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U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-KSB (Mark One) þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER 0-17756 CONSULIER ENGINEERING, INC.  Florida
    
    59-2556878(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S Employer Identification No.)
 2391 Old Dixie Highway
Riviera Beach, FL
    
    33404-5456(Address of principal executive offices)
    
    (Zip Code)
 (561) 842-2492   Securities registered under Section 12(b) of the Exchange Act: Title of each class
    
    Name of each exchange on which registeredNone
    
    None
 Securities registered under Section 12(g) of the Exchange Act: Common Stock and Redeemable Warrants   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 o Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x The Issuers revenues for the fiscal year ended December 31, 2003 totaled
$193,966. As of March 28, 2004, there were 4,942,414 outstanding shares of common stock,
par value $0.01 per share. The aggregate market value of the voting stock of
the registrant held by non-affiliates of the registrant on March 12, 2004 based
on the average bid and asked price on such date was $2,032,621.




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CONSULIER ENGINEERING, INC. 2003 FORM 10-KSB ANNUAL REPORT TABLE OF CONTENTS PAGEPART IItem 1.
    
    Description of Business
    
    
    3Item 2.
    
    Description of Property
    
    
    6Item 3.
    
    Legal Proceedings
    
    
    6Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    6PART IIItem 5.
    
    Market for Common Equity and Related Stockholder Matters
    
    
    7Item 6.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    8Item 7.
    
    Financial Statements
    
    
    11Item 8.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    11Item 8a.
    
    Controls and Procedures
    
    
    11PART IIIItem 9.
    
    Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
    
    
    12Item 10.
    
    Executive Compensation
    
    
    13Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    15Item 12.
    
    Certain Relationships and Related Transactions
    
    
    15Item 13.
    
    Exhibits and Reports on Form 8-K
    
    
    16Item 14.
    
    Principal Accountant Fees and Services
    
    
    17CERTIFICATION PURSUANT SECTION 302CERTIFICATION PURSUANT SECTION 302CERTIFICATION PURSUANT SECTION 906CERTIFICATION PURSUANT SECTION 906




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PART I 
 ITEM 1. DESCRIPTION OF BUSINESS GENERAL DEVELOPMENT OF BUSINESS In June 1985, Consulier Engineering, Inc. (Consulier or the Company) was
incorporated in Florida. Its principal businesses are the development
and sale of
household and tool products, and corporate and investment activities.
In 2002 and 2003,
the Company was also in the distribution of automobile parts in the automotive
after market. Consulier conducted its automobile parts distribution business
through a wholly owned subsidiary, Southeast Automotive Acquisition Corporation
(Southeast), which is based in Miami, Florida. Effective December 31, 2002, Consulier
sold 70% of its interest in Southeast to Southeasts executive officers. In the
2nd Quarter of 2003, the Company sold its remaining interest in Southeast to
Southeasts executive officers. Consuliers corporate office is located in
Riviera Beach, Florida. DESCRIPTION OF BUSINESS SEGMENTS (1) INVESTMENTS SEGMENT INVESTMENT IN AVM, L.P. Consulier owns a 10% equity interest in AVM, L.P. (AVM), a broker/dealer in
U.S. Government securities formed in October 1983 as an Illinois limited
partnership and located in West Palm Beach, Florida. AVM is registered with
the Commodity Futures Trading Commission as an Introducing Broker (IB) and
conducts its IB business with other broker/dealers on a fully disclosed basis.
AVM is also registered as a broker/dealer with the Securities and Exchange
Commission, and is a member of the National Association of Securities Dealers,
Inc. The firm is generally engaged in the brokerage of U.S. Government
securities, other fixed income instruments, and arbitrage transactions and
presently employs 59 people in addition to the four members of its general
partner. Warren B. Mosler (Mosler), Consuliers Chairman and majority
shareholder is one of the founders of AVM and is a member of the general
partner of AVM. As of December 31, 2003 and 2002, Consuliers limited partnership interest
represented approximately 10% of AVMs total partnership capital. Allocation
of the partnerships income to its partners varies based on amounts of
appreciation of the partnerships assets and operating profits of the
partnership. Based on earnings distributions provided in the partnership
agreement, Consulier was allocated approximately           8-1/2% of AVMs earnings in
2003 and 2002. Under the partnership agreement, Consulier may withdraw all or any portion of
its capital upon 30 days written notice. AVMs general partner may also expel
Consulier from the partnership, on 30 days written notice, through return of
the balance of Consuliers capital. BIOSAFE SYSTEMS, LLC Consulier owns a 40% equity interest in BioSafe Systems, LLC. (BioSafe), a
Connecticut limited liability corporation. BioSafe develops and markets
environmentally safe products, alternatives to traditionally toxic pesticides.
Consulier is entitled to representation on BioSafes Board of Managers.
BioSafe had revenues of approximately $5,826,000 and $4,673,000 for fiscal 2003
and fiscal 2002, respectively. Steady and consistent progress has been made
with respect to establishing an algaecide/fungicide product into the commercial
greenhouse/nursery market. Slower progress has been experienced with respect
to introducing such products to the golf course industry. 3




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Systems Technologies, LLC During August 2002 the Company purchased a 14.25% interest in Systems
Technologies, LLC (ST, LLC), a Nevada limited liability company. During the
year ended December 31, 2003, the Company made additional contributions of
$4,057,005 to increase its investment in ST, LLC. As of December 31, 2003, the
Companys interest in ST, LLC totaled 34%. ST, LLC is a member of Patient Care
Technology Systems, LLC, a California limited liability company (PCTS). ST,
LLCs primary asset is its approximate 75% (at December 31, 2003) investment in
PCTS. The original ST, LLC agreement provided that the losses from ST, LLC be
allocated to ST, LLCs principal members. Effective April 1, 2003, the
agreement was amended and stipulates that the Company receives allocated losses
to the extent that the Company has made capital contributions during the
current year or since inception. Consequently, the loss allocated to the
Company is greater than 34%. The Companys principal shareholder owns
approximately 51% of ST, LLC, and together with the Companys 34%, the
ownership aggregates 85%. The Company can require the Companys principal
shareholder to purchase its interest in ST, LLC for cash equal to the Companys
total capital contributions in ST, LLC at any time with 60 days written notice.
Management has evaluated ST, LLCs (primarily PCTS) projections and related assumptions
regarding their operations. In this regard, management periodically compares
actual results to these projections. Should actual results be significantly
less than the projection, a write down might be necessary. Following is a
summary of the results of operations of PCTS and the losses allocated to the
Company: (In thousands)2003
    
    2002Revenue
    
    $
    387
    
    
    $
    259Costs and expenses
    
    
    4,953
    
    
    
    3,409Net loss
    
    $
    (4,566
    )
    
    $
    (3,150
    )Consuliers share of loss
    
    $
    (4,566
    )
    
    $
    (66
    )
 PCTS markets the Amelior patient care systems which are data based integrated
emergency room information systems. PCTS has considered 2002 as a proof of
concept year when their Amelior system was tested in real, high volume
emergency department environments. During 2003 PCTS focused on marketing and
selling its Amelior systems, greatly expanded and upgraded their sales force
and by year end had fully operational installations in 3 facilities which can
serve approximately 229,000 patients annually. (2) CORPORATE SEGMENT GENERAL Consuliers Corporate Segment includes management and finance activities as
well as consulting, engineering, new product development and business
management. Wholly owned subsidiaries include Consulier International, Inc.
and C-6 Products, Inc. 4




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(3) HOUSEHOLD AND TOOL PRODUCTS In April 1997, C-6 Products, Inc. purchased six patents for tool and ladder
related products. The patents are for work platform and tool holding
attachments to ladders. Initial development was launched in April 1997 of a
product that attached to a standard stepladder, converting it into a handy work
platform for standard household chores, which is the present day Tool Topper
Workstation and related accessories. The design and development was completed
in 1998. On June 30, 2000, Tool Topper inventory and tooling were written
down based on the units failure to meet expected sales and income goals. During the third Quarter of 2003, Consulier International, Inc. took over the
marketing of Tool Topper products. During the fourth Quarter of 2003, the
Company was successful in selling substantially all of its Tool Topper
inventory to an independent marketing company who resold the Tool Toppers on
QVC. The Company is in negotiations concerning possible licensing of its Tool
Topper patents and molds. During the third Quarter of 2003 Consulier International, Inc. began
implementing marketing plans for Captain Cra-Z Hand and All Purpose Cleaner to
retail and distribution outlets, locally, nationally and internationally. (4) AUTOMOTIVE PARTS DISTRIBUTION (DISCONTINUED OPERATIONS) BACKGROUND Southeast Automotive Acquisition Corporation (a former subsidiary)
(Southeast) is located in Miami, Florida. It is engaged in research,
development and distribution to the automotive wholesale market. It celebrated
its 21st year of existence in the automotive transmission industry, as a
significant contributor of OEM Quality Aftermarket Products, distributing
automotive flywheels, flex plates, transmission and engine mounts, torque
struts, nylon gears, plastic components, grommets, cables and repair kits. DIVESTITURE Effective December 31, 2002, the Company sold seventy percent of the common stock of
its wholly-owned subsidiary, Southeast, to executive officers of Southeast, in
exchange for the return of 45,000 shares of the Companys common stock, and a
promissory note of approximately $1,600,000 payable to the Company by
Southeast for its pre-existing debt to the Company, secured by Southeasts
assets, the common stock in Southeast and the purchasers personal guarantees,
limited to the cash in Southeast at December 31, 2002 of approximately
$228,000. The note bore interest at 6% and was payable in monthly
installments of principal and interest of approximately $9,600 beginning
February 20, 2003 through January 20, 2033. On June 29,2003, the Company transferred its remaining thirty percent of the
common stock of Southeast to executive officers of Southeast in consideration
of their agreement to change the method of calculating the purchase price of
the seventy percent of common stock of Southeast and their agreement to amend
the original promissory note to reflect an original principal balance of
$1,764,581 with a term of 40 years from June 20, 2003, with a balloon payment
of $206,915.90 due on May 20, 2043; the remaining terms of the Note were
unchanged. On June 30, 2003 the Company sold and assigned the Note to the
Companys majority shareholder, together with its security interest for the
consideration of $1,762,574.74, the then current unpaid principal balance and
accrued interest due on the Note which was received by the Company in collected
funds on June 30, 2003. 5




