UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One) ~~þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~FOR~~þ ~~THE~~ QUARTERLY ~~PERIOD~~REPORT ~~ENDED~~UNDER ~~MARCH~~SECTION ~~31,~~13 ~~2009~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009


o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 0-17756

CONSULIER ENGINEERING, INC.

(Exact name of small business issuer as specified in its charter)


Florida		59-2556878

(State or other jurisdiction of of incorporation or organization)		(I.R.S. Employer Identification No.)

2391 Old Dixie Highway
Riviera Beach, FL 33404

~~2391~~(Address ~~Old~~of ~~Dixie~~principal ~~Highway Riviera~~executive ~~Beach, FL 33404~~offices)

(561) 842-2492

(~~561~~Registrant’s telephone number, including area code) ~~842-2492~~

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for 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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

As of ~~May~~August 10, 2009, there were 5,294,748 outstanding shares of common stock, par value $0.01 ~~per~~ per share.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” or similar expressions. The statements include, among others, statements regarding our prospects, opportunities, outlook, plans, intentions, anticipated financial and operating results, our business strategy and means to implement the strategy, and objectives.

Forward-looking statements are only estimates or predictions and are not guarantees of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products and services, competition from existing and new competitors, our ability to introduce new products, expected pricing levels, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Among other things, continued unfavorable economic conditions may impact market growth trends or otherwise impact the demand for our products and services, and competition from existing and new competitors and producers of alternative products will impact our ability to penetrate or expand our presence in new or growing markets. Uncertainties relating to our ability to develop and distribute new proprietary products to respond to market needs in a timely manner may impact our ability to exploit new or growing markets. Our ability to successfully identify and implement productivity improvements and cost reduction initiatives may impact profitability.

In addition, unless otherwise specifically provided herein, the statements in this Report are made as of end of the period for which the Report is filed. We expect that subsequent events or developments will cause our views to change. We undertake no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectations or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the end of the period for which the Report is filed.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES

INDEX

	Page		~~Page~~
PART-I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Condensed Consolidated Balance Sheets at March 31, 2009 (Unaudited) and December 31, 2008			3
Condensed Consolidated Balance Sheets at June 30, 2009 (Unaudited) and December 31, 2008		4
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008 (Unaudited)			4
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008 (Unaudited)		5
	Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2009 (Unaudited)			5
Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2009 (Unaudited)		6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008 (Unaudited)			6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008 (Unaudited)		7
Notes to the Unaudited Condensed Consolidated Financial Statements	~~Notes to the Unaudited Condensed Consolidated Financial Statements~~	8		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28		25
Item 4T. Controls and Procedures				25
Item 4. Controls and Procedures		28
PART-II. OTHER INFORMATION
Item 1. Legal Proceedings		29		26
Item 1A. Risk Factors		29		26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29		26
Item 3. Defaults Upon Senior Securities		29		26
Item 4. Submission of Matters to a Vote of Security Holders		29		26
Item 5. Other Information		29		26
Item 6. Exhibits		30		27
SIGNATURES		31		28
Ex 31.1 Section 302 CEO Certification
Ex 31.2 Section 302 CFO Certification
Ex 32.1 Section 906 CEO Certification
Ex 32.2 Section 906 CFO Certification
EX-31.1
EX-31.2
EX-32.1
EX-32.2

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	March 31,			December 31,
	2009			2008
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	226,090		$	270,192
Receivables		741,838			1,266,429
Inventories		108,623			117,831
Deferred Implementation Costs		2,293,511			2,293,464
Other Current Assets		207,650			252,385
Deferred Income Taxes		270,483			364,615
Total Current Assets		3,848,195			4,564,916
PROPERTY AND EQUIPMENT, Net		1,255,233			1,316,638
PARTNERSHIP AND LIMITED LIABILITY COMPANIES — INVESTMENTS		2,625,932			2,629,017
DEFERRED INCOME TAXES		668,566			496,393
INTANGIBLE ASSETS		257,516			367,838
OTHER ASSETS		50,898			50,898
TOTAL ASSETS	$	8,706,340		$	9,425,700
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities	$	1,606,112		$	1,812,163
Unearned Revenue		1,116,223			1,102,902
Related Party Payable		—			201,992
Total Current Liabilities		2,722,335			3,117,057
NOTES PAYABLE — RELATED PARTY		718,796			968,948
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common Stock $.01 Par Value:
Authorized 25,000,000 Shares; Issued 5,485,122 Shares		54,851			54,851
Additional Paid-in Capital		4,117,221			4,117,221
Accumulated Deficit		(1,047,657	)		(894,360	)
		3,124,415			3,277,712
Less:
Treasury Stock, Cost - 190,374 Shares in 2009 and 2008		(589,027	)		(589,027	)
Notes Receivable for Common Stock		(6,651	)		(6,651	)
Total Stockholders’ Equity		2,528,737			2,682,034
Noncontrolling interest		2,736,472			2,657,661
Total Equity		5,265,209			5,339,695
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	8,706,340		$	9,425,700

See accompanying notes to unaudited consolidated financial statements

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES ~~CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)~~

	THREE MONTHS ENDED
	MARCH 31,
	2009			2008
Revenue:
Software Licensing Fees	$	1,132,859		$	885,155
Other Revenue		2,278			3,717
Total Revenue		1,135,137			888,872
Operating Costs and Expenses:
Cost of Revenue		249,415			251,325
Payroll and Related Expense		794,239			853,780
Selling, General and Administrative		595,125			586,099
Professional Services		139,037			373,827
Depreciation and Amortization		168,537			279,852
Total Operating Costs and Expenses		1,946,353			2,344,883
Operating Loss		(811,216	)		(1,456,011	)
Other Income (Expense):
Investment Income — Related Parties		462,511			1,166,049
Interest Expense		(19,848	)		(83,564	)
Net Undistributed Income of Equity Investees		26,282			(43,813	)
Other Income		37,138			62,868
Total Other Income (Expense)		506,083			1,101,540
Loss Before Income Taxes		(305,133	)		(354,471	)
Benefit from Income Taxes		90,997			28,163
Net Loss	$	(214,136	)	$	(326,308	)
Less: Net (loss) attributable to noncontrolling interest		(60,839	)		(313,984	)
Net Loss attributed to Consulier Engineering, Inc.		(153,297	)		(12,324	)
Loss Per Share — Basic and Diluted	$	(0.03	)	$	—

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)


	June 30,			December 31,
	2009			2008
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	122,941		$	270,192
Receivables		997,601			1,266,429
Inventories		112,696			117,831
Deferred Implementation Costs		2,447,332			2,293,464
Other Current Assets		213,961			252,385
Deferred Income Taxes		277,132			364,615

Total Current Assets		4,171,663			4,564,916
PROPERTY AND EQUIPMENT, Net		1,209,253			1,316,638
PARTNERSHIP AND LIMITED LIABILITY COMPANIES - INVESTMENTS		2,801,140			2,629,017
DEFERRED INCOME TAXES		567,528			496,393
INTANGIBLE ASSETS		147,193			367,838
OTHER ASSETS		50,898			50,898

TOTAL ASSETS	$	8,947,675		$	9,425,700

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities	$	1,438,656		$	1,812,163
Unearned Revenue		1,085,579			1,102,902
Related Party Payable		—			201,992

Total Current Liabilities		2,524,235			3,117,057

NOTES PAYABLE - RELATED PARTY		736,766			968,948

Total Liabilities		3,261,001			4,086,005

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common Stock $.01 Par Value:
Authorized 25,000,000 Shares; Issued 5,485,122 Shares
Additional Paid-in Capital		54,851			54,851
Accumulated Deficit		4,117,221			4,117,221
		(824,160	)		(894,360	)

		3,347,912			3,277,712
Less:
Treasury Stock, Cost - 190,374 Shares in 2009 and 2008		(589,027	)		(589,027	)
Notes Receivable for Common Stock		(6,651	)		(6,651	)

Total Stockholders’ Equity		2,752,234			2,682,034

Noncontrolling interest		2,934,440			2,657,661

Total Equity		5,686,674			5,339,695

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	8,947,675		$	9,425,700

See accompanying notes to unaudited consolidated financial statements

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~OPERATIONS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2009


	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
	2009			2008			2009			2008
Revenue:
Software Licensing Fees	$	915,881		$	506,175		$	2,048,740		$	1,391,330
Other Revenue		7,601			5,802			9,879			9,519

Total Revenue		923,482			511,977			2,058,619			1,400,849


Operating Costs and Expenses:
Cost of Revenue		89,263			519,998			338,678			757,940
Payroll and Related Expense		1,201,523			1,253,690			1,995,762			2,107,470
Selling, General and Administrative		737,789			604,020			1,332,914			1,190,119
Professional Services		134,176			191,065			273,213			578,275
Depreciation and Amortization		164,255			287,092			332,792			566,944

Total Operating Costs and Expenses		2,327,006			2,855,865			4,273,359			5,200,748

Operating Loss		(1,403,524	)		(2,343,888	)		(2,214,740	)		(3,799,899	)

Other Income (Expense):
Investment Income – Related Parties		183,962			732,343			646,473			1,898,392
Interest Expense		(18,474	)		(56,344	)		(38,322	)		(139,908	)
Net Undistributed Income of Equity Investees		286,663			166,602			312,945			122,789
Other Income		48,272			53,517			85,410			116,385

Total Other Income (Expense)		500,423			896,118			1,006,506			1,997,658


Loss Before Income Taxes		(903,101	)		(1,447,770	)		(1,208,234	)		(1,802,241	)

