 30, 2024 , borrowers for one of our loans totaling $ 26.2 million, failed to meet certain loan covenants.

As a result, we are subject to additional cash management procedures, which resulted in approximately $ 1.0 million of restricted cash as of September 30, 2024 .

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 June 30, 2024 , future principal payments on notes payable are as follows (dollars in thousands):

As of September 30, 2024 , future principal payments on notes payable are as follows (dollars in thousands):

2024 (remainder)

6 unchanged sentences

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 %.

In June 2024, we requested, and KeyBank accepted, a fixed all-in rate on our Revolving Credit Facility of 8.4 % from July 1 until October 1, 2024.

As of June 30, 2024, the balance of unamortized loan fees associated with the Revolving Credit Facility is $ 0.1 million which is being amortized to Interest Expense, Net in the Consolidated Statements of Operations over the remaining term.

In April 2024, we executed the first extension option, which extended the maturity through October 2024.

In October 2024, we executed the second extension option which extends the maturity through April 1, 2025 with an interest rate spread above SOFR of 3.5 %.

In September 2024, we entered into a fixed all-in rate on our Revolving Credit Facility of 8.2 % from October 1, 2024 until January 2, 2025.

Upon closing of the Line of Credit, as defined below, we remitted $ 5.0 million of the proceeds to pay down outstanding borrowings under the Credit Agreement.

Line of Credit

In September 2024, we entered into a $ 40.4 million revolving credit facility agreement with Harvest Small Cap Partners, L.P.

and Harvest Small Cap Partners Master, Ltd.

(collectively, the “Lenders”) maturing in September 2025 (the “Line of Credit”).

Borrowings under the Line of Credit will accrue interest at a rate of 15.0 % per annum, with interest payable in arrears at maturity or upon repayment of any principal amount borrowed under the Line of Credit.

The proceeds from the Line of Credit (after payment of related legal fees) are only to be used for redemption payments on the Series A Preferred Stock and Series 1 Preferred Stock, payment of dividends on the Series A Preferred Stock and Series 1 Preferred Stock accrued prior to the closing date of the Line of Credit, funding of the share repurchase program, discussed below, and a $ 5.0 million paydown on the Revolving Credit Facility, as noted above.

The Line of Credit includes provisions for a cross-default in connection with the Revolving Credit Facility and defaults on certain other indebtedness exceeding $ 25 million.

Osher, co-chair of the Company’s board of directors, is the managing member of No Street Capital LLC, which serves as the investment manager of the Lenders.

Upon drawing the first $ 15.0 million under the Line of Credit on the closing date, we issued 500,000 shares of common stock to the Lenders subject to a 180 -day lock period commencing on the date of issuance.

The issuance date fair value of the shares of approximately $ 1.8 million is considered a debt issuance cost and recorded in Other Assets on our Consolidated Balance Sheet and amortized over the one -year term to Interest Expense on the Consolidated Statement of Operations.

Unamortized loan fees as of September 30, 2024 were approximately $ 1.7 million.

As of September 30, 2024, approximately $ 17.9 million was outstanding under the Line of Credit.

As of the November 1, 2024, the outstanding balance increased to approximately $ 23.6 million.

Note H — Equity

6 unchanged sentences

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 Legacy MIC 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.

As of June 30, 2024 and December 31, 2023, approximately $ 0.7 million and $ 0.8 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.

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 receipt of the notice.

During the six months ended June 30, 2024 , approximately 500 shares of Series A Preferred Stock converted to approximately 172,000 shares of common stock and the payment of accrued distributions in common stock are shown as a non-cash item in the Consolidated Statements of Cash Flows.

Series 1 Convertible Redeemable Preferred Stock

1 unchanged sentence

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 Legacy MIC 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.

As of June 30, 2024 and December 31, 2023, approximately $ 9.2 million and $ 9.7 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.

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 receipt of the notice.

During the six months ended June 30, 2024 , approximately 5,200 shares of Series 1 Preferred Stock converted to approximately 1.7 million shares of common stock and the payment of accrued distributions in common stock are shown as a non-cash item in the Consolidated Statements of Cash Flows.

Series 1 Preferred Stock and Series A Preferred Stock Distributions

March 2020, we began accruing distributions on the Series

1 Preferred Stock and Series A Preferred Stock after the Legacy MIC Board unanimously authorized the suspension of the payment of distributions.

