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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 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)
 (Issuers Telephone Number)
  
 þ o
 þ
 o þ




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##### 



CONSULIER ENGINEERING, INC.
 REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 TABLE OF CONTENTS
 PAGEPART IItem 1.
    
    Description of Business
    
    
    3Item 2.
    
    Description of Property
    
    
    5Item 3.
    
    Legal Proceedings
    
    
    5Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    5PART IIItem 5.
    
    Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of
Equity Securities
    
    
    6Item 6.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    7Item 7.
    
    Financial Statements
    
    
    11Item 8.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    12Item 8A.
    
    Controls and Procedures
    
    
    12Item 8B.
    
    Other Information
    
    
    12PART IIIItem 9.
    
    Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance withSection 16(a) of the Exchange Act
    
    
    13Item 10.
    
    Executive Compensation
    
    
    15Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters
    
    
    16Item 12.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    17Item 13.
    
    Exhibits
    
    
    17Item 14.
    
    Principal Accountant Fees and Services
    
    
    17Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS
 GENERAL DEVELOPMENT OF BUSINESS
  DESCRIPTION OF BUSINESS SEGMENTS
 (1)
    
    OWNERSHIP IN LIMITED LIABILITY PARTNERSHIPS AND LIABILITY COMPANIES SEGMENT
 AVM, L.P.
    BIOSAFE SYSTEMS, LLC
   3




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SYSTEMS TECHNOLOGIES, LLC AND PATIENT CARE TECHNOLOGY SYSTEMS, LLC
       4




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(2) CORPORATE SEGMENT
  
 ITEM 2. DESCRIPTION OF PROPERTY
  .
 
 ITEM 3. LEGAL PROCEEDINGS
   ,
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   5




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PART II
 
 ITEM 5.
    
    MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES
 MARKET PRICE AND DIVIDENDS
  Year Ended December 31, 2005
    
    High
    
    LowFirst quarter
    
    $
    3.95
    
    
    $
    3.00Second quarter
    
    
    15.00
    
    
    
    3.00Third quarter
    
    
    9.94
    
    
    
    3.07Fourth quarter
    
    
    8.20
    
    
    
    4.50
 Year Ended December 31, 2006
    
    High
    
    LowFirst quarter
    
    $
    5.99
    
    
    $
    4.05Second quarter
    
    
    4.86
    
    
    
    3.05Third quarter
    
    
    4.00
    
    
    
    3.28Fourth quarter
    
    
    15.09
    
    
    
    3.17
  EQUITY COMPENSATION PLANS
 .
 RECENT SALES OF UNREGISTERED SECURITIES
  NASDAQ LISTING
   6




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 FORWARD LOOKING STATEMENTS
     CRITICAL ACCOUNTING POLICIES
  Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51 Consolidation of Variable Interest Entities
  7




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Accounting for the Costs of Software to be Sold, Leased, or Otherwise Marketed.
  PARTNERSHIP AND LIMITED LIABILITY COMPANY INVESTMENTS
 .
 REVENUE RECOGNITION
     8




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9




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USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
  RESULTS OF OPERATIONS
       OUTLOOK FOR 2007
    10




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LIQUIDITY AND CAPITAL RESOURCES
      IMPACT OF INFLATION AND CHANGING PRICES
  
 ITEM 7. FINANCIAL STATEMENTS
   11




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ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 CHANGES IN CERTIFYING ACCOUNTANTS
  
 ITEM 8A. CONTROLS AND PROCEDURES
 (a) Evaluation of Disclosure Controls and Procedures
   (b) Managements Annual Report on Internal Control Over Financial Reporting
  
 ITEM 8B. OTHER INFORMATION
   12




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PART III
 
 ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
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
    
    57
    
    1985
    
    Chairman of the Board, 1985 to present. President and Chief Executive Officer,
June 1985 to May 1994, and from February 1999 to the present. Principal in AVM, L.P., and a broker/dealer engaged in arbitrage and government securities trading, 1983 to present.Alan R. Simon, Esq.
    
