Property and Equipment (Net of Accumulated Depreciation)

6 Months Ended

Jun. 30, 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:

		June 30			December 31
		2014			2013
Land located in Calabasas, California	$	1,787,485		$	1,787,485
Building located in Calabasas, California		7,212,515			7,212,515
Leasehold improvements and office equipment located in Woodland Hills, California		3,582,104			3,268,298
Accumulated depreciation and amortization		(2,376,293	)		2,098,358	)
Net property and equipment	$	10,205,811		$	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 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 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 was amortized monthly through June 30, 2014. The deferred asset is reflected in Other Assets on the Consolidated Balance Sheets as of December 31, 2013, and was fully amortized as of June 30, 2014. As of June 30, 2014, approximately 43,535 square feet of the building was leased. On June 30, 2014, one of the leases on approximately 36,590 square feet expired; however, that tenant continues to occupy approximately 32,401 square feet under a new short-term lease expiring on September 7, 2014; and, approximately 4,189 square feet that was previously subleased by that tenant was leased to a different tenant until December 31, 2014. The Company intends to move into approximately half the building by the end of 2014, with the remaining half of the building leased to non-affiliated companies. This property is intended to be the new home office of the Company.

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 on the building 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 and six months ended June 30, 2014 was $139,749 and $277,935 and for the three and six months ended June 30, 2013 was $54,064 and $106,651, respectively.