FORM 10-KSB.-- ANNUAL 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-KSB
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 For the fiscal year ended December 31, 1998
-------------------------------------------------
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
------------------- ---------------------
Commission file number 2-54020
--------------------------------------------------
American Geological Enterprises, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 87-0273300
- -------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
495 East 4500 South, #102 Salt Lake City, Utah 84107
- --------------------------------------------------------------------------------
(Address of principal executive officers)
Registrant's telephone number, including area code (801) 293-8101
--------------
Securities registered pursuant to Section 12(b) of the Act:
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of class)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is met contained in this form, and no disclosures will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
[X]
State issuer's revenues for its most recent fiscal year. $171,398
The market in which the common stock of the Registrant is traded is the
"over-the-counter" market. During the last year trading was limited and done
primarily on a negotiated basis.
<PAGE>
Table of Contents
Heading Page
- ------------ -----------
Part I
Item 1 Description of Business I-1
Item 2 Description of Property I-1
Item 3 Legal Proceedings I-2
Item 4 Submission of Matters to a Vote of Securities Holders I-2
Part II
Item 5 Market for Common Equity and Related Stockholder Matters II-1
Item 6 Management's Discussion and Analysis II-1
Item 7 Consolidated Financial Statements II-2
Item 8 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure II-2
Part III
Item 9 Directors, Executive Officers, Promoters,
and Control Persons; Compliance with
Section 16(a) of the Exchange Act III-1
Item 10 Executive Compensation III-2
Item 11 Security Ownership of Certain Beneficial
Owners and Management III-3
Item 12 Certain Relationships and Related Transactions III-3
Item 13 Exhibits and Reports on Form 8-K III-3
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Year ended December 31, 1998
Part I
Item 1. Description of Business
- ------- -----------------------
General: American Geological Enterprises, Inc. (AGE) is engaged in
activities designed to identify and acquire geothermal and oil and
gas leases.
Activities undertaken to identify such leases have consisted of
searches of pertinent geological literature, maps and aerial
photographs, construction of maps, and confirmatory fieldwork. In
connection with leasehold acquisitions, AGE's activities have
included examination of title documents, location and negotiation
with landowners, and preparation of leases.
These activities are performed by unsalaried officers and
directors of AGE. AGE proposes to continue these activities and to
intensify its promotional efforts with respect to possible joint
ventures at selected leasehold sites.
AGE holds a 5.49 percent working interest in the Roosevelt Hot
Springs geothermal power unit (Unit). On July 22, 1993, AGE agreed
to sell on a prepayment basis its steam from the Unit for a
30-year period to PacifiCorp, which has constructed the Blundell
power plant to utilize the steam. Certain leases have been
committed to the Unit, of which 9,257 acres are within the
participating area.
Competition: Competition for energy leases is intense, and many
large oil and gas companies, with financial and technical
resources greater than those of AGE, are now engaged, or have
indicated an intention to engage, in the acquisition of energy
leases.
Regulations: AGE is not currently engaged in energy exploration or
development. Should it later enter into such activities, it will
be subject to Federal, state, and local regulations with respect
to environmental matters.
Item 2. Description of Property
- ------- -----------------------
AGE held all mineral (including geothermal) rights in leases,
covering approximately 17,284 acres of land, that expired in 1991.
However, certain leases were assigned to subsequent parties and
AGE retained an overriding interest in the royalties from
productive land. As of December 31, 1998, approximately 450 acres
of land in Central Utah continued to be productive and AGE
continues to receive the related royalty payments which aggregated
$432 in 1998. AGE will continue to receive these overriding
interest royalty payments as long as the land remains productive.
I-1
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Item 2. Description of Property (continued)
- ------- -----------------------------------
AGE holds all mineral (including geothermal) rights in leases
covering 9,257 acres located in the valley on the west side of the
Mineral Mountains in Beaver and Millard counties in Utah. These
leases include land that has been made part of the Unit. The
original terms of these leases expired in 1991, but the leases are
automatically extended for 1-year periods as long as the lands
involved remain part of the active, producing Unit. The annual
commitment for lease payments on these leases amounts to $4,645,
plus a royalty equal to five percent of net operation and
maintenance revenues on one lease.