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ITEM 2. DESCRIPTION OF PROPERTY In May 2000, Consulier moved its headquarters to Riviera Beach, Florida,
occupying approximately 500 square feet of office space in a building owned by
Warren Mosler, the Companys major shareholder. Consulier owns a 47,000 square foot industrial warehouse in Medley, Florida,
which is leased to Southeast Automotive Acquisition Company, its former
subsidiary, for a five (5) year term which commenced on July 1, 2002 with a
initial base rent of $10,000 per month; the lease contains provisions for
annual CPI rental increases and two (2) options to renew for additional terms
of five (5) years each. 
 ITEM 3. LEGAL PROCEEDINGS The Company, from time to time, is involved in routine litigation arising in
the ordinary course of business. While the outcome of litigation can never be
predicted with certainty, the Company does not believe that any existing
litigation, individually or in aggregate, will have a material adverse effect
upon the Company. As of December 31, 2003, there were no legal proceedings pending against the
Company or its subsidiaries nor did the Company have any knowledge of any
proceedings (prior to 2000 in a previous line of business), which were being contemplated except a personal injury claim
concerning a fall from a lifeguard stand manufactured by the Company which was
filed on May 16, 2003. Although the outcome of any litigation cannot be
guaranteed with certainty and the Company maintains insurance coverage for this
type of claim, there is a good likelihood that the Company will succeed in its
defense of this claim. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The election of five directors and the approval of independent auditors were
submitted to a vote of shareholders at the Companys Annual Meeting held
February 5, 2003. Warren B. Mosler, Alan R. Simon, Charles E. Spaeth, Burck E.
Grosse and Skender Fani were elected upon receipt of the following votes: for
4,933,530, against 100, and 0 shares abstaining. BDO Seidman, LLP was approved
as independent auditors by a vote for of 4,933,530, against 100, and 0 shares
abstaining. 6




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ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET PRICE AND DIVIDENDS The following table sets forth, for the periods indicated, the high and low bid
prices for Consuliers common stock, as reported by NASDAQ. Year Ended December 31, 2002
    
    High
    
    LowFirst quarter
    
    $
    2.25
    
    
    $
    2.05Second quarter
    
    
    2.25
    
    
    
    2.00Third quarter
    
    
    3.25
    
    
    
    1.86Fourth quarter
    
    
    3.25
    
    
    
    2.02
 Year Ended December 31, 2003
    
    High
    
    LowFirst quarter
    
    $
    2.60
    
    
    $
    2.05Second quarter
    
    
    3.00
    
    
    
    2.20Third quarter
    
    
    2.65
    
    
    
    2.20Fourth quarter
    
    
    3.00
    
    
    
    2.00
 As of March 18, 2004, there were approximately 339 record holders of
Consuliers common stock. To date, Consulier has not paid any dividends on its
common stock. Because of the financial requirements of the Company, the Board
of Directors has no current intention to commence paying dividends. Future
dividend policy will depend upon Consuliers profitability, capital
requirements and other factors. NASDAQ LISTING Consuliers common stock (Symbol: CSLR) is listed on the NASDAQ SmallCap Market
and has been traded thereon since Consuliers initial public offering in May
1989. 7




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION FORWARD LOOKING STATEMENTS Statements made in this Managements Discussion and Analysis and elsewhere in
this Annual Report that state Consuliers or managements intentions, hopes,
beliefs, expectations or predictions of the future contain forward looking
statements. Such forward looking statements include, without limitation,
statements regarding Consuliers planned capital expenditure requirements, cash
and working capital requirements, Consuliers expectations regarding the
adequacy of current financing arrangements, product demand and market growth,
other statements regarding future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. It should be noted that Consuliers actual results could differ
materially from those contained in such forward looking statements mentioned
above due to adverse changes in any number of factors that affect Consuliers
business including, without limitation, risks associated with investing in
BioSafe, AVM and ST, LLC and the marketing of Consuliers Tool Topper and Cra-Z Soap
products, manufacturing and supply risks, risks concerning the protection of
Consuliers patents, reliance upon distributors, regulatory risks, risks of
expansion, product liability and other risks described herein. CRITICAL ACCOUNTING POLICIES Financial Reporting Release No. 60, which was recently released by the U.S.
Securities and Exchange Commission, encourages all companies to include a
discussion of critical accounting policies or methods used in the preparation
of consolidated financial statements. Note 1 to the Companys consolidated
financial statements includes a summary of the significant accounting policies
and methods used in the preparation of Consuliers consolidated financial
statements. Management believes the following critical accounting policies affect the
significant judgments and estimates used in the preparation of the consolidated
financial statements: PARTNERSHIP AND LIMITED
LIABILITY COMPANY INVESTMENTS The Companys Partnership and Limited Liability Company investments, all of
which are less than 50% interests, are accounted for using the equity method.
Income or loss is allocated by the investee to Consulier based on the
partnership and LLC agreements. REVENUE RECOGNITION Sales are recorded upon shipment of goods to customers. Shipping and handling costs
billed to customers are included in sales and
recorded when goods are shipped to customers. Shipping costs incurred
by the Company are classified as
a selling expense. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. 8




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RESULTS OF OPERATIONS CONSOLIDATED OPERATING RESULTS FROM CONTINUING OPERATIONS  During the twelve
months ended December 31, 2003, sales increased $132,408, to $193,966, over the
prior twelve months. Cost of goods sold increased $12,253, to $18,618, from
the comparable amounts recorded during the twelve months ended December 31,
2002. Gross profit for the twelve months ended December 31, 2003 increased
$120,155 over the year ended December 31, 2002, primarily due to the sale,
during 2003, of previously written off inventory of Tool Topper
and Cra-Z Soap (prior formula) of approximately $158,000.
The increase in selling, general and administrative costs were as a result of
an increase in marketing Cra-Z Hand and All Purpose Cleaner, increased
accounting and auditing fees associated with the divestiture of Southeast
Automotive and the recognition of bad debt expense. When these factors are
combined they resulted in a $71,658 increase in operating loss, from $385,544
in 2002 to $457,202 in 2003. Other income, consisting primarily of investment income, less net undistributed
loss of equity investees reflects a total loss from other income (expense) of
$1,130,701 in 2003, compared to total other income of $2,188,873 during 2002.
The primary reason for the decrease in net income was due to the increase in
loss allocated from the Companys investment in ST, LLC (as
discussed below) coupled with the following: HOUSEHOLD AND TOOL PRODUCTS  During the third Quarter of 2003 Consulier
International, Inc. began implementing marketing plans for the Captain Cra-Z
Hand and All Purpose Cleaner to retail distribution outlets. During the fourth
Quarter, the Company was successful in selling substantially all of its Tool
Topper and Cra-Z Soap (prior formula) inventory to two
independent marketing companies for approximately $158,000. This inventory had
previously been written off in 2000. The Company is in negotiations concerning
possibly licensing of its Tool Topper patents and molds. INVESTMENT IN AVM  Investment income from Consuliers AVM limited partnership
interest was $3,095,475 in 2003, a 65% increase from 2002 income of
$1,871,133.
This represents annualized returns of 167% and 96% on Consuliers average
investment during the years ended December 31, 2003 and 2002, respectively. INVESTMENT IN BIOSAFE  Equity in income of BioSafe was $265,148 in 2003, a 17%
decrease over 2002 income of $321,207. This represents the Companys 40%
interest in BioSafes net income of approximately $663,000 in 2003, compared to
$803,000 in 2002. The decrease in net income was mainly due to personnel
additions, notably two new market segment managers, two marketing associates,
and four company employed salesmen. INVESTMENT IN ST, LLC  Equity in the loss of ST, LLC was $4,566,126 for 2003
and $66,330 in 2002. The increase in losses allocated to the Company was
mainly due to the increase in marketing expenses and the amendment to
the ST, LLC operating agreement which resulted in an increase in the
Companys allocation of loss. OUTLOOK FOR 2004 Based on AVMs recent operations and operating results over the past five
years, management expects continued annualized returns in 2004 on Consuliers
limited partnership investment. However, there is no guarantee that the
returns of 167% and 96% in 2003 and 2002, respectively, will be maintained. Consulier International, Inc. has been developing new retail and distribution
outlets locally, nationally and internationally. There are several trade shows
scheduled for marketing the Cra-Z Hand and All Purpose Cleaner throughout 2004
and the internet web site continues to be a good lead generator with
applications for distribution being received through the site from countries
all over the world and new marketing materials are being developed. 9




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The Company intends to substantially increase its investment in ST, LLC over
the next three to five years. While the exact amount of the Companys future
investment has not been quantified at this time, it is expected that the
investment will be between $5 million and $7 million. The exact amount will be
based upon market acceptance of PCTSs Amelior products and the need for
investment funds. PCTS currently has contracts for 3 additional installations
which are scheduled to be in place during and 2nd and 3rd quarters of 2004. The
new installations which should serve approximately 152,000 patients
would bring
the estimated number of patients served to approximately 381,000 annually. During 2004
PCTS plans to expand its product scope to incorporate solutions for departments
in addition to Emergency Room, such as Operating Room, ICU and Labor &
Delivery. PCTS plans to implement their expansion plans in the acute care
market through a wider product offering by developing strategic partnerships
with vendors that offer unique technologies and augment their core emergency
department information system. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2003, Consuliers cash totaled $1,002,613 as compared to
$262,303 at December 31, 2002, an increase of $740,310. Net cash used in
operations was $840,873 in 2003, compared to net cash used of
$1,460,200 in
2002. Net cash used by operations decreased mainly due to an increase in an
estimated receivable for an overpayment of estimated income taxes offset by
changes in undistributed income (losses) and investment income from equity
investees. Net cash provided by
investing activities was $1,563,394 in 2003, compared to
net cash provided in investing activities of $1,508,466 in 2002. The net
increase is the result of the distribution of investment income from AVM,
$3,095,475, net proceeds from related party receivables/payables, $2,480,330
and the sale of a marketable security, $66,783. These amounts are offset by
additional contributions made in the continued investment in ST, LLC,
$4,057,005, and property and equipment acquisitions, $4,400. The ability of Consulier to continue to generate cash flow in excess of its
operating requirements depends in the short-term almost entirely on the
performance of its limited partnership investment in AVM. Consulier cannot,
with any degree of assurance, predict whether there will be a continuation of
the net return experienced in the period the AVM limited partnership interest
has been owned. However, Consulier does not expect that the rate of return
will decline to the point where Consulier has negative cash flow. Furthermore,
although AVM has given Consulier no indication of any intention on its part to
redeem the partnership interest, there can be no assurance that AVM will not do
so in the future. Consulier is planning to continue to invest in ST, LLC and
estimates an additional investment of $3,600,000, at which time the
goal is for ST, LLC to
be at the break-even point for its operations. Marketing expenditures for
the Cra-Z soap
should approximate $200,000 in 2004. During 2001 through July 2002, a significant portion of the Companys excess cash funds was
advanced to Mr. Warren Mosler under demand receivables. During
2002, approximately $735,000 of these advances were repaid. In 2003,
approximately $180,000 was repaid. Below is a chart setting forth the Companys contractual cash payment
obligations, which have been aggregated to facilitate a basic understanding of
the Companys liquidity as of December 31, 2003: Contractual
    
