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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

(Mark one)

 

[X]☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 20212022

 

Or

 

[ ]☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number: 000-55760

 

 

Mobile Infrastructure Corporation

(Exact name of registrant as specified in its charter)

Maryland		47-3945882
(Exact nameState or Other Jurisdiction of registrant as specified in its charter)

Maryland		47-3945882(I.R.S. Employer
(StateIncorporation or Other Jurisdiction ofOrganization)		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

 

250 E. 5th STREET, SUITE 2110, CINCINNATI,30 W. 4th Street, Cincinnati, OH 45202

 (Address(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, including Area Code: 513(513) 834-5110

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

 

Securities registered pursuant to Section 12(g) of the Act:

 

	Common Stock, $0.0001 Par Value
	(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ]☐ No [X]☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [  ]☐ No [X]☒

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]☒ No [  ]

1☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X]☒ No [  ]☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]☐	Accelerated filer [  ]☐
Non-accelerated filer [X] ☒	Smaller reporting company [X]☒ Emerging growth company [ ]☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. [ ]☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ]☐ No [X]☒

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: There is 0no established market for the Registrant's shares of common stock. On January 14, 2021,August 29, 2022, the board of directors of the Registrant approved an estimated net asset value per share of the Registrant's common stock of $11.75.$14.76. There were approximately 5,999,2035,137,544 shares of common stock held by non-affiliates at June 30, 2021,2022, the last business day of the registrant's most recently completed second fiscal quarter.

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 

	Class		Number of Shares Outstanding As of March 28, 202217, 2023
	Common Stock, $0.0001 Par Value		7,762,375

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Special Note Regarding Forward-Looking Statements

Certain statements included in this annual report on Form 10-K (this "Annual Report"“Annual Report”) that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential"“may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon the Company’s current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on operations and future prospects include, but are not limited to: 

Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed upon any forward-looking statements included herein. All forward-looking statements are made as of the date of this Annual Report, and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward – looking statements made after the date of this Annual Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward – looking statements included in this Annual Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Annual Report will be achieved.

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PART I

ITEM 1.BUSINESS

General

Mobile Infrastructure Corporation (formerly known as The Parking REIT, Inc.) (the “Company,” “we,” “us” or “our”), is a Maryland corporation formed on May 4, 2015. The Company focuses on acquiring, owning and leasing parking facilities and related infrastructure, including parking lots, parking garages and other parking structures throughout the United States. The Company targets both parking garage and surface lot properties primarily in top 50 U.S. Metropolitan Statistical Areas (“MSAs”), with proximity to key demand drivers, such as airports, transportation hubs, educational facilities,commerce, events and venues, government buildings and courthouses, sportsinstitutions, hospitality and entertainment venues, hospital and health centers, hotels, office complexes and residences.multifamily central business districts.

As of December 31, 2021,2022, the Company owned 44 parking facilities (including one property classified as held for sale) in 22 separate markets throughout the United States, with a total of 15,26315,750 parking spaces and approximately 5.35.4 million square feet.  The Company also owns approximately 0.10.2 million square feet of retail/commercial space adjacent to its parking facilities.

The Company is led by an experienced management team with more than 50 yearsAs of combined industry experience and relationships. The management team, including our Chief Executive Officer and our President and Interim Chief Financial Officer, has extensive experience acquiring and operating real estate andDecember 31, 2022, 29 of the Company has a seasoned investment team that uses a defined and disciplined approach to underwriting parking facilities for potential acquisition. Our Chief Executive Officer, Manuel Chavez, has over 25 years of experience in the parking and commercial real estate sector. Mr. Chavez founded Bombe Asset Management, LLC, a Cincinnati, Ohio based alternative asset management firm,Company’s leases, or Bombe, in 2017 after a 15-year career at PCA, Inc.65.9%, the second largest off airport parking operator in the United States, where he served as Chief Executive Officer from 2007 to 2017. Stephanie Hogue, our President and Interim Chief Financial Officer, had over 15 years of experience in mergers and acquisitions and capital markets in various real estate and infrastructure asset classes before she joined Bombe in 2020.

Effective January 1, 2022, the Company amended the majority of its leases with tenants to provide forare governed under a modified net lease structure typically consisting of a low base rent component plus percentage rent above a negotiated threshold, which is referred to as the Newfurther described below (the “New Lease Structure.Structure”). The Company believes that the New Lease Structure will result in an increase in our property rental revenue compared to the prior leases.

The Company is the sole general partner of Mobile Infra Operating Partnership, L.P., formerly known as MVP REIT II Operating Partnership, LP, a Maryland limited partnership (the “Operating Partnership”). The Company owns substantially all of its assets and conducts substantially all of its operations through the Operating Partnership, is the sole general partner of the Operating Partnership and owns approximately 45.8% of the common units of the Operating Partnership (the “OP Units”). Color Up, LLC, a Delaware limited liability company (“Color Up” or “Purchaser”) and HSCP Strategic III, LP, a Delaware limited partnership (“HS3”), are limited partners of the Operating Partnership and own approximately 44.2% and 10%, respectively, of the outstanding OP Units. Color Up is our largest stockholder and is controlled by the Company’s Chief Executive Officer and a director, Manuel Chavez, the Company’s President, Interim Chief Financial Officer Treasurer, Secretary and a director, Stephanie Hogue, and a director of the Company, Jeffrey Osher. HS3 is controlled by Mr. Osher.

The Company previously elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and operated in a manner that allowed the Company to qualify as a REIT through December 31, 2019.  As a consequence of lease modifications entered into during the COVID-19 pandemic, the Company entered into temporary lease amendments with someearned income from a number of its tenants during the year ended December 31, 2020. The income generated under these lease amendmentsthat did not constitute qualifying REIT income for purposes of the annual REIT gross income tests, and, as a result, the Company was not in compliance with the annual REIT income tests for theits taxable year ended December 31, 2020. Accordingly, the Company did not qualify for taxation as a REIT in 2020 and has beencontinues to be taxed as a C corporation beginning with its 2020 taxable year. 

corporation. As a C corporation, the Company is subject to federal income tax on its taxable income at regular corporate rates. In addition, any distributions to our stockholders will not be deductible by the Company. As a result, being taxed as a C corporation rather than as a REIT could reduce the cash available for distribution by the Company to its stockholders. Moreover, as a C corporation, the Company is not required to distribute any amounts to its stockholders. For further information on distributions to stockholders, see Part I, Item 1A “Risk Factors – Our cash distributions are not guaranteed and may fluctuate” and Part II, Item 5 of this Annual Report.

Merger with Fifth Wall Acquisition Corp. III

On December 13, 2022, the Company and Fifth Wall Acquisition Corp. III (“FWAC”), a special purpose acquisition company sponsored by Fifth Wall Acquisition Sponsor III LLC ("Fifth Wall"), entered into a definitive merger agreement (the “Merger Agreement”). Upon closing of the merger (the “Merger”), FWAC will be the surviving entity and will be renamed “Mobile Infrastructure Corporation”.  The combined company following the Merger (“New MIC”) expects to be publicly traded on the New York Stock Exchange under the ticker “BEEP.” Following the steps of the Merger as provided in the Merger Agreement:

Additionally, in connection with the execution of the Merger Agreement, FWAC entered into subscription agreements with an initial PIPE investor (the “Initial PIPE Investor”), pursuant to which the Initial PIPE Investor agreed to purchase from New MIC, prior to or substantially concurrently with the closing of the Merger, $10 million of common stock, par value $0.0001 per share, of New MIC (the “New MIC Common Stock”) at $10.00 per 1.2 shares. The Initial PIPE Investor is controlled by Jeffrey Osher, a member of the Company’s Board of Directors.

The Merger Agreement also contemplates other PIPE investments through the entry into one or more additional subscription agreements with one or more investors to purchase Class A Shares of FWAC, New MIC Common Stock, New MIC preferred stock or convertible notes of New MIC.

Pursuant to the Merger, the Operating Partnership will convert from a Maryland limited partnership to a Delaware limited liability company. As a limited liability company, the Operating Partnership will continue to be treated as a partnership and a disregarded entity for tax and accounting purposes.

During the year ended December 31, 2022, the Company incurred costs of approximately $2.1 million associated with the Merger. These costs are being accounted for as deferred offering costs in accordance with FASB ASC Topic 340, Other Assets and Deferred Costs and are reflected within deferred offering costs on our Consolidated Balance Sheets as of December 31, 2022.

Terminated Merger with Mobile Infrastructure Trust

On May 27, 2022, the Company entered into an Agreement and Plan of Merger (the “MIT Merger Agreement”) by and between the Company and Mobile Infrastructure Trust, a Maryland real estate investment trust (“MIT”), which is 100% owned by Bombe Asset Management LLC (“Bombe”), an Ohio limited liability company owned by Mr. Chavez and Ms. Hogue. Pursuant to the terms of the MIT Merger Agreement, the Company would merge with and into MIT, with MIT continuing as the surviving entity resulting from the transaction. Prior to and as a condition to the merger with MIT, MIT expected to undertake an initial public offering (the “MIT IPO”) of its common shares of beneficial interest. Also, in March 2022, the Company had entered into an agreement with MIT, requiring the Company to be allocated, bear and (where practicable) pay directly certain costs and expenses related to the merger with MIT and the MIT IPO. 

In connection with the execution of the Merger Agreement with FWAC, the MIT Merger Agreement and the cost allocation agreement with MIT were terminated.

During the year ended December 31, 2022, the Company incurred costs of approximately $4.6 million pursuant to the cost allocation agreement with MIT. Such amounts are included in organizational, offering and other costs on the Consolidated Statements of Operations.

2021 Recapitalization

On January 8, 2021, the Company entered into an equity purchase and contribution agreement (the “Purchase Agreement”) by and among the Company, the Operating Partnership, Vestin Realty Mortgage I, Inc., (“VRMI”) Vestin Realty Mortgage II, Inc. (“VRMII”), and Michael V. Shustek (“Mr. Shustek” and together with VRMI and VRMII, the “Former Advisor”) and Color Up (the “Purchaser”). The transactions contemplated by the Purchase Agreement are referred to herein collectively as the “Transaction.”

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On August 25, 2021, the closing ofwe completed the Transaction occurred (the “Closing”). Asand as a result, of the Transaction, the Company acquired three multi-level parking garages consisting of approximately 765 and 1,625 parking spaces located in Cincinnati, Ohio and approximately 1,154 parking spaces located in Chicago, Illinois totaling approximately 1,201,0001.2 million square feet. In addition to the parking garages contributed, proprietary technology was contributed to the Company, which will provide Managementmanagement of the Company with real-time information on the performance of its assets. Pursuant to the Closing,closing of the Transaction, the Operating Partnership issued 7,495,090 newly issued common units of the Operating Partnership (the “OP Units”)OP Units at $11.75 per unit for total consideration of $84.1 million, net of transaction costs. The consideration received consisted of $35.0 million of cash, three parking assets with aan estimated fair value of approximately $98.8 million (“Contributed Interests”) and technology with aan estimated fair value of $4.0 million. The Company also assumed long-term debt with aan estimated fair value of approximately $44.5 million. In addition, the Company issued warrants to Color Up to purchase up to 1,702,128 shares of Common Stockcommon stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $11.75 for an aggregate cash purchase price of up to $20 million. The estimated fair value of the warrants recorded as of the Closingclosing date of the Transaction was approximately $3.3 million. Transaction expenses not directly related to the acquisition of the Contributed Intereststhree contributed real estate assets or issuance of OP Units of approximately $12.2 million and the settlement of the deferred management internalization liability of $10.0 million were recorded in transaction expenses and settlement of deferred management internalization, respectively, in the StatementConsolidated Statements of Operations.

At the Closing, Mr. Shustek resigned as a director and officer of the Company and its subsidiaries and Mr. Chavez became the Chief Executive Officer of the Company and Ms. Hogue became the President of the Company. Mr. Shustek no longer owns any shares of the Company.

Management assessed the potential accounting treatment for the Transaction by applying ASC 805 and determined that the Transaction did not result in a change of control. As a result, the three contributed real estate assets and the technology platform acquired, described above, were accounted for by the Company as asset acquisitions in the financial statements, resulting in thewhich required recognition of assets and liabilities at acquired cost and reflect the capitalization of any transaction costs directly attributable to the asset acquisitions.acquisition.

Objectives

As noted above, the Company closed on the Transaction on August 25, 2021, which resulted in a new management team. In addition, as of December 3, 2021, Ms. Hogue was appointed Interim Chief Financial Officer of the Company. Over the next twelve months, management of the Company will be focused predominantly on the following:following strategic objectives:

The Company’s strategic plan includes pursuing acquisitions as well as a potential liquidity event, which may include a potential listing event or other alternatives intended to provideManagement of the Company scale and capacityhas continued to grow beyond its current asset base.

Since the Closing, our new management team has been workingwork closely with our tenants to evaluate capital requirements of the assets, with a view to understanding current and future demand drivers of those assets. The Company has been implementing the recently contributedits proprietary technology which will provideprovides real-time information on the performance of assets. Going forward underUnder the New Lease Structure, the Company is involved withhas funded capital expenditures related to upgrades and optimization of our parking facilities, including but not limited to gate arm systems, lighting, and large capital improvements to structure and concrete. We expect to maintain an active dialogue with our tenants for the betterment of the Company’s portfolio. 

Investment Strategy & Criteria

Because of theThe Company’s management team’steam has a long experience in the parking industry, the new management teamCompany often receives off-market calls for parking facilities that are not yet being marketed for sale, as well as have early notices on properties just getting ready to be marketed. As such, the Company has a pipeline of acquisitions that is both bespoke and actionable, that the Company believes are off-market and largely unavailable to our competitors. The Company intends to continue to consolidate the industry through acquisitions, partnering with both owners and operator tenants, to create a meaningful pipeline and scale. 

