FORM 10-K (UNAUDITED)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1998
_________________
Commission File No. 0-10286
_______
General Energy Resources and Technology Corporation
____________________________________________________
(Exact name of registrant as specified in its charter)
Michigan 38-2266968
________ __________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 W. Front Street
Traverse City, Michigan 49684
_____________________________
(Address of principal executive offices)
(616) 946-1473
______________
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
Which registered
___________________ ________________________
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
____________
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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. Yes (X) No ( ).
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not 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-K or any amendment to this
Form 10-K. (X)
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. The aggregate market value shall
be computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within 60 days prior to the date of filing.
Common Stock, Par Value $.10 - 7,991,870 shares, as of March 1,
1999 at $.10 per share, for an aggregate market value of
$799,187.00.
The warrants previously issued, all expired on April 22, 1986.
As of March 1, 1999, there are 7,991,870 shares of Common Stock
outstanding.
General Energy Resources and
Technology Corporation
Index to Form 10-K
PART I Page
______ ____
Item 1 History and Business of the Company. . . . . . . 4
Description of Business of the Company . . . . . 5
Item 2 Properties . . . . . . . . . . . . . . . . . . . 7
Item 3 Legal Proceedings. . . . . . . . . . . . . . . . 9
Item 4 Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . 9
PART II
_______
Item 5 Market for the Registrants Common Stock and
Related Security Holders Matters . . . . . . .10
Item 6 Selected Financial Data. . . . . . . . . . . . .11
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations.12
Item 8 Financial Statements . . . . . . . . . . . . . .15
Item 9 Disagreements on Accounting and Financial
Disclosure Matters . . . . . . . . . . . . . .33
PART III
________
Item 10 Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . .33
Item 11 Executive Compensation . . . . . . . . . . . . .34
Item 12 Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . .36
Item 13 Certain Relationships and Related Transactions .37
Signatures . . . . . . . . . . . . . . . . . . . . . . . .39
PART I
ITEM 1. - HISTORY AND BUSINESS OF THE COMPANY
The Company was incorporated in Michigan in 1979 and commenced
business in 1980. Originally, the Company was formed as a passive
investor in oil and gas drilling ventures with Reef Petroleum
Corporation (RPC) which was the operator of the wells drilled.
However, in September of 1983, RPC filed a Chapter 11 Petition in
the Bankruptcy Court of the Western District of Michigan and
since then has liquidated all of it's assets in a final
bankruptcy action. In 1986, the Company's involvement with RPC
was terminated.
During 1987, the Company entered into a Management Agreement with
Penteco Corporation to analyze the Company's financial position
and provide management services to the Company. The Agreement
called for an 18 month option to Penteco to purchase an
additional 1,000,000 shares at $.31 per share and a 36 month
option to purchase an additional 1,000,000 shares at $.50 per
share. In 1990, the Management Agreement was extended for a three
year period through September, 1993. Penteco has exercised part
of their option for 1,000,000 shares at $.31 per share. Effective
January 1993, the Management Agreement with Penteco Corporation
was terminated, and those responsible for management duties
became salaried employees or advisors to the Company.
In an exchange of shares in 1987, the Company purchased from
Penteco a 12 percent interest in the general partners portion of
the 1985-A Limited Partnership (Penteco East Central Pipeline)
and from Penteco a 10 percent interest in Lincoln Gas and Oil
Marketing Corporation for a total price of $290,000. Penteco East
Central Pipeline is a gas gathering and transmission system
located in the area of Southern Kansas and Northern Oklahoma. In
1991, Penteco East Central Pipeline was sold to Consolidated
Capital of North America. Penteco received, and is holding for
the benefit of the partnership, 450,000 shares of $1.00 preferred
stock of Consolidated Capital. In addition, Penteco acquired for
the partnership, a 10 percent working interest after debt service
in the Tulare Lakes Field from Chevron. Lincoln Gas and Oil
Marketing Corporation is located in Boston, Massachusetts and is
involved in the development and supply of gas to co-generation
facilities. In a restructuring of Lincoln Gas and Oil Marketing,
Penteco provided an opportunity for General Energy to increase
it's holdings to 20 percent of Lincoln Gas and Oil Marketing and
also to receive a 10 percent interest in Eastern Pacific Energy
Corporation located in Los Angeles, California. During 1989 and
1992, the Company determined the value of these investments have
suffered permanent declines of $185,000 and $103,950
respectively. Consequently, these investments are now carried at
a value of $1,050.
It is the Company's intention to continue to drill or participate
in the drilling of exploratory and development wells in the state
of Michigan, in an effort to develop it's oil and gas reserves.
During 1997, the Company jointly participated in a Niagaran
horizontal drain hole in Otsego County which was hooked up and
producing in 1998.
DESCRIPTION OF BUSINESS OF THE COMPANY
Identification of Prospects and Prospect Acquisition
The Company will, as in the past, selectively maintain it's lease
inventory on the basis of its own information, the interpretation
of the Company's seismic, geological and geophysical information
and such additional information as may be acquired. The Company
also is actively seeking and participating in exploration
projects with other companies by purchasing working interest on a
selective basis.
The following table provides information as to the expiration of
the Company's leases (assuming extension by payment of delay
rentals to the extent possible); and is intended to supply
information required pursuant to industry Guide 2 Paragraph 5.
All of the following leases are located in the state of Michigan.
Acres
Years of Expiration Gross Net
___________________ ____________________
1998 0.000 0.000
1999 0.000 0.000
2000 0.000 0.000
2001 0.000 0.000
Geology - Seismic Testing
The Company prefers, where possible, to act on the basis of
geophysical as well as geological information. A seismic survey
of the areas covered by it's inventory of leases is undertaken
and evaluated. The Company's Geology Department seeks to utilize
both seismic and geological data (primarily the results from
nearby drilling) to locate geological traps which may contain
hydrocarbons.
Drilling, Completion and Operations of Producing Wells
1. During 1998, the Company did not participate in any new
prospects.
2. The rights and obligations of the Company, as operator, are
governed by a Lease Development Agreement (or, in the case of a
participation commencing with the acquisition of the lease, a
Lease Acquisition and Development Agreement) and a Standard
Operating Agreement which provides for the allocation of costs,
including specified amounts to defray the Company's
nonspecifically identifiable costs based upon the depth of the
well and other scheduled factors.