    
    
    
    
    Less ThanObligations
    
    Total
    
    1 YearBonds Payable
    
    $
    355,000
    
    
    $
    355,000Total Contractual Cash Obligations
    
    $
    355,000
    
    
    $
    355,000
 10




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The Company does not trade derivative instruments. The Company is invested in
AVM, which enters various transactions involving derivatives and other
off-balance sheet financial instruments. These derivatives and off-balance
sheet instruments are subject to varying degrees of market and credit risk. IMPACT OF INFLATION AND CHANGING PRICES Management does not consider the impact of inflation on Consuliers operations
to be material. The operating segments of its businesses had inventories of
approximately $87,100 as of December 31, 2003. Considering the dollar value of
inventory and the gross profit margins generated by sales, moderate rates of
inflation should have little, if any, effect on the business. Product
development expenditures will be significantly reduced, but such expenditures
should not be significantly affected by inflation. Interest rates on bond
indebtedness are fixed and, therefore, are not impacted by inflationary rate
increases, while rates on notes payable and notes receivable are floating and
should move with inflation. 
 ITEM 7. FINANCIAL STATEMENTS See table of contents to Financial Statements on page F-1. 
  ITEM 8.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE CHANGES IN CERTIFYING ACCOUNTANTS Effective June 11, 2003, the accounting firm of BDO Seidman, LLP of West Palm
Beach, Florida was dismissed as Consuliers auditor. Effective June 11, 2003,
Goldstein Lewin & Co. of Boca Raton, Florida was appointed and retained by the
Company as its auditor. On June 13, 2003, the Company filed a Form 8-K per Regulation S-K, Item 304 (a)
(I) and submitted the following: (a) (i) the former accountant was dismissed. (ii) the accountants report on the consolidated financial statements for
the past two years contained no adverse opinions or disclaimers of opinions,
nor was it modified as to uncertainty, audit scope, or accounting principles. (iii) the change of accountant was not recommended by anyone but
precipitated by the Board of Directors and the Companys Audit Committees
desire to engage new accountants. The Board of Directors, Chairman of the
Audit Committee and the outside Director members of the Audit Committee
recommended and approved the accountant change. (iv) (A) during the registrants two most recent fiscal years and the
subsequent interim period through June 11, 2003, there were no disagreements,
exceptions noted below, or reportable events with the former accountant as
described in Item 304(a) (I) (iv) and (v) of Regulation S-K. As of March 31, 2003 there was a disagreement as to the propriety of
consolidating the financial statements of a subsidiary that was
partially sold
effective
December 31, 2002. The disagreement was ultimately resolved. Reference is
made to Note 1 to the consolidated financial statements included in the
Companys Form 10-QSB for the quarter ended March 31, 2003 for a discussion of
this matter. (b) no added disagreements, requests or events that could effect the
financial statements were made by the accountant. 
 ITEM 8a. CONTROLS AND PROCEDURES  (a)
    
    Evaluation of Disclosure Controls and Procedures. The
Companys management, with the participation of the chief
executive officer and the secretary/treasurer, carried out an
evaluation of the effectiveness of the Companys
disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 (the Exchange Act)
Rules 13a-15(e) and 15-d-15(e)) as of the end of the period
covered by this report (the Evaluation Date). Based upon
that evaluation, the chief executive officer and the
secretary/treasurer concluded that, as of the Evaluation Date, the
Companys disclosure controls and procedures are effective,
providing them with material information relating to the Company as
required to be disclosed in the reports the Company files or submits
under the Exchange Act on a timely basis.  (b)
    
    Changes in Internal Control over Financial Reporting. There
were no changes in the Companys internal controls over
financial reporting, known to the chief executive officer or the
secretary/treasurer, that occurred during the Companys fiscal
fourth quarter that has materially affected, or is reasonably likely
to materially affect, the Companys internal control over
financial reporting. 11




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PART III 
  ITEM 9.
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT DIRECTORS Director
    
    
    
    
    
    
    
    
    
    Positions and Offices Held and Principal Occupation or OtherName
    
    Age
    
    Since
    
    Employment during the Past Five YearsWarren B. Mosler
    
    
    54
    
    
    
    1985
    
    
    Chairman of the Board, 1985 to present. President and Chief
Executive Officer, June 1985 to May 1994. In February
1999, Mr. Mosler reassumed the positions of President and
Chief Executive Officer. Principal in AVM, L.P., a
broker/dealer engaged in arbitrage and government
securities trading, 1983 to present.Alan R. Simon, Esq.
    
    
    53
    
    
    
    1985
    
    
    General Counsel, Treasurer and Secretary since November
2001. 1982 to present, private practice of law in Palm
Beach Gardens, Florida.Charles E. Spaeth
    
    
    80
    
    
    
    1992
    
    
    Chief Engineer 1992 to present. Project Engineer, Pratt &
Whitney Aircraft, 1949 to 1990. Last position 
responsible for directing product design support functions
in areas of structural analytical methods, life prediction
methods, mission definition and component design
verification.Burck E. Grosse
    
    
    74
    
    
    
    1992
    
    
    1991 to present, President, BG Consulting Group, Inc. July
1987 to 1991, Senior Vice President, Lear Group, Inc.,
general contracting firm. 1948 to 1987, General Motors
Corporation. Last position General Director, Technical
Service; responsible for coordination of all technical
service functions for GM car and truck division.Dr. Skender Fani
    
    
    64
    
    
    
    1999
    
    
    Dr. Fani is the Chairman of the Board of Otis Elevators,
Austria. Dr. Fani is a corporate lawyer in Austria, also
specializing in sports and entertainment law. For the past
20 years he has represented top sports and entertainment
personalities throughout Europe.
 No family relationships exist among the directors and officers of Consulier.
Messrs. Mosler and Simon have been directors since the inception. EXECUTIVE OFFICERS The principal occupation of each executive officer of Consulier is set forth
below. All of the executive officers are elected annually, or until their
successors have been duly elected. 12




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##### Table of Contents



Warren B. Mosler, 54, is the Chairman of the Board of Directors. Mr. Mosler has
served as Chairman since the inception of Consulier and as Chief Executive
Officer from inception to March 1989 and from August 1989 to May 1994. In
February 1999 Mr. Mosler reassumed the positions of President and Chief
Executive Officer. From 1983 to the present, Mr. Mosler has been a principal
in AVM, LP, a broker/dealer engaged in arbitrage and government securities
trading in West Palm Beach, Florida. Alan R. Simon, 53, is a director, and has served as the Corporations General
Counsel and its Secretary-Treasurer since November 2001. He has been in the
private practice of law in Boca Raton, Florida since 1982, and has relocated
his practice to Palm Beach Gardens, Florida in 2001. Clark T. Feezel, 44, has served as President and CEO of Consulier International
since its inception in 2003 when it was founded as a wholly owned subsidiary of
the Company. Previously, Mr. Feezel was a Regional Manager of Ferguson
Enterprise, Inc. a division of Wosleley, PLC. for thirteen years. Bernardo Davila, 52, served as President and CEO of Southeast Automotive
Acquisition Corporation since 1991. In 1980 Mr. Davila founded Southeast
Automotive Parts, Inc. of Dade which was purchased by Consulier in 1991. From
1971 to 1980 Mr. Davila was in management at Carfel, Inc., an importer of
automotive parts. Effective January 1, 2003 Mr. Davila ceased being an
executive officer of the Company due to the sale of 70% of Consuliers interest
in Southeast Automotive Acquisition Corporation. Identification of Audit
Committee The Audit Committee of the
Company is currently composed of three directors (Alan R. Simon,
Burck E. Grosse and Skender Fani) and operates under a written
charter adopted by the Board of Directors. The Companys audit
committee is responsible for: (1) selection and oversight of our
independent accountant; (2) establishing procedures for the
receipt, retention and treatment of complaints regarding accounting,
internal controls and auditing matters; (3) establishing
procedures for the confidential, anonymous submission by our
employees of concerns regarding accounting and auditing matters;
(4) engaging outside advisors; and, (5) funding for the
outside auditor and any outside advisors engagement by the audit
committee. Audit Committee Financial
Expert The Companys board of
directors does not have an audited committee financial
expert, within the meaning of such phrase under applicable
regulations of the Securities and Exchange Commission, serving on
its audit committee. The board of directors believes that all members
of its audit committee are financially literate and experienced in
business matters, and that one or more members of the audit committee
are capable of (i) understanding generally accepted accounting
principles (GAAP) and financial statements,
(ii) assessing the general application of GAAP principles in
connection with our accounting for estimates, accruals and reserves,
(iii) analyzing and evaluating our financial statements,
(iv) understanding our internal controls and procedures for
financial reporting; and (v)  understanding audit committee
functions, all of which are attributes of an audit committee
financial expert. However, the board of directors believes
that there is not any audit committee member who has obtained these
attributes through the experience specified in the SECs
definition of audit committee financial expert.
Further, like many small companies, it is difficult for the Company
to attract and retain board members who quality as audit
committee financial experts, and competition for these
individuals is significant. The board believes that its current audit
committee is able to fulfill its role under SEC regulations despite
not having a designated audit committee financial
expert. Code of Business Conduct
and Ethics The Company has not adopted a
code of ethics that applies to its principle officers and persons
performing similar functions. In light of the fact that the
Companys Chief Executive Officer acts as the Companys
principal executive, the other officers and the relatively small
number of persons employed by the Company, the Company did not
previously adopt a formal written Code of Business Conduct and Ethics
but is in the process of developing a comprehensive Code of Business
Conduct and Ethics to cover all of its employees, which is expected
to be completed during the second quarter of 2004. 
 ITEM 10. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth the aggregate compensation paid to Consuliers
Chief Executive Officer for the last three years: SUMMARY COMPENSATION TABLE Fiscal
    