    56
    
    1985
    
    General Counsel, Treasurer and Secretary since November 2001.  1982 to present,
private practice of law in Palm Beach Gardens, Florida.  President of Consulier International, Inc., since 2005.Burck E. Grosse
    
    77
    
    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.Jean-Pierre Arnaud
    
    59
    
    2005
    
    Mr. Arnaud worked for Eastman Kodak Company in the USA
and UK in various areas involving health imaging, including
manufacturing, sales, marketing, and management.  In 1991
Mr. Arnaud performed financial auditing services for Fotcor
(Brazil).  During 1991, he received his M.A. in
International and Public Affairs, International Business
and Finance from Columbia University.Dr. Skender Fani
    
    67
    
    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.
   13




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EXECUTIVE OFFICERS
     AUDIT COMMITTEE
  AUDIT COMMITTEE FINANCIAL EXPERT
   14




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CODE OF BUSINESS CONDUCT AND ETHICS
   
 ITEM 10. EXECUTIVE COMPENSATION
 SUMMARY COMPENSATION TABLE
  SUMMARY COMPENSATION TABLE
 Fiscal
    
    
    
    
    
    All OtherName and Principal Position
    
    Year
    
    Salary
    
    CompensationWarren B. Mosler,
    
    
    2006
    
    
    $
    75,000
    
    
    $
    Chairman of the Board,
    
    
    2005
    
    
    $
    75,000
    
    
    $
    President and CEO
    
    
    2004
    
    
    $
    75,000
    
    
    $
    
   OPTION/SAR GRANTS IN LAST FISCAL YEAR NEED TO CONFIRM
  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
  LONG-TERM INCENTIVE AND PENSION PLANS
   15




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COMPENSATION OF DIRECTORS
  
 ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    Amount andNature Of
    
    Percent of ClassName and Address
    
    Beneficial
    
    atTitle of Class
    
    of Beneficial Owner
    
    Ownership
    
    December 31, 2006Common Stock
    
    Warren B. Mosler (1)(2)5000 Estate Southgate
    
    
    4,334,745
    
    
    
    79.0
    %Christainsted, USVI 00820Common Stock
    
    Alan R. Simon (1)(2)8295 North Military Trail, Suite C
    
    
    190,000
    
    
    
    3.5
    %Palm Beach Gardens, FL 33410Common Stock
    
    Burck E. Grosse (1)11 Huntly Circle
    
    
    10,000
    
    
    
    .2
    %Palm Beach Gardens, FL 33418All directors and executive
    
    
    4,534,745
    
    
    
    82.7
    %Officers as a group (3 people)
 
 (1)
    
    Director(2)
    
    Executive Officer
  16




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ITEM 12.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
 ITEM 13. EXHIBITS
  Number
    
    Description3.1
    
    Articles of Incorporation, as amended (1)3.2
    
    By-Laws (1)4.1
    
    Form of Common Stock Certificate (1)10.3
    
    Exchange Agreement between the Company and Warren B. Mosler Dated September 29, 2006 (2)10.4
    
    Exchange Agreement between the Company and Warren B. Mosler Dated September 29, 2006 (2)14.0
    
    Code of Ethics (1)21.0
    
    Subsidiaries of the Registrant (1)31.1
    
    Section 302 Certificate of Chief Executive Officer (3)31.2
    
    Section 302 Certificate of Chief Financial Officer (3)32.1
    
    Section 906 Certificate of Chief Executive Officer (3)32.2
    
    Section 906 Certificate of Chief Financial Officer (3)
 
 (1)
    
    Previously filed.(2)
    
    Previously filed with Form 8-K on October 3, 2006.(3)
    
    Filed herewith.
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    17




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SIGNATURES
  CONSULIER ENGINEERING, INC.Dated: April 16, 2007
    
    By:
    
    /s/ Warren B. MoslerWarren B. MoslerChairman of the Board of Directors,President and Chief Executive Officer
  Name
    
    Title
    
    Date/s/ Warren B. Mosler
    
    Chairman of the Board of Directors,
    
    April 16,
2007Warren B. Mosler
    
    President and Chief Executive Officer/s/ Alan R. Simon
    
    Secretary, Treasurer
    
    April 16, 2007Alan R. Simon/s/ Burck E. Grosse
    
    Director
    
    April 16, 2007Burck E. Grosse/s/ Skender Fani
    
    Director
    
    April 16, 2007Skender Fani/s/ Jean-Pierre Arnaud
    
    Director
    
    April 16, 2007Jean-Pierre Arnaud
  19




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CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
FORM 10-KSB ITEM 7 CONSOLIDATED FINANCIAL STATEMENTS
 TABLE OF CONTENTS
 PAGEREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1CONSOLIDATED FINANCIAL STATEMENTS:Balance Sheet
    
