Property and Equipment (Net of Accumulated Depreciation)

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Property and Equipmentr (Net of Accumulated Depreciation)

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	Year ended December 31
	2018			2017
Building and tenant improvements, located in Calabasas, California	$	8,398,275		$	8,352,181
Furniture, fixtures, equipment		2,063,549			2,724,775
Computer software		363,016			355,234
Accumulated depreciation and amortization		(3,051,505	)		(3,204,806	)
Land located in Calabasas, California		1,787,485			1,787,485
Property and equipment, net	$	9,560,820		$	10,014,869

Depreciation on the Calabasas building is computed using the straight line method over 39 years. Improvements to the building structure are amortized over the useful life of the improvements. Depreciation on furniture, fixtures and equipment in the Calabasas building is computed using the straight line method over 3 to 15 years. Amortization of tenant improvements in the Calabasas building is being computed using the shorter of the useful life of the tenant improvements or the remaining years of the lease.

Depreciation and amortization expense on all property and equipment for the years ended December 31, 2018 and 2017 were $551,183 and $517,199, respectively.

For the years ended December 31, 2018 and 2017, the Calabasas building has generated rental revenue in the amount of $1,150,428 and $1,065,104, and incurred operating expenses in the amount of $774,663 and $796,270, which included depreciation, respectively. These amounts are included in “Other income” from insurance company operation and other operating expenses, respectively, in the Company’s Consolidated Statements of Operations.

The total square footage of the Calabasas building is 46,884, including common areas. As of December 31, 2018, 14,481 square feet of the Calabasas building was leased to non-affiliated entities. As of December 31, 2018, the Calabasas building was fully occupied.

The Company capitalizes certain computer software costs purchased from outside vendors for internal use. These costs also include configuration and customization activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrade and enhancements are capitalized if it is probable that such expenditure will result in additional functionality. The capitalized costs are not depreciated until the software is placed into production.