    
    
    
    
    All OtherName and Principal Position
    
    Year
    
    Salary
    
    CompensationWarren B. Mosler,
    
    
    2003
    
    
    $
    75,000
    
    
    $
    Chairman of the Board,
    
    
    2002
    
    
    $
    75,000
    
    
    $
    President and CEO
    
    
    2001
    
    
    $
    75,000
    
    
    $
    Bernardo Davila
    
    
    2003
    
    
    
    (1
    )
    
    $
    President and CEO
    
    
    2002
    
    
    
    (1
    )
    
    $
    Of Subsidiary
    
    
    2001
    
    
    
    (1
    )
    
    $
    
  (1)
    
    Total annual salary and bonus was less than $100,000. Certain columns have been omitted from the above table because there is no
compensation required to be reported in such columns. 13




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##### Table of Contents



OPTION/SAR GRANTS IN LAST FISCAL YEAR NEED TO CONFIRM There were no stock options/SARs granted to executive officers during 2003
requiring disclosure. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES There were no stock options/SARs exercised during 2003 and no stock
options/SARs outstanding at December 31, 2003. LONG-TERM INCENTIVE AND PENSION PLANS On January 1, 1998 employees of Consulier became members of the Mosler Auto
Care Center, Inc. 401(k) Retirement Plan (the Plan). The Plan allows employees
to save up to 15% of their gross pay. Consulier may match a percentage of the
employees savings contributions or provide more money, through discretionary
contributions. During 2003 and 2002 there were no matching or discretionary
contributions made by the Company to employees accounts. The benefit derived
by employees was the tax deferral on earnings until they receive them as
benefits. Mr. Mosler and the directors do not participate in this Plan. COMPENSATION OF DIRECTORS Directors are compensated $100 for attendance at each Board of Directors
meeting. 14




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##### Table of Contents



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following officers and directors of Consulier beneficially own the
indicated number of shares of Common Stock of Consulier as of
March 28, 2004: Amount and Nature
    
    Percent of ClassName and Address
    
    Of Beneficial
    
    atTitle of Class
    
    of Beneficial Owner
    
    Ownership
    
    December 31, 2003Common
    
    Warren B. Mosler
    
    
    4,102,859
    
    
    
    83
    %Stock
    
    5000 Estate Southgate
Christainsted, USVI 00820Common
    
    Alan R. Simon
    
    
    201,368
    (1)
    
    
    4.1
    %Stock
    
    3980 RCA Boulevard, Suite 8012
Palm Beach Gardens, FL 33420Common
    
    Burck E. Grosse
    
    
    10,000
    
    
    
    (2
    )Stock
    
    11 Huntly Circle
Palm Beach Gardens, FL 33418Common
    
    Charles Spaeth
    
    
    10,000
    
    
    
    (2
    )Stock
    
    13 Paddock Circle
Tequesta, FL 33469All directors and executive
Officers as a group (6 people)
    
    
    4,324,227
    
    
    
    87.5
    %
  (1)
    
    Includes options to acquire 190,000 shares of Consulier common stock from
Mr. Mosler at $1.25 per share.  (2)
    
    Does not exceed one (1%) percent of the class. 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In May 2000, Consulier moved its headquarters to Riviera Beach, Florida
occupying approximately 500 square feet of office space in a building owned by
Warren B. Mosler, Consuliers Chairman of the Board, President and CEO. Effective December 31, 2002, the Company sold seventy percent of the common stock of
its wholly-owned subsidiary, Southeast, to executive officers of Southeast, in
exchange for 45,000 shares of the Companys common stock, and a promissory note
of approximately $1,600,000 payable to the Company by Southeast for its
pre-existing debt to the Company, secured by Southeasts assets, the common
stock in Southeast and the purchasers personal guarantees, limited to the cash
in Southeast at December 31, 2002 of approximately $228,000. The note bore
interest at 6% and was payable in monthly installments of principal and
interest of approximately $9,600 beginning February 20, 2003 through January
20, 2033. 15




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##### Table of Contents



On June 29,2003, the Company transferred its remaining thirty percent of the
common stock of Southeast to executive officers of Southeast in consideration
of their agreement to change the method of calculating the purchase price of
the seventy percent of common stock of Southeast and their agreement to amend
the original promissory note to reflect an original principal balance of
$1,764,581 with a term of 40 years from June 20, 2003, with a balloon payment
of $206,916 due on May 20, 2043; the remaining terms of the Note were
unchanged. On June 30, 2003 the Company sold and assigned the Note to the
Companys majority shareholder, together with its security interest for the
consideration of $1,762,575, the then current unpaid principal balance and
accrued interest due on the Note which was received by the Company in collected
funds on June 30, 2003. SALE OF AUTOMOBILE OPERATIONS In consideration of the sale of Consuliers automobile manufacturing business
in 1990, Mosler Auto Care Center, Inc. (MACC) executed a promissory note for $750,000, which note was
personally guaranteed by Mr. Mosler. This note, which has an interest rate of
one month U.S. Dollar London Interbank Offering Rate (LIBOR), will mature on
May 11, 2005. It had an unpaid balance of $430,559 at December 31, 2003. SALE AND LEASEBACK OF REAL ESTATE In December 1989, Consulier engaged in a sale and partial leaseback of real
estate to Mr. Mosler, subject to existing bond indebtedness collateralized by
the property. This real estate is located in Riviera Beach, Florida. In
consideration for the property, Mr. Mosler signed a promissory note, which was
to mature in December 2001, of $2,500,000 with interest at one month LIBOR. In
2001, the maturity date was extended to December 2003. Simultaneously with the execution of the sale, Consulier entered into a lease
with Mr. Mosler for approximately 25,000 square feet of space at an annual
gross rental of $4.00 per square foot. This lease was subsequently reduced to
6,000 square feet when Consulier sold its automobile operations. The lease was
terminated in 1994. The balance of principal and interest at December 31, 2003 and 2002 was $0 and
$1,748,357, respectively. Consulier owns a 47,000 square foot industrial warehouse in Medley, Florida,
which is leased to Southeast Automotive Acquisition Company, its former
subsidiary for a five (5) year term which commenced July 1, 2002 with an
initial base rent of $10,000 per month; the lease contains provisions for
annual CPI rental increases and two (2) options to renew for additional terms
of five (5) years each. 
 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits  See index subsequent to Annual Report. (b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report. 16




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES AUDIT FEES The aggregate audit fees billed by Goldstein Lewin & Co. for professional
services rendered for the review of quarterly financial statements included in
our Quarterly Reports on Form 10-QSB for the quarters ended June 30, 2003 and
September 30, 2003 were $33,167. The aggregate audit fees
billed to Consulier by BDO Seidman LLP for professional
services rendered for the audit of annual financial statements included in our
Annual Report on Form 10-KSB for the year ended December 31, 2002 and for the
review of quarterly financial statements included in our Quarterly Report on
Form 10-QSB for the quarters ended March 31, 2002, June 30,
2002 and September 30, 2002 were $77,665, and $19,800 for the
quarter ended March 31, 2003. AUDITED-RELATED FEES None. TAX FEES For the years ended
December 31, 2003, and 2002, no fees were billed to Consulier by
Goldstein Levin & Co. for tax services. For the year ended December 31, 2002, the aggregate fees billed to Consulier by
BDO Seidman. were $750 for tax services. ALL OTHER FEES None. AUDIT COMMITTEE POLICIES Effective May 6, 2003, the Securities and Exchange Commission adopted rules
that require that before our independent auditor is engaged by us to render any
auditing or permitted non-audit related service, the engagement be: 
    
    approved by our audit committee; or  
    
    entered into pursuant to pre-approval policies and procedures
established by the audit committee, provided the policies and
procedures are detailed as to the particular service, the audit
committee is informed of each service, and such polices and procedures
do not include delegation of the audit committees responsibilities to
management. The audit committee pre-approves all services provided by our independent
auditors, including those set forth above. The audit committee has considered
the nature and amount of fees billed by Goldstein Lewin & Co. and believes that
the provision of services for activities unrelated to the audit is compatible
with maintaining Goldstein Lewin & Co.s independence. 17




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##### Table of Contents



SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed by the undersigned, thereunto duly authorized. CONSULIER ENGINEERING, INC.Dated:  April 14, 2004
    By:
    /s/ Warren B. MoslerWarren B. MoslerChairman of the Board of Directors,
President and Chief Executive Officer In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated: Name
    
    Title
    
    Date/s/ Warren B. Mosler
Warren B. Mosler
    
    Chairman of the Board of Directors,
President and Chief Executive Officer
    
    April 14, 2004/s/ Alan R. Simon
Alan R. Simon
    
    Secretary, Treasurer
    
    April 14, 2004/s/ Charles E. Spaeth
Charles E. Spaeth
    
    Director
    
    April 14, 2004/s/ Burck E. Grosse
Burck E. Grosse
    
    Director
    
    April 14, 2004/s/ Skender Fani
Skender Fani
    
    Director
    
    April 14, 2004
 18




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
FORM 10-KSB ITEM 7 CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS PAGEREPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (Goldstein Lewin & Co.)
    