September 11, 2024, the Board declared payment of accrued and unpaid dividends for all past dividend periods on the Series

1 Preferred Stock at a rate of

$ 299.84 per share and on the Series A Preferred Stock at a rate of

$ 319.81 per share to holders of record as of close of business on

September 10, 2024 ( collectively, the “Prior Dividend”).

The Company paid the Prior Dividend on

September 30, 2024.

September 11, 2024, the Board also authorized the payment of the monthly dividend for

September 2024 on the Series

1 Preferred Stock and the Series A Preferred Stock at a rate of

and$4.791 per share, respectively, on

October 14, 2024 to holders of record as of the close of business on

September 29, 2024.

The payment of future dividends is subject to the Board’s discretion and will be determined by the Board based on the Company’s financial condition, applicable law and such other considerations as the Board deems relevant.

Series 1 Preferred Stock and Series A Preferred Stock Redemptions and Conversions

Upon receipt of written notice to convert shares of Series 1 Preferred Stock and Series A Preferred Stock into common stock, we have the option to redeem the shares for cash with the redemption price equal to the Series 1 Preferred Stock and Series A Preferred Stock stated value, which is $1,000, plus any accrued but unpaid dividends.

Should we elect to convert the shares, each share of Series 1 Preferred Stock and Series A Preferred Stock will convert into a number of shares of common stock determined by dividing the sum of (i) 100% of the 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 receipt of the notice.

During the nine months ended September 30, 2024 , approximately 8,000 shares of Series 1 Preferred Stock and approximately 600 shares of Series A Preferred Stock converted to approximately 2.8 million and 193,000 shares of common stock, respectively.

Approximately 1,300 shares of the Series 1 Preferred Stock were redeemed for cash during the nine months ended September 30, 2024.

In addition, requested redemptions at September 30, 2024 of approximately 5,500 shares with a stated value of approximately $ 5.5 million of Series 1 Preferred Stock were reclassified to Accrued Preferred Distributions and Redemptions on the Consolidated Balance Sheet, as we intend to redeem the shares for cash.

There were no cash redemptions on the Series A Preferred Stock during the nine months ended September 30, 2024.

In accordance with its warrant agreement between Legacy MIC and Color Up, LLC, a Delaware limited liability company controlled by Mr.

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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 June 30, 2024, the Operating Company had approximately 43.7 million Common Units outstanding, excluding any equity incentive units granted.

Convertible Non-controlling Interests

As of September 30, 2024, the Operating Company had approximately 45.4 million Common 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 our 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 June 30, 2024 are classified as noncontrolling interests within permanent equity on our Consolidated Balance Sheet.

During the nine months ended September 30, 2024, approximately 337,000 Common Units converted to shares of common stock on a one -for- one basis.

As of November 1, 2024, approximately 8.5 million additional Common Units converted to shares of common stock on a one -for- one basis.

The Common Units not held by the Company outstanding as of September 30, 2024 are classified as noncontrolling interests within permanent equity on our Consolidated Balance Sheet.

Share Repurchase Program

September 2024, the Board authorized a share repurchase program of up to

$ 10 million of shares of our outstanding common stock.

may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

Open market repurchases

may be structured to occur in accordance with the requirements of Rule

18 of the Securities Exchange Act of

1934, as amended.

may also, from time to time, enter into Rule

1 plans to facilitate repurchases of our shares under this authorization.

nine months ended

2024, we repurchased

26,925 shares under the program, for a cost of approximately

$ 0.1 million.

November 1, 2024, approximately

236,000 additional shares were repurchased under the program for a cost of approximately

$ 0.7 million.

Note I — Stock-Based Compensation

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This award will vest based upon the performance of our stock versus the Russell 2000 Index through January 2027.

The following table sets forth a roll forward of all incentive equity awards for the six months ended June 30, 2024:

The following table sets forth a roll forward of all incentive equity awards for the nine months ended September 30, 2024:

Number of Incentive Equity Awards

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( 823,497 ) 6.31

Unvested - June 30, 2024

Unvested - September 30, 2024

3,671,748 $ 6.56

We recognized $ 3.4 million and $ 3.1 million of equity-based compensation expense for the six months ended June 30, 2024 and 2023, respectively, which is included in General and Administrative in the Consolidated Statements of Operations.

We recognized $ 4.8 million and $ 6.1 million of equity-based compensation expense for the nine months ended September 30, 2024 and 2023, respectively, which is included in General and Administrative in the Consolidated Statements of Operations.

The remaining unrecognized compensation cost of approximately $ 3.8 million will be recognized over a weighted average term of 2.1 years.

