NOTE 9 – SEGMENT INFORMATION

Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses incurred for which discrete financial information is available that is evaluated regularly by our chief operating decision makers in deciding how to allocate resources and in assessing performance.

The Company has historically been engaged in the business of investing primarily in mortgage loans secured by a first lien on real estate in various stages of development, which was considered our sole reportable segment. As a result of the significant disruptions in the real estate and credit markets, we have foreclosed on numerous loans and have taken title to the underlying real estate, some of which consist of operating properties, land held for further development and land held for immediate sale. Accordingly, beginning in the first quarter of 2012, we changed the composition of the Company’s reportable segments based on the products and services offered and management’s intent for such assets to include the following:

Mortgage and REO – Legacy Portfolio and Other Operations — Consists of the collection, workout and sale of legacy loans and REO assets, including financing of such asset sales. This also encompasses the carrying costs of such assets and other related expenses. This segment also reflects the carrying value of such assets and the related finance and operating obligations.

Commercial Real Estate Leasing Operations — Consists of rental revenue and tenant recoveries less direct property operating expenses (maintenance and repairs, real estate taxes, management fees, and other operating expenses) and depreciation and amortization. This segment also reflects the carrying value of such assets and the related finance and operating obligations.

Hospitality and Entertainment Operations — Consists of revenues less direct operating expenses, depreciation and amortization relating to hotel, golf, spa, and food & beverage operations. This segment also reflects the carrying value of such assets and the related finance and operating obligations.

Corporate and Other — primarily consists of our centralized general and administrative and corporate treasury and deposit gathering activities, and interest expense associated with debt issuances. Corporate and Other also includes reclassifications and eliminations between the reportable operating segments, if any. This segment also reflects the carrying value of such assets and the related finance and operating obligations.

The information presented in our reportable segments tables that follow may be based in part on internal allocations, which involve management judgment. Substantially all revenues recorded are from external customers. There is no material intersegment activity.

Condensed consolidated financial information for our reportable operating segments as of and for the years ended December 31, 2013 and 2012 is summarized as follows (in thousands):



Balance Sheet Items	As of December 31,
	2013		2012
			(Restated)
Total Assets
Mortgage and REO - Legacy Portfolio and Other Operations	$	112,073	$	171,009
Commercial Real Estate Leasing Operations	21,202		21,485
Hospitality and Entertainment Operations	87,061		2,673
Corporate and Other	17,065		25,847
Consolidated	$	237,401	$	221,014

Notes Payable, Special Assessment Obligations, Capital Leases and Other Long Term Obligations
Mortgage and REO - Legacy Portfolio and Other Operations	$	16,764	$	14,559
Commercial Real Estate Leasing Operations	10,000		850
Hospitality and Entertainment Operations	25,845		—
Corporate and Other	65,446		60,409
Consolidated	$	118,055	$	75,818

Operating Liabilities
Mortgage and REO - Legacy Portfolio and Other Operations	$	4,434	$	5,229
Commercial Real Estate Leasing Operations	743		569
Hospitality and Entertainment Operations	2,712		993
Corporate and Other	5,585		6,330
Consolidated	$	13,474	$	13,121



	Year Ended December 31, 2013
Income Statement Items	Mortgage and REO - Legacy Portfolio and Other Operations		Commercial Real Estate Leasing Operations		Hospitality and Entertainment Operations		Corporate and Other		Consolidated
Revenues:
Operating property revenue	$	1	$	1,474	$	15,665	$	—	$	17,140
Investment and other interest income	5,388		2		4		9		5,403
Mortgage loan income	783		—		—		—		783
Total Revenue	6,172		1,476		15,669		9		23,326
Expenses:
Operating Property Direct Expenses (excluding interest and depreciation):
Payroll related expenses	—		54		4,917		—		4,971
Cost of sales	—		—		2,125		—		2,125
Property Taxes	—		335		219		—		554
Management Fees	—		36		1,409		—		1,445
Other costs	—		989		4,322		—		5,311
Operating Property Direct Expenses (excluding interest and depreciation)	—		1,414		12,992		—		14,406

Expenses for Non-Operating Real Estate Owned:
Property Taxes	1,051		—		—		—		1,051
Other costs	1,086		—		—		8		1,094
Expenses for Non-Operating Real Estate Owned	2,137		—		—		8		2,145

Professional Fees:
Financial Reporting - Audit, Legal and Tax	23		—		—		769		792
Other Legal	3,401		—		—		16		3,417
Asset Management	3		—		—		1,500		1,503
Other costs	324		—		—		1,224		1,548
Professional Fees	3,751		—		—		3,509		7,260

General and Administrative Expenses
Payroll related expenses	—		—		—		3,574		3,574
Insurance expense	6		—		—		1,259		1,265
Rent	—		—		—		210		210
Other general and administrative costs	27		—		—		670		697
General and Administrative Expense	33		—		—		5,713		5,746

Other Expenses:



Interest Expense	1,766			1,801			2,124			13,485			19,176
Depreciation & Amortization Expense	—			1,337			1,512			206			3,055
(Gain) Loss on Disposal of Assets	(1,460		)	—			—			30			(1,430		)
Settlement and Related Costs	9			—			—			6,100			6,109
(Recovery of) Provision for Credit Losses	(8,028		)	(11		)	—			—			(8,039		)
Impairment of Real Estate Owned	1,103			—			—			—			1,103
Other Expenses	(6,610		)	3,127			3,636			19,821			19,974