Benefit from (provision for) Income Taxes		(81,434	)		110,002			9,563			138,165

Net Loss		(984,535	)		(1,337,768	)		(1,198,671	)		(1,664,076	)

Less: Net (loss) attributable to noncontrolling interest		(1,208,032	)		(1,087,957	)		(1,268,871	)		(1,401,941	)


Net Income (Loss) attributed to Consulier Engineering, Inc.	$	223,497		$	(249,811	)	$	70,200		$	(262,135	)


Earnings (Loss) Per Share – Basic and Diluted	$	0.04		$	(0.05	)	$	0.01		$	(0.05	)

(UNAUDITED)

															Notes
												Retained			Receivable
										Additional		Earnings			for			Total
	Common Stock				Treasury Stock					Paid-in		(Accumulated			Common			Stockholders’
	Shares		Amount		Shares		Amount			Capital		Deficit)			Stock			Equity
Balance, December 31, 2008		5,485,122	$	54,851		190,374	$	(589,027	)	$	4,117,221	$	(894,360	)	$	(6,651	)	$	2,682,034
Net Loss attributed to Consulier Engineering, Inc.													(153,297	)					(153,297	)
Balance March 31, 2009		5,485,122	$	54,851		190,374	$	(589,027	)	$	4,117,221	$	(1,047,657	)	$	(6,651	)	$	2,528,737

See accompanying notes to unaudited consolidated financial statements

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES ~~CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

	THREE MONTHS ENDED
	MARCH 31,
	2009			2008
Cash Flow (Used in) Operating Activities	$	(169,912	)	$	(1,536,777	)
Investing Activities:
Acquisition of Software Upgrades		—			(20,400	)
Distributions from Partnership Interest		460,992			1,389,091
Net Acquisition of Property and Equipment		(3,190	)		(23,703	)
Net Cash Provided by Investing Activities		457,802			1,344,988
Financing Activities:
Proceeds from Noncontrolling Interest in ST, LLC		140,000			375,000
Increase (Decrease) in Related Party Payables		(201,992	)		85,137
Proceeds from Subscription Receivable		—			22,496
Purchase of Treasury Stock		—			(126,425	)
Repayment of Notes Payable Related Party		(270,000	)		—
Net Cash Provided by (Used in) Financing Activities		(331,992	)		356,208
Increase (Decrease) in Cash and Cash Equivalents		(44,102	)		164,419
Cash and Cash Equivalents — Beginning of Period		270,192			333,024
Cash and Cash Equivalents — End of Period	$	226,090		$	497,443
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest	$	63,440		$	—
Cash Paid for Income Taxes	$	20,000		$	—

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED JUNE 30, 2009

(UNAUDITED)


															Notes
												Retained			Receivable
										Additional		Earnings			for			Total
	Common Stock				Treasury Stock					Paid-in		(Accumulated			Common			Stockholders’
	Shares		Amount		Shares		Amount			Capital		Deficit)			Stock			Equity
Balance, December 31, 2008		5,485,122	$	54,851		190,374	$	(589,027	)	$	4,117,221	$	(894,360	)	$	(6,651	)	$	2,682,034
Net Income attributed to Consulier Engineering, Inc.													70,200						70,200

Balance June 30, 2009		5,485,122	$	54,851		190,374	$	(589,027	)	$	4,117,221	$	(824,160	)	$	(6,651	)	$	2,752,234

See accompanying notes to unaudited consolidated financial statements

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES ~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2009~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	SIX MONTHS ENDED
	JUNE 30,
	2009			2008
Cash Flow (Used in) Operating Activities	$	(2,487,675	)	$	(2,592,779	)


Investing Activities:

Acquisition of Software Upgrades		—			(40,771	)
Distributions from Partnership Interest		1,228,598			2,158,705
Net Acquisition of Property and Equipment		—			(34,972	)


Net Cash Provided by Investing Activities		1,228,598			2,082,962


Financing Activities:

Proceeds from Noncontrolling Interest in ST, LLC		1,546,000			375,000
Increase (Decrease) in Related Party Payables		(201,992	)		336,895
Proceeds from Subscription Receivable		—			22,496
Purchase of Treasury Stock		—			(161,136	)
Repayment of Notes Payable Related Party		(232,182	)		—


Net Cash Provided by (Used in) Financing Activities		1,111,826			573,255


Increase (Decrease) in Cash and Cash Equivalents		(147,251	)		63,438

Cash and Cash Equivalents - Beginning of Period		270,192			333,024


Cash and Cash Equivalents - End of Period	$	122,941		$	396,462


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest	$	63,440		$	—

Cash Paid for Income Taxes	$	20,000			—

Conversion of Note Payable-Related Party to Class A Stock	$	—		$	3,405,062

Conversion of Related Party Payable to Note Payable	$	—		$	915,541

See accompanying notes to unaudited consolidated financial statements

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Consulier Engineering, Inc., and its subsidiaries (collectively called “Consulier” or the “Company”) are engaged in three primary business lines: ownership in medical software activities, distribution of Captain Cra-Z Soap™ and minority ownership of other business entities.

Consulier International, Inc. (a wholly-owned subsidiary) markets and distributes Captain Cra-Z Soap™. Consulier’s income is also derived from ownership of interests (Note 43) in BioSafe Systems, LLC (“BioSafe”), a California limited liability company, 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, a majority-owned (51%) limited liability company, is a majority member (75%) of Patient Care Technology Systems, LLC (“PCTS”), a California limited liability company, which develops and licenses data-based integrated emergency room information systems marketed as Amelior ED™. PCTS is also a provider of passive tracking technologies for emergency departments and operating rooms. Its software technologies track the status and location of patients and assets through wireless badges worn by people or attached to equipment in the emergency department and ancillary areas. PCTS also designs, customizes, markets, sells and distributes paper templates used for diagnostic purposes in emergency medical departments. Mosler’s ownership in ST, LLC was approximately 24% as the Class A member and Consulier’s ownership was approximately 51% as of ~~March~~June 3130, 2009.

Basis of Consolidation

The accompanying condensed consolidated financial statements include Consulier and its wholly-owned subsidiary, Consulier International, Inc., and ST, LLC, with its majority- owned subsidiary, PCTS. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company uses the equity method of accounting for investments where its ownership is between 20% and 50% (Note 3).

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~MARCH~~JUNE 3130, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Interim Financial Data

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, management believes the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the consolidated financial position of Consulier Engineering, Inc. and subsidiaries as of ~~March~~June 3130, 2009, and the results of their operations for the three and six months ended June 30, 2009 and 2008, and cash flows for the ~~three~~six months ended ~~March~~June 3130, 2009 and 2008. The results of operations and cash flows for the period are not necessarily indicative of the results of operations or cash flows that can be expected for the year ending December 31, 2009. For further information, refer to the consolidated financial statements and footnotes thereto included in Consulier’s annual report on Form 10-K for the year ended December 31, 2008.

Revenue Recognition

PCTS derives revenue from the following sources: (1) licensing and sale of data- based integrated emergency room information systems and passive tracking technologies, which include new software license and software license updates and product support revenues, and (2) services, which include consulting, advanced product services and education revenues. The following generally describes the revenue accounting followed by PCTS.

New software license revenues represent all fees earned from granting customers licenses to use ~~the~~ PCTS’s database and tracking technology as well as applications software, and exclude revenue derived from software license updates, which is included in software license updates and product support. While the basis for software license revenue recognition is substantially governed by the provisions of Statement of Position (“SOP”) No. 97-2, Software Revenue Recognition, issued by the American Institute of Certified Public Accountants, PCTS exercises judgment and uses estimates in connection with the determination of the amount of software and services revenues to be recognized in each accounting period. ~~For software license arrangements that do not require significant~~ modification or customization of the underlying software, PCTS recognizes new software license revenue when: (1) PCTS enters into a legally binding arrangement with a customer for the license of software; (2) PCTS delivers the products; (3) a customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Substantially all new software license revenues are recognized in this manner.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

For software license arrangements that do not require significant modification or customization of the underlying software, PCTS recognizes new software license revenue when: (1) PCTS enters into a legally binding arrangement with a customer for the license of software; (2) PCTS delivers the products; (3) a customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Substantially all new software license revenues are recognized in this manner. The vast majority of software license arrangements include software license updates and product support, which are recognized ratably over the term of the arrangement, typically one year. Software license updates provide customers with rights to unspecified software product upgrades, maintenance releases and patches released during the term of the support period. Product support includes internet access to technical content, as well as internet and telephone access to technical support personnel. Software license updates and product support are generally priced as a percentage of the net new software license fees.

Many of PCTS’s software arrangements include consulting implementation services sold separately under consulting engagement contracts. Consulting revenue from these arrangements is generally accounted for separately from new software license revenue because the arrangements qualify as service transactions as defined in SOP No. 97-2. The more significant factors considered in determining whether the revenue should be accounted for separately include the nature of services (e.g., consideration of whether the services are essential to the functionality of the licensed product), degree of risk, availability of services from other vendors, timing of payments and impact of milestones or acceptance criteria on the realizability of the software license fee.

Revenue for consulting services is generally recognized as the services are performed. If there is a significant uncertainty about the project completion or receipt of payment for the consulting services, revenue is deferred until the uncertainty is sufficiently resolved. Contracts with fixed or “not to exceed” fees are recognized on a proportional performance basis.

