FORM 10-KSB
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934 [Fee Required]

For the fiscal year ended: 12/31/97

     OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ___________to ____________

                         Commission file number: 0-14039

                         AMERICAN GENERAL VENTURES, INC.
                         -------------------------------
                 (Name of Small Business Issuer in its charter)

                Annual Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934


            NEVADA                                       11-2714721
            ------                                       ----------
   (State of incorporation)                (I.R.S. Employer Identification No.)

                     3650 Austin Bluffs Parkway - Suite 138
                        Colorado Springs, Colorado 80918
                -------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant telephone number, including area code: (719) 548-1616

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value

<PAGE>

Check  whether the  Company  (l) has filed all  reports  required to be filed by
Section  13 or 15(d) of the  Securities  and  Exchange  Act of 1934  during  the
preceding  12  months  (or for such  shorter  periods  that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X   No___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of the  Company's  knowledge,  in  definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [x]

The Company's revenues for its most recent fiscal year. $721,745.

As of December 31,  1997,  the market  value of the  Company's  voting $.001 par
value common stock held by non-affiliates of the Company was $1,020,000.

The number of shares  outstanding of Company's only class of common stock, as of
December 31, 1997 was 10,593,666 shares of its $.001 par value common stock.

Check  whether the Issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the  distribution of
securities under a plan confirmed by a court. Yes  X  No
                                                  ---   ---

No documents are incorporated into the text by reference.

Transitional Small Business Disclosure Format (check one) Yes     No  X
                                                              ---    ---
<PAGE>




                         AMERICAN GENERAL VENTURES, INC.
                                   FORM l0-KSB
                                     PART I

ITEM 1 DESCRIPTION OF BUSINESS

     (a) General Development of Business

     (a) (1) The  original  purpose of  American  General  Ventures,  Inc.  (the
Company) was to seek potential  business  ventures,  which in the opinion of the
management  of the  Company  would  provide  a  profit  for  the  Company.  Such
involvement  would be  either  as  acquisition  of  existing  businesses  or the
acquisition of assets to establish a subsidiary business for the Company.

     On January  22,  l986,  the  Company  signed a letter of intent  with Aspen
Medical Diagnostics,  Inc. and Neuro Medical,  Inc., both Utah Corporations,  to
acquire all of the stock of both of those  companies in exchange  for  1,000,000
shares of the common  stock of the  Company to the  shareholders  of each of the
acquired companies or a total of 2,000,000 shares.  Both Companies acquired were
in the business of establishing medical diagnostic facilities.

     On September 11, 1987,  the Company  acquired all of the stock of ACI Micro
Systems,  Inc.,  a Colorado  Corporation.  ACI Micro  Systems,  Inc.  was in the
business of manufacturing and selling micro computers.

     In January 1991, the Company  incorporated Your ATTACHE(C),  a wholly owned
subsidiary.  Your  ATTACHE  develops and sells  licenses of powerful  high speed
computer  systems  that  provides  a  mutually   beneficial   communication  and
interaction  medium between  suppliers and consumers.  ATTACHE is not active and
had no revenues in 1997.

     The Company has not been involved, during the year ended December 31, l997,
in any bankruptcy, receivership or similar proceedings.

     (a)(2) Not applicable.

     (b) Financial Information About Industry segments.

     The Company has engaged in a single line of business  since  September  11,
1987,  when the Company  acquired ACI Micro Systems.  The Company engages in the
business  of  manufacturing  computers  and  sales  of  computers  and  computer
accessories.

<PAGE>



     (c) Narrative Description of Business

     (c)(1)(i)  The  Company  on  January  29,  l986,  acquired  100  percent of
outstanding stock of Neuro-Medical,  Inc. (Neuro) and Aspen Medical Diagnostics,
Inc. (Aspen), both Utah corporations. The letter of intent for said purchase was
executed on the 22nd day of  January,  l986.  In  exchange,  the Company  issued
1,000,000 of its restricted shares to the stockholders of Aspen and 1,000,000 of
its restricted shares to the stockholders of Neuro.

     The business of Neuro and Aspen was to establish  and operate  neurological
diagnostic  centers that provide diagnostic testing for physicians and others in
the medical  community.  The Company made available to the medical community the
latest  neurological  testing  and  assessment  equipment.  The  officers of the
Company for eight years used the Brain Electrical Activity Mapping System (BEAM)
which was developed at Harvard  University  Medical School.  The officers of the
Company  selected  the  BEAM  system  because  they  believed  that  the  system
represented a significant  advancement over alternative equipment being used for
neurological  testing  in  the  overall  treatment  of  patients.  However,  the
technology faced resistance from the medical  community which created a negative
impact upon the growth of the  Company.  The Company  ceased to operate its BEAM
centers in 1993.

CURRENT OPERATIONS

     The Company continues to operate ACI Micro Systems, Inc., (ACI), a Colorado
Corporation, that manufactures and sells computers and accessories.

     In August 1995, ACI received a national vendor number from Wal-Mart Stores,
Inc. authorizing the Company to sell computers and accessories in 1,989 of their
retail stores and 245 of their supercenters.

     Wal-Mart  Stores selected the ACI computer  because it uses  non-integrated
circuitry  and versatile  cases with extra bays that allows true  upgradability.
The ACI  computer  can grow  with  the  consumer's  needs.  ACI  provides  local
upgrades, service and technical support.

