FORM 10-KSB.-- ANNUAL REPORT UNDER SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                     (Last amended by 34-32231, eff. 6-3-93)

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] Annual  Report Under Section 13 or 15(d) of the  Securities  Exchange Act of
1934 For the fiscal year ended December 31, 1998
                               -------------------------------------------------

                                       or

[ ] Transition  Report  Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 

For the transition period from                   to
                              -------------------  ---------------------

Commission file number        2-54020
                              --------------------------------------------------
                      American Geological Enterprises, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               Utah                                   87-0273300
--------------------------------------    --------------------------------------
   (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)                 Identification No.)

              495 East 4500 South, #102 Salt Lake City, Utah 84107
--------------------------------------------------------------------------------
                    (Address of principal executive officers)

Registrant's telephone number, including area code       (801) 293-8101
                                                         --------------
Securities registered pursuant to Section 12(b) of the Act:

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.01 Par Value
--------------------------------------------------------------------------------
                                (Title of class)

Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter  period that the  registrant  was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.

                                                          [X]   Yes     [ ] No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is met  contained  in  this  form,  and no  disclosures  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
                                                                        [X]

State issuer's revenues for its most recent fiscal year.                $171,398

The  market  in which  the  common  stock of the  Registrant  is  traded  is the
"over-the-counter"  market.  During the last year  trading  was limited and done
primarily on a negotiated basis.


<PAGE>

                                Table of Contents



  Heading                                                                Page
------------                                                         -----------

                                     Part I

Item 1      Description of Business                                          I-1

Item 2      Description of Property                                          I-1

Item 3      Legal Proceedings                                                I-2

Item 4      Submission of Matters to a Vote of Securities Holders            I-2


                                     Part II

Item 5      Market for Common Equity and Related Stockholder Matters        II-1

Item 6      Management's Discussion and Analysis                            II-1

Item 7      Consolidated Financial Statements                               II-2

Item 8      Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure                        II-2


                                    Part III

Item 9      Directors, Executive Officers, Promoters, 
              and Control Persons;  Compliance with
              Section 16(a) of the Exchange Act                            III-1

Item 10     Executive Compensation                                         III-2

Item 11     Security Ownership of Certain Beneficial 
              Owners and Management                                        III-3

Item 12     Certain Relationships and Related Transactions                 III-3

Item 13     Exhibits and Reports on Form 8-K                               III-3


<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report

                          Year ended December 31, 1998

                                     Part I


Item 1.       Description of Business
-------       -----------------------

              General: American Geological Enterprises, Inc. (AGE) is engaged in
              activities designed to identify and acquire geothermal and oil and
              gas leases.

              Activities  undertaken to identify  such leases have  consisted of
              searches  of  pertinent  geological  literature,  maps and  aerial
              photographs,  construction of maps, and confirmatory fieldwork. In
              connection  with leasehold  acquisitions,  AGE's  activities  have
              included examination of title documents,  location and negotiation
              with landowners, and preparation of leases.

              These   activities  are  performed  by  unsalaried   officers  and
              directors of AGE. AGE proposes to continue these activities and to
              intensify its  promotional  efforts with respect to possible joint
              ventures at selected leasehold sites.

              AGE holds a 5.49 percent  working  interest in the  Roosevelt  Hot
              Springs geothermal power unit (Unit). On July 22, 1993, AGE agreed
              to sell on a  prepayment  basis  its  steam  from  the  Unit for a
              30-year period to PacifiCorp,  which has  constructed the Blundell
              power  plant to  utilize  the  steam.  Certain  leases  have  been
              committed  to the  Unit,  of which  9,257  acres  are  within  the
              participating area.

              Competition:  Competition  for energy leases is intense,  and many
              large  oil  and  gas  companies,   with  financial  and  technical
              resources  greater  than those of AGE,  are now  engaged,  or have
              indicated  an intention to engage,  in the  acquisition  of energy
              leases.

              Regulations: AGE is not currently engaged in energy exploration or
              development.  Should it later enter into such activities,  it will
              be subject to Federal,  state, and local  regulations with respect
              to environmental matters.


Item 2.       Description of Property
-------       -----------------------

              AGE held all  mineral  (including  geothermal)  rights in  leases,
              covering approximately 17,284 acres of land, that expired in 1991.
              However,  certain  leases were assigned to subsequent  parties and
              AGE  retained  an  overriding   interest  in  the  royalties  from
              productive land. As of December 31, 1998,  approximately 450 acres
              of  land  in  Central  Utah  continued  to be  productive  and AGE
              continues to receive the related royalty payments which aggregated
              $432 in 1998.  AGE  will  continue  to  receive  these  overriding
              interest royalty payments as long as the land remains productive.



