Property and Equipment (Net of Accumulated Depreciation)

12 Months Ended

Dec. 31, 2014

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
		2014			2013
Land located in Calabasas, California	$	1,787,485		$	1,787,485
Building located in Calabasas, California		7,269,449			7,212,515
Furniture, fixtures, leasehold improvements, computer and
office equipment located in Woodland Hills, California		4,091,338			3,268,298
Accumulated depreciation and amortization		(2,637,966	)		(2,098,358	)
Property and equipment, net	$	10,510,306		$	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 was recorded as a deferred asset and was amortized monthly through June 30, 2014. The deferred asset was reflected in Other Assets on the Consolidated Balance Sheets as of December 31, 2013, and was fully amortized as of June 30, 2014.

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, 2014, 2013 and 2012, were $539,608, $307,237 and $139,293, respectively.

For the years ended December 31, 2014 and 2013, the property has generated rental revenue in the amount of $815,601 and $263,919 and incurred operating expenses in the amount of $781,988 and $299,420 which included depreciation, respectively. These amounts are included in other income from insurance company revenues and other operating expenses, respectively, in the Company’s Consolidated Statements of Operations.

On September 7, 2014, a lease from a single tenant occupying approximately 32,403 square feet of the building ended and the tenant has vacated the premises. The Company intends to occupy most of this recently vacated space as its new home office and is currently in the process of planning and implementing the steps necessary to modify the space to fit its operational needs with a targeted move in date in mid-2015. The Company’s current home office located in Woodland Hills, California, will be vacated, and the month-to-month lease for this office will be terminated upon the completion of the move to the Calabasas building.

As of December 31, 2014, 8,442 square feet at the Calabasas building was leased to non-affiliated entities.