<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 June 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
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(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 August 9,
1996
<PAGE> 2
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
- ------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1996 (Unaudited)
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations -
three and six month periods ended June 30,
1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
six month periods ended June 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
- ---------
</TABLE>
2
<PAGE> 3
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
(Unaudited)
- ----------------------------------------------------- ------------- --------------
<S> <C> <C>
Current assets:
Cash $ 425,777 $ 321,920
Receivables 792,392 600,881
Receivables - related parties 562,809 462,361
Notes receivable - related parties 430,559 430,559
Inventories (Note 2) 1,194,062 650,126
Income taxes - 55,603
Other current assets 7,798 19,899
------------- --------------
Total current assets 3,413,397 2,541,349
Property and equipment, net of
accumulated depreciation of $700,962
in 1996 and $691,240 in 1995 237,269 271,084
Limited partnership interest (Note 3) 2,405,160 2,292,403
Notes receivable - related parties 1,741,798 1,741,797
Patents and other assets 28,566 35,689
------------- --------------
$ 7,826,190 $ 6,882,322
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------
Current liabilities:
Accounts payable and accruals $ 259,186 $ 172,338
Income taxes 89,172 -
Notes payable - related parties 275,000 -
Notes payable - banks 4,722 6,855
------------- --------------
Total current liabilities 628,080 179,193
Bonds payable 1,275,000 1,275,000
Deferred income taxes 14,766 14,766
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Total liabilities 1,917,846 1,468,959
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Stockholders' equity:
Common stock - par value $.01; shares
authorized 5,000,000, issued and
outstanding 2,562,033 shares 25,620 25,620
Additional paid-in capital 2,881,823 2,881,823
Retained earnings 3,208,851 2,676,926
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6,116,294 5,584,369
Less treasury stock at cost - 62,538 shares
in 1996 and 50,316 shares in 1995 (207,950) (171,006)
------------- --------------
Total stockholders' equity 5,908,344 5,413,363
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$ 7,826,190 $ 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 Six Months Ended
June 30, June 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $1,056,911 $ 735,721 $1,854,455 $1,296,474
Commission income $915 - 1,015 17,545
---------- ---------- ---------- ----------
1,057,826 735,721 1,855,470 1,314,019
---------- ---------- ---------- ----------
OPERATING COSTS AND EXPENSES:
Cost of goods sold 651,284 461,413 1,173,962 794,594
Selling, general and
administrative 304,010 278,709 569,678 579,855
Research and development expense 45,116 89,630 90,464 177,210
1,000,410 829,752 1,834,104 1,551,659
---------- ---------- ---------- ----------
Operating income (loss) 57,416 (94,031) 21,366 (237,640)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Investment income - related party 347,562 545,372 725,359 926,233
Interest income - related parties 85,866 121,591 166,438 167,369
Interest expense - other (24,731) (79,685) (49,464) (87,487)
Other income - 1,973 4,000 1,973
---------- ---------- ---------- ----------
408,697 589,251 846,333 1,008,088
---------- ---------- ---------- ----------
Income before income taxes 466,113 495,220 867,699 770,448
Income taxes 200,775 185,500 335,775 291,000
---------- ---------- ---------- ----------
Net income $ 265,338 $ 309,720 $ 531,924 $ 479,448
========== ========== ========== ==========
Net income per share $ 0.11 $ 0.12 $ 0.21 $ 0.18
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1996 1995
----------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 531,924 $ 479,448
Adjustments to reconcile net income to net
cash used in operations:
Depreciation 37,027 46,475
Provision for uncollectible accounts - 5,999
Amortization 7,123 11,526
Investment income - related party (725,359) (926,233)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current (310,735) (106,086)
(Increase) decrease in inventories (543,936) (143,130)
Increase (decrease) in accounts payable
and accruals 86,848 (19,828)
Increase (decrease) in income taxes payable 335,775 (54,500)
----------- ----------
NET USED IN OPERATIONS (581,333) (706,329)
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INVESTING ACTIVITIES:
Property and equipment additions, net of dispositions (3,212) (23,267)
Investment in The High Risk Opportunities Fund L.P. (100,000) -
Patent development - (14,873)
Distributions from partnership interest 602,467 852,967
Loans to related parties (49,988) -
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NET CASH PROVIDED BY INVESTING ACTIVITIES 449,267 814,827
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FINANCING ACTIVITIES:
Repayment of bank and other loans (2,133) (40,151)
Early redemption of bonds due in 2004 - (300,000)
Borrowings from related parties 275,000 -
Purchase of stock for the treasury and stock options (36,944) (17,263)
----------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 235,923 (357,414)
----------- ----------
INCREASE (DECREASE) IN CASH 103,857 (248,916)
CASH, BEGINNING OF PERIOD 321,920 1,066,146
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CASH, END OF PERIOD $ 425,777 $ 817,230
=========== ==========
</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:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Raw materials $ 10,501 $ 46,947
Work-in-process 104,274 32,773
Finished goods 1,079,287 570,406
------------ ------------
$ 1,194,062 $ 650,126
============ ============
</TABLE>
6
<PAGE> 7
(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 June 30, 1996 and June 30, 1995. This investment is accounted for
under the equity method. The following summarizes the operations of AVM (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------------- --------------
<S> <C> <C> <C> <C>
Revenues $ 9,146 $ 9,416 $17,706 $17,497
Costs and expenses 4,673 2,826 8,357 6,014
------- ------- ------- -------
Net income $ 4,473 $ 6,590 $ 9,349 $11,483
======= ======= ======= =======
Company's share of
net income $ 337 $ 545 $ 713 $ 926
======= ======= ======= =======
</TABLE>
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 June 30, 1996 the Consulier
investment in this partnership was valued at $112,757 with earnings for the
second quarter of $10,980.