The Company’s investment strategy has historically focused primarily on acquiring, owning and leasing parking facilities, to third-party operators, including parking lots, parking garages and other parking structures throughout the United States.  The Company has historically focused primarily on investing in income-producing parking lots and garages with air rights in MSAs. In expanding the Company’s portfolio, the Company will seek geographically diverse investments that address multiple key demand drivers and demonstrate consistent consumer use that are expected to generate cash flows and provide greater predictability during periods of economic uncertainty. Such targeted investments include, but are not limited to, parking facilities near one or more of the following key demand drivers:

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The Company generally targets parking facilities that are near multiple key demand drivers so as not to be solely reliant on a single source of income.  Parking garages in downtown cores constitute a large portion of the Company’s parking facilities as they serve multiple key demand drivers.

As a result of the COVID-19 pandemic, such key demand drivers have been and are expected to be diminished for an indeterminate period of time with an uneven return to downtown cores across our properties. Many state and local governments have restricted public gatherings, which has in some cases eliminated or severely reduced the demand for parking.

The Company is workingworks closely with our current tenants to understand the return to each individual market, both as the Company considers the key demand drivers of the Company’s current assets, as well as new assets that the Company may consider acquiring as part of normal course of business.our investment strategy. The Company’s deep relationships with key tenants help facilitate collaboration with respect to our portfolio.

The Company is focused on acquiring properties that are expected to generate cash flow, located in populated MSAs and expected to produce income within 12 months of the properties’ acquisition. The Company intends to acquire under-managed parking facilities and collaborate with its tenants to implement a tailored, value-add approach that includes fostering the implementation of identified value levers and mitigating risk exposure, while fostering local business relationships to derive market knowledge and connectivity.

In the event of a future acquisition of properties, the Company would expect the foregoing criteria to serve as guidelines; however, management and the Company’s Board of Directors may vary from these guidelines to acquire properties which they believe represent value or growth opportunities.

The Company’s investments are subject to various federal, state, local and foreign laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. The Company has obtained or intends to obtain all permits and approvals necessary under current law to operate its investments.

The Company cannot assure you that theythe Company will attain investment objectives or that the value of the Company’s assets will not decrease. The Company’s board of Board of Directors reviewsutilizes the Company’s investment policies at least annually to determine whetherensure investment policies continue to bedecisions are in the best interests of the Company’s shareholders.stockholders.

Concentration

The Company had fifteen and fourteen parking operators during the years ended December 31, 2022 and 2021, respectively. One tenant/operator, SP + Corporation (Nasdaq: SP) (“SP+”), represented 60.5% of the Company’s revenue, excluding commercial revenue, for both the years ended December 31, 2022 and 2021. Premier Parking Service, LLC represented 12.4% and 12.6% of the Company’s revenue, excluding commercial revenue, for the years ended December 31, 2022 and 2021, respectively.

In addition, the Company had concentrations in Cincinnati (19.2% and 20.8%), Detroit (12.5% and 13.8%), Chicago (8.7% and 9.5%), and Houston (7.8% and 8.5%) based on gross book value of real estate as of December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021, the Company had concentrations in Cincinnati (20.8%), Detroit (13.8%), Chicago (9.5%),59.2% and Houston (8.5%) based on book value52.2% of the real estate the Company owned.

One tenant, SP Plus Corporation (Nasdaq: SP) (“SP+”), operated properties that contributed approximately 60.5% of our parking rental revenue for the year ended December 31, 2021. SP+ is one of the largest providers of parking management in the United States. SP+ typically enters into contractual relationshipsCompany’s outstanding accounts receivable balance, respectively, was with property owners or managers as opposed to owning parking facilities. As of December 31, 2021, SP+ managed approximately 3,200 locations in North America.

SP+, together with our next top four tenants, operated properties that contributed approximately 88.4% of our parking rental revenue for the year ended December 31, 2021. These four tenants are Premier Parking (12.6%), Interstate Parking (5.7%), Denison Parking (4.8%), and Parking Company of America, Inc. d/b/a Park Place (4.8%).

Competition

The Company has significant competition with respect to the acquisition of real property. Competitors include REITs, owners and operators of parking facilities, private investment funds, hedge funds and other investors, many of which have significantly greater resources. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If the Company pays higher prices for investments, the returns will be lower and the value of assets may not increase or may decrease significantly below the amount paid for such assets.

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The Company’s parking facilities face, and any parking facilities acquired or invested in, will face, intense competition, which may adversely affect parking and rental income. The relatively low cost of entry has led to a strongly competitive, fragmented market consisting of competitors ranging from single facility operators to large regional and national multi-facility operators, including several public companies. In addition, the Company’s parking facilities compete with building owners that provide on-site paid parking. Certain competitors have more experience in owning and operating parking facilities. Moreover, some of the competitors will have greater capital resources, greater cash reserves less demanding rules governing distributions to shareholders and a greater ability to borrow funds. Competition for investments may reduce the number of suitable investment opportunities available, may increase acquisition costs and may reduce demand for parking facilities, all of which may adversely affect operating results.

The Company will compete with numerous other persons or entities seeking to attract tenants to parking facilities the Company acquires. These persons or entities may have greater experience and financial strength. There is no assurance that the Company will be able to attract tenants on favorable terms, if at all. For example, the Company’s competitors may be willing to offer space at rental rates below our rates, causing the Company to lose existing or potential tenants and pressuring the Company to reduce our rental rates to retain existing tenants or convince new tenants to lease space at our properties. Each of these factors could adversely affect results of operations, financial condition, value of the Company’s investments and ability to pay distributions.

Government Regulations

The Company’s investments are subject to various federal, state, local and foreign laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. The Company intends to obtain all permits and approvals necessary under current law to operate the Company’s investments.

Human Capital

The Company had 1814 employees as of December 31, 2021.2022. Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business successfully.

The Company’s key human capital management objectives are to attract, recruit, hire, develop and promote a deep and diverse bench of talent that translates into a strong and successful workforce. 

Available Information

The Company is subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for Smaller Reporting Companies, and, as a result, files the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information with the SEC from time to time. The SEC maintains a website (http://www.sec.gov) that contains the Company’s annual, quarterly and current reports, proxy and information statements and other information the Company files electronically with the SEC from time to time. Access to these filings is free of charge and can be accessed on the Company’s website, www.mobileit.com. The information on, or accessible through, the Company’s website is not incorporated into and does not constitute a part of this Annual Report or any other report or document the Company files with or furnishes to the SEC from time to time.

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ITEM 1A. RISK FACTORS

Summary Risk Factors

Set forth below is a summary of the risks, as described under item 1A – Risk Factors in this Annual Report on Form 10-K.

Risks Related to Our Business

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Risks Related to Our Portfolio

Risks Related to Our Financing Strategy

Risks Related to Conflicts of Interest

Risks Related to Our Corporate Structure

Federal Income Tax Risks

Risks Related to Our Business

The Increased fuel prices may adversely affect our operating environment and costs.COVID-19 pandemic has had, and may continue to

Fuel prices have a material adverse effect on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations, and its duration and ultimate lasting impact is unknown.

The COVID-19 pandemic and restrictions intended to prevent its spread have had a significant adversedirect impact on economicthe ability and market conditions around the world, includingfrequency of consumers to engage in activities related to transportation. Increases in the United States. These conditions have had,price of fuel may result in higher transportation costs and may continue to have, a material adverse impact on our business. In particular, many ofadversely affect consumer use at our parking facilities are located near government buildings and sports centers, which dependgarages. Increases in large part on consumer traffic, and conditions thatfuel costs also can lead to a declineother non-recoverable, direct expense increases to us through, for example, increased costs of energy. Increases in consumer traffic have had a material and adverse impact on those businesses. Many state and local governments restricted public gatherings or required people to shelter in place, which also had, in some cases, eliminated or severely reduced the demandenergy costs for parking. Such events have adversely impacted and may continue to adversely impact our tenants’ operations and/or cause the temporary closure of our tenants’ businesses, which could significantly disrupt or cause a closure of their operations and, in turn, significantly impact or eliminate the rental revenue we generate from our leases with them. In particular, our tenants pay us percentage rent, which is based on the amount by which gross revenuesare typically recovered from lessees, although our share of each parking facility exceeds a base amount; therefore, declines in occupancy and the decreases in utilization resulting from the restrictions intended to prevent the spread of COVID-19 and the disruption or closure of our tenants’ operationsenergy costs increases as a result of the COVID-19 pandemic have,lower occupancies, and may inhigher operating cost reimbursements impact the future, reduce the annualized parking revenues we earn. 

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Although occupancy and utilization at our parking facilities are beginning to recover from their low point experienced during the COVID-19 pandemic, they remain below pre-COVID-19 pandemic levels and may continue to remain so indefinitely. We may experience future declines as a result of a resurgence of the COVID-19 pandemic from time-to-time or otherwise.

The duration and ultimate impact of the COVID-19 pandemic is not known. Our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligationsincrease underlying rents. Rising fuel prices also may continue to be negatively impacted as a resultincrease the cost of construction and the COVID-19 pandemic and may remain at depressed levels compared to prior tocost of materials that are petroleum-based, thus affecting the outbreak of the COVID-19 pandemic for an extended period, which would also have a material adverse effect on the value and trading pricedevelopment of our Common Stock. existing assets or our tenants’ ongoing development projects.

We have a limited operating history which makes our future performance difficult to predict.

We were formed on May 4, 2015 and, on December 15, 2017, merged with MVP REIT, Inc., which wasa Maryland corporation formed on April 3, 2012, on December 15, 2017. In addition,2012. We internalized our management function was internalized effective April 1, 2019. In addition, following2019 and the Closing, a newcurrent management team took over.has been in place since August 2021. Accordingly, we have a limited operating history, particularly as an internally managed company and with a new management team. Stockholderscompany. Investors should not assume that ourthe Company’s future performance will be similar to the past performance of other real estate investment programs. Our lack of an operating history increases the risk and uncertainty that stockholders face in making or holding an investment in our shares.Company.

We have experiencedincurred net losses inattributable to our common stockholders of $11.1 million and $14.1 million for the past,years ended December 31, 2022 and 2021, respectively, and we may experience additional net losses in the future.

Historically, we have experiencedWe incurred net losses (calculated in accordance with GAAP),attributable to our common stockholders of $11.1 million and $14.1 million for the years ended December 31, 2022 and 2021, respectively, and we may experience additional net losses in the future and not be profitable or realize growth in the value of our portfolio. Many of our losses can be attributed to start-up costs, depreciation and amortization, as well as acquisition expenses incurred in connection with purchasing properties or making other portfolio investments. For a further discussion of our operational history and the factors affecting our net losses, see “Item 7. Management’sItem 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report and our accompanying consolidated financial statements and notes thereto.annual report.

The Company will need to improve cash flow from operations to avoid a future liquidity shortfall.

The Company must improve operational performance to avoid a liquidity shortfall. The Company’s ability to generate sufficient cash flow from operations will depend on a range of economic, competitive and business factors, many of which are outside its control, including the impact of COVID-19 and return to normal daily activities, which are inconsistent across markets.  Some of the Company’s loan agreements require that the Company maintain certain liquidity and net worth levels. As of the date of this Annual Report, the Company was in compliance with all lender requirements. Should operational performance not materially improve through 2022,2023, the Company will need to evaluate additional alternatives to raise capital to avoid a liquidity shortfall with its lenders.

The Company will need to continue the successful integration of the properties and management acquired pursuant to the Equity Purchase and Contribution Agreement.

On August 25, 2021, the Closing of the Transaction occurred. As a result of the Transaction, the Company acquired three multi-level parking garages consisting of approximately 765 and 1,625 parking spaces located in Cincinnati Ohio and approximately 1,154 parking spaces located in Chicago, Illinois totaling approximately 1,201,000 square feet. In addition to the parking garages contributed, proprietary technology was contributed to the Company, which will provide management real-time information on the performance of assets. Additionally, Manuel Chavez and Stephanie Hogue were added to the management team as Chief Executive Officer and President, respectively. The success of the acquisition will depend, in part, on the Company’s ability to successfully combine and integrate the properties and management and realize the anticipated benefits, including synergies, cost savings, and operational efficiencies, in a manner that does not materially disrupt existing tenant and employee relations. We have incurred substantial expenses in connection with the completion of the Transaction and we expect to incur further expenses to complete the integration. If the Company is not able to successfully integrate the acquired properties and management team, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected. Some of the factors to successful integration are outside of the Company’s control, including certain impacts of the COVID-19 pandemic discussed elsewhere in our risk factors, and any one of them could result in delays, increased costs, decreases in the amount of expected revenue or synergies, and diversion of management’s time and energy, which would materially affect our financial position, results of operations and cash flows.

We depend on our management team. The loss of key personnel could have a material adverse effect upon our ability to conduct and manage our business.

Our ability to achieve our investment objectives and to paymake distributions is dependent upon the performance of our management team in the identification and acquisition of investments, the determination of any financing arrangements, the management of our portfolioassets and operation of our day-to-day activities. The loss of services of one or more members of our key personnel or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, parking facility operators and managers and other industry personnel, which could materially and adversely affect our business, financial condition, results of operations and ability to make distributions to stockholders in the future and the value of our Common Stock. Additionally,Furthermore, the loss of one or more of our key personnel may constitute an event of default under certain of our limited non-recourse property-level indebtedness, which could result in December 2021, our then-Chief Financial Officer, Kevin J. Bland resigned, at which time our current President, Stephanie Hogue, was appointed Interim Chief Financial Officer. The Company is engaging with an executive search firm in the search for a principal financial and/or accounting officer. The failure to locate a permanent principal financial and/or accounting officer or instability caused by the leadership transition could adversely affect the Company or its financial condition.such indebtedness being accelerated.

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Shares of our Common Stock are illiquid. No public market currently exists for our shares, and our charter does not require us to liquidate our assets or list our shares on an exchange by any specified date, or at all. It will be difficult for stockholders to sell shares, and if stockholders are able to sell shares, it will likely be at a substantial discount.

There is no current public market for our shares, and our charter does not require us to liquidate our assets or list our shares on an exchange by any specified date, or at all. Our charter limits stockholders' ability to transfer or sell shares unless the prospective stockholder meets the applicable suitability and minimum purchase standards. Our charter also prohibits the ownership of more than 9.8% in value of the aggregate of our outstanding capital stock or more than 9.8% in value or number, whichever is more restrictive, of the aggregate of our outstanding Common Stock unless exempted or waived prospectively or retroactively by our board of directors. These restrictions may inhibit large investors from desiring to purchase stockholders' shares. Moreover, our share repurchase program was suspended in May 2018, other than with respect to hardship repurchases in connection with a shareholders’ death, which were suspended by the board of directors on March 24, 2020. It will be difficult for stockholders to sell shares promptly or at all. If stockholders are able to sell shares, stockholders will likely have to sell them at a substantial discount to their purchase price. It is also likely that stockholders' shares would not be accepted as the primary collateral for a loan.