     ACI began  selling it computers in eight  stores in Southern  Colorado.  By
December 31, 1996,  ACI had expanded to 70 Wal-Mart  retail  stores in Colorado,
New Mexico, Kansas, Nebraska, Iowa, Oklahoma and Missouri.

     Because of ACI's  relationship  with  Wal-Mart  stores it received a second
vendor  number  from  Wal-Mart  Stores,  Inc.  allowing  the Company to sell its
products through Wal-Mart's interactive world wide web site  (www.Wal-Mart.com).
On June 26,  1997,  ACI had seven  lines of  computer  systems  available  to be
purchased through Wal-Mart's online server.


<PAGE>


PROPOSED OPERATIONS

     ACI has an exclusive  agreement with Wal-Mart in which ACI will be the sole
manufacturer of Wal-Mart's  build to order "BTO" computer.  ACI expects that the
BTO will be available  through  Wal-Mart's web site by the end of July 1998. The
BTO will be for both  desktop and notebook  computers.  ACI  presently  has five
pre-configured  desktop  computer systems and a notebook on Wal-Mart's web site.

     In  addition to selling  its  products  through  Wal-Mart  Online,  ACI has
developed  its own web site  (www.availpc.com).  ACI's web site is  promoted  by
Hotmail, a wholly owned subsidiary of Microsoft.  Hotmail is the world's largest
e-mail provider with more than nine million  members.  ACI banner ads on Hotmail
are presently  eliciting an average of 600 hits per day. If the Hotmail customer
chooses,  he/she can be directly  linked into ACI's web site. ACI offers a fully
loaded computer for $799.00 on its web site.  ACI's web page will also provide a
direct link into Wal-Mart's BTO page.


THE ACI MICRO COMPUTER SYSTEMS

     ACI Micro Systems,  Inc.,  manufactures  non-integrated  circuitry computer
systems  that  allows  true   upgradability.   Through  in-house   assembly  and
outsourcing,  ACI presently has a capacity of  assembling  15,000  computers per
month.

REVENUES

     During the fiscal year ending  December 31, 1997, the Company,  through its
subsidiary,  ACI, generated operating revenues of $721,745. In 1996, the Company
had $1,397,850 in operating revenues.

     In 1997,  the Company had revenues of $721,745  with a net loss of $430,921
compared with  $1,397,850  with a net loss of  ($723,911) in 1996.  The loss for
1997  yielded a net loss of ($0.05)  compared to 1996 that  yielded  ($0.08) per
share loss. Revenues of $721,745 for 1997 were down 48 percent from the revenues
of $1,397,850 in 1996. The decrease in revenues was in part due to the Company's
decision to  concentrate  on sales  through  Wal-Mart  Online and not to sell to
Wal-Mart  retail stores.  The  guaranteed  sales  provision  given to the retail
stores forced the Company to credit Wal-Mart for outdated and obsolete  product.
The last orders  shipped to  Wal-Mart's  retail  stores were in April 1997.  The
Company began selling its products  through  Wal-Mart Online in June 1997. There
were no sales to Wal-Mart for two months in 1997.

     When the Company began selling its products through Wal-Mart's web page, it
quickly became one of the top five vendors for Wal-Mart Online.  Even though the
Company  was one the top five  vendors for  Wal-Mart  Online,  revenues  for the
Company  were  down  from  previous  quarters.  Concentrating  on sales  through
Wal-Mart   Online  resulted  in  lower  revenues  but  offered  the  Company  an
opportunity  to grow with a new  division  within the  largest  retailer  in the
world. When the Company began selling its products through Wal-Mart Online,  the
Online division was in its development stage.

<PAGE>



     (c)(1)(ii) Not applicable.

     (c)(1)(iii) Not applicable.

     (c)(1)(iv) Not applicable.

     (c)(1)(v) The Company's business is not considered seasonal.

     (c)(1)(vi) The Company's working capital of ($142,243) (current assets less
current  liabilities)  would  normally  cause  difficulty  for moderate  growth.
However,  with the Company's "just in time" inventory  control,  the Company can
grow without considerable  capital infusion.  The Company is paid by Wal-Mart 15
days  from  the  date of  shipment.  The  Company  has 25 days to pay its  major
outsourcing  facility from the date of ship. This provides the Company a ten day
period between receiving funds and having to pay for the product shipped.

     Customers  ordering  through the Company's own web site must pay, by credit
card, for the product at the time of ordering.  The Company has the use of these
revenues for 30 days before having to pay its supplier.

     (c)(1)(vii) Not applicable.

     (c)(1)(viii)  As of December 31, l997,  the Registrant was able to fill all
orders and did not have any backlog orders.

     (c)(1)(viii) Not applicable.

     (c)(1)(ix) Not applicable.

     (c)(1)(x) COMPETITION.  The Company's manufacturing  operations faces stiff
competition  from  existing  computer  manufacturers.  The  Company  has met the
competition in the past with its niche in the computer industry.  ACI is able to
produce  computers in America and still be competitive  with computers  built in
foreign  countries.  The  Company's  computers  are built in America  giving the
Company a  competitive  edge to  resellers  such as  Wal-Mart  whose  philosophy
mirrors that of the Company. In addition to "Made in America" the Company builds
computers with non-integrated circuitry that allows true upgradability and local
service and support.

