<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number 0-17756
-------
Consulier Engineering, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified 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)
(407) 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
period 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:
AS OF MAY 9, 1997, THERE WERE 2,499,495 OUTSTANDING SHARES OF COMMON STOCK, PAR
VALUE $0.01 PER SHARE.
1
<PAGE> 2
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
- ------------------------------
PAGE
----
[S] [C]
Item 1. Financial Statements
Consolidated Balance Sheets at
March 31, 1997 (Unaudited)
and December 31, 1996 .................................... 3
Consolidated Statements of Income at
three month periods ended March 31,
1997 and 1996 (Unaudited) ................................ 4
Consolidated Statements of Cash Flows at
three month periods ended March 31, 1997
and 1996 (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 ........................................ 11
Item 2. Changes in Securities .................................... 11
Item 3. Defaults upon Senior Securities .......................... 11
Item 4. Submission of Matters to Vote of
Security Holders ................................ 11
Item 5. Other information ........................................ 11
Item 6. Exhibits and Reports on Form 8-K ......................... 11
SIGNATURE ......................................................... 13
2
<PAGE> 3
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
ASSETS
Current:
Cash (Notes 1 and 5) $ 683,381 $ 557,639
Receivables (Note 2) 679,839 676,383
Receivables - related parties (Note 11(a)) 718,507 666,859
Note receivable - related parties (Note 11(c)) 430,559 430,558
Inventories (Notes 1 and 3) 2,507,158 2,383,976
Other current assets 5,633 4,213
----------- -----------
Total current assets 5,025,077 4,719,628
Property and equipment, net of
accumulated depreciation of $574,990
in 1997 and $550,457 in 1996 288,559 237,190
Limited partnership interest (Notes 1 and 5) 2,129,388 2,124,148
Note receivable - related parties (Note 11(b)) 1,741,798 1,741,797
Patents and other assets 19,378 21,480
----------- -----------
$ 9,204,200 $ 8,844,243
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Current :
Accounts payable and accruals $ 355,622 $ 188,663
Income taxes (Notes 1 and 8) 104,326 93,939
Notes payable - banks (Note 6(a)) 401,191 402,018
Note payable - related parties (Note 6(c)) 282,597 282,597
----------- -----------
Total current liabilities 1,143,736 967,217
Bonds payable (Note 6(b)) 1,275,000 1,275,000
Deferred income taxes (Notes 1 and 8) 14,766 14,766
----------- -----------
Total liabilities 2,433,502 2,256,983
----------- -----------
STOCKHOLDERS' EQUITY: (Notes 1 and 9)
Common stock of $.01 par value:
Authorized --- 5,000,000 shares;
Issued --- 2,562,033 shares 25,620 25,620
Additional paid-in capital (Note 9(c)) 2,881,823 2,881,823
Retained earnings 4,071,205 3,887,767
----------- -----------
6,978,648 6,795,210
Less treasury stock at cost - 62,538 shares
in 1997 and 1996 (207,950) (207,950)
----------- -----------
Total stockholders' equity 6,770,698 6,587,260
----------- -----------
$ 9,204,200 $ 8,844,243
=========== ===========
</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,
--------------------------
1997 1996
--------- -----------
<S> <C> <C>
REVENUES:
Net sales $ 844,107 $ 797,544
Commission income -- 100
--------- ---------
844,107 797,644
--------- ---------
OPERATING COSTS AND EXPENSES:
Cost of goods sold 493,952 522,678
Selling, general and
administrative 383,658 265,668
Research and development expense 29,404 45,348
--------- ---------
907,014 833,694
--------- ---------
Operating loss (62,907) (36,050)
--------- ---------
OTHER INCOME (EXPENSE):
Investment income - related party 299,901 377,797
Interest income - related parties 87,187 80,572
Interest expense - other (40,493) (24,733)
Other income 6,750 4,000
--------- ---------
353,345 437,636
--------- ---------
Income before income taxes 290,438 401,586
Income taxes (Notes 1 and 8) 107,000 135,000
--------- ---------
Net income $ 183,438 $ 266,586
========= =========
Net income per share $ 0.07 $ 0.11
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 183,438 $ 266,586
Adjustments to reconcile net income to net
cash used in operations:
Depreciation 24,533 19,557
Amortization 2,099 3,552
Investment income - related party (299,901) (377,797)
Investment in the High Risk Opportunities Fund L.P. -- (100,000)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets (21,986) 106,973
(Increase) decrease in inventories (123,182) 29,471
Increase in accounts payable and accruals 166,959 1,549
Increase in income taxes payable 10,387 135,000
--------- ---------
NET CASH USED IN OPERATIONS (57,653) 84,891
--------- ---------
INVESTING ACTIVITIES:
Property and equipment additions, net of dispositions (75,900) (479)
Patent development -- (765)
Distributions from partnership interests 311,769 358,953
Loans to related parties (51,647) (49,988)
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 184,222 307,721
--------- ---------
FINANCING ACTIVITIES:
Repayment of bank and other loans (827) (1,067)
Purchase of stock for the treasury and stock options (Note 9(c)) -- (30,000)
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (827) (31,067)
--------- ---------
INCREASE (DECREASE) IN CASH 125,742 361,545
CASH, BEGINNING OF PERIOD 557,639 321,920
--------- ---------
CASH, END OF PERIOD $ 683,381 $ 683,465
========= =========
</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, 1996.