While the Company is pursuing options for a potential liquidity event, which may include a potential listing on a national securities exchange, there can be no assurance that our Common Stock will ever be listed on a national securities exchange or other market. However, our ability to achieve liquidity for our stockholders is subject to market conditions, legal requirements and loan covenants, and there can be no assurance that we will affect a liquidity event. If we do not successfully implement a liquidity event, our shares of Common Stock may continue to be illiquid and stockholders may, for an indefinite period of time, be unable to convert their investments to cash easily and could suffer losses on their investments.

We do not currently pay cash dividends and do not intend to pay cash dividends for the foreseeable future.

The Company's Board of Directors (the “Board of Directors” or “board”) suspended our payment of cash distributions and stock dividends to holders of our Common Stock, effective as of March 22, 2018. In addition, on March 24, 2020, the Company’s board of directors suspended the payment of distributions on our Series A Convertible Redeemable Preferred Stock (the “Series A Preferred Stock”) and Series 1 Convertible Redeemable Preferred Stock (the “Series 1 Preferred Stock”), however such distributions will continue to accrue in accordance with the terms of the Series A Convertible Redeemable Preferred Stock and Series 1 Convertible Redeemable Preferred Stock.  Our board is focused on preserving capital in order to maintain sufficient liquidity to continue to operate the business and maintain compliance with debt covenants, including minimum liquidity covenants and to seek to provide liquidity to stockholders through potential strategic transactions. Our board will continue to evaluate our performance and expects to assess our distribution policy quarterly, although we do not currently expect to resume paying cash distributions in the near future. There can be no assurance that we will resume payment of distributions to common or preferred stockholders at any time in the future, or that any liquidity event will occur or when such event may occur. If and when distributions are able to resume, if the Operating Partnership similarly makes a distribution to its partners, the Company will receive approximately 45.8% of any such distributions from the Operating Partnership through its ownership of OP Units.

StockholdersInvestors should not rely on the Company’s estimated net asset value, or NAV per share as being an accurate the primary measure of the current value of ourthe shares of our Common Stock.Stock, and relying on estimated NAV insolation could create a misleading or incomplete view of the current value of the shares of our Common Stock.

Our boardThe Board of directors,Directors, including all of ourits independent directors, has historically approved and established at least annually an estimated NAV per share NAV of our Common Stock, which wasis based on an estimated market value of ourthe Company’s assets less the estimated market value of ourthe Company’s liabilities and the Preferred Stock, divided by the number of fully-diluted shares of our Common Stock outstanding. On January 8, 2021,outstanding (after giving effect to the Boardredemption, on a one-for-one basis, of Directors established the NAV as $11.75 per share as reported in the Form 8-K filed January 14, 2021.OP Units). The objective of ourthe board of directors in determining the estimated NAV per share of Common Stock was to arrive at a value, based on recently available data, that it believed was reasonable and appropriate based on the Transaction, the Company’s efforts since mid-2019 to explore a broad range of potential strategic alternatives to provide liquidity to stockholders, and other available data, andmethods that it deemed appropriate after consultation with the Company’s management team. As with any valuation method, the methods used to determine the estimated NAV per share were based upon a number of assumptions, estimates, forecasts and judgments that over time may prove to be incorrect, incomplete, or may change materially. Further, estimated NAV per share, if viewed in isolation, could create a misleading or incomplete view of the current value of the shares of our Common Stock. You should carefully review the financial information disclosed in this annual report in evaluating an investment decision.

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In the most recent estimation of NAV our boardestablished on August 29, 2022, the Board of directorsDirectors relied upon information provided by its management team regarding the Company’s management teamreal estate investments, other assets and liabilities and the price per share andnumber of shares of Common Stock outstanding on a fully diluted basis after giving effect to the redemption, on a one-for-one basis, of the OP Units to be paid in connection withheld by the Transaction,limited partners of the Operating Partnership, which will not necessarily result in a reflection of fair value under GAAP or market value. Further, differentGAAP. Different parties using different methods could derive an estimated NAV per share that is significantly different from the estimated NAV per share determined by our board of directors. the board.

The estimated NAV per share is not a representation, warranty, guarantee or other indication that, among other things: a stockholder would be able to realize the estimated NAV per share if he or she attempts to sell shares; a stockholder would ultimately realize distributions per share equal to the estimated NAV per share; a third party would offer the estimated NAV per share in an arms-length transaction to purchase all or substantially all of our shares of Common Stock or, the Employee Retirement Income Security Act of 1974, as amended, or ERISA, or other regulatory authorities (including state regulators), with respect to their respective requirements.

Further, the estimated NAV per share was calculated as of a specificparticular moment in time based on the shares of our Common Stock then outstanding and the amount and value of shares of our sharesCommon Stock will fluctuate over time as a result of, among other things, future acquisitions or dispositions of assets, developments related to individual assets, and changes in the real estate and capital marketsmarkets. If the proposed merger with Fifth Wall Acquisition Corporation III is approved by stockholders and issuances and redemptions of shares of our Common Stock after that date that theconsummated, we do not expect to publish an estimated NAV per share was established. NAV.

WeA material failure, inadequacy, interruption or security failure of our technology networks and related systems could harm our business.

Our information technology networks and related systems are essential to our ability to conduct our day to day operations. As a result, we face risks associated with security breaches, whether through cyber-attacks,cyberattacks or cyber intrusions over the internet, malware, computer viruses, attachments to emails, persons who access our systems from inside or otherwise, as well asoutside our organization and other significant disruptions of our information technology networks and related systems.

We face risks associated with A security breaches, whether through cyber-attacksbreach or cyber intrusions overother significant disruption involving our information technology networks and related systems could: disrupt our operations; result in the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons withunauthorized access to, systems insideand the destruction, loss, theft, misappropriation or release of, proprietary, personally identifiable, confidential, sensitive or otherwise valuable information, which others could use to compete against us or which could expose us to damage claims by third parties for disruptive, destructive or otherwise harmful outcomes; require significant management attention and resources to remedy any damages that result; subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or damage our organization,business relationships or reputation generally. Any or all of the foregoing could materially and other significant disruptionsadversely affect our business.

Although we take various actions to maintain the security and integrity of our information technology or IT, networks and related systems. Thesystems and have implemented various measures to manage the risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations. There canwe cannot be no assurancesure that our security efforts to maintain the security and integrity of these types of IT networks and related systemsmeasures will be effective or that any attempted security breaches or disruptions would not be successful or damaging. AEven the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breachbreaches change and generally are not recognized until launched against a target, and in some cases such techniques are designed to not be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures. It is not possible for this risk to be entirely mitigated.

Moreover, we may be required to expend significant disruption involvingadditional resources to continue to modify or enhance our IT networksprotective measures or to investigate and relatedremediate any vulnerabilities in our information technology networks. In addition, our remediation efforts may not be successful. Certain measures that could increase the security of our systems take significant time and resources to deploy broadly, and such measures may not be deployed in a timely manner or be effective against an attack. The inability to implement, maintain and upgrade adequate safeguards could have a material and adverse impact on our business, financial condition and results of operations.

Our proprietary software systems contain open source software, which may pose particular risks to our proprietary software in a manner that could harm our business.

We use open source software in our proprietary software and anticipate using open source software in the future. Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost, and we may be subject to such terms. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide our offerings. We could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease providing the implicated offerings unless and until we can re-engineer them to avoid infringement, which may be a costly and time-consuming process. While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred, in part because open source license terms are often ambiguous. Any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could harm our business and could help third parties, including our competitors, develop offerings that are similar to or better than ours.  

Additionally, the use of certain open source software can lead to greater risks than use of third party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. There is typically no support available for open source software, and we cannot ensure that the authors of such open source software will implement or push updates to address security risks or will not abandon further development and maintenance. Many of the risks associated with the use of open source software, such as the lack of warranties or assurances of title or performance, cannot be eliminated, and could, if not properly addressed, negatively affect our business. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have an adverse effect on our business, financial condition and results of operations.

Inigma and pKatalyst, our proprietary software systems, are not currently protected by any patents, registered trademarks or licenses, which may prevent us from using, or enforcing our intellectual property rights to these systems and could adversely impactaffect our business, results of operations and financial condition.

Inigma is our proprietary software management tool that we developed to monitor parking facilities in real-time. pKatalyst is our proprietary technology platform that will allow us to provide a virtual fence or perimeter around up to 14,000 parking facilities and to monitor consumer movement into and out of our parking facilities, as well as those of our competitors. Neither Inigma nor pKatalyst, nor these systems’ underlying technology, is currently registered, as a patent or a trademark, with the U.S. Patent and Trademark Office and we do not intend to register them in the near future. To the extent that Inigma or pKatalyst violates the proprietary rights of others, we may therefore be subject to damage awards or judgments prohibiting our use of Inigma or pKatalyst. In addition, our intellectual property rights in Inigma or pKatalyst may not be enforceable against any prior users of similar intellectual property. Our inability to use Inigma or pKatalyst or enforce our intellectual property rights to Inigma or pKatalyst could have an adverse effect on our business, financial condition and results of operations.

We may in the future be subject to claims that we violated certain third party intellectual property rights, which, even where meritless, can be costly to defend and could materially adversely affect our business, results of operations and financial condition.

Our success depends, in part, on our ability to maximize revenues and profitability at our parking facilities with a technology-driven approach to collaboration with our tenant operators, including the use of our proprietary software, without infringing on, misappropriating or otherwise violating the intellectual property rights of third parties. However, we may not be aware that our software systems are infringing on, misappropriating or otherwise violating third party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation or violation. Also, various “non-practicing entities” and other intellectual property rights holders may in the future attempt to assert intellectual property claims against us or seek to monetize the intellectual property rights they own to extract value through licensing or other settlements, even if the claims are meritless.

Our use of third party software and other intellectual property rights may be subject to claims of infringement or misappropriation. The vendors who provide us with technology that we incorporate in our proprietary software also could become subject to various infringement or misappropriation claims, which may then affect our use of our proprietary software. We cannot guarantee that our internally developed or acquired technologies and content do not or will not infringe, misappropriate or otherwise violate the intellectual property rights of others.

From time to time, our competitors or other third parties may claim that we are infringing upon, misappropriating or otherwise violating their intellectual property rights. We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition, results of operations, cash flowflows, or prospects. Any claims or litigation, even those without merit and regardless of the outcome, could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial costs or damages, obtain a license, which may not be available on commercially reasonable terms or at all, pay significant ongoing royalty payments, settlements or licensing fees, prevent us from maximizing our revenues and profitability at our parking facilities and from using certain technologies, force us to implement expensive and time-consuming workarounds or redesigns, distract management from our business or impose other unfavorable terms.

We may not be able to obtain, maintain, protect, defend and enforce our trademarks and trade names, or build name recognition in our markets of interest, thereby harming our competitive position.

We believe that the protection of our trademark rights is an important factor in protecting our brand and maintaining goodwill. We may be unable to obtain trademark protection for our technologies, logos, slogans and brands, and our existing trademark registrations and applications, and any trademarks that may be used in the future, may not provide us with competitive advantages or distinguish our brand and our business from those of our competitors. Further, we may not timely or successfully register our trademarks.

If we do not adequately protect our rights in our trademarks from infringement and unauthorized use, any goodwill that we have developed in those trademarks could be lost or impaired, which could harm our brand and our business. We have filed applications for registration, among other trademarks, the term “Mobile Infrastructure Corporation” in the United States. Although we have applied for these trademark registrations, there are no certainties that these applications will result in a registration of these trademarks.

Competitors may adopt trademarks and/or tradenames similar to ours, thereby harming our ability to satisfybuild brand identity and possibly leading to customer confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks that are similar to our debt service obligationstrademarks. Furthermore, our trademarks, upon registration, may be opposed, contested, circumvented or found to be unenforceable, weak or invalid, and we may not be able to prevent third parties from infringing or otherwise violating them or using similar marks in a manner that causes confusion or dilutes the value or strength of our brand. Litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies in the United States may be necessary in the future to enforce our trademark rights and to pay distributionsdetermine the validity and scope of the trademark rights of others. Our efforts to obtain, maintain, protect, defend and enforce our trademarks may be ineffective and could result in substantial costs and diversion of resources, which could adversely affect our business, financial condition, and results of operations.

We may be unable to continue to use the domains that we use in our business or prevent third parties from acquiring and using domains that infringe, misappropriate or otherwise violate, are similar to, or otherwise decrease the value of our brand, trademarks, or service marks.

We have registered a domain that we use in, or is related to, our stockholders.business, www.mobileit.com. If we lose the ability to use the domain name, whether due to trademark claims, failure to renew the applicable registration, or any other cause, we may be forced to market our offerings under a new domain name, which could cause us substantial harm or cause us to incur significant expense in order to purchase rights to the domain name in question. In addition, our competitors and other third parties could attempt to capitalize on our brand recognition by using domains similar to ours. We may be unable to prevent our competitors and other third parties from acquiring and using domains that infringe, misappropriate, or otherwise violate, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks. Obtaining, maintaining, protecting, defending and enforcing our rights in our domain may require litigation, which could result in substantial costs and diversion of resources, which could in turn adversely affect our business, financial condition, and results of operations.

Adverse judgments, settlements or investigations resulting from legal proceedings in which we may be involved could reduce our profits, limit our ability to operate our business or distract our officers from attending to the Company'sour business.

The nature of the Company’sour business exposes our properties, the Company,us, the Operating Partnership and itsour other subsidiaries to the risk of claims and litigation in the normal course of business. The outcome of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely to us or a settlement involving a payment of a material sum of money were to occur, it could materially and adversely affect our profits or ability to operate our business. Additionally, we could become the subject of future claims by third parties, including current or former tenants, our employees, our investors or regulators. Any significant adverse judgments or settlements would reduce our profits and could limit our ability to operate our business. Further, we may incur costs related to claims for which we have appropriate third-partythird party indemnity, but such third parties fail to fulfill their contractual obligations.