    
    F-1REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (BDO Seidman LLP)
    
    
    F-2CONSOLIDATED FINANCIAL STATEMENTS:Balance Sheet
    
    
    F-3Statements of Operations
    
    
    F-4Statements of Stockholders Equity
    
    
    F-5Statements of Cash Flows
    
    
    F-6Notes to the Consolidated Financial Statements
    
    
    F-7




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##### Table of Contents



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors
Consulier Engineering, Inc. and Subsidiaries
Riviera Beach, Florida We have audited the accompanying consolidated balance sheet of Consulier
Engineering, Inc. and Subsidiaries as of December 31, 2003 and the related
consolidated statements of operations, stockholders equity and cash flows for
the year then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Consulier
Engineering, Inc. and Subsidiaries as of December 31, 2003 and the results of
their operations and their cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America. /s/ Goldstein Lewin
& Co. March 18, 2004
Boca Raton, Florida F-1




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##### Table of Contents



Report of Independent
Certified Public Accountants Board of Directors
Consulier Engineering, Inc.
Riviera Beach, Florida We have audited the
accompanying consolidated statements of operations,
stockholders equity, and cash flows of Consulier Engineering,
Inc. (the Company) for the year ended December 31,
2002. These financial statements are the responsibility of the
Companys management. Our responsibility it to express an
opinion on these financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion. In our opinion, the
consolidated financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and
cash flows of Consulier Engineering, Inc. for the year ended
December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. BDO Seidman, LLP West Palm Beach, Florida April 4, 2003 F-2




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003 ASSETSCURRENTCash and Cash Equivalents
    
    $
    1,002,613Receivables, Net
    
    
    82,683Due from Principal Shareholder
    
    
    453,572Income Tax Receivable
    
    
    1,256,065Inventories
    
    
    87,100Deferred Income Taxes
    
    
    50,943Total Current Assets
    
    
    2,932,976PROPERTY AND EQUIPMENT, NET
    
    
    1,076,498PARTNERSHIP AND LIMITED LIABILITY COMPANIES 
INVESTMENTS
    
    
    3,755,196NOTE RECEIVABLE  RELATED PARTY
    
    
    430,559DEFERRED INCOME TAXES
    
    
    83,431$
    8,278,660LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Bonds Payable
    
    $
    339,460Accounts Payable and Accrued Liabilities
    
    
    95,991Related Party Payable
    
    
    141,108Total Current Liabilities
    
    
    576,559COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common
Stock, $.01 Par Value;
Authorized 25,000,000 Shares; Issued 5,198,298 Shares
    
    
    51,983Additional Paid-in Capital
    
    
    3,129,631Retained Earnings
    
    
    5,112,7778,294,391Less:Treasury Stock at Cost  255,884 Shares
    
    
    (515,750
    )Notes Receivable for Common Stock
    
    
    (76,540
    )Total Stockholders Equity
    
    
    7,702,101$
    8,278,660
 The Accompanying Notes are an Integral
Part of These Consolidated Financial Statements F-3




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003 AND 2002 2003
    
    2002Revenue:Net Sales
    
    $
    193,966
    
    
    $
    61,558Operating Costs and Expenses:Cost of Goods Sold
    
    
    18,618
    
    
    
    6,365Selling, General and Administrative
    
    
    632,550
    
    
    
    440,737Total Operating Costs and Expenses
    
    
    651,168
    
    
    
    447,102Operating Loss
    
    
    (457,202
    )
    
    
    (385,544
    )Other Income (Loss)/(Expense):Investment Income  Related Parties
    
    
    3,095,475
    
    
    
    1,871,933Interest Income  Related Parties
    
    
    24,138
    
    
    
    45,297Interest Expense
    
    
    (36,840
    )
    
    
    (23,085
    )Net Undistributed Income (Loss) of Equity Investees
    
    
    (4,300,978
    )
    
    
    254,877Other Income
    
    
    87,504
    
    
    
    39,851Total Other Income (Loss)
    
    
    (1,130,701
    )
    
    
    2,188,873Income (Loss) from Continuing Operations Before Income Taxes
    
    
    (1,587,903
    )
    
    
    1,803,329Income Tax (Provision) Benefit
    
    
    672,966
    
    
    
    (735,979
    )Income (Loss) from Continuing Operations
    
    
    (914,937
    )
    
    
    1,067,350Discontinued Operations:Income From Operations of Discontinued Subsidiary
    
    
    15,420
    
    
    
    94,126Less Income Taxes
    
    
    (4,905
    )
    
    
    (22,106
    )10,515
    
    
    
    72,020Gain on Disposal of Subsidiary
    
    
    342,782
    
    
    
    Less Income Taxes
    
    
    (245,218
    )
    
    
    97,564
    
    
    
    Net Income (Loss)
    
    $
    (806,858
    )
    
    $
    1,139,370Earnings (Loss) Per Share  Basic and Diluted:Continuing Operations
    
    $
    (0.18
    )
    
    $
    0.22Discontinued Operations
    
    
    0.02
    
    
    
    0.01Net Income (Loss)
    
    $
    (0.16
    )
    
    $
    0.23
 The Accompanying Notes are an Integral
Part of These Consolidated Financial Statements F-4




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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2003 AND 2002 Common Stock
    
    Treasury Stock
    
    Additional
    
    
    
    
    
    Notes
Receivable
    
    AccumulatedOther
    
    TotalPaid-in
    
    Retained
    
    for Common
    
    Comprehensive
    
    StockholdersShares
    
    Amount
    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Stock
    
    Loss
    
    EquityBalance, December 31, 2001
    
    
    5,198,298
    
    
    $
    51,983
    
    
    $
    247,148
    
    
    $
    (468,363
    )
    
    $
    3,110,700
    
    
    $
    4,780,265
    
    
    $
    (76,540
    )
    
    $
    (26,888
    )
    
    $
    7,371,157Sale of Treasury Stock
    
    
    
    
    
    
    
    
    
    
    (29,093
    )
    
    
    50,452
    
    
    
    13,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,005Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,139,370
    
    
    
    
    
    
    
    
    
    
    
    1,139,370Change in Unrealized Loss
on Marketable Security
Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,973
    )
    
    
    (12,973
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,126,397Balance, December 31, 2002
    
    
    5,198,298
    
    
    
    51,983
    
    
    
    218,055
    
    
    
    (417,911
    )
    
    
    3,124,253
    
    
    
    5,919,635
    
    
    
    (76,540
    )
    
    
    (39,861
    )
    
    
    8,561,559Sale of Treasury Stock
    
    
    
    
    
    
    
    
    
    
    (7,171
    )
    
    
    12,411
    
    
    
    5,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,789Acquisition of Treasury Stock
    
    
    
    
    
    
    
    
    
    
    45,000
    
    
    
    (110,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110,250
    )Comprehensive Income:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (806,858
    )
    
    
    
    
    
    
    
    
    
    
    (806,858
    )Reclassification Adjustment
for Unrealized Loss on
Marketable Security, Net
of Tax, Included in
Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,861
    
    
    
    39,861Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (766,997
    )Balance, December 31, 2003
    
    
    5,198,298
    
    
    $
    51,983
    
    
    
    255,884
    
    
    $
    (515,750
    )
    
    $
    3,129,631
    
    
    $
    5,112,777
    
    
    $
    (76,540
    )
    
    $
    
    
    
    $
    7,702,101
 The Accompanying Notes are an Integral
Part of These Consolidated Financial Statements F-5




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003 AND 2002 2003
    
    2002Operating Activities:Net Income (Loss)
    
    $
    (806,858
    )
    
    $
    1,139,370Adjustments to Reconcile Net Income (Loss) to Net Cash (Used in)
Operations:Gain on Sale of Discontinued Operations, Net of Tax
    
    
    (97,564
    )
    
    
    Gain on Sale of Marketable Security
    
    
    (16,516
    )
    
    
    Depreciation
    
    
    25,557
    
    
    
    18,490Amortization of Bonds Discount
    
    
    15,540
    
    
    
    15,540Undistributed (Income) Loss of Equity Investee
    
    
    4,300,978
    
    
    
    (254,877
    )Investment Income  Related Party
    
    
    (3,095,475
    )
    
    
    (1,871,933
    )Deferred Income Taxes
    
    
    (60,508
    )
    
    
    (40,417
    )Cash Provided from Discontinued Operations
    
    
    266,694
    
    
    
    206,149Provision for Doubtful Accounts
    
    
    71,101
    
    
    
    Changes in Operating Assets and Liabilities:Decrease (Increase) in Receivables
    
    
    7,903
    
    
    
    (29,852
    )Decrease (Increase) in Income Tax Receivable
    
    
    (1,381,396
    )
    
    
    Decrease (Increase) in Inventories
    
    
    (56,588
    )
    
    
    (669
    )Increase (Decrease) in Accounts Payable and Accrued Liabilities
    
    
    12,572
    
    
    
    41,984Increase (Decrease) in Income Taxes Payable
    
    
    (26,313
    )
    
    
    (683,985
    )Net Cash (Used in) Operations
    
    
    (840,873
    )
    
    
    (1,460,200
    )Investing Activities:Distributions from Partnership Interest
    
    
    3,095,475
    
    
    
    2,084,014Contributions to Partnership Interest
    
    
    (4,057,005
    )
    
    
    (1,425,000
    )Proceeds from Sale of Equity Investment
    
    
    66,783
    
    
    
    Acquisition of Property and Equipment
    
    
    (4,400
    )
    
    
    (42,143
    )Net Proceeds from Related Parties
    
    
    2,462,541
    
    
    
    891,595Net Cash Provided by Investing Activities
    
    
    1,563,394
    
    
    
    1,508,466Financing Activities:Sale of Treasury Stock
    
    
    17,789
    
    
    
    64,005Net Cash Provided by Financing Activities
    
    
    17,789
    
    
    
    64,005Increase in Cash
    
    
    740,310
    
    
    
    112,271Cash Beginning of Period
    
    
    262,303
    
    
    
    150,032Cash, End of Period
    
    $
    1,002,613
    
    
    $
    262,303SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash Paid for Taxes
    
    $
    1,024,689
    
    
    $
    1,488,000Cash Paid for Interest
    
    $
    21,300
    
    
    $
    23,000SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Repurchase of Treasury Stock in Connection with Discontinued
Operations
    
    $
    110,250
    
    
    $
    
 The Accompanying Notes are an Integral
Part of These Consolidated Financial Statements F-6




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



|        |                                                                       
|------- | ----------------------------------------------------------------------
|NOTE 1: | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Consulier Engineering, Inc. (Consulier) and its subsidiaries are engaged in
three primary business lines: the distribution of Captain Cra-Z Soap,
investment activities and other activities.