    
    F-2Statements of Operations
    
    
    F-3Statements of Stockholders Equity
    
    
    F-4Statements of Cash Flows
    
    
    F-5Notes to the Consolidated Financial Statements
    
    
    F-6




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F-1 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




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F-2 CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEET
 DECEMBER 31, 2006
 ASSETSCURRENT ASSETSCash and Cash Equivalents
    
    $
    241,428Receivables, Net of Allowance for Doubtful Accounts of $81,167
    
    
    569,493Income Tax Receivable
    
    
    651,068Inventories
    
    
    57,841Deferred Implementation Costs
    
    
    1,749,100Other Current Assets
    
    
    194,334Deferred Income Taxes
    
    
    82,477Total Current Assets
    
    
    3,545,741PROPERTY AND EQUIPMENT, Net
    
    
    1,888,070CAPITALIZED SOFTWARE DEVELOPMENT COSTS
    
    
    245,098PARTNERSHIP AND LIMITED LIABILITY COMPANIES  INVESTMENTS
    
    
    2,711,004NOTE RECEIVABLE  RELATED PARTY
    
    
    200,000DEFERRED INCOME TAXES
    
    
    1,111,573INTANGIBLE ASSET
    
    
    769,534$
    10,471,020LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESLine of Credit
    
    $
    800,000Accounts Payable and Accrued Liabilities
    
    
    1,518,212Unearned Revenue
    
    
    554,107Related Party Payable
    
    
    433,098Note Payable  Related Party
    
    
    96,649Total Current Liabilities
    
    
    3,402,066NOTES PAYABLE  RELATED PARTY
    
    
    3,405,062COMMITMENTS AND CONTINGENCIESMINORITY INTEREST
    
    
    STOCKHOLDERS EQUITY:Common Stock of $.01 Par Value:Authorized 25,000,000 Shares; Issued 5,485,122 Shares
    
    
    54,851Additional Paid-in Capital
    
    
    4,107,503Accumulated Deficit
    
    
    (227,299
    )3,935,055Less:Treasury Stock at Cost  104,936 Shares
    
    
    (264,512
    )Notes Receivable for Common Stock
    
    
    (6,651
    )Total Stockholders Equity
    
    
    3,663,892$
    10,471,020




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F-3 CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 YEARS ENDED DECEMBER 31, 2006 AND 2005
 2006
    
    
    2005Revenue:Software Licensing Fees
    
    $
    1,580,062
    
    
    $
    984,271Other Revenue
    
    
    27,411
    
    
    
    32,957Total Revenue
    
    
    1,607,473
    
    
    
    1,017,228Operating Costs and Expenses:Cost of Revenue
    
    
    664,968
    
    
    
    353,577Payroll and Related Expense
    
    
    4,669,821
    
    
    
    3,607,281Selling, General and Administrative
    
    
    2,816,872
    
    
    
    2,512,214Professional Services
    
    
    1,802,770
    
    
    
    1,287,435Depreciation and Amortization
    
    
    1,310,693
    
    
    
    1,048,627Total Operating Costs and Expenses
    
    
    11,265,124
    
    
    
    8,809,134Operating Loss
    
    
    (9,657,651
    )
    
    
    (7,791,906
    )Other Income (Loss)/ (Expense):Investment Income  Related Parties
    
    
    1,884,777
    
    
    
    1,889,476Interest Expense
    
    
    (605,955
    )
    
    
    (190,287
    )Net Undistributed Income of Equity Investees
    
    
    170,499
    
    
    
    236,604Other Income
    
    
    122,843
    
    
    
    127,502Gain (Loss) on Disposal of Equipment
    
    
    15,504
    
    
    
    (29,885
    )Total Other Income (Loss)/(Expense)
    
    
    1,587,668
    
    
    