If an arrangement does not qualify for separate accounting of the software license and consulting transactions, then new software license revenue is generally recognized together with the consulting services based on contract accounting using either the percentage-of-completion or completed-contract method. Contract accounting is applied to any arrangements: (1) that include milestones or customer specific acceptance criteria that may affect collection of the software license fees; (2) where services include significant modification or customization of the software; (3) where significant consulting services are provided for in the software license contract without additional charge or are substantially discounted; or (4) where the software license payment is tied to the performance of consulting services. ~~Advanced product services revenue is recognized~~ ~~over the term of the service contract, which is generally one year. Education revenue is recognized as the classes or other education offerings are delivered.~~

910

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~MARCH~~JUNE 3130, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

~~For~~Advanced arrangements with multiple elements, PCTS allocates revenue to each element of a transaction based upon its fair value as determined by “vendor specific objective evidence.” Vendor specific objective evidence of fair value for all elements of an arrangement is based upon the normal pricing and discounting practices for those products and services when sold separately, and for software license updates and product ~~support~~ services, ~~is additionally measured by the renewal rate offered to the customer. PCTS defers~~ revenue ~~for any undelivered elements, and recognizes revenue when the product~~ is ~~delivered~~recognized or over the ~~period~~term inof ~~which~~ the service ~~is performed~~contract, inwhich ~~accordance~~is ~~with~~generally ~~the~~one ~~revenue recognition policy for such element~~year. IfEducation ~~PCTS cannot objectively determine the fair value of any undelivered element included in bundle software and service arrangements, PCTS defers~~ revenue until all elements are delivered and services have been performed, or until fair value can objectively be determined for any remaining undelivered elements. When the fair value of a delivered element has not been established, the residual method is ~~used~~recognized toas ~~record revenue if~~ the ~~fair~~ ~~value~~classes ofor ~~all~~other ~~undelivered~~education ~~elements~~offerings ~~is determinable. Under the residual method, the fair value~~are ~~of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the~~ delivered ~~elements and is recognized as revenue~~.

For arrangements with multiple elements, PCTS allocates revenue to each element of a transaction based upon its fair value as determined by “vendor specific objective evidence.” Vendor specific objective evidence of fair value for all elements of an arrangement is based upon the normal pricing and discounting practices for those products and services when sold separately, and for software license updates and product support services, is additionally measured by the renewal rate offered to the customer.

PCTS defers revenue for any undelivered elements, and recognizes revenue when the product is delivered or over the period in which the service is performed, in accordance with the revenue recognition policy for such element. If PCTS cannot objectively determine the fair value of any undelivered element included in bundle software and service arrangements, the Company defers revenue until all elements are delivered and services have been performed, or until fair value can objectively be determined for any remaining undelivered elements. When the fair value of a delivered element has not been established, the residual method is used to record revenue if the fair value of all undelivered elements is determinable. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue.

Sales of the Company’s soap products 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 of the Company are classified as a selling expense.

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.

As part of the process of preparing our consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. ~~These differences result in~~ deferred tax assets and liabilities, which are included within the Company’s consolidated balance sheet. The Company then assesses the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent it believes that recovery is not likely, it establishes a valuation allowance.

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes (Continued)

To the extent the Company establishes a valuation allowance or changes this allowance in a period, it includes an expense or a benefit within the tax provision in the Company’s statement of operations.

In June 2006, the Financial Accounting Standards Board published FASB Interpretation No. 48 (“FIN No. 48”). “Accounting for Uncertainty in Income Taxes,” to address the non-comparability in reporting tax assets and liabilities resulting from a lack of specific guidance in FASB Statement of Financial Accounting Standards No. 109 (“SFAS 109”), “Accounting for Income Taxes,” on the uncertainty in income taxes recognized in an enterprise’s financial statements. Specifically, FIN No. 48 prescribes (a) a consistent recognition threshold and (b) a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides related guidance on derecognition, classification, interest and penalties, accounting interim periods, disclosure and transition. FIN 48 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is “not more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded in the accompanying consolidated financial statements as selling, general and administrative expenses.

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax years ended December 31, 2008, 2007, 2006, and 2005, the tax years which remain subject to examination by major tax jurisdictions as of March 31, 2009.

Newly Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. For all of our financial assets and liabilities that are recognized and disclosed at fair value on a recurring basis, we adopted the provisions of SFAS 157 effective January 1, 2008. The implementation of SFAS No. 157 did not have a material effect on the Company’s consolidated financial statements.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Newly~~Income ~~Issued~~Taxes ~~Accounting Pronouncements~~ (Continued)

~~For~~These ~~all~~differences result in deferred tax assets and liabilities, ~~that~~which are ~~non-financial~~included ~~that~~within ~~are recognized or disclosed at fair~~the ~~value~~Company’s inconsolidated ~~the~~balance ~~financial~~sheet. ~~statements~~The onCompany athen ~~non-recurring~~assesses ~~basis~~the welikelihood ~~had~~that ~~planned to adopt~~ the ~~provisions~~deferred oftax ~~SFAS~~assets ~~157~~will ~~effective~~be ~~January 1,~~recovered ~~2009.~~from ~~This~~future ~~partial~~taxable ~~deferral~~income ~~was~~and ato ~~result~~the ofextent ~~Staff~~it ~~Position~~believes ~~157-2~~that recovery ~~“Effective~~is ~~Date~~not oflikely, ~~FASB~~it ~~Statement~~establishes ~~No. 157”~~a ~~(FSP~~valuation ~~157-2”)~~allowance. ~~issued~~To onthe ~~February 12,~~extent ~~2008,~~the ~~which~~Company ~~delayed~~establishes a ~~the~~valuation ~~adoption~~allowance ofor ~~SFAS~~changes ~~157~~this ~~for~~allowance ~~non-financial~~in ~~assets~~a ~~and~~period, ~~liabilities~~it ~~that~~includes ~~are~~an ~~recognized~~expense or ~~disclosed at fair value on~~ a ~~non-recurring~~benefit within ~~basis.~~the Wetax ~~are~~provision ~~currently~~in ~~evaluating~~ the ~~impact~~Company’s ofconsolidated ~~SFAS~~statement ~~157-2~~of ~~on our financial statements relative to non-financial assets and liabilities~~operations.

OnIn ~~February~~June 152006, ~~2007,~~ the ~~FASB~~Financial ~~issued~~Accounting ~~SFAS~~Standards ~~No. 159,~~Board ~~The~~published ~~Fair~~FASB ~~Value~~Interpretation ~~Option~~No. 48 ~~for Financial Assets and Financial Liabilities~~ (“~~SFAS~~ FIN No. ~~159~~48”). ~~Under~~“Accounting ~~SFAS~~for ~~No. 159,~~Uncertainty ~~the~~in ~~Company~~Income ~~may~~Taxes,” ~~elect~~ to ~~report financial~~address ~~instruments~~the ~~and~~non-comparability ~~certain~~in reporting ~~other~~tax ~~items~~assets atand ~~fair~~liabilities ~~value~~resulting onfrom a ~~contract-by-contract~~lack ~~basis~~of ~~with changes~~specific guidance in ~~value~~FASB ~~reported~~Statement of inFinancial ~~earnings~~Accounting Standards No. 109 ~~This~~(“SFAS ~~election~~109”), is“Accounting ~~irrevocable.~~for ~~SFAS~~Income ~~No. 159~~Taxes,” ~~provides~~on anthe ~~opportunity~~uncertainty toin ~~mitigate~~income ~~volatility~~taxes recognized in ~~reported~~an ~~earnings~~enterprise’s ~~that~~financial isstatements. ~~caused~~Specifically, byFIN No. 48 ~~measuring~~prescribes ~~hedged~~(a) a ~~assets~~ consistent recognition threshold and ~~liabilities~~(b) a ~~that~~measurement ~~were~~attribute ~~previously~~for ~~required~~the financial tostatement ~~use~~recognition aand ~~different~~measurement ~~accounting~~of ~~method~~a ~~than~~tax ~~the~~position ~~related hedging~~taken ~~contracts~~or ~~when~~expected ~~the~~to ~~complex~~be ~~provisions~~taken ofin a ~~SFAS~~tax ~~No. 133~~return, ~~Accounting~~and ~~for~~provides ~~Derivative Instruments~~related ~~and~~guidance ~~Hedging~~on ~~Activities~~derecognition, ~~(“SFAS~~classification, ~~133”)~~interest ~~applicable~~and penalties, toaccounting ~~hedge~~interim ~~accounting~~periods, ~~are~~disclosure ~~not~~and ~~met~~transition. ~~The Company~~FIN ~~adopted~~48 ~~SFAS~~requires ~~No. 159~~companies onto determine ~~January 1,~~whether ~~2008.~~it ~~The~~is ~~Company~~“more ~~chose~~likely than not” tothat ~~elect~~a ~~the~~tax ~~fair~~position ~~value~~will be sustained upon ~~option~~examination ~~for~~by ~~its~~the ~~financial~~appropriate ~~assets~~taxing ~~and~~authorities ~~liabilities~~before ~~existing~~any atpart ~~January 1,~~of ~~2009,~~the ~~and~~benefit ~~did~~can ~~not~~be ~~elect~~recorded ~~the~~in ~~fair~~the ~~value~~financial ~~option~~statements. onFor ~~financial~~those ~~assets~~tax ~~and~~positions ~~liabilities~~where ~~transacted~~it inis ~~the~~“not ~~three~~more ~~months~~likely ~~ended~~than ~~March~~not” that a tax ~~31,~~benefit ~~2009.~~will ~~Therefore~~be sustained, ~~the~~no ~~adoption~~tax ofbenefit ~~SFAS~~is Norecognized. ~~159~~ ~~had~~Where noapplicable, ~~impact~~associated oninterest ~~the~~and penalties ~~Company’s~~are ~~interim~~also ~~condensed~~ recorded in the accompanying consolidated financial statements as selling, general and administrative expenses. .