                                      I-1
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report



Item 2.       Description of Property (continued)
-------       -----------------------------------


              AGE  holds all  mineral  (including  geothermal)  rights in leases
              covering 9,257 acres located in the valley on the west side of the
              Mineral  Mountains in Beaver and Millard  counties in Utah.  These
              leases  include  land that has been  made  part of the  Unit.  The
              original terms of these leases expired in 1991, but the leases are
              automatically  extended  for  1-year  periods as long as the lands
              involved  remain part of the active,  producing  Unit.  The annual
              commitment  for lease  payments on these leases amounts to $4,645,
              plus  a  royalty  equal  to  five  percent  of net  operation  and
              maintenance revenues on one lease.


Item 3.       Legal Proceedings
-------       -----------------

              None.


Item 4.       Submission of Matters to a Vote of Securities Holders
-------       -----------------------------------------------------

              None.



                                      I-2
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report

                          Year ended December 31, 1998

                                     Part II


Item 5.       Market For Common Equity and Related Stockholder Matters
-------       --------------------------------------------------------

              a)  The  market in which the  common  stock of the  Registrant  is
                  traded is the "over-the-counter" market. During the last three
                  years,  there were no established  "bid" or "asked" prices and
                  trading was done primarily on a negotiated basis.

              b) The  approximate  number of holders  of common  stock of AGE at
                 December 31, 1998 is 708.


Item 6.       Management's Discussion and Analysis
-------       ------------------------------------

              AGE is engaged in the  acquisition  of geothermal  and oil and gas
              leases.   Revenue  consists  of  royalties  and  interest.   AGE's
              financial condition and results of operations  fluctuate from year
              to year,  depending upon the production from current  leases,  the
              availability of leases to be acquired, and the opportunity to sell
              lease rights. AGE's ability to obtain future leases or to generate
              revenues from the sale of lease rights is not determinable; hence,
              its financial condition and operations may fluctuate widely in the
              future.

              Results of Operations - Years ended December 31, 1998 and 1997
              --------------------------------------------------------------

              Gross revenues from the Unit represent  sales of steam  production
              and  fluctuate  based on the activity and  production of the Unit.
              Gross revenues for fiscal year 1998 are fairly consistent with the
              previous year's revenues. Net income increased slightly to $82,219
              in 1998 from $80,040 in 1997.  Increases in power unit revenue and
              dividend  income  and a  decrease  in  operating  and  maintenance
              expenses  contributed  to this  increase,  but  were  offset  by a
              decrease  in  interest  income  and an  increase  in  general  and
              administrative  expenses.  All of  these  were  considered  normal
              fluctuation in power unit, investment, and operating activity.

              Royalty Income
              --------------

              AGE owns seven oil and gas leases, all of which have been assigned
              to either Barrett  Resources or Flying J Oil and Gas.  Pursuant to
              these  assignments,   AGE  retained  an  overriding   interest  in
              royalties  from  productive  land; and for the year ended December
              31, 1998, AGE received $432 in override interest royalty payments.

              Liquidity
              ---------

              AGE's liquidity at December 31, 1998, is considered  adequate with
              $1,148,112 in working capital. AGE believes that it has sufficient
              resources to cover its cash needs during the fiscal year 1999.



                                      II-1
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report



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

              Commitments
              -----------

              AGE's future commitments  consist of lease payments on land. There
              are no other commitments or anticipated  expenditures of a capital
              nature, other than the commitment related to the agreement for the
              sale of steam discussed above.

              External Factors
              ----------------

              AGE's economic  future will be dependent,  in major part, upon the
              value of its undeveloped  interests in the Unit. The value of such
              undeveloped  interests  will,  in turn, be dependent  upon,  among
              other matters,  (i) the current price of energy, (ii) governmental
              incentives  to  develop  renewable  resources,   (iii)  regulatory
              incentives, and (iv) the load needs of PacifiCorp.