Consulier International, Inc. (a subsidiary) markets and distributes Captain
Cra-Z Soap and C-6 Products, Inc. (a subsidiary) distributed the Tool Topper
products.

Consuliers investment income and losses are derived from investments in
limited liability companies and limited partnership interests (Note 6) in
BioSafe Systems, LLC (BioSafe), Systems Technologies, LLC (ST, LLC) and
AVM, L.P. (AVM), an Illinois limited partnership. BioSafe develops and
markets environmentally safe products, alternatives to traditionally toxic
pesticides. AVM is a broker/dealer in government securities and other fixed
income instruments. Consuliers Chairman and majority stockholder, Warren B.
Mosler (Mosler), is a general partner of the general partner of AVM. ST, LLC
is a majority member of Patient Care Technology Systems LLC which
develops and licenses data based
integrated emergency room information systems.

Basis of Presentation

The consolidated financial statements include Consulier and its wholly-owned
subsidiaries, Consulier International, Inc., C-6 Products, Inc. and Southeast
Automotive Acquisition Corporation (Southeast) (Note 2) (collectively known
as the Company). All significant intercompany balances and transactions have
been eliminated.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments with original maturities of three
months or less to be cash equivalents.

Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms.
Management performs continuing credit evaluations of customers financial
condition and generally does not require collateral. Management reviews
accounts receivable on a monthly basis to determine if any receivables will
potentially be uncollectible. The Company includes any accounts receivable
balances that are determined to be uncollectible, along with a general reserve,
in its overall allowance for doubtful accounts. The general reserve is based
upon historical collection experience, current economic conditions and market
conditions. After all attempts to collect a receivable have failed, the
receivable is written off against the allowance. Based on the information
available, management believes its allowance for doubtful accounts as of
December 31, 2003 is adequate. However, actual write-offs might exceed the
recorded allowance.

Inventories

Inventories, which consist of Cra-Z Soap for resale, are stated at the lower of
cost (determined on a first-in, first-out basis) or market. Management
performs periodic assessments to determine the existence of obsolete,
slow-moving and non-salable inventories and records necessary provisions to
reduce such inventories to net realizable value.

F-7



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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1:
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over estimated useful lives. The cost of additions and betterments are capitalized, and repairs and
maintenance costs are charged to operations in the period incurred. When
depreciable assets are retired or sold, the cost and related accumulated
depreciation are removed from the accounts and the gain or loss, if any, is
recognized. Long-Lived Assets  Impairments and Disposals The Company accounts for long-lived assets in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.SFAS No. 144 requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company compares the carrying amount of the asset to the
estimated undiscounted future cash flows expected to result from the use of the
asset. If the carrying amount of the asset exceeds estimated expected
undiscounted future cash flows, the Company records an impairment charge for
the difference between the carrying amount of the asset and its fair value.
The estimation of fair value is generally measured by discounting expected
future cash flows at the Companys incremental borrowing rate or fair value, if
available. Partnership and Limited Liability Companies Investments The Companys partnership and limited liability companies (LLC) investments,
all of which are less than 50% interests, are accounted for using the equity
method. The Company owns less than 20% in the partnership investment, however,
the Company has the ability to significantly influence this investee under the
terms of the partnership agreement. Income or loss is allocated to Consulier
based on the partnership and LLC agreements. The Company reviews its
partnership and limited liability companies investments for other than
temporary declines in value on a monthly basis by analyzing the underlying
investees actual revenue, earnings capacity and estimated future undiscounted
cash flows. Stock-Based Compensation In previous years, the Company granted stock options to employees under stock
option plans that are more fully described in Note 9. The Company accounted
for those plans using the intrinsic value method under Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.All
options under such plans, granted in previous years, expired during 2001 and no
new options were granted in 2003 and 2002. As such, there is no proforma effect
on net income (loss) and earnings (loss) per share if the Company had applied
the fair value recognition provisions of SFAS No. 123, Accounting for
Stock-Based Compensation,and SFAS No. 148 Accounting for Stock-Based
Compensation  Transition and Disclosure. F-8




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1:
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED) Revenue Recognition Sales are recorded upon shipment of goods, when related risks and title passes
to the customers and collectibility is reasonably assured. Shipping and
handling expenses incurred by the Company are recorded as selling expenses, and
are classified in the caption selling, general and administrative expenses in
the accompanying consolidated statements of operations. For years ended
December 31, 2003 and 2002, shipping and handling expenses were not material.
Historically, the Companys warranty costs have been nominal as the Companys
suppliers bear the Companys cost of warranty claims. Advertising Costs Advertising costs are expensed as incurred and amounted to $35,627 and $10,499
in 2003 and 2002, respectively. Income Taxes The Company accounts for income taxes under the liability method. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the consolidated financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Earnings (Loss) Per Common Share Earnings (loss) per common share - basic is computed as net income (loss) divided by the
weighted average number of common shares outstanding during the year. Earnings
(loss) per common share  diluted is based on the weighted average of common
shares and dilutive potential common shares outstanding during the year.
Common stock equivalents were not included in the calculation of diluted
earnings (loss) per common share diluted for the year ended December 31, 2003,
as their effect would be anti-dilutive. Comprehensive Income (Loss) Comprehensive income (loss) represents the change in net assets of the Company
during the period from transactions and other events and circumstances from
non-owner sources. Comprehensive income (loss) of the Company includes net
income (loss) adjusted for the change in net unrealized gain (loss) in a
marketable security investment. Fair Value of Financial Instruments SFAS No. 107, Disclosures about Fair Value of Financial Instruments,requires
disclosures of information about the fair value of certain financial
instruments for which it is practicable to estimate the value. For purposes of
this disclosure, the fair value of a financial instrument is the amount at
which the instrument could be exchanged in a current transaction between
willing parties other than in a forced sale or liquidation. F-9




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1:
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED) Fair Value of Financial Instruments (Continued) The carrying amounts of the Companys financial instruments, including cash and
cash equivalents, accounts receivables, income tax receivable, accounts payable and accrued
liabilities approximate fair value because of their
short maturities. The carrying amount of investments approximate fair value
based upon the recoverability of these assets. The carrying amount of the
Companys fixed rate bonds payable approximates fair value because they may be
redeemed at face value by the Company. Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. Reclassifications Certain amounts in the 2002 consolidated financial statements have been
reclassified to conform to 2003 presentation. Recent Accounting Pronouncements In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51(revised in December
2003). FIN 46 requires certain variable interest entities to be consolidated
by the primary beneficiary of the entity of the equity investors if the entity
does not have the characteristics of a controlling financial interest or does
not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties. For
public entities that are small business issuers, FIN 46 (as revised) is
effective for all new variable interest entities created or acquired no later
than the end of the first reporting period that ends after December 15, 2004.
The Company has not determined the effect the adoption of this standard will
have on its consolidated financial position or results of operations. F-10




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 2:
    DISCONTINUED OPERATIONS Effective December 31, 2002, the Company sold seventy percent of the common
stock of its wholly-owned subsidiary, Southeast, to executive officers of
Southeast, in exchange for the return of 45,000 shares of the Companys common
stock, and a promissory note (the Note) of approximately $1,600,000 payable
to the Company by Southeast for its pre-existing debt to the Company,
collateralized by Southeasts assets, the common stock in Southeast and the
purchasers personal guarantees, limited to the cash in Southeast at December
31, 2002 of approximately $228,000. The Note bears interest at 6% and is
payable in monthly installments of principal and interest of approximately
$9,600 beginning February 20, 2003 through January 2033. Southeasts
activities included primarily the sale of automobile parts in the automotive
after-market. On June 29, 2003, the Company transferred its remaining thirty percent of the
common stock of Southeast to the former executive officers of Southeast in
consideration of their agreement to amend the Note to reflect an original
principal balance of $1,764,581 with a term of 40 years from June 30, 2003,
with a balloon payment of $206,916 due on May 20, 2043; the remaining terms of
the Note were unchanged. On June 30, 2003, the Company sold and assigned the
Note to the principal stockholder of Consulier, together with its security
interest for the consideration of $1,762,575, the then current unpaid principal
balance and accrued interest due on the Note. F-11




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 2:
    DISCONTINUED OPERATIONS (CONTINUED) Since the Note was sold and assigned, the Company is no longer considered to be
the primary beneficiary. As such, Southeast is considered to be divested as of
the assigned date of the Note, June 30, 2003, and as a result the Company
reflected the operations and disposal of Southeast as discontinued operations
recording an after tax gain on the disposal of subsidiary of $97,564. Following is summarized financial information for the discontinued operations
as of December 31, 2003 and 2002 and for
the six months ended June 30, 2003 and the year ended
December 31, 2002: 2003
    
    2002Total Assets
    
    $
    
    
    
    $
    2,045,029Total Liabilities
    
    $
    
    
    
    $
    2,164,136Net Deficit
    
    $
    
    
    
    $
    (119,107
    )Net Sales  Southeast Automotive
    
    $
    1,021,644
    
    
    $
    2,642,624Net Income Per Share  Basic and Diluted
    
    $
    .00
    
    
    $
    .01
  NOTE 3:
    CONCENTRATION OF CREDIT RISK The Company maintains its cash in bank deposit accounts, which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant credit risk on
cash and cash equivalents. As of December 31, 2003, the Company had
approximately $888,000 in these accounts. The Company grants credit to customers, substantially all of whom are
businesses located in the United States and Canada. The Company typically does
not require collateral from customers. The Company monitors exposure to credit
losses and maintains allowances for anticipated losses considered necessary in
the circumstances. Sales to three customers represented approximately 83% of consolidated revenue
for the year ended December 31, 2003. There were no sales to any
one customer which comprised more than 10% of consolidated revenue during the year ended December 31, 2002. F-12