3. During 1998, the Company's Exploration Department supervised
the drilling and completion of it's wells; which included
downhole completion as well as selecting the surface handling
facilities to measure and separate out water and gas from oil,
providing the connections to the gas pipelines and the storage
tanks for oil and installing meters to measure production.
Marketing
Production from the Company's royalty and working interests is
marketed by the operator of the well, generally to a major oil
company or gas utility.
In the twelve month period ending December 31, 1998, the
following purchasers accounted for more than 10 percent of the
Company's oil and gas revenues:
Delta Oil Company 36% Lindenmuth & Assoc. 39%
Other purchasers of the Company's oil and gas production include
Shell Oil, Total Petroleum and Michigan Consolidated Gas.
Substantially all gas sales are made under long term contracts
with the above utilities. These contracts may relate either to
the reserves from a specified well or wells or to those to be
developed from specified acreage and generally obligate the
utility to take or pay for specified annual quantities, typically
in amounts sufficient to account for the bulk of the reserves
within ten years or less. The contracts normally extend for a
term substantially co-extensive with the life of the reserves and
provide for periodic price adjustments, which usually involve
annual or more frequent price increases on the basis of specified
percentage or dollar increments and may also involve provision
for increases or price limitations based on the prices paid to
others for natural gas or alternative fuels or those permitted
generally to be paid for natural gas pursuant to government price
regulations. The Company has no reason to believe that any of the
contracts for the sale of gas will be voided. Oil is sold under
less structured arrangements and at posted prices more
immediately responsive to market conditions.
Contracts, Accounting and Related Functions
The Company handles the following procedures concerning the
drilling of new wells: Contract negotiations, price
determinations, government compliance, including, for example,
NGPA-FERC gas well filings, maintenance of computerized records
providing ownership and revenue distribution data on a well-by-
well and owner-by-owner basis. The Company generates and
distributes monthly reports containing information as to daily
production and sales together with, in the case of working
interest owners, operating statements detailing expenses.
Employees
The Company began employing certain accounting and operations
personnel in March, 1983. The Company presently has employees in
the executive, geology and land, data processing, accounting and
operations areas. The Company will also utilize third party
contractors for needed services. None of the Company's employees
are represented by a labor union or collective bargaining agent.
Relations with the employees are good. There have been no work
stoppages associated with labor disputes or grievances.
As of January 1, 1999, there are four employees of the Company.
Competition
The Company competes with major oil companies, independent
operators and others in acquiring drilling prospects, in
contracting for oil and gas field services and equipment, in
selling oil and gas production and in securing trained personnel.
The Company is not a significant factor in the oil and gas
business even within the limited geographic area in which it's
operations are conducted.
ITEM 2. - PROPERTIES
Oil and Gas Reserves
The Company has not filed estimates of it's oil and gas reserves
with any Federal Agency other than the Securities and Exchange
Commission. The reserve information set forth in this section has
been compiled from estimates made by the independent engineering
firm of K&A Energy Consultants, Inc., Tulsa, Oklahoma in a report
dated January 1, 1992 (and updated January 1, 1997 internally) on
an unescalated basis for the Company's most productive 16 wells
and from the independent engineering firm of Evan, Carey and
Crozier, Bakersfield, California in a report dated July 24, 1989
and revised August 1, 1993 by Basim Ziara, Petroleum Engineering
Consultants for the company's production purchase and operations
in California. The remaining reserve figures are from a report
dated January 1, 1988 and revised January 1, 1999 internally
based on 1988 through 1998 production history changes, if any,
and the acquisition and sale of production properties. The
Company removed all reserve estimates from the Tulare Lakes Field
in California and added reserves for the St. Dover & House #1-33A
HD1 well in Otsego County, Michigan.
Reserve Category - Net to the Appraised Interest
Interest Oil Gas Future Net Present Worth
Cond. (Mcf) Cash Flow Discounted at
(Bbls) 10 Percent
_________________________________________________________________
Proved Developed
Producing Totals n/a n/a n/a n/a
Oil and Gas Production
The Company's net oil and gas production, constituting it's share
of production from it's working and royalty interests for the
years ended December 31, 1998, 1997 and 1996 are set forth in the
table below:
1998 1997 1996
____ ____ ____
Oil (Bbls) 795 1,435 2,666
Gas (Mcf) 21,342 22,828 35,136
- --All of the Interests and Reserves of the Company are located
within Michigan.
Prices and Costs
The following tables set forth the average sales price per unit
and average lifting cost with respect to the Company's production
of oil and gas for the past three years.
Average sales
price per unit
1998 1997 1996
____ ____ ____
Oil (Per Bbl) 13.02 19.92 21.04
Gas (Per Mcf) 2.62 3.03 2.72
The price per barrel of oil as of March 31, 1999, is $12.50 and
the price per mcf of gas as of the same date ranges from $1.87 to
$3.27 per mcf.
Average lifting cost
(Oil & Gas Combined)
1998 1997 1996
____ ____ ____
12.86 12.96 8.36
Lifting costs include monthly operating charges and operating
expenses but, do not include severance or windfall profit taxes.
Average lifting cost per sales dollar was $1.25
Gross Net Exploratory Wells Net Development Wells
_____ _____________________ _____________________
Year Wells Oil Gas Dry Oil Gas Dry
____ _____ ___ ___ ___ ___ ___ ___
1994 10 ---- .0050 .0600 ---- ---- ----
1995 1 .1500 ---- ---- ---- ---- ----
1996 1 ---- ---- .0800 ---- ---- ----
1997 1 ---- ---- ---- .075 ---- ----
1998 0 ---- ---- ---- ---- ---- ----
From inception through January 1, 1999, the total gross wells (a
well in which a working interest is owned) in which the Company
has an interest is 12 and the total net productive wells (the
fractional ownership working interests in gross wells equal to
one) is .949.
As of January 1, 1999, the total gross developed acres (acres
spaced or assignable to productive wells) is 7,720.
All working interests and acreage is located within the United
States of America.
