<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 September 30, 1996
------------------
Commission file number 0-17756
-------------------------------------------------------
Consulier Engineering, Inc.
- ------------------------------------------------------------------------------
(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
- --------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
(561) 745-9149
- ------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
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 November 11,
1996
<PAGE> 2
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1996 (Unaudited)
and December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations -
three and nine month periods ended September 30,
1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
nine month periods ended September 30, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2
<PAGE> 3
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
- ------------------------------------------------------- ----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 419,592 $ 321,920
Receivables 886,620 600,881
Receivables - related parties 615,153 462,361
Notes receivable - related parties 430,559 430,559
Inventories (Note 2) 1,805,060 650,126
Income taxes -- 55,603
Other current assets 9,398 19,899
----------- -----------
TOTAL CURRENT ASSETS 4,166,382 2,541,349
Property and equipment, net of
accumulated depreciation of $734,427
in 1996 and $691,240 in 1995 246,984 271,084
Limited partnership interest (Note 3) 2,410,188 2,292,403
Notes receivable - related parties 1,741,798 1,741,797
Patents and other assets 25,089 35,689
----------- -----------
$ 8,590,441 $ 6,882,322
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable and accruals $ 291,324 $ 172,338
Income taxes 87,038 --
Notes payable - related parties 575,000 --
Notes payable - banks 3,656 6,855
----------- -----------
TOTAL CURRENT LIABILITIES 957,018 179,193
Bonds payable 1,275,000 1,275,000
Deferred income taxes 14,766 14,766
----------- -----------
TOTAL LIABILITIES 2,246,784 1,468,959
----------- -----------
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 3,644,164 2,676,926
----------- -----------
6,551,607 5,584,369
Less treasury stock at cost - 62,538 shares
in 1996 and 50,316 shares in 1995 (207,950) (171,006)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,343,657 5,413,363
----------- -----------
$ 8,590,441 $ 6,882,322
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 864,564 $ 578,461 $ 2,719,019 $ 1,874,935
Commission income -- 89 1,015 17,634
----------- ----------- ----------- -----------
864,564 578,550 2,720,034 1,892,569
----------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of goods sold 588,061 385,967 1,762,023 1,180,561
Selling, general and
administrative 366,418 283,129 936,096 862,984
Research and development expense 37,927 59,441 128,391 236,651
----------- ----------- ----------- -----------
992,406 728,537 2,826,510 2,280,196
----------- ----------- ----------- -----------
Operating (loss) (127,842) (149,987) (106,476) (387,627)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Investment income - related party 752,022 481,739 1,477,381 1,407,972
Interest income - related parties 72,215 85,191 238,653 254,533
Interest expense - other (25,004) (38,813) (74,468) (126,300)
Other income 11,788 -- 15,788 --
----------- ----------- ----------- -----------
811,021 528,117 1,657,354 1,536,205
----------- ----------- ----------- -----------
Income before income taxes 683,179 378,130 1,550,878 1,148,578
Income taxes 247,866 160,000 583,641 451,000
----------- ----------- ----------- -----------
Net income $ 435,313 $ 218,130 $ 967,237 $ 697,578
=========== =========== =========== ===========
Net income per share $ 0.17 $ 0.08 $ 0.38 $ 0.26
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE> 5
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 967,237 $ 697,578
Adjustments to reconcile net income to net
cash used in operations:
Depreciation 71,976 69,842
Provision for uncollectible accounts -- 5,999
Amortization 10,599 17,401
Investment income - related party (1,477,381) (1,407,972)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets 34,421 (118,845)
(Increase) decrease in inventories (1,154,934) (193,331)
Increase (decrease) in accounts payable
and accruals 118,986 30,725
Increase (decrease) in income taxes payable 142,641 (38,086)
----------- -----------
NET USED IN OPERATIONS (1,286,455) (936,689)
----------- -----------
INVESTING ACTIVITIES:
Property and equipment additions, net of dispositions (47,876) (49,520)
Investment in The High Risk Opportunities Fund L.P. (117,785) --
Patent development -- (23,320)
Distributions from partnership interest 1,167,725 1,388,921
Loans to related parties (152,794) (125,992)
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 849,270 1,190,089
----------- -----------
FINANCING ACTIVITIES:
Repayment of bank and other loans (3,199) (40,920)
Early redemption of bonds due in 2004 -- (700,000)
Borrowings from related parties 575,000 --
Purchase of stock for the treasury and stock options (36,944) (38,867)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 534,857 (779,787)
----------- -----------
INCREASE (DECREASE) IN CASH 97,672 (526,387)
CASH, BEGINNING OF PERIOD 321,920 1,066,146
----------- -----------
CASH, END OF PERIOD $ 419,592 $ 539,759
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
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:
September 30, December 31,
1996 1995
------------- ------------
Raw materials $ 10,501 $ 46,947
Work-in-process 79,369 32,773
Finished goods 1,715,190 570,406
----------- ---------
$ 1,805,060 $ 650,126
=========== =========
6
<PAGE> 7
(UNAUDITED)
NOTE 3. LIMITED PARTNERSHIP INVESTMENT
Consulier has a limited partnership interest in Adams, Viner & Mosler, Ltd.