Total Expenses	(689		)	4,541			16,628			29,051			49,531

Net income (loss)	$	6,861		$	(3,065	)	$	(959	)	$	(29,042	)	$	(26,205	)


	Year Ended December 31, 2012
							(Restated)
	Mortgage and REO - Legacy Portfolio and Other Operations			Commercial Real Estate Leasing Operations			Hospitality and Entertainment Operations			Corporate and Other			Consolidated
Revenues:
Operating property revenue	$	85		$	1,415		$	1,985		$	—		$	3,485
Investment and other interest income	20			13			1			161			195
Mortgage loan income	1,085			—			—			(1		)	1,084
Total Revenue	1,190			1,428			1,986			160			4,764

Expenses:
Operating Property Direct Expenses (excluding interest and depreciation):
Payroll related expenses	—			80			—			—			80
Cost of sales	—			—			483			—			483
Property Taxes	—			326			131			—			457
Management Fees	—			48			1,152			—			1,200
Other costs	—			1,078			896			—			1,974
Operating Property Expenses (excluding interest and depreciation)	—			1,532			2,662			—			4,194

Expenses for Non-Operating Real Estate Owned:
Property Taxes	1,444			—			—			(2		)	1,442
Other costs	1,762			—			—			2			1,764
Expenses for Non-Operating Real Estate Owned	3,206			—			—			—			3,206

Professional Fees:
Financial Reporting - Audit, Legal and Tax	40			—			—			660			700
Other Legal	1,988			—			—			(443		)	1,545



Asset Management	—			—			—			1,500			1,500
Other costs	340			—			—			1,856			2,196
Professional Fees	2,368			—			—			3,573			5,941

General and Administrative Expenses:
Payroll related expenses	—			—			—			3,234			3,234
Insurance expense	—			—			—			1,243			1,243
Rent	—			—			—			416			416
Other general and administrative costs	34			—			—			1,470			1,504
General and Administrative Expense	34			—			—			6,363			6,397

Other Expenses:
Interest Expense	2,247			12			93			12,863			15,215
Depreciation & Amortization Expense	—			1,323			336			892			2,551
(Gain) Loss on Disposal of Assets	(982		)	—			—			(7		)	(989		)
Settlement and Related Costs	—			—			—			2,563			2,563
(Recovery of) Provision for Credit Losses	(2,117		)	(5		)	—			—			(2,122		)
Impairment of Real Estate Owned	—			—			—			—			—
Other Expenses	(852		)	1,330			429			16,311			17,218

Total Expenses	4,756			2,862			3,091			26,247			36,956

Net income (loss)	$	(3,566	)	$	(1,434	)	$	(1,105	)	$	(26,087	)	$	(32,192	)


	Year Ended December 31, 2011
							(Restated)
	Mortgage and REO - Legacy Portfolio and Other Operations			Commercial Real Estate Leasing Operations			Hospitality and Entertainment Operations			Corporate and Other			Consolidated
Revenues:
Operating property revenue	$	98		$	1,814		$	—		$	—		$	1,912
Investment and other income	242			237			—			133			612
Mortgage loan income	1,274			—			—			—			1,274
Total Revenue	1,614			2,051			—			133			3,798

Expenses:
Operating Property Direct Expenses:
Payroll related expenses	—			51			—			—			51
Cost of sales	—			—			—			—			—
Property Taxes	—			328			—			—			328
Management Fees	—			85			—			—			85
Other costs	—			2,115			—			—			2,115
Operating Property Expenses (excluding interest and depreciation)	—			2,579			—			—			2,579




Expenses for Non-Operating Real Estate Owned:
Property Taxes	1,830			—			—		1			1,831
Other costs	1,762			—			—		25			1,787
Expenses for Non-Operating Real Estate Owned	3,592			—			—		26			3,618

Professional Fees:
Financial Reporting - Audit, Legal and Tax	27			—			—		861			888
Other Legal	645			—			—		814			1,459
Asset Management	—			—			—		1,430			1,430
Other costs	285			—			—		2,101			2,386
Professional Fees	957			—			—		5,206			6,163

General and Administrative Expenses
Payroll related expenses	—			—			—		5,066			5,066
Insurance expense	16			—			—		1,129			1,145
Rent	—			—			—		822			822
Other general and administrative costs	39			—			—		4,236			4,275
General and Administrative Expense	55			—			—		11,253			11,308

Other Expenses:
Interest Expense	2,143			964			—		6,736			9,843
Depreciation & Amortization Expense	—			1,320			—		477			1,797
(Gain) Loss on Disposal of Assets	(202		)	—			—		1			(201		)
Settlement and Related Costs	—			—			—		1,357			1,357
(Recovery of) Provision for Credit Losses	1,000			—			—		—			1,000
Impairment of Real Estate Owned	1,529			—			—		—			1,529
Other Expenses	4,470			2,284			—		8,571			15,325

Total Expenses	9,074			4,863			—		25,056			38,993

Net income (loss)	$	(7,460	)	$	(2,812	)	$	—	$	(24,923	)	$	(35,195	)

As described in note 2, due to the conversion to a new accounting system during the year ended December 31, 2013, we identified various changes in the classifications of certain previously reported segment information and have restated certain 2012 and 2011 amounts in the foregoing tables.