Item 7.       Consolidated Financial Statements 
-------       --------------------------------- 

              Index to Consolidated Financial Statements                   Page
              ------------------------------------------                   ----

              Independent Auditors' Report                                 II-3

              Consolidated Balance Sheets - December 31, 1998 and 1997     II-4

              Consolidated Statements of Income -
               Years ended December 31, 1998 and 1997                      II-5

              Consolidated Statements of Stockholders' Equity and
               Comprehensive Income - Years ended
                December 31, 1998 and 1997                                 II-6

              Consolidated Statements of Cash Flows -
               Years ended December 31, 1998 and 1997                      II-7

              Notes to Consolidated Financial Statements                   II-8


Item 8.       Changes in and Disagreements  with Accountants on  Accounting  and
-------       ------------------------------------------------------------------
              Financial Disclosure
              --------------------

              None.



                                      II-2
<PAGE>

                          Independent Auditors' Report



The Board of Directors
American Geological Enterprises, Inc.:


We have  audited  the  accompanying  consolidated  balance  sheets  of  American
Geological  Enterprises,  Inc. and subsidiary  (AGE) as of December 31, 1998 and
1997, and the related  consolidated  statements of income,  stockholders' equity
and  comprehensive  income,  and cash  flows for the  years  then  ended.  These
consolidated  financial  statements are the  responsibility of AGE's management.
Our  responsibility  is to express an  opinion on these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of AGE as of December
31, 1998 and 1997, and the results of their  operations and their cash flows for
the  years  then  ended  in  conformity  with  generally   accepted   accounting
principles.


                                                               /s/ KPMG LLP

                                                               KPMG LLP

Salt Lake City, Utah
February 12, 1999


                                      II-3

<PAGE>

<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                           Consolidated Balance Sheets

                           December 31, 1998 and 1997
<CAPTION>

                                        Assets                                               1998          1997
                                        ------                                            -----------   -----------
<S>                                                                                      <C>               <C>    
Current assets:
    Cash and cash equivalents                                                            $   945,212       935,431
    Marketable securities (note 2)                                                           209,049       192,365
    Accounts receivable                                                                       19,874        22,025
    Interest and dividends receivable                                                          1,276         1,276
    Prepaid lease costs                                                                        2,649         2,649
                                                                                          -----------   -----------
           Total current assets                                                            1,178,060     1,153,746

Investment in geothermal power unit, at cost, less accumulated amortization of
   $164,940 and $134,951 at December 31, 1998 and 1997, respectively                         662,259       692,248

Marketable securities (note 2)                                                                70,968        71,106
                                                                                          -----------   -----------
           Total assets                                                                  $ 1,911,287     1,917,100
                                                                                          ===========   ===========

                         Liabilities and Stockholders' Equity
                         ------------------------------------
Current liabilities:
    Accounts payable                                                                     $    12,238         7,751
    Income taxes payable                                                                       7,636        18,374
    Accrued liabilities                                                                          416        27,286
    Deferred income taxes (note 5)                                                             9,658        11,009
                                                                                          -----------   -----------
           Total current liabilities                                                          29,948        64,420
Deferred income taxes (note 5)                                                                86,657        95,803
Deferred revenue (note 6)                                                                    937,435       979,885
Minority interest                                                                             11,460        11,152
Stockholders' equity:
    Common stock, $.01 par value; authorized 2,500,000 shares; issued and
      outstanding 1,260,997 shares                                                            12,610        12,610
    Additional paid-in capital                                                               557,211       557,211
    Accumulated other comprehensive income                                                    16,234        18,506
    Retained earnings                                                                        259,732       177,513
                                                                                          -----------   -----------
           Total stockholders' equity                                                        845,787       765,840
Commitments (note 4)


                                                                                          -----------   -----------
           Total liabilities and stockholders' equity                                    $ 1,911,287     1,917,100
                                                                                          ===========   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      II-4
<PAGE>

<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                        Consolidated Statements of Income

                     Years ended December 31, 1998 and 1997
<CAPTION>

                                                                                1998         1997
                                                                             ----------   ----------
<S>                                                                         <C>             <C>    
Revenues - geothermal power unit (note 6)                                   $  171,398      167,013
                                                                             ----------   ----------
Expenses:
    Operating and maintenance of geothermal power unit (note 6)                 49,996       58,454
    Amortization of geothermal power unit                                       29,989       29,989
    General and administrative                                                  33,400       26,574
    Lease costs                                                                  4,645        4,645
                                                                             ----------   ----------
                                                                               118,030      119,662
                                                                             ----------   ----------
           Operating income                                                     53,368       47,351
Other income:
    Interest income                                                             32,656       42,765
    Dividend income                                                             25,721       16,188
    Royalties                                                                      432        1,312
    Gain on redemption of marketable securities                                      -          125
                                                                             ----------   ----------
                                                                                58,809       60,390
                                                                             ----------   ----------