InThe ~~March 2008,~~Company adopted the ~~FASB~~provisions ~~issued~~of ~~SFAS~~FIN ~~161~~48 ~~“Disclosures~~on ~~about Derivative Instruments and Hedging Activities~~January 1, ~~an amendment of FASB Statement No~~2007. ~~133”~~ ~~(“SFAS~~Based ~~161”),~~on ~~which~~our ~~is effective for fiscal years and interim periods beginning after November 15~~evaluation, ~~2008,~~we ~~with earlier adoption encouraged.~~have ~~This~~concluded ~~statement~~that isthere ~~intended~~are tono ~~improve~~significant ~~transparency~~uncertain intax ~~financial~~positions ~~reporting by~~ requiring ~~enhanced disclosures~~recognition ofin ~~an entity’s derivative instruments and hedging activities and their effects on the~~our ~~entity’s~~ financial ~~position, financial performance, and cash flows~~statements. ~~SFAS~~Our ~~161~~evaluation ~~applies~~was toperformed ~~all derivative~~for ~~instruments within~~ the ~~scope~~tax ofyears ~~SFAS~~ended ~~133~~December 31, ~~as well as related hedged items~~2008, ~~bifurcated~~ ~~derivatives~~2007, 2006, and ~~non-derivative~~2005, ~~instruments~~the ~~that~~tax ~~are~~years ~~designated~~which ~~and~~remain ~~qualify~~subject asto ~~hedging~~examination ~~instruments. This~~by ~~statement~~major ~~was~~tax ~~adopted~~jurisdictions as ~~effective~~of ~~January~~June 130, 2009. ~~SFAS 161 had no material impact on our~~ ~~consolidated financial statements.~~

Recently Adopted Accounting Pronouncements

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~MARCH~~JUNE 3130, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Newly~~Recently ~~Issued~~Adopted Accounting Pronouncements (Continued)

InThe ~~December 2007,~~implementation ~~the~~of ~~FASB issued~~ SFAS ~~141R,~~No. 157 ~~“Business~~did ~~Combinations”~~not ~~(“SFAS~~have ~~141R”),~~a ~~which~~material ~~is effective~~effect ~~prospectively for all business combinations with acquisition dates~~ on ~~or after~~ the ~~beginning~~ ofCompany’s ~~the first fiscal year beginning after December 15, 2008, with the exception of the~~consolidated ~~accounting~~financial ~~for~~statements. ~~valuation~~For ~~allowances~~all onassets ~~deferred taxes~~ and ~~acquired~~liabilities ~~tax~~that ~~contingencies.~~are ~~SFAS~~non-financial ~~141R replaces SFAS 141 “Business Combinations” (“SFAS 141”), but it retains the underlying concepts of SFAS 141 in~~ that ~~all business combinations~~ are ~~required~~recognized toor disclosed ~~be accounted for~~ at fair value ~~under~~in the ~~acquisition~~ ~~method~~financial ofstatements ~~accounting.~~on ~~However,~~a ~~SFAS~~non-recurring ~~141R~~basis ~~changed~~we ~~the~~adopted ~~method of applying~~ the ~~acquisition~~provisions ~~method~~of inSFAS a157 ~~number~~effective ofJanuary 1, ~~significant ways~~2009. ~~Acquisition~~This ~~costs~~partial ~~will~~deferral ~~generally~~was bea ~~expensed as~~result ~~incurred;~~of ~~noncontrolling interests will be valued at fair value at the acquisition date;~~Staff inPosition 157-~~process~~2 ~~research~~“Effective ~~and~~Date ~~development~~of ~~will~~FASB beStatement ~~recorded~~No. 157” at(FSP ~~fair value at the acquisition date as an indefinite~~157-~~lived~~2”) ~~intangible~~issued ~~asset;~~on ~~restructuring~~February 12, ~~cost associated with a business combination will~~2008, ~~generally~~which bedelayed ~~expensed subsequent to~~ the ~~acquisition~~adoption ~~date;~~of ~~and~~SFAS ~~changes~~157 infor ~~deferred~~non-financial ~~tax~~assets ~~asset valuation allowances~~ and ~~income~~liabilities ~~tax~~that ~~uncertainties~~are ~~after~~recognized or ~~the~~disclosed ~~acquisition~~at ~~date~~fair ~~generally~~value ~~will~~on ~~affect income~~a ~~tax~~non-recurring ~~expense~~basis. ~~This~~The ~~statement~~adoption ~~was~~of ~~adopted~~this ~~effective~~standard ~~January 1, 2009. SFAS 141R~~ did not have a significant ~~material~~ impact on ~~our~~the ~~consolidated~~Company’s financial ~~statements~~position or results of operations.

InOn ~~April~~February ~~2008~~15, 2007, the FASB issued ~~FSP~~SFAS No. ~~FAS 142-3~~159, The Fair Value Option for Financial Assets and Financial Liabilities (“~~Determination~~SFAS ofNo. 159”). Under SFAS No. 159, the ~~Useful~~Company ~~Life~~may ofelect ~~Intangible~~to report ~~Assets~~financial instruments and certain other items at fair value on a contract-by-contract basis with changes in value reported in earnings.” This ~~FSP~~election ~~amends~~is ~~the~~irrevocable. ~~factors~~SFAS ~~that~~No. 159 ~~should~~provides bean opportunity ~~considered~~to mitigate volatility in ~~developing~~reported ~~renewal~~earnings orthat ~~extension~~is caused by measuring hedged assets ~~assumptions~~and ~~used~~liabilities tothat ~~determine~~were ~~the~~previously ~~useful~~required ~~life~~to ofuse a ~~recognized~~different ~~intangible~~accounting ~~asset~~method ~~under~~than the related hedging contracts when the complex provisions of SFAS No. ~~142~~133, Accounting for Derivative ~~“Goodwill~~Instruments and ~~Other~~Hedging ~~Intangible~~Activities, ~~Assets”~~ (“SFAS ~~142~~133”) applicable to hedge accounting are not met. The Company ~~objective~~adopted ofSFAS ~~this~~No. 159 ~~FSP~~on isJanuary 1, 2008. The Company chose not to ~~improve~~elect the ~~consistency~~ ~~between~~fair ~~the~~value option ~~useful~~for ~~life~~its offinancial aassets ~~recognized~~and ~~intangible~~liabilities ~~asset~~existing ~~under~~at ~~SFAS~~January 1, ~~142~~2009, and ~~the~~did ~~period~~not elect the offair ~~expected~~value ~~cash~~option ~~flows~~on ~~used~~financial toassets ~~measure~~and liabilities transacted in the ~~fair~~six ~~value~~months ofended June 30, 2009. Therefore, the ~~asset~~adoption ~~under~~of SFAS ~~141(R),~~No. 159 ~~and~~had ~~other~~no impact on the Company’s interim condensed ~~principles~~consolidated offinancial ~~GAAP~~statements.

~~This~~In ~~FSP~~March 2008, ~~applies~~the toFASB ~~all~~issued ~~intangible~~SFAS ~~assets,~~161 ~~whether~~“Disclosures ~~acquired~~about inDerivative aInstruments ~~business~~and ~~combination~~Hedging Activities, oran ~~otherwise, and~~amendment ~~shall~~of beFASB ~~effective~~Statement ~~for~~No. 133” ~~financial~~(“SFAS ~~statements~~161”), ~~issued~~which is effective for fiscal years and interim periods beginning after ~~December~~ November 15, 2008, with earlier adoption encouraged. This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and ~~interim~~hedging ~~periods~~activities ~~within~~and ~~those~~their ~~fiscal~~effects ~~years~~on the entity’s financial position, financial performance, and ~~applied~~cash ~~prospectively~~flows. SFAS 161 applies to ~~intangible~~all ~~assets~~derivative ~~acquired~~instruments ~~after~~within the ~~effective~~scope ~~date.~~of ~~Early~~SFAS ~~adoption~~133, isas ~~prohibited.~~well Weas ~~have~~related ~~evaluated~~hedged ~~the~~items, ~~new~~bifurcated ~~statement~~derivatives, and ~~have~~non-derivative ~~determined~~instruments that itare ~~will~~designated ~~not~~and ~~have~~qualify aas ~~significant~~hedging ~~impact~~instruments. This onstatement ~~the~~was ~~determination~~adopted ~~or reporting~~effective ofJanuary 1, ~~our~~2009. SFAS 161 had no material impact on the Company’s consolidated financial ~~results~~statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162). This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in accordance with GAAP. With the issuance of this statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and reside in the accounting literature

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~MARCH~~JUNE 3130, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Newly~~Recently ~~Issued~~Adopted Accounting Pronouncements (Continued)

~~established~~In byDecember 2007, the FASB asissued ~~opposed~~SFAS to141R, “Business Combinations” (“SFAS 141R”), which is effective prospectively for all business combinations with acquisition dates on or after the beginning ~~American~~of ~~Institute~~the first fiscal year beginning after December 15, 2008, with the exception of ~~Certified~~the accounting ~~Public~~for ~~Accountants~~valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141R replaces SFAS 141 “Business Combinations” (~~AICPA~~“SFAS 141”) ~~Statement~~, onbut ~~Auditing~~it ~~Standards~~retains Nothe underlying concepts of SFAS 141 in that all business combinations are required to be accounted for at fair value under the acquisition method of accounting. 69 However, ~~“The~~SFAS ~~Meaning~~141R changed the method of ~~Present~~applying ~~Fairly~~the acquisition method in ~~Conformity~~a ~~With Generally~~number ~~Accepted~~of ~~Accounting~~significant ~~Principles~~ways.” ~~This~~Acquisition ~~statement~~costs iswill ~~effective~~generally ~~60 days~~be ~~following~~expensed as incurred; noncontrolling interests will be valued at fair value at the ~~SEC’s~~acquisition date; ~~approval~~in-process ofresearch and development will be recorded at fair value at the ~~Public~~acquisition ~~Company~~date ~~Accounting~~as ~~Oversight~~an indefinite-lived ~~Board~~intangible ~~amendments~~asset; torestructuring AUcost ~~Section 411,~~associated ~~“The~~with a business combination will ~~Meaning~~generally ofbe ~~Present~~expensed ~~Fairly~~subsequent into ~~Conformity~~the ~~With~~acquisition ~~Generally~~date; ~~Accepted~~and ~~Accounting~~changes ~~Principles.”~~in Wedeferred ~~have~~tax asset ~~evaluated~~valuation allowances and income tax uncertainties after the ~~new~~acquisition date generally will affect income tax expense. This statement ~~and~~was ~~have~~adopted ~~determined~~effective ~~that~~January 1, it2009. ~~will~~SFAS 141R did not have a ~~significant~~material impact on the ~~determination~~ orCompany’s ~~reporting of our~~ consolidated financial ~~results~~statements.

