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, 1996
                    -----------------------------------------
                                       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.               $163,743

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-3

Item 8      Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure                                     II-3


                                    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, 1996

                                     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,  Corp.  (Roosevelt) 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 Utah  Power & Light  Company
              (UP&L),  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, 1996,  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  $1,433 in 1996.  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 revenues from steam production 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, 1996

                                     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, 1996 is 791.


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, 1996 and 1995:

              Gross revenues from the Unit represent  sales of steam  production
              and  fluctuate  based on the activity and  production of the Unit.
              Gross  revenues for 1996 are fairly  consistent  with the previous
              year's  revenues,  however,  income from  operations  increased to
              $32,976 in 1996 from $19,499 in 1995. The majority of the increase
              in income from operations  resulted from a decrease in general and
              administrative  expenses  ($31,968 in 1996  compared to $40,552 in
              1995). General and administrative expenses were higher in 1995 due
              to legal fees  related  to a  proposed  merger  with  Natural  Gas
              Vehicle (NGV). This proposed merger with NGV was terminated during
              fiscal year 1996.

              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,  1996,  AGE  received  $1,433 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, 1996, is considered  adequate with
              $1,025,598 in working capital. AGE believes that it has sufficient
              resources to cover its cash needs during the fiscal year 1996.

              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 UP&L.


Item 7.       Consolidated Financial Statements

              Index to Consolidated Financial Statements                    Page

              Independent Auditors' Report                                  II-3

              Consolidated Balance Sheets - December 31, 1996 and 1995      II-4

              Consolidated Statements of Operations -
                 Years ended December 31, 1996 and 1995                     II-5

              Consolidated Statements of Stockholders' Equity -
                 Years ended December 31, 1996 and 1995                     II-6

              Consolidated Statements of Cash Flows -
                 Years ended December 31, 1996 and 1995                     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, 1996 and
1995,  and the related  consolidated  statements  of  operations,  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, 1996 and 1995, 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 21, 1997

                                      II-3
<PAGE>


                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                           Consolidated Balance Sheets

                           December 31, 1996 and 1995
<TABLE>
<CAPTION>



                                       Assets                                              1996            1995
                                       ------
                                                                                        ------------    -----------
Current assets:
<S>                                                                                    <C>                  <C>    
    Cash and cash equivalents                                                          $    833,654         869,129
    Marketable securities (note 2)                                                          193,217         184,308
    Accounts receivable                                                                      24,414          20,988
    Interest and dividends receivable                                                         1,276           1,297
    Prepaid lease costs                                                                       2,649           2,649
                                                                                        ------------    -----------
           Total current assets                                                           1,055,210       1,078,371

Investment in geothermal power unit, at cost, less accumulated amortization of
   $104,962 and $74,973 at December 31, 1996 and 1995                                       722,237         752,226

Marketable securities (note 2)                                                               71,239          74,348
                                                                                        ------------    -----------
           Total assets                                                                $  1,848,686       1,904,945
                                                                                        ============    ===========

<CAPTION>
                        Liabilities and Stockholders' Equity
Current liabilities:
<S>                                                                                    <C>                   <C>   
    Accounts payable                                                                   $      6,793          18,858
    Income taxes payable                                                                      2,089          68,269
    Accrued liabilities                                                                      20,730          14,668
                                                                                        ------------    -----------
           Total current liabilities                                                         29,612         101,795
Deferred income taxes (note 5)                                                              109,976         117,437
Deferred revenue (note 6)                                                                 1,022,335       1,064,784
Minority interest                                                                            10,086           9,674
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                                      9,383           9,731
    Retained earnings                                                                        97,473          31,703
                                                                                        ------------    -----------
                                                                                            676,677         611,255
Commitments (note 4)
                                                                                        ------------    -----------
           Total liabilities and stockholders' equity                                  $  1,848,686       1,904,945
                                                                                        ============    ===========
</TABLE>



See accompanying notes to consolidated financial statements.