In addition, we may be required to indemnify and advance indemnification expenses to MIC’s former chief executive officer for certain claims related to a civil lawsuit filed by the SEC against him and his advisory firm alleging violations of securities laws, in an amount not to exceed $2.0 million, depending on the final outcome of the findings of the court. The Company has been subject to litigation in the past. See Note C — CommitmentsSEC seeks disgorgement, injunctions, and Contingencies in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report.bars against him and his advisory firm and related penalties.

We haveThe Company identified material weaknesses in ourits internal control over financial reporting. If we fail to remediate these material weaknesses, or if we experiencereporting and the Company may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Common Stock.

Effective internal control over financial reporting, is necessary for us to provide reliablewhich may result in material misstatements of the Company’s financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Any failure to implement required newstatements or improved controls, or difficulties encountered incause the implementation, could cause usCompany to fail to meet our periodic reporting obligations. In addition, any testing by us, and as and when required, our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to beThese material weaknesses or that may require prospective or retroactive changescould adversely affect the Company’s ability to ourreport their results of operations and financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidencecondition accurately and in our reported financial information, which could have a negative effect on the trading price of our Common Stock.timely manner.

ManagementThe Company’smanagement identified material weaknesses in ourits internal control over financial reporting in connection with ourits assessment as of and for the year ended December 31, 2021,2022. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of oura company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i)(1) the Company’s lack of appropriate segregation of duties within theits accounting and finance groups; (ii)(2) the lack of formal and effective controls over user access to certain information systems to ensure adequate restriction of users and privileged access to transaction processing applications; and (iii)(3) inappropriate application of technical accounting for certain transactions and disclosures.

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Although we havethe Company has begun to implement measures to address the material weaknesses, the implementation of thesethose measures may not fully address the material weaknesses and deficiencies in ourthe Company’s internal control over financial reporting, and wethe Company cannot conclude that these matters have been fully remedied. AsThe following remedial actions have been identified and initiated by the Company:

There can be no assurance that the actions we continuealready have completed coupled with the additional actions we have planned under our remediation plan will be sufficient to evaluate,remediate the material weakness identified and work to improve,strengthen our internal control over financial reporting,reporting. The actions we are taking are subject to ongoing senior management may determine that additional or different measures to address control deficiencies or modifications to the remediation plan are necessary. Further, in the future we may determine that we have additional material weaknesses. Ourreview.

Any failure to remediate the material weaknesses or failuremaintain such internal control could adversely impact our ability to identifyreport our financial position and address any other material weaknesses or control deficiencies could result in inaccuracies inresults of operations on a timely and accurate basis. If our financial statements andare not accurate, investors may not have a complete understanding of our operations. Ineffective internal controls could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis, which could cause investors to lose confidence in our reported financial information, which may result in volatility in andcould have a decline innegative effect on the markettrading price of our Common Stock.stock.

We can give no assurance that any additional material weaknesses or resulting restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

Risks Related to Our Portfolio

We may be unable to attain our investment strategy or increase the value of our portfolio.

Our investment strategy has historically focused primarily on acquiring, owning and leasing parking facilities to third-partythird party tenants, including parking lots, parking garages and other parking structures throughout the United States. We have historically focused primarily on investing in income-producing parking lots and garages with air rights in MSAs. In expanding our portfolio, we will seek geographically diverse investments that address multiple key demand drivers and demonstrate consistent consumer use, that are expected to generate positive cash flows and provide greater predictability during periods of economic uncertainty. Such targeted investments include, but are not limited to, parking facilities near one or more of the following key demand drivers. We may be unable to expand our portfolio in accordance with this investment strategy or increase the value of our portfolio, and as a result, we may be not be able to increase our rental revenues we anticipate earning through our investment strategy.

We rely on our new management team’s experience in the parking industry and their ability to grow our portfolio.

Because of our new management team’s long experience in the parking industry, we often receive off-market calls for parking facilities that are not yet being marketed for sale, as well as have early notices on properties just getting ready to be marketed. As such, we believe we have a pipeline of acquisitions that is both bespoke and actionable, that we believe are off-market and largely unavailable to our competitors.   We intend to continue to consolidate the industry through acquisitions, partnering with both owners and tenants, to create a meaningful pipeline and scale.  We may be unable to acquire new parking facilities if our pipeline of acquisitions no longer becomes actionable, if we experience a decline in the number of off-market calls for parking facilities that are not yet being marketed for sale, or if notices of properties just getting ready to be marketed for sale become increasingly available to our competitors.

We may be unable to grow our business by acquisitions of additional parking facilities.

Our investment strategy involves the acquisition of additional parking facilities. Our ability to make profitable acquisitions is subject to risks, including, but not limited to, risks associated with:

We might encounter unanticipated difficulties and expenditures relating to any acquired parking facilities.

For example:

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For these reasons, among others, we might not realize the anticipated benefits of our acquisitions, and our investment strategy with respect to the acquisition of additional parking facilities may not succeed or may cause us to experience losses.

In addition, because of our management team’s extensive experience in the parking industry, we often receive off-market calls for asset acquisition opportunities before properties are marketed for sale, as well as early notices on properties preparing to be marketed. We may be unable to acquire new parking facilities if we experience a decline in the number of off-market calls for parking facilities that are not yet being marketed for sale or if notices of properties preparing to be marketed for sale become increasingly available to our competitors.  

Our revenues arehave been and will continue to be significantly influenced by demand for parking facilities generally, and a decrease in such demand would likely have a greater adverse effect on our revenues than if we owned a more diversified real estate portfolio.

The focus for our portfolio has been and will continue to be on parking facilities. A decrease in the demand for parking facilities, or other developments adversely affecting such sector of the real estate market, would likely have a more pronounced effect on our financial performance than if we owned a more diversified real estate portfolio.

If adverse economic conditions reduce discretionary spending, business travel or other economic activity, such as sporting events and entertainment, that fuels demand for parking, services, our revenues could be reduced. In addition, our parking facilities tend to be concentrated in urban areas.

The COVID-19 pandemic has resulted in reduced discretionary spending, reduced travel and other activity. Users of our parking facilities include workers who commute by car to their places of employment in these urban centers. The return on our investments has been and may continue to be materially adversely affected by restrictions in reaction to the COVID-19 pandemic and may further continue to be materially adversely affected to the extent that economic conditions result in the elimination of jobs or the migration of jobs from the urban centers where our parking facilities are situated to other locations. See “Risks Related to Our Business - The COVID-19 pandemic has had, and may continue to have, a material adverse effect on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations, and its duration and ultimate lasting impact is unknown.”

Increased office vacancies in urban areasMSAs or movement toward home office alternatives could reduce consumer demand for parking, which could adversely impact our revenues and financial condition. Moreover, changing lifestyles and technologytechnological innovations also may decrease the need for parking spaces, thereby decreasing the demand for parking facilities. The need for parking spaces, for example, may decrease as the public increases its use of liverydelivery service companies and ride sharingridesharing companies or elects to take public transit for their transportation needs. Future technologytechnological innovations, such as driverless vehicles, also may decrease the need for parking spaces. It is also possible that cities could enact new or additional measures such as higher tolls, increased taxes andor vehicle occupancy requirements in certain circumstances, to encourage car-pooling and the use of mass transit, all of which could adversely impact the demand for parking. Weather conditions, such as hurricanes, snow, flooding or severe weather storms, and other natural disasters and acts of terrorism could also disrupt our parking operations and further reduce the demand for parking.

Changing consumer preferences and legislation affecting our industry or related industries may lead to a decline in parking demand, which could have a material adverse impact on our business, financial condition and results of operations.

Increased demand for ride sharing services, such as Uber and Lyft, and car sharing services, like Zipcar, along with the potential for driverless cars, may lead to a decline in parking demand in cities and urban areas. While we devote considerable effort and resources to analyzing and responding to consumer preference and changes in the markets in which we operate, consumer preferences cannot be predicted with certainty and can change rapidly. Changes in consumer behaviors, including the use of mobile phone applications and on-line parking reservation services that help drivers reserve parking with garage, lots and individual owner spaces, cannot be predicted with certainty and could change current customers' parking preferences, which may have an impact on the price customers are willing to pay for parking. Additionally, urban congestion and congestion pricing due to the aforementioned ride sharing services, or state and local laws that have been or may be passed encouraging carpooling and use of mass transit systems, may negatively impact parking demand and pricing that a customer would be willing to pay for parking. If we are unable to anticipate and respond to trends in the consumer marketplace and the industry, including, but not limited to, market displacement by livery service companies, car sharing companies and changing technologies, we could experience a material and adverse impact on our business, financial condition and results of operations. In addition, several state and local laws have been passed in recent years that encourage the use of carpooling and mass transit. In the future, local, state and federal environmental regulatory authorities may pursue or continue to pursue, measures related to climate change and greenhouse gas emissions which may have the effect of decreasing the number of cars being driven. Such laws or regulations could adversely impact the demand for our services and our business.

The COVID-19 pandemic has had, and may continue to have, a material adverse effect on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations, and its duration and ultimate lasting impact is unknown.

The COVID-19 pandemic and the restrictions intended to prevent its spread have had a significant adverse impact on economic and market conditions around the world, including in the United States. These conditions have had, and may continue to have, a material adverse impact on our business. In particular, many of our parking facilities are located near government buildings and courthouses and event centers, which depend in large part on consumer traffic, and conditions that lead to a decline in consumer traffic have had a material and adverse impact on those businesses. Many state and local governments restricted public gatherings or required people to shelter in place, which also had, and in some cases, eliminated or severely reduced the demand for parking. Such events have adversely impacted and may continue to adversely impact our tenants’ operations and/or cause the temporary closure of our tenants’ businesses, which could significantly disrupt or cause a closure of their operations and, in turn, significantly impact or eliminate the rental revenue we generate from our leases with them. In particular, our tenants pay us percentage rent, which is based on the amount by which gross revenues of each parking facility exceeds a base amount; therefore, declines in occupancy and the decreases in utilization resulting from the restrictions intended to prevent the spread of COVID-19 and the disruption or closure of our tenants’ operations as a result of the COVID-19 pandemic have reduced, and may in the future reduce, the annualized parking revenues we earn.

The COVID-19 pandemic has also resulted in reduced discretionary spending, reduced travel and other activity. Users of our parking facilities include workers who commute by car to their places of employment in these urban centers. The return on our investments has been and may continue to be materially adversely affected by restrictions in reaction to the COVID-19 pandemic and may further continue to be materially adversely affected to the extent that economic conditions result in the elimination of jobs or the migration of jobs, via hybrid-scheduled and remote work, from the urban centers where our parking facilities are situated to other locations.

Although occupancy and utilization at our parking facilities are beginning to recover from their low point experienced during the COVID-19 pandemic, they remain below pre-COVID-19 pandemic levels and may continue indefinitely. We may experience future declines as a result of a resurgence of the COVID-19 pandemic from time-to-time or otherwise.

The duration and ultimate impact of the COVID-19 pandemic is not known. Our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations may continue to be negatively impacted as a result of the COVID-19 pandemic and may remain at depressed levels compared to pre-COVID-19 pandemic levels for an extended period, which would have a material adverse effect on the value and trading price of our Common Stock.

We may not acquire the properties that we evaluate in our pipeline.

We generally seek to maintain a robust pipeline of investment opportunities. Transactions may fail to close for a variety of reasons, including the discovery of previously unknown liabilities or other items uncovered during our diligence process. Similarly, we may not execute binding purchase agreements with respect to properties that are currently subject to non-binding letters of intent, or LOIs, and properties with respect to which we are negotiating may not lead to the execution of any LOI. For many other reasons, we may not ultimately acquire the properties in our pipeline.

Our parking facilities face intense competition, which may adversely affect rental and fee income.

We believe that competition in parking facility operations is intense. In addition, any parking facilities we acquire may compete with building owners that provide on-site paid parking. Certain of the competitors have more experience than we do in owning and operating parking facilities. Moreover, some of our competitors will have greater capital resources, greater cash reserves less demanding rules governing distributions to stockholders and a greater ability to borrow funds. Competition for investments may reduce the number of suitable investment opportunities available to us, may increase acquisition costs and may reduce demand for parking facilities, all of which may adversely affect our operating results. Additionally, an economic slowdown in a particular market could have a negative effect on our parking fee revenues.

If competitors build new facilities that compete with our facilities or offer space at rates below the rates we charge, our lessees may lose potential or existing customers and may be pressured to discount their rates to retain business, thereby causing them to reduce rents paid to us. As a result, our ability to make distributions to stockholders, if and when cash distributions return, may be impaired. In addition, increased competition for customers may require us to make capital improvements to facilities that we would not otherwise make, which could further reduce cash available for distribution to our stockholders, if and when made by the Company.

Our leases expose us to certain risks.

We lease our parking facilities to lesseestenants that either offer parking servicesfacilities to the public or provide parking to their employees. We rely upon the lessee to manage and conduct the daily operations of the facilities. One of our strategic objectives is to focus heavily on the performance of each parking facility, working with our tenants to create a business plan for each parking facility to improve cash flow and rental income. Those business plans were finalized in the first quarter of 2022 and are now underway for execution. We anticipateThe performance of our parking facilities continued to improve through 2022, although assets with significant work force and/or corporate exposure have not returned to office as quickly as anticipated in early 2022.  While our tenant-operators continue to execute on the asset-level business plans, it is possible that the economic slowdown will materially impact the performance of the parking facilities will start to improve in the second half of 2022.our assets. Our inability or the inability of our tenants to execute on these business plans could have a material adverse effect on our business, financial condition and results of operations. In addition, the loss or renewal on less favorable terms of a substantial number of leases, or a breach, default or other failure to perform by a lesseetenant under a lease, or material reduction in the rental income associated with our leases (or an increase in anticipated expenses to the extent we are responsible for such expenses) could also have a material adverse effect on our business, financial condition and results of operations.

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Our investments in real estate will be subject to the risks typically associated with real estate.

