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, 1997
                          ------------------------------------------------------
                                       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.)

                  1102 Walker Center Salt Lake City, Utah 84111
--------------------------------------------------------------------------------
                    (Address of principal executive officers)

Registrant's telephone number, including area code         (801) 363-3283
                                                   -----------------------------

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.                $167,013

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-3

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, 1997

                                     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,  for the most part, by Dr. Paul T.
              Walton,  President, and other 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  188  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 now  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, 1997,  approximately 450 acres
              of land in  Central  Utah  continued  to be  productive  (from oil
              wells) and AGE continues to receive the related  royalty  payments
              which  aggregated  $1,312 in 1997.  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  approximately  9,400 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
              approximately  $4,645,  together  with a  royalty  equal  to  five
              percent of gross revenues from the sale of steam 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, 1997

                                     Part II


Item 5.       Market For the 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, 1997 is 715.


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, 1997 and 1996:
              ---------------------------------------------------------------

              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 1997 are fairly consistent with the
              previous year's revenues,  however,  operating income increased to
              $47,351 in 1997 from $32,976 in 1996.  This was primarily a result
              of the following two factors. First, operating income increased as
              a result of less operation and maintenance expenses being incurred
              in the current year ($58,454 in 1997 compared to $64,165 in 1996).
              Secondly,  general and administrative  expenses decreased ($26,574
              in  1997  compared  to  $31,968  in  1996)  as AGE  made a  $5,000
              charitable  contribution in fiscal year 1996 but not during fiscal
              year 1997.

              Royalty Income:
              ---------------

              AGE owns seven oil and gas leases, all of which have been assigned
              to either  Pennzoil,  Medallion  Exploration,  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,  1997,  AGE  received  $1,312 in  override  interest
              royalty payments.





                                      II-1
<PAGE>




                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report


Item 6.       Management's Discussion and Analysis (continued)
-------       ------------------------------------

              Liquidity:
              ----------

              AGE's liquidity at December 31, 1997, is considered  adequate with
              $1,089,326 in working capital. AGE believes that it has sufficient
              resources to cover its cash needs during the fiscal year 1998.

              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, 1997 and 1996     II-4

              Consolidated Statements of Income -
                 Years ended December 31, 1997 and 1996                    II-5

              Consolidated Statements of Stockholders' Equity -
                 Years ended December 31, 1997 and 1996                    II-6

              Consolidated Statements of Cash Flows -
                 Years ended December 31, 1997 and 1996                    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 subsidiaries (AGE) as of December 31, 1997 and
1996, and the related consolidated  statements of income,  stockholders' equity,
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, 1997 and 1996, and the results of their  operations and their cash flows for
the  years  then  ended  in  conformity  with  generally   accepted   accounting
principles.




                                                           KPMG Peat Marwick LLP


Salt Lake City, Utah
February 19, 1998




                                      II-3
<PAGE>




<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                           Consolidated Balance Sheets

                           December 31, 1997 and 1996
<CAPTION>



                                        Assets                                               1997          1996
                                        ------                                            -----------   -----------
Current assets:
<S>                                                                                      <C>               <C>
    Cash and cash equivalents                                                            $   935,431       833,654
    Marketable securities (note 2)                                                           192,365       193,217
    Accounts receivable                                                                       22,025        24,414
    Interest and dividends receivable                                                          1,276         1,276
    Prepaid lease costs                                                                        2,649         2,649
                                                                                          -----------   -----------
           Total current assets                                                            1,153,746     1,055,210

Investment in geothermal power unit, at cost, less accumulated amortization of
   $134,951 and $104,962 at December 31, 1997 and 1996                                       692,248       722,237

Marketable securities (note 2)                                                                71,106        71,239
                                                                                          -----------   -----------
           Total assets                                                                  $ 1,917,100     1,848,686
                                                                                          ===========   ===========