In ~~December~~April ~~2007~~2008, the FASB issued FSP No. FAS ~~160 “Non~~142-~~controlling~~3, ~~Interests in Consolidated Financial Statements” (~~“~~FAS160”),~~Determination ~~which~~of ~~amends~~the ~~Accounting~~Useful ~~Research~~Life ~~Bulletin~~of ~~(“ARB”) 51, “Consolidated~~Intangible ~~Financial Statements~~Assets.” ~~(“ARB 51”).~~ This ~~statement~~FSP ~~was~~amends ~~adopted~~the ~~effective~~factors ~~January 1,~~that ~~2009.~~should ~~FAS160 provides~~be ~~guidance~~considered ~~for~~in ~~the~~developing ~~accounting,~~renewal ~~reporting~~or ~~and~~extension assumptions ~~disclosure~~used ofto ~~noncontrolling~~determine ~~interests~~the ~~and requires,~~useful ~~among~~life ~~other~~of ~~things,~~a ~~that~~recognized ~~noncontrolling~~intangible ~~interests~~asset beunder ~~recorded~~SFAS asNo. 142, “Goodwill ~~equity~~and inOther ~~the consolidated~~Intangible ~~financial~~Assets” ~~statements~~(SFAS 142). The ~~adoption~~objective of this ~~standard~~FSP ~~resulted~~is into ~~the~~improve ~~reclassification~~the ofconsistency ~~$2,736,472~~between ofthe ~~Minority~~useful ~~Interests~~life ~~(now~~of ~~referred~~a torecognized asintangible ~~noncontrolling~~asset ~~interests)~~under toSFAS a142 ~~separate component~~and ~~of Stockholders’ Equity on~~ the ~~Consolidated~~period of ~~Balance~~expected ~~Sheet.~~cash ~~Additionally,~~flows ~~net~~used ~~income attributable~~ to ~~non~~measure ~~controlling~~the ~~interests~~fair isvalue ~~now~~of ~~shown separately from parent net income in~~ the ~~Consolidated~~ ~~Statement~~asset ofunder ~~Income.~~SFAS ~~Prior~~141(R), ~~periods have been restated to reflect the presentation~~ and other ~~disclosure~~principles ~~requirements~~ of ~~FAS 160~~GAAP.

~~EITF~~This ~~08-6,~~FSP ~~which~~applies isto ~~effective~~all ~~January 1,~~intangible ~~2009~~assets, ~~clarifies~~whether ~~the~~acquired ~~accounting~~in ~~for~~a ~~certain~~business ~~transactions~~combination or otherwise. ~~and~~The ~~impairment~~Company ~~considerations~~adopted ~~involving~~this ~~equity~~standard ~~method~~on ~~investments~~January 1, 2009, and isit ~~applied~~did onnot have a ~~prospective~~significant impact on ~~basis~~the todetermination ~~future~~or ~~transactions~~reporting of the Company’s consolidated financial results.

~~Under~~In ~~FSP FAS 157-4~~May 2008, ifthe anFASB ~~entity~~issued ~~determines~~SFAS ~~that~~No. 162, ~~there~~“The ~~has~~Hierarchy ~~been~~of aGenerally ~~significant~~Accepted ~~decrease in the~~Accounting ~~volume~~Principles” ~~and~~(SFAS ~~level~~162). ofThis ~~activity~~statement ~~for~~identifies anthe ~~asset~~sources orof ~~liability~~accounting inprinciples ~~relation~~and to the ~~normal market activity~~ framework for selecting the ~~asset~~principles orused ~~liability~~in ~~(or~~the ~~similar~~preparation ~~assets~~of orfinancial ~~liabilities),~~statements ~~then~~of nongovernmental ~~transactions~~entities orthat ~~quoted~~are ~~prices may~~presented ~~not~~in ~~accurately~~accordance ~~reflect~~with ~~fair value~~GAAP. InWith ~~addition, if there is evidence that~~ the ~~transaction~~issuance ~~for the~~of ~~asset or liability is not orderly~~this statement, the ~~entity~~FASB ~~shall~~concluded ~~place little, if any, weight on~~ that ~~transaction~~ ~~price~~the asGAAP anhierarchy ~~indicator~~should ofbe ~~fair~~directed ~~value.~~toward ~~Since~~the ~~FSP~~entity ~~FAS~~and ~~157-4 is effective for interim~~not ~~reporting~~its ~~periods ending after June 15~~auditor, ~~2009,~~and ~~the~~reside ~~Company~~in ~~will adopt~~ the ~~provisions~~accounting ofliterature ~~FSP~~established ~~FAS 157-4~~by ~~during~~ the ~~second~~FASB ~~quarter~~as ofopposed ~~2009~~to ~~and is currently assessing~~ the American ~~impact~~Institute of ~~adoption~~Certified onPublic ~~its~~Accountants ~~financial position and results of operations.~~

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Newly~~Recently ~~Issued~~Adopted Accounting Pronouncements (Continued)

~~FSP~~(AICPA) Statement ~~FAS~~on ~~107-1/APB~~Auditing ~~28-1~~Standards ~~requires disclosures about fair values of financial instruments in interim and annual financial statements~~No. ~~Prior to the issuance of FSP FAS 107-1/APB 28-1~~ 69, ~~disclosures about~~“The ~~fair~~Meaning ~~values~~ of ~~financial~~Present ~~instruments~~Fairly ~~were~~in ~~only~~Conformity ~~required to be disclosed annually. FSP FAS~~With ~~107-1/APB~~Generally ~~28-1~~Accepted ~~requires~~Accounting ~~disclosures about fair value of financial instruments in interim and annual financial statements~~Principles.” ~~Since~~The ~~FSP~~Company ~~FAS~~adopted ~~107-1/APB~~this ~~28-1~~standard is effective ~~for interim reporting periods ending after June~~January 151, 2009, ~~the~~and ~~Company~~it ~~will~~did ~~adopt~~not ~~FSP~~have ~~FAS~~a ~~107-1/APB~~significant ~~28-1~~impact inon the ~~second~~determination ~~quarter 2009.~~or ~~Since~~reporting ~~FSP FAS 107-1/APB 28-1 requires only additional disclosures~~ of ~~fair values of financial instruments in interim financial statements,~~ the ~~adoption will not affect the~~ Company’s consolidated financial ~~position or~~ results ~~of operations~~.

~~NOTE~~In December 2007, the FASB issued SFAS 160 “Non-controlling Interests in Consolidated Financial Statements” (“SFAS160”), which amends Accounting Research Bulletin (“ARB”) 51, “Consolidated Financial Statements” (“ARB 51”). This statement was adopted effective January 1, 2009. FAS160 provides guidance for the accounting, reporting and disclosure of noncontrolling interests and requires, among other things, that non-controlling interests be recorded as equity in the consolidated financial statements. The adoption of this standard resulted in the reclassification of $2,688,758 of Minority Interests (now referred to as non-controlling interests) to a separate component of Stockholders’ Equity on the Consolidated Balance Sheet. ~~DEFERRED~~Additionally, ~~IMPLEMENTATION~~net ~~COSTS~~income attributable to non-controlling interests is now shown separately from parent net income in the Consolidated Statement of Income. Prior periods have been restated to reflect the presentation and disclosure requirements of SFAS 160.

~~Deferred~~EITF ~~implementation~~08-6, ~~costs~~which aswas ofeffective ~~March~~January 311, 2009, ~~totaled~~clarifies ~~$2,293,511~~the ~~and~~accounting ~~$2,293,464 as of December 31, 2008, and represented equipment purchased~~ for ~~customers, payroll and payroll related expenses for customer contracts which have not met~~ certain ~~milestones~~ transactions and ~~customer~~impairment ~~acceptance~~considerations ~~or “go-live”~~involving ~~dates.~~equity ~~Implementation~~method ~~costs~~investments ~~are deferred~~ and ~~recognized~~is ~~ratably~~applied ~~over the initial licensing term or upon reaching certain milestones, acceptance criteria or “go-live” dates, depending~~ on ~~the~~a ~~applicable revenue stream. Deferred implementation costs are stated at the lower~~prospective ofbasis ~~cost~~to orfuture ~~market~~transactions.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS161). SFAS 161 requires entities that use derivative instruments to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives. SFAS 161 also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the provisions of SFAS 133 have been applied, and the impact that hedges have on an entity’s financial position, financial performance, and cash flows. The Company does not currently hold derivative instruments and was not impacted by the adoption of SFAS 161.