We invest directly in real estate. We will not know whether the values of properties that we own directly will remain at the levels existing on the dates of acquisition. If the values of properties we own decrease, our risk will increase because of the lower value of the real estate. In this manner, real estate values could impact the value of our real estate investments. Therefore, our investments will be subject to the risks typically associated with real estate.

The value of real estate may be adversely affected by a number of risks, including:

Uninsured losses or premiums for insurance coverage relating to real property may adversely affect stockholder returns.

Our real properties may incur casualty losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders sometimes require property owners to purchase specific coverage against terrorism as a condition for providing mortgage loans. These policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance real property we may hold. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. Changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of our real property incurs a casualty loss which is not fully covered by insurance, the value of our assets will be reduced by any such uninsured loss. In addition, we cannot assure stockholders that funding will be available to us for repair or reconstruction of damaged real property in the future.

Climate change may have a long-term impact on our business.

There are inherent climate-related risks wherever our business is conducted. Changes in market dynamics, investor expectations, local, national and international climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure in the United States, all have the potential to disrupt our business and operations. Such events could result in a significant increase in our costs and expenses and harm our future revenue, cash flows and financial performance. Global climate change is resulting, and may continue to result, in certain natural disasters and adverse weather, such as droughts, wildfires, storms, sea-levels rising and flooding, occurring more frequently or with greater intensity, which could cause business disruptions and impact our employees’ abilities to commute to work or to work from home effectively. Government failure to address climate change could result in greater exposure to economic and other risks from climate change and impact our ability to achieve climate goals.

Our costs of complying with governmental laws and regulations related to environmental protection and human health and safety may be high.

All real property investments and the operations conducted in connection with such investments are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. Some of these laws and regulations may impose joint and several liabilities on customers, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal.

Under various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of removing or remediating hazardous or toxic substances on such real property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such real property as collateral for future borrowings. For example, the presence of significant mold or other airborne contaminants at any of our real property investments could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants or to increase ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others if property damage or personal injury occurs.

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Environmental laws also may impose restrictions on the manner in which real property may be used or businesses may be operated. Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. Additionally, operations of our parking facilities and other tenant operations, the existing condition of land when we buy it, operations in the vicinity of our real property, such as the presence of underground storage tanks, oil leaks and other vehicle discharge, or activities of unrelated third parties may affect our real property. There are also various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance. In connection with the acquisition and ownership of real property, we may be exposed to such costs in connection with such regulations. The cost of defending against environmental claims, of any damages or fines we must pay, of compliance with environmental regulatory requirements or of remediating any contaminated real property could materially adversely affect our business, lower the value of our assets or results of operations and, consequently, lower the amounts available for distribution to our stockholders.

Real property is an illiquid investment, and we may be unable to adjust our portfolio in response to changes in economic or other conditions or sell a property if or when we decide to do so.

Real property is an illiquid investment. We may be unable to adjust our portfolio in response to changes in economic or other conditions. In addition, the real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any real property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a real property. Also, we may acquire real properties that are subject to contractual “lock-out” provisions that could restrict our ability to dispose of the real property for a period of time, and a number of our assets are subject to loans that impose prepayment penalties or debt breakage costs that could significantly impair our ability to sell that asset or the net value realized from any such sale.

We may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure stockholders that we will have funds available to correct such defects or to make such improvements.

In acquiring a real property, we may agree to restrictions that prohibit the sale of that real property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that real property. Our real properties may also be subject to resale restrictions. All these provisions would restrict our ability to sell a property, which could reduce the amount of cash available for distribution to our stockholders.

Declines in the market values of our portfolio may adversely affect periodic reported results of operations and credit availability, which may reduce earnings.

A decline in the market value of our portfolio may adversely affect us particularly in instances where we have borrowed money based on the market value of assets in our portfolio. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we are unable to post the additional collateral, we may have to sell assets at a time when we might not otherwise choose to do so. A reduction in credit available may reduce our earnings and, in turn, cash available for distribution to stockholders.

Further, credit facility providers may require us to maintain a certain amount of cash reserves or to set aside unlevered assets sufficient to maintain a specified liquidity position, which would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on equity. In the event that we are unable to meet these contractual obligations, our financial condition could deteriorate rapidly.

Market values of the assets in our portfolio may decline for a number of reasons, such as changes in prevailing market rates, increases in tenant defaults, increasesdecreases in voluntary prepayments for those investments that we have that are subject to prepayment risk, widening of credit spreadsparking facility occupancy or utilization and downgrades of ratings of the securities by ratings agencies.decreases in market rents and other factors typically associated with owning real estate.

We require scale to improve cash flow and earnings for shareholders.

To best off-set the costs of being a public reporting company, we will be required to increase the scale in size and number of assets. The ability to scale will be determined by our ability to find high-quality assets to purchase and assess capital to acquire those assets, as well as integrate those assets successfully into our portfolio. Our assets are often acquired via off-market processes from private sellers and our ability to continue to scale will be influenced by our access to those sellers and assets.

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Risks Related to Our Financing Strategy

Our inability to comply with a financial covenant under our Revolving Credit Facility resulted in the inclusion by our independent auditor of an explanatory paragraph regarding our ability to continue as a “going concern” for the year ended December 31, 2022 which may accelerate a default under our Revolving Credit Facility, and consequently, unless resolved favorably, continue to raise substantial doubt about MIC’s ability to continue as a 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 Company has incurred net losses since its inception and anticipates net losses for the near future. As of December 31, 2022, the Company was not in compliance with all applicable covenants in agreements governing its debt, resulting in events of default. Additionally, based on the Company’s expected financial performance for the twelve-month period subsequent to the filing of the December 31, 2022 Form 10-K, the Company expects that it will not be in compliance with a financial covenant under the Revolving Credit Facility, which would result in another event of default. Such event allows the lender to accelerate the maturity of the debt under the Revolving Credit Facility which carries a balance of $73.7 million as of December 31, 2022. Further, our independent auditor has included an explanatory paragraph regarding our ability to continue as a “going concern” in its report on our financial statements for the year ending December 31, 2022, which constitutes an event of default under our Revolving Credit Facility at the time our financial statements for the year ending December 31, 2022 are filed. The Revolving Credit Facility also requires the Company to initiate an equity raise in order to achieve a fixed charge coverage ratio (“FCCR”) of 1.4 to 1.0 as of March, 31, 2023. The Company does not currently have sufficient cash on hand, liquidity or projected future cash flows to repay these outstanding amounts upon an event of default. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, management’s plans include the following:

However, there can be no assurance that we will be successful in completing any of these options.  As a result, management’s plans cannot be considered probable and thus does not alleviate substantial doubt about our ability to continue as a going concern.

The consolidated financial statements do not 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.

If we cannot obtain sufficient capital on acceptable terms, our business and our ability to operate could be materially adversely impacted.

In addition to customary representations, warranties, covenants, and indemnities, our existing loan agreements require us and/or our subsidiaries to comply with covenants involving, among other matters, limitations on incurrence of indebtedness, debt cancellation, property cash flow allocation, liens on properties and requirements to maintain minimum unrestricted cash balances. As noted above, unless we are able to sell assets or raise other capital, we may be unable to meet the minimum unrestricted cash balances in our loan agreements, which could result in events of default.  Our existing loan agreements contain covenants that may limit our ability to sell assets, including covenants that limit debt cancellation and assignment of debt in connection with the sale of an asset. In addition, certain of our assets are collateral under multiple loan agreements, which may limit our ability to sell such assets. We may enter into additional loan agreements that also may contain covenants, including those requiring us to comply with various financial covenants.

If we breach covenants under our loan agreements, we could be held in default under such loans, which could accelerate our repayment date and materially adversely affect our financial condition, results of operations and cash flows.

Our failure to comply with covenants in any of our loan agreements will likely constitute an event of default and, if not cured or waived, may result in:

Further, our loan agreements may contain cross default provisions, which could result in a default on our other outstanding debt.

Any such event of default, termination of commitments, acceleration of payments, or foreclosure of our assets could have a material adverse effect on our financial condition, results of operations and cash flows and ability to continue to operate or make distributions to our stockholders in the future. A default also could limit significantly our financing alternatives, which could cause us to curtail our investment activities and/or dispose of assets.  It is also possible that we could become involved in litigation related to matters concerning the loan, and such litigation could result in significant costs to us.

We have debt, and we may incur additional debt.

We are subject to numerous risks associated with our debt, including the risk that our cash flows could be insufficient to meet required payments on our debt. There are no limits in our organizational documents on the amount of debt we may incur, and we may incur substantial debt. Our debt obligations could have important consequences to our investors. Incurrence of debt may increase our vulnerability to adverse economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business, and place us at a disadvantage in relation to competitors that have lower debt levels. Excessive debt could limit our ability to obtain financing for working capital, capital expenditures, acquisitions, refinancing, lease obligations or other purposes, prevent our achieving investment grade ratings from nationally recognized credit rating agencies and reduce our ability to make distributions to our investors.

For example, the Credit Agreement, dated as of March 29, 2022, by and among the Operating Partnership, KeyBanc Capital Markets, as lead arranger, and KeyBank, National Association, as administrative agent and lender, as amended by Amendment No. 1 to Credit Agreement, dated November 17, 2022 (the  “Credit Agreement”), contains customary representations, warranties, conditions to borrowing, covenants and events of default, including certain covenants that limit or restrict, subject to certain exceptions, the ability of us, the Operating Partnership and our other subsidiaries to sell or transfer assets, enter into a merger or consolidate with another company, create liens, make investments or acquisitions or incur certain indebtedness. Among other things, the Credit Agreement requires us to:

As of the date of this Annual Report, the Company was not in compliance with all lender requirements of our debt.

Instability in the debt markets and other factors may make it more difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire and the amount of cash distributions we can make to our stockholders.

If mortgage debt is unavailable on reasonable terms as a result of increased interest rates or other factors, we may not be able to finance the initial purchase of properties. In addition, if we place mortgage debt on properties, we run the risk of being unable to refinance such debt when the loans come due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance debt, our income could be reduced. We may be unable to refinance debt at appropriate times, which may require us to sell properties on terms that are not advantageous to us or could result in the foreclosure of such properties. For example, some of our loans are packed into commercial mortgage-backed securities, which place restrictions on our ability to restructure such loans without the consent of holders of the commercial mortgage-backed securities. Obtaining such consents may be time-consuming or may not be possible at all and could delay or prevent us from restructuring one or more loans. If any of these events occur, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to stockholders and may hinder our ability to raise more capital by issuing securities or by borrowing more money.

InterestIncreasing interest rates may increase, which could increase the amount of our debt payments and negatively impact our operating results.adversely affect us.

Since the most recent U.S. economic recession, the Board of Governors of the U.S. Federal Reserve System, or the U.S. Federal Reserve, has taken actions that have resulted in low interest rates for a long period of time. In March 2022, the U.S. Federal Reserve increased interest rates for the first time since 2018 and raised rates six more times in 2022 and once more in February 2023. The U.S. Federal Reserve signaled that more rate hikes may come in 2023. Market interest rates are expected to continue to increase, and those increases may materially and negatively affect us in several ways, including:

Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates would increase our interest costs on our variable rate debt and increasecould lower the cost of refinancing existing debt and issuing new debt, which could limit our growth prospects, reduce our cash flows and our ability to make distributions to stockholders. If we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or morevalue of our investments at times which may not permit realizationproperties and cause the market price of the maximum return on such investments. The effect of prolonged interest rate increases could materially adversely impact our abilityCommon Stock to make acquisitions and develop properties.decline.

Failure to hedge effectively against interest rate changes may materially adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.

We currently have, and may incur in the future, debt that bears interest at variable rates. An increase in interest rates would increase our interest costs to the extent we have not effectively hedged against such increase, which could adversely affect our cash flows and results of operations. Subject to our exemption from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”), we may manage and mitigate our exposure to interest rate risk attributable to variable-rate debt by using interest rate swap arrangements, interest rate cap agreements and other derivatives. The goal of any interest rate management strategy that we may adopt is to minimize or eliminate the effects of interest rate changes on the value of our assets, to improve risk-adjusted returns and, where possible, to lock in, on a long-term basis, a favorable spread between the yield on our assets and the cost of financing such assets. However, these derivatives themselves expose us to various risks, including the risk that: (i) counterparties may fail to honor their obligations under these arrangements; (ii) the credit quality of the counterparties owing money under these arrangements may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transactions; (iii) the duration of the hedging transactions may not match the duration of the related liability; (iv) these arrangements may not be effective in reducing our exposure to interest rate changes; and (v) these arrangements may actually result in higher interest rates than we would otherwise have. Moreover, no hedging activity can completely insulate us from the risks associated with changes in interest rates. Failure to hedge effectively against interest rate changes may materially adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.

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Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2022, the Company had aggregate U.S. federal and state net operating loss carryforwards, or NOLs, of $58,602,794 (of which $8,585,685 was incurred in tax years beginning before January 1, 2018), which may be available to offset future taxable income for income tax purposes, and portions of which expire in various years. Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), federal NOLs incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of taxable income. Federal NOLs incurred in tax years ending before January 1, 2018 may be carried forward for 20 years. The Company’s NOLs are subject to these carry forward and deductibility limits. Further, a lack of future taxable income would adversely affect the Company’s ability to utilize these NOLs before they expire.

In addition, under Section 382 of the Code, a corporation that undergoes an “ownership change” (as defined under Sections 382 and 383 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs and certain other tax attributes to offset post-change taxable income or taxes. The proposed merger with FWAC as well as the transactions occurring prior to the proposed merger, including transactions contemplated by the Purchase and Contribution Agreement, may result in an ownership change under Section 382 of the Code that could affect the Company’s ability to utilize the Company’s NOLs to offset future taxable income. Furthermore, the Company’s ability to utilize NOLs of companies that we have acquired or that we may acquire in the future may be subject to limitations. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. For these reasons, the Company may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if the Company attains profitability, which could potentially result in increased future tax liability to the Company and could adversely affect our operating results and financial condition.

Certain loans are and may be secured by mortgages on our properties and if we default under our loans, we may lose properties through foreclosure.