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 4:
    RECEIVABLES Receivables consist of the following as of December 31, 2003: Trade receivables (a)
    
    $
    85,293Employee advances
    
    
    20,390105,683Less allowance for doubtful accounts
    
    
    (23,000
    )$
    82,683
  (a)
    
    Approximately 98% of trade receivables as of December 31, 2003 is due
from one customer. This customer accounted for approximately 51% of total
revenue for 2003 (none for 2002).  NOTE 5:
    PROPERTY AND EQUIPMENT Property and equipment consists of the following as of December 31, 2003: Range ofUsefulLives (Years)Building and improvements
    
    
    30
    
    
    $
    830,463Land
    
    
    N/A
    
    
    
    412,000Machinery and equipment
    
    
    5-7
    
    
    
    242,692Furniture and fixtures
    
    
    5-7
    
    
    
    41,7821,526,937Less accumulated depreciation
    
    
    
    
    
    
    (450,439
    )$
    1,076,498
 F-13




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 6:
    PARTNERSHIP AND LIMITED LIABILITY COMPANIES  INVESTMENTS The limited partnership and limited liability company interests consist of
Consuliers investment in AVM, BioSafe and ST, LLC. AVM, L.P Consulier owned approximately 10% of AVM capital as of December 31, 2003 and
2002. Based on capital and earnings distributions provided in the partnership
agreement, Consulier was allocated approximately 8.5% of AVMs earnings
during 2003 and 2002. Under the partnership agreement, Consulier may withdraw
all or any portion of its capital account upon 30 days written notice. AVMs
general partner may also expel Consulier from the partnership through payment
of the balance of Consuliers capital account. Following is a summary of the financial information of AVM as of and for the
years ended December 31: 2003
    
    2002Cash
    
    $
    60,137,179
    
    
    $
    61,267,687Due from brokers
    
    
    3,797,006
    
    
    
    3,996,873Securities owned
    
    
    521,561
    
    
    
    614,841Investment in affiliate and other assets
    
    
    1,690,146
    
    
    
    1,289,086Total assets
    
    $
    66,145,892
    
    
    $
    67,168,487Due to brokers
    
    $
    4,839,835
    
    
    $
    4,852,837Customer payables & subordinated borrowings
    
    
    39,382,169
    
    
    
    41,135,418Other liabilities
    
    
    2,907,795
    
    
    
    1,884,403Anticipated partners withdrawals
    
    
    1,370,318
    
    
    
    1,451,142Total liabilities
    
    
    48,500,117
    
    
    
    49,323,800Partners capital
    
    
    17,645,775
    
    
    
    17,844,687Total liabilities and partners capital
    
    $
    66,145,892
    
    
    $
    67,168,487Revenue
    
    $
    77,326,384
    
    
    $
    56,859,740Net income
    
    $
    36,373,133
    
    
    $
    22,198,057Consuliers share of AVMs earnings
    
    $
    3,095,475
    
    
    $
    1,871,933
 The carrying value of Consuliers investment in AVM was $1,852,133 at December
31, 2003. F-14




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 6:
    PARTNERSHIP AND LIMITED LIABILITY COMPANIES INTERESTS (CONTINUED) BioSafe Systems, LLC Consulier owns a 40% interest in BioSafe. At December 31, 2003 and 2002
BioSafes summarized financial information was as follows: 2003
    
    2002Total Assets
    
    $
    2,024,000
    
    
    $
    1,725,000Total Liabilities
    
    $
    309,000
    
    
    $
    272,000Revenue
    
    $
    5,826,259
    
    
    $
    4,672,645Costs and Expenses
    
    
    5,163,389
    
    
    
    3,869,622Net Income
    
    $
    662,870
    
    
    $
    803,023Consuliers Share of Earnings
    
    $
    265,148
    
    
    $
    321,207
 The carrying value of Consuliers investment in BioSafe was $1,053,519 at
December 31, 2003. SYSTEMS TECHNOLOGIES, LLC During August 2002, Consulier purchased a 14.25% interest in ST, LLC, a Nevada
limited liability company. During the year ended December 31, 2003, Consulier
made additional contributions of $4,057,005 to increase its investment in ST,
LLC. As of December 31, 2003, Consuliers interest in ST, LLC totaled 34%.
ST, LLC is a member of Patient Care Technology Systems, LLC (PCTS), a
California limited liability company. ST, LLCs primary asset is its 75% (at
December 31, 2003) investment in PCTS. The original ST, LLC operating
agreement provided that the losses from ST, LLC be allocated to ST, LLCs
initial members and then to the Company based on investment percentage. Effective April 1, 2003, this agreement was amended and
provides that Consulier receive allocated losses to the extent of Consuliers
contributions from inception. Consequently, the loss allocated to Consulier
was greater than 34%. Consuliers principal shareholder owns approximately 51%
of ST, LLC, and together with the Companys 34%, the combined ownership
aggregates 85%. F-15




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 6:
    PARTNERSHIP AND LIMITED LIABILITY COMPANIES INTERESTS (CONTINUED) Consulier can require Consuliers principal shareholder to purchase its
interest in ST, LLC for cash equal to the Consuliers capital account balance
in ST, LLC at any time with 60 days written notice. Management has evaluated ST,
LLCs (primarily PCSTs) projections and related assumptions
regarding their operations. In this regard, management periodically compares
actual results to these projections. Should actual results be significantly
less than the projection, a write down might be necessary. Following is a
summary of the summarized financial information of PCTS and the losses
allocated to Consulier: 2003
    
    2002Total Assets
    
    $
    3,092,000
    
    
    $
    557,000Total Liabilities
    
    $
    447,000
    
    
    $
    254,000Revenue
    
    $
    386,958
    
    
    $
    259,000Costs and Expenses
    
    
    4,953,084
    
    
    
    3,409,000Net Loss
    
    $
    (4,566,126
    )
    
    $
    (3,150,000
    )Consuliers Share of Loss
    
    $
    (4,566,126
    )
    
    $
    (66,330
    )
 The carrying value of Consuliers investment in ST, LLC was $849,544 at
December 31, 2003.  NOTE 7:
    BONDS PAYABLE Bonds payable of $355,000 are payable on maturity (June 30, 2004) and bear
interest at 6% per annum, payable quarterly. The Companys principal
shareholder owns $205,000 of the outstanding bonds at December 31, 2003. As
additional incentive to purchase the bonds, the Company attached a total of
70,000 warrants at a purchase price of $1.78175 per share. On December 7,
1999, the original June 30, 1999 expiration date of the 70,000 warrants held by
bondholders was extended to June 30, 2004. The fair market value of the
warrants at December 7, 1999, of approximately $77,700 (Note 9), has been
recorded as original issue discount and is being amortized over the remaining
term of the bonds. The bonds are redeemable by Consulier at face value after June 30, 1994. The
bonds are collateralized by land and building owned by Consuliers principal
shareholder, and machinery and equipment, personal property, and leasehold
improvements owned by the Consulier. F-16




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 8:
    INCOME TAXES Provisions (benefits) for federal and state income tax in the consolidated
statements of operations consist of the following: CONTINUING OPERATIONS
    
    2003
    
    2002Current:Federal
    
    $
    (612,458
    )
    
    $
    636,304State
    
    
    
    
    
    
    140,092(612,458
    )
    
    
    776,396Deferred:Federal
    
    
    (53,931
    )
    
    
    (35,939
    )State
    
    
    (6,577
    )
    
    
    (4,478
    )(60,508
    )
    
    
    (40,417
    )Total income tax expense (benefit)
    
    $
    (672,966
    )
    
    $
    735,979
 DISCONTINUED OPERATIONS
    
    2003
    
    2002Current:Federal
    
    $
    66,822
    
    
    $
    30,294State
    
    
    7,425
    
    
    
    7,31274,247
    
    
    
    37,606Deferred:Federal
    
    
    158,288
    
    
    
    (13,900
    )State
    
    
    17,588
    
    
    
    (1,600
    )175,876
    
    
    
    (15,500
    )Total income tax expense
    
    $
    250,123
    
    
    $
    22,106
 F-17




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 8:
    INCOME TAXES (CONTINUED) Applicable income taxes (benefit) for financial reporting purposes differ from
the amount computed by applying the statutory federal income tax rate as
follows: 2003
    
    2002Tax expense (benefit) at statutory rate
    
    $
    (539,887
    )
    
    $
    613,132State income tax expense (benefit) net of federal
tax effect
    
    
    (43,409
    )
    
    
    89,905Transfer to discontinued operations
    
    
    (72,571
    )
    
    
    Other
    
    
    (17,099
    )
    
    
    33,342Income tax expense (benefit)
    
    $
    (672,966
    )
    
    $
    735,979
 As a result of the Companys sale of its interest in Southeast (Note 2), the
Company will not be able to utilize approximately $176,000 of the net deferred
tax assets which existed December 31, 2002. Therefore, this amount was included in the
current year deferred tax expense of discontinued operations. The Company utilized all of its capital
loss carry forward during the year ended December 31, 2003 due to the sale of
Southeast. During the year ended December 31, 2003, the Company generated a
Federal tax net operating loss that is to be carried back to prior year
operating income, giving rise to an income tax refund. As of December 31,
2003, the Company had state tax loss carry forward of approximately $1,645,000
available to reduce future years income for state tax purposes through 2023. The approximate tax effects of temporary differences that give rise to deferred
tax assets (liabilities) are as follows: 2003
    
    2002Depreciation
    
    $
    17,653
    
    
    $
    45,500Allowance for doubtful accounts
    
    
    8,655
    
    
    
    22,500Inventory
    
    
    
    
    
    
    137,200Tax loss carry forward
    
    
    57,794
    
    
    
    Unrealized loss on available for sale securities
    
    
    
    
    
    
    24,000Other
    
    
    16,405
    
    
    
    20,500Accrued Wages
    
    
    33,867
    
    
    
