Property and Equipment (Net of Accumulated Depreciation)

3 Months Ended

Mar. 31, 2014

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
		2014			2013
Land and building located in Calabasas, California
Land	$	1,787,485		$	1,787,485
Building		7,212,515			7,212,515
Other property and equipment located in Woodland Hills, California
Furniture, fixtures, leasehold improvements, computer and office equipment		3,404,569			3,268,298
Accumulated depreciation and amortization		(2,236,544	)		(2,098,358	)
Net property and equipment	$	10,168,025		$	10,169,940

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 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 during the three months ended September 30, 2013. 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 March 31, 2014, approximately 43,535 square feet of the building is leased. On June 30, 2014, one of the leases on approximately 36,590 square feet expires. After this tenant vacates the building, Crusader and its affiliated companies intend to occupy approximately half the building. This property is intended to be the new home office of the Company. Crusader intends to lease the remaining half of the building to non-affiliated companies.

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.

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 three months ended March 31, 2014 and 2013 was $138,186 and $52,587, respectively.