           Income before income taxes                                          112,177      107,741
Income tax expense (note 5)                                                     29,958       27,701
                                                                             ----------   ----------
           Net income                                                       $   82,219       80,040
                                                                             ==========   ==========

Basic net income per share                                                  $      .07          .06
                                                                             ==========   ==========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      II-5
<PAGE>

<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

    Consolidated Statements of Stockholders' Equity and Comprehensive Income

                     Years ended December 31, 1998 and 1997
<CAPTION>
                                                                                   Accumu-
                                                                                    lated
                                                             Addi-                  other                Total
                                        Common stock        tional     Compre-     compre-               stock-
                                    --------------------     paid-     hensive     hensive   Retained   holders'
                                     Shares     Amount    in capital   income      income    earnings    equity
                                    ---------  ---------   --------   ---------   --------   --------   --------
<S>                                 <C>       <C>           <C>         <C>          <C>       <C>       <C>    
Balances, December 31, 1996         1,260,997 $  12,610     557,211          -       9,383     97,473    676,677

Comprehensive income:

   Net income                              -          -           -     80,040           -     80,040     80,040

   Other comprehensive income, net of tax:

      Realized and unrealized
       gain on marketable                  -          -           -      9,021           -          -          -
       securities

      Reclassification for
       realized gain recorded
       in statement of income              -          -           -        (78)          -          -          -
                                                                      ---------
   Other comprehensive income,
     net of tax expense of $5,427          -          -           -      9,123       9,123          -      9,123
                                                                      ---------

Comprehensive income                                                $   89,163
                                    ---------  ---------   --------   =========   --------   ---------  ---------

Balances, December 31, 1997         1,260,997 $  12,610     557,211                 18,506    177,513    765,840

Comprehensive income:
   Net income                              -          -           -     82,219           -     82,219     82,219
   Other comprehensive
     income-unrealized loss on
     marketable securities,
     net of tax benefit of                 -          -           -     (2,272)     (2,272)         -     (2,272)
     $1,352
                                                                      ---------

Comprehensive income                                                $   79,947
                                    ---------  ---------   --------   =========   --------   ---------  ---------

Balances, December 31, 1998         1,260,997 $  12,610     557,211                 16,234    259,732    845,787
                                    =========  =========   ========               ========   =========  =========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      II-6
<PAGE>

<TABLE>
                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 1998 and 1997
<CAPTION>

                                                                                           1998          1997
                                                                                        ----------    ----------
<S>                                                                                    <C>               <C>   
Cash flows from operating activities:
    Net income                                                                         $   82,219        80,040
    Adjustments to reconcile net income to net cash provided by operating
      activities:
         Amortization of geothermal power unit                                             29,989        29,989
         Amortization on investments                                                          138           133
         Gain on redemption of marketable securities                                            -          (125)
         Changes in operating assets and liabilities:
            Receivables                                                                     2,151         2,389
            Accounts payable and accrued liabilities                                      (22,383)        7,514
            Income taxes payable                                                          (10,738)       16,285
            Minority interest                                                                 308         1,066
            Deferred income taxes                                                          (9,146)       (8,466)
            Deferred revenue                                                              (42,450)      (42,450)
                                                                                        ----------    ----------
                  Net cash provided by operating activities                                30,088        86,375
                                                                                        ----------    ----------
Cash flows from investing activities:
    Redemption of marketable securities                                                         -        25,000
    Acquisition of marketable securities                                                  (20,307)       (9,598)
                                                                                        ----------    ----------
                  Net cash provided by (used in) investing activities                     (20,307)       15,402
                                                                                        ----------    ----------
Increase in cash and cash equivalents                                                       9,781       101,777
Cash and cash equivalents, beginning of year                                              935,431       833,654
                                                                                        ----------    ----------
Cash and cash equivalents, end of year                                                 $  945,212       935,431
                                                                                        ==========    ==========

Supplemental Disclosure of Cash Flow Information
Cash paid during the year for income taxes                                             $   37,160        19,747
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      II-7
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997



(1)    Summary of Significant Accounting Policies
       ------------------------------------------

       (a)  Description of Business
            -----------------------

            American  Geological  Enterprises,  Inc.  and  subsidiary  (AGE) are
            engaged in  activities  designed to identify and acquire  geothermal
            and oil and gas leases in the Western United  States.  AGE's revenue
            is primarily derived from royalty payments from these leases.

