Mobile Infrastructure Corp

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(UNAUDITED)

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 optimizing 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 top50 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* September**30,* 2024, we own 41 parking facilities in20 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.

FWAC was a blank check, Cayman Islands exempted company, incorporated on* February 19, 2021for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination withone* 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 Quarterly Report on Form10*-Q 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 Quarterly Report on Form10-Q to “Legacy MIC” refer to Mobile Infrastructure Corporation and its consolidated subsidiaries prior to the closing of the Merger. References in this Quarterly Report on Form10-Q 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 aone-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 andone appointed by the other members of the Operating Company. Currently, thetwo directors of the Operating Company are Manuel Chavez, III, our Chief Executive Officer and a director, and Stephanie Hogue, our President and a director. The Company owns approximately 70.0% of the Common Units of the Operating Company. The remaining Common Units are held by certain of our executive officers and directors (directly or indirectly) and outside investors.

The Company is publicly traded on the NYSE American under the ticker “BEEP.” As a result of the Merger:

Additionally, on* June 15, 2023,HSCP Strategic III, LP, a Delaware limited partnership (“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 Series2* Convertible Preferred Stock of the Company, par value $0.0001 per share (the “Series2 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 Series2* 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.

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:

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, withno 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.

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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 generally accepted accounting principles in the United States (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) ASC, and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the consolidated financial statements donot include all of the information and footnotes required by GAAP for complete financial statements. 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. Operating results for thethree andnine months ended* September 30, 2024*, arenot necessarily indicative of the results that* maybe expected for the year ending December 31, 2024.There wereno* significant changes to our significant accounting policies during thenine months ended* September 30, 2024* other than those noted below. For a full summary of our accounting policies, refer to our Annual Report on Form10-K for the fiscal year ended* December 31, 2023filed with the SEC on March 22, 2024.*

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 we will be able to meet our obligations and continue our operationsone year from the date of the issuance of the Quarterly Report, which is dependent upon our ability to effectively implement plans related to the secured debt that matures withinone year after the date of the issuance of the Quarterly Report.

We have incurred net losses since our inception and anticipate net losses for the near future. We have $111.1 million of debt due withintwelve 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 donot 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.

We are currently analyzing financial and strategic alternatives in order to satisfy these debt maturities. While there can beno assurance that we will satisfy the debt prior to or at maturity, management has determined it is probable that it will be able to address the notes payable maturities by refinancing the notes payable and/or selling the real estate investments and utilizing the sales proceeds to satisfy the related notes payable.

With respect to the Revolving Credit Facility, we are evaluating several refinancing options supported by current term sheets received from multiple lenders. We expect to execute on available options in2024. 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 arenot fully within our control and therefore cannot be deemed probable and thus our plans donot alleviate substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements donot include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts of liabilities that might result from the outcome of this uncertainty.

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

Our operators* mayact as agents collecting revenues on our behalf or mayact as lessee if under a lease agreement. The revenue from locations where Metropolis Technologies, Inc. (“Metropolis”) acts as either a lease tenant or an operator agent represented 56.2% and 61.6% of our revenue, excluding commercial revenue, for thenine* months ended* September30,* 2024 and2023, 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 thenine months ended* September30,* 2024 and2023, 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* September30,* 2024 and* December 31, 2023,respectively and with LAZ of 11.8% and 2.7% as of September30,* 2024 and* December 31, 2023,respectively. During thenine* 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

During2024, 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. We recognize revenue and expenses on a gross basis as we have determined we are the principal in these arrangements. These management contracts are accounted for in accordance with ASC Topic606, Revenue from Contracts with Customers, and the revenues associated with these contracts are recorded as Managed Property Revenue in the Consolidated Statement of Operations.

Taxes assessed by a governmental authority that are collected from a customer are excluded from revenue.

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Allowance for Doubtful Accounts

Accounts receivable is primarily comprised of amounts owed to us for services provided under our managed property contracts and a note receivable related to a property sale. Amounts are recorded at the invoiced amount net of an allowance for doubtful accounts, if necessary. 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 approximately $0.2 million as of* September**30,* 2024 and immaterial as of* December 31, 2023.*

Income Taxes

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.As a consequence of the COVID-19 pandemic, Legacy MIC earned management income in lieu of lease income from a number of distressed tenants, which didnot* constitute qualifying REIT income for purposes of the annual REIT gross income tests, and, as a result, Legacy MIC wasnot in compliance with the annual REIT income tests for the year ended* December 31, 2020.Accordingly, Legacy MIC didnot* qualify for taxation as a REIT in2020 and we continue to be taxed as a C corporation. As a C corporation, we are subject to federal income tax on our taxable income at regular corporate rates.

