Property and Equipment (Net of Accumulated Depreciation)

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Property and Equipmentr (Net of Accumulated Depreciation)

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

		March 31			December 31
		2016			2015
Building  and leasehold improvements located in Calabasas, California	$	8,275,806		$	8,217,477
Furniture, fixtures and equipment		2,541,033			2,251,623
Accumulated depreciation and amortization		(2,319,310	)		(2,204,027	)
Land located in Calabasas, California		1,787,485			1,787,485
Computer software under development		172,200			168,162
Property and equipment, net	$	10,457,214		$	10,220,720

Depreciation on the Calabasas building, owned by Crusader, is computed using the straight line method over 39 years. Depreciation on furniture, fixtures and equipment in the Calabasas building is computed using the straight line method over 3 to 15 years. Amortization of leasehold improvements in the Calabasas building is being computed using the shorter of the useful life of the leasehold improvements or the remaining years of the lease. Depreciation and amortization expense on all property and equipment for the three months ended March 31, 2016 and 2015, was $115,283 and $117,451, respectively.

For the three months ended March 31, 2016 and 2015, the Calabasas building has generated rental revenue from non-affiliated tenants in the amount of $59,406 and $49,857 which is included in “Other income” from insurance company operation in the Company’s Consolidated Statements of Operations.

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For the three months ended March 31, 2016 and 2015, the Calabasas building has incurred operating expenses (including depreciation) in the amount of $171,877 and $178,079 which are included in “Other operating expenses” in the Company’s Consolidated Statements of Operations.

The total square footage of the Calabasas building is 46,884, including common areas. As of March 31, 2016, 10,292 square feet of the Calabasas building was leased to non-affiliated entities and 4,189 square feet was vacant and available to be leased to non-affiliated entities.

The Company capitalizes certain computer software costs purchased from outside vendors for internal use. These costs also include configuration and customization activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrade and enhancements are capitalized if it is probable that such expenditure will result in additional functionality. The capitalized costs are not depreciated until the software is placed into production.