Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
 9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY
STOCK-BASED COMPENSATION
On May 25, 2022, the Stockholders of the Company approved the CorEnergy Infrastructure Trust, Inc. Omnibus Equity Incentive Plan (the "Omnibus Plan") (3,000,000 shares of Common Stock authorized) which will allow the Company to grant equity awards to its employees, non-employee directors, and consultants in its employ or service (or the employ or service of any parent, subsidiary or affiliate). Incentive compensation programs play a pivotal role in the Company's effort to (i) attract and retain key personnel essential to its long-term growth and financial success, and (ii) align long term interests of recipients with the Company's stockholders. Under the Omnibus Plan, awards may be granted in the form of options, restricted stock, restricted stock units, stock appreciation rights, Common Stock awards, cash-based awards and performance-based awards.
On May 26, 2022, the Company filed a Form S-8 registration statement with the SEC, pursuant to which it registered 3,000,000 shares of Common Stock for issuance under the Omnibus Plan. As of September 30, 2022, the Company has issued 62,365 shares of Common Stock and 682,890 RSUs to directors and certain of the Company’s employees, respectively, under the Omnibus Plan resulting in remaining availability of 2,254,745 shares of Common Stock under the plan.
Director Stock-Based Compensation
During the three months ended June 30, 2022, members of the CorEnergy Board of Directors were granted awards under the Omnibus Plan of 30,917 fully vested shares of Common Stock with an aggregate weighted average grant date fair value of $2.60 per share based on the closing price of CorEnergy's Common Stock on the grant dates.
During the three months ended September 30, 2022, members of the CorEnergy Board of Directors were granted awards of 31,448 fully vested shares of Common Stock with an aggregate weighted average grant date fair value of $1.59 per share based on the closing price of CorEnergy's Common Stock on the grant dates.
The Company recognized approximately $50 thousand and $130 thousand of expense in general and administrative expense for the three and nine months ended September 30, 2022, respectively, in connection with these awards.
Restricted Stock Units
The Company’s Board of Directors approved awards of restricted stock units ("RSUs"), to certain of the Company’s employees under the Omnibus Plan. During the three months ended June 30, 2022, the Company granted RSU awards covering 654,497 shares of Common Stock to certain members of management. The number of awards granted to each employee is derived from the employee's bonus target and a 20-day volume weighted average price (VWAP) of CorEnergy's Common Stock with the number of RSUs fixed as of the grant date. The Company records stock-based compensation expense on a straight-line recognition method over the requisite service period for the entire award. Each RSU represents the right to receive one share of Common Stock at a future date. The RSUs vest over three years, with 1/3 vesting on March 15th each year. These RSUs will be settled within 30 days of vesting, and will accrue dividend equivalents over the vesting period which will be paid to the holder in cash or, at the discretion of the Compensation and Corporate Governance Committee of the Board, in the form of additional
shares of Common Stock having a fair market value equal to the amount of such dividends upon vesting of the units. Forfeitures will be accounted for when they occur.
During the three months ended September 30, 2022, the Company granted RSU awards covering 28,393 shares of Common Stock to certain members of management.
The following table represents the nonvested RSU activity for the nine months ended September 30, 2022:
Restricted Stock Units Weighted Average Grant Date
Fair Value
Outstanding at January 1, 2022 —  $ — 
Granted 682,890  2.58 
Vested —  — 
Forfeited —  — 
Outstanding at September 30, 2022 682,890  $ 2.58 
Expected to vest as of September 30, 2022 682,890 

As of September 30, 2022, the estimated remaining unrecognized compensation cost related to stock-based compensation arrangements was $1.5 million. The weighted average period over which this remaining compensation expense is expected to be recognized is 2.5 years.

The following table presents the Company's stock-based compensation expense:
For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
General and administrative expense $ 203,414  $ —  $ 342,808  $ — 
Transportation and distribution expense 29,610  —  41,575  — 
Total $ 233,024  $ —  $ 384,383  $ — 
NON-CONTROLLING INTEREST
As disclosed in Note 3 ("Acquisitions") as part of the Crimson Transaction, the Company and the Grier Members entered into the Third LLC Agreement of Crimson. Pursuant to the terms of the Third LLC Agreement, the Grier Members and the Company's interests in Crimson are summarized in the table below:
As of
September 30, 2022
Grier Members CorEnergy
(in units, except as noted)
Economic ownership interests in Crimson Midstream Holdings, LLC
Class A-1 Units 1,650,245  — 
Class A-2 Units 2,460,414  — 
Class A-3 Units 2,450,142  — 
Class B-1 Units —  10,000 
Voting ownership interests in Crimson Midstream Holdings, LLC
Class C-1 Units 505,000  495,000 
Voting interests of C-1 Units (%) 50.50  % 49.50  %
In June 2021, the final working capital adjustment was made for the Crimson Transaction which resulted in an increase in the assets acquired of $1,790,455 (as further described above in Note 3 ("Acquisitions")). This resulted in an additional 37,043 Class A-1 Units being issued to the Grier Members. The newly issued units resulted in an increase in non-controlling interest of $882,726.
After working capital adjustments, the fair value of the Grier Members' noncontrolling interest, which is represented by the Class A-1, Class A-2 and Class A-3 Units listed above, was $116.2 million as of the acquisition date (as further described above in Note 3 ("Acquisitions")). As described further below, the Class A-1, Class A-2 and Class A-3 Units may eventually be
exchanged for shares of the Company's Class B Common Stock and preferred stock subject to the approval of the CPUC ("CPUC Approval"), which is expected to occur in 2022. The Class A-1, Class A-2 and Class A-3 Units held by the Grier Members and the Class B-1 Units held by the Company represent economic interests in Crimson while the Class C-1 Units represent voting interests.
