FORM 10-QSB.-- QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Last amended by 34-32231, eff. 6/3/93)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended September 30, 1998
or
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act For the
transition period from to
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Commission file number 2-54020
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American Geological Enterprises, Inc.
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(Exact name of registrant as specified in its charter)
Utah 87-0273300
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
495 East 4500 South, Suite 102, Salt Lake City, UT 84107
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(Address of principal executive officers)
(801) 293-8101
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(Registrant's telephone number)
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(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
As of September 30, 1998, 1,260,997 shares of common stock were outstanding.
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Balance Sheets
<TABLE>
<CAPTION>
September 30,
1998 December 31,
Assets (unaudited) 1997
------ ---------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 926,540 935,431
Marketable securities held-for-sale 199,518 192,365
Accounts receivable 22,390 22,025
Interest and dividends receivable 2,515 1,276
Prepaid lease costs 3,810 2,649
---------------- --------------
Total current assets 1,154,773 1,153,746
Investment in geothermal power unit, at cost, less accumulated
amortization of $157,443 in 1998 and $134,951 in 1997 669,756 692,248
Marketable securities held-to-maturity 71,003 71,106
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$ 1,895,532 1,917,100
================ ==============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 9,967 7,751
Income taxes payable 921 18,374
Accrued liabilities 2,913 27,286
Deferred income taxes 13,335 11,009
---------------- --------------
Total current liabilities 27,136 64,420
Deferred income taxes 89,194 95,803
Deferred revenue 948,047 979,885
Minority interest 11,152 11,152
Stockholders' equity:
Common stock, $.01 par value; authorized 2,500,000 shares; issued and
outstanding 1,260,997 shares 12,610 12,610
Additional paid-in capital 557,211 557,211
Unrealized gain on marketable securities, net of tax 22,416 18,506
Retained earnings 227,766 117,513
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820,003 765,840
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$ 1,895,532 1,917,100
================ ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
--------------------------- ---------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues - gross revenues from geothermal
power unit 42,757 42,008 128,124 125,132
------------ ------------ ------------ ------------
Expenses:
Operating expenses of geothermal
power unit 11,746 13,544 38,020 44,952
Amortization of geothermal power unit 7,497 7,497 22,492 22,492
Lease costs 1,181 1,161 3,484 3,483
General and administrative 2,613 11,778 26,684 21,002
------------ ------------ ------------ ------------
23,037 33,980 90,680 91,929
------------ ------------ ------------ ------------
Income from operations 19,720 8,028 37,444 33,203
Other income and expenses:
Interest income 8,194 10,252 24,487 29,488
Dividend income 1,889 1,747 4,482 5,404
Royalty income 112 259 330 1,025
------------ ------------ ------------ ------------
10,195 12,258 29,299 35,917
------------ ------------ ------------ ------------
Income before income taxes 29,915 20,286 66,743 69,120
Income tax expense 8,742 7,100 16,490 19,171
------------ ------------ ------------ ------------
Net income $ 21,173 13,186 50,253 49,949
============ ============ ============ ============
Net income per share $ .02 .01 .04 .04
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
------------------------------------
Sept. 30, Sept. 30,
1998 1997
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 50,253 49,949
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of geothermal power unit 22,492 22,492
Accretion on marketable securities held to maturity 103 100
Change in operating assets and liabilities:
Accounts receivable (365) 2,492
Interest and dividends receivable (1,239) (447)
Prepaid lease costs (1,161) (1,161)
Accounts payable 2,216 2,609
Accrued liabilities (24,373) 4,665
Income taxes payable (17,453) 10,487
Deferred income taxes (6,953) (5,110)
Deferred revenue (31,838) (31,837)
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Net cash provided by/(used in) operating activities (8,318) 54,239
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Cash flows from investing activities:
Purchase of marketable securities (573) (724)
Redemption of marketable securities - 25,000
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Net cash provided by/(used in) investing activities (573) 24,276
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Increase (decrease) in cash and cash equivalents (8,891) 78,515
Cash and cash equivalents at beginning of period 935,431 833,654
----------------- ----------------
Cash and cash equivalents at end of period $ 926,540 912,169
================= ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Notes and Disclosures to Form 10-QSB
1. Presentation
------------
The financial statements as of September 30, 1998, and for the nine
months then ended were prepared by American Geological Enterprises, Inc.