We have obtained, and intend to continue to obtain, loans that are secured by mortgages on our properties, and we may obtain additional loans evidenced by promissory notes secured by mortgages on our properties. As a general policy, we will seek to obtain mortgages securing indebtedness which encumber only the particular property to which the indebtedness relates, but recourse on these loans may include all of our assets. If recourse on any loan incurred by us to acquire or refinance any particular property includes all of our assets, the equity in other properties could be reduced or eliminated through foreclosure on that loan. If a loan is secured by a mortgage on a single property, we could lose that property through foreclosure if we default on that loan. We may also give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity. Some of our loans contain cross collateralization or cross default provisions, and therefore, a default on a single property could affect multiple properties. In addition, for tax purposes, a foreclosure on any of our properties that is subject to a nonrecourse mortgage loan would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds.  Further, if we default under a loan, it is possible that we could become involved in litigation related to matters concerning the loan, and such litigation could result in significant costs to us which could affect distributions to stockholders or lower our working capital reserves or our overall value.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We have historically based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances as discussed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Mobile Infrastructure Corporation.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in our consolidated financial statements will include, and may include in the future, those related to revenue recognition; valuation of intangibles in purchase accounting; allowance for doubtful accounts; costs to obtain or fulfill a contract; valuation of common stock; carrying value and useful lives of long-lived assets; loss contingencies; and the provision for income taxes and related deferred taxes. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of industry or financial analysts and investors, resulting in a decline in the market price of the Company’s Common Stock.

Additionally, we will regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, alter our operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or we may be required to restate our published financial statements. Such changes to existing standards or changes in their interpretation may have an adverse effect on our reputation, business, financial position and profit, or cause an adverse deviation from our revenue and operating profit targets, which may negatively impact our financial results.

We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets.

In the future, we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable to us absent such restrictions.

Risks Related to Conflicts of Interest

CertainMr. Chavez, Ms. Hogue and Mr. Osherown, directly or indirectly, a substantial beneficial interest in the Company on a fully diluted basis and have the ability to exercise significant influence on the Company and the Operating Partnership, including the approval of significant corporate transactions.

As of December 31, 2022, (i) Mr. Chavez, Ms. Hogue and Mr. Osher beneficially own, as the controlling persons of Color Up, 2,624,831 shares of the Company’s Common Stock, or 33.8% of the outstanding shares of the Company Common Stock as of such date, a warrant to purchase 1,702,128 shares of the Company Common Stock and 7,495,090 OP Units, or approximately 44.2% of the outstanding OP Units as of such date, (ii) Mr. Osher beneficially owns through HS3 an additional 1,702,128 OP Units, or approximately 10.0% of the outstanding OP Units as of such date,  425,532 Class A Units, and, individually, 2,092 LTIP Units and (iii) Mr. Chavez and Ms. Hogue beneficially own, in the aggregate, 1,500,000 OP Performance Units and 272,341 OP LTIP Units. OP Units are redeemable for shares of the Company’s Common Stock, on a one-for-one basis, or cash at the Company’s option, pursuant and subject to the terms and provisions of the Partnership Agreement. In accordance with the 2021 Employment Agreements, Mr. Chavez and Ms. Hogue received 13,550 LTIP Units and 10,163 LTIP Units, respectively, as annual bonus for fiscal year 2022.  Additionally, in accordance with the 2021 Employment Agreements, Mr. Chavez and Ms. Hogue were awarded 67,751 LTIP Units and 40,650 LTIP Units, respectively, as annual equity awards for fiscal year 2022.  Each LTIP Units awarded for the annual bonus and annual equity awards was granted on February 28, 2023. On February 28, 2023, Mr. Osher was awarded 5,420 LTIP Units as payment for annual director fees for the year ended December 31, 2022.

Pursuant to their current ownership and potential future ownership of the Company’s Common Stock, Mr. Chavez, Ms. Hogue and Mr. Osher have the ability to influence the outcome of matters presented to the Company’s stockholders, including the election of the Company’s Board and approval of significant corporate transactions, including business combinations, consolidations and mergers. Therefore, Mr. Chavez, Ms. Hogue and Mr. Osher have substantial influence over the Company and could exercise influence in a manner that is not in the best interests of the Company’s other stockholders. This concentration of voting power might also have the effect of delaying or preventing a change of control that our directors andstockholders may view as beneficial.

The Company’s executive officers and certain of the Company’s directors face or may face conflicts of interest related to their positions and interests in our affiliates of the Company, which could hinder our ability to implement our business strategy and to generate returns to stockholders.investors.

CertainThe Company’s executive officers and certain of ourthe Company’s directors and executive officers are also executive officers, directors, managers and key professionals of other affiliated entities. OurThe Company’s Chief Executive Officer and director,one of its directors, Manuel Chavez, ourits President, Interim Chief Financial Officer, SecretaryTreasurer and director,one of its directors, Stephanie Hogue, and our director, Jeffrey B. Osher, one of the Company’s directors, together beneficially ownsown a significant percentage in Color Up, our largest stockholderof the Company’s Common Stock and aentities affiliated with them are limited partner inpartners of the Operating Partnership. Each of Mr. Kellar, Ms. Holley and Mr. Jones are current directors of the Company. Each of Mr. Chavez, Ms. Hogue, Mr. Osher, Mr. Kellar, Ms. Holley and Mr. Jones, individually, are also controls HS3, a 10% limited partner inpartners of the Operating Partnership. Mr. Chavez and Ms. Hogue will also continue in their ownership and management roles with Bombe Asset Management, Ltd a party to that Software License and Development Agreement with the Company. LLC (“Bombe”).

As a result, theythe Company’s executive officers and certain of the Company’s directors owe duties to each of these entities, their members, and limited partners and those investors, which duties may from time to time conflict with the duties that they owe to us.the Company. Their duty of loyaltyloyalties to these other entities and investors could result in action or inaction that is detrimental to ourthe Company’s business, which could harm the implementation of ourthe Company’s business strategy and ourthe Company’s investment and leasing opportunities.

Conflicts with ourthe Company’s business and interests are most likely to arise from involvement in activities related to (a) allocation of new investments and management time and services between usthe Company and the other entities, (b) the timing and terms of the investment in or sale of an asset, (c) development of ourthe Company’s properties by such affiliates, and (d) investments with such affiliates. The loyalties of these individuals to other entities and investors could result in action or inaction that is detrimental to ourthe Company’s business, which could harm the implementation of ourthe Company’s business strategy and our investment and leasing opportunities. If we dothe Company does not successfully implement ourits business strategy, wethe Company may be unable to generate the cash available for distribution needed to enable us to make distributions to stockholdersour investors and to maintain or increase the value of ourits assets.

The foregoing responsibilities and relationships could create competition for the time and efforts of Mr. Chavez, Ms. Hogue and Mr. Osher and may give rise to conflicts of interest, or the appearance of such conflicts of interest.

Further, ourthe Company’s directors and officers and any of their respective affiliates are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in any other business venture or ventures, including businesses and ventures involved in the acquisition or sale of real estate investments or that otherwise compete with us.the Company following the proposed merger with Fifth Wall Acquisition Corporation III (“FWAC”). Additionally, concurrently with the execution of the Merger Agreement, FWAC entered into a Subscription Agreements with entities affiliated with Mr. Osher (the “Initial PIPE Investor”), pursuant to which, among other things, the Initial PIPE Investor agreed to subscribe for and purchase, and FWAC agreed to issue and sell to the Initial PIPE Investor an aggregate of 1,200,000 shares of the Company’s common stock (post-merger) for a purchase price of $10.00 per 1.2 shares, on the terms and subject to the conditions set forth therein. The Subscription Agreement contains customary representations and warranties of FWAC, on the one hand, and the Initial PIPE Investor, on the other hand, and customary conditions to closing, including the consummation of the transactions contemplated by the Merger Agreement. The Subscription Agreement provides the Initial PIPE Investor with certain customary registration rights.

All of the Company’s transactions or relationships which involve a conflict of interest will be approved by the Company’s directors who are disinterested in the particular transaction and, if there are no disinterested directors, by both the affirmative vote of a majority of the Company’s Board and the affirmative vote of a majority of the Company’s independent directors. Similarly, the appointment of, and the equity compensation paid by the Company to its executive officers and directors will be subject to determination by the Company’s independent directors or the compensation committee of the Company’s Board. Nonetheless, despite such reviews and approvals, the Company’s agreements with certain of its executive officers will provide wide discretion for these parties to pursue their business activities separate from the Company, and these parties may pursue activities that conflict with our interests.

Risks Related to Our Corporate Structure

Certain provisions of Maryland law could inhibit changes in control.

Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of deterring a third party from making a proposal to acquire us or of inhibiting a change in control under circumstances that otherwise could provide the holders of our common stockCommon Stock with the opportunity to realize a premium over the then-prevailing market price of our common stock.Common Stock. Under the MGCL, certain “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and an interested stockholder (as defined in the statute) or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (2) two-thirds of the votes entitled to be cast by holders of shares of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has by resolution exempted any business combination between us and any other person.

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The MGCL provides that holders of “control shares” of our company (defined as shares of voting stock that, if aggregated with all other shares of capital stock owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights except to the extent approved at a special meeting of stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares. Our bylaws currently contain a provision exempting any and all acquisitions by any person of shares of our stock from this statute.

The “unsolicited takeover” provisions of the MGCL permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses if we have a class of equity securities registered under the Exchange Act and at least three independent directors. These provisions may have the effect of inhibiting a third party from acquiring us or of delaying, deferring or preventing a change in control of our company under the circumstances that otherwise could provide the holders of shares of our common stockCommon Stock with the opportunity to realize a premium over the then-current market price. Our charter contains a provision whereby we have elected to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors. See “Certain Provisions of Maryland Law and of our Charter and Bylaws—Business Combinations” and “Certain Provisions of Maryland Law and of our Charter and Bylaws—Control Share Acquisitions.”

Our charter contains provisions that make removal of our directors difficult, which makes it more difficult for our stockholders to effect changes to our management and may prevent a change in control of our company that is in the best interests of our stockholders.

Our charter provides that, subject to the rights of holders of our Series A Preferred Stock and Series 1 Preferred Stock, a director may be removed from office at any time, but only by the affirmative vote of at least a majority of all the votes of stockholders entitled to be cast generally in the election of directors. Vacancies on our board of directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any individual elected to fill such a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until his or her successor is duly elected and qualifies. These requirements make it more difficult for our stockholders to effect changes to our management by removing and replacing directors and may prevent a change in control of our company that is otherwise in the best interests of our stockholders.

Our rights and the rights of our stockholders to take action against our directors and officers are limited.

As permitted by Maryland law, our charter limits the liability of our directors and officers to us and our stockholders for money damages to the maximum extent permitted by Maryland law. Therefore, our directors and officers will be subject to monetary liability resulting only from:

As a result, we and our stockholders have rights against our directors and officers that are more limited than might otherwise exist. Accordingly, in the event that actions taken by any of our directors or officers impede the performance of our company, stockholders and our ability to recover damages from such director or officer will be limited. In addition, our charter and our bylaws require us to indemnify our directors and officers for actions taken by them in those and certain other capacities to the maximum extent permitted by Maryland law.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the exclusive forum for certain actions and proceedings that may be initiated by our stockholders against us or any of our directors, officers or other employees.

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Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any of our directors, officers or other employees to us or to our stockholders, (c) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws or (d) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our stock will be deemed to have notice of and consented to the provisions of our charter and bylaws, including the exclusive forum provisions in our bylaws. This choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable for such disputes and may discourage lawsuits against us and any of our directors, officers or other employees. We believe that requiring these claims to be filed in a single court in Maryland is advisable because (i) litigating these claims in a single court avoids unnecessarily redundant, inconvenient, costly and time-consuming litigation in multiple forums and (ii) Maryland courts are authoritative on matters of Maryland law and Maryland judges have more experience in dealing with issues of Maryland corporate law than judges in any other state.

Our charter limits the number of shares a person may own, which may discourage a takeover that could otherwise result in a premium price to our stockholders.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary or appropriate to preserve qualification as a REIT, even though the Company no longer qualifies as a REIT. To help us comply with the REIT ownership requirements of the Internal Revenue Code of 1986, as amended (the “Code”), among other purposes, our charter generally prohibits a person from beneficially or constructively owning more than 9.8% in value of the aggregate of our outstanding shares of capital stock or more than 9.8% in value or number of shares, whichever is more restrictive, of the aggregate of our outstanding Common Stock, unless exempted, prospectively or retroactively, by our Board of Directors. The ownership limit may have the effect of precluding a change in control of us by a third party, even if such change in control would be in the interest of the stockholders (and even if such change in control would not reasonably jeopardize REIT status, if it were applicable). This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our Common Stock. In addition, these provisions may also decrease a stockholder’s ability to sell their shares of our Common Stock.

Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our board of directors may classify or reclassify any unissued shares of common stockCommon Stock or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of repurchase of any such classes or series of stock. Thus, our board of directors could authorize the issuance of shares of a class or series of preferred stock with priority as to distributions and amounts payable upon liquidation over the rights of our stockholders. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to our stockholders. However, the issuance of preferred stock must be approved by a majority of our independent directors not otherwise interested in the transaction, who will have access, at our expense, to our legal counsel or to independent legal counsel.

Holders of the Company’s outstanding Preferred Stock have dividend, liquidation and other rights that are senior to the rights of the holders of the Company’s Common Stock.

The Company’s board has the authority to designate and issue shares of preferred stock with liquidation, dividend and other rights that are senior to those of the Company’s Common Stock. As of December 31, 2022, 2,862 shares of the Company’s Series A Preferred Stock and 39,811 shares of the Company’s Series 1 Preferred Stock are issued and outstanding. Holders of the outstanding the Company Series A Preferred Stock and the Company Series 1 Preferred Stock are entitled to cumulative dividends before any dividends may be declared or set aside on the Company’s Common Stock. Upon the Company’s voluntary or involuntary liquidation, dissolution or winding up, before any payment is made to holders of the Company’s Common Stock, holders of the Company’s Series A Preferred Stock and the Company’s Series 1 Preferred Stock are entitled to receive a liquidation preference of $1,000.00 per share plus any accrued and unpaid distributions. This will reduce the remaining amount of the Company’s assets, if any, available to distribute to holders of the Company’s Common Stock.