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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 three and six months ended June 30, 2024 and 2023 and therefore were excluded from the dilutive calculation.

Outstanding warrants and stock-based compensation were antidilutive as a result of the net loss for the three and nine months ended September 30, 2024 and 2023 and therefore were excluded from the dilutive calculation.

We include unvested performance units as contingently issuable shares in the computation of diluted EPS once the market criteria are met, assuming that the end of the reporting period is the end of the contingency period.

We had 4.1 million unvested service- and performance-based awards which are considered antidilutive to the dilutive loss per share calculation for the three and six months ended June 30, 2024 and 2023.

We had 3.7 million unvested service- and performance-based awards which are considered antidilutive to the dilutive loss per share calculation for the three and nine months ended September 30, 2024 and 2023.

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

six months ended June 30, 2024 and 2023 (dollars in thousands):

nine months ended September 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended

For the Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

For the Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Net loss attributable to MIC

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Through the discounting of the remaining lease payments at our incremental borrowing rate of 8.42 %, the value of both the ROU asset and ROU liability recognized at commencement date was approximately $ 0.3 million.

We recognized approximately $ 11,000 and $ 20,000 of operating lease expense during the three and six months ended June 30, 2024, respectively.

We recognized approximately $ 10,000 and $ 30,000 of operating lease expense during the three and nine months ended September 30, 2024, respectively.

This expense is included in Property Operating Expense on the Consolidated Statements of Operations.

Changes in the lease liability and lease asset amortization expense were not material in the Statement of Cash Flows.

As of June 30, 2024, future lease payments are as follows (dollars in thousands):

As of June 30, 2024

As of September 30, 2024, future lease payments are as follows (dollars in thousands):

As of September 30, 2024

2024 (remainder)

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Louis and MVP St.

Louis Cardinal Lot Master Tenant, LLC, which had total assets of approximately $ 12.2 and $ 13.0 million (substantially all real estate investments) and liabilities of approximately $ 6.3 and $ 6.6 million (substantially all mortgage debt) before consolidation as of June 30, 2024 and December 31, 2023, respectively.

Louis Cardinal Lot Master Tenant, LLC, which had total assets of approximately $ 12.1 and $ 13.0 million (substantially all real estate investments) and liabilities of approximately $ 6.2 and $ 6.6 million (substantially all mortgage debt) before consolidation as of September 30, 2024 and December 31, 2023, respectively.

Note M — Fair Value

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Due to their short maturities or recent nature, 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 approximates $ 183.7 million and $ 182.9 million as of June 30, 2024 and December 31, 2023, respectively.

The estimated fair value of our notes payable and the Revolving Credit Facility was derived using Level 2 inputs and approximates $ 174.9 million and $ 182.9 million as of September 30, 2024 and December 31, 2023, respectively.

The carrying amount of the Line of Credit as of September 30, 2024 approximates fair value.

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 six months ended June 30, 2024 and the year ended December 31, 2023 were as follows (in thousands):

June 30, 2024

Fair value measurements that occurred as of and during the nine months ended September 30, 2024 and the year ended December 31, 2023 were as follows (in thousands):

September 30, 2024

December 31, 2023

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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 approximately $ 1.0 million during the six months ended June 30, 2024, as a result of changes in the estimated fair values after the Merger.

We recognized a gain of approximately $ 1.1 million during the nine months ended September 30, 2024, as 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 six months ended June 30, 2024 (in thousands):

The following table reflects the change in value during the nine months ended September 30, 2024 (in thousands):

Level 3 Liability

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Change in fair value recognized in earnings

Balance as of June 30, 2024

Balance as of September 30, 2024

Our real estate assets are measured and recognized at fair value on a nonrecurring basis when we determine an impairment has occurred.

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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 six months ended June 30, 2024, we impaired approximately $ 0.2 million of our real estate assets as a result of a planned disposition of a property.

During the nine months ended September 30, 2024, we impaired approximately $ 0.2 million of our real estate assets as a result of a planned disposition of a property.

Note N — Commitments and Contingencies

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As a result of the District 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).

During the first quarter of 2023, and as part of the appeals process, Legacy MIC posted cash collateral of $ 0.7 million for an appeals bond, which is reflected in Cash-Restricted on our Consolidated Balance Sheets.

During the first quarter of 2023, and as part of the appeals process, Legacy MIC posted cash collateral of $ 0.7 million for an appeals bond.