Item 3. Legal Proceedings
- ------- -----------------
None.
Item 4. Submission of Matters to a Vote of Securities Holders
- ------- -----------------------------------------------------
None.
I-2
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Year ended December 31, 1998
Part II
Item 5. Market For Common Equity and Related Stockholder Matters
- ------- --------------------------------------------------------
a) The market in which the common stock of the Registrant is
traded is the "over-the-counter" market. During the last three
years, there were no established "bid" or "asked" prices and
trading was done primarily on a negotiated basis.
b) The approximate number of holders of common stock of AGE at
December 31, 1998 is 708.
Item 6. Management's Discussion and Analysis
- ------- ------------------------------------
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.
Results of Operations - Years ended December 31, 1998 and 1997
--------------------------------------------------------------
Gross revenues from the Unit represent sales of steam production
and fluctuate based on the activity and production of the Unit.
Gross revenues for fiscal year 1998 are fairly consistent with the
previous year's revenues. Net income increased slightly to $82,219
in 1998 from $80,040 in 1997. Increases in power unit revenue and
dividend income and a decrease in operating and maintenance
expenses contributed to this increase, but were offset by a
decrease in interest income and an increase in general and
administrative expenses. All of these were considered normal
fluctuation in power unit, investment, and operating activity.
Royalty Income
--------------
AGE owns seven oil and gas leases, all of which have been assigned
to either Barrett Resources or Flying J Oil and Gas. Pursuant to
these assignments, AGE retained an overriding interest in
royalties from productive land; and for the year ended December
31, 1998, AGE received $432 in override interest royalty payments.
Liquidity
---------
AGE's liquidity at December 31, 1998, is considered adequate with
$1,148,112 in working capital. AGE believes that it has sufficient
resources to cover its cash needs during the fiscal year 1999.
II-1
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Item 6. Management's Discussion and Analysis (continued)
- ------- ------------------------------------------------
Commitments
-----------
AGE's future commitments consist of lease payments on land. There
are no other commitments or anticipated expenditures of a capital
nature, other than the commitment related to the agreement for the
sale of steam discussed above.
External Factors
----------------
AGE's economic future will be dependent, in major part, upon the
value of its undeveloped interests in the Unit. The value of such
undeveloped interests will, in turn, be dependent upon, among
other matters, (i) the current price of energy, (ii) governmental
incentives to develop renewable resources, (iii) regulatory
incentives, and (iv) the load needs of PacifiCorp.
Item 7. Consolidated Financial Statements
- ------- ---------------------------------
Index to Consolidated Financial Statements Page
------------------------------------------ ----
Independent Auditors' Report II-3
Consolidated Balance Sheets - December 31, 1998 and 1997 II-4
Consolidated Statements of Income -
Years ended December 31, 1998 and 1997 II-5
Consolidated Statements of Stockholders' Equity and
Comprehensive Income - Years ended
December 31, 1998 and 1997 II-6
Consolidated Statements of Cash Flows -
Years ended December 31, 1998 and 1997 II-7
Notes to Consolidated Financial Statements II-8
Item 8. Changes in and Disagreements with Accountants on Accounting and
- ------- ------------------------------------------------------------------
Financial Disclosure
--------------------
None.