     ACI has an  exclusive  arrangement  with  Wal-Mart  Online for its build to
order (BTO)  computer  program on  Wal-Mart's  web site.  Wal-Mart  Online's BTO
software has been developed  exclusively for marketing the Company's desktop and
notebook  computer.  Being an exclusive partner with the largest retailer in the
world gives the  Company  name  recognition  and a  competitive  edge over other
computer manufacturers.

<PAGE>



     ACI's BTO program has an advantage over the larger  computer  manufacturers
because it gives the consumer more choices and lower prices. The Wal-Mart Online
customer is able to build a computer  system for less than  $1,000.  This is not
possible with some of the larger firms because their  standard  systems  contain
components  that the consumer may not want.  Limited  choices  results in higher
prices for computer systems.

     (c)(1)(xi) Since its inception,  the Company has spent $193,370 for company
sponsored research and development of the Your ATTACHE concept.

     (c)(1)(xii)  Compliance with federal, state and local provisions regulating
the discharge of materials  into the  environment  or otherwise  relating to the
protection  of the  environment  will have no  material  effect  on the  capital
expenditures, earnings and competitive position of the Company.

     (c)(1)(xiii)  The  Company  employs  a total of eight  persons:  One  Chief
Executive Officer,  one  Secretary/Treasurer,  one Chief Technology Officer, one
part-time  Accountant,  and four part time technicians  and/or  assemblers.  The
Company's outsourcing facility has 125 employees.

     (d) Not  applicable  since the Company had no foreign  operations or export
sales during fiscal year l997. The Company does ship to APO and FPO addresses.

ITEM 2   PROPERTIES

     The Company  currently  occupies  approximately  2,000  square feet at 3650
Austin Bluffs Parkway,  suite 138,  Colorado Springs,  Colorado.  The Company is
paying $2110 plus  utilities for rent for the Austin  Bluffs.  The lease for the
Austin  Bluffs space will continue  until May l, l999.  The Company has two five
year options on the Austin Bluffs space.

ITEM 3   LEGAL PROCEEDINGS

     The  Company's  subsidiary,  ACI  Micro  Systems,  Inc.  has  been  sued by
California IC for $27,500 for goods and services. ACI has answered generally and
specifically  that the plaintiff  refused to accept  returned  merchandise.  The
matter has been dormant since February 1998 and until recently the court ordered
some action or the case will be dismissed.  No settlement negotiations have been
held but should be fruitful if initiated by plaintiff.

     Two other suppliers have recently made demands for payment.  Daytek alleges
$27,000 is due and Altura PC Systems claims $21,350. Both claims are in dispute.
Negotiations will likely result in settlement of both at reduced amounts.

<PAGE>



ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The shareholders at the annual shareholders meeting held on August 10, 1997
elected  Steven H. Walker as a Director and Chair of the Board of Directors  and
Christopher S. Walker as a Director on the Board of Directors.

PART II

ITEM 5              MARKET FOR THE REGISTRANT'S COMMON STOCK
                      AND RELATED SECURITY HOLDER MATTERS

     (a)(1)(i)  The  principal  market on which the  Company's  common  stock is
traded is on the Over-the-Counter Bulletin Board. Its symbol is AMGV.

     (a)(1)(ii) Not applicable.

     (a)(1)(iii)  Since January l986, the Company's stock has been traded on the
over-the-counter  market.  The  range  of high  and low bid  quotations  for the
Company's  common  stock  for  the  quarters  in  l997 is  provided  below.  The
over-the-counter  market quotations reflect  inter-dealer  prices without retail
markup,  markdown  or  commissions  and may  not  necessarily  represent  actual
transactions.


                                High Bid       Low Bid

1/1/97 -- 3/31/97                 $.46          $.15

4/1/97 -- 6/30/97                 $.56          $.15

7/1/97 -- 9/31/97                 $.43          $.21

l0/1/97 -- 12/31/97               $1.28         $.25

     (a)(1)(iv) Not applicable.

     (a)(1)(v) Not applicable.

     (a)(2) Not applicable.

     (b)(2) The  approximate  number of record  holders of the Company's  common
stock on December 31, 1997 was 1,150.

     (b)(2) Not applicable.

<PAGE>



     (c)(1) The Company has paid no dividends  with respect to its common stock.
There are no contractual restrictions on the Company's present or future ability
to pay dividends.

     (c)(2) Not applicable  since the Company has not had earnings that indicate
an ability to pay cash  dividends.  The Company does not expect to pay dividends
in the foreseeable future.

ITEM 6                MANAGEMENT DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

     The ratio of current assets to current liabilities for year ending December
31, 1997 is .58 compared to .87 for 1996.  Actual  working  capital for the year
ended December 1997 was  ($142,243)  compared to ($45,484) at December 31, 1996.
The decrease in working  capital was primarily due to an increase in liabilities
that came from  increases in payables due to the return of product from Wal-Mart
retail stores.

     The Company  believes that its "just in time" inventory  method will reduce
capital   requirements  and  provide  sufficient   revenues  to  meet  its  cash
requirements  for major growth in the year ahead.  The Company plans to sell its
product only through Wal-Mart Online and its own web site.  Products will not be
shipped until paid for.

     The Company has reached an agreement  with  Wal-Mart  that there will be no
more returns of products from its retail  stores.  The Company has satisfied its
debit balance with Wal-Mart and has  satisfied its  obligation  with its largest
creditor.

The Company currently has no commitments for capital expenditures.