                         Liabilities and Stockholders' Equity
                         ------------------------------------
Current liabilities:
    Accounts payable                                                                     $     7,751         6,793
    Income taxes payable                                                                      18,374         2,089
    Accrued liabilities                                                                       27,286        20,730
    Deferred income taxes (note 5)                                                            11,009         5,582
                                                                                          -----------   -----------
           Total current liabilities                                                          64,420        35,194
Deferred income taxes (note 5)                                                                95,803       104,394
Deferred revenue (note 6)                                                                    979,885     1,022,335
Minority interest                                                                             11,152        10,086
Stockholders' equity:
    Common stock, $.01 par value; authorized 2,500,000 shares; issued and
      outstanding 1,260,997 shares                                                            12,610        12,610
    Additional paid-in capital                                                               557,211       557,211
    Unrealized gain on marketable securities, net of tax                                      18,506         9,383
    Retained earnings                                                                        177,513        97,473
                                                                                          -----------   -----------
           Total stockholders' equity                                                        765,840       676,677
Commitments (note 4)
                                                                                          -----------   -----------
           Total liabilities and stockholders' equity                                    $ 1,917,100     1,848,686
                                                                                          ===========   ===========
</TABLE>


See accompanying notes to consolidated financial statements.




                                      II-4
<PAGE>




<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                        Consolidated Statements of Income

                     Years ended December 31, 1997 and 1996
<CAPTION>



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

<S>                                                                  <C>             <C>
Revenues - geothermal power unit (note 6)                            $  167,013      163,743
                                                                      ----------   ----------
Expenses:
    Operating and maintenance of geothermal power unit (note 6)          58,454       64,165
    Amortization of geothermal power unit                                29,989       29,989
    General and administrative                                           26,574       31,968
    Lease costs                                                           4,645        4,645
                                                                      ----------   ----------
                                                                        119,662      130,767
                                                                      ----------   ----------
           Operating income                                              47,351       32,976
Other income:
    Interest income                                                      42,765       38,451
    Dividend income                                                      16,188       16,904
    Royalties                                                             1,312        1,433
    Gain on redemption of marketable securities                             125            -
                                                                      ----------   ----------
                                                                         60,390       56,788
                                                                      ----------   ----------

           Income before income taxes                                   107,741       89,764
Income tax expense (note 5)                                              27,701       23,994
                                                                      ----------   ----------
           Net income                                                $   80,040       65,770
                                                                      ==========   ==========

Basic net income per share:                                          $      .06          .05
                                                                      ==========   ==========
</TABLE>



See accompanying notes to consolidated financial statements.




                                      II-5
<PAGE>




<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                 Consolidated Statements of Stockholders' Equity

                     Years ended December 31, 1997 and 1996
<CAPTION>




                                                                  Addi-        Unreal-                      Total
                                         Common stock            tional       ized gain                     stock-
                                    ------------------------     paid-in     (loss), net     Retained      holders'
                                     Shares         Amount       capital        of tax       earnings       equity
                                    ----------    ----------    ----------    ----------    ----------    ----------

<S>                                  <C>         <C>               <C>            <C>           <C>         <C>
Balance,
   December 31, 1995                 1,260,997   $    12,610       557,211        9,731         31,703      611,255

Unrealized loss on marketable
   securities, net of tax                    -             -             -         (348)             -         (348)
Net income                                   -             -             -            -         65,770       65,770
                                    ----------    ----------    ----------    ----------    ----------    ----------

Balance,
   December 31, 1996                 1,260,997        12,610       557,211        9,383         97,473      676,677

Unrealized gain on marketable
   securities, net of tax                    -             -             -        9,123              -        9,123
Net income                                   -             -             -            -         80,040       80,040
                                    ==========    ==========    ==========    ==========    ==========    ==========

Balance,
   December 31, 1997                 1,260,997   $    12,610       557,211       18,506        177,513      765,840
                                    ==========    ==========    ==========    ==========    ==========    ==========
</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, 1997 and 1996
<CAPTION>



                                                                                 1997          1996
                                                                              ----------    ----------
<S>                                                                          <C>               <C>
Cash flows from operating activities:
    Net income                                                               $   80,040        65,770
    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
         Amortization of geothermal power unit                                    29,989       29,989
         Accretion on investments                                                   133           132
         Gain on redemption of marketable securities                               (125)            -
         Changes in operating assets and liabilities:
            Receivables                                                           2,389        (3,404)
            Accounts payable and accrued liabilities                              7,514        (6,003)
            Income taxes payable                                                 16,285       (66,180)
            Minority interest                                                     1,066           412
            Deferred income taxes                                                (8,466)       (7,387)
            Deferred revenue                                                    (42,450)      (42,450)
                                                                              ----------    ----------
                  Net cash provided by (used in) operating activities            86,375       (29,121)
                                                                              ----------    ----------
Cash flows from investing activities:
    Redemption of marketable securities                                          25,000         3,000
    Acquisition of marketable securities                                         (9,598)       (9,354)
                                                                              ----------    ----------
                  Net cash provided by (used in) investing activities            15,402        (6,354)
                                                                              ----------    ----------
Increase (decrease) in cash and cash equivalents                                101,777       (35,475)

Cash and cash equivalents, beginning of year                                    833,654       869,129
                                                                              ----------    ----------
Cash and cash equivalents, end of year                                       $  935,431       833,654
                                                                              ==========    ==========

Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash paid during the year for income taxes                                   $   19,747        28,680
</TABLE>




See accompanying notes to consolidated financial statements.