    2,033,410(Loss) from Operations Before Minority Interest and Income Taxes
    
    
    (8,069,983
    )
    
    
    (5,758,496
    )Minority Interest in Consolidated Subsidiary Losses
    
    
    7,231,450
    
    
    
    3,768,643(Loss) from Operations Before Income Taxes
    
    
    (838,533
    )
    
    
    (1,989,853
    )(Provision) Benefit for Income Taxes
    
    
    (705,888
    )
    
    
    829,136Net (Loss)
    
    $
    (1,544,421
    )
    
    $
    (1,160,717
    )(Loss) Per Share  Basic and Diluted:
    
    $
    (0.29
    )
    
    $
    (0.22
    )




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F-4 CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 DECEMBER 31, 2006 AND 2005
 NotesRetained
    
    
    ReceivableAdditional
    
    
    Earnings
    
    
    for
    
    
    TotalCommon Stock

    
    Treasury Stock

    
    Paid-in
    
    
    (Accumulated
    
    
    Common
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Stock
    
    
    EquityBalance, December 31, 2004
    
    
    5,243,105
    
    
    $
    52,431
    
    
    
    275,007
    
    
    $
    (582,686
    )
    
    $
    3,216,008
    
    
    $
    2,477,839
    
    
    $
    (36,082
    )
    
    $
    5,127,510Net (Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,160,717
    )
    
    
    
    
    
    
    (1,160,717
    )Payments on Notes Receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,431
    
    
    
    29,431Balance, December 31, 2005
    
    
    5,243,105
    
    
    
    52,431
    
    
    
    275,007
    
    
    
    (582,686
    )
    
    
    3,216,008
    
    
    
    1,317,122
    
    
    
    (6,651
    )
    
    
    3,996,224Common Stock Issued for Cash
    
    
    2,090
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    13,794
    
    
    
    
    
    
    
    
    
    
    
    13,815Sale of Treasury Stock
    
    
    
    
    
    
    
    
    
    
    (3,867
    )
    
    
    6,690
    
    
    
    11,485
    
    
    
    
    
    
    
    
    
    
    
    18,175Issuance of Treasury Stock Upon
Conversion of Note Payable  Related Party
    
    
    
    
    
    
    
    
    
    
    (166,204
    )
    
    
    311,484
    
    
    
    288,516
    
    
    
    
    
    
    
    
    
    
    
    600,000Net (Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,544,421
    )
    
    
    
    
    
    
    (1,544,421
    )Stock Based Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    580,099
    
    
    
    
    
    
    
    
    
    
    
    580,099Common Stock Issued in December 2006,
at Par, Pursuant to Net-Share (Cashless)
Exercise of Common Stock Warrants
    
    
    239,927
    
    
    
    2,399
    
    
    
    
    
    
    
    
    
    
    
    (2,399
    )
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2006
    
    
    5,485,122
    
    
    $
    54,851
    
    
    
    104,936
    
    
    $
    (264,512
    )
    
    $
    4,107,503
    
    
    $
    (227,299
    )
    
    $
    (6,651
    )
    
    $
    3,663,892




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F-5 CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2006 AND 2005
 2006
    
    
    2005Operating Activities:Net (Loss)
    
    $
    (1,544,421
    )
    
    $
    (1,160,717
    )Adjustments to Reconcile Net (Loss) to Net Cash (Used in) Operations:Depreciation & Amortization of Intangibles
    
    
    1,310,693
    
    
    
    1,048,627(Gain) Loss on Sale of Equipment
    
    
    (15,504
    )
    
    
    29,885Loss on Disposal of Equipment
    
    
    
    
    
    
    63,499Minority Interest in consolidated Subsidiary Losses
    
    
    (7,231,450
    )
    
    
    (3,768,643
    )Stock Based Compensation
    
    
    580,099
    
    
    
    Undistributed Loss of Equity Investee
    
    
    (170,499
    )
    
    
    (236,604
    )Investment Income  Related Party
    
    
    (1,884,777
    )
    
    
    (1,889,476
    )Deferred Income Taxes
    
    
    671,307
    
    
    
    (829,136
    )Changes in Operating Assets and Liabilities:Decrease (Increase) in Receivables
    
    
    (10,649
    )
    
