NOTE 6. INVESTMENTS IN JOINT VENTURES

Mitigation Bank. The Investment in Joint Venture on the Company’s consolidated balance sheet represents the Company’s ownership interest in the Mitigation Bank (the “JV Investment”). We have concluded the Mitigation Bank is a variable interest entity and is accounted for under the equity method of accounting as the Company is not the primary beneficiary as defined in FASB ASC Topic 810, Consolidation. The significant factors related to this determination include, but are not limited to, the Mitigation Bank being jointly controlled by the members through the use of unanimous approval for all material actions and the retention by the Venture of a third party as the day-to-day manager of the Mitigation Bank property, responsible for the maintenance, generation, tracking, and other aspects of wetland mitigation credits. Under the guidance of FASB ASC 323, Investments-Equity Method and Joint Ventures, the Company uses the equity method to account for the JV Investment.

The following table provides summarized financial information of the Venture as of December 31, 2018:


	As of
	December 31, 2018
	($000's)
Assets, cash and cash equivalents	$	2,316
Assets, prepaid expenses		19
Assets, investment in mitigation credit assets		1,511
Assets, property, plant, and equipment		18
Total Assets	$	3,864

Liabilities, accounts payable, deferred mitigation credit sale revenue	$	62
Equity	$	3,802
Total Liabilities & Equity	$	3,864

Beachfront Parcel. During the year ended December 31, 2015, the Company acquired, through a real estate venture with an unaffiliated third-party institutional investor, an interest in the Beachfront Parcel. The Company acquired its 50% interest in the real estate venture for approximately $5.7 million and served as its general partner with day-to-day management responsibilities. The venture was structured such that the Company earned a base management fee and would have received a preferred interest as well as a promoted interest if certain return hurdles were achieved. The Company’s preferred interest represented the first 9% of the investment return achieved at the disposition of the property. GAAP requires consolidation of a VIE in which an enterprise has a controlling financial interest and is the primary beneficiary. Upon entering into the venture described above and as of December 31, 2015, the Company determined it had a controlling financial interest and is the primary beneficiary; therefore, the venture was a VIE and was consolidated in the Company’s financial statements.

On November 17, 2016, the Company acquired the unaffiliated third party’s interest for approximately $4.8 million, a discount of approximately $879,000. The discount was recorded through equity on the consolidated balance sheet during the quarter and year ended December 31, 2016. The Company evaluated its interest in Beachfront Parcel for impairment and determined that no impairment was necessary as of December 31, 2016. As the Company owned the entire real estate venture as of December 31, 2016, there is no longer a consolidated VIE. The Company’s consolidated statements of operations included a net loss from the noncontrolling interest in the Beachfront Parcel VIE of approximately $52,000 during the year ended December 31, 2016.