RESULTS OF OPERATIONS

     The  Company's  primary  business and source of revenue is derived from the
sales by its wholly owned  subsidiary ACI Micro Systems,  Inc. The Company had a
net loss of  ($430,921)  for the year ended  December 31, 1997 compared to a net
loss of ($723,911) for the year ended December 31, 1996.

     Revenues  from  overall  operations  for the year ended  December  31, 1997
decreased by $676,105  from the year ended  December  31, 1996.  The decrease in
sales was  primarily  due to the  Company's  change from  selling its product to
Wal-Mart retail stores to Wal-Mart  Online.  There were two months that no sales
were made to either the Wal-Mart retail stores or through Wal-Mart Online.

     Cost of sales as a percentage  of sales for ACI was 95 percent  compared to
98 percent for the cost of sales in 1996.  The decrease in the percentage of the
cost of goods was due to Wal-Mart  returning fewer unsold computers in 1997 than
in 1996, and the Company's  decision to sell products  through  Wal-Mart  Online
instead of Wal-Mart  retail stores.  While returns due to defective  product are
minimal,  ACI had a  guaranteed-sale  provision with Wal-Mart and agreed to take
back unsold  computers at the original  invoice amount.  The vast fluctuation in
prices of computer components causes the percentage of the cost of goods to rise
if the computers are returned several months after they are originally sold. The
Company's decision to sell computers through Wal-Mart Online instead of Wal-Mart
retail stores has enabled the Company to adopt a `Just In Time' inventory method
which significantly reduces the risk of obsolete inventory.

<PAGE>



     The Company has taken provisions to avoid  guaranteed-sale  returns. ACI no
longer  accepts  orders from Wal-Mart  retail  stores.  The Company only accepts
orders from  Wal-Mart  Online and those orders are produced only if the computer
is sold and paid for.  The  customer has only 15 days to return the computer and
there are no returns of unsold computers.

     ACI received a second  vendor  agreement  from Wal-Mart  Stores,  Inc. that
provides  the  Company  the  ability to sell its  computers  world wide  through
Wal-Mart's  web site. ACI presently has five computer  configurations  available
through  Wal-Mart's web site and expects to have its  customized  built to order
"BTO" computer web page up and running by the end of July 1998.  These computers
are  sold to the  consumer  before  they are  built,  therefore  nullifying  the
guaranteed-sale problem.

     ACI has an exclusive  agreement with Wal-Mart Online for the BTO computers.
Wal-Mart  Online  software has been developed to be used with ACI's price points
and  products  for both the  desktop  and  notebook  computer.  ACI's BTO has an
advantage over some of the larger BTO companies in that the customer can build a
computer with fewer standard features thus providing the customer more choices.

     Selling,  general  and  administrative  expenses  were  $429,212  for  1997
compared with  $701,032 for 1996.  The Company  reduced its selling  general and
administrative  by 39 percent in 1997.  The  Company  was able to  decrease  its
selling  general and  administrative  expenses by focusing on Internet sales and
reducing sales to retail stores.

     The loss  per  share in 1997 was  ($.05)  compared  to a loss per  share of
($.08) in 1996. The accumulated  deficit was reduced by $119,059 in 1997 and the
Shareholder  equity deficit was reduced from ($510,632) in 1996 to ($211,490) in
1997 or $299,142.  The deficit reductions were due to additional paid in capital
for common shares and by the President,  Steven H. Walker converting $500,000 of
debt owing him to equity.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial  statements  and  supporting  schedules  reporting  supplementary
financial  information are listed in the Index to Financial  Statements filed as
part of this Form l0-KSB.

<PAGE>



ITEM 9 DISAGREEMENTS OF ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


                                    PART III

ITEM 10           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                        CONTROL PERSONS OF THE COMPANY.

     (a) Identification of Directors.


                          Position held                            Dates of
Name                      with Company                Age          Service
----                      ------------                ---          -------

Steven H. Walker         President, Chair             59           l985-l997
                         of the Board, Director

Christopher S. Walker    Secretary-Treasurer,         28           1996-1997
                         Director


     (b) Identification of Executive Officers

                          Position held                            Dates of
Name                      with Company                Age          Service
----                      ------------                ---          -------

Steven H. Walker              CEO                     59           l985-l997

Christopher S. Walker         COO                     28           l996-1997


     (c) Identification of Certain Significant Employees.

     Michael P. Lohman,  Ph.D.  was appointed to the position  Chief  Technology
Officer  (CTO).  Dr.  Lohman  received  his  doctorate  from  UCLA  in  Computer
Science/Electrical Engineering in 1986.

     No  other  officer  or  director  of  the  Company,  including  controlling
shareholders, is related to any other such person.

     (e)(1) The business  experience of the Registrant's  officers and directors
is as follows:

<PAGE>


STEVEN  H.  WALKER,  (59),  has been  President,  Chair of the  Board  and Chief
Executive  Officer of the Company since January l986 and has been Vice President
and Chair of the Board of  Neuro-Medical,  Inc. and  President  and Chair of the
Board of Aspen Medical Diagnostics, Inc. since 1983 and 1984 respectively. He is
also a licensed  psychologist  who was in private practice for 15 years. He is a
past president of the El Paso County Psychological  Society. He received a Ph.D.
from the University of Wyoming in l972.

CHRISTOPHER S. WALKER, (28), has been Secretary/Treasurer, Director on the Board
and Chief  Operating  Officer  since August 1996. He has been an employee of the
Company  since  1988 and has held  positions  of  Transfer  Agent and  Marketing
Director.  Mr.  Walker  received  a  Bachelor  of  Science  degree  in  Business
Administration  from the University of Northern Colorado in 1990. Mr. Walker was
instrumental in acquiring the Wal-Mart accounts.