We are not and do not plan to be registered as an investment company under the Investment Company Act, and therefore we will not be subject to the requirements imposed and stockholder protections provided by the Investment Company Act; maintaining an exemption from registration may limit or otherwise affect our investment choices.

None of us, our Operating Partnership, or any of our subsidiaries is registered or intends to register as an investment company under the Investment Company Act. Our Operating Partnership’s and subsidiaries’ investments in real estate will represent the substantial majority of our total asset mix. In order for us not to be subject to regulation under the Investment Company Act, we engage, through our Operating Partnership and our wholly and majority-owned subsidiaries, primarily in the business of buying real estate.

If we were obligated to register as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things, limitations on capital structure, restrictions on specified investments, prohibitions on transactions with affiliates, and compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

Although we intend to monitor our portfolio periodically and prior to each acquisition and disposition, there can be no assurance that we, our Operating Partnership or our subsidiaries will be able to maintain our exemptions from registration for us and each of our subsidiaries. If the SEC or its staff does not agree with our determinations, we may be required to adjust our activities or those of our subsidiaries.

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Further, if we, our Operating Partnership or our subsidiaries are required to register as investment companies under the Investment Company Act, our investment options may be limited by various limitations, such as those mentioned above, and we or our subsidiaries would be subjected to a complex regulatory scheme, the costs of compliance with which can be high.

Stockholders have limited control over changes in our policies and operations, which increases the uncertainty and risks a stockholder may face.

Our Board of Directors determines our major policies, including our policies regarding investment strategies and approach, growth, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under the MGCL and our charter, our stockholders have a right to vote only on limited matters. Our board of directors’ broad discretion in setting policies and our stockholders’ inability to exert control over those policies increase the uncertainty and risks a stockholder may face.

Stockholders' interest in us could be diluted if we issue additional shares or Operating Partnership units, which could reduce the overall value of their investment.

Stockholders do not have preemptive rights to any shares issued by us in the future and generally have no appraisal rights. Our charter currently has authorized 100,000,000 shares of capital stock. Of the total number of shares of capital stock authorized, 98,999,000 shares are classified as Common Stock, par value $0.0001 per share; and 1,000,000 shares are classified as preferred stock, par value $0.0001 per share, within which (i) 97,000 shares are classified and designated as Series 1 Convertible Redeemable Preferred Stock, and (ii) 50,000 shares are classified and designated as Series A Convertible Redeemable Preferred Stock, and 1,000 shares are classified as convertible stock, par value $0.0001 per share. Subject to any limitations set forth under Maryland law, a majority of our board of directors may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of stock of any class or series, or classify or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval. All of such shares may be issued in the discretion of our board of directors. A stockholder's interest in us may be diluted in the event that we (1) sell additional shares in the future, (2) sell securities that are convertible into shares of our Common Stock, (3) issue shares of our Common Stock in a private offering of securities to institutional investors, or (4) issue shares of our Common Stock to sellers of properties acquired by us in connection with an exchange for partnership interests in the Operating Partnership, which are convertible into shares of our Common Stock. . Pursuant to the Purchase Agreement, we issued to the Purchaser the Common Stock Warrants 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 $20,000,000. Pursuant to the Purchase Agreement, the Company issued the Purchaser 7,495,090 OP Units. On November 2, 2021, the Company issued and sold to HS3 (a) 1,702,128 newly issued OP Units; and (b) 425,532 newly-issued Class A units of limited partnership of the Operating Partnership (“Class A Units”) which entitle HS3 to purchase up to 425,532 additional OP Units (the “Additional OP Units”) at an exercise price equal to $11.75 per Additional OP Unit, subject to adjustment as provided in the Class A Unit Agreement, and HS3 paid to the Operating Partnership cash consideration of $20.0 million. Because of these and other reasons described in this “Risk Factors” section, stockholders should not expect to be able to own a significant percentage of our shares. In addition, depending on the terms and pricing of any additional offerings and the value of our investments, stockholders also may experience dilution in the book value and fair mark value of, and the amount of distributions paid on, their shares.

Our charter also authorizes our board of directors, without stockholder approval, to designate and issue any classes or series of preferred stock (including equity or debt securities convertible into preferred stock) and to set or change the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions and qualifications or terms or conditions of redemption of each class or series of shares so issued. Because our board of directors has the power to establish the preferences and rights of each class or series of preferred stock, it may afford the holders of any series or class of preferred stock preferences, powers, and rights senior to the rights of holders of common stockCommon Stock or preferred stock.

Under this power, our board of directors has created the Series A preferred stockPreferred Stock and the Series 1 preferred stock,Preferred Stock, each of which ranks senior to our common stockCommon Stock with respect to the payment of dividends and rights upon liquidation, dissolution or winding up. Specifically, payment of any distribution preferences on the Series A preferred stock,Preferred Stock, Series 1 preferred stock,Preferred Stock, or any future series of preferred stock would reduce the amount of funds available for the payment of distributions on our common stock.Common Stock. Further, holders of our preferred stock are entitled to receive a preference payment if we liquidate, dissolve, or wind up before any payment is made to the common stockholders,Common Stockholders, likely reducing the amount common stockholdersCommon Stockholders would otherwise receive upon such an occurrence. Holders of our preferred stock will have the right to require us to convert their shares into shares of our common stock.Common Stock. The conversion of our preferred stock into common stockCommon Stock may further dilute the ownership interest of our common stockholders.Common Stockholders. Following a Listing Event (as defined in the Articles Supplementary), we also have the right, but not the obligation, to redeem the Series A preferred stockPreferred Stock and Series 1 preferred stockPreferred Stock and pay the redemption payments in the form of shares of our common stock,Common Stock, which may further dilute the ownership interest of our common stockholders.Common Stockholders. Although the dollar amounts of such payments are unknown, the number of shares to be issued in connection with such payments may fluctuate based on the price of our common stock.Common Stock. If we elect to redeem any of our preferred stock with cash, the exercise of such rights may reduce the availability of our funds for investment purposes or to pay for distributions on our common stock.Common Stock. A Listing Event is defined in the Articles Supplementary for the Series A preferred stockPreferred Stock and Series 1 preferred stockPreferred Stock as a liquidity event involving the listing of our shares of common stockCommon Stock on national securities exchange or a merger or other transaction in which our stockholders will receive shares listed on a national securities exchange as consideration in exchange for their shares in us.

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Any sales or perceived sales in the public market of shares of our common stockCommon Stock issuable upon the conversion or redemption of our preferred stock could adversely affect prevailing market prices of shares of our common stock.Common Stock. The issuance of common stockCommon Stock upon any conversion or redemption of our preferred stock also may have the effect of reducing our net income per share (or increasing our net loss per share). In addition, if a Listing Event occurs, the existence of our preferred stock may encourage short selling by market participants because the existence of redemption payments could depress the value or market price of shares of our common stock.Common Stock.

Federal Income Tax Risks

Our failure to qualify as a REIT willcould have significant adverse consequences to us and the value of our common stock.Common Stock.

The Company elected to be taxed and believes it operated in a manner that allowed the Company to qualify as a REIT for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2017 through December 31, 2019.  As a consequence of the COVID-19 pandemic, the Company earned income from a number of distressed tenants that did not constitute qualifying REIT income for purposes of the REIT gross income tests, and, as a result, the Company was not in compliance with the annual REIT income tests for the year ended December 31, 2020.  Accordingly, the Company did not qualify as a REIT in 2020 and has been taxed as a C corporation beginning with its taxable year ended December 31, 2020. Being subject to tax as a C corporation rather than as a REIT could substantially reduce the funds available for distribution to our stockholders for each of the years involved because:

Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to our stockholders.  In addition, being taxed as a C corporation could impair our ability to expand our business and raise capital and could materially and adversely affect the value of our common stock.Common Stock. While the Company is in the process of remediating its REIT status, there can be no assurances that such remediation will take place and the Company may continue to be taxed as a C corporation for the foreseeable future.

The stock ownership limit imposed by the Code for REITs and our charter may restrict our business combination opportunities.

To qualify as a REIT under the Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of any taxable year after our first year in which we qualified as a REIT. Our charter, with certain exceptions, authorizes our board of directors to take the actions that are necessary or appropriate to preserve our qualification as a REIT, if applicable. Unless an exemption is granted prospectively or retroactively by our board of directors, no person (as defined in the Code to include certain entities) may own more than 9.8% in value of the aggregate of our outstanding shares of capital stock or more than 9.8%, in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of Common Stock. Generally, this limit can be waived and adjusted by the board of directors. In 2021, the Board of Directors granted waivers of the ownership restrictions for the Transaction, the Tender Offer, and the subsequent investment by HS3. In addition, our charter will generally prohibit beneficial or constructive ownership of shares of our capital stock by any person that owns, actually or constructively, an interest in any of our tenants that would cause us to own, actually or constructively, 10% or more of any of our tenants. Our board of directors may grant an exemption from the 9.8% ownership limit prospectively or retroactively in its sole discretion, subject to such conditions, representations and undertakings as required by our charter or as it may determine. These and other ownership limitations in our charter are common in REIT charters and are intended, among other purposes, to assist us in complying with the tax law requirements and to minimize administrative burdens. However, these ownership limits and the other restrictions on ownership and transfer in our charter might also delay or prevent a transaction or a change in our control that might involve a premium price for our Common Stock or otherwise be in the best interests of our stockholders.

Non-U.S. investors may be subject to FIRPTA on the sale of common stock.Common Stock.

A non-U.S. person disposing of a United States real property interest (as defined in the Code), including shares of a U.S. corporation whose assets consist principally of United States real property interests, is generally subject to a tax under the Foreign Investment in Real Property Tax Act of 1980, or “FIRPTA,” on the gain recognized on the disposition. Gain realized by a foreign investor on a sale

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of our Common Stock would be subject to FIRPTA unless our Common Stock was traded on an established securities market and the non-U.S. investor did not at any time during a specified testing period directly or indirectly own more than 5% of the value of our outstanding Common Stock. We are not currently traded on an established securities market, nor can we provide any assurance as to whether or when we will be traded on an established securities market.

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ITEM 1B. Unresolved Staff CommentsUNRESOLVED STAFF COMMENTS

None.

ITEM 2.PROPERTIES

The Company’s headquarters are located at 250 East Fifth30 W. 4th Street, Suite 2110, Cincinnati, Ohio 45202.

As of December 31, 2021, we2022, the Company owned 44 parking facilities (including one classified as held for sale) in 22 separate markets throughout the United States with a total of 15,26315,750 parking spaces and approximately 5.35.4 million square feet, including 2625 parking lots and 1819 parking garages. WeThe Company also ownowns approximately 0.10.2 million square feet of retail/commercial space adjacent to ourits parking facilities. As of December 31, 2021,2022, our properties were 100% leased to 1415 tenants.

The following table sets forth the property name, location and other information with respect to the parking facilities that wethe Company owned as of December 31, 2021:2022:

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ITEM 3.LEGAL PROCEEDINGS

See Note C — Commitments and Contingencies in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report.

The nature of the Company’s business exposes its properties, the Company, its Operating Partnership and its other subsidiaries to the risk of claims and litigation in the normal course of business. Other than as noted above or routine litigation arising out of the ordinary course of business, the Company is not presently subject to any material litigation nor, to its knowledge, is any material litigation threatened against the Company.

See Note O — Commitments and Contingencies in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report.

ITEM 4.MINE SAFETY DISCLOSURES

None.

PART II

ITEM 5.MARKET FOR REGISTRANT’SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stockholder Information

As of March 28, 2022,17, 2023, there were 3,4043,275 holders of record of the Company’s common shares and 5248 and 654624 holders of record of the Company’s Series A Preferred Shares and Series 1 Preferred Shares, respectively. The number of stockholders is based on the records of the Company’s transfer agent.

Market Information

The Company’s shares of Common Stock are not currently listed on a national securities exchange or any over-the-counter market and might not to be listed in the future. The charter does not require the Board of Directors to pursue a liquidity event, however, as noted above, in mid-2019, the Company engaged financial and legal advisors and began to explore a broad range of potential strategic alternatives, including potential sales of assets, a potential sale of the Company or a portion thereof, a potential strategic business combination or a potential liquidation. On August 25, 2021, the Company consummated the Transaction. On December 13, 2022, the Company entered into the Merger Agreement with FWAC. There can be no assurance that the Company will cause a liquidity event to occur in the near future or at all. 

In order for members of FINRA and their associated persons to have participated in the offering and sale of the Company’s Common Stock or to participate in any future offering of common shares, the Company is required pursuant to FINRA Rule 5110 to disclose in each Annual Report distributed to stockholders a per share estimated value of the Company’s Common Stock, the method by which it was developed and the date of the data used to develop the estimated value. In addition, the Company must prepare annual statements of estimated share values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in the Company’s Common Stock. On January 14, 2021August 29, 2022, the Board of Directors unanimously approved and established a new estimated NAV for shares of the Company's Common Stock of $14.76 per share. The estimated NAV was based on the estimated value of the Company's assets less the estimated value of Company’s liabilities and preferred stock, divided by the number of shares of common stock outstanding on a fully diluted basis, each calculated as of August 1, 2022. The Company announcedengaged an independent third-party appraisal and valuation firm to perform the market appraisal on the Company's real property assets that was used by management to determine the estimated NAV. Different parties using different methods could derive an estimated NAV per share of Common Stock NAV of $11.75 per share as of January 8, 2021. In determiningthat is significantly different from the estimated NAV per share of Common Stock, the Board of Directors relied upon information provideddetermined by the Company’s management team and the price per share and OP Unit to be paid in connection with the Transaction. The objective of the Board of Directors in determining the estimated NAV per share of Common Stock was to arrive at a value that it believed was reasonable and appropriate based on the Transaction, the Company’s efforts since mid-2019 to explore a broad range of potential strategic alternatives to provide liquidity to stockholders, and other available data, and after consultation with the Company’s management team.

Our Board of Directors is currently considering the manner in which the estimated NAV per share in 2022 may be determined. The Company expects that it will undertake a form of appraisal in compliance with FINRA rules in the near future and disclose the results thereof as soon as practical following completion thereof.Board.