("AVM") representing approximately 12 percent of the capital of the partnership
at September 30, 1996 and 13 percent at September 30, 1995. This investment is
accounted for under the equity method. The following summarizes the operations
of AVM (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------------------ --------------------
Revenues $ 14,987 $ 9,239 $ 32,694 $ 26,736
Costs and expenses 5,126 3,092 13,483 9,106
-------- -------- -------- --------
Net income $ 9,861 $ 6,147 $ 19,211 $ 17,630
======== ======== ======== ========
Company's share of
net income $ 747 $ 482 $ 1,460 $ 1,408
======== ======== ======== ========
On February 1, 1996 Consulier invested $100,000 in a second limited
partnership, The High Risk Opportunities Fund L.P. This investment is also
accounted for under the equity method. As of September 30, 1996 the Consulier
investment in this partnership was valued at $117,785 with earnings for the
third quarter of $5,027.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
RESULTS OF OPERATIONS
Consulier Engineering, Inc. ("CEI") experienced an increase in revenues of
44% for the nine months of 1996, reflecting growth in its subsidiary Southeast
Automotive. Net income increased 39% to $967,237 in the nine months of 1996
from $697,578 in 1995 while pre-tax income increased 35% to $1,550,878.
Net income for the third quarter of 1996 increased 99.6% to $435,313 from
$218,130 in 1995. This was due primarily to an increase in return on the
company's investment in Adams, Viner & Mosler, Ltd., ("AVM"), a government bond
dealer. Consulier earned $746,994 on its investment in AVM for the quarter,
which equates to an annualized return of 130%. Third quarter 1995 income from
AVM was $481,739, a return of 84%.
Consolidated General, administrative and sales expenses increased 29% in the
third quarter from $283,129 to $366,418. The Company's subsidiary Southeast
Automotive is introducing a new product ("CRA-Z Soap") in the National market.
Additional warehouse rental space was added and staff hired. Also, printing of
promotional materials and advertising in national publications increased in the
third quarter.
Nine month sales of subsidiary, Southeast Automotive, have increased 46% to
$2,687,000. The increase is due to improved economic conditions and the
continued introduction of new products. Nine months pretax earnings have
increased 11% to $329,000 at Southeast.
For the nine months, Consulier earned $1,459,595 on its investment in AVM, an
annualized return of 85% compared to $1,407,972 last year, which was a return
of 82%.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Current assets at September 30, 1996 were $4,166,382, an increase of
$1,625,033 from December 31, 1995. An increase of $97,672 in cash, $1,154,934
in inventory and $438,531 in receivables were the reasons for the increase.
Current liabilities increased $777,825 due to an increase in accounts payable,
notes payable and income taxes.
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. Management believes the Company has sufficient cash to fund
current operations.
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 "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 Automotive has entered into
an agreement with Masters Marketing & Development, Inc. of Sarasota, Florida
wherein Southeast will receive a royalty of 3.5% of net sales of CRA-Z Soap.
Southeast intends to expand its business through the introduction of new
product lines and development of a wider customer base. CRA-Z Soap hand
cleaner is the next generation in hand cleaners. It is a unique, heavy duty
bar with the ability to remove both surface grime and deeply embedded stains
without resorting to petroleum based solvents or skin irritating pumice common
to all other hand cleaners.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of September 30, 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 third 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 third 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 third 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
EXHIBIT DESCRIPTION
------- -----------
11 Statement regarding computation of
earnings per share
27 Financial Data Schedule (for SEC use only)
(B) CURRENT REPORTS ON FORM 8-K
10
<PAGE> 11
The Company did not file any reports on Form 8-K during the three month period
ended September 30, 1996.
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/ Ralph D. Butler
--------------------------
Date: November 11, 1996 Ralph D. Butler
Secretary/Treasurer
Chief Financial Officer
11
<PAGE> 1
EXHIBIT 11
CONSULIER ENGINEERING, INC.
COMPUTATION OF EARNINGS PER SHARE
PRIMARY AND FULLY DILUTED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------------------ -----------------
<S> <C> <C> <C> <C>
Net income $ 435,313 $ 218,130 $ 967,237 $ 697,578
========== ========== ========== ==========
Shares used in
computation:
Weighted average
number of
common shares
outstanding 2,499,495 2,520,211 2,501,190 2,521,627
Common stock
equivalents
from assumed
issuances using
the treasury
stock method -
Stock options and
warrants 13,191 155,698 13,191 152,057
Primary and fully
diluted earnings
per share 2,512,686 2,675,909 2,514,381 2,673,684
========== ========== ========== ==========
Primary and fully
diluted earnings
per share $ .17 $ .08 $ .38 $ .26
========== ========== ========== ==========
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CONSULIER ENGINEERING FOR THE PERIOD ENDED SEPTEMBER
30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 420
<SECURITIES> 0
<RECEIVABLES> 1,502
<ALLOWANCES> 24
<INVENTORY> 1,805
<CURRENT-ASSETS> 4,166
<PP&E> 981
<DEPRECIATION> 734
<TOTAL-ASSETS> 8,590
<CURRENT-LIABILITIES> 957
<BONDS> 1,275
0
0
<COMMON> 26
<OTHER-SE> 6,734
<TOTAL-LIABILITY-AND-EQUITY> 8,590
<SALES> 2,719
<TOTAL-REVENUES> 2,720
<CGS> 1,762
<TOTAL-COSTS> 1,762
<OTHER-EXPENSES> 1,064
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74
<INCOME-PRETAX> 1,551
<INCOME-TAX> 584
<INCOME-CONTINUING> 967
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 967
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
