Receivables, Net

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Premiums, Commissions and Notes Receivable, Net

NOTE 6 – RECEIVABLES, NET

Receivables, net, include premium, commissions and notes receivable and are as follows:

	Year ended December 31
	2015			2014
Premium and commission receivable	$	2,001,609		$	1,966,376
Premium finance notes receivable		4,689,040			4,390,226
Total premium and notes receivable		6,690,649			6,356,602
Allowance for doubtful accounts		(1,185,288	)		(1,186,289	)
Receivables, net	$	5,505,361		$	5,170,313

Premium receivable and premium finance notes receivables are substantially secured by unearned premium and funds held as security for performance. Premium finance notes receivable represents the balance due to AAC, the Company's premium finance subsidiary, from policyholders who elected to finance their premium over a nine-month term. These notes are net of unearned finance charges and credit loss reserves.

One of the Company’s agents, which was appointed in 2008 to assist the Company in implementing its Trucking Program, failed to pay the net premium and policy fees due Unifax, the exclusive general agent for Crusader. The agent was initially late in paying its February 2009 production that was due to Unifax on April 15, 2009. In May 2009, as a result of the agent’s failure to timely pay its balance due to Unifax, the Company terminated its agency agreement and assumed ownership and control of that agent’s policy expirations written with the Company. The Company subsequently commenced legal proceedings against the agent corporation, its three principals (who personally guaranteed the agent’s obligations) and another individual for the recovery of the balance due and any related recovery costs incurred. All related recovery costs have been expensed as incurred. The agent corporation and two of its principals filed bankruptcy. The corporation was adjudicated bankrupt. The Company obtained judgments, non-dischargeable in bankruptcy, for the full amount due from the two principals who filed bankruptcy. The other principal stipulated to a judgment of $1,200,000. The claim against the other individual was resolved. The Company collected $0 and $75,000 during the years ended December 31, 2015, and 2014, respectively. As of December 31, 2015 and 2014, the agent’s balance due to Unifax was $1,181,272. As of December 31, 2015 and 2014, the Company’s bad debt reserve associated with this matter was $1,181,272, which represents approximately 100% of the balance due to Unifax. Although the receivable is fully reserved for financial reporting purposes at December 31, 2015, the Company continues to pursue collection of the judgments from the three principals. Bad debt expense was $(1,460) and $255,299 and $(50,792) for the years ended December 31, 2015, 2014 and 2013, respectively.