    
    (264,961
    )Decrease (Increase) in Income Tax Receivable
    
    
    
    
    
    
    96,000Decrease (Increase) in Inventories
    
    
    6,740
    
    
    
    11,838(Increse) in Deferred Implementation Costs
    
    
    (469,551
    )
    
    
    (1,279,548
    )Decrease (Increase) in other current assets
    
    
    28,207
    
    
    
    (173,090
    )Increase in Accounts Payable and Accrued Liabilities
    
    
    568,628
    
    
    
    376,367Increase in Deferred Revenue
    
    
    273,608
    
    
    
    280,499Increase (Decrease) in Income Taxes Payable
    
    
    (10,635
    )
    
    
    (17,785
    )Net Cash (Used in) Operations
    
    
    (7,898,204
    )
    
    
    (7,713,245
    )Investing Activities:Distributions from Partnership Interest
    
    
    1,927,938
    
    
    
    2,014,580Proceeds from Sale of Equipment
    
    
    72,894
    
    
    
    3,105Acquisition of Property and Equipment
    
    
    (185,015
    )
    
    
    (933,904
    )Acquisition of Intangible Asset
    
    
    
    
    
    
    (424,500
    )Net Proceeds from Related Party Receivables
    
    
    
    
    
    
    20,800Acquisition of Software Upgrades
    
    
    (292,600
    )
    
    
    Net Cash Provided by Investing Activities
    
    
    1,523,217
    
    
    
    680,081Financing Activities:Proceeds from Sale of Treasury Stock
    
    
    18,175
    
    
    
    Proceeds from the Issuance of Common Stock
    
    
    13,815
    
    
    
    Proceeds from Subscription Receivable
    
    
    
    
    
    
    29,431Proceeds from Minority Shareholder in ST, LLC
    
    
    5,064,000
    
    
    
    1,163,615Repayments on Notes Payable  Related Party
    
    
    (1,305,592
    )
    
    
    Proceeds
from Notes Payable  Related Party
    
    
    3,334,066
    
    
    
    4,024,080Repayments on Line of Credit
    
    
    (2,000,000
    )
    
    
    1,715,000Proceeds from Line of Credit
    
    
    800,000
    
    
    
    Increase in Related Party Payables
    
    
    405,509
    
    
    
    270,356Net Cash Provided by Financing Activities
    
    
    6,329,973
    
    
    
    7,202,482Increase (Decrease) in Cash and Cash Equivalents
    
    
    (45,014
    )
    
    
    169,318Cash and Cash Equivalents  Beginning of Period
    
    
    286,442
    
    
    
    117,124Cash and Cash Equivalents  End of Period
    
    $
    241,428
    
    
    $
    286,442SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash Paid for Taxes
    
    $
    34,581
    
    
    $
    Cash Paid for Interest
    
    $
    94,501
    
    
    $
    58,255SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:Stock Issuance at Par, Pursuant to Net-Share (Cashless)Exercise of Common Stock Warrants
    
    $
    2,399
    
    
    $
    Conversion of Note Payable and Related Interest  Related Party
to Class A Stock of ST, LLC
    
    $
    2,167,450
    
    
    $
    Issuance of Treasury Stock upon Conversion of Note Payable-Related Party
    
    $
    600,000
    
    
    $
    




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 NATURE OF BUSINESS
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 BASIS OF CONSOLIDATION
    F-6




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 ACCOUNTING ESTIMATES
  CASH AND CASH EQUIVALENTS
  ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
    F-7




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 CONCENTRATIONS
 Disclosure of Information about
Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of
Credit Risk
   INVENTORIES
  PROPERTY AND EQUIPMENT
   F-8




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 CAPITALIZED SOFTWARE DEVELOPMENT COSTS
 Accounting for the
Costs of Software to be Sold, Leased or Otherwise Marketed
   INTANGIBLE ASSETS
  LONG-LIVED ASSETS  IMPAIRMENTS AND DISPOSALS
 Accounting for the Impairment or Disposal of Long-Lived Assets.
  F-9




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##### Table of Contents



NOTE 1:
    
    NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 PARTNERSHIP AND LIMITED LIABILITY COMPANIES INVESTMENTS
    ,
  F-10