The estimated NAV per share determined by the Board of Directors is not a representation, warranty, guarantee or guaranteeother indication that, among other things:

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Further, the estimated NAV per share iswas calculated as of a particular moment in time based on the shares of Common Stock then outstanding and the amount and value of the Company's shares of common stock will fluctuate over time as a result of, among other things, future acquisitions or dispositions of assets, developments related to individual assets, and changes in the real estate and capital markets. Please see our Current Reports on Form 8-K filed with the SEC on January 14, 2021August 29, 2022 for additional information regarding the 20212022 NAV calculation, as well as “Item 1A. Risk Factors— Risks Related to an Investment in the Company–StockholdersInvestors should not rely on the Company’s estimated NAV per share as being an accurate measure of the current value of ourthe shares of our Common Stock”Stock” in this Annual Report on Form 10-K.

Distributions and Stock Dividends

On May 29, 2018, the Company’s Board of Directors suspended the Share Repurchase Program and, on March 22, 2018 the Company suspended payment of distributions from the Dividend Reinvestment Plan (“DRIP”). On March 24, 2020, the Board of Directors suspended all repurchases, even in the case of a shareholder’s death.

On March 22, 2018, the Company suspended the payment of distributions on its Common Stock.shares of common stock, par value $0.0001 per share There can be no assurance that cash distributions to the Company’s Common Stockholders will be resumed in the future. The actual amount and timing of distributions, if any, will be determined by the Company’s board of directors in its discretion and typically will depend on the amount of funds available for distribution, which is impacted by current and projected cash requirements, tax considerations and other factors.

The Company isdoes not currently, and may not in the future, generate sufficient cash flow from operations to resume paying and fully fund future distributions. The Company does not currently anticipate that it will be able to resume the payment of distributions.  However, if distributions do resume, all or a portion of the distributions may be paid from other sources, such as cash flows from equity offerings, financing activities, borrowings, or by way of waiver or deferral of fees. The Company has not established any limit on the extent to which distributions could be funded from these other sources. Accordingly, the amount of distributions paid may not reflect current cash flow from operations and distributions may include a return of capital, (rather than a return on capital). If the Company pays distributions from sources other than cash flow from operations, the funds available to the Company for investments would be reduced and the share value may be diluted. The level of distributions will be determined by the board of directors and depend on several factors including current and projected liquidity requirements, anticipated operating cash flows and tax considerations, and other relevant items deemed applicable by the board of directors.

The Company did not repurchase any of its shares in 2021. In 2021, the Company did not pay dividends on its shares of Common Stock and does not intend to pay dividends on its shares of Common Stock in 2022. No cash dividends can be made on the Common Stock until the preferred distributions are paid. For additional information see Note N – Equity in the notes to the consolidated financial statements included in Part II, Item 8 - Notes to the Consolidated Financial Statements of this Annual Report.

Other Matters

Immaterial Correction of Prior Period Financial StatementsITEM 6.[RESERVED]

As discussed in Note B to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, the Company determined that the reimbursable property tax related to certain of its properties should have been recorded on a gross basis in the consolidated statement of operations. The error in the recording of the property taxes resulted in rental revenues and property tax expense being understated by $1.1 million for the year ended December 31, 2020. There was no impact on net income for the year ended December 31, 2020, or on the consolidated balance sheet or consolidated statement of cash flows. Management has evaluated this misstatement and concluded it was not material to prior periods, individually or in aggregate. The Company plans to correct the Q1 2021, Q2 2021, and Q3 2021 condensed consolidated financial statements that will be presented in the Q1 2022, Q2 2022, and Q3 2022 Form 10-Q filings, respectively.

The following table reflects the effects of the correction on all affected line items of the Company’s previously reported condensed consolidated financial statements (in thousands):

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ITEM 6.   [RESERVED] 

ITEM 7. MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this Annual Report. Also see “Special Note Regarding Forward-Looking Statements” preceding Part I.

Overview 

The Company focuses on acquiring, owning and leasing parking facilities and related infrastructure, including parking lots, parking garages and other parking structures throughout the United States. The Company targets both parking garage and surface lot properties primarily in top 50 U.S. MSAs, with proximity to key demand drivers, such as airports, transportation hubs, educational facilities,commerce, events and venues, government buildings and courthouses, sportsinstitutions, hospitality and entertainment venues, hospital and health centers, hotels, office complexes and residences.multifamily central business districts.

As of December 31, 2021,2022, the Company owned 44 parking facilities (including one property classified as held for sale) in 22 separate markets throughout the United States, with a total of 15,26315,750 parking spaces and approximately 5.35.4 million square feet. TheAs of December 31, 2022, the Company also ownsowned approximately 0.10.2 million square feet of retail/commercial space adjacent to its parking facilities. The Company owns substantially all of its assets and conducts its operations through the Operating Partnership, of which it is the sole general partner and holder of approximately 45.8%of the outstanding OP Units.

Management of the Company has been focused on the undertaking of four strategic objectives to reposition the Company for its next phase of growth. First was to revertgrowth and a potential liquidity event. The Company converted all management contracts back to leases under the New Lease Structure effective as of January 1, 2022, so that the Company once again has qualifying income from a REIT-test perspective beginning in 2022. The second objective was to focus on the balance sheet and the Company’s upcoming debt maturities. In connection with that effort,During the first quarter, the Company extended maturities for certain debt intoand refinanced 2022 and workedmaturities with lenders to refinance maturities beyond 2022.a revolving credit facility from KeyBank. Management’s third objective was to focus heavily on the performance of each asset, working with the operators to create a business plan for each asset to improve cash flow and rental income to the Company. Those business plans were finalized in the first quarter of 2022 and are now underway for execution.currently being implemented with our tenant-operators. The Company anticipates that theasset-level performance of the assets to startwill continue to improve inthrough 2023. Finally, management continues to focus on the second half of 2022. Finally, management’s fourth objective was to focus onwhich is the remediation of REIT status for the Company and evaluating options for a potential liquidity event, including a potential listing on a national securities exchange.

See Item I – Business for further discussion

Impact of COVID-19

The ongoing COVID-19 pandemic has significantly adversely impacted global economic activity, contributing to significant volatility. The return to normalized movement within and between states and cities is relatively uneven among markets and industries, which has impacted the performance of our assets, as many of the Company’s properties are located in urban centers, near government buildings, entertainment centers, or hotels. While the employment level in the United States has nearly returned to 2019 levels, many companies continue to deploy a work-from-home or hybrid remote strategy for employees. We anticipate that a hybrid work structure for traditional central business district office workers will be the normalized state going-forward. This has impacted the performance of many of our assets that have office exposure and underscores the importance of a multi-demandmulti-key demand driver strategy in repositioning current and/or acquiring new assets. During 2020 and 2021, many state and local governments restricted public gatherings and implemented social distancing measures, which has, in some cases, eliminated or severely reduced the demand for parking. State governments and other authorities have been increasingly lifting or modifying some oflifted these measures which will encouragehas encouraged greater movement around and between cities. Should COVID-19public health restrictions be reinstated, the Company’s rental revenue may continue to be adversely affected by the COVID-19 pandemic and may be further materially adversely affected to the extent that economic conditions result in the elimination of jobs or the migration of jobs from the urban centers where the Company’s parking facilities are situated to other locations. In particular, a majority of the Company’s property leases call for additional percentage rent, which willwould be adversely impacted by a decline in the demand for parking. However, we see increasing demand for multi-use assets that have exposure to entertainment and sporting venues or have exposure to driving travel through hotel relationships. As restrictions continue to lift across the United States, we anticipate a return to normal, in particular a return to driving vacations, which may positively impact the longer-term outlook of central business districts.

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The COVID-19 pandemic has had, and may continue to have, a material adverse effect on the Company’s business, financial condition, results of operations, cash flows, liquidity and ability to satisfy debt service obligations, and its duration and ultimate lasting impact is unknown. The Company’s business, financial condition, results of operations, cash flows, liquidity and ability to satisfy debt service obligations may continue to be negatively impacted as a result of the COVID-19 pandemic and may remain at depressed levels compared to pre-COVID-19 pandemic levels for an extended period.

The Company’s 2021 annual financial results were more severely impacted by the COVID-19 pandemic in comparison with the 2022 annual financial results. In response to the COVID-19 pandemic, the Company entered into certain lease amendments and new lease agreements with tenants and operators during 2020. TheseUnder these lease amendments and agreements, are described in detail inthe tenants operated parking facilities on the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 

Results of Operations for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Revenues

The $3,830,000 increase in revenues from $16,594,000 for the year ended December 31, 2020 to $20,424,000 for the year ended December 31, 2021, which includes reimbursement revenue, is primarily attributable to (1) the acquisition of five parking assets which total revenue of $3,024,000 and (2) increasing demand for parking during the year ended December 31, 2021 compared to December 31, 2020 as a result of partial recovery from COVID-19 restrictions implemented during 2020. As a result of the COVID-19 pandemic, the Company transitioned certain leases to management agreements in 2020. Per these management agreements, the tenant operated the property on behalf of the Company and paid their operating expenses from gross parking revenue and waswere required to remit an agreed upon percentage of the remainder to the Company instead of base rent payments. Revenues from these properties arewere recorded as management income. During 2021,income, which did not constitute qualifying REIT income for purposes of the annual REIT gross income tests, and, as a result, the Company returned a number of these agreements to leaseswas not in compliance with a commencement date in 2022.

In 2021,the annual REIT income tests for its taxable year ended December 31, 2020. Accordingly, the Company began moving certain leasesdid not qualify as a REIT in 2020 and has been taxed as a C corporation beginning with its taxable year ended December 31, 2020. The Company converted these lease amendments and new lease agreements to the New Lease Structure suchas defined below and does not expect to recognize any management income from the New Lease Structure described below going forward.

Results of Operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 (dollars in thousands).

Base rental income

The decrease in base rental income for the year ended December 31, 2022 compared to the same period in 2021 is due primarily to (1) a $5.1 million decrease in rental income from our same store properties as a result of restructuring most of our leases and management contracts to a new lease structure which require tenants to pay a lower base rent (typically $500-$1,000 per month) (the "New Lease Structure"), partially offset by (2) a $0.9 million increase in base rental income related to five parking facilities acquired in the third and fourth quarters of 2021 and one property acquired during the second quarter of 2022 and (3) a $0.6 million increase for base rental income recognized through a consolidated VIE entity that tenants payprior to August 25, 2021 was accounted for under the equity method of accounting. The Company defines same store properties as those that were owned and consolidated for the full period in both comparison periods.

Management income

The $4.0 million decrease in management income for the year ended December 31, 2022 compared to the same period in 2021 is due primarily to the restructuring of management contracts to the New Lease Structure.  Management income for 2021 reflects income from 13 management contracts that existed as of December 31, 2021. As of December 31, 2022, there are no management contracts in effect.

Percentage rental income

The $16.3 million increase in percentage rent income is due primarily to (1) a $8.4 million increase from our same store properties as a result of an increase in the demand for parking across our portfolio as well as the impact of our New Lease Structure whereby we are recognizing a higher percentage of parking revenues generated at our properties in lieu of the higher base rent, and (2) a $7.9 million increase related to five parking facilities acquired in the third and fourth quarters of 2021 and one property acquired during the second quarter of 2022. Under the New Lease Structure in addition to base rent we recognize percentage rent in an amount equal to a designated percentage, typically ninety percent (90%), of the amount by which gross revenues at the property during any lease year exceed a negotiated base amount; tenants are also financially responsibleamount.

The demand for all, or substantially all, property-level operatingevent parking has increased during 2022 as a result of Major League Baseball and maintenance expenses, subject to certain exceptions. Percentage rent is typically basedNational Basketball Association producing full seasons with limited, if any, restrictions on the amount by which gross revenues of the parking facility exceeds a base amount, which allows the tenant to offset some of its property-level operational expenses. The Company negotiates base rent, percentage rent and the base amount used in the calculation of percentage rent with the applicable tenant based on economic factors applicablecapacity at sporting venues compared to the particularprior year restrictions due to COVID-19.  This demand positively affects several of our properties in St. Louis, Minneapolis, Houston and Milwaukee. The demand for event parking facilityhas also increased in our markets where theatres, festivals, and geographic market. As of January 1, 2022, the majority of the Company’s leases are structured under the New Lease Structure.other gatherings have resumed during 2022.

Additionally, the demand for hotel parking has increased in key markets such as Chicago, Detroit, Denver and Cincinnati, driven by the corresponding increase in events, vacation, and business travel during 2022 compared to 2021.

Property taxes

The $583,000$1.5 million increase in property taxes from $4,799,000 forduring the year ended December 31, 20202022 compared to $5,382,000December 31, 2021 is attributable primarily to (1) approximately $1.4 million related to new acquisitions, including the five properties acquired during the third and fourth quarters of 2021 and one property acquired during the second quarter of 2022 and (2) the New Lease Structure, which increased the property tax burden on the Company as it is solely responsible for the property tax payments under the New Lease Structure.

Property operating expense

The $1.4 million increase in property operating expense during the year ended December 31, 2022 compared to December 31, 2021 is attributable primarily to increased insurance, professional services related to engineering surveys and other operating expenses attributable to the five properties acquired during the third and fourth quarters of 2021 and one property acquired during the second quarter of 2022.

Interest expense

The increase in interest expense of approximately $3.4 million during the year ended December 31, 2022 compared to the same period in the prior year is primarily attributable to (1) $3.9 million of 2022 interest expense on the Company’s Revolving Credit Facility (which includes $1.2 million of non-cash fee amortization), and (2) interest expense on loans assumed as part of the Transaction, partially offset by the repayment of $56.1 million of mortgage loans during the second quarter of 2022.

Depreciation and amortization expenses

The $2.4 million increase in depreciation and amortization expenses during the year ended December 31, 2022 compared to the year ended December 31, 2021 is primarily due to the five properties acquired during the third and fourth quarters of 2021, the one property acquired during the second quarter of 2021.2022, and the $4.0 million of technology acquired as a result of the Transaction.

See Note D – Acquisitions and Dispositions