Property and Equipment (Net of Accumulated Depreciation)

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Property and Equipmentr (Net of Accumulated Depreciation)

NOTE 5 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

		December 31			December 31
		2013			2012
Land and building located in Calabasas, California
Land	$	1,787,485		$	—
Building		7,212,515			—
Other property and equipment located in Woodland Hills, California
Furniture, fixtures, leasehold improvements, computer and office equipment		3,268,298			2,647,971
Accumulated depreciation and amortization		(2,098,358	)		(1,791,121	)
Net property and equipment	$	10,169,940		$	856,850

On September 26, 2013, Crusader closed escrow on the purchase of land and a building located in Calabasas, California. There is no relationship between the seller and the Company. The real estate consists of a two-story office building located on commercial land, about four miles from the Company’s current location. The office building has approximately 46,884 rentable square feet. The purchase price of the land and building was $9,500,000. Acquisition costs of $106,505 were expensed as period costs. The Company determined that the purchase price represented the fair value of the assets acquired. No liabilities were assumed. The consideration for the land and building was cash. The purchase price included $500,000 to reimburse the seller for rents on existing tenants in excess of current market through June 30, 2014, which is recorded as a deferred asset and will be amortized monthly through June 30, 2014, the remaining life of the lease terms. The deferred asset is reflected in Other Assets on the Consolidated Balance Sheets. As of December 31, 2013, approximately 43,534 square feet of the building is leased. On June 30, 2014, one of the leases on approximately 36,592 square feet expires. After June 30, 2014, Crusader intends to lease approximately half of the building to non-affiliated companies. The remaining half is intended to be occupied by Crusader and its affiliated companies. This property is intended to be the new home office of the Company.

The Company considered many factors in its decision to purchase a building. Some of the factors considered by management, though not definitive, include:

1. The Company has been paying rent at its present location since 1987 and, therefore, has not received any benefit from equity buildup or long-term appreciation.

2. The current and expected cost benefit of ownership versus renting is favorable to ownership.

3. The Company would have a facility that can accommodate future growth.

4. The timing of the current real estate marketplace was favorable.

5. The purchase was a more efficient use of the Company’s available cash compared to maintaining the funds in the Company’s current investment portfolio.

6. The new building will provide the Company with a substantial improvement in the quality and appearance of its office space.

7. Ownership will provide the Company a hedge against possible future inflation of occupancy costs.

In February 2014, the Company completed its purchase price allocation and costs segregation analysis for the acquisition of the Calabasas building, including the determination of depreciable lives. The purchase price of the land and building was allocated based on the fair values of the assets acquired on the purchase date of September 26, 2013. Depreciation is computed using straight line methods over 39 years. Depreciation on other property and equipment located in the Calabasas building is computed using straight line methods over 3 to 15 years. Amortization of leasehold improvements on the property is being computed using the shorter of the useful life of the leasehold improvements or the remaining years of the lease.

Since the date of acquisition through December 31, 2013, the property has generated revenue in the amount of $263,919 and incurred expenses in the amount of $299,420 which included depreciation. These amounts are included in other income from insurance company revenues and other operating expenses, respectively on the Company’s consolidated statements of operations.

Depreciation on property and equipment located in Woodland Hills, California is computed using straight line methods over 3 to 7 years. Amortization of leasehold improvements on property located in Woodland Hills, California, is 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 years ended December 31, 2013, 2012 and 2011, are $307,237, $139,293 and $59,483, respectively.