Debt

3 Months Ended

Mar. 31, 2020

DEBT

The Company’s debt balances consist of the following:



Debt balances	March 31, 2020		December 31, 2019
NCCRE loan	$	487	$	492
Seller’s notes	2,744		2,810
Related party debt	—		15,000
Financing liability	19,052		19,052
Finance lease liabilities	6,006		6,132
SAF loan	19,438		—
SAF loan collateral (related party)	22,254		—
Total debt	$	69,981	$	43,486
Less: current portion of debt	22,514		15,300

Total long-term debt	$	47,467	$	28,186

The interest expense related to the Company’s debt during the three months ended March 31, 2020 and 2019 consists of the following:



Interest Expense	Three Months Ended March 31,
	2020		2019
NCCRE loan	5		5
Seller’s notes	72		101
Interest expense on financing liability	591		—
Interest expense on finance lease liability	215		12
Interest expense on SAF loan	89		—
Interest expense on SAF loan collateral (related party)	254		—
Total interest expense	$	1,226	$	118

NCC Real Estate, LLC (“NCCRE”) loan

NCCRE, which is owned by the Company’s consolidated subsidiary HSC Solutions, LLC, entered into a $550 secured loan with a financial institution for the purchase of a building in Rolling Meadows, Illinois in December 2016. The building is leased to NCC. The promissory note payable carries a fixed interest rate of 3.7% and is due in December 2021.

Seller’s notes

The Company issued Seller’s notes payable in connection with several transactions, bearing interest at rates ranging from 3.5% to 10%.

Related party debt

During the year ended December 31, 2019, the Company’s CEO made a non-interest bearing loan of $15,000 to Acreage. In January 2020, he made an additional loan of $5,000 to Acreage. These amounts were subsequently repaid in March 2020.

Financing liability

In connection with the Company’s failed sale-leaseback transaction (refer to Note 14), a financing liability was recognized equal to the cash proceeds received. The Company will recognize the cash payments made on the lease as interest expense, and the principal will be derecognized upon expiration of the lease.

SAF loan and collateral

On March 11, 2020, the Company borrowed $21,000 from an institutional lender pursuant to a credit facility. The credit facility permits the Company to borrow up to $100,000, which may be drawn down by the Company in four tranches, maturing two years from the date of the first draw down. The Company will pay an annual interest rate of 3.55% on the first advance of debt for a term of two years. The borrowed amounts under the credit facility are fully collateralized by $22,000 of restricted cash, which was borrowed pursuant to the loan transaction described below. Any additional draws must be fully cash collateralized as well.

Also on March 11, 2020, the Company closed $22,000 in borrowings pursuant to a loan transaction with IP Investment Company, LLC (the “Lender”). The maturity date is 366 days from the closing date of the loan transaction. The Company will pay monthly interest on the collateral in the form of 41 SVS through the maturity date. The Lender may put any unsold interest shares to the Company upon maturity at a price of $4.50 per share. Kevin Murphy, the Company’s Chief Executive Officer, loaned $21,000 of the $22,000 borrowed by the Company to the Lender. The loan is secured by the non-U.S. intellectual property assets, a cannabis state license and 12,000 SVS shares of the Company.

The Company has determined such interest on collateral to be a mandatorily redeemable financial instrument that is recorded as a liability in accordance with ASC 480 - Distinguishing liabilities from equity (“ASC 480”). The liability is calculated based upon the share interest multiplied by the maturity price of $4.50 per share. The liability amounted to $128 as of March 31, 2020 and was recorded in Debt, current within the Statements of Financial Position.