II-2
<PAGE>
Independent Auditors' Report
The Board of Directors
American Geological Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of American
Geological Enterprises, Inc. and subsidiary (AGE) as of December 31, 1998 and
1997, and the related consolidated statements of income, stockholders' equity
and comprehensive income, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of AGE's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of AGE as of December
31, 1998 and 1997, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
KPMG LLP
Salt Lake City, Utah
February 12, 1999
II-3
<PAGE>
<TABLE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Consolidated Balance Sheets
December 31, 1998 and 1997
<CAPTION>
Assets 1998 1997
------ ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 945,212 935,431
Marketable securities (note 2) 209,049 192,365
Accounts receivable 19,874 22,025
Interest and dividends receivable 1,276 1,276
Prepaid lease costs 2,649 2,649
----------- -----------
Total current assets 1,178,060 1,153,746
Investment in geothermal power unit, at cost, less accumulated amortization of
$164,940 and $134,951 at December 31, 1998 and 1997, respectively 662,259 692,248
Marketable securities (note 2) 70,968 71,106
----------- -----------
Total assets $ 1,911,287 1,917,100
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 12,238 7,751
Income taxes payable 7,636 18,374
Accrued liabilities 416 27,286
Deferred income taxes (note 5) 9,658 11,009
----------- -----------
Total current liabilities 29,948 64,420
Deferred income taxes (note 5) 86,657 95,803
Deferred revenue (note 6) 937,435 979,885
Minority interest 11,460 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
Accumulated other comprehensive income 16,234 18,506
Retained earnings 259,732 177,513
----------- -----------
Total stockholders' equity 845,787 765,840
Commitments (note 4)
----------- -----------
Total liabilities and stockholders' equity $ 1,911,287 1,917,100
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
II-4
<PAGE>
<TABLE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Consolidated Statements of Income
Years ended December 31, 1998 and 1997
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Revenues - geothermal power unit (note 6) $ 171,398 167,013
---------- ----------
Expenses:
Operating and maintenance of geothermal power unit (note 6) 49,996 58,454
Amortization of geothermal power unit 29,989 29,989
General and administrative 33,400 26,574
Lease costs 4,645 4,645
---------- ----------
118,030 119,662
---------- ----------
Operating income 53,368 47,351
Other income:
Interest income 32,656 42,765
Dividend income 25,721 16,188
Royalties 432 1,312
Gain on redemption of marketable securities - 125
---------- ----------
58,809 60,390
---------- ----------
Income before income taxes 112,177 107,741
Income tax expense (note 5) 29,958 27,701
---------- ----------
Net income $ 82,219 80,040
========== ==========
Basic net income per share $ .07 .06
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
II-5
<PAGE>
<TABLE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Consolidated Statements of Stockholders' Equity and Comprehensive Income
Years ended December 31, 1998 and 1997
<CAPTION>
Accumu-
lated
Addi- other Total
Common stock tional Compre- compre- stock-
-------------------- paid- hensive hensive Retained holders'
Shares Amount in capital income income earnings equity
--------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1996 1,260,997 $ 12,610 557,211 - 9,383 97,473 676,677
Comprehensive income:
Net income - - - 80,040 - 80,040 80,040
Other comprehensive income, net of tax:
Realized and unrealized
gain on marketable - - - 9,021 - - -
securities
Reclassification for
realized gain recorded
in statement of income - - - (78) - - -
---------
Other comprehensive income,
net of tax expense of $5,427 - - - 9,123 9,123 - 9,123
---------
Comprehensive income $ 89,163
--------- --------- -------- ========= -------- --------- ---------
Balances, December 31, 1997 1,260,997 $ 12,610 557,211 18,506 177,513 765,840
Comprehensive income:
Net income - - - 82,219 - 82,219 82,219
Other comprehensive
income-unrealized loss on
marketable securities,
net of tax benefit of - - - (2,272) (2,272) - (2,272)
$1,352
---------
Comprehensive income $ 79,947
--------- --------- -------- ========= -------- --------- ---------
Balances, December 31, 1998 1,260,997 $ 12,610 557,211 16,234 259,732 845,787
========= ========= ======== ======== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
II-6
<PAGE>
<TABLE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Consolidated Statements of Cash Flows
Years ended December 31, 1998 and 1997
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 82,219 80,040
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of geothermal power unit 29,989 29,989
Amortization on investments 138 133
Gain on redemption of marketable securities - (125)
Changes in operating assets and liabilities:
Receivables 2,151 2,389
Accounts payable and accrued liabilities (22,383) 7,514
Income taxes payable (10,738) 16,285
Minority interest 308 1,066
Deferred income taxes (9,146) (8,466)
Deferred revenue (42,450) (42,450)
---------- ----------
Net cash provided by operating activities 30,088 86,375
---------- ----------
Cash flows from investing activities:
Redemption of marketable securities - 25,000
Acquisition of marketable securities (20,307) (9,598)
---------- ----------
Net cash provided by (used in) investing activities (20,307) 15,402
---------- ----------
Increase in cash and cash equivalents 9,781 101,777
Cash and cash equivalents, beginning of year 935,431 833,654
---------- ----------
Cash and cash equivalents, end of year $ 945,212 935,431
========== ==========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for income taxes $ 37,160 19,747
</TABLE>
See accompanying notes to consolidated financial statements.