(AGE) without audit pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). Certain information and
footnote disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, all necessary adjustments to the financial
statements have been made to present fairly the financial position and
results of operations and cash flows. The results of operations for the
periods presented are not necessarily indicative of the results for the
respective complete years. AGE has previously filed with the SEC a Form
10-KSB, which included audited financial statements for the two years
ending December 31, 1997 and 1996. It is suggested that the financial
statements contained in this filing be read in conjunction with the
statements and notes thereto contained in AGE's Form 10-KSB filing.
2. Net Income Per Share
--------------------
Net income per share is computed by dividing net income by the weighted
average number of shares outstanding during each period.
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
AGE is engaged in the acquisition of geothermal and oil and gas leases. Revenue
consists of royalties and interest. AGE's financial condition and results of
operations fluctuate from year to year, depending upon the production from
current leases, the availability of leases to be acquired, and the opportunity
to sell lease rights. AGE's ability to obtain future leases or to generate
revenues from the sale of lease rights is not determinable; hence, its financial
condition and operations may fluctuate widely in the future.
Financial Condition & Results of Operations
- -------------------------------------------
At September 30, 1998, AGE's financial condition is consistent with December 31,
1997. Income and expenses are consistent for both the three months ended and the
nine months ended September 30, 1998 and 1997 except for general and
administrative expenses. Although general and administrative expenses for the
three months ended September 30, 1998 and 1997 are significantly different, this
is due to the fact that these expenses, particularly professional fees, are not
incurred ratably during the year. However, general and administrative expenses
for the nine months ended September 30, 1998 and 1997 are comparable.
Liquidity
- ---------
AGE's liquidity at September 30, 1998, is considered adequate with $1,127,637 in
working capital. AGE's future commitments consist of lease payments on land
which lies within the participating area of the geothermal power unit.
Additionally, AGE is committed to furnish its share of steam from its investment
in the geothermal power unit to Utah Power & Light (UP&L) under a 30-year
agreement that commenced in 1991. There are no other commitments or anticipated
expenditures of a capital nature.
AGE's economic future will be dependent, in major part, upon the value of its
undeveloped interests in the geothermal power unit. The value of such
undeveloped interests will, in turn, be dependent upon, among other matters (a)
the then current price of energy; (b) governmental incentives to develop
renewable resources; (c) regulatory incentives; and (d) the load needs of UP&L.
Other
- -----
A tax rate of 34.6 percent was used for income tax calculations for 1998.
Current estimates support 34.6 percent as the effective tax rate for the 1998
year.
<PAGE>
Part II
Other Information
There is no information to be submitted under Part II, and no reports were
required to be filed under Form 8-K during the period.
S I G N A T U R E S
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.
AMERICAN GEOLOGICAL ENTERPRISES, INC.
(Registrant)
November 12, 1998 /s/ Dominic Welch
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Date DOMINIC WELCH, President/Treasurer
November 12, 1998 /s/ Peter W. G. Cayias
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Date PETER W.G. CAYIAS, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 926540
<SECURITIES> 270521
<RECEIVABLES> 22390
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1154773
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1895532
<CURRENT-LIABILITIES> 27136
<BONDS> 0
0
0
<COMMON> 12610
<OTHER-SE> 807393
<TOTAL-LIABILITY-AND-EQUITY> 1895532
<SALES> 0
<TOTAL-REVENUES> 128124
<CGS> 0
<TOTAL-COSTS> 90680
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 66743
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50253
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