     (e)(2) Not applicable

     (f) Not applicable

     (g) Not applicable.

ITEM II MANAGEMENT REMUNERATION

     (a)(l) Cash compensation for the fiscal year ended December 31, l997.

                                                                  Cash bonuses
Name of individual       Capacities           Cash salaries       and deferred
or number in group     in which served           and fees         compensation
------------------     ---------------           --------         ------------

Steven H. Walker        President/CEO       $63,000/year plus 10% of netprofits

Christopher W. Walker   Secretary/Treasurer
                        COO                 $26,400

All officers and/or 
Directors as a Group 
(two persons)                               $89,400 plus 10% of net profit


     (a)(2) Bonuses and deferred compensation.

Name of individual            Capacities                Deferred Compensation.
------------------            ----------                ----------------------

Steven H. Walker              President                   10% of net profit

     (b)(1) Compensation pursuant to Plans.

     The Company  has no  retirement,  pension or profit  sharing  covering  its
officers and directors and does not  contemplate  implementing  any such plan at
this time.

<PAGE>



     (b)(2) Pension Table. Not applicable.

     (b)(3) Alternative Pension Plan Disclosure. Not applicable.
      
     (b)(4) Stock Option and Stock Purchase right plans. Not applicable.

     (c) Other compensation. Not applicable.

     (d) Compensation of Directors.

     (d)(l) Standard Arrangements. The Board Directors shall not receive any fee
for serving as directors.

     (d)(2) Other arrangements. None.

     (e) Termination of employment and change of control arrangements. None.

ITEM 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     (a)  Security  Ownership  of Certain  Beneficial  Owners as of December 31,
l997.

     Title of class  Name and  address of Amount and  Percent  beneficial  owner
Nature of beneficial class

                  Ownership    
--------------------------------------------------------------------------------
Common Stock      Steven H. Walker            5,563,400      60.5%    $.001 par 
                  3650 Austin Bluffs Parkway                           value
                  Colorado Springs, CO 80918

Common Stock      Christopher S. Walker         304,800       3.3%    $.001 par 
                  3650 Austin Bluffs Parkway                           value
                  Colorado Springs, CO 80918

Common Stock      All officers and            5,868,200      63.8%    $.001 par 
                  directors as a group                                 value

<PAGE>


     (c) Changes in control. none

ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     (a) Transactions With Management and Others.

     Steven H. Walker,  President and CEO receives cash salaries and  consulting
fees totaling $63,000 per annum plus 10% of the net profit before taxes.


                                     PART IV

ITEM 14  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) The  following  documents are filed apart of this Report of the Company
immediately following the signature page.

1.   Financial Statements

     Report of Certified Public Accountants

     Balance Sheets - December 31, 1997

     Statements of Operations - Years ended December 31, 1997 and 1996.

     Statement of Stockholders' Equity - Years ended December 31, 1997 and 1996.

     Statements of Cash Flows - Years ended December 31, 1997 and 1996.

     Notes to Financial Statements

2.   Financial  Statement schedules required to be filed immediately follow Item
     14 of this Form 10-KSB

<PAGE>


INDEPENDENT AUDITOR'S REPORT



Board of Directors and Shareholders
American General Ventures, Inc.


We have audited the  consolidated  balance sheet of American  General  Ventures,
Inc.  as of  December  31,  1997,  and the related  consolidated  statements  of
operations,  changes  in  stockholders'  equity,  and cash flows for each of the
years in the two year period ended December 31, 1997. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We  conducted  our  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 American General
Ventures,  Inc. as of December 31, 1997,  and the results of its  operations and
cash flows for each of the years in the two year period ended December 31, 1997,
in conformity with generally accepted accounting principles.




                                        James E. Scheifley & Associates, P.C.
                                        Certified Public Accountants

Englewood, Colorado
May 26, 1998


<PAGE>
                         American General Ventures, Inc.
                           Consolidated Balance Sheet
                                December 31, 1997

                                     ASSETS
                                     ------
Current assets:
  Cash                                                              $    17,706
  Accounts receivable, trade                                              1,425
  Inventory                                                             177,057
  Prepaid exepnses                                                          198
                                                                    -----------
      Total current assets                                              196,386

Property and equipment, at cost, net of
  accumulated depreciation of $36,081                                    37,602

Goodwill, net of amortization of $25,183                                 22,583
                                                                    -----------
                                                                    $   256,571
                                                                    -----------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
Current liabilities:
 Current portion of long-term debt                                  $     4,200
  Accounts payable                                                      289,846
  Accrued interest - related party                                       37,729
  Accrued expenses, other                                                 6,854
                                                                    -----------
      Total current liabilities                                         338,629

Notes payable - shareholders                                            115,215
Long-term debt                                                           14,217
Commitments and contingencies (Note 9)

Stockholders' equity:
 Preferred stock, no stated value
   8,000,000 shares authorized,
  no shares issue and outstanding                                          --
 Common stock, $.001 par value,
  900,000,000 shares authorized,
  10,593,666 shares issue and outstanding                                10,594
 Additional paid-in capital                                           2,430,788
 Accumulated deficit                                                 (2,652,872)
                                                                    -----------
                                                                       (211,490)
                                                                    -----------
                                                                    $   256,571
                                                                    -----------