In September 2024, a settlement was reached resulting in a gain on the settlement of approximately $ 0.3 million which is reflected in Other Income, Net in the Consolidated Statements of Operations for the nine months ended September 30, 2024.

In September 2023, we entered into arbitration with one vendor regarding disputes over amounts payable of approximately $ 1.8 million.

In June 2024, a settlement was reached and the net impact of the gain on the settlement and related legal and administrative fees is immaterial to the Consolidated Statements of Operations for the six months ended June 30, 2024.

The remaining amount payable is accrued for in Accounts Payable and Accrued Expenses on the Consolidated Balance Sheets.

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Our CEO is neither an owner nor beneficiary of Park Place Parking.

As of June 30, 2024 and December 31, 2023, we recorded balances of approximately $ 0.2 million and $ 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 management agreement.

As of September 30, 2024 and December 31, 2023, we recorded balances of approximately $ 0.2 million and $ 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 management agreement.

In May 2022, we entered into a lease agreement with ProKids, an Ohio not -for-profit.

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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 us throughout the lease term, other than a rental fee on parking spaces used by the ProKids staff and visitors.

As of June 30, 2024, ProKids does not owe us rental income related to the lease agreement.

ProKids will have no rent due to us throughout the lease term, other than a rental fee on parking spaces used by the ProKids staff and visitors and payment toward common area utility costs.

As of September 30, 2024, ProKids does not owe us 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.

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We have agreed to pay for certain tax return preparation services of Color Up and certain member entities of Color Up as well as certain legal services in connection with the Registration Rights Agreement.

We have incurred approximately $ 0.1 million related to these services which is reflected in General and Administrative and Other Income (Expense) on the Consolidated Statements of Operations for the six months ended June 30, 2024.

Total fees are estimated to be approximately $ 0.2 million.

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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.

Line of Credit

In September 2024, we entered into a $ 40.4 million Line of Credit.

Osher, co-chair of the Company’s board of directors, is the managing member of No Street Capital LLC, which serves as the investment manager of the Lenders.

For further discussion of the Line of Credit, refer to Note G above.

Note P — Revision of Previously Issued Financial Information

During the quarter ended September 30, 2024, the Company identified certain errors impacting our 2023 annual filing and our first and second quarterly filings of 2024.

The error resulted from a need to adjust the carrying amount of noncontrolling interest related to conversions of preferred shares into common shares.

Management assessed the materiality of these errors and concluded the misstatements were not material to the audited financial statements for the period ended December 31, 2023, and the unaudited financial statements for the periods ended March 31, 2024 and June 30, 2024.

Presented below are revisions to the previously issued financial statements presented in this Form 10 -Q.

As of December 31, 2023

(in thousands, unaudited)

Consolidated Balance Sheet:

Additional paid-in capital

$ 240,357 $ 21,827 $ 262,184

Non-controlling interest

$ 93,568 $ ( 21,827 ) $ 71,741

For the Year Ended December 31, 2023

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

(in thousands, unaudited)

Consolidated Statement of Changes in Equity

Allocation of equity to non-controlling interest

$ — $ 21,827 $ 21,827 $ — $ 3,087 $ 3,087 $ — $ 2,183 $ 2,183

Additional paid-in capital

$ 240,357 $ 21,827 $ 262,184 $ 240,994 $ 24,914 $ 265,908 $ 241,812 $ 27,097 $ 268,909

Non-controlling interest

$ 93,568 $ ( 21,827 ) $ 71,741 $ 95,177 $ ( 24,914 ) $ 70,263 $ 95,327 $ ( 27,097 ) $ 68,230

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a financial review and analysis of our financial condition and results of operations for the three and six months ended June 30, 2024 and 2023.

The following is a financial review and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2024 and 2023.

This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Conditions and Results of Operations in our annual report on Form 10-K for the fiscal year ended December 31, 2023.

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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 June 30, 2024, we own 42 parking facilities in 21 separate markets throughout the United States, with a total of approximately 15,400 parking spaces and approximately 5.2 million square feet.

We also own approximately 0.2 million square feet of retail/commercial space adjacent to its parking facilities.

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Managed Property Revenue Contracts

In the first half of 2024, 27 of our 42 assets converted to management contracts.

In 2024, 29 of our 41 assets converted to management contracts.

We believe asset management contracts provide the opportunity for net operating income ("NOI") growth through more transparent and controlled expense management, and will reduce the revenue variability associated with the timing of payments for contract parking agreements.

