Property and Equipment (Net of Accumulated Depreciation)

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Property and Equipmentr (Net of Accumulated Depreciation)

NOTE 6 – REAL ESTATE HELD FOR SALE, NET AND PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	Year ended December 31
	2020			2019
Real estate held for sale, located in Calabasas, California	$	10,202,676		$	—
Accumulated depreciation and amortization		(1,867,659	)		—
Real estate held for sale, net	$	8,335,017		$	—
Building and tenant improvements, located in Calabasas, California		—			8,411,541
Furniture, fixtures, equipment		2,191,411			2,110,653
Computer software		467,275			459,899
Accumulated depreciation and amortization		(2,423,617	)		(3,617,381	)
Computer software under development		1,803,346			1,074,398
Land located in Calabasas, California		—			1,787,485
Property and equipment, net	$	2,038,415		$	10,226,595

Real estate held for sale, owned by Crusader, includes land, building, and leasehold improvements. On September 29, 2020, the real estate was listed for sale at a price of $12,999,000. Upon the listing, the Company stopped recording the depreciation expense on the Calabasas building and the leasehold improvements in the Calabasas building. On October 23, 2020, Crusader entered into an agreement to sell the building, the leasehold improvements and substantially all existing furniture, fixtures and equipment for a sale price of $12,695,000. The building was sold on February 12, 2021.

Through the date of the real estate listing, depreciation on the Calabasas building was 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. Through the date of the real estate listing, amortization of leasehold improvements in the Calabasas building was 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, 2020 and 2019 were $673,895 and $565,876, respectively.

For the years ended December 31, 2020 and 2019, the Calabasas building has generated rental revenue from non-affiliated tenants in the amount of $150,319 and $177,596, and incurred operating expenses in the amount of $677,930 and $669,359, 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, 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.