          See accompanying notes to consolidated financial statements.
<PAGE>


                         American General Ventures, Inc.
                      Consolidated Statement of Operations
                     Years Ended December 31, 1997 and 1996
                                                                    
                                                       1997             1996 
                                                       ----             ---- 

Sales                                              $   721,745      $ 1,397,850
Cost of sales                                          690,064        1,365,308
                                                   -----------      -----------
Gross profit
                                                        31,681           32,542

Other costs and expenses:
 General and administrative                            429,212          701,032
                                                   -----------      -----------
Income (loss) from operations                         (397,531)        (668,490)


Other income and (expense):
 Other income                                              117             --
 Interest expense - related party                      (12,000)         (25,729)
 Interest expense                                      (21,507)         (29,692)
                                                   -----------      -----------
                                                       (33,390)         (55,421)
                                                   -----------      -----------

Income (loss) before income taxes                     (430,921)        (723,911)
Provision for income taxes                                --               --
                                                   -----------      -----------

  Net income (loss)                                $  (430,921)     $  (723,911)
                                                   -----------      -----------


Earnings (loss) per share:
 Net income (loss)                                 $     (0.05)     $     (0.08)
                                                   -----------      -----------

 Weighted average shares outstanding                 9,506,222        9,200,000
                                                   -----------      -----------


          See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>

                                            American General Ventures, Inc.
                               Consolidated Statement of Changes in Stockholders' Equity
                                        Years Ended December 31, 1997 and 1996

                                                                                  Additional
                                                        Common Stock               Paid -in      Accumulated
                                                   Shares          Amount          Capital        (Deficit)         Total
                                                ----------------------------------------------------------------------------

<S>                                              <C>           <C>             <C>             <C>              <C>        
Balance, December 31, 1995                        9,200,000     $     9,200     $ 1,702,099     $(1,498,040)     $   213,259

Net (loss) for the year                                --              --              --          (723,911)        (723,911)
                                                -----------     -----------     -----------     -----------      -----------
Balance, December 31, 1996                        9,200,000           9,200       1,702,099      (2,221,951)        (510,652)

Common stock sold for cash                          566,666             567         150,266            --            150,833

Common stock issued for services                    277,000             277          53,973            --             54,250

Common stock issued for debt conversion             550,000             550         524,450                          525,000

Net (loss) for the year                                --              --              --          (430,921)        (430,921)
                                                -----------     -----------     -----------     -----------      -----------
Balance, December 31, 1996                       10,593,666          10,594       2,430,788      (2,652,872)        (211,490)







                                  See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>


                        American General Ventures, Inc.
                     Consolidated Statements of Cash Flows
                     Years Ended December 31, 1997 and 1996

                                                            1997         1996
                                                         ---------    ---------
Net income (loss)                                        $(430,921)   $(723,911)
  Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
   Depreciation and amortization                            16,134       12,255
   Stock issued for services                                44,250         --
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable              18,126      112,097
    (Increase) decrease in inventory                        (9,070)       2,929
    (Increase) decrease in prepaid expenses                  1,802        2,024
    (Increase) decrease in other assets                       --          4,874
    Increase (decrease) in accounts payable and
        accrued expenses                                   150,955      318,560
                                                         ---------    ---------
       Total adjustments                                   222,197      452,739
                                                         ---------    ---------
  Net cash (used in)
   operating activities                                   (208,724)    (271,172)
                                                         ---------    ---------

Cash flows from investing activities:
   Acquisition of plant and equipment                         --         (1,740)
                                                         ---------    ---------
Net cash (used in) investing activities                       --         (1,740)
                                                         ---------    ---------


Cash flows from financing activities:
   Repayment of long-term debt                              (8,084)      (3,085)
   Proceeds from the sale of common stock                  148,833         --
   Increase in officer loans                                61,697      299,981
                                                         ---------    ---------
  Net cash provided by
   financing activities                                    202,446      296,896
                                                         ---------    ---------


Increase (decrease) in cash                                 (6,278)      23,984
Cash and cash equivalents,
 beginning of period                                        23,984         --
                                                         ---------    ---------
Cash and cash equivalents,
 end of period                                           $  17,706    $  23,984
                                                         =========    =========


          See accompanying notes to consolidated financial statements.


<PAGE>


                        American General Ventures, Inc.
                     Consolidated Statements of Cash Flows
                     Years Ended December 31, 1997 and 1996

                                                             1997         1996
                                                           --------     --------

Supplemental cash flow information:
   Cash paid for interest                                  $ 21,506     $  1,803
   Cash paid for income taxes                              $   --       $   --

Non-cash investing and financing activities:
   Assets acquired by issuance of long-term debt           $   --       $ 46,664
   Asset liquidated to satisfy note payable                $ 18,741     $   --
   Conversion of officer loans to common stock             $500,000     $   --







          See accompanying notes to consolidated financial statements.

<PAGE>

American General Ventures, Inc.
Notes to Consolidated Financial Statements
December 31, 1997


Note 1. Organization and Summary of Significant Accounting Policies.
        ------------------------------------------------------------

The  Company  was  incorporated  in Nevada in November  1984.  The  consolidated
financial  statements  include the  accounts of the Company and its wholly owned
subsidiary, ACI Micro Systems, Inc., a manufacturer and distributor of computers
and related products,  which was acquired on September 11, 1987. All significant
inter-company  items  have  been  eliminated  in  consolidation..   The  Company
distributes  its products  through a retail outlet in Colorado  Springs,  CO and
through a national  retail chain in the  southwestern  United States through the
chain's worldwide online shopping website.