    Total Net Deferred Tax Asset
    
    $
    134,374
    
    
    $
    249,700
 Deferred tax assets and liabilities are reflected on the balance sheet as of
December 31, 2003 as follows: Net Short-Term Deferred Tax Assets
    
    $
    50,943Net Long-Term Deferred Tax Assets
    
    
    83,431Net Deferred Tax Assets
    
    $
    134,374
 F-18




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 9:
    STOCKHOLDERS EQUITY Stock Option Plans Consulier established a Tandem Stock Option Plan (Tandem Plan) and an
Incentive Stock Option Plan (Incentive Plan) covering current employees and
former employees who currently work for Mosler Auto Care Center, Inc. (MACC).
Under the Tandem Plan, qualified and non-qualified options may be granted. The Tandem Plan provides that an aggregate of 200,000 options to purchase
shares of Consuliers common stock may be granted to officers, directors and
other key employees of Consulier and MACC. The Incentive Plan provides that an
aggregate of 100,000 options to purchase shares of Consuliers common stock may
be granted to officers and other key employees of Consulier. The options under
both plans are exercisable after two years of continuous employment or service
and have a maximum life of ten years from the date of grant. Options to purchase 61,232 shares of Consuliers common stock by employees were
exercised in fiscal 2000. Loans totaling $76,540 were made to these employees
for a term up to five years at an 8% annual interest rate for the exercise. At
December 31, 2003, such loans remain outstanding and are recorded as notes
receivable for common stock, included as a reduction of stockholders equity. On October 8, 1991, the principal shareholder of the Company granted options to
one of the officers of the Company to purchase common stock of the Company from
that primary shareholder. As of December 31, 2003, the remaining balance of
these options amounted to 190,000 shares at $1.25 per share. Since the
issuance of these options in 1991 and all subsequent revisions made to the
options were for reasons unrelated to the business of Consulier Engineering,
Inc., no accounting recognition was reflected on the books and records of the
Company in 1991 nor at the time of any subsequent extension. Capital Stock On December 23, 2002, 29,093 shares of restricted treasury stock with a
historical cost of $50,452 were sold for cash of $64,005 (approximately $2.20
per share, the then market price). During February 2003, the Company received the return of 45,000 shares of its
common stock held by certain executive officers of Southeast in connection with
the sale of that subsidiary. The value of the stock was based upon the closing
market value on the day received (Note 2). On December 23, 2003, 7,171 shares of restricted treasury stock with a
historical cost of $12,411 were sold to a related party for a total value of
$17,789 (approximately $2.48 per share, the then market price). Common Stock Warrants In connection with the issuance of the bonds payable (Note 7), Consulier
issued warrants to purchase shares of its common stock at a purchase price of
$1.78175 per share. No warrants have been exercised to date. Using the
Black-Scholes option pricing model, the fair market value of the 70,000
warrants at the December 7, 1999 extension date was calculated as approximately
$77,700 with the following assumptions: 46% volatility, 4.5 years expected
life, and a 5.86% risk free interest rate. The fair value of the warrants
represents an original issue discount, which is being amortized over the
remaining term of the bonds payable. The allocated value of the warrants has
been recorded as additional paid-in-capital. F-19




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 10:
    RELATED PARTY TRANSACTIONS Due from Principal Shareholder The Company advances its cash distribution from AVM (Note 6) to the principal
shareholder, offset by cash repayments from the principal shareholder.
Additionally, the Company and the principal shareholder advances funds for
certain joint costs and expenses in the normal course of business. The unpaid
amount are due on demand and are non-interest bearing. Note Receivable  Related Party In 1990, Consulier sold its automobile manufacturing business to MACC. As
consideration for the purchase, MACC executed a promissory note (the Note)
for $750,000, which was personally guaranteed by the Companys principal
shareholder. The Note accrues interest at an annual rate of one month LIBOR
(1.12% at December 31, 2003). The Note matures on May 11, 2005. Interest
income recorded for the years ended December 31, 2003 and 2002, totaled
approximately $3,976 and $7,561, respectively. Related Party Payable MACC and Consulier incur certain joint costs and expenses in the normal course
of business. Consulier owed MACC $141,108, due on demand, at December 31, 2003
resulting from these transactions. Other For other related party transactions see Notes 6, 7, 9 and 13. F-20




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Segment Information Operating segments are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. The Company has four reportable segments: automotive parts
distribution, distribution of household and tool products, investments, and
corporate. The automotive parts distribution segment distributed after-market
automotive and truck parts to wholesale markets, which is shown as discontinued
operations (Note 2). The household and tool products manufacturing segment is
engaged in sales of the Captain Cra-Z soap product line and tool and ladder
related products. The investments segment maintains investment interests in an
investment limited partnership and limited liability companies. The corporate
segment is engaged in management of the business and finance activities.
Segment information as of and for the years ended December 31, 2003 and 2002
are as follows: Year Ended December 31, 2003Distribution
    
    Investing
    
    Corporate
    
    DiscontinuedActivities
    
    Activities
    
    Activities
    
    Operations
    
    TotalRevenue
    
    $
    193,966
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    193,966Operating Income (Loss)
    
    
    (211,294
    )
    
    
    
    
    
    
    (245,908
    )
    
    
    
    
    
    
    (457,202
    )Other Income (Loss)
    
    
    
    
    
    
    (1,205,503
    )
    
    
    74,802
    
    
    
    
    
    
    
    (1,130,701
    )Income (Loss) From
Continuing Operations(a)
    
    
    (121,746
    )
    
    
    (694,601
    )
    
    
    (98,590
    )
    
    
    
    
    
    
    (914,937
    )Income (Loss) From
Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,079
    
    
    
    108,079Total Assets
    
    $
    214,683
    
    
    $
    3,755,196
    
    
    $
    4,308,781
    
    
    $
    
    
    
    $
    8,278,660
 Year Ended December 31, 2002Distribution
    
    Investing
    
    Corporate
    
    DiscontinuedActivities
    
    Activities
    
    Activities
    
    Operations
    
    TotalRevenue
    
    $
    51,358
    
    
    $
    
    
    
    $
    10,200
    
    
    $
    
    
    
    $
    61,558Operating Income (Loss)
    
    
    (24,661
    )
    
    
    
    
    
    
    (360,883
    )
    
    
    
    
    
    
    (385,544
    )Other Income (Loss)
    
    
    
    
    
    
    2,126,810
    
    
    
    62,063
    
    
    
    
    
    
    
    2,188,873Income (Loss) From
Continuing Operations(a)
    
    
    (14,588
    )
    
    
    1,258,812
    
    
    
    (176,874
    )
    
    
    
    
    
    
    1,067,350Income (Loss) From
Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,020
    
    
    
    72,020Total Assets
    
    $
    30,626
    
    
    $
    4,009,575
    
    
    $
    3,492,933
    
    
    $
    2,045,029
    
    
    $
    9,578,163
 (a) All interest expense
incurred by the Company was allocated to the Corporate Activities
Segment. F-21




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##### Table of Contents



CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 12:
    EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per share for the years ended December 31: 2003
    
    2002EARNINGS (LOSS) PER SHARE COMPUTATION:NUMERATOR:Income (loss) from continuing operations
    
    $
    (914,937
    )
    
    $
    1,067,350Discontinued operations, net of income taxes
    
    
    108,079
    
    
    
    72,020Net Income (Loss)
    
    $
    (806,858
    )
    
    $
    1,139,370DENOMINATOR:Average number of common shares outstanding
    
    
    4,935,439
    
    
    
    4,951,788DILUTED EARNINGS (LOSS) PER SHARE COMPUTATION:NUMERATOR:Income (loss) from continuing operations
    
    $
    (914,937
    )
    
    
    1,067,350Discontinued operations, net of income taxes
    
    
    108,079
    
    
    
    72,020Net Income (loss)
    
    $
    (806,858
    )
    
    $
    1,139,370DENOMINATOR:Average number of common shares outstanding
    
    
    4,935,439
    
    
    
    4,951,788Incremental shares for assumed exercise of warrants
    
    
    (a
    )
    
    
    17,235Total shares
    
    
    4,935,439
    
    
    
    4,969,023
  (a)
    
    The weighted average shares of common stock outstanding are not adjusted
for potential effects of the Companys stock options/warrants because of
their antidilutive effect.  NOTE 13:
    COMMITMENTS AND CONTINGENCIES Revolving Credit Agreement On August 1, 2003, the Company renewed a revolving credit agreement
(borrowing) with a financial institution in an amount not to exceed
$2,000,000. The borrowings under this agreement bear interest at either a
LIBOR based rate plus a margin of 2.10% or at the financial institutions Prime
rate less 0.075%, depending upon the rate chosen by the Company. The
borrowings are collateralized by primarily all assets of the Company, by
collateral pledged by the principal shareholder, WBM Investors Limited
Partnership (partially owned by the principal shareholder) and AVM, L.P. (Note
6). The revolving credit agreement matures on August 1, 2004. There is no
outstanding balance under this credit agreement at December 31, 2003. F-22




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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 13:
    COMMITMENTS AND CONTINGENCIES (CONTINUED) Legal Proceeding From time to time, the Company is involved in lawsuits and claims incidental in
the ordinary course of business. Management does not believe the outcome of
any litigation against the Company would have a material adverse effect on the
Companys financial position or results of operations. Leases Consulier leases office space under month-to-month leases. Rent expense
charged to operations was approximately $2,181 in 2003 and $8,300 in 2002, all
of which was to related parties. Lease of Real Estate Consulier leases its industrial warehouse to Southeast (Note 2) with an initial
base rent of $10,000 per month for the first year, adjusted for any cost of
living adjustments every succeeding year over the lease term. The term of this
lease is 5 years, ending on June 30, 2007. Southeast is also responsible to
pay 100% of the real estate taxes during the term of the lease. F-23




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##### Table of Contents



FORM 10-KSB ITEM 13
EXHIBITS PageExhibit 31(i)  Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 302 of the Sarbanex-Oxley Act of 2002
    
    E-1Exhibit 31(ii)  Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 302 of the Sarbanex-Oxley Act of 2002
    
    E-2Exhibit 32(i) Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section 1350)
    
    E-3Exhibit 32(ii) Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section 1350)
    
    E-4