       (b)  Marketable Securities
            ---------------------

            Marketable  investment  securities  consist  of  corporate  debt and
            equity   securities.   AGE   classifies   its  debt   securities  as
            "held-to-maturity" and all other securities as "available-for-sale."

            Available-for-sale   securities   are   recorded   at  fair   value.
            Held-to-maturity  securities  are recorded at cost  adjusted for the
            accretion of premiums and  discounts.  Unrealized  holding gains and
            losses,  net  of  the  related  tax  effect,  on  available-for-sale
            securities   are  excluded   from   earnings  and  are  reported  as
            accumulated other comprehensive income in stockholders' equity until
            realized.

            A decline in the  market  value of any  available-for-sale  security
            below  cost that is deemed to be other than  temporary  results in a
            reduction  in  carrying  amount to fair  value.  The  impairment  is
            charged  to  earnings  and a new  cost  basis  for the  security  is
            established.  Dividend  and  interest  income  are  recognized  when
            earned.

       (c)  Investment in Geothermal Power Unit
            -----------------------------------

            AGE holds a 5.49  percent  working  interest  in the  Roosevelt  Hot
            Springs  geothermal power unit (Unit). The investment in the Unit is
            being  amortized  using the  straight-line  method over the term (30
            years) of the steam sale agreement with PacifiCorp (note 6).

       (d)  Lease Costs
            -----------

            Annual lease  payments  are  expensed  over the period of the lease.
            Direct  costs of  acquisition  of new  leases  are  capitalized  and
            amortized over the initial life of the lease.

       (e)  Cash and Cash Equivalents
            -------------------------

            Cash and cash  equivalents  include  all cash and  investments  with
            original maturities to AGE of three months or less.


                                      II-8
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements


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

            Basic net income  per share is the  amount of net income  (loss) for
            the  period  available  to each  share of common  stock  outstanding
            during  the  reporting  period.   Diluted  earnings  per  share,  if
            applicable,  is the  amount  of net  income  (loss)  for the  period
            available  to each  share of common  stock  outstanding  during  the
            reporting  period and to each share that would have been outstanding
            assuming  the issuance of common  shares for all dilutive  potential
            common shares  outstanding  during the period. For fiscal years 1998
            and 1997,  only the basic earnings per share is  applicable,  as AGE
            had no potentially  dilutive  common shares  outstanding.  Basic net
            income  per share  computations  are  based  upon  1,260,977  shares
            outstanding for the years ended December 31, 1998 and 1997.

       (g)  Consolidation Policy
            --------------------

            AGE owns 83.8 percent interest in Overthrust Exploration Corporation
            (Overthrust),  a Nevada corporation that was incorporated to explore
            for and develop oil and gas properties.  Accordingly, Overthrust has
            been  included  in  the  consolidated   financial  statements.   All
            directors of Overthrust are also directors of AGE. All  intercompany
            accounts have been eliminated in consolidation.

       (h)  Comprehensive Income
            --------------------

            Effective  January 1,  1998,  AGE  adopted  Statement  of  Financial
            Accounting  Standards No. 130, Reporting  Comprehensive Income (SFAS
            No. 130).  This  statement  establishes  rules for the  reporting of
            comprehensive  income  and  its  components.   Comprehensive  income
            consists  of net  income  and  unrealized  gains or  losses on AGE's
            available-for-sale  securities and is presented in the  consolidated
            statement of  stockholders'  equity and  comprehensive  income.  The
            adoption  of SFAS  No.  130 had no  impact  on  total  stockholders'
            equity.  Prior  year  consolidated  financial  statements  have been
            reclassified to conform to the SFAS No. 130 requirements.

       (i)  Use of Estimates
            ----------------

            Management of AGE has made estimates and assumptions relating to the
            reporting of assets and  liabilities  to prepare these  consolidated
            financial   statements  in  conformity   with   generally   accepted
            accounting  principles.  Actual  results  could  differ  from  those
            estimates.