II-7
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Description of Business
-----------------------
American Geological Enterprises, Inc. and subsidiary (AGE) are
engaged in activities designed to identify and acquire geothermal
and oil and gas leases in the Western United States. AGE's revenue
is primarily derived from royalty payments from these leases.
(b) Marketable Securities
---------------------
Marketable investment securities consist of corporate debt and
equity securities. AGE classifies its debt securities as
"held-to-maturity" and all other securities as "available-for-sale."
Available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at cost adjusted for the
accretion of premiums and discounts. Unrealized holding gains and
losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as
accumulated other comprehensive income in stockholders' equity until
realized.
A decline in the market value of any available-for-sale security
below cost that is deemed to be other than temporary results in a
reduction in carrying amount to fair value. The impairment is
charged to earnings and a new cost basis for the security is
established. Dividend and interest income are recognized when
earned.
(c) Investment in Geothermal Power Unit
-----------------------------------
AGE holds a 5.49 percent working interest in the Roosevelt Hot
Springs geothermal power unit (Unit). The investment in the Unit is
being amortized using the straight-line method over the term (30
years) of the steam sale agreement with PacifiCorp (note 6).
(d) Lease Costs
-----------
Annual lease payments are expensed over the period of the lease.
Direct costs of acquisition of new leases are capitalized and
amortized over the initial life of the lease.
(e) Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include all cash and investments with
original maturities to AGE of three months or less.
II-8
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Notes to Consolidated Financial Statements
(f) Net Income Per Share
--------------------
Basic net income per share is the amount of net income (loss) for
the period available to each share of common stock outstanding
during the reporting period. Diluted earnings per share, if
applicable, is the amount of net income (loss) for the period
available to each share of common stock outstanding during the
reporting period and to each share that would have been outstanding
assuming the issuance of common shares for all dilutive potential
common shares outstanding during the period. For fiscal years 1998
and 1997, only the basic earnings per share is applicable, as AGE
had no potentially dilutive common shares outstanding. Basic net
income per share computations are based upon 1,260,977 shares
outstanding for the years ended December 31, 1998 and 1997.
(g) Consolidation Policy
--------------------
AGE owns 83.8 percent interest in Overthrust Exploration Corporation
(Overthrust), a Nevada corporation that was incorporated to explore
for and develop oil and gas properties. Accordingly, Overthrust has
been included in the consolidated financial statements. All
directors of Overthrust are also directors of AGE. All intercompany
accounts have been eliminated in consolidation.
(h) Comprehensive Income
--------------------
Effective January 1, 1998, AGE adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
No. 130). This statement establishes rules for the reporting of
comprehensive income and its components. Comprehensive income
consists of net income and unrealized gains or losses on AGE's
available-for-sale securities and is presented in the consolidated
statement of stockholders' equity and comprehensive income. The
adoption of SFAS No. 130 had no impact on total stockholders'
equity. Prior year consolidated financial statements have been
reclassified to conform to the SFAS No. 130 requirements.
(i) Use of Estimates
----------------
Management of AGE has made estimates and assumptions relating to the
reporting of assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those
estimates.