The Company's total working interest reserves developed during
1998 are as follows:
Total Reserves
Wells Drilled Developed
______________________ ______________________
Total Successful Dry Disposal Well Oil (Bbls) Gas (Mcf)
_____ _________ ___ _____________ __________ _________
0 0 0 0 0 0
ITEM 3. - LEGAL PROCEEDINGS
On June 2, 1995, a lawsuit was filed in Kings County, California,
against General Energy and it's subsidiary, G.E.N.Y. Operations,
Inc., by Kings County Development, Limited (KCDL) and J.G.
Boswell Company.
As a result, and to protect the corporation against ongoing legal
expenses, on March 25, 1996, the Company and it's subsidiary
filed petitions for relief under Chapter 11 of the Bankruptcy
Code.
In July of 1996, the Chapter 11 Bankruptcy against General Energy
Resources and Technology Corporation was dismissed. G.E.N.Y.
Operations, Inc., a wholly owned subsidiary, remained under the
protection of the Chapter 11 Bankruptcy. In August of 1996,
G.E.N.Y. Operations was sold to Penteco Corporation and venue for
the Chapter 11 Bankruptcy was removed from Michigan to Oklahoma.
In January, 1997, the lawsuit involving General Energy and KCDL,
and J.G. Boswell was dismissed upon entry of a judgement granting
title of the unit side of the Tulare Lakes Field to KCDL/Boswell.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The registrant did not submit any matters for a vote of security
holders during the fourth quarter of 1998 through the
solicitation of proxies or otherwise.
PART II
ITEM 5. - MARKET FOR THE REGISTRANTS COMMON STOCK
AND RELATED SECURITY HOLDERS MATTERS
As of March 1, 1999, there are 7,991,870 shares of the Company's
Common Stock outstanding. The Company has registered the Common
Stock under Section 15(d) of the Securities and Exchange Act of
1934. All warrants to purchase common shares expired on April 22,
1986 and there are no longer any warrants outstanding.
The stock is principally traded on the over-the-counter market.
The high and low sales prices for the Company's Common Stock, for
the following periods were:
Common Stock Common Stock
1998 Bid Asked 1997 Bid Asked
____ ____________ ____ ____________
December 31 1/16 1/4 December 31 1/16 1/4
September 30 1/16 1/4 September 30 1/16 1/4
June 30 1/16 1/4 June 30 1/16 1/4
March 31 1/16 1/4 March 31 1/16 1/4
The number of holders of record of the Common Stock as of March
1, 1998 totaled approximately 1,000. No dividends, either cash or
stock, have been declared as of December 31, 1998, and there is
no present intention on the part of the Company to declare
dividends in the foreseeable future.
ITEM 6. - SELECTED FINANCIAL DATA
Years Ended December 31,
1998 1997 1996 1995 1994
____ ____ ____ ____ ____
Revenues $ 115,123 $ 109,150 $ 258,079 $ 753,294 $ 460,618
Net profit (loss) before
extraordinary items ($ 127,397) ($ 166,619) $ 155,647 ($ 191,588) ($ 146,250)
Net profit (loss) per
share before
extraordinary items ($ .016) ($ .02) ($ .019) $ .02 ($ .018)
Net profit (loss) from
operations ($ 127,397) ($ 166,619) ($ 155,647) $ 191,588 ($ 146,250)
Net profit (loss) per
share ($ .016) ($ .02) ($ .019) ($ .02) ($ .018)
Total assets $ 171,547 $ 198,658 $ 416,393 $1,059,672 $1,517,349
Current portion of
long-term debt $ 0 $ 2,500 $ 3,000 $ 3,000 $ 54,749
Long-term debt $ 52,947 $ 45,521 $ 47,521 $ 55,429 $ 951,750
Stockholders' equity ($ 467,348) ($ 339,951) ($ 173,332) ($ 17,685) ($ 209,273)
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity/Capital Resources
Net cash from operating activities for the Company as of the
three most recent year-ends is as follows:
1998 1997 1996
____ ____ ____
Cash Flows (13,064) (96,703) (34,315)
The Company has generated cash flow from operations, bank
borrowings and the funds derived from it's initial public
offering in 1981, which yielded $3.7 million. Private sales from
stock and the exercise of options have provided additional
working capital.
In June 1989, one of the Company's major trade creditors,
Mosbacher Energy Company (MEC), filed an operator's lien against
various properties in which the Company owns a working interest
and for which the Company owed MEC operating expenses. The liens
resulted in the curtailment of revenue from these properties. A
repayment plan was negotiated and on June 1, 1990, the Company
signed a $292,814 promissory note with MEC for the amount owed
MEC by General Energy Corporation for well operations as of May
7, 1990. The note is secured by the Company's interest in eleven
producing properties operated by MEC and bears interest at 7 1/4
percent per annum. The terms of the agreement call for a monthly
payment to Mosbacher Energy Company of the lesser of $20,000 or
one months production of the secured properties.
In August of 1991, the Company borrowed $350,000 from Huntington
Banks of Michigan. The note was secured by the personal
guarantees of H. Terry Snowday and Edgar R. Puthuff, directors of
the Company. Interest was payable monthly at one percent over the
bank prime rate.
Proceeds from this note were loaned to American Barter Petroleum,
Inc. to be used in a production property purchase in California.
Interest is due at one percent over prime and principal is paid
back out of production according to a predetermined schedule. In
exchange for this loan, the Company received a 25 percent
interest in net revenue.
Both notes were paid in full in October, 1992.
In 1991, the Company recorded approximately $875,500 of long-term
debt on the Tulare Lakes Field. This represents a 25% share of
the outstanding debt on the field. This is a non recourse debt.
General Energy is not a party to the purchase contract between
Chevron, Penteco and American Barter. The Company's 25% interest
was to be paid from Penteco Corporation's working interest
percentage, net of expenses. As of December 31, 1995, the total
revenue from the field continued to be less than the total
expenses with no expectation of improvement within the next
twelve months. Management determined the asset and liability to
be unrealistically presented on the financial statements and the
outstanding debt balance of $908,410 which included accrued
interest and the asset balance of $717,288, net of accumulated
DD&A, were written off.