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 41%
for the first half of 1996, reflecting growth in its subsidiary Southeast
Automotive. Net income increased 11% to $531,924 from $479,448 the prior year
while pre-tax income increased 13% to $867,699.
Net income for the second quarter of 1996 decreased 14% to 265,338 from
$309,720 in 1995. This was due to a decrease in return on the company's
investment in Adams, Viner & Mosler, Ltd., ("AVM"), a government bond dealer.
Consulier earned $337,000 on its investment in AVM for the quarter, which
equates to an annualized return of 59%. Second quarter 1995 income from AVM
was 545,000, a return of 95%. Consolidated net sales increased 44% in the
second quarter of 1996 relative to the second quarter of 1995.
Consolidated General, administrative and sales expenses increased 9% in the
second quarter from $278,709 to $304,010. The Company's subsidiary Southeast
Automotive is introducing a new product ("CRA-Z Soap") in the Miami market.
Additional warehouse rental space was added and staff hired.
Six month sales have increased $557,981 over the prior period. Sales result
primarily from the Company's Southeast Automotive wholesale subsidiary.
Southeast's sales have increased due to improved economic conditions and the
continued introduction of new products. Southeast's pretax earnings for the
first six months of 1996 increased to $326,325 compared to $231,100 for the
first six months of 1995. Management expects continued improvement in this
business throughout 1996.
For the six months, Consulier earned $713,000 on its investment in AVM, an
annualized return of 62% compared to $926,000 last year, which was a return of
81%.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Current assets at June 30, 1996 were $3,413,397, an increase of $872,048 from
December 31, 1995. An increase of $103,857 in cash, $543,936 in inventory and
$291,959 in receivables were the reasons for the increase. Current liabilities
increased $448,887 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 the gross 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.
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 June 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 second 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 second 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 second 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
------- -----------
<S> <C>
11 Statement regarding computation of earnings per share
27 Financial Data Schedule (for SEC use only)
</TABLE>
(B) CURRENT REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the three month period
ended June 30, 1996.
10
<PAGE> 11
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: August 9, 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 Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------------- ---------------
<S> <C> <C>
Net income $ 265,338 $ 309,720 $ 531,924 $ 479,448
========== ========== ========== ==========
Shares used in
computation:
Weighted average
number of
common shares
outstanding 2,502,046 2,552,346 2,502,046 2,552,346
Common stock
equivalents
from assumed
issuances using
the treasury
stock method -
Stock options and
warrants 19,069 149,759 18,063 154,864
------ ------- ------ -------
Primary and fully
diluted earnings
per share 2,521,077 2,672,105 2,520,109 2,677,210
========== ========== ========== ==========
Primary and fully
diluted earnings
per share $ .11 $ .12 $ .21 $ .18
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 426
<SECURITIES> 0
<RECEIVABLES> 1,379
<ALLOWANCES> 24
<INVENTORY> 1,194
<CURRENT-ASSETS> 3,413
<PP&E> 938
<DEPRECIATION> 701
<TOTAL-ASSETS> 7,826
<CURRENT-LIABILITIES> 628
<BONDS> 1,275
0
0
<COMMON> 26
<OTHER-SE> 5,883
<TOTAL-LIABILITY-AND-EQUITY> 7,826
<SALES> 1,854
<TOTAL-REVENUES> 1,855
<CGS> 1,174
<TOTAL-COSTS> 1,174
<OTHER-EXPENSES> 660
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49
<INCOME-PRETAX> 868
<INCOME-TAX> 336
<INCOME-CONTINUING> 532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 532
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
