PROPERTY AND EQUIPMENT NET

6 Months Ended

Jun. 30, 2022

PROPERTY AND EQUIPMENT NET

PROPERTY AND EQUIPMENT, NET

NOTE 6 –PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	June 30			December 31
	2022			2021
Furniture, fixtures, and equipment	$	1,168,516		$	2,316,885
Computer software		1,861,912			466,892
Accumulated depreciation and amortization		(1,245,771	)		(2,983,418	)
Computer software under development		-			2,354,161
Property and equipment, net	$	1,784,657		$	2,154,520

On January 11, 2022, Crusader entered into a sublease agreement (the “Lease”) with Western General Insurance Company, in Liquidation (“Western General”) for the lease of approximately 4,199 rentable square feet of office space located at 5230 Las Virgenes Road, Suite 100, Calabasas, CA 91302 (the “Premises”). The Lease is subject and subordinate to that certain Office Lease by and between Western General and Colorado Capital Calabasas LLC, a Delaware limited liability Company, dated August 1, 2021. Crusader is using the Premises for its new corporate headquarters.

The term of the Lease commenced on February 1, 2022 (the “Commencement Date”) and will terminate on January 31, 2023, unless earlier terminated pursuant to the terms of the Lease. The Lease is considered a “short-term” lease as a lease term with twelve months or less that does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Management has elected the permitted practical expedient that applies solely to short-term leases under ASC 842 Leases of not recognizing a right-of-use asset on the Company’s balance sheet and expensing the rental payments as an operating expense when incurred.

Beginning on the Commencement Date, Crusader is obligated to make monthly rent payments in an amount of $10,539. In addition, Crusader is obligated to pay Western General its proportionate share, 5.45%, of operating expenses. Crusader was also required to deliver to Western General an initial payment of $20,539, $10,000 of which is held by Western General as a refundable security deposit.

In January 2022, Unico, Crusader, and Unifax agreed, with the pre-approval of the Special Examiner, to transfer a computer system, owned by Unico, to Crusader. Unico contributed the computer system at its book value of $1,991,956 to Unifax, and Unifax in turn contributed the computer system to Crusader at its book value of $1,991,956 as a direct reduction in the amount due to Crusader, which resulted in a dollar-for-dollar reduction in the premium trust deficiency. The amount of such deficiency was $340,674 as of September 15, 2022 and $335,619 as of June 30, 2022.

Depreciation on furniture, fixtures, and equipment was computed using the straight-line method over 3 to 15 years. Depreciation and amortization expense on all property and equipment for the three and six months ended June 30, 2022, was $176,363 and $369,862, respectively, and for the three and six months ended June 30, 2021, was $146,548 and $268,275, respectively.

The Company capitalizes certain computer software costs purchased from outside vendors for internal use or incurred internally to upgrade the existing systems. 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.