Property and Equipment (Net of Accumulated Depreciation)

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Property and Equipment (Net of Accumulated Depreciation)

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	March 31			December 31
	2020			2019
Building  and leasehold improvements located in Calabasas, California	$	8,411,541		$	8,411,541
Furniture, fixtures, and equipment		2,120,078			2,110,653
Computer software		459,899			459,899
Accumulated depreciation and amortization		(3,805,466	)		(3,617,381	)
Computer software under development		1,249,625			1,074,398
Land located in Calabasas, California		1,787,485			1,787,485
Property and equipment, net	$	10,223,162		$	10,226,595

Depreciation on the Calabasas building, owned by Crusader, is computed using the straight line method over 39 years. Depreciation on furniture, fixtures, and equipment in the Calabasas building is computed using the straight line method over 3 to 15 years. Amortization of leasehold improvements in the Calabasas building is being 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, 2020 and 2019 was $188,085 and $135,027, respectively.

For the three months ended March 31, 2020 and 2019, the Calabasas building has generated rental revenue from non-affiliated tenants in the amount of $53,290 and $42,230, respectively, which is included in “Other income” from insurance company operation in the Company’s Condensed Consolidated Statements of Operations.

For the three months ended March 31, 2020 and 2019, the Calabasas building incurred operating expenses (including depreciation) in the amount of $190,097 and $156,789, respectively, which are included in “Other operating expenses” in the Company’s Condensed Consolidated Statements of Operations.

The total square footage of the Calabasas building is 46,884, including common areas. As of March 31, 2020, 6,942 square feet of the Calabasas building was leased to non-affiliated entities and 7,539 square feet was vacant and available to be leased to non-affiliated entities.

The Company capitalizes certain computer software costs purchased from outside vendors for internal use or incurred internally to upgrade the existing systems. 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.