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Overall, the conversion to contracts also provides enhanced visibility on the performance of the portfolio within our financial results.

Our intent is to convert the remaining assets to asset management contracts by the end of 2027, with additional assets expected to be converted in 2024.

Results of Operations for the Three Months Ended June 30, 2024 (dollars in thousands):

For the Three Months Ended June 30,

Our intent is to convert the remaining assets to asset management contracts by the end of 2027.

Results of Operations for the Three Months Ended September 30, 2024 (dollars in thousands):

For the Three Months Ended September 30,

Managed property revenue

3 unchanged sentences

Total revenues

The increase in total revenues for the three months ended June 30, 2024 compared to the same period in 2023 is due primarily to 27 of our 42 assets converting to management contracts in the first half of 2024, as noted above.

The increase in total revenues for the three months ended September 30, 2024 compared to the same period in 2023 is due primarily to 29 of our 41 assets converting to management contracts in 2024, as noted above.

The change to management contracts results in us recognizing revenue from all parking transactions at those locations.

Under the previous lease agreements, we only received a portion of the revenue after a certain threshold was reached.

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Operating expenses

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Property operating expense

Depreciation and amortization

General and administrative

Preferred Series 2 - issuance expense

Professional fees

Organizational, offering and other costs

Depreciation and amortization

Total expenses

1 unchanged sentence

Property operating expense

The increase in property operating expense for the three months ended June 30, 2024 compared to the same period in 2023 is due primarily to 27 of our 42 assets converting to management contracts in the first half of 2024, as noted above.

The increase in property operating expense for the three months ended September 30, 2024 compared to the same period in 2023 is due primarily to 29 of our 41 assets converting to management contracts in 2024, as noted above.

The change to management contracts results in higher reflected operating expenses as revenues under the previous lease agreements were calculated based on collections reduced by certain costs, whereas these costs are now recorded as property operating expense under management contracts.

General and administrative

The $0.5 million increase in general and administrative expenses during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 is primarily attributable to non-cash compensation cost for certain executive LTIP Units and restricted stock units granted in the first half of 2024, as well as an increase in payroll and technology expenses.

For the Three Months Ended June 30,

The $1.5 million decrease in general and administrative expenses during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 is primarily attributable to the cancellation of executive LTIP Units for $1.4 million in the third quarter of 2023.

Preferred Series 2 - issuance expense

As part of accounting for the reverse capitalization in 2023, we evaluated the Series 2 Preferred Stock arrangement and determined the fair value of the Series 2 Preferred Stock at the time of the transaction of $66.7 million ($4.84 per share) exceeded the implied conversion rate based on a total of 13,787,464 shares of common stock being issued on December 31, 2023 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.

Organizational, offering and other costs

The decrease in organizational, offering and other costs during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 is primarily attributable to transaction costs associated with the Merger that were allocated to the 1,900,000 FWAC Class B Shares that converted to common stock and which are subject to an earn-out structure (the “Earn-Out Shares”) under terms outlined in the Second Amended and Restated Sponsor Agreement.

During the three months ended September 30, 2023 the Company recorded approximately $8.7 million of asset impairment charges related to assets impacted by delayed return-to-work trends or other reductions of demand-drivers impacting these assets.

For the Three Months Ended September 30,

Interest expense

Other (expense) income, net

(Loss) Gain on sale of real estate

Other income, net

Change in fair value of Earn-Out liability

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The decrease in interest expense of approximately $0.3 million during the three months ended

June 30, 2024 compared to the same period in the prior year is primarily attributable to the repayment of $9.9 million of mortgage loans and the paydown of $15.0 million on the Revolving Credit Facility in the third quarter of 2023 partially offset by increases in interest rates on the Revolving Credit Facility compared to the prior year.

September 30, 2024 compared to the same period in the prior year is primarily attributable to the repayment of $9.9 million of mortgage loans in the third quarter of 2023 and the paydowns of $15.0 million and $5.0 million on the Revolving Credit Facility in the third quarter of 2023 and 2024, respectively.

This was partially offset by increases in interest rates on the Revolving Credit Facility compared to the prior year and additional interest expense on the Line of Credit entered into in the third quarter of 2024.

Other income, net

The decrease in other income of approximately $0.7 million during the three months ended September 30, 2024 compared to the same period in the prior year is primarily attributable to a gain from a settlement agreement entered into on September 6, 2023.

Change in the fair value of the Earn-Out liability

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Changes to the fair value of the liability during the period are reflected in earnings.