                                      II-7
<PAGE>



                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements

                           December 31, 1997 and 1996



(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 at December 31, 1997,  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 a separate
            component of stockholders' equity until realized.

       (c)  Investment in Geothermal Power 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>





       (f)  Net Income Per Share
            --------------------

            In February 1997, the Financial  Accounting  Standards  Board issued
            Statement of Financial  Accounting  Standards No. 128,  Earnings per
            Share (SFAS 128). SFAS 128 became effective for financial statements
            with  interim and annual  periods  ending  after  December 15, 1997.
            Accordingly, AGE has adopted SFAS 128.

            SFAS 128  establishes  a different  method of  computing  net income
            (loss)  per  common  share than was  previously  required  under the
            provisions of Accounting  Principles Board Opinion No. 15. SFAS 128,
            requires the  presentation  of basic and diluted  income  (loss) per
            share.  Basic 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 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  year  1997  and  1996,   only  basic   earnings   per  share
            calculations  were  applicable,  as AGE had no potentially  dilutive
            common shares outstanding.

            Based on the  criteria  noted  above,  basic  net  income  per share
            computations  have been based upon 1,260,977 shares  outstanding for
            the years ended December 31, 1997 and 1996, respectively.

       (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)  Reclassifications
            -----------------

            Certain   amounts  in  the  prior  year's   consolidated   financial
            statements have been reclassified to conform to the fiscal year 1997
            presentation.

       (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.





                                      II-9
<PAGE>


(2)    Marketable Securities
       ---------------------

       Marketable investment securities at December 31,  1997 and  1996, consist
       of:

<TABLE>
<CAPTION>
                                                                        1997           1996
                                                                    ------------   -------------

<S>                                                               <C>                   <C>
            Available-for-sale, at fair value                     $     192,365         193,217
            Held-to-maturity, at amortized cost                          71,106          71,239
                                                                    ------------   -------------
                                                                  $     263,471         264,456
                                                                    ============   =============
</TABLE>

       The amortized cost, gross unrealized holding gains, and fair market value
       for marketable securities by major security type at December 31, 1997 and
       1996, were as follows:
<TABLE>
<CAPTION>
                                                                                        Gross
                                                                                     unrealized
                                                                     Amortized      holding gains
                                                                        cost                        Fair value
                                                                    ------------   -------------   -------------

<S>                                                              <C>                     <C>           <C>
            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
                                                                    ============   =============   =============

            Year ended December 31, 1996:
                Available-for-sale:
                   Mortgage-backed securities                    $        25,000             250         25,250
                   Equity securities                                     153,252          14,715        167,967
                                                                    ------------    ------------    ------------

                                                                 $       178,252          14,965        193,217
                                                                    ============    ============    ============

                Held-to-maturity - corporate debt securities
                                                                 $        71,239           2,899         74,138
                                                                    ============    ============    ============
</TABLE>

       Maturities  of debt  securities  classified as  held-to-maturity  were as
follows at December 31, 1997:
<TABLE>
<CAPTION>

                                                                     Amortized           Fair
                                                                        cost            value
                                                                    ------------    ------------

<S>                                                              <C>                      <C>
            Due within five years                                $       50,401           52,013
            Due after ten years                                          20,705           24,296
                                                                    ============    ============
                                                                 $       71,106           76,309
                                                                    ============    ============
</TABLE>




                                     II-10
<PAGE>





(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  geothermal  or 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,  1997,  approximately  450 acres of land in Central Utah
       continued  to be  productive  and AGE  continued  to receive  the related
       royalty payments which aggregated  $1,312 in 1997 and $1,433 in 1996. AGE
       will continue to receive these  overriding  interest  royalty payments as
       long as the land remains productive.