(2) Marketable Securities
---------------------
Marketable investment securities at December 31, 1998 and 1997, consist
of:
1998 1997
------------ -------------
Available-for-sale, at fair value $ 209,049 192,365
Held-to-maturity, at amortized cost 70,968 71,106
------------ -------------
$ 280,017 263,471
============ =============
II-9
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Notes to Consolidated Financial Statements
(2) Marketable Securities (continued)
---------------------
The amortized cost, gross unrealized holding gains, and fair market value
for marketable securities by major security type at December 31, 1998 and
1997, were as follows:
<TABLE>
<CAPTION>
Gross
unrealized
Amortized holding
cost gains Fair value
------------ ------------- -------------
<S> <C> <C> <C>
Year ended December 31, 1998:
Available-for-sale - equity securities $ 183,157 25,892 209,049
============ ============= =============
Held-to-maturity - corporate debt securities $ 70,968 7,786 78,754
============ ============= =============
Year ended December 31, 1997:
Available-for-sale - equity securities $ 162,850 29,515 192,365
============ ============ ============
Held-to-maturity - corporate debt securities $ 71,106 5,203 76,309
============ ============ ============
Maturities of debt securities classified as held-to-maturity were as
follows at December 31, 1998:
Amortized Fair
cost value
------------ ------------
Due within five years $ 50,315 52,964
Due after ten years 20,653 25,790
------------ ------------
$ 70,968 78,754
============ ============
</TABLE>
(3) Fair Value of Financial Instruments
-----------------------------------
The carrying value for certain short-term financial instruments that
mature frequently approximates fair value. Such financial instruments
include: cash and cash equivalents, accounts receivable, and accounts
payable. The fair values of debt securities and equity investments are
based on quoted market prices at the reporting date for those or similar
investments (see note 2).
(4) Land Leases
-----------
AGE held all mineral (including geothermal) rights in leases, covering
approximately 17,284 acres of land, that expired in 1991. However,
certain leases were assigned to subsequent parties and AGE retained an
overriding interest in the royalties from productive land. As of December
31, 1998, approximately 450 acres of land in Central Utah continued to be
productive and AGE continued to receive the related royalty payments
which aggregated $432 in 1998 and $1,312 in 1997. AGE will continue to
receive these overriding interest royalty payments as long as the land
remains productive.
II-10
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Notes to Consolidated Financial Statements
(4) Land Leases (continued)
-----------
AGE also holds all mineral (including geothermal) rights in leases
covering 9,257 acres located in the valley on the west side of the
Mineral Mountains in Beaver and Millard counties in Utah. These leases
include land that has been made part of the Roosevelt Hot Springs
geothermal power unit (the Unit). The original terms of these leases
expired in 1991, but the leases are automatically extended for one-year
periods as long as the lands involved remain part of the active,
producing Unit. The annual commitment for lease payments on these leases
amounts to $4,645, plus a royalty equal to five percent of net operation
and maintenance revenues on one lease. AGE may terminate its leases by
not making the annual lease or royalty payments.