A full valuation allowance for deferred tax assets was historically provided each year since we believed that as a REIT it was more likely thannot that it wouldnot realize the benefits of its deferred tax assets. As a taxable C Corporation, we have evaluated our deferred tax assets for thenine 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 thethree-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 thenine months ended* September 30, 2024*. A change in circumstances* maycause us to change our judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely thannot* be realized. We would generally report any change in the valuation allowance through our Consolidated Statements of Operations in the period in which such changes in circumstances occur.

Reportable Segments

Our principal business is the ownership and operation of parking facilities. We donot 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:

Note C—Reverse Recapitalization

As described in Note A, the Merger closed on* August 25, 2023.*In connection with the Merger:

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Following the completion of the Merger, the Company had the following outstanding securities:

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 byHS3 on* August 29, 2023,*the Operating Company had the following outstanding securities:

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 year ended* December**31,* 2023 (in thousands):

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 M. Because the shares have voting rights but have contingent vesting conditions, we consider the shares to be issued butnot outstanding. 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 Earn-Out 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 M 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 Series2 Preferred Stock arrangement using the guidance in ASC820 and480. We determined the fair value of the Series2 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 Series2 issuance expense on the Consolidated Statements of Operations.

Note D—** Managed Property Revenues**

Contracts with customers

At our parking facilities, we have a performance obligation to provide access to our property and space for the parker's vehicle. As compensation for that service, we are entitled to fees that will vary based on the level of usage. Substantially all of our managed property revenues come from the followingtwo types of arrangements: Transient Parkers and Contract Parkers. We generally donot have costs associated with obtaining parking contracts as we arenot obligated to pay commissions or incur additional costs to fulfill our responsibility. Revenue transactions occur over time but are generally completed within a single day for Transient Parkers and by the end of the month for Contract Parkers. Therefore we donot have any remaining performance obligations at the end of the period. We apply the practical expedient that permits exclusion of information about the remaining performance obligations that have original expected durations ofone year or less.

Transient Parkers

Transient Parkers include customers who arrive at our parking facilities and have the right to park in any open spotnot otherwise marked as reserved. The contract is entered into and approved by the customer entering the lot and parking based on customary business practices. The term of the contract and duration of parking is determined by the customer, who can leave at any time upon paying. The transaction price is determined using the hourly or fixed rate set at the facility, and the full transaction price is allocated to the single performance obligation. Revenue is recognized the day the parking facility is accessed.

Contract Parkers

Contract parkers include customers who pay, generally in advance, to have the right to access the facility for a set period. The access will generally be for a calendar month and* maybe restricted to certain days or times based on the terms of the contract. The transaction price is determined using the parking fee agreed upon and paid prior to use, withno* 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 relates.

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Disaggregation of revenue

We disaggregate revenue from contracts with customers by Transient Parkers and Contract Parkers. 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 thethree andnine months ended* September**30,* 2024 are as follows (dollars in thousands):

Contract balances

The timing of revenue recognition, billings and cash collections results in accounts receivable and contract liabilities. Accounts receivable represent amounts where we have an unconditional right to the consideration and therefore only the passage of time is required for us to receive consideration due from the customer. Receivables* maybe 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 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. Billing typically occurs prior to revenue recognition, resulting in contract liabilities. The majority of any contract liability will be recognized at end of the following month. Changes in deferred revenue primarily include prepayments for future parking months and recognition of previously deferred revenue.No material amounts in deferred revenue represent prepayments longer than a single month. 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 wasno deferred managed property revenue as of* December 31, 2023.*

Note E—Acquisitions and Dispositions of Investments in Real Estate

2024

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. As part of the agreement, we entered into a financing arrangement with the buyer with the property as collateral. Under the terms of the financing arrangement, the buyer will pay interest of 8.0% on a $3.12 million dollar note for a term of 24 months, at which time the principal amount of the loan will be due. 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 soldone* 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.

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.

Note F—** Intangible Assets**

A schedule of our intangible assets and related accumulated amortization as of* September 30, 2024* and* December 31, 2023* is as follows (dollars in thousands):

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 approximately $0.2 million for both thethree months ended* September30,* 2024 and2023 and approximately $0.6 million for both thenine months ended* September30,* 2024 and2023.

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Estimated future amortization of intangible assets as of* September**30,* 2024 for each of the nextfive years is 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):

*2 Year Interest Only

**10 Year Interest Only

I/O - Interest Only

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In* February 2024**,* we refinanced the note payable for MVP St. Louis2013 and MVP Memphis Poplar with afive 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* September 30, 2024*, borrowers forone 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 millionof 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 fortwo consecutive quarters to return to less restrictive cash management procedures.

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

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”). 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 asecond* 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.