       AGE also holds geothermal or all mineral (including geothermal) rights in
       leases  covering  approximately  9,400 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
       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 approximately $4,645,  together with a royalty of five percent
       of gross revenues from the sale of steam 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, 1997:
                  U.S. federal                       $    29,583       (2,759)       26,824
                  State and local                          1,283         (406)          877
                                                       ----------   -----------   ----------
                                                     $    30,866       (3,165)       27,701
                                                       ==========   ===========   ==========
              Year ended December 31, 1996:
                  U.S. federal                       $    26,601       (6,505)       20,096
                  State and local                          4,855         (957)        3,898
                                                       ----------   -----------   ----------
                                                     $    31,456       (7,462)       23,994
                                                       ==========   ===========   ==========
</TABLE>




                                     II-11
<PAGE>




(5)    Income Taxes (continued)
       ------------

       Income tax expense  attributable  to income from operations for the years
       ended December 31, 1997 and 1996,  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:

<TABLE>
<CAPTION>
                                                                                     1997         1996
                                                                                   ----------   ----------
<S>                                                                              <C>              <C>
              Computed "expected" tax expense                                    $   36,630       30,519
              Increase (reduction) in income taxes resulting from:
                    State and local income taxes, net of federal income
                      tax benefit                                                       580        2,573
                    Effect of surtax exemption and other, net                        (9,509)      (9,098)
                                                                                   ----------   ----------
                                                                                 $   27,701       23,994
                                                                                   ==========   ==========

       The tax effects of temporary  differences  that give rise to  significant
       portions of the deferred tax  liabilities  at December 31, 1997 and 1996,
       are presented below:

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

                  Valuation of marketable securities                             $    11,009         5,582
                  Investment in geothermal power unit, principally due
                    to amortization                                                   95,803       104,394
                                                                                   ----------   ----------

                                Total deferred tax liabilities                   $   106,812       109,976
                                                                                   =========     =========
</TABLE>



(6)    Revenues and Expenses of Geothermal Power Unit
       ----------------------------------------------

       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 PacificCorp, 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 1997 and
       1996.  Additionally,  PacificCorp  pays  royalties on the lease AGE holds
       relating to the Unit.  Royalties  due are equal to five  percent of AGE's
       share  of  revenues  from  the  sale  of  steam.   PacificCorp  paid  AGE
       approximately $125,000 and $121,000 in 1997 and 1996,  respectively,  for
       these royalties.

       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  $58,000 and $64,000 in 1997 and
       1996, respectively.





                                     II-12
<PAGE>





(7)    Officer Remuneration
       --------------------

       There was no  compensation  paid to  officers  and  directors  during the
       fiscal years ended December 31, 1997 or 1996.

       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-13
<PAGE>





                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report

                          Year ended December 31, 1997

                                    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
                  Paul T. Walton          President and Director
                  M. Walker Wallace       Vice President and Director
                  Peter W. G. Cayias      Secretary and Director
                  Dominic Welch           Treasurer and Director
                  Katie L. Dixon          Director

              Mr. Fisher, 77, 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.

              Dr. Walton,  84, who became President of AGE upon its organization
              in 1969, has also been a Director since 1969, and has been engaged
              for over 40 years as an independent  geologist in connection  with
              the  exploration  and development of oil and gas and other mineral
              properties.  He is a member of a number of geological associations
              and has  published  numerous  articles in this  field.  He holds a
              bachelor of science in geological engineering, a master of science
              in geology from the University of Utah, and a doctor of philosophy
              in geology from the Massachusetts Institute of Technology.

              Mr.  Wallace,  74, 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 the 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, 62, 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.

              Mr.  Welch,  65,  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.  Mr.  Welch holds a bachelor of arts in
              accounting from Utah State University.

              Mrs. Dixon, 72, 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.




                                     III-2
<PAGE>




                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report



Item 10.      Executive Compensation
--------      ----------------------

              There was no compensation paid to officers or directors during the
              years ended December 31, 1997 and 1996.

              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.


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, 1997:

<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                                       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          Paul T. Walton
                                           -------------------------------------
                                           Paul T. Walton, President and
                                              Principal Executive Officer



Date                                    By          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.


         Paul T. Walton                                M. Walker Wallace
-----------------------------------           ----------------------------------
Paul T. Walton, Director                      M. Walker Wallace, Director





         Peter W. G. Cayias                            Dominic Welch
-----------------------------------           ----------------------------------
Peter W. G. Cayias, Director                  Dominic Welch, Director