Long-Term Incentive Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Long-Term Incentive Compensation

Note 16. Long-Term Incentive Compensation

The Company’s long-term incentive plan for employees, directors, consultants, and other service providers (as amended from time to time, the “LTIP”) provides for the grant of all or any of the following types of equity-based awards: (i) incentive stock options qualified as such under United States federal income tax laws; (ii) stock options that do not qualify as incentive stock options; (iii) stock appreciation rights; (iv) restricted stock awards; (v) restricted stock units (“RSUs”); (vi) stock awards; (vii) performance awards; (viii) dividend equivalents; (ix) other stock-based awards; (x) cash awards; and (xi) substitute awards.

Subject to adjustment in accordance with the terms of the LTIP, 35,000,000 shares of the Company’s common stock were reserved for issuance pursuant to awards under the LTIP, as such LTIP was in effect as of December 31, 2023 and without consideration of the Reverse Stock Split. This number was subsequently adjusted to 1,225,000 shares, effective as of October 16, 2023, to reflect the Reverse Stock Split. After giving effect to the Reverse Stock Split and the awards that have been granted and forfeited under the LTIP as of December 31, 2023 there were 677,426 shares remaining available for grant under the LTIP.

Stock-Based Compensation

The Company’s stock-based compensation is classified as either equity awards or liability awards in accordance with GAAP. The fair value of an equity-classified award is determined at the grant date and is amortized to general and administrative expense on a graded attribution basis over the vesting period of the award. The Company accounts for forfeitures of stock-based compensation awards as they occur.  The fair value of a liability-classified award is determined on a quarterly basis beginning at the grant date until final vesting. Changes in the fair value of liability-classified awards are recorded to general and administrative expense over the vesting period of the award.

The Company issued RSUs to employees, directors and advisors that (i) cliff-vest on May 3, 2024 (the one-year anniversary of the Merger) (ii) vest one year after the effective date of the applicable consulting agreement, or (iii) vest ratably over three years, on each anniversary date of the Merger beginning with May 3, 2024, as applicable. RSUs granted under the LTIP can immediately vest (A) upon a termination due to (i) death, (ii) disability, or (iii) retirement, or (B) in connection with a change in control; provided that for employee RSU awards, such accelerated vesting upon a change in control only applies to the extent no provision is made in connection with a change in control for the assumption of awards previously granted or there is no substitution of such awards for new awards. To the extent an employee’s RSU award is assumed or substituted in connection with the change in control, if a participant is terminated by the Company without “cause” or the employee terminates for “good reason” (each as defined in the applicable award agreement), then each RSU award will become fully vested. The fair value of RSU awards is based on the stock price of the Company’s common stock as of each relevant date. Pursuant to the terms of the award agreements covering the RSUs granted to employees in August 2023, no adjustment to the number of shares subject to such RSUs was made in connection with the Reverse Stock Split.

The Company recognized the following amounts in total related to long-term incentive compensation costs for the year ended December 31, 2023 and the period from June 7, 2022 (date of inception) through December 31, 2022:

	For the year ended December 31, 2023		June 7, 2022 (date of inception) through December 31, 2022
Long-term incentive compensation	$	2,973,641	$	—

Equity-Classified Awards

The Company recognized $2.9 million in equity-classified stock-based compensation costs for the year ended December 31, 2023. There were no equity-classified stock-based compensation costs for the period from June 7, 2022 (date of inception) through December 31, 2022.

Equity-Classified Restricted Stock Units

As of December 31, 2023, there was $4.8 million of total unrecognized compensation cost related to the Company’s unvested equity-classified RSUs. This cost is expected to be recognized over a weighted-average period of 0.9 years. The following table summarizes equity-classified restricted stock units for the year ended December 31, 2023 and provides information for unvested units as of December 31, 2023.

	Number of Units			Weighted Average Fair Value
Unvested units at December 31, 2022		—		$	—
Granted		628,545		$	14.58
Vested		—		$	—
Forfeited		(100,000	)	$	14.57
Unvested units at December 31, 2023		528,545		$	9.51

Liability-Classified Awards

The Company recognized $78,955 in liability-classified stock-based compensation costs for the year ended December 31, 2023. There were no liability-classified stock-based compensation costs for the period from June 7, 2022 (date of inception) through December 31, 2022.

Liability-Classified Restricted Stock Units

In August 2023, the Company granted RSUs to directors and an advisor that vest in May 2024 and August 2024, respectively, which are payable 60% in common stock and 40% in either cash or common stock (or a combination thereof), as determined by the Compensation Committee of the Board. The Company has accounted for the portion of the awards that can be settled in cash as liability-classified awards and accordingly changes in the market value of the instruments will be recorded to general and administrative expense over the vesting period of the award. As of December 31, 2023, there was $0.1 million of total unrecognized compensation cost related to liability-classified RSUs that is expected to be recognized over a weighted-average period of 0.3 years. The amount of unrecognized compensation cost for liability-classified awards will fluctuate over time as they are marked to market.

The following table summarizes activity related to liability-classified RSUs for the year ended December 31, 2023:

	Number of Units		Weighted Average Fair Value
Unvested units at December 31, 2022		—	$	—
Granted		19,030	$	14.71
Vested		—	$	—
Forfeited		—	$	—
Unvested units at December 31, 2023		19,030	$	9.51