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 STOCK-BASED COMPENSATION
     REVENUE RECOGNITION
    F-11




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 REVENUE RECOGNITION (CONTINUED)
       F-12




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 REVENUE RECOGNITION (CONTINUED)
     ADVERTISING AND MARKETING COSTS
  RECLASSIFICATIONS
  INCOME TAXES
   F-13




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 INCOME TAXES (CONTINUED)
  EARNINGS (LOSS) PER COMMON SHARE
  COMPREHENSIVE INCOME (LOSS)
  FAIR VALUE OF FINANCIAL INSTRUMENTS
 Disclosures about Fair Value of Financial Instruments,
   F-14




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##### Table of Contents



NOTE 1:
    
    DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
 Accounting for Uncertainty
in Income Taxes. Accounting for Income Taxes.
 Fair Value Measurements.
    F-15




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##### Table of Contents



NOTE 2: ACCOUNTING FOR VARIABLE INTEREST ENTITY (VIE)
 Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51
      NOTE 3: DEFERRED IMPLEMENTATION COSTS
   F-16




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##### Table of Contents



NOTE 4: ACQUISITION
    FormED Software
    
    $
    252,223TrackingED Module Software
    
    
    113,500Customer List
    
    
    174,500Non-Compete Agreements
    
    
    200,000Computer Equipment
    
    
    2,000Total Purchase Price
    
    $
    742,223
 NOTE 5: CONCENTRATION OF CREDIT RISK
     F-17




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##### Table of Contents



NOTE 6: RECEIVABLES
  Trade receivables
    
    $
    491,602Due from AVM
    
    
    115,897Due from BioSafe
    
    
    43,161Less allowance for doubtful accounts
    
    
    (81,167
    )$
    569,493
 NOTE 7: PROPERTY AND EQUIPMENT
  Range ofUsefulLives (Years)Building and Improvements
    
    
    40
    
    
    $
    830,463Land
    
    
    N/A
    
    
    
    412,000Computer Hardware and Software
    
    
    3-5
    
    
    
    1,587,916Machinery and Equipment
    
    
    5-7
    
    
    
    242,693Furniture and Fixtures
    
    
    5-7
    
    
    
    178,1453,251,217Less: Accumulated Depreciation
    
    
    
    
    
    
    (1,363,147
    )$
    1,888,070
  NOTE 8: INTANGIBLE ASSETS
  Range ofUsefulLives (Years)Customer List
    
    
    3-5
    
    
    $
    1,396,723Non-Compete Agreements
    
    
    1
    
    
    
    200,0001,596,723Less: Accumulated Amortization
    
    
    
    
    
    
    ( 827,189
    )$
    769,534
  F-18




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##### Table of Contents



NOTE 8: INTANGIBLE ASSETS (CONTINUED)
  YEAR ENDING DECEMBER 31,2007
    
    $
    301,1172008
    
    
    279,8042009
    
    
    188,613$
    769,534
 NOTE 9: PARTNERSHIP AND LIMITED LIABILITY COMPANIES  INVESTMENTS
  AVM, L.P
   F-19




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##### Table of Contents



NOTE 9:
    
    PARTNERSHIP AND LIMITED LIABILITY COMPANIES  INVESTMENTS (CONTINUED)
 AVM, L.P (CONTINUED)
  2006
    
    
    2005(in thousands)
    
    
    (in thousands)Cash
    
    $
    16,899
    
    
    $
    34,995Due from brokers
    
    
    2,849
    
    
    
    1,179Securities owned
    
    
    60,530
    
    
    
    303Investment in affiliate and other assets
    
    
    4,971
    
    
    
    5,623Total assets
    
    $
    85,249
    
    
    $
    42,100Due to brokers
    
    $
    931
    
    
    $
    401Customer payables & subordinated borrowings
    
    
    56,000
    
    
    
    14,079Other liabilities
    
    
    1,399
    
    
    
    1,265Anticipated partners withdrawals
    
    
    2,386
    
    
    
    1,822Total liabilities
    
    
    60,716
    
    
    
    17,567Partners capital
    
    
    24,533
    
    
    