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:
March 31, December 31,
1997 1996
----------- -----------
Raw materials $ 13,800 $ 63,235
Work-in-process -- --
Finished goods 2,537,358 2,364,741
Obsolescence reserve (44,000) (44,000)
----------- -----------
$ 2,507,158 $ 2,383,976
=========== ===========
6
<PAGE> 7
CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. LIMITED PARTNERSHIP INTEREST
The limited partnership interest consists of Consulier's investment in Adams,
Viner & Mosler, Ltd. ("AVM") and The High Risk Opportunities Fund L.P. ("HRO").
Investment income from HRO was $5,241 for the quarter ended March 31, 1997.
These investment's are accounted for under the equity method. Following is a
summary of the operations of AVM (in thousands):
Three Months Ended
March 31,
1997 1996
------------------
Revenue $9,130 $8,560
Costs and expenses 4,348 3,684
------ ------
Net income $4,782 $4,876
====== ======
Consulier's share of
earnings $ 295 $ 376
====== ======
Consulier owned approximately 10% and 13% of AVM's capital as of March 31, 1997
and 1996, respectively. Based on capital and earnings distributions provided in
the partnership agreement, Consulier was allocated approximately 6% and 8% of
AVM's earnings at March 31, 1997 and 1996, respectively.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Consulier Engineering, Inc. ("CEI") experienced a decrease in net income for the
first quarter of 1997. Net income decreased $83,148 or 31% to $183,438 from
$266,586 in 1996. Revenues increased 6% or $46,463 in the first quarter of 1997
compared to 1996, reflecting continued growth.
During 1997 CEI direct expenditures on research and development totaled $29,404.
This represents a decrease of 35% from 1996 direct expenditures of $45,348.
Consolidated selling, general and administrative expenses increased 44% in the
first quarter from $265,668 to $383,658. The primary reason these expenses
increased was the expense associated with introducing a new product, CRA-Z Soap
Hand Cleaner, in the national market. Additional warehouse rental space for
increased inventory was added along with additional staff. Also, printing of
promotional materials and advertising in national publications increased
significantly.
Sales of the company's Southeast automotive parts wholesale subsidiary increased
6% to $842,307 in the quarter due to the continued introduction of new products.
Southeast's cost of goods sold decreased to 57% of sales in the quarter from 63%
in the first quarter of 1996. Gross profit increased 26% in the quarter to
$364,655 but pretax earnings decreased $99,071 to $24,298 for the quarter due to
the increased expenses associated with CRA-Z Soap Hand Cleaner. Management
anticipates increased sales of CRA-Z Soap in the last half of 1997.
Investment income from Consulier's AVM limited partnership interest and HRO
interest was $299,901 in the first quarter of 1997, a 21% decrease from 1996
income of $377,797. On October 1, 1996 Consulier reduced its partnership
interest in AVM by $292,403. The first quarter annualized return on investments
was 59% compared to 66% in the first quarter last year.
LIQUIDITY AND CAPITAL RESOURCES
Current assets at March 31, 1997 were $5,025,077, an increase of $305,449 from
December 31, 1996. An increase of $125,742 in cash, $123,182 in inventory and
$51,648 in receivables were the reasons for the increase. Current liabilities
increased $176,519 due to an increase in taxes payable and accounts payable. On
April 25, 1997, Southeast Automotive purchased a 47,000 square foot industrial
8
<PAGE> 9
warehouse in Medley, Florida for $1.1 million which it will use as its
distribution center and headquarters. The company used its credit line with
Chase Manhattan Bank of New York to fund this purchase. Management believes that
a positive cash flow will continue through at least December 31, 1997, assuming
continued positive cash flow generated by Consulier's investment in AVM.