The Company has been able to satisfy it's long-term debt
commitments. Trade accounts payable total $408,416 at December
31, 1998. A large portion of the accounts payable are for
services provided by companies that have been very tolerant
regarding timing of payment for these services.
The monthly operating cost for direct obligations for rent of the
Company's office space will be $825.00. Management is aware that
it has limited capital resources available with which to continue
a lease acquisition/exploration program. Evaluation of various
investment alternatives will continue to be made on a case-by-
case and/or well-by-well basis, and commitments will be made as
funds permit.
A major stockholder of the Company has loaned monies to the
Company for ongoing expenses. The balance owing as of December
31, 1998 is $113,400. The note is secured by substantially all of
the Company's oil and gas interests. Interest on the note is 10
percent per annum and the note is due on or before December 31,
1999.
Management has developed plans to provide services in an Antrim
gas project located in the State of Michigan and anticipates
consulting fees.
As part of this project, the Company anticipates purchasing new
computer hardware and software which will be Year 2000 compliant.
In view of its currently limited activity, the Company has
determined that the potential consequences of year 2000 issues
would not have a material effect on business, results of
operations, or financial conditions.
Management believes cash flow from its currently producing oil
and gas properties, future loan advances from a major stockholder
and consulting fees earned in 1999 should be sufficient to pay
current operating liabilities.
The price that the Company received for oil during 1998 ranged
from $8.02 to $17.47. The posted price for crude oil is at $12.50
per barrel as of March 31, 1999. There is uncertainty as to the
price of oil over the next twelve months. The price of crude oil
in the future will have a material effect on our ability to
continue operations.
While the sale of gas remains subject to NGPA regulated pricing
policies, it is recognized that certain concessions must be made
as to contractual pricing to insure that the Company's gas
reserves remain a competitive alternative fuel.
Results of Operations
_____________________
1998 1997 1996
Revenues ____ ____ ____
Oil and gas sales
Working interest $ 66,489 $ 88,463 $ 98,590
Royalty interest 3,495 20,019 66,500
Expense reimbursement 15,000 0 0
Gain (loss) on sale of
turnkey working interests
and oil properties 900 (32,146) 801
Repromotional income 0 (5,236) 0
Oilfield revenue
distribution 420 6,000 0
Consulting income 0 0 578
Administrative overhead 16,800 31,800 25,392
Gain on write-off 12,019 0 66,116
Other income 0 250 102
_________ _________ _________
Total Revenues 115,123 109,150 258,079
Net Earnings (loss) $ (127,397) $ (166,619) $ (155,647)
========= ========= =========
The Company's total revenues increased $5,973 from $109,150 at
December 31, 1997 to $115,123 at December 31, 1998 and is largely
the result of a $12,019 gain on the write-off of an accounts
payable.
Total expenses decreased ($33,249) from $275,769 at December 31,
1997 to $242,520 at December 31, 1998. This was largely the
result of a decrease in general and administrative, lease and
operating expenses, and taxes other than income.
The cost incurred in oil and gas property acquisitions,
exploration and development activities for the year ended
December 31, 1998 totaled $12,149 and capitalized costs related
to oil and gas producing activities as of December 31, 1998
totaled $130,602 as compared to $12,771 and $150,471 respectively
in 1997.
ITEM 8. - FINANCIAL STATEMENTS
Index to Financial Statements
Consolidated Balance Sheets. . . . . . . . . . . . . . 16
Consolidated Statements of Operations. . . . . . . . . . 18
Consolidated Statements of Cash Flows. . . . . . . . . . 20
Consolidated Statements of Stockholders' Equity. . . . . 22
Notes to Consolidated Financial Statements . . . . . . . 23
Supplemental Schedules . . . . . . . . . . . . . . . . . 31
General Energy Resources and Technology Corporation
and Subsidiary
Consolidated Balance Sheets, December 31, 1998 and 1997
ASSETS
1998 1997
____ ____
CURRENT ASSETS
Cash $ 2,817 $ 294
Accounts Receivable Trade 48,819 56,425
Less Allowance for Doubtful
Accounts (13,526) (11,223)
Prepaid Expenses 1,785 1,641
_________ _________
Total Current Assets 39,895 47,137
PROPERTY AND EQUIPMENT, AT COST
Proved Oil and Gas Properties,
Successful Efforts Method of
Accounting 2,358,252 2,510,896
_________ _________
2,358,252 2,510,896
Less Accumulated Depreciation,
Depletion, and Amortization 2,227,650 2,360,425
_________ _________
Net Property and Equipment 130,602 150,471
OTHER ASSETS
Investments (net of unrealized
loss of $288,950) 1,050 1,050
_________ _________
$ 171,547 $ 198,658
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current Portion Long-Term Debt $ 0 $ 2,500
Account Payable Trade 408,416 420,396
Notes Payable 113,400 16,500
Salaries Payable 57,892 53,692
Accrued Interest 6,240 0
_________ _________
Total Current Liabilities 585,948 493,088
LONG-TERM DEBT 52,947 45,521
STOCKHOLDERS' EQUITY
Common Stock ($.10 Par Value,
18,000,000 Shares Authorized,
7,991,870 Shares Issued and
Outstanding) 799,187 799,187
Additional Paid-in Capital 7,435,012 7,435,012
Deficit (8,701,547) (8,574,150)
_________ _________
Total Stockholders' Equity (467,348) (339,951)
========= =========
Total Liabilities and
Stockholders' Equity $ 171,547 $ 198,658
========= =========
See Accompanying Notes to Financial Statements
General Energy Resources and Technology Corporation
and Subsidiary
Consolidated Statements of Operations
For the Years Ending December 31, 1998, 1997 and 1996
1998 1997 1996
____ ____ ____
REVENUES
Oil and Gas Sales
Working Interest $ 66,489 $ 88,463 $ 98,590