    24,533Total liabilities and partners capital
    
    $
    85,249
    
    
    $
    42,100Revenue
    
    $
    72,514
    
    
    $
    61,832Net income
    
    $
    35,395
    
    
    $
    33,328Consuliers share of AVMs earnings
    
    $
    1,885
    
    
    $
    1,889
   F-20




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##### Table of Contents



NOTE 9:
    
    PARTNERSHIP AND LIMITED LIABILITY COMPANIES  INVESTMENTS (CONTINUED)
 BIOSAFES SYSTEMS, LLC
  (Unaudited)2006
    
    
    2005Total Assets
    
    $
    2,481,812
    
    
    $
    2,013,243Total Liabilities
    
    $
    334,635
    
    
    $
    179,985Revenue
    
    $
    6,924,590
    
    
    $
    6,317,456Costs and Expenses
    
    
    6,504,967
    
    
    
    5,697,647Net Income
    
    $
    419,623
    
    
    $
    619,809Consuliers Share of Earnings
    
    $
    170,499
    
    
    $
    236,604
  NOTE 10: INCOME TAXES
  CONTINUING OPERATIONS
    
    2006
    
    
    2005Current:Federal
    
    $
    
    
    
    $
    State
    
    
    34,581
    
    
    
    10,63534,581
    
    
    
    10,635Deferred:Federal
    
    
    557,394
    
    
    
    (748,392
    )State
    
    
    113,913
    
    
    
    (91,379
    )671,307
    
    
    
    (839,771
    )Total income tax expense (benefit)
    
    $
    705,888
    
    
    $
    (829,136
    )
  F-21




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##### Table of Contents



NOTE 10: INCOME TAXES (CONTINUED)
  2006
    
    
    2005Tax expense (benefit) at statutory rate
    
    $
    (315,540
    )
    
    $
    (676,550
    )State income tax expense (benefit) net
of federal tax effect
    
    
    34,581
    
    
    
    10,635Losses allocated to minority shareholder of ST,
LLC
    
    
    102,581
    
    
    
    Depreciation and Amortization
    
    
    214,706
    
    
    
    Adjustment of net operating loss carryovers
    
    
    807,003
    
    
    
    Other
    
    
    (137,443
    )
    
    
    (163,221
    )Income tax expense (benefit)
    
    $
    705,888
    
    
    $
    (829,136
    )
   2006
    
    
    2005Depreciation and Amortization
    
    $
    343,461
    
    
    $
    17,653Allowance for doubtful accounts
    
    
    30,543
    
    
    
    30,543Tax loss carry forward
    
    
    768,112
    
    
    
    1,751,817Other
    
    
    3,015
    
    
    
    16,425Accrued Wages
    
    
    48,919
    
    
    
    48,919Total Net Deferred Tax Asset
    
    $
    1,194,050
    
    
    $
    1,865,357
  Net Short-Term Deferred Tax Assets
    
    $
    82,477Net Long-Term Deferred Tax Assets
    
    
    1,111,573Net Deferred Tax Assets
    
    $
    1,194,050
  F-22




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##### Table of Contents



NOTE 11: STOCKHOLDERS EQUITY
 CAPITAL STOCK
   TREASURY STOCK
    F-23




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##### Table of Contents



NOTE 11: STOCKHOLDERS EQUITY (CONTINUED)
 STOCK-BASED EMPLOYEE COMPENSATION
    COMMON STOCK WARRANTS
  WEIGHTEDAVERAGEOPTIONS
    
    
    PRICEBalance at January 1, 2005
    
    
    400,000
    
    
    $
    3.5Options granted
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Balance at December 31, 2005
    
    
    400,000
    
    
    
    3.5Options granted
    
    
    
    
    
    
    Options exercised
    
    
    (400,000
    )
    
    
    3.5Options expired
    
    
    
    
    
    
    Balance at December 31, 2006
    
    
    
    
    
    $
    
  F-24




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##### Table of Contents



NOTE 12: RELATED PARTY TRANSACTIONS
 DUE FROM RELATED PARTIES
  NOTE PAYABLE  RELATED PARTY
   OTHER
  NOTE 13: LINE OF CREDIT
   F-25




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##### Table of Contents



NOTE 14: BUSINESS SEGMENT INFORMATION
 SEGMENT INFORMATION
  Year Ended December 31, 2006Income (Loss)Derived From
    