In* March 2024,we executed the Third Amendment to the Credit Agreement, which provided extension options through June 2025with increased interest rate spreads above SOFR at each extension. In April 2024,we executed thefirst* extension option, which extended the maturity through* October 2024.In October 2024,we executed thesecond* extension option which extends the maturity through* April 1, 2025with an interest rate spread above SOFR of 3.5%. In September2024,* we entered into a fixed all-in rate on our Revolving Credit Facility of 8.2% from* October1,* 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 Series1 Preferred Stock, payment of dividends on the Series A Preferred Stock and Series1 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. Mr. Osher, co-chair of the Company’s board of directors, is the managing member ofNo Street Capital LLC, which serves as the investment manager of the Lenders.

Upon drawing thefirst $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 a180-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 theone-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**

Prior to the Merger, Legacy MIC hadtwo classes of capital stock outstanding: common stock and preferred stock. Following the Merger, we retaintwo 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 Series1 Preferred Stock,50,000 are designated as shares of Series A Preferred Stock and 60,000 are designated as shares of Series2 Preferred Stock.

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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 Series1 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 to5.75% 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.

Series1 Convertible Redeemable Preferred Stock

The terms of the Series1 Preferred Stock provide that the holders of the Series1 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 Series1 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 Series1 Preferred Stock.

Series1 Preferred Stock and Series A Preferred Stock Distributions

In* March 2020,we began accruing distributions on the Series1* Preferred Stock and Series A Preferred Stock after the Legacy MIC Board unanimously authorized the suspension of the payment of distributions. On* September 11, 2024,the Board declared payment of accrued and unpaid dividends for all past dividend periods on the Series1* 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.On September 11, 2024,the Board also authorized the payment of the monthly dividend for September 2024on the Series1* Preferred Stock and the Series A Preferred Stock at a rate of $4.583 and$4.791 per share, respectively, on* October 14, 2024to 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.

Series1 Preferred Stock and Series A Preferred Stock Redemptions and Conversions

Upon receipt of written notice to convert shares of Series1 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 Series1 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 Series1 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, butnot including, the date of conversion by the volume weighted average price per share of common stock for the20 trading days prior to the delivery date of the receipt of the notice.

During thenine months ended* September*30,* 2024,* approximately 8,000 shares of Series1 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 Series1 Preferred Stock were redeemed for cash during thenine months ended* September 30, 2024.In addition, requested redemptions at September 30, 2024of approximately 5,500 shares with a stated value of approximately $5.5 million of Series1* 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 wereno cash redemptions on the Series A Preferred Stock during thenine months ended* September 30, 2024.*

Warrants

In accordance with its warrant agreement between Legacy MIC and Color Up, LLC, a Delaware limited liability company controlled by Mr. Chavez, Ms. Hogue, and Mr. Osher (“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 purchaseone* 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 butnot* 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. Subsequently, Color Up distributed the entirety of the Common Stock Warrants toHS3 and Bombe Asset Management, LLC, an entity owned and controlled by Mr. Chavez and Ms. Hogue.

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, andHS3,* pursuant to which the Operating Partnership issued and sold toHS3 (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 entitleHS3 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, andHS3 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* maybe 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 Section4*(a)(2) of the Securities Act. On* August 29, 2023,the Operating Company issued 156,138 Common Units toHS3* upon the cashless exercise of 638,298 Class A Units based upon a fair market value of $10.37 per Common Unit.

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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. Beginningsix months afterfirst 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”). During thenine months ended* September 30, 2024,approximately 337,000 Common Units converted to shares of common stock on aone*-for-one basis. As of* November 1, 2024,approximately 8.5 million additional Common Units converted to shares of common stock on aone*-for-one basis.

The Common Unitsnot 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

In* September 2024,the Board authorized a share repurchase program of up to $10 million of shares of our outstanding common stock. Repurchases maybe 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 maybe structured to occur in accordance with the requirements of Rule10b*-18 of the Securities Exchange Act of1934, as amended. We* mayalso, from time to time, enter into Rule10b5*-1 plans to facilitate repurchases of our shares under this authorization. During thethree andnine months ended* September* 30, 2024, we repurchased 26,925 shares under the program, for a cost of approximately $0.1 million. As of* 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

2024 Awards

In* January 2024,*the Compensation Committee of the Board of Directors approved the issuance of the following awards:

In* May**2024,* the Compensation Committee of the Board of Directors approved the issuance of the following awards:

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

We recognized $4.8 million and $6.1 million of equity-based compensation expense for thenine months ended* September**30,* 2024 and2023, 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. Performance based awards are valued at target and* may*have the ability to earn additional or fewer shares based on level of achievement.