~~NOTE~~CONSULIER 3ENGINEERING, INC. ~~INVESTMENTS~~AND —SUBSIDIARIES NOTES ~~PARTNERSHIP~~TO ~~AND~~THE ~~LIMITED~~UNAUDITED ~~LIABILITY~~CONDENSED ~~COMPANY~~CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Adopted Accounting Pronouncements (Continued)

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4), and FSP FASB 107-1 and Accounting Principles Board (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP 107-1). These two staff positions relate to fair value measurements and related disclosures. The FASB also issued a third FSP relating to the accounting for impaired debt securities titled FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP 115-2). These standards are effective for interim and annual periods ending after June 15, 2009. The company has determined that FSP 157-4 and FSP 115-2 do not currently apply to its activities and had adopted the disclosure requirements of FSP 107-1.

In May 2009, the FASB issued Statement No. 165, “Subsequent Events” (“SFAS 165”), which establishes general standards of accounting for, and requires disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company adopted the provisions of SFAS 165 for the quarter ended June 30, 2009. The adoption of these provisions did not have a material effect on the Company’s consolidated financial statements. The Company evaluated subsequent events through August 14, 2009, the date this quarterly report was filed with the Securities and Exchange Commission.

Recently Issued Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, as amendment to SFAS No. 140 (SFAS166). SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010 and is evaluating the impact it will have on the consolidated results of the Company.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Accounting Pronouncements (Continued)

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt SFAS 167 in fiscal 2010 and is evaluating the impact it will have on the consolidated results of the Company.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (SFAS 168). SFAS 168 replaces FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes the FASB Accounting Standards Codification™ (the Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). SFAS 168 is effective for interim and annual periods ending after September 15, 2009. The Company will begin to use the new Codification when referring to GAAP in its quarterly report of Form 10Q for the quarter ending September 30, 2009. This will not have an impact on the consolidated results of the Company.

NOTE 2. DEFERRED IMPLEMENTATION COSTS

Deferred implementation costs as of June 30, 2009, totaled $2,447,332 and $2,293,464 as of December 31, 2008, and represented equipment purchased for customers, payroll and payroll related expenses for customer contracts which have not met certain milestones and customer acceptance or “go-live” dates. Implementation costs are deferred and recognized ratably over the initial licensing term or upon reaching certain milestones, acceptance criteria or “go-live” dates, depending on the applicable revenue stream. Deferred implementation costs are stated at the lower of cost or market.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 3. INVESTMENTS – PARTNERSHIP AND LIMITED LIABILITY COMPANY

The Company’s limited partnership and limited liability company interests consist of its investments in AVM and BioSafe, respectively.

AVM, L.P.

Consulier owned an approximately 6.3% ~~and 7.5%~~ limited partnership interest in AVM as of ~~March~~June 3130, 2009 and 2008, respectively. Based on capital and earnings distributions provided in the ~~partnership~~ partnership agreement, Consulier was allocated approximately 3.768% and 54.686% of AVM’s earnings during the ~~three~~ six months ended ~~March~~June 3130, 2009 and 2008, respectively. Under the partnership agreement, Consulier may withdraw from AVM upon 90 days’ written notice.

The following is a summary of the results of operations (unaudited) of AVM and the income allocated to the Company:

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	(In Thousands)				(In Thousands)
	(Unaudited)				(Unaudited)
	2009		2008		2009		2008
Revenues	$	2713,~~347~~505	$	4328,~~413~~945	$	35,912	$	62,153
Cost & Expenses	$	148,~~967~~309	$	2213,~~727~~082	$	18,335	$	25,603
Net Income	$	125,~~380~~196	$	2015,~~686~~863	$	17,577	$	36,550
Consulier’s Share of Earnings	$	~~463~~184	$	~~1,166~~732	$	646	$	1,898

The carrying value of the Company’s investment in AVM, at ~~March~~June 3130, 2009, and December 31, 2008, was $1,552,893 and $1,582,260, respectively.

1618

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

BIOSAFE SYSTEMS, LLC

Consulier owned a 40% interest in BioSafe Systems as of ~~March~~June 3130, 2009 and 2008. The following is a a summary of the results of operations of BioSafe and the income allocated to Consulier:

	Three Months Ended					Six Months Ended
	March 31,
	June 30,					June 30,
	(In Thousands)					(In Thousands)
	(Unaudited)					(Unaudited)
	2009		2008			2009		2008
Revenues	$	12,~~419~~477	$	12,~~786~~042		$	3,896	$	3,828
Cost & Expenses	$	1,~~351~~762	$	1,~~896~~625		$	3,111	$	3,521
Net Income	$	68715	$	~~(110~~417	)	$	785	$	307
Consulier’s Share of Earnings	$	26287	$	~~(44~~167	)	$	313	$	123

The carrying value of Consulier’s investment in BioSafe at ~~March~~June 3130, 2009 was $1,~~073~~248,~~039~~247 and $1,046,757 at December 31, 2008.

NOTE 4. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net income (loss) available to stockholders by the weighted average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of shares issuable upon the exercise of stock awards (calculated using the treasury stock method) warrants, convertible debt and convertible preferred stock during the period they were outstanding.

1719

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~MARCH~~JUNE 3130, 2009

NOTE 4. EARNINGS PER SHARE (CONTINUED)

Basic and diluted earnings per share for the three and six months ended ~~March~~June 3130, 2009 were calculated as follows:

	Three Months Ended						Six Months Ended
	March 31,
	June 30,						June 30,
	2009			2008			2009		2008
BASIC & DILUTED EARNINGS PER SHARE COMPUTATION:
BASIC & DILUTED
NUMERATOR:
EARNINGS PER SHARE
Net Loss attributed to Consulier Engineering, Inc.	$	(153,297	)	$	(12,324	)
COMPUTATION:
DENOMINATOR:
NUMERATOR:
Common Shares- Weighted Average Number of common share outstanding		5,294,748			5,320,823
Net Income (Loss) attributed to Consulier Engineering, Inc.	$	223,497		$	(249,811	)	$	70,200	$	(262,135	)
Earnings(Loss) per share weighted average shares outstanding	$	(0.03	)	$	0.00
DENOMINATOR:
Common Shares- Weighted Average Number of common shares outstanding		5,294,748			5,300,018			5,294,748		5,310,421
Earnings(Loss) per share	$	0.04		$	(0.05	)	$	0.01	$	(0.05	)

As of ~~March~~June 3130, 2009 and 2008, the Company did not have any dilutive outstanding common stock instruments to be included in its diluted earnings per share computation.

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009


NOTE 5.		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: distribution of household and tool products, ownership of limited liability entities, medical software activities, and corporate. 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 a limited partnership and a limited liability company (which are together called “Limited Liability Companies” in the following tables). The corporate segment is engaged in management of the business and finance activities.

18Segment information as of and for the three and six months ended June 30, 2009 and 2008 are as follows:


				Three Months Ended June 30, 2009
				Income (loss) Derived						Medical
	Distribution			from Ownership of			Corporate			Software
	Activities			Investments			Activities			Activites			Total
Revenue (b)	$	7,601		$	—		$	—		$	915,881		$	923,482
Operating Income (loss)		(28,836	)		—			(149,097	)		(1,225,591	)		(1,403,524	)
Other Income (loss)(a)		—			470,625			29,798			—			500,423
Noncontrolling Interest		—			—			—			1,208,032			1,208,032
Income Tax Benefit (Expense)		12,643			(190,779	)		52,966			43,736			(81,434	)
Net Income (loss)(a)		(16,193	)		279,846			(66,333	)		26,171			223,497
Total Assets	$	38,997		$	2,801,140		$	2,315,440		$	3,792,098		$	8,947,675

				Three Months Ended June 30, 2008
				Income (loss) Derived						Medical
	Distribution			from Ownership of			Corporate			Software
	Activities			Investments			Activities			Activites			Total
Revenue (b)	$	5,802		$	—		$	—		$	506,175		$	511,977
Operating Income (loss)		(7,058	)		—			(103,612	)		(2,233,218	)		(2,343,888	)
Other Income (loss)(a)		—			898,945			53,931			(56,758	)		896,118
Noncontrolling Interest		—			—			—			1,087,957			1,087,957
Income Tax Benefit (Expense)		2,717			(346,094	)		19,127			434,252			110,002
Net Income (loss)(a)		(4,341	)		552,851			30,554			(767,767	)		(249,811	)
Total Assets	$	47,091		$	2,769,803		$	2,480,776		$	3,696,163		$	8,993,833

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2009

Segment information as of and for the three months ended March 31, 2009 and 2008 are as follows:

	Three Months Ended March 31, 2009
				Income (loss) Derived						Medical
	Distribution			from Ownership of			Corporate			Software
	Activities			Investments			Activities			Activites			Total
Revenue (b)	$	2,278		$	—		$	—		$	1,132,859		$	1,135,137
Operating Income (loss)		(26,425	)		—			(148,474	)		(636,317	)		(811,216	)
Other Income (loss)(a)		—			488,793			17,290			—			506,083
Noncontrolling Interest		—			—			—			60,839			60,839
Income Tax Benefit		—			—			—			—			0
(Expense)		8,945			(165,673	)		44,603			203,122			90,997
Net Income (loss)(a)		(17,480	)		323,120			(86,581	)		(372,356	)		(153,297	)
Total Assets	$	36,241		$	2,625,932		$	2,289,116		$	3,755,051		$	8,706,340

	Three Months Ended March 31, 2008
				Income (loss) Derived						Medical
	Distribution			from Ownership of			Corporate			Software
	Activities			Investments			Activities			Activites			Total
Revenue (b)	$	3,717		$	—		$	—		$	885,155		$	888,872
Operating Income (loss)		(33,706	)		—			(204,274	)		(1,218,031	)		(1,456,011	)
Other Income (loss)(a)		—			1,122,236			64,491			(85,187	)		1,101,540
Noncontrolling Interest		—			—			—			313,984			313,984
Income Tax Benefit														—
(Expense)		11,096			(401,756	)		51,720			367,103			28,163
Net Income (loss)(a)		(22,610	)		720,480			(88,063	)		(622,131	)		(12,324	)
Total Assets	$	50,272		$	2,902,441		$	2,602,286		$	4,245,460		$	9,800,459


(a)		All interest expense incurred by the Company was allocated to the Corporate Activities Segment.