Results of Operations for the Six Months Ended June 30, 2024 (dollars in thousands):

For the Six Months Ended June 30,

Results of Operations for the Nine Months Ended September 30, 2024 (dollars in thousands):

For the Nine Months Ended September 30,

Managed property revenue

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Total revenues

The increase in total revenues for the six months ended June 30, 2024 compared to the same period in 2023 is due primarily to 27 of our 42 assets converting to management contracts in the first half of 2024, as noted above.

The increase in total revenues for the nine months ended September 30, 2024 compared to the same period in 2023 is due primarily to 29 of our 41 assets converting to management contracts in 2024, as noted above.

The change to management contracts results in us recognizing revenue from all parking transactions at those locations.

Under the previous lease agreements, we only received a portion of the revenue after a certain threshold was reached.

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Operating expenses

1 unchanged sentence

Property operating expense

Depreciation and amortization

General and administrative

Preferred Series 2 - issuance expense

Professional fees

Organizational, offering and other costs

Depreciation and amortization

Total expenses

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The increase in property taxes for the

six months ended

June 30, 2024 compared to the same period in 2023 is due primarily to increases in estimated property tax assessments recognized in the first half of 2024.

nine months ended

September 30, 2024 compared to the same period in 2023 is due primarily to increases in estimated property tax assessments recognized in 2024.

Property operating expense

The increase in property operating expense for the six months ended June 30, 2024 compared to the same period in 2023 is due primarily to 27 of our 42 assets converting to management contracts in the first half of 2024, as noted above.

The increase in property operating expense for the nine months ended September 30, 2024 compared to the same period in 2023 is due primarily to 29 of our 41 assets converting to management contracts in 2024, as noted above.

General and administrative

The $0.9 million increase in general and administrative expenses during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 is primarily attributable to non-cash compensation cost for certain executive LTIP Units and restricted stock units granted in the first half of 2024, as well as, an increase in payroll and technology expenses.

The $0.6 million decrease in general and administrative expenses during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 is primarily attributable to the cancellation of executive LTIP Units for $1.4 million in the third quarter of 2023, partially offset by non-cash compensation cost for awards granted in 2024 and an increase in payroll and technology expenses.

Preferred Series 2 - issuance expense

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.

Professional fees

Professional fees increased by approximately $0.2 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Professional fees increased by approximately $0.2 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The increase was primarily attributable to additional professional service fees and costs associated with being publicly traded on the NYSE American.

During the six months ended June 30, 2024, we impaired approximately $0.2 million of our real estate assets as a result of a planned disposition of a property.

For the Six Months Ended June 30,

Organizational, offering and other costs

The decrease in organizational, offering and other costs during the nine

September 30, 2024

compared to the nine months ended

September 30, 2023

is primarily attributable to transaction costs associated with the Merger that were allocated to the 1,900,000 Earn-Out Shares under terms outlined in the Second Amended and Restated Sponsor Agreement.

During the nine months ended September 30, 2024, we impaired approximately $0.2 million of our real estate assets as a result of a planned disposition of a property.

During the nine months ended September 30, 2023 we recorded approximately $8.7 million of asset impairment charges related to assets impacted by delayed return-to-work trends or other reductions of demand-drivers impacting these assets.

For the Nine Months Ended September 30,

Interest expense

(Loss) Gain on sale of real estate

Other (expense) income, net

Other income, net

Change in fair value of Earn-Out liability

2 unchanged sentences

The decrease in interest expense of approximately $1.5 million during the

six months ended

nine months ended

(Loss) Gain on sale of real estate

In February 2024, we disposed of our Cincinnati Race Street location for $3.15 million, resulting in a loss on sale of real estate of approximately $0.1 million.

In July 2024, we sold one parking lot in Clarksburg, West Virginia for approximately $0.5 million, resulting in an immaterial loss on sale of real estate.

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.

Other income, net

The decrease in other income of approximately $0.9 million during the nine months ended

September 30, 2024 compared to the same period in the prior year is primarily attributable to a gain from a settlement agreement entered into on September 6, 2023.

Change in the fair value of the Earn-Out liability

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The following table presents our NOI as well as a reconciliation of NOI to Net Loss, the most directly comparable financial measure under U.S.