(5) Income Taxes
------------
Income tax expense (benefit) attributable to income from operations
consists of:
<TABLE>
<CAPTION>
Current Deferred Total
---------- ----------- ----------
<S> <C> <C> <C>
Year ended December 31, 1998:
U.S. Federal $ 33,653 (9,090) 24,563
State and local 6,802 (1,407) 5,395
---------- ----------- ----------
$ 40,455 (10,497) 29,958
========== =========== ==========
Year ended December 31, 1997:
U.S. Federal $ 29,583 (2,759) 26,824
State and local 1,283 (406) 877
---------- ----------- ----------
$ 30,866 (3,165) 27,701
========== =========== ==========
Income tax expense attributable to income from operations for the years
ended December 31, 1998 and 1997, differed from the amounts computed by
applying the U.S. federal income tax rate of 34 percent to pretax income
from continuing operations as a result of the following:
1998 1997
---------- ----------
Computed "expected" tax expense $ 38,120 36,630
Increase (reduction) in income taxes resulting from:
State and local income taxes, net of federal
income tax benefit 3,561 580
Effect of surtax exemption and other, net (11,723) (9,509)
---------- ----------
$ 29,958 27,701
========== ==========
</TABLE>
II-11
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Notes to Consolidated Financial Statements
(5) Income Taxes (continued)
------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax liabilities at December 31, 1998 and 1997,
are presented below:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Valuation of marketable securities $ 9,658 11,009
Investment in geothermal power unit, principally due
to amortization 86,657 95,803
--------- ---------
Total deferred tax liabilities $ 96,315 106,812
========= =========
</TABLE>
(6) Geothermal Power Unit and Concentration of Credit
-------------------------------------------------
AGE entered into an agreement on July 22, 1993, to sell its share of
steam from the Unit for a 30-year period on a prepayment basis commencing
January 22, 1991 to PacifiCorp, which has constructed the Blundell power
plant to utilize the steam. The advance received is being recognized as
revenue over the remaining term of the agreement. Revenue of
approximately $42,000 was amortized and recognized in each of 1998 and
1997.
AGE is required to pay its proportionate share of operating and
maintenance expenses to the operator of the Unit. AGE paid operating and
maintenance expenses of approximately $50,000 and $58,000 in 1998 and
1997, respectively.
Additionally, PacifiCorp pays AGE for operating and maintenance services
and a reimbursement of royalties for one lease AGE holds that is included
in the Unit. PacifiCorp paid AGE approximately $129,000 and $125,000 in
1998 and 1997, respectively, for operating and maintenance services that
is reported as revenue from the Unit. Royalties due are equal to five
percent of AGE's net operating and maintenance revenue. PacifiCorp paid
AGE approximately $3,900 and $3,300 in 1998 and 1997, respectively, for
these royalties which AGE, in turn, paid to its lessors.
(7) Officer Remuneration
--------------------
There was no compensation paid to officers and directors during the
fiscal years ended December 31, 1998 or 1997.
The stockholders adopted an Employee Qualified Stock Option Plan (Plan)
under which a maximum of 25,000 shares of AGE's $.01 par value common
stock are reserved for issuance to key employees of AGE at market value
on the date of grant. Options expire five years from the date of grant.
No options are outstanding under the Plan.
II-12
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Year ended December 31, 1998
Part III
Item 9. Directors, Executive Officers, Promoters, and Control Persons;
- ------- Compliance with Section 16(a) of the Exchange Act
------------------------------------------------------------------
The following directors and executive officers will serve until
the next annual stockholders' meeting and until their successors
are duly qualified and elected.
Name Office
---- ------
Milton Fisher Chairman of the Board and Director
Dominic Welch President, Treasurer and Director
M. Walker Wallace Vice President and Director
Peter W. G. Cayias Secretary and Director
Katie L. Dixon Director
Mr. Fisher, 78, President of A. D. Gilhart & Co., Inc. (investment
bankers since 1959), has been a Director of AGE since its
organization in 1969 and now serves as Chairman of the Board. He
holds a doctor of law, is a member of the Bar of the State of New
York, and presently serves as a director of several public
companies. He has written and lectured in the field of business
finance and interpersonal relationships.
Mr. Welch, 66, is a certified public accountant and is the
President and a Director of Kearns-Tribune Corporation, where he
has been employed for over 20 years. He became a Director and
Treasurer of AGE in 1970 and President in 1998. Mr. Welch holds a
bachelor of arts in accounting from Utah State University.
Mr. Wallace, 75, has been an officer and director of AGE and has
devoted a portion of his time to its affairs since 1969. He is
also, and has been for over 35 years, a consultant in the
development and management of real property investments and a
private investor. Mr. Wallace presently serves as a Director and a
member of the executive committee of First Interstate Bank of
Utah, as a Director and President of Arizona Ranch & Metals
Company, and as Chairman of Wallace Associates, Inc., a real
estate investment and management firm. He holds a bachelor of arts
from Stanford University and a master's degree in city planning
from the Massachusetts Institute of Technology.