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Note J — Earnings Per Share

Basic and diluted loss per weighted average common share (“EPS”) is calculated by dividing net income (loss) attributable to 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 thetwo-class method of allocating distributed and undistributed earnings when thetwo-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 thethree andnine months ended* September30,* 2024 and2023 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 3.7 million unvested service- and performance-based awards which are considered antidilutive to the dilutive loss per share calculation for thethree andnine months ended* September30,* 2024 and2023.

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 thethree andnine months ended* September 30, 2024and2023* (dollars in thousands):

Note K — Right of Use Asset and Lease Liability

We are the lessee in a ground lease for additional space atone location with a commencement date of* January 1, 2024.The lease has afourteen-year term, including extension options, with an annual payment of $40,457 per annum for thefirst* year and increased each year by the lesser of 3.5% and the Consumer Price Index. The lease is accounted for as an operating lease under ASU2016-02, Leases–* (Topic842).* We recognized a Right of Use (“ROU”) Leased Asset and a ROU Lease Liability on the lease commencement date which is included in Land and Improvements and Accounts Payable and Accrued Expenses, respectively, on the Consolidated Balance Sheets. 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 $10,000 and $30,000 of operating lease expense during thethree andnine 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 werenot material in the Statement of Cash Flows.

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

Note L — 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.

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MVP St. Louis is considered VIE and we conclude that we are 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 our investment in MVP St. Louis and MVP St. 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* September30,* 2024 and* December31,* 2023, respectively.

Note M—** 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 is as follows:

Level1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level2 – Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that arenot active, and model-derived valuations whose inputs are observable.

Level3 – 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.

Our financial instruments include cash and cash equivalents, restricted cash, accounts receivable, notes receivable and accounts payable. 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 notes payable and the Revolving Credit Facility was derived using Level2 inputs and approximates $174.9 million and $182.9 million as of* September30,* 2024 and* December31,* 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 thenine months ended* September30,* 2024 and the year ended* December31,* 2023 were as follows (in thousands):

Earn-Out Shares

The terms of the Earn-Out Shares allow an additional 1,900,000 shares to vest if certain milestones are achieved:

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 Level3 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.

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We recognized a gain of approximately $1.1 million during thenine months ended* September30,* 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 thenine months ended* September30,* 2024 (in thousands):

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* mayuse internally developed valuation models or independentthird*-parties where available. In either case, the fair value of real estate* maybe 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 real estate assets 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 Level3* of the fair value hierarchy. During thenine 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**

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 arenot presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us.

In* March**2023,* Legacy MIC's former CEO filed a complaint against Legacy MIC. On* September 6, 2023,the parties entered into a settlement agreement, and we recognized a gain of approximately $1.2 million which was recorded as Other Income, Net in the Consolidated Statements of Operations for thethree* months ended* September 30, 2023.*

In* January 2023,the43rd* 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. In* July 2024,the Texas Court of Appeals, Second District, reversed the decision of the District Court granting summary judgement in favor of Mr. Roy and remanded the case to the District Court for further consideration. As a result of the District Court’s summary judgment, in December 2022we recognized a charge of $0.7 million for the full estimated amount of damages (including legal fees and costs). During thefirst* quarter of2023, 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 thenine* months ended* September**30,* 2024.

In* September 2023,we entered into arbitration withone* 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 thenine* months ended* September**30,* 2024. The remaining amount payable is accrued for in Accounts Payable and Accrued Expenses on the Consolidated Balance Sheets.

Note O — Related Party Transactions and Arrangements

Three of our assets,1W7 Carpark,222W7 and Whitefront Garage, 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. 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 Ohionot*-for-profit. An immediate family member of our CEO is a member of the Board of Trustees and President of that organization. ProKids leased21,000 square feet of vacant unfinished commercial space in a531,000 square foot building in Cincinnati, Ohio for120 months. ProKids will invest in the tenant improvements in this space and ultimately use it as their headquarters location. ProKids will haveno 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 doesnot owe us rental income related to the lease agreement.

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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 2021of thethree* properties contributed by Color Up. The accrual is reflected within Due to Related Parties on the Consolidated Balance Sheets.

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 thenine months ended* September**30,* 2024. Total fees are estimated to be approximately $0.2 million.

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 President (the “Supplier”), pursuant to which 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 thetenth* 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 thetenth 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 least20% 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. Mr. Osher, co-chair of the Company’s board of directors, is the managing member ofNo* 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 our2023* annual filing and ourfirst andsecond quarterly filings of2024. 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 werenot material to the audited financial statements for the period ended* December 31, 2023,and the unaudited financial statements for the periods ended March 31, 2024and June 30, 2024.Presented below are revisions to the previously issued financial statements presented in this Form10*-Q.

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