     Inventory:
Inventory is valued at the lower of cost or market on a first-in first-out basis
and consists  primarily of finished goods including  complete  computer systems,
spare parts and related equipment held for retail sale.

     Property, Plant and Equipment:
Property,  plant and  equipment are recorded at cost and are  depreciated  based
upon estimated  useful lives using the  straight-line  method.  Estimated useful
lives range from 3 to 5 years for  furniture and fixtures and from 5 to 10 years
for equipment.


     Loss per share:
In February 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 128,  "Earnings  Per Share."  SFAS No. 128  supersedes  and  simplifies  the
existing  computational  guidelines  under  Accounting  Principles Board ("APB")
Opinion No. 15, "Earnings Per Share."

The statement is effective for financial  statements  issued for periods  ending
after  December 15,  1997.  Among other  changes,  SFAS No. 128  eliminates  the
presentation  of primary  earnings per share and replaces it with basic earnings
per  share  for  which  common  stock  equivalents  are  not  considered  in the
computation.  It also revises the computation of diluted earnings per share. The
Company  has  adopted  SFAS No.  128 and  there  is no  material  impact  to the
Company's earnings per share, financial condition, or results of operations. The
Company's  earnings per share have been restated for all periods presented to be
consistent  with SFAS No.  128.  Per  share  amounts  are based on the  weighted
average number of common shares  outstanding.  Common stock  equivalents are not
considered in years when operating  losses are incurred as their effect would be
anti-dilutive.

The basic loss per share is computed by dividing  the net loss for the period by
the weighted  average number of common shares  outstanding for the period.  Loss
per share is unchanged on a diluted  basis since the assumed  exercise of common
stock equivalents would have an anti-dilutive effect.


<PAGE>




     Revenue Recognition:
Revenue is  recognized  at the time the product is  delivered  or the service is
performed. Revenue related to long term service contracts is recognized on a pro
rata  basis  over the term of the  contract.  Provision  for sales  returns  are
estimated based on the Company's historical return experience.

     Intangible Assets:
Intangible assets consist of goodwill related to the acquisition of a subsidiary
company.  Goodwill  is being  amortized  using the  straight  line method over a
period of 20 years.  Amortization  expense  amounted  to $2,388  for each of the
years ended December 31, 1997 and 1996.

The Company  makes reviews for the  impairment of long-lived  assets and certain
identifiable  intangibles  whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable. Under SFAS No. 121,
an impairment loss would be recognized when estimated future cash flows expected
to result from the use of the asset and its  eventual  disposition  is less than
its carrying  amount.  No such  impairment  losses have been  identified  by the
Company for the 1997 and 1996 fiscal years.

      Cash:
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid debt instruments  purchased with a maturity of three months or less to be
cash equivalents.

      Estimates:
The preparation of the Company's  financial  statements  requires  management to
make estimates and assumptions that affect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from these
estimates.  The Company made sales to its major customer,  see Note 10, on terms
which  include a  guaranteed  right of return.  At December 31, 1996 the Company
accrued $39,000 related to anticipated returns.

      Advertising costs:
Advertising  costs are charged to operations  when the  advertising  first takes
place.  Advertising  costs charged to operations were $3,720 and $15,554 in 1997
and 1996, respectively.

      Fair value of financial instruments
The  Company's  short-term  financial  instruments  consist  of  cash  and  cash
equivalents,  accounts and loans  receivable,  and payables  and  accruals.  The
carrying amounts of these financial instruments  approximates fair value because
of their short-term  maturities.  Financial instruments that potentially subject
the Company to a  concentration  of credit risk consist  principally of cash and
accounts  receivable,  trade.  During the year the Company did not maintain cash
deposits at financial  institutions  in excess of the $100,000  limit covered by
the Federal  Deposit  Insurance  Corporation.  The Company has a major customer,
(see Note 10) the loss of which could have a material  negative  impact upon the
Company.  The Company does not hold or issue  financial  instruments for trading
purposes  nor  does it hold  or  issue  interest  rate or  leveraged  derivative
financial  instruments.


<PAGE>



     Stock-based Compensation
The Company  adopted  Statement  of Financial  Accounting  Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of 1996.  Upon  adoption of FAS 123,  the Company  continued  to measure
compensation expense for its stock-based  employee  compensation plans using the
intrinsic value method  prescribed by APB No. 25, Accounting for Stock Issued to
Employees.  No stock based  compensation was paid by the Company during the year
ended December 31, 1997.


Note 2.  Property, Plant and Equipment.
         ------------------------------

Property, plant and equipment consists of the following at December 31, 1996

         Office furniture and equipment       $    50,908
         Vehicles                                  22,775
                                              -----------
         Less accumulated depreciation            (36,081)
                                              -----------
                                              $    37,602
                                              ===========

Depreciation  charged to  operations  was $13,746 and $9,897 for the years ended
December 31, 1997 and 1996 respectively.  Vehicles are pledged as collateral for
the underlying purchase financing contracts, see Note 7.


Note 3.  Goodwill.
         ---------

Amortization of goodwill amounted to $2,388 for each of the years ended December
31, 1997 and 1996 and was computed  using the straight line method over a twenty
year  period.  Goodwill  recorded  by the Company  represents  the excess of the
purchase of ACI Micro Systems, Inc. over the net assets acquired.