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

       Marketable  investment  securities at December 31, 1998 and 1997, consist
       of:
                                                        1998           1997
                                                    ------------   -------------
            Available-for-sale, at fair value    $      209,049        192,365
            Held-to-maturity, at amortized cost          70,968         71,106
                                                    ------------   -------------
                                                 $      280,017        263,471
                                                    ============   =============


                                      II-9
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements



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

       The amortized cost, gross unrealized holding gains, and fair market value
       for marketable securities by major security type at December 31, 1998 and
       1997, were as follows:
<TABLE>
<CAPTION>
                                                                                        Gross
                                                                                     unrealized
                                                                     Amortized         holding
                                                                        cost            gains       Fair value
                                                                    ------------   -------------   -------------
<S>                                                              <C>                     <C>           <C>    
            Year ended December 31, 1998:
                Available-for-sale - equity securities           $      183,157          25,892        209,049
                                                                    ============   =============   =============
                Held-to-maturity - corporate debt securities     $       70,968           7,786         78,754
                                                                    ============   =============   =============

            Year ended December 31, 1997:
                Available-for-sale - equity securities           $      162,850          29,515        192,365
                                                                    ============    ============    ============
                Held-to-maturity - corporate debt securities     $       71,106            5,203        76,309
                                                                    ============    ============    ============

       Maturities  of debt  securities  classified as  held-to-maturity  were as
       follows at December 31, 1998:

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

            Due within five years                                $       50,315          52,964
            Due after ten years                                          20,653          25,790
                                                                    ------------    ------------
                                                                 $       70,968          78,754
                                                                    ============    ============
</TABLE>


(3)    Fair Value of Financial Instruments
       -----------------------------------

       The carrying  value for certain  short-term  financial  instruments  that
       mature frequently  approximates  fair value.  Such financial  instruments
       include:  cash and cash equivalents,  accounts  receivable,  and accounts
       payable.  The fair values of debt  securities and equity  investments are
       based on quoted market prices at the reporting  date for those or similar
       investments (see note 2).


(4)    Land Leases
       -----------

       AGE held all mineral (including  geothermal)  rights in leases,  covering
       approximately  17,284  acres  of land,  that  expired  in 1991.  However,
       certain  leases were assigned to  subsequent  parties and AGE retained an
       overriding interest in the royalties from productive land. As of December
       31, 1998, approximately 450 acres of land in Central Utah continued to be
       productive  and AGE  continued  to receive the related  royalty  payments
       which  aggregated  $432 in 1998 and $1,312 in 1997.  AGE will continue to
       receive these  overriding  interest  royalty payments as long as the land
       remains productive.


                                     II-10
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements


(4)    Land Leases (continued)
       -----------

       AGE also  holds  all  mineral  (including  geothermal)  rights  in leases
       covering  9,257  acres  located  in the  valley  on the west  side of the
       Mineral  Mountains in Beaver and Millard  counties in Utah.  These leases
       include  land  that has  been  made  part of the  Roosevelt  Hot  Springs
       geothermal  power unit (the Unit).  The  original  terms of these  leases
       expired in 1991, but the leases are  automatically  extended for one-year
       periods  as  long  as the  lands  involved  remain  part  of the  active,
       producing Unit. The annual  commitment for lease payments on these leases
       amounts to $4,645,  plus a royalty equal to five percent of net operation
       and  maintenance  revenues on one lease.  AGE may terminate its leases by
       not making the annual lease or royalty payments.


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

       Income tax  expense  (benefit)  attributable  to income  from  operations
       consists of:

<TABLE>
<CAPTION>
                                                                             Current      Deferred      Total
                                                                           ----------   -----------   ----------
              <S>                                                        <C>               <C>           <C>   
              Year ended December 31, 1998:
                  U.S. Federal                                           $    33,653       (9,090)       24,563
                  State and local                                              6,802       (1,407)        5,395
                                                                           ----------   -----------   ----------
                                                                         $    40,455      (10,497)       29,958
                                                                           ==========   ===========   ==========
              Year ended December 31, 1997:
                  U.S. Federal                                           $    29,583       (2,759)       26,824
                  State and local                                              1,283         (406)          877
                                                                           ----------   -----------   ----------
                                                                         $    30,866       (3,165)       27,701
                                                                           ==========   ===========   ==========

       Income tax expense  attributable  to income from operations for the years
       ended December 31, 1998 and 1997,  differed from the amounts  computed by
       applying the U.S.  federal income tax rate of 34 percent to pretax income
       from continuing operations as a result of the following:


                                                                              1998         1997
                                                                           ----------   ----------
              Computed "expected" tax expense                            $   38,120       36,630
              Increase (reduction) in income taxes resulting from:
                    State and local income taxes, net of federal
                      income tax benefit                                      3,561          580
                    Effect of surtax exemption and other, net               (11,723)      (9,509)
                                                                           ----------   ----------
                                                                         $   29,958       27,701
                                                                           ==========   ==========
</TABLE>


                                     II-11
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements


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

       The tax effects of temporary  differences  that give rise to  significant
       portions of the deferred tax  liabilities  at December 31, 1998 and 1997,
       are presented below:

<TABLE>
<CAPTION>
                                                                                     1998          1997
                                                                                   ---------     ---------
                  <S>                                                            <C>                <C>   
                  Valuation of marketable securities                             $     9,658        11,009
                  Investment in geothermal power unit, principally due
                    to amortization                                                   86,657        95,803
                                                                                   ---------     ---------
                                Total deferred tax liabilities                   $    96,315       106,812
                                                                                   =========     =========
</TABLE>


(6)    Geothermal Power Unit and Concentration of Credit
       -------------------------------------------------

       AGE entered  into an  agreement  on July 22,  1993,  to sell its share of
       steam from the Unit for a 30-year period on a prepayment basis commencing
       January 22, 1991 to PacifiCorp,  which has constructed the Blundell power
       plant to utilize the steam.  The advance  received is being recognized as
       revenue  over  the   remaining   term  of  the   agreement.   Revenue  of
       approximately  $42,000 was amortized  and  recognized in each of 1998 and
       1997.

       AGE  is  required  to  pay  its  proportionate  share  of  operating  and
       maintenance  expenses to the operator of the Unit. AGE paid operating and
       maintenance  expenses  of  approximately  $50,000 and $58,000 in 1998 and
       1997, respectively.

       Additionally,  PacifiCorp pays AGE for operating and maintenance services
       and a reimbursement of royalties for one lease AGE holds that is included
       in the Unit.  PacifiCorp paid AGE approximately  $129,000 and $125,000 in
       1998 and 1997, respectively,  for operating and maintenance services that
       is reported  as revenue  from the Unit.  Royalties  due are equal to five
       percent of AGE's net operating and maintenance  revenue.  PacifiCorp paid
       AGE approximately $3,900 and $3,300 in 1998 and 1997,  respectively,  for
       these royalties which AGE, in turn, paid to its lessors.


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

       There was no  compensation  paid to  officers  and  directors  during the
       fiscal years ended December 31, 1998 or 1997.

       The stockholders  adopted an Employee  Qualified Stock Option Plan (Plan)
       under  which a maximum of 25,000  shares of AGE's  $.01 par value  common
       stock are reserved  for issuance to key  employees of AGE at market value
       on the date of grant.  Options  expire five years from the date of grant.
       No options are outstanding under the Plan.



                                     II-12
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report

                          Year ended December 31, 1998

                                    Part III



Item 9.       Directors,  Executive  Officers,  Promoters,  and Control Persons;
-------       Compliance with Section 16(a) of the Exchange Act
              ------------------------------------------------------------------

              The following  directors  and executive  officers will serve until
              the next annual  stockholders'  meeting and until their successors
              are duly qualified and elected.

                         Name                               Office
                         ----                               ------
                    Milton Fisher             Chairman of the Board and Director
                    Dominic Welch             President, Treasurer and Director
                    M. Walker Wallace         Vice President and Director
                    Peter W. G. Cayias        Secretary and Director
                    Katie L. Dixon            Director

              Mr. Fisher, 78, President of A. D. Gilhart & Co., Inc. (investment
              bankers  since  1959),  has  been  a  Director  of AGE  since  its
              organization  in 1969 and now serves as Chairman of the Board.  He
              holds a doctor of law,  is a member of the Bar of the State of New
              York,  and  presently  serves  as a  director  of  several  public
              companies.  He has written  and  lectured in the field of business
              finance and interpersonal relationships.

              Mr.  Welch,  66,  is a  certified  public  accountant  and  is the
              President and a Director of Kearns-Tribune  Corporation,  where he
              has been  employed  for over 20 years.  He became a  Director  and
              Treasurer of AGE in 1970 and President in 1998.  Mr. Welch holds a
              bachelor of arts in accounting from Utah State University.

              Mr.  Wallace,  75, has been an officer and director of AGE and has
              devoted a portion of his time to its  affairs  since  1969.  He is
              also,  and  has  been  for  over 35  years,  a  consultant  in the
              development  and  management  of real property  investments  and a
              private investor. Mr. Wallace presently serves as a Director and a
              member of the  executive  committee  of First  Interstate  Bank of
              Utah,  as a  Director  and  President  of  Arizona  Ranch & Metals
              Company,  and as  Chairman  of Wallace  Associates,  Inc.,  a real
              estate investment and management firm. He holds a bachelor of arts
              from Stanford  University  and a master's  degree in city planning
              from the Massachusetts Institute of Technology.


                                     III-1
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report


Item 9.       Directors,  Executive  Officers,  Promoters,  and Control Persons,
-------       ------------------------------------------------------------------
              Compliance with Section 16(a) of the Exchange Act (continued)
              -------------------------------------------------

              Mr. Cayias, 63, has been a licensed insurance agent since 1960. He
              has been an Officer and  Director of AGE since 1969 and is also an
              Officer and Director of several other corporations  engaged in the
              real estate business and natural resource investment business. Mr.
              Cayias holds a bachelor of science in business administration from
              the University of Utah.

              Mrs. Dixon, 73, was Recorder of Salt Lake County from January 1975
              through  December 1994, and a Director of AGE since 1972. For more
              than 14  years  prior  to  1975,  she was  involved  in  community
              affairs.  Mrs.  Dixon holds a bachelor of science  from Utah State
              University.

              Beneficial Ownership Reporting Compliance
              -----------------------------------------

              Section 16(a) of the Exchange Act of 1934 requires AGE's officers,
              directors,  and  persons  who  own  more  than  ten  percent  of a
              registered  class of AGE's equity  securities,  to file reports of
              ownership  and  changes  in  ownership  with  the  Securities  and
              Exchange  Commission  (SEC)  and  the  New  York  Stock  Exchange.
              Officers, directors, and greater than ten percent stockholders are
              required  by SEC  regulation  to  furnish  AGE with  copies of all
              Section 16(a) forms they file.

              Based solely on its review of the copies of such forms received by
              it, or written representations from certain reporting persons that
              no Forms 5 were  required for those  persons,  AGE  believes  that
              during AGE's last fiscal year all filing  requirements  applicable
              to  its  officers,   directors,   and  greater  than  ten  percent
              beneficial owners were complied with.



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

              There was no compensation paid to officers or directors during the
              years ended December 31, 1998 and 1997.

              On  December  15,  1970,  the  stockholders  adopted  an  Employee
              Qualified Stock Option Plan (Plan) under which a maximum of 25,000
              shares of AGE's  common  stock are  reserved  for  issuance to key
              employees  of AGE at market  value on the date of  grant.  Options
              expire  five  years  from  the  date  of  grant.  No  options  are
              outstanding under the Plan.


                                     III-2
<PAGE>

                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                            Form 10-KSB Annual Report



Item 11.      Security Ownership of Certain Beneficial Owners and Management
--------      --------------------------------------------------------------

              The following table sets forth  information as to the ownership of
              AGE's $.01 par value common stock by all officers and directors of
              AGE as a group and by owners  of more than five  percent  of AGE's
              common stock as of December 31, 1998:

<TABLE>
<CAPTION>
                                                                       Type of            Amount         Percent of
               Name                                                   ownership           owned            class
               ----                                                ---------------     ------------     ----------
                  <S>                                                  <C>                <C>              <C>
                  All directors and officers (6) as a group            Record             395,747          31%
                  M. Walker Wallace                                    Record             107,667           9
                  Katie L. Dixon                                       Record             104,428           8
                  Paul T. Walton Estate                                Record              76,665           6
                  Milton Fisher                                        Record              75,646           6
</TABLE>


Item 12.      Certain Relationships and Related Transactions
--------      ----------------------------------------------

              None.


Item 13.      Exhibits and Reports on Form 8-K
--------      --------------------------------

              Report on Form 8-K
              ------------------

              No reports on Form 8-K have been filed.


                                     III-3
<PAGE>

                                S I G N A T U R E
                                -----------------


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


AMERICAN GEOLOGICAL ENTERPRISES, INC.
-------------------------------------
                                                            (Registrant)




                                      By  /s/ Dominic Welch
                                        ----------------------------------------
                                        Dominic Welch, President and
                                         Principal Executive Officer



Date  March 25, 1999                  By  /s/ Peter W. G. Cayias
    -------------------------------     ----------------------------------------
                                        Peter W. G. Cayias, Secretary and
                                         Principal Financial Officer


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


       /s/ Dominic Welch                   /s/ M. Walker Wallace
-----------------------------------     ----------------------------------------
 Dominic Welch, Director                 M. Walker Wallace, Director





       /s/ Peter W. G. Cayias
-----------------------------------
 Peter W. G. Cayias, Director