Upon CPUC Approval, the parties will enter into a Fourth Amended and Restated LLC Agreement of Crimson ("Fourth LLC Agreement"), which will, among other things, (i) give the Company control of Crimson and its assets, in connection with an anticipated further restructuring of the Company's asset ownership structure and (ii) provide the Grier Members and management members the right to exchange their entire interest in Crimson for securities of the Company as follows:
•Class A-1 Units will become exchangeable for up to 1,755,579, (which includes the addition of 37,043 shares as a result of the working capital adjustment) of the Company's depositary shares, each representing 1/100th of a share of the Company's Series A Preferred Stock,
•Class A-2 Units will become exchangeable for up to 8,762,158 shares of the Company's non-listed Class B Common Stock, and
•Class A-3 Units will become exchangeable for up to 2,450,142 shares of the Company's non-listed Class B Common Stock.
Class B Common Stock will eventually be converted into the Common Stock of the Company on the occurrence of the earlier of the following: (i) the occurrence of the third anniversary of the closing date of the Crimson Transaction or (ii) the satisfaction of certain conditions related to an increase in the relative dividend rate of the Common Stock.
Prior to exchange of the Crimson Class A-1, Class A-2 and Class A-3 Units into corresponding Company securities (and after giving effect to the changes to the Company securities into which the Class A-1 and Class A-2 Units may be exchanged, as described above), the Grier Members only have the right to receive distributions to the extent that the Company's Board of Directors determines dividends would be payable if they held the shares of Series A Preferred (for the Class A-1 Units), and Class B Common Stock (for the Class A-2 Units and Class A-3 Units), respectively, regardless of whether the securities are outstanding. If the respective shares of Series A Preferred and Class B Common Stock are not outstanding, the Company's Board of Directors must consider that they would be outstanding when declaring dividends on the Common Stock. Following CPUC Approval, the terms of the Fourth LLC Agreement provide that such rights will continue until the Grier Members elect to exchange the Class A-1, Class A-2 and Class A-3 Units for the related securities of the Company. The following table summarizes the distributions payable under the Class A-1, Class A-2 and Class A-3 Units as if the Grier Members held the respective underlying Company securities. The Class A-1, Class A-2 and Class A-3 Units are entitled to the distribution regardless of whether the corresponding Company security is outstanding.
Units Distribution Rights of CorEnergy Securities Liquidation Preference Annual Distribution per Share
Class A-1 Units
7.375% Series A Cumulative Redeemable Preferred Stock
 $ 25.00  $ 1.84 
Class A-2 Units
Class B Common Stock(1)(2)
N/A
Varies(1)
Class A-3 Units
Class B Common Stock(1) (2)
N/A
Varies(1)
(1) For each fiscal quarter ending June 30, 2021 through and including the fiscal quarter ending March 31, 2024, each share of Class B Common Stock will be entitled to receive dividends (the "Class B Common Stock Dividends"), subject to Board approval, equal to the quotient of (i) difference of (A) Cash Available for Distribution of the most recently completed quarter and (B) 1.25 multiplied by the Common Stock Base Dividend (as defined in footnote 2 below), divided by (ii) shares of Class B Common Stock issued and outstanding multiplied by 1.25.
(2) (A) For the fiscal quarters of the Company ending June 30, 2021, September 30, 2021, December 31, 2021 and March 31, 2022, the Common Stock Base Dividend Per Share shall equal $0.05 per share per quarter; (B) for the fiscal quarters of the Company ending June 30, 2022, September 30, 2022, December 31, 2022 and March 31, 2023, the Common Stock Base Dividend Per Share shall equal $0.055 per share per quarter; and (C) for the fiscal quarters of the Company ending June 30, 2023, September 30, 2023, December 31, 2023 and March 30, 2024, the Common Stock Base Dividend Per Share shall equal $0.06 per share per quarter. The Class B Common Stock Dividend is subordinated to Common Stock with respect to dividends
During the three and nine months ended September 30, 2022, distributions in the amount of $809 thousand and $2.4 million, respectively, were paid to the Grier Members for the Class A-1 Units. No distributions were paid for the Class A-2 or Class A-3 Units as no distributions were declared on the Class B Common Stock. See Note 18 ("Subsequent Events") for further information regarding the declaration of distributions related to the Class A-1 Units.
SHELF REGISTRATION STATEMENTS
On October 30, 2018, the Company filed a shelf registration statement with the SEC, pursuant to which it registered 1,000,000 shares of Common Stock for issuance under its dividend reinvestment plan ("DRIP"). As of September 30, 2022, the Company has issued 327,784 shares of Common Stock under its DRIP pursuant to the shelf, resulting in remaining availability of 672,216 shares of Common Stock under the DRIP.
On September 16, 2021, the Company had a resale shelf registration statement declared effective by the SEC, pursuant to which it registered the following securities that were issued in connection with the Internalization for resale by the Contributors: 1,837,607 shares of Common Stock (including both (i) 1,153,846 shares of Common Stock issued at the closing of the Internalization and (ii) up to 683,761 additional shares of Common Stock which may be acquired by the Contributors upon the conversion of outstanding shares of our unlisted Class B Common Stock issued at the closing of the Internalization) and 170,213 depositary shares each representing 1/100th fractional interest of a share of 7.375% Series A Cumulative Redeemable Preferred Stock, par value $0.001 per share issued at the closing of the Internalization.
On November 3, 2021, the Company filed a new shelf registration statement to replace its prior shelf registration statement, which was declared effective by the SEC on November 17, 2021 and permits the Company to publicly offer additional debt or equity securities with an aggregate offering price of up to $600.0 million. As of September 30, 2022, the Company has not issued any securities under this new shelf registration statement, so total availability remains at $600.0 million.