Royalty Interest 3,495 20,019 66,500
Expense Reimbursement 15,000 0 0
Gain(Loss) on Turnkey
Working Interests and
Oil Properties 900 (32,146) 801
Oilfield Revenue
Distribution 420 6,000 0
Promotional Income 0 (5,236) 0
Consulting Income 0 0 578
Administrative Overhead 16,800 31,800 25,392
Gain on Write-off 12,019 0 66,116
Other Income 0 250 102
_________ _________ _________
Total Revenues 115,123 109,150 258,079
COSTS AND EXPENSES
Lease and Operating
Expenses 55,978 67,910 71,258
Taxes Other Than Income 4,001 8,880 10,545
Dry Holes and
Abandonments 10,682 10,056 81,093
Depreciation, Depletion
And Amortization 9,208 11,495 13,777
General and
Administrative 147,434 161,283 233,108
Interest Expense, Net of
Capitalized Interest 9,833 4,922 3,945
Bad Debt Expense 5,384 11,223 0
_________ _________ _________
Total Costs and
Expenses 242,520 275,769 413,726
_________ _________ _________
NET EARNINGS (LOSS)
BEFORE TAXES (127,397) (166,619) (155,647)
CURRENT INCOME TAXES 0 0 0
_________ _________ _________
NET EARNINGS (LOSS) $ (127,397) $ (166,619) $ (155,647)
========= ========= =========
Per Share of Common Stock,
Weighted Average Method
Income Before
Extraordinary Items $ (.016) $ (.02) $ (.019)
========= ========= =========
Net Income $ (.016) $ (.02) $ (.019)
========= ========= =========
Weighted Average Number of
Shares Outstanding 7,991,870 7,991,870 7,991,870
========= ========= =========
See Accompanying Notes to Financial Statements
General Energy Resources and Technology Corporation
and Subsidiary
Consolidated Statements of Cash Flows
For the Years Ending December 31, 1998, 1997 and 1996
1998 1997 1996
____ ____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (127,397) $ (166,619) $ (155,647)
Adjustments to Reconcile
Net Earnings to Net
Cash Provided by
Operating Activities:
Depreciation, Depletion
and Amortization 9,208 11,495 13,777
Abandonments, Expired and
Surrendered Leases 0 14 33,608
(Gain)Loss on Sale of
Oil and Gas Properties 0 32,146 1,928
(Increase)Decrease in
Current Assets:
Trade Accounts
Receivable 9,909 76,018 462,306
Prepaid Expenses (144) (1,141) (63)
Increase(Decrease) in
Current Liabilities:
Trade Accounts Payable (11,980) (43,616) (228,019)
Notes Payable 96,900 (5,000) 0
Accrued Interest 6,240 0 (1,231)
Salaries Payable 4,200 0 0
Joint Interest
Prepayments 0 0 (135,371)
Expired Credits - Stock
Purchase Overpayment 0 0 (25,603)
_________ _________ _________
NET CASH FROM OPERATING
ACTIVITIES (13,064) (96,703) (34,315)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Property
and Equipment 0 0 0
Proceeds from Sale of
Property and Equipment 0 70,000 4,473
Write-off of Oil & Gas
Property 10,661 10,569 0
Reduction of Drilling contracts
in Progress 0 10,070 0
_________ _________ _________
NET CASH FROM INVESTING
ACTIVITIES 10,661 90,639 4,473
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of
Short-Term Debt 0 0 21,500
Reduction of Short-Term
Debt 0 0 (111,000)
Increase(Reduction) of
Long-Term Debt 4,926 (2,500) (7,908)
_________ _________ _________
NET CASH FROM FINANCING
ACTIVITIES 4,926 (2,500) (97,408)
_________ _________ _________
NET INCREASE(DECREASE)
IN CASH 2,523 (8,564) (127,250)
CASH AT BEGINNING OF PERIOD 294 8,858 136,108
_________ _________ _________
CASH AT END OF PERIOD $ 2,817 $ 294 $ 8,858
========= ========= =========
See Accompanying Notes to Financial Statements
General Energy Resources and Technology Corporation
and Subsidiary
Consolidated Statements of Stockholders' Equity
For the Years Ending December 31, 1998, 1997 and 1996
Additional Retained Total
Common Paid-in Earnings Treasury Stockholder
Stock Capital (Deficit) Stock Equity
________ _________ ___________ ________ ________
Balance at December 31, 1995 $ 799,187 $7,435,012 $(8,251,884) $ 0 $ (17,685)
Net Earnings(Loss) for the
Year 0 0 (155,647) 0 (155,647)
Issue of Stock 0 0 0 0 0
________ _________ __________ _______ ________
Balance at December 31, 1996 799,187 7,435,012 (8,407,531) 0 (173,332)
Net Earnings(Loss) for the
Year 0 0 (166,619) 0 (166,619)
Issue of Stock 0 0 0 0 0
________ _________ __________ _______ ________
Balance at December 31, 1997 799,187 7,435,012 (8,574,150) 0 (339,951)
Net Earnings(Loss) for the
Year 0 0 (127,397) 0 (127,397)
Issue of Stock 0 0 0 0 0
________ _________ __________ _______ ________
Balance at December 31, 1998 $ 799,187 $7,435,012 $(8,701,547) $ 0 $(467,348)
======== ========= ========== ======= ========
Common Stock Outstanding December 31, 1997 7,991,870 Shares
Common Stock Issued during 1998 0 Shares
Common Stock Outstanding December 31, 1998 7,991,870 Shares
See Accompanying Notes to Financial Statements
/TABLE
General Energy Resources and Technology Corporation
and Subsidiary
Consolidated Notes to Financial Statements
December 31, 1998, 1997 and 1996
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated Statements
The consolidated financial statements include the accounts of
General Energy Resources and Technology Corporation (a Michigan
Corporation) and it's wholly owned subsidiary, G.E.N.Y.
Operations, Inc. (a California Corporation) which was formed in
1993. All significant intercompany balances and transactions have
been eliminated in consolidation.
Oil & Gas Property and Equipment
The Company utilizes the successful efforts method of accounting
for it's oil and gas exploration and development program. Under
this method of accounting, costs of drilling and completing
successful wells are capitalized, while costs of dry holes are
charged to expense when incurred. Depletion and amortization of
producing leasehold and mineral interests and related intangible
development costs are provided by the unit-of-production method
based on estimates of recoverable oil and gas reserves prepared
by independent petroleum engineers. Lease and well equipment is
depreciated over its estimated useful life (seven years) by the
straight-line method.