III-1
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Item 9. Directors, Executive Officers, Promoters, and Control Persons,
- ------- ------------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act (continued)
-------------------------------------------------
Mr. Cayias, 63, has been a licensed insurance agent since 1960. He
has been an Officer and Director of AGE since 1969 and is also an
Officer and Director of several other corporations engaged in the
real estate business and natural resource investment business. Mr.
Cayias holds a bachelor of science in business administration from
the University of Utah.
Mrs. Dixon, 73, was Recorder of Salt Lake County from January 1975
through December 1994, and a Director of AGE since 1972. For more
than 14 years prior to 1975, she was involved in community
affairs. Mrs. Dixon holds a bachelor of science from Utah State
University.
Beneficial Ownership Reporting Compliance
-----------------------------------------
Section 16(a) of the Exchange Act of 1934 requires AGE's officers,
directors, and persons who own more than ten percent of a
registered class of AGE's equity securities, to file reports of
ownership and changes in ownership with the Securities and
Exchange Commission (SEC) and the New York Stock Exchange.
Officers, directors, and greater than ten percent stockholders are
required by SEC regulation to furnish AGE with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, AGE believes that
during AGE's last fiscal year all filing requirements applicable
to its officers, directors, and greater than ten percent
beneficial owners were complied with.
Item 10. Executive Compensation
- -------- ----------------------
There was no compensation paid to officers or directors during the
years ended December 31, 1998 and 1997.
On December 15, 1970, the stockholders adopted an Employee
Qualified Stock Option Plan (Plan) under which a maximum of 25,000
shares of AGE's common stock are reserved for issuance to key
employees of AGE at market value on the date of grant. Options
expire five years from the date of grant. No options are
outstanding under the Plan.
III-2
<PAGE>
AMERICAN GEOLOGICAL ENTERPRISES, INC.
Form 10-KSB Annual Report
Item 11. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
The following table sets forth information as to the ownership of
AGE's $.01 par value common stock by all officers and directors of
AGE as a group and by owners of more than five percent of AGE's
common stock as of December 31, 1998:
<TABLE>
<CAPTION>
Type of Amount Percent of
Name ownership owned class
---- --------------- ------------ ----------
<S> <C> <C> <C>
All directors and officers (6) as a group Record 395,747 31%
M. Walker Wallace Record 107,667 9
Katie L. Dixon Record 104,428 8
Paul T. Walton Estate Record 76,665 6
Milton Fisher Record 75,646 6
</TABLE>
Item 12. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
None.
Item 13. Exhibits and Reports on Form 8-K
- -------- --------------------------------
Report on Form 8-K
------------------
No reports on Form 8-K have been filed.
III-3
<PAGE>
S I G N A T U R E
-----------------
Pursuant to the requirements of Sections 13 or 15(d) 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)
By /s/ Dominic Welch
----------------------------------------
Dominic Welch, President and
Principal Executive Officer
Date March 25, 1999 By /s/ Peter W. G. Cayias
------------------------------- ----------------------------------------
Peter W. G. Cayias, Secretary and
Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Dominic Welch /s/ M. Walker Wallace
- ----------------------------------- ----------------------------------------
Dominic Welch, Director M. Walker Wallace, Director
/s/ Peter W. G. Cayias
- -----------------------------------
Peter W. G. Cayias, Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 945212
<SECURITIES> 280017
<RECEIVABLES> 21150
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1178060
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1911287
<CURRENT-LIABILITIES> 29948
<BONDS> 0
0
0
<COMMON> 12610
<OTHER-SE> 833177
<TOTAL-LIABILITY-AND-EQUITY> 1911287
<SALES> 0
<TOTAL-REVENUES> 171398
<CGS> 0
<TOTAL-COSTS> 118030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 112177
<INCOME-TAX> 29958
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82219
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