(b)		There was no intersegment revenue during the period.

1921

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 5. SEGMENT INFORMATION (CONTINUED)


				Six Months Ended June 30, 2009
				Income (loss) Derived						Medical
	Distribution			from Ownership of			Corporate			Software
	Activities			Investments			Activities			Activites			Total
Revenue (b)	$	9,879		$	—		$	—		$	2,048,740		$	2,058,619
Operating Income (loss)		(55,261	)		—			(297,571	)		(1,861,908	)		(2,214,740	)
Other Income (loss)(a)		—			959,418			47,088			—			1,006,506
Noncontrolling Interest		—			—			—			1,268,871			1,268,871
Income Tax Benefit (Expense)		21,588			(356,452	)		97,569			246,858			9,563
Net Income (loss)(a)		(33,673	)		602,966			(152,914	)		(346,179	)		70,200
Total Assets	$	38,997		$	2,801,140		$	2,315,440		$	3,792,098		$	8,947,675


				Six Months Ended June 30, 2008
				Income (loss) Derived						Medical
	Distribution			from Ownership of			Corporate			Software
	Activities			Investments			Activities			Activites			Total
Revenue (b)	$	9,519		$	—		$	—		$	1,391,330		$	1,400,849
Operating Income (loss)		(6,749	)		—			(298,181	)		(3,494,969	)		(3,799,899	)
Other Income (loss)(a)		—			2,021,181			78,783			(102,306	)		1,997,658
Noncontrolling Interest		—			—			—			1,401,941			1,401,941
Income Tax Benefit (Expense)		2,598			(778,551	)		84,468			829,254			138,165
Net Income (loss)(a)		(4,151	)		1,243,026			(134,930	)		(1,366,080	)		(262,135	)
Total Assets	$	47,091		$	2,769,803		$	2,480,776		$	3,696,163		$	8,993,833

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009


NOTE 6.		INCOME TAXES

Provisions (benefit) for federal and state income tax in the interim condensed consolidated statements of operations consist of the following:

	For the Three Months						For the Six Months
	Ended March 31,
	Ended June 30,						Ended June 30,
	2009			2008			2009			2008
Current:
Federal	$	(12,~~956~~955	)	$	—		$	(25,911	)	$	—
State	$	—		$	—		$	—		$	—
	$	(12,~~956~~955	)	$	—		$	(25,911	)	$	—
Deferred:
Federal	$	~~(64~~82,~~741~~488	)	$	(2599,~~477~~973	)	$	17,747		$	(124,869	)
State	$	~~(13~~11,~~300~~901	)	$	(210,~~686~~029	)	$	(1,399	)	$	(13,296	)
	$	~~(78~~94,~~041~~389	)	$	(28110,~~163~~002	)	$	16,348		$	(138,165	)
Total Income Tax (Benefit)	$	(90,997	)	$	(28,163	)
Total Income Tax (Benefit) Expense	$	81,434		$	(110,002	)	$	(9,563	)	$	(138,165	)

Applicable income taxes (benefit) expense for financial reporting purposes ~~differ~~differs from the ~~amount~~ amount computed by applying the statutory federal income tax rate as follows:

	For Three Months						For Six Months
	Ended March 31,
	Ended June 30,						Ended June 30,
	2009			2008			2009			2008
Federal Tax Expense (Benefit) at statutory Rate	$	(103,745	)	$	(120,520	)
Federal tax expense (benefit) at statutory rate	$	93,423		$	(492,242	)	$	(10,322	)	$	(612,762	)
State Income Tax Expense (Benefit) net of Federal Tax effect	$	(8,778	)	$	(12,867	)
State income tax expense (benefit) net of federal tax effect	$	7,855		$	(52,554	)	$	(923	)	$	(65,421	)
Losses allocated to noncontrolling interest of ST, LLC	$	20,685		$	103,072
Losses allocated to minority shareholder of St. LLC	$	(20,685	)	$	424,478		$	—		$	527,550
Meals and Entertainment	$	841		$	2,152
Adjustment of net operating loss carryovers	$	—		$	1,742		$	—		$	3,894
Income Tax (Benefit)	$	(90,997	)	$	(28,163	)
Other	$	841		$	8,574		$	1,682		$	8,574
Income Tax (Benefit) Expense	$	81,434		$	(110,002	)	$	(9,563	)	$	(138,165	)

As of ~~March~~June 3130, 2009, the Company had Federal and ~~state~~State tax loss carry-forwards totaling approximately $0 and $54,~~200~~928,000, respectively, available to reduce future years’ income through 2023.

2023

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2009

NOTE 6. INCOME TAXES (CONTINUED)

The approximate tax effects of temporary differences that give rise to deferred tax assets (liabilities) as of ~~March~~June 3130, 2009 ~~and December 31~~, ~~2008,~~ are as follows:

	March 31,		December 31,
	June 30th
	2009		~~2008~~
Depreciation and Amortization	$	~~339~~368,~~567~~163	$	~~310,974~~
Tax loss carry forward		~~328~~199,~~999~~365		~~185,419~~
Accrued Interest		~~270~~277,~~483~~132		~~364,615~~
Total Net Deferred Tax Asset	$	~~939~~844,~~049~~660	$	~~861,008~~

Deferred tax assets and liabilities are reflected on the balance sheet as of ~~March~~June 3130, 2009 ~~and December 31~~, ~~2008,~~ as follows:

	March 31,		December 31,
	June 30,
	2009		~~2008~~
Net Short-Term Deferred Tax Asset	$	~~270~~277,~~483~~132	$	~~364,615~~
Net Long-Term Deferred Tax Asset		~~668~~567,~~566~~528		~~496,393~~
Net Deferred Tax Assets	$	~~939~~844,~~049~~660	$	~~861,008~~

NOTE 7.: COMMITMENTS AND CONTINGENCIES

From time to time, the Company may be involved in lawsuits and claims in the ordinary course of business. Currently, neither the Company nor any of its subsidiaries are involved in any lawsuits or claims.

NOTE 8. RELATED PARTY TRANSACTIONS

NOTE PAYABLE —– RELATED PARTY

ST, LLC, ~~has~~had unsecured promissory notes to the majority stockholder totaling $~~718~~736,~~796~~766 and $968,948 as of ~~March 31~~June 30, 2009 and December 31, 2008, respectively, the proceeds of which have been used to meet operating requirements. These promissory notes accrue interest at 10% per annum, compounding monthly. Interest only is payable annually on the anniversary date of each of the promissory notes. The promissory notes and any accrued interest are due on demand any time after 10 years from the applicable date of the note. Accordingly, the total unpaid principal balance is included in long-term liabilities on the accompanying consolidated balance sheet. The Company may not prepay the principal balance without prior consent of the majority stockholder.

2124

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~MARCH~~JUNE 3130, 2009

NOTE PAYABLE —– RELATED PARTY (CONTINUED)

Accrued interest on these notes totaled $927,~~815~~736 and $53,407 and is included in ~~note payable~~ related party note payable on the accompanying consolidated balance sheets as of ~~March~~June 3130, 2009 and December 31, ~~2008,~~ ~~respectively. Interest on the note totaled $19,848 and $858,783 for the period ending March 31, 2009 and~~ 2008, respectively.

OTHER RELATED PARTY TRANSACTIONS

PCTS’s president is also the majority owner of a company that provides materials related to the Company’s passive tracking technologies. The Company paid this vendor approximately $1432,000 for the three months ended ~~March~~June 3130, 2009, for these materials. Amounts due this related party vendor totaled $20 of June 30,~~950~~ 2009. ~~These~~This ~~amounts~~amount ~~are~~is included in accounts payable and accrued expenses on ~~the~~ the accompanying condensed consolidated balance sheets.

ACCOUNTS RECEIVABLE —– RELATED PARTY

Included in accounts receivable on the condensed consolidated balance sheets at ~~March~~June 3130, 2009, is $~~154~~119,~~197~~170 due from AVM, L.P., and $111,456 from BioSafe, LLC.

2225

~~CONULIER~~CONSULIER ENGINEERING, INC. AND SUBSIDIARIES


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Gross revenue, which is predominantly software licensing fees, increased approximately 2880% in the quarter ended ~~March~~June 3130, 2009, compared to the quarter ended ~~March~~June 3130, 2008, due to the completion of of implementation projects at certain hospitals.

The operating loss for the ~~three~~six months ended ~~March~~June 3130, 2009, was approximately $~~811~~2,215,000 compared to to an operating loss for the ~~three~~six months ended ~~March~~June 3130, 2008, of $13,~~456~~800,000. This reduction in operating loss of approximately $~~645~~1,585,000 was largely due to an increase in revenue from software licensing fees, and reduction in professional services ofand ~~that~~amortization in the medical software segment due to the completion in 2008 of major software revisions.