Costs of non-producing leasehold and mineral interests are not
amortized but, are charged to operations when such properties are
abandoned, surrendered, determined to be worthless, or
transferred to producing properties and depleted when
successfully developed.
Maintenance and repairs are charged to expense when incurred.
Renewals and betterments are capitalized. When assets are sold,
retired or otherwise disposed of, applicable costs and
accumulated depreciation and depletion are removed from the
accounts and the resulting gain or loss is recognized.
Interest Capitalization
Interest costs applicable to the drilling and equipment of
in-progress and shut-in oil and gas wells are capitalized until
such time as the wells begin producing.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company
considers all highly liquid investment instruments purchased with
an original maturity of three months or less to be cash
equivalents.
No income taxes have been paid during 1997 and 1996 Income taxes
for 1995 totaled $1,650.00. Interest paid (net of amounts
capitalized) amounted to $9,833 during 1998, $4,922 during 1997
and $3,945 for 1996.
Earnings Per Share
Earnings per share is based on the weighted average number of
shares outstanding. Common stock equivalents (stock options and
warrants) were antidilutive in 1998, 1997 and 1996.
NOTE 2
BUSINESS OPERATIONS, SIGNIFICANT CUSTOMERS, AND CREDIT RISK
General Energy Resources and Technology Corporation (the
"Company", formerly Reef Energy Corporation) was incorporated
under the laws of the State of Michigan in June, 1979 for the
purpose of investing in oil and gas exploration and production.
Effective June 1987, the Board of Directors and stockholders
changed the name of the Company to General Energy Resources and
Technology Corporation. The Company and it's predecessors have
been engaged in the exploration, development and production of
oil and gas. The operations are conducted entirely within the
United States.
The Company created a wholly owned subsidiary, G.E.N.Y.
Operations, Inc. in 1993 to function as the operator for the
Tulare Lakes Field in Kings County, California. As operator, all
revenues and expenses are passed on to the working interest
owners, and the subsidiary therefore, shows no profit or loss. At
December 31, 1995, total assets and liabilities were $461,838 and
$451,838 respectively. In August of 1996, G.E.N.Y. Operations,
Inc., was sold to Penteco Corporation.
During 1998, sales to two major customers accounted for 39 and 36
percent of total revenues. During 1997, sales to two major
customers accounted for 23, and 21 percent of total revenues.
During 1996, sales to two major customers accounted for 36 and 19
percent of total revenues.
NOTE 3
INVESTMENTS
In 1987, the Company purchased from Penteco Corporation (a
related party), a 12% interest (3.36% overall interest) in the
general partner's portion of the Penteco East Central pipeline
1985-A limited partnership and a 10% interest in Lincoln Gas &
Oil Marketing Corporation in exchange for Company stock valued at
a total price of $290,000. Penteco East Central Pipeline was
initially a gas gathering and transmission system located in the
area of Southern Kansas and Northern Oklahoma. Lincoln Gas and
Oil Marketing Corporation is located in Boston, Massachusetts and
is involved in the development and supply of gas to cogeneration
facilities.
During 1989 and 1992, the Company determined the value of these
investments have suffered permanent declines of $185,000 and
$103,950 respectively. Consequently, these investments are now
carried by management at a value of $1,050.
NOTE 4
NOTES PAYABLE
This represents money loaned to the Company for ongoing expenses.
Interest on the note is 10% per annum and the note is due on or
before December 31, 1999.
12/31/98 12/31/97
_________ _________
Note payable Calvert $ 113,400 $ 16,500
_________ _________
$ 113,400 $ 16,500
========= =========
NOTE 5
LONG-TERM DEBT
Long-term debt consisted of:
12/31/98 12/31/97
_________ _________
Note payable Mosbacher $ 52,947 $ 48,021
_________ _________
52,947 48,021
Less current portion 0 (2,500)
_________ _________
$ 52,947 $ 45,521
========= =========
On June 1, 1990, the Company signed a $292,814 promissory note
with Mosbacher Energy Company (MEC) for the amount owed MEC by
General Energy Corporation for well operations as of May 7, 1990.
The note is secured by the Company's interest in eleven producing
properties operated by MEC and bears interest at 7 1/4% per
annum. Additional terms of the agreement call for monthly
payments of the lesser of $20,000 or the month's production to
MEC. Based on current production estimates, management does not
expect to reduce this loan during the current year.
NOTE 6
NON CASH TRANSACTIONS
1998 1997 1996
____ ____ ____
Write-offs of Expired
Credits $ 0 $ 0 $ 66,116
Write-off of Accounts
Payable $ 12,019
NOTE 7
RELATED PARTIES
The Company recorded approximately $18,000 and $28,000 in
management fees during 1992 and 1991 respectively to Penteco. The
management fees were for preparation of a business plan and
ongoing management throughout the year in accordance with the
Management Agreement dated March 13, 1987, between the Company
and Penteco. As of December 31, 1998, the Company has a liability
to Penteco of $13,262 for management fees and out-of-pocket
costs. The Company and Penteco have mutual directors. As of
January 1, 1993, the agreement expired.
As of January 1, 1993, Terry Snowday was to receive an annual
salary of $20,000, and Charles Taylor was to receive an annual
consulting fee of $10,000. At December 31, 1998, amounts accrued
but not paid to Snowday and Taylor are $57,892 and $20,000
respectfully. As of January 1, 1995, Charles Taylor resigned as
consultant to General Energy. As of March 8, 1996, Terry Snowday
was placed on lay-off and is paid $10 per hour as needed.
As discussed in Notes 2 and 3, Company stock was exchanged with
Penteco in 1987 for investments in Penteco East Pipeline and
Lincoln Gas & Oil Marketing Corporation. Penteco is the general
partner in Penteco East Pipeline. Penteco and Lincoln Gas and Oil
have mutual directors.
The Company received an interest in the general partners'
interest of Penteco East Pipeline. However, the Company does not
receive a K-1 for this investment even though the partnership has
been active and has had income. It is the understanding of
management that the Company is not a general partner even though
they purchased a portion of the general partners' interest. There
is no written agreement explaining how profits, losses,
distributions, liabilities, etc. are to be divided regarding the
Company's interest in the general partners' interest.