Note 4.  Stockholders' Equity.
         ---------------------

During the year ended December 31, 1997 the Company issued 500,000 shares of its
common stock for the conversion of debt owed to its  president.  The shares were
valued at bid price ($1.00 per share) for the Company's common stock at the date
the conversion was approved by the Company's  Board of Directors.  Additionally,
50,000  shares of  restricted  common  stock  were  issued to a vendor  for debt
conversion  at $.50 per  share,  the fair  value of the stock on the  conversion
date.

The  Company  issued an  aggregate  of 277,000  shares of its  common  stock for
services  provided to the Company by three  entities.  The shares were valued at
$.10 pre share for 100,000  shares issued in January 1998 and $.25 per share for
177,000 shares issued in September 1998.

During the fourth quarter of 1998, the Company received an aggregate of $150,833
in cash for the exercise of common stock warrants. The exercise price of 125,000
of the  warrants  was $.25 per  share  and the  exercise  price of 25,833 of the
warrants was $.3875 per share.



<PAGE>




Note 5. Income Taxes.
        -------------

The Company has not provided  for income taxes for the years ended  December 31,
1997 and 1996 due to operating losses.

The Company has net  operating  loss  carryforwards  available to offset  future
taxable income of approximately $2,676,000.  Such carryforward amounts expire in
years beginning in 2002 as follows:

                         2002                             $214,000
                         2003                             $233,000
                         2004                             $353,000
                         2005                             $190,000
                         2007                             $140,000
                         2008                             $280,000
                         2009                             $ 81,000
                         2011                             $724,000
                         2012                             $461,000

The Company does not anticipate the utilization of these net operating losses in
the near future and has established a valuation allowance for the full amount of
deferred tax asset ($910,000)  estimated to arise therefrom.  The reserve amount
increased by approximately $157,000 and $246,000 during the years ended December
31, 1997 and 1996.


Note 6. Related Party Transactions.
        ---------------------------

The Company is obligated to compensate its president at the rate of $63,000 plus
10% of pre tax profits per annum effective January, 1992.

During  1992 the  balance  due for cash  advances  and  deferred  salary  to the
Company's  president was converted to an unsecured note with interest at 10% per
annum due in  installments  through  August,  2000. The balance on this note was
$129,691  at  December  31,  1996.  The  Company  was  unable to meet  repayment
requirements  during 1997 and 1996. The Company has accrued  interest of $12,000
and $12,969 for the years ended December 31, 1997 and 1996, respectively. During
the years ended December 31, 1997 and 1996, the Company's president made working
capital advances to the Company of $61,697 and $44,781,  respectively and during
1996,  assumed  personal  liability  for funds  advanced  to the Company in 1996
pursuant to a line of credit with a bank amounting to $255,200.

At December 31, 1997 the note plus  additional  cash advances an salary accruals
amounting to $500,000 were converted into


<PAGE>


Note 7. Long-term debt
        --------------

During the year ended  December 31, 1996,  the Company  entered into two vehicle
purchase contracts which provide for monthly repayments  aggregating $968 though
2001.  The  contracts  bear  interest  at 8.5% per annum and are  secured by the
Company's vehicles. During 1997, the Company disposed of one of the vehicles and
retired the related debt. Aggregate amounts due under the remaining contract are
$4,200 in 1998, $4,603 in 1999, $5,044 in 2000 and $4,570 in 2001.


Note 8. Commitments and contingencies
        -----------------------------

Operating leases

The Company  leases its  facilities  under an operating  leases  through May 31,
1999. Minimum future rentals payable under the leases are as follows:

                       Year                         Amount
                       ----                         ------

                       1998                       $ 18,453
                       1999                          7,875
                                                  $ 26,328

Rent  expense  amounted to $27,310 and $52,843 for the years ended  December 31,
1997 and 1996, respectively.

The Company has three legal matters pending with its suppliers for collection of
trade accounts payable aggregating  $approximately  $75,000. The Company expects
to reach  settlement  agreements with the suppliers for reduced payment amounts,
however,  the gross amounts due each vendor are included in accounts  payable at
December 31, 1997.


Note 9.  Sales to major customers
         ------------------------

During the years ended December 31, 1997 and 1996, the Company  recorded revenue
for goods or services  provided to client  companies that comprise  greater than
10% of total revenues as follows:

                                      1997          1996
                                      ----          ----
      Wal-Mart  Stores, Inc.        $422,041      $975,940


Note 10. Subsequent event
         ----------------

On June 29,1998, the Company settled an outstanding trade account payable with a
vendor  having  a  balance  at  December  31,  1997 and the  settlement  date of
$110,232. The Company made a one time cash payment of $32,000 in full settlement
of the claim and will record a gain from debt extinguishment  during the quarter
ended June 30, 1998 amounting to $78,232.

<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements of Section 13 or 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                       AMERICAN GENERAL VENTURES, INC.

By: /s/  Steven H. Walker
   -------------------------------
Steven H. Walker
President/CEO

Date:  July 28, 1998
     -----------------------------

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

Date:  July 28, 1998                        /s/  Steven H. Walker
     -----------------------------          ------------------------------------
                                            Steven H. Walker, President Director

Date:  July 28, 1998                        /s/  Christopher S. Walker
     -----------------------------          ------------------------------------
                                            Christopher S. Walker, Secretary
                                            Treasurer, Director