During the ~~quarter~~six months ended ~~March~~June 3130, 2009, other income decreased by approximately $~~600~~396,000, primarily driven by the Company’s interest in AVM, Ltd., whose income was approximately 6066% less than ~~for~~ the same period of 2008. The income from the Company’s interest in AVM Ltd., was income of ~~approximately~~ of $~~463~~646,~~000~~473 in the ~~first~~six ~~quarter~~months ofended June 30, 2009 compared to income of $1,~~166~~898,~~000~~392 ~~for~~during the ~~quarter~~comparable ~~ended~~period ~~December 31,~~in 2008.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash position decreased $44147,~~102~~251 in the ~~three~~six months ended ~~March~~June 3130, 2009, compared to an increase of $~~164~~63,~~419~~438 during the comparable period in 2008. Net cash flow used in operations for the ~~three~~six months ended ~~March~~June 3130, 2009, was approximately $~~169~~2.5 million,~~912,~~ compared with cash used in operations of approximately $~~1,536,000~~2.6 million for the ~~three~~six months ended ~~March~~June 3130, 2008. The primary reason for the approximate $1100,~~366,088~~000 difference is a decrease in operating costs and the recognition of deferred revenues associated with completed implementation contracts.

Net cash used by financing activities was approximately $~~331~~1,~~992~~112,000 for the ~~three~~six months ended ~~March 31~~June 30, 2009, compared to cash provided by financing activities of approximately $~~356~~573,000 for the ~~three months~~six months ended ~~March~~June 3130, 2008. Net cash provided by financing activities ~~in 2008~~ was primarily affected from an ~~investments~~investment from the ~~minority~~majority shareholder in the amount of approximately $~~375~~1,546,000. in 2009. During the period ending ~~March~~June 3130, 2009, approximately $~~472~~434,000 was used to reduce related party ~~debt and~~ ~~investments from minority shareholder was $140,000~~debt.

Net cash provided by investing activities relates primarily to the distribution from AVM ofand BioSafe of approximately $~~460~~1,~~992~~229,000 for the ~~three~~six months ended ~~March~~June 3130, 2009. This compares to net cash provided by investing activities for the ~~three~~six months ended ~~March~~June 3130, 2008, of approximately $12,~~345~~083,000. The distribution from AVM for the quarter ended ~~March~~June 3130, ~~2008~~2009, was approximately $1184,~~389,~~000.

2326

The ability of Consulier to continue to generate cash flow in excess of its normal operating requirements depends almost entirely on the performance of its limited partnership interest in AVM. Consulier cannot, with any degree of assurance, predict whether there will be a continuation of the net return from our interest in ~~AVM~~partnerships for the ~~three~~six months ended ~~March~~June 3130, 2009, nor whether we will continue to be able to obtain additional funding when necessary. However, Consulier does not expect that the rate of return will decline to the point that Consulier has negative cash flow.

Consulier is planning to continue to invest in ST, LLC~~, and estimates an additional investment of $2 million to $3 million during the next two years, at which time the goal is for ST, LLC to be at the break-even point for its operations~~. The Company anticipates that the cash which it will use to invest in ST, LLC will be available from the Company’s interest in AVM and BioSafe.

The Company does not trade derivative instruments. However, AVM enters into 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.

OUTLOOK

Based on AVM’s operations over the past five years, management expects continued return in 2009 on its interest in AVM; however, there is no guarantee that the return in the ~~first~~second quarter of 2009 will be maintained throughout fiscal 2009.

Consulier International, Inc., continues to develop new retail and distribution outlets locally, nationally and internationally. ~~However~~As a result, sales of that company’s primary product, Captain Cra-Z Hand and All Purpose Cleaner, have ~~decreased~~increased for the ~~three~~six months ended ~~March~~June 3130, 2009, by 394% ~~over~~ over the comparable 2008 period.

~~PCTS~~In ~~successfully~~the ~~completed~~second ~~three~~quarter, ~~implementations~~Patient ~~across~~Care ~~its~~Technology ~~high~~Systems ~~acuity~~(PCTS) signed ~~tracking~~a ~~and~~contract ~~documentation~~with Wake Forest ~~portfolio.~~University ~~These~~Baptist ~~included~~Medical ~~patient~~Center ~~and~~in ~~asset~~Winston-Salem, ~~tracking~~NC infor ~~the~~what ~~cardiovascular~~will ~~department~~be atthe ~~Providence~~world’s largest ~~St.~~real-time ~~Vincent~~location ~~Medical~~system ~~Center~~ (~~Portland, OR~~RTLS); implementation ~~patient~~in ~~and~~a ~~asset~~health ~~tracking~~care infacility. ~~the~~PCTS ~~emergency~~will ~~department~~track assets atin ~~Moses~~an ~~Taylor~~over ~~Hospital~~4.1 million ~~(Scranton,~~square ~~PA);~~foot ~~and~~campus. ~~emergency~~PCTS ~~department~~also ~~documentation~~signed ~~(EDIS) at~~an ~~Stafford~~asset tracking contract with the ~~Hospital~~13-hospital ~~Center~~system, inAurora ~~Virginia.~~Health ~~During~~Care ~~the~~in ~~quarter~~Milwaukee, ~~PCTS~~WI ~~also~~for ~~exhibited~~an atover ~~two~~1.65 million ~~national~~square ~~clinical~~foot ~~conferences.~~deployment ~~PCTS~~at ~~customer~~Aurora ~~implementations~~St. ~~were~~Luke’s ~~profiled~~Medical inCenter. ~~trade~~PCTS ~~publications~~successfully ~~and~~completed ~~the~~an ~~Company’s~~implementation of its emergency department ~~implementation~~automatic patient tracking system at ~~Albert~~Hoag ~~Einstein~~Memorial ~~Medical~~Hospital ~~Center~~Presbyterian in ~~was~~Newport ~~featured~~Beach, asCA. aDuring ~~patient flow~~the ~~case~~quarter, ~~study~~PCTS ~~best~~exhibited ~~practice~~and byspoke at eight conferences, including the ~~Agency~~internationally ~~for~~recognized ~~Healthcare~~HIMSS ~~Research~~annual ~~and~~conference ~~Quality~~where ~~(AHRQ),~~three acustomers ~~division~~delivered ofpresentations on the ~~U.S.~~return ~~Department~~on ofinvestment ~~Health~~benefits &their ~~Human~~departments ~~Services~~have achieved using PCTS workflow visibility solutions.

PCTS currently supports 2829 completed installations of its core product line of electronic tracking and documentation solutions with over 12 implementations in progress. Including its non-core solutions, PCTS supports a total customer base of 6669 implementations representing over 1.8 million annual patient encounters.

24 The Company’s income from its interest in BioSafe was $312,945 for the six months ended June 30, 2009, compared to income of $122,789 for the six months ended June 30, 2008.

~~The~~Total ~~Company’s~~revenue ~~income from its interest in BioSafe was $26,282~~ for the ~~three~~six months ended ~~March~~June 3130, ~~2009,~~ ~~compared to a loss of $43,813 for the three months ended March 31, 2008. Total revenue for the quarter ended March 31,~~ 2009, ~~decreased~~increased by 362% compared with the ~~quarter~~six months ended ~~March~~June 3130, 2008. The Company expects continued sales growth and continued success with cost containment.

The company net income increased by 189% for the quarter ended June 30, 2009 over the same period in the prior quarter due to the reduction in sales and administrative expenses. The Company is confident that its profitability will continue with maintaining the current sales volume and the cost containment success.


ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a smaller reporting company, as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, and is accordingly not required to provide the information required by this Item.

ITEM 4T4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, or the “Evaluation Date,” we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Office and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the “Exchange Act”). Because of its inherent limitations, our internal control over financial reporting may not prevent material errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The continued effectiveness of our internal control over financial reporting is subject to risks, including that the controls may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~March~~June 3130, 2009, the disclosure controls were effective in ensuring that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, ~~processes~~processed, summarized and reported.

Changes in Internal Control over Financial ~~Statements~~Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~three~~six months ended ~~March~~ June 3130, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2528

CONSULIER ENGINEERING, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION


ITEM 1.		LEGAL PROCEEDINGS

None.


ITEM 1A.		RISK FACTORS


ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In April 2007, the Company adopted a plan to repurchase up to 50,000 shares of its common stock on the open market at a price not to exceed $3.75 per share plus brokerage fees. In January 2008, the Company adopted a second plan to repurchase up to an additional 50,000 shares of its common stock on the open market at a price not to exceed $3.50 plus brokerage fees. Since April, 2007 through ~~March~~June 3130, 2009, the Company repurchased 91,437 shares of its common stock. There were no repurchases of stock during the quarter ended ~~March~~June 3130, 2009.


ITEM 3.		DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5.		OTHER INFORMATION

None.

2629


ITEM 6.		EXHIBITS

31.1 — Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

	31.1		– Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

	31.2		– Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

	32.1		– Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

	32.2		– Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

~~31.2 — Certification of Chief Financial Officer Pursuant to Section 302 of~~30 ~~Sarbanes-Oxley Act of 2002~~

32.1 — Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2 — Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CONSULIER ENGINEERING, INC. (Registrant)
	CONSULIER ENGINEERING, INC.
Date: May 18, 2009	By:	/s/ Alan R Simon
	(Registrant)
Date: August 18, 2009	By:	/s/ Alan R Simon
		Alan R. Simon, Esq.
		Secretary and Treasurer (Principal Financial and Accounting Officer)
Date: May 18, 2009	By:	/s/ Warren B. Mosler
Date: August 18, 2009	By:	/s/ Warren B. Mosler
		Warren B. Mosler
		Chairman of the Board, President & Chief Executive Officer (Principal Executive Officer)

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