    
    
    
    
    MedicalDistribution
    
    Ownership of
    
    Corporate
    
    SoftwareActivities
    
    Investments
    
    Activities
    
    Activities
    
    TotalRevenue (b)
    
    $
    27,411
    
    
    $
    
    
    
    $
    
    
    
    $
    1,580,062
    
    
    $
    1,607,473Operating Income (Loss)
    
    
    (47,636
    )
    
    
    
    
    
    
    (1,154,362
    )
    
    
    (8,455,653
    )
    
    
    (9,657,651
    )Other Income (Loss) (a)
    
    
    
    
    
    
    2,055,276
    
    
    
    20,929
    
    
    
    (488,537
    )
    
    
    1,587,668Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,231,450
    
    
    
    7,231,450Income Tax Benefit
(Expense)
    
    
    
    
    
    
    (34,581
    )
    
    
    (671,307
    )
    
    
    
    
    
    
    (705,888
    )Net Income (Loss) (a)
    
    
    (47,636
    )
    
    
    2,020,695
    
    
    
    (1,804,740
    )
    
    
    (1,712,740
    )
    
    
    (1,544,421
    )Total Assets
    
    $
    67,489
    
    
    $
    2,711,004
    
    
    $
    3,504,891
    
    
    $
    4,187,636
    
    
    $
    10,471,020
 Year Ended December 31, 2005Income (Loss)Derived From
    
    
    
    
    
    MedicalDistribution
    
    Ownership of
    
    Corporate
    
    SoftwareActivities
    
    Investments
    
    Activities
    
    Activities
    
    TotalRevenue (b)
    
    $
    32,957
    
    
    $
    
    
    
    $
    
    
    
    $
    984,271
    
    
    $
    1,017,228OperatingIncome (Loss)
    
    
    (18,832
    )
    
    
    
    
    
    
    (517,795
    )
    
    
    (7,255,279
    )
    
    
    (7,791,906
    )Other Income (Loss) (a)
    
    
    
    
    
    
    2,126,080
    
    
    
    73,983
    
    
    
    (166,653
    )
    
    
    2,033,410Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,768,643
    
    
    
    3,768,643Income Tax Benefit
(Expense)
    
    
    6,591
    
    
    
    (744,128
    )
    
    
    155,334
    
    
    
    1,411,339
    
    
    
    829,136Net Income (Loss) (a)
    
    
    (12,241
    )
    
    
    1,381,952
    
    
    
    (288,478
    )
    
    
    (2,241,950
    )
    
    
    (1,160,717
    )Total Assets
    
    $
    79,645
    
    
    $
    2,707,129
    
    
    $
    3,687,179
    
    
    $
    5,057,425
    
    
    $
    11,531,378
 
 (a)
    
    All interest expense incurred by the Company was allocated to the Corporate Activities
Segment.(b)
    
    There were no intersegment revenue during the year.
  F-26




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##### Table of Contents



NOTE 15: EARNINGS (LOSS) PER SHARE
  2006
    
    
    2005BASIC AND DILUTED (LOSS) PER SHARE COMPUTATION:NUMERATOR:Net (Loss)
    
    $
    (1,544,421
    )
    
    $
    (1,160,717
    )DENOMINATOR:Average number of common shares outstanding
    
    
    5,260,916
    
    
    
    5,243,105(.29
    )
    
    
    (0.22
    )
  NOTE 16: COMMITMENTS AND CONTINGENCIES
 LEGAL PROCEEDING
  ,
  F-27




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##### Table of Contents



NOTE 16: COMMITMENTS AND CONTINGENCIES (CONTINUED)
 LEASES
   YEAR ENDING DECEMBER 31,2007
    
    $
    340,8572008
    
    
    351,1542009
    
    
    359,7682010
    
    
    345,0262011
    
    
    $
    1,396,805
  LEASE OF REAL ESTATE
  NOTE 17: 401 (K) PLAN
   F-28




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description31.1
    
    Section 302 Certificate of Chief Executive Officer31.2
    
    Section 302 Certificate of Chief Financial Officer32.1
    
    Section 906 Certificate of Chief Executive Officer32.2
    
    Section 906 Certificate of Chief Financial Officer