FUTURE OUTLOOK
In April 1997, Michael G. Maguire, former Marketing Manager, assumed the
position of President and Chief Executive Officer of Consulier Engineering, Inc.
Mr. Charles Spaeth, former President and CEO will remain as a Director of the
Company and continue as Chief Engineer.
Consulier expects 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 Engineering, Inc. is continuing to develop several of its potential
products and patented technologies. No additional development of the
Lug-Remov-R(TM) torque multiplying wrench will take place at this time. Because
of the number of competing, low cost products introduced in the last several
years for the purpose of automotive lug removal, this project will be dormant
unless a new application can be identified. Development of the TigerTail(TM)
winch will continue. Test evaluations were completed on our improved design.
Wear and distress was found on gear teeth and one of the journals. Design
modifications are being made to eliminate these problems. Additionally, other
refinements planned for incorporation are adding the capability to "free spool"
and adding alternatives to the webbing or strapping being used for our basic
design. Several companies have shown interest in working with Consulier in
testing the Hyperoll(TM) ball screw and possibly adding it to their product line
through some sort of licensing arrangement. We plan to continue working to
develop a strategic business relationship with a company in the ball screw
industry. Consulier has carried the development of Hyperoll(TM) as far as we can
without assistance from some company knowledgeable in the business.
On May 9, 1997, Consulier consumated a contract for the purchase of six patents
for tools and related products. Several are related to work platform and tool
holding attachments to ladders tentatively being called our Tool Topper(TM) line
of products. The balance of the patents are related to powered hack saws powered
by 110/220 volt AC,
9
<PAGE> 10
pneumatic and battery power sources. A new Florida based corporation is being
established to develop, manufacture, sell and distribute the patented products.
This corporation, tentatively called C-6 Products, Inc., will be a wholly owned
subsidiary of Consulier Engineering, Inc. Consulier has also taken the
additional step of contracting an exclusive sales agreement with Gugel
Enterprise, Inc. for marketing services necessary to service large retailers and
wholesalers.
Consulier is actively developing its potential products and patented
technologies. Development efforts continue on the Hyperoll ballscrew, as well as
on the TigerTail winch. Consulier's general approach has been to establish
licensing agreements with various companies to generate royalty revenues or to
sell the product's intellectual rights outright. In today's environment, that
approach is proving nonproductive. To increase the value of intellectual rights,
most concepts or ideas must be carried all the way to production with sales
contracts secured before the intellectual rights have a marketable value.
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. Management is not certain that royalties will be paid since Electricar may
not have sufficient cash to meet its obligations.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As of March 31, 1997, 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, 1997 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, 1997 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, 1997, 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)
11
<PAGE> 12
(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, 1997.
12
<PAGE> 13
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: May 12, 1997 Ralph D. Butler
Secretary/Treasurer
Chief Financial Officer
13
<PAGE> 1
EXHIBIT 11
CONSULIER ENGINEERING, INC.
COMPUTATION OF EARNINGS PER SHARE
PRIMARY AND FULLY DILUTED
Three Months Ended
March 31,
1997 1996
--------------------------
Net Income $ 183,438 $ 266,586
========== ==========
Shares used in computation:
Weighted average number of
common shares outstanding 2,499,495 2,504,134
Common stock equivalents
from assumed issuances
using the treasury
stock method -
Stock options and
warrants 23,630 12,069
---------- ----------
Total shares used 2,523,125 2,516,203
========== ==========
Primary and fully diluted
Earnings per Share $ .07 $ .11
========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 683
<SECURITIES> 0
<RECEIVABLES> 1,829
<ALLOWANCES> 44
<INVENTORY> 2,507
<CURRENT-ASSETS> 5,025
<PP&E> 864
<DEPRECIATION> 575
<TOTAL-ASSETS> 9,204
<CURRENT-LIABILITIES> 1,144
<BONDS> 1,275
0
0
<COMMON> 26
<OTHER-SE> 6,745
<TOTAL-LIABILITY-AND-EQUITY> 9,204
<SALES> 844
<TOTAL-REVENUES> 844
<CGS> 494
<TOTAL-COSTS> 494
<OTHER-EXPENSES> 413
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> 290
<INCOME-TAX> 107
<INCOME-CONTINUING> 183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 183
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