GAAP reported in our consolidated financial statements, for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

GAAP reported in our consolidated financial statements, for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Managed property revenue

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Loss (gain) on sale of real estate

Other (expense) income, net

Other income, net

Change in fair value of Earn-Out liability

2 unchanged sentences

General and administrative

Preferred Series 2 - issuance expense

Professional fees

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We use EBITDA and Adjusted EBITDA as measures of operating performance which allow us to compare earnings and evaluate debt leverage and fixed cost coverage.

The following table presents our calculation of EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

The following table presents our calculation of EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Reconciliation of Net Loss to Adjusted EBITDA Attributable to the Company

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Impairment of real estate

Preferred Series 2 - Issuance Expense

Change in fair value of Earn-Out liability

Gain on settlement of indemnification liability

Loss (gain) on sale of real estate

Transaction costs

Transaction and other costs

Equity based compensation

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capital expenditures;

redemption and dividend payments on the Series A Preferred Stock and Series 1 Preferred Stock;

funding of our share repurchase program;

acquisitions of assets.

Our principal source of funds will be rental income and managed property revenue at our parking facilities as well as existing cash on hand as a result of the Merger and the Preferred PIPE Investment.

Our principal source of funds will be rental income and managed property revenue at our parking facilities as well as existing cash on hand as a result of the Merger, the Preferred PIPE Investment and the Line of Credit.

We also may sell properties that we own or place mortgages on properties that we own to raise capital.

We have $93.1 million of debt maturing within twelve months of the date of the issuance of the Quarterly Report which is comprised of $58.7 million related to the Revolving Credit Facility and $34.4 million of notes payable.

We do not currently have sufficient cash on hand, liquidity or projected future cash flows to repay these outstanding amounts upon maturity.

We have $111.1 million of debt due within twelve months of the date of the issuance of the Quarterly Report which is comprised of $53.3 million related to the Revolving Credit Facility (as defined herein), $23.6 million related to the Line of Credit (as defined herein) and $34.2 million of notes payable.

We do not currently have sufficient cash on hand, liquidity or projected future cash flows to repay these outstanding amounts and interest due upon maturity.

These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

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We expect to execute on available options in 2024.

We are also evaluating refinancing options for the Line of Credit and expect to refinance prior to maturity.

See Note B — Summary of Significant Accounting Policies in Part I, Item 1 Notes to the Consolidated Financial Statements of this Quarterly Report for further discussion.

During 2023 and the six months ended June 30, 2024, we have taken steps to both extend and ladder maturities in our debt profile, including:

During 2023 and the nine months ended September 30, 2024, we have taken steps to both extend and ladder maturities in our debt profile, including:

In September 2023, we paid approximately $9.9 million to Vestin Realty Mortgage II, Inc.

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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%.

In April 2024, we executed the first extension option, which extended the maturity through October 2024.

In October 2024, we executed the second extension option which extends the maturity through April 1, 2025 with an interest rate spread above SOFR of 3.5%.

We intend to pursue additional refinancing options related to the Credit Agreement and our near-term maturities.

In September 2024, we entered into a $40.4 million Line of Credit, maturing in September 2025 (the “Line of Credit”).

Borrowings under the Line of Credit will accrue interest at a rate of 15.0% per annum, with interest payable in arrears at maturity or upon repayment of any principal amount borrowed under the Line of Credit.

The proceeds from the Line of Credit (after payment of related legal fees) are only to be used for redemption payments on the Series A Preferred Stock and Series 1 Preferred Stock, unpaid dividends on the Series A Preferred Stock and Series 1 Preferred Stock accrued prior to the closing date of the Line of Credit, funding of the share repurchase program, and a $5.0 million paydown on the Revolving Credit Facility.

Certain lenders may require reserves related to capital improvements, insurance, and excess cash.

These lender-required reserves make up the majority of our restricted cash amounts as of June 30, 2024.

These lender-required reserves make up the majority of our restricted cash amounts as of September 30, 2024.

Capital Expenditures

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However, we have identified a pipeline of acquisition opportunities that we believe is bespoke and actionable, while being largely off-market and unavailable to our competitors.

As of June 30, 2024, we have identified and are evaluating several parking facilities with approximately $300 million in asset value as potential acquisition targets.

As of September 30, 2024, we have identified and are evaluating several parking facilities as potential acquisition targets.

However, we are unlikely to acquire additional parking facilities until more favorable financial market conditions are realized.

Distributions and Warrants

Distributions and redemptions

In September 2024, we paid all accrued and unpaid dividends for the past dividend periods on the Series A Preferred Stock and Series 1 Preferred Stock.