In 1991, the Company loaned $350,000 to American Barter. American
Barter agreed to repay this loan, with interest at the Company's
borrowing rate and to assign a 25% working interest in the Tulare
Lakes Field. The Tulare Lakes Field was purchased from Chevron by
Penteco and American Barter in 1991. The Agreement between
Chevron and Penteco and American Barter states that the note owed
to Chevron will be repaid from production from the Tulare Lakes
Field. If production does not cover debt payments, General Energy
is not liable to Chevron or other third parties. The Company
booked 25% of the purchase price as proved oil and gas
properties, approximately $875,900. The Company also recorded 25%
of the liabilities for Penteco and American Barter's purchase of
the fields along with 25% of American Barter's $350,000 debt to
General Energy, borrowed for costs of revitalizing the field.
During 1992 and 1993, additional debt has been recorded for
Society Bank loans used to pay off the original $350,000, and for
operating expenses and accrued interest. In 1993, the Company
sold a 1% interest to Richard Calvert, a company shareholder, for
$10,000. As of December 31, 1995, management determined the
Company's 25% interest to be misrepresented on the Financial
Statements and the asset and related liability were written off.
The Company sold working interests to several major shareholders
and directors during 1996. Accounts receivable from these related
parties totaled $10,191 at December 31, 1998, while related party
accounts payable amounted to $8,993. No interest has been accrued
on any of the above amounts.
NOTE 8
STOCK OPTION AGREEMENT
The Company had an outstanding Stock Option Agreement with an
employee to purchase 100,000 shares of General Energy stock for
$.25 per share. This Agreement expired on January 5, 1993.
NOTE 9
CONTINGENCIES AND COMMITMENTS
The prices of the Company's natural gas production are subject to
the regulations of the Federal Energy Regulatory Commission
(FERC). The Company believes it has substantially complied with
regulations as issued.
In the normal course of business, the Company makes various
commitments and incurs certain contingent liabilities that are
not presented in the accompanying financial statements. The
Company does not anticipate any losses as a result of these
commitments and contingent liabilities.
NOTE 10
LEASE COMMITMENTS
The Company entered into a 12 month Lease Agreement for it's
office facilities on February 1, 1999. This lease requires
payments of $825 per month.
NOTE 11
SUBSEQUENT EVENTS
The Company continues to have a working capital deficit and
declining cash flows from existing oil and gas operations. The
Company anticipates that cash flows will be generated in 1999
from culting fees and from additional loan advances.
NOTE 12
OIL AND GAS ACTIVITIES
The following is a summary of certain financial information
(including cost, both capitalized and expensed) with respect to
the Company's oil and gas activities, all of which are located in
the United States:
Costs Incurred in Oil and Gas Property
Acquisition, Exploration and Development Activities
Years Ended December 31,
1998 1997 1996
____ ____ ____
Acquisition of unproved
properties $ 0 $ 0 $ 0
========= ========= =========
Exploration and development
costs $ 12,149 $ 12,771 $ 84,797
========= ========= =========
Results of Operations for Producing Activities
Sales $ 69,984 $ 108,482 $ 165,090
Production costs 59,979 74,743 81,802
Exploration costs 10,682 10,056 81,093
Depreciation, depletion and
amortization 9,208 11,495 13,777
_________ _________ _________
79,869 96,294 176,672
_________ _________ _________
Results of Operations from
producing activities
(excluding corporate over-
head and interest costs) $ (9,885) $ 12,188 $ (11,582)
========= ========= =========
NOTE 13
"SUPPLEMENTAL" OIL AND GAS RESERVES INFORMATION (UNAUDITED)
The following tables present the Company's estimate of it's
proved oil and gas reserves and future net cash flows. The
Company emphasizes that reserve and related future net cash flow
estimates are inherently imprecise and that estimates of new
discoveries are more imprecise than those of producing oil and
gas properties. Accordingly, the estimates are expected to change
as future information becomes available. The Company has received
reports from independent petroleum reservoir engineers for a
portion of their reserves through January 2, 1992. The Company's
staff geologist along with K&A Energy Consultants and Evan, Carey
and Crozier Engineering, has updated these reserve estimates
through December 1991. All estimates for December 1996, 1997 and
1998 have been updated by the Company's staff geologist without
the assistance of independent petroleum engineers. The Company
has prepared the following tables to comply with the applicable
provisions of the Securities and Exchange Commission's disclosure
regulations. Estimated net quantities of proved developed oil and
gas reserves attributable to working interests for the years
ended December 31, 1998, 1997 and 1996 are as follows (all
reserves are located in the United States):
Oil (Bbls) Gas (Mcf)
__________ _________
New discoveries and extensions 0 0
Production (2,666) (35,136)
Revision of previous estimates
Sale of Reserves 0 0
_________ _________
Proved developed reserves as
of December 31, 1996 287,817 1,397,002
New discoveries and extensions 37,500 15,000
Production (1,435) (22,828)
Revision of previous estimates (1,200) (85,000)
Sale of Reserves (80,000) (400,000)
_________ _________
Proved developed reserves as
of December 31, 1997 242,682 904,174
New discoveries and extensions 0 0
Production (795) (21,342)
Revision of previous estimates - -
Sale of Reserves 0 0
_________ _________
Proved developed reserves as
of December 31, 1998 241,887 882,832
The above amounts represent proved developed reserves. The
Company does not estimate proved undeveloped reserves,
accordingly, the reserve amounts do not include undeveloped
reserves.
The Company's estimates of the standardized measure of discounted
future net cash flows are as follows:
1998 1997 1996
____ ____ ____
Future cash inflows n/a n/a n/a
Future production and
development costs n/a n/a n/a
_________ _________ _________
Future net cash flows
10% annual discount
for estimated timing of
cash flows n/a n/a n/a
_________ _________ _________
Standardized measure of
discounted future net
cash flows n/a n/a n/a
========= ========= =========
The price per barrel of oil as of March 31, 1997 was $19.15 and
the price per Mcf of gas as of the same date ranged from $2.92 to
$5.12. The price per barrel as of March 31, 1998 was $11.75 and
the price per Mcf of gas as of the same date ranged from $1.67 to
$5.19 per Mcf. The price per barrel as of March 31, 1999 was
$12.50 and the price for gas as of the same date ranged from
$1.87 to $3.27 per Mcf.