                                      II-4
<PAGE>


                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                      Consolidated Statements of Operations

                     Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>



                                                                                               1996           1995
                                                                                            -----------   -----------

<S>                                                                                        <C>               <C>    
Revenues - gross revenues from geothermal power unit (note 6)                              $   163,743       160,619
                                                                                            -----------   -----------
Expenses
    Operating and maintenance of geothermal power unit (note 6)                                 64,165        65,934
    Amortization of geothermal power unit                                                       29,989        29,989
    General and administrative                                                                  31,968        40,552
    Lease costs                                                                                  4,645         4,645
                                                                                            -----------   -----------
                                                                                               130,767       141,120
                                                                                            -----------   -----------
           Income from continuing operations                                                    32,976        19,499
Other income:
    Interest income                                                                             38,451        37,690
    Dividend income                                                                             16,904        16,035
    Gain on redemption of marketable securities                                                      -            73
    Royalties                                                                                    1,433         3,063
                                                                                            -----------   -----------
                                                                                                56,788        56,861
                                                                                            -----------   -----------

           Income before income taxes                                                           89,764        76,360
Income tax expense (note 5)                                                                     23,994        17,668
                                                                                            -----------   -----------
           Net income                                                                      $    65,770        58,692
                                                                                            ===========   ===========

Income per share:                                                                          $       .05           .05
                                                                                            ===========   ===========

</TABLE>


          See accompanying notes to consolidated financial statements.

                                      II-5
<PAGE>


                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                 Consolidated Statements of Stockholders' Equity

                     Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>


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

Balance,
<S>                          <C>         <C>                     <C>           <C>             <C>          <C>    
   December 31, 1994         1,260,997   $     12,610            557,211       (1,291)         (26,989)     541,541

Unrealized gain on
   marketable securities,
   net of tax                        -              -                  -       11,022                -       11,022
Net income                           -              -                  -            -           58,692       58,692
                           ------------   ------------   ---------------   ------------   -------------   ----------

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
                           ============   ============   ===============   ============   =============   ==========
</TABLE>





          See accompanying notes to consolidated financial statements.

                                      II-6


<PAGE>


                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>


                                                                                            1996           1995
                                                                                        ------------   ------------
Cash flows from operating activities:
<S>                                                                                    <C>                 <C>   
    Net income                                                                         $    65,770         58,692
    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
         Amortization of geothermal power unit                                              29,989         29,989
         Gain on redemption of marketable securities                                             -            (73)
         Change in operating assets and liabilities:
            Receivables                                                                     (3,404)          (528)
            Accounts payable and accrued liabilities                                        (6,003)        14,919
            Income taxes payable                                                           (66,180)        51,477
            Minority interest                                                                  412            472
            Deferred income taxes                                                           (7,255)       (46,867)
            Deferred revenue                                                               (42,450)       (42,450)
                                                                                        ------------   ------------
                  Net cash provided by (used in) operating activities                      (29,121)        65,631
                                                                                        ------------   ------------
Cash flows from investing activities:
    Redemption of marketable securities                                                      3,000          7,000
    Acquisition of marketable securities                                                    (9,354)        (8,414)
                                                                                        ------------   ------------
                  Net cash used in investing activities                                     (6,354)        (1,414)
                                                                                        ------------   ------------
Increase (decrease) in cash and cash equivalents                                           (35,475)        64,217
Cash and cash equivalents, beginning of year                                               869,129        804,912
                                                                                        ============   ============
Cash and cash equivalents, end of year                                                 $   833,654        869,129
                                                                                        ============   ============

Supplemental Disclosure of Cash Flow Information
Cash paid during the year for income taxes                                             $    28,680         21,800

</TABLE>



          See accompanying notes to consolidated financial statements.

                                      II-7
<PAGE>


                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements

                           December 31, 1996 and 1995



(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 of these leases.

       (b)  Marketable Securities

            Marketable  investment  securities  at December  31, 1996 consist of
            corporate  debt,  and  mortgage  backed 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 UP&L (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.

       (f)  Income Per Share

            Income per share  computations have been based upon 1,260,977 shares
            outstanding  for  the  years  ended  December  31,  1996  and  1995,
            respectively.

                                      II-8
<PAGE>


                      AMERICAN GEOLOGICAL ENTERPRISES, INC.

                   Notes to Consolidated Financial Statements


       (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 prior year amounts have been  reclassified to conform to the
            current years' 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.


(2)    Marketable Securities

       Marketable  investment  securities at December 31, 1996 and 1995, consist
       of:
                                                        1996          1995
                                                     -----------   -----------

            Available-for-sale, at fair value       $    193,217       184,308
            Held-to-maturity, at amortized cost           71,239        74,348
                                                     ===========   ===========
                                                    $    264,456       258,656
                                                     ===========   ===========

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

                                                                                        Gross
                                                                                      unrealized
                                                                     Amortized         holding 
                                                                        cost            gains       Fair value
                                                                    ------------    ------------   -------------
            Year ended December 31, 1996:
                Available-for-sale:
<S>                                                                <C>                       <C>        <C>   
                   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
                                                                    ============    ============   =============
                                      II-9

<PAGE>

<CAPTION>

(2)    Marketable Securities (continued)
                                                                                       Gross
                                                                                     unrealized
                                                                     Amortized        holding
                                                                        cost            gains        Fair value
                                                                    ------------    ------------    ------------

            Year ended December 31, 1995:
                Available-for-sale:
<S>                                                                <C>                       <C>         <C>   
                   Mortgage-backed securities                      $      25,000             875         25,875
                   Equity securities                                     143,790          14,643        158,433
                                                                    ------------    ------------    ------------

                                                                   $     168,790          15,518        184,308
                                                                    ============    ============    ============

                Held-to-maturity - corporate debt securities
                                                                   $      74,348           6,059         80,407
                                                                    ============    ============    ============
<CAPTION>

       Maturities  of debt  securities  classified as  held-to-maturity  were as
       follows at December 31, 1996:

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

<S>                                                                <C>                    <C>   
            Due after five years through ten years                 $     50,487           51,094
            Due after ten years                                          20,752           23,044
                                                                    ============    ============
                                                                   $     71,239           74,138
                                                                    ============    ============
</TABLE>


(3)    Fair Value of Financial Instruments

       The carrying  value for certain  short-term  financial  instruments  that
       mature  frequently  approximate  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,  1996,  approximately  450 acres of land in Central Utah
       continued  to be  productive  and AGE  continued  to receive  the related
       royalty payments which aggregated  $1,433 in 1996 and $3,063 in 1995. AGE
       will continue to receive these  overriding  interest  royalty payments as
       long as the land remains productive.

                                     II-10

<PAGE>


(4)    Land Leases (continued)

       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 Corp. 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 net revenues from the sale of steam with respect to 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
                                                                         -----------  -------------  ---------
              Year ended December 31, 1996:
<S>                                                                      <C>               <C>          <C>   
                  U.S. federal                                           $   26,601        (6,505)      20,096
                  State and local                                             4,855          (957)       3,898
                                                                         ===========  =============  =========
                                                                         $   31,456        (7,462)      23,994
                                                                         ===========  =============  =========
              Year ended December 31, 1995:
                  U.S. federal                                           $   47,023       (32,712)      14,311
                  State and local                                            11,030        (7,673)       3,357
                                                                         -----------  -------------  ---------
                                                                         $   58,053       (40,385)      17,668
                                                                         ===========  =============  =========
</TABLE>

       Income tax expense  attributable  to income from operations for the years
       ended December 31, 1996 and 1995,  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>

                                                                                      1996           1995
                                                                                    ----------     ----------

<S>                                                                                 <C>                <C>   
              Computed "expected" tax expense                                       $  30,519          25,962
              Increase (reduction) in income taxes resulting from:
                    State and local income taxes, net of federal income
                      tax benefit                                                       2,573           2,216
                    Effect of surtax exemption
                      and other, net                                                   (9,098)        (10,510)
                                                                                    ==========     ==========
                                                                                    $  23,994          17,668
                                                                                    ==========     ==========
</TABLE>

                                     II-11

<PAGE>


(5)    Income Taxes (continued)

       The tax effects of temporary  differences  that give rise to  significant
       portions of the deferred tax  liabilities  at December 31, 1996 and 1995,
       are presented below:
<TABLE>
<CAPTION>

                                                                                      1996          1995
                                                                                   ----------    -----------

              Deferred tax liabilities:

<S>                                                                                <C>                <C>  
                  Valuation of marketable securities                               $    5,582         5,788

                  Investment in geothermal power unit, principally due to
                    amortization                                                      104,394       111,649
                                                                                   ==========    ===========

                                Total deferred tax liabilities                     $  109,976       117,437
                                                                                   ==========    ===========

</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 Utah Power & Light (UP&L),  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 1996 and
       1995.  Additionally,  UP&L 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. UP&L paid AGE approximately $121,000 and
       $118,000 in 1996 and 1995, 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  $64,000 and $66,000 in 1996 and
       1995, respectively.


(7)    Officer Remuneration

       There was no compensation  paid to officers and directors  during 1996 or
       1995.

       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, 1996

                                    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, 76, 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,  83, 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,  73, 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, 61, 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,  64,  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, 71, 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
              year ended December 31, 1996 and 1995.

              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, 1996:
<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%
                  Milton Fisher                                        Record              75,646            6
                  Katie L. Dixon                                       Record             104,428            8
                  Paul T. Walton                                       Record              76,665            6
                  M. Walker Wallace                                    Record             107,667            9

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



Date       March 27, 1997                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/  Paul T. Walton                            /S/  M. Walker Wallace
------------------------------------           ---------------------------------
Paul T. Walton, Director                       M. Walker Wallace, Director





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