Additionally, on September 11, 2024, we declared payment of the September monthly dividend, which was paid on October 14, 2024 to the respective holders of record of the Series A Preferred Stock and the Series 1 Preferred Stock as of the close of business on September 29, 2024.

On October 28, 2024, we declared payment of the October monthly dividend, which is payable on November 12, 2024 to the respective holders of record of the Series A Preferred Stock and the Series 1 Preferred Stock as of the close of business on October 28, 2024.

The payment of future dividends is subject to the Board’s discretion and will be determined by the Board based on the Company’s financial condition and such other considerations as the Board deems relevant.

Additionally, in September 2024, we began electing to redeem shares of Series A Preferred Stock and Series 1 Preferred Stock for cash rather than converting to common stock.

Proceeds from the Line of Credit are used to pay the stated value of the shares redeemed for cash as well as the unpaid dividends accrued prior to closing of the Line of Credit.

In March 2018, we suspended the payment of distributions on our common stock.

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We have not established any limit on the extent to which distributions could be funded from these other sources.

We are currently accruing dividends in accordance with the terms of the Series A Preferred Stock and Series 1 Preferred Stock.

As of June 30, 2024, the balance unpaid dividends outstanding was approximately $0.7 million and $9.2 million for Series A Preferred Stock and Series 1 Preferred Stock, respectively.

No cash dividend on the common stock can be paid until the preferred distributions are paid.

Share repurchase program

In September 2024, the Board authorized a share repurchase program of up to $10 million of shares of our outstanding common stock.

Repurchases may be made from time to time through open-market purchases or privately negotiated transactions.

Proceeds from the Line of Credit are used to fund the share repurchase program.

As a result of the Merger, our previously outstanding warrant became a warrant to purchase 2,553,192 shares of our common stock at an exercise price of $7.83 per share, exercisable as of the date of the Closing (the “Common Stock Warrants”).

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Sources and Uses of Cash

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023 (dollars in thousands):

For the Six Months Ended June 30,

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023 (dollars in thousands):

For the Nine Months Ended September 30,

Net cash (used in) operating activities

Net cash (used in) provided by investing activities

Net cash (used in) financing activities

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023:

Net cash (used in) investing activities

Net cash (used in) provided by financing activities

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023:

Cash flows from operating activities

The cash used in operating activities for the six months ended June 30, 2024 was primarily attributable to payment of certain general and administrative and professional fees and changes in working capital, which offset the benefit of changes in NOI for the period.

The cash used in operating activities for the nine months ended September 30, 2024 was primarily attributable to payment of certain general and administrative and professional fees, settlement of liabilities and changes in working capital, which offset the benefit of changes in NOI for the period.

Cash flows from investing activities

The cash used in investing activities during the six months ended June 30, 2024 was primarily attributable to capital expenditures and payments on sale of one parking asset in February 2024 as the sale was financed with a note receivable.

The cash provided by investing activities during the six months ended June 30, 2023 was primarily attributable to routine and strategic capital expenditures and the sale of one parking asset in February 2023.

The cash used in investing activities during the nine months ended September 30, 2024 was primarily attributable to capital expenditures and proceeds on the sale of one parking asset in July 2024 partially offset by payments on sale of one parking asset in February 2024 as the sale was financed with a note receivable.

The cash used in investing activities during the nine months ended September 30, 2023 was primarily attributable to routine and strategic capital expenditures partially offset by proceeds from the sale of one parking asset in February 2023.

Cash flows from financing activities

The cash used in financing activities during the six months ended June 30, 2024 was primarily attributable to the refinancing of certain notes payable and related loan fees.

The cash used in financing activities during the six months ended June 30, 2023 was primarily attributable to principal payments on mortgage loans, including $1.0 million for the one parking asset sold in February 2023, as well as distribution payments to non-controlling interest holders in MVP St.

Louis Cardinal Lot, DST.

The cash used in financing activities during the nine months ended September 30, 2024 was primarily attributable to the proceeds from the Line of Credit, payments on the Revolving Credit Facility and refinancing of certain notes payable and related loan fees, as well as distribution and redemption payments on the Series 1 Preferred Stock and Series A Preferred Stock.

The cash provided by financing activities during the nine months ended September 30, 2023 was primarily attributable to the Merger and the PIPE investment.

The proceeds from the Merger were then used to fund the $15.0 million paydown of the Revolving Credit Facility, payment of transaction costs, and pay-off of certain of mortgage loans.

Seasonality and Quarterly Results

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements