<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
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Commission file number 0-17756
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Consulier Engineering, Inc.
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(Exact Name of Small Business Issuer in Its Charter)
Florida 59-2556878
- --------------------------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
169 Tequesta Drive - Suite 31E
Tequesta, FL 33469
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(Address of Principal Executive Offices) (Zip Code)
(407) 745-9149
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(Issuer's Telephone Number, Including Area Code)
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Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
periods that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
- -
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding for each of the issuer's classes of
common equity as of the last practical date:
Common Stock $.01 Par Value - 2,499,495 shares outstanding as of May 9, 1996
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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
- ------------------------------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1996 (Unaudited)
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Operations -
three month periods ended March 31,
1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
three month periods ended March 31, 1996
and 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis or
Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 5. Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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</TABLE>
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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
- --------------------------------------------------- ---------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 683,465 $ 321,920
Receivables 516,998 600,881
Receivables - related parties 512,349 462,361
Notes receivable - related parties 430,559 430,559
Inventories (Note 2) 620,655 650,126
Income taxes - 55,603
Other current assets 12,876 19,899
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TOTAL CURRENT ASSETS 2,776,902 2,541,349
Property equipment, net of
accumulated depreciation of $682,010
in 1996 and $691,240 in 1995 252,006 271,084
Limited partnership investments (Notes 3) 2,394,181 2,292,403
Notes receivable - related parties 1,741,797 1,741,797
Patents and other assets 33,902 35,689
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$7,198,788 $6,882,322
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------
CURRENT LIABILITIES:
Accounts payable and accruals $ 173,887 $ 172,338
Income taxes 79,397
Notes payable - banks 5,788 6,855
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TOTAL CURRENT LIABILITIES 259,072 179,193
Bonds payable 1,275,000 1,275,000
Deferred income taxes 14,766 14,766
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TOTAL LIABILITIES 1,548,838 1,468,959
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STOCKHOLDERS' EQUITY:
Common stock - par value $.01; shares
authorized 5,000,000, issued and
outstanding 2,562,033 shares 25,620 25,620
Additional paid-in capital 2,881,823 2,881,823
Retained earnings 2,943,513 2,676,926
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5,850,956 5,584,369
Less treasury stock at cost - 60,316 shares
in 1996 and 50,316 shares in 1995 (201,006) (171,006)
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TOTAL STOCKHOLDERS' EQUITY 5,649,950 5,413,363
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$7,198,788 $6,882,322
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</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
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1996 1996
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<S> <C> <C>
REVENUES:
Net sales $797,544 $560,753
Commission income 100 17,545
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797,644 578,298
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OPERATING COSTS AND EXPENSES:
Costs of goods sold 522,678 333,181
Selling, general and administrative 265,668 301,146
Research and development expense 45,348 87,580
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833,694 721,907
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Operating loss (36,050) (143,609)
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OTHER INCOME (EXPENSE):
Investment income - related party 377,797 380,861
Interest income - related parties 80,572 45,778
Interest expense - other (24,733) (7,802)
Miscellaneous income 4,000
-------- --------
437,636 418,837
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Income before income taxes 401,586 275,228
Income taxes (Notes 1 and 8) 135,000 105,500
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Net income $266,586 $169,728
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Net income per share $ 0.11 $ 0.06
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $266,586 $ 169,728
Adjustments to reconcile net income to net cash used in operations:
Depreciation 19,557 26,281
Provision for uncollectible accounts - 999
Amortization 3,552 5,386
Investment income (377,797) (380,861)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets 106,973 (20,010)
(Increase) decrease in inventories 29,471 (177,556)
Increase (decrease) in accounts payable and accruals 1,549 147,106
Increase (decrease) in income taxes payable 135,000 (59,499)
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NET CASH USED IN OPERATIONS 184,891 (288,426)
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INVESTING ACTIVITIES:
Property & equipment additions, net of dispositions (479) (12,795)
Patent development (765) (1,107)
Investment in High Risk Fund Ltd. Partnership (100,000) -
Distributions from partnership interests 358,953 364,901
Loans to related parties (49,988) (40,059)
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NET CASH PROVIDED BY INVESTING ACTIVITIES 207,721 310,940
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FINANCING ACTIVITIES:
Repayment of bank and other loans (1,067) (21,066)
Early redemption of bonds due in 2004 - -
Purchase of stock for the treasury and stock options (30,000) (17,262)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (31,067) (38,328)
-------- ----------
INCREASE (DECREASE) IN CASH 361,545 (15,814)
CASH, BEGINNING OF PERIOD 321,920 1,066,146
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CASH, END OF PERIOD $683,465 $1,050,332
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</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) considered necessary for a fair presentation have been
included. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-KSB for the year ended December 31, 1995.
The consolidated financial statements include Consulier Engineering, Inc. (the
"Company") and its wholly-owned subsidiaries, Southeast Automotive Acquisition
Corporation and Consulier Business Services, Inc. All intercompany balances
and transactions have been eliminated.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market. Major classes of inventory are summarized as
follows:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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<S> <C> <C>
Raw materials $ 6,223 $ 46,947
Work-in-process 77,447 32,773
Finished goods 536,985 570,406
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$ 620,655 $ 650,126
========= =========
</TABLE>
6
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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. LIMITED PARTNERSHIP INVESTMENT
Consulier has a limited partnership interest in Adams, Viner & Mosler, Ltd.
("AVM") representing approximately 13 percent of the capital of the partnership
at both March 31, 1996 and December 31, 1995. This investment is accounted for
under the equity method. The following summarizes the operations of AVM (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---------------------
<S> <C> <C>
Revenues $ 8,560 $ 8,081
Costs and expenses 3,684 3,188
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Net income $ 4,876 $ 4,893
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Company's share of net income $ 376 $ 381
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</TABLE>
On February 1, 1996 Consulier invested $100,000 in a second limited
partnership, The High Risk Fund. This investment is also accounted for under
the equity method.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Consulier Engineering, Inc. ("CEI") experienced an excellent first quarter.
Consolidated net sales increased 38% to $797,600 from $578,300 in 1995.
Consolidated pretax earnings increased $126,400 or 46.9% for the quarter to
$401,600, while consolidated net income increased $96,900 or 57.0% from
$169,700 to $266,600. This was due to record operating results from the
company's Southeast automotive parts wholesale subsidiary, and to reductions of
both Selling, General & Administrative expense, and Research & Development
expense.
Consolidated General, administrative and sales expenses decreased 11.8% in the
first quarter from $301,100 to $265,700. Consolidated Research and Development
expense decreased $42,200 or 48.2% to $45,300. Early in February 1996 George
Mount, Consulier's President and CEO resigned to pursue other opportunities.
Consulier is continuing its efforts to develop in house products and
technology, however, spending levels have declined since the departure of Mr.
Mount.
Sales of the company's Southeast automotive parts wholesale subsidiary
increased 39.1% to $772,987 in the quarter due to improved economic conditions
and the continued introduction of new products. Southeast's cost of goods sold
increased to 62.7% of net sales in the quarter from 56.2% in the first quarter
of 1995. Pretax earnings increased to a record $123,400 for the quarter
compared to $100,100 for the prior year quarter. Management expects continued
improvement in this business through the balance of the year.
CEI earned $376,000 on its investment in AVM for the quarter, which equates to
an annualized return of 65.6%. First quarter 1995 income from AVM was $380,900.
LIQUIDITY AND CAPITAL RESOURCES
Current assets at March 31, 1996 were $2,777,000, a decrease of $235,000 from
December 31, 1995. An increase of $363,500 in cash was offset by decreases of
$33,800 in accounts receivable, $29,400 in inventories and $55,600 in prepaid
taxes. Current liabilities increased $79,900 due to an increase of $79,400 in
taxes payable.
Consulier does not anticipate any material capital additions in 1996.
Current cash flow from AVM and Southeast is more than adequate to meet
operating requirements. The
8
<PAGE> 9
company may retire additional long term debt during the year.
FUTURE OUTLOOK
Consulier is actively developing its potential products and patented
technologies. The company currently is seeking partners to manufacture and/or
market products. During 1995, licensing agreements to market the "torque
multiplying device" and the "Tiger Tail"(TM) pocket winch were suspended.
These products have been redesigned to satisfy objections of the previous
licensee, and conversations have resumed with potential licensees. Development
efforts continue on the "Consulier Actuator Motor" and the "Hyper-Roll" ball
screw, as well as on an improved intake engine valve which Mr. Mosler has
patented and which the Company has a option to purchase at Mosler's cost of
development.
Consulier expects continued improvement in the operating results of its
automotive parts wholesale distribution business due to expanded product lines
and the signing of new supply contracts. Southeast intends to expand its
business through the introduction of new product lines and development of a
wider customer base.
Consulier has an option to purchase one million shares of restricted U.S.
Electricar ("Electricar") common stock at a price of $.50 per share. CEI is
also entitled to receive production royalties on sales of vehicles using the
composite monocoque construction technology. No royalties have been received
to date. Electricar has entered into a voluntary agreement for the benefit of
creditors, and creditor claims for minimum royalties have been filed on
Consulier's behalf.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of March 31, 1996, there were no legal proceedings pending against the
Company or its subsidiaries nor did the Company have any knowledge of any
proceedings which were being contemplated.
ITEM 2. CHANGES IN SECURITIES
During the first quarter of the fiscal year ending December 31, 1996 there were
no changes in the instruments defining the rights of the holders of any class
of registered securities, nor were the rights evidenced by any class of
registered securities limited or qualified by the issuance or modification of
any other class of securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the first quarter of the fiscal year ending December 31, 1996 there have
been no material defaults in the payment of principal, interest, or any other
material default with respect to any indebtedness, nor has there been any
arrearage in the payment of dividends of any class of stock.
ITEM 4. SUBMISSION OF MATTERS FOR A VOTE OF SECURITY HOLDERS
During the first quarter of the fiscal year ending December 31, 1996, the
Company did not submit any matters to a vote of security holders.
ITEM 5. OTHER INFORMATION
The registrant has no other information to report which might otherwise be
reported under Form 8-K.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
11 Statement regarding computation of earnings per share
</TABLE>
10
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27 Financial Data Schedule (for SEC use only)
(B) CURRENT REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the three month period
ended March 31, 1996.
11
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SIGNATURE
In accordance with the requirements of the Exchange Act, Consulier Engineering,
Inc. has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CONSULIER ENGINEERING, INC.
---------------------------
(Registrant)
/s/ Thomas G. Weber
---------------------------
Date: May 9, 1996 Thomas G. Weber
Vice President
Secretary/Treasurer
Chief Financial Officer
12
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EXHIBIT 11
CONSULIER ENGINEERING, INC.
COMPUTATION OF EARNINGS PER SHARE
PRIMARY AND FULLY DILUTED
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
----------------------
<S> <C> <C>
Net Income $ 266,586 $ 169,728
========= =========
Shares used in computation:
Weighted average number of
common shares outstanding 2,504,134 2,552,346
Common stock equivalents
from assumed issuances
using the treasury
stock method -
Stock options and warrants 12,069 153,285
--------- ---------
Total shares used 2,516,203 2,675,631
========= =========
Primary and fully diluted
Earnings per Share $ .11 $ .06
========= =========
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 683
<SECURITIES> 0
<RECEIVABLES> 1,460
<ALLOWANCES> 15
<INVENTORY> 621
<CURRENT-ASSETS> 2,777
<PP&E> 934
<DEPRECIATION> 682
<TOTAL-ASSETS> 7,199
<CURRENT-LIABILITIES> 259
<BONDS> 1,275
0
0
<COMMON> 26
<OTHER-SE> 5,423
<TOTAL-LIABILITY-AND-EQUITY> 7,199
<SALES> 773
<TOTAL-REVENUES> 798
<CGS> 484
<TOTAL-COSTS> 523
<OTHER-EXPENSES> 311
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 402
<INCOME-TAX> 135
<INCOME-CONTINUING> 267
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 267
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