Sources of Changes in the Standardized Measure
of Discounted Future Net Cash Flows
1998 1997 1996
____ ____ ____
Beginning of period $2,936,666 $3,321,756 $3,647,961
Sales of oil and gas
produced, net of
production costs (33,739) (165,090) (324,205)
Net changes in prices,
production costs and
reserve estimates (273,000) (220,000) (482,000)
Sale of reserves (50,000) 0 0
Extensions, discoveries
and improved recovery,
less related costs 75,000 0 480,000
_________ _________ _________
End of period $2,936,666 $2,936,666 $3,321,756
========= ========= =========
Schedule V
Property and Equipment
Balance at Retirements Balance
Beginning Additions Adjustments at End
of Period at Cost and Sales of Period
_________ _________ _________ _________
Year end 12/31/96
Proved oil and gas
properties $2,891,901 $ 0 $ 165,502 $2,726,399
Unproved leasehold
and minerals 85,106 0 0 85,106
_________ _________ _________ _________
$2,977,007 $ 0 $ 165,502 $2,811,505
========= ========= ========= =========
Year end 12/31/97
Proved oil and gas
properties $2,726,399 $ 0 $ 215,503 $2,510,896
Unproved leasehold
and minerals 85,106 0 85,106 0
_________ _________ _________ _________
$2,811,505 $ 0 $ 300,609 $2,510,896
========= ========= ========= =========
Year end 12/31/98
Proved oil and gas
properties $2,510,896 $ 0 $ 152,644 $2,358,252
Unproved leasehold
and minerals 0 0 0 0
_________ _________ _________ _________
$2,510,896 $ 0 $ 152,644 $2,358,252
========= ========= ========= =========
Schedule VI
Accumulated Depreciation, Depletion, Amortization and
Valuation Allowances of Property and Equipment
Balance at Charged to Retirements Balance
Beginning Cost and Adjustments at End
Of Period Expenses and Sales of Period
_________ _________ _________ _________
Proved oil and gas
properties
Year end 12/31/96 $2,650,669 $ 13,777 $ 127,636 $2,536,810
========= ========= ========= =========
Year end 12/31/97 $2,536,810 $ 11,495 $ 187,880 $2,360,425
========= ========= ========= =========
Year end 12/31/98 $2,360,425 $ 9,208 $ 141,983 $2,227,650
========= ========= ========= =========
Schedule VIII
Valuation and Qualifying Accounts
Balance at Collections Balance
Allowance for Beginning and at End
Doubtful Accounts of Period Additions Write offs of Period
_________________ _________ _________ __________ __________
Year end 12/31/96 $ 8,698 $ 0 $ 0 $ 8,698
Year end 12/31/97 $ 8,698 $ 2,525 $ 0 $ 11,223
Year end 12/31/98 $ 11,223 $ 2,303 $ 0 $ 13,526
Schedule X
Supplementary Income Statement Information
Charges to Costs and Expenses
Item 1998 1997 1996
____ ____ ____ ____
Maintenance and repairs n/a n/a n/a
Depreciation of Intangible
Assets 7,741 8,780 10,073
Property taxes n/a n/a n/a
Royalties n/a n/a n/a
Advertising n/a n/a n/a
Only amounts which exceed 1% of total sales and revenues are
required in this schedule.
ITEM 9. - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE MATTERS
There are no disagreements with the independent accountants on
accounting and financial disclosure matters.
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors and Officers
The positions held by each director and officer of the Company
are shown in the following table:
Positions and Offices
Name Age With the Company
____ ___ ________________
H. Terry Snowday, Jr. 64 Chairman of the Board and
President, Chief Executive
Officer and Director
Rosalie A. Herman 47 Chief Financial Officer and
Treasurer
Leslie L. Guernsey 43 Secretary
Edgar R. Puthuff 64 Director
John G. Ross 63 Director
Charles W. Taylor 60 Director
Edward A. Ward 65 Director
Officers may be removed, with or without cause, by a vote of a
majority of all directors.
Directors are elected at the annual meeting of shareholders and
serve a one year term. Vacancies and new positions which occur
between annual stockholders' meetings are filled by remaining
directors.
H. Terry Snowday, Jr., an original investor and director was
Executive Vice President of the Company from 1979 until November,
1985. From January, 1986 to January, 1987, he was Vice President
of Penteco Corporation of Tulsa, Oklahoma. He became President
and Chief Executive Officer of General Energy Resources and
Technology Corporation on January 20, 1987.
Rosalie A. Newman, Chief Financial Officer and Treasurer, has
been an employee of the Company since June 15, 1981.
Leslie L. Guernsey, Secretary, has been an employee of the
Company since April 5, 1976.
Edgar R. Puthuff, a director since 1987, is Chairman and
President of Miller Puthuff Associates, Inc., Manufacturers
Representative in Troy, Michigan. He is also a Director of U.S.
Communications, Inc. and a private investor.
John G. Ross, a director since 1991, is a member of the New York
Stock Exchange. For 15 years, he was a partner of DeCordova,
Cooper & Company, a specialist firm which was acquired by Paine
Webber Specialists, Inc. in September, 1989. In September, 1990,
he retired as Sr. Vice President of Paine Webber Specialists,
Inc. to manage personal business activities.
Charles W. Taylor, a director since 1987, is Chairman and Chief
Executive Officer of Penteco Corporation. Previously, he served
for over 17 years as President and Chief Executive Officer of
various commercial banks and as a Director of these banks.
Edward A. Ward II, a director since 1983, is the principal of Ned
Ward Realtors in New Vernon, New Jersey. He is a Director of the
National Association of Realtors and Past President of the New
Jersey Association of Realtors.
ITEM 11. - EXECUTIVE COMPENSATION
Directors received no compensation for such positions in 1998.
Compensation for certain officers and related parties is
determined by the Compensation Committee, which consists of
Directors Edgar R. Puthuff, Edward A. Ward II and John G. Ross. A
meeting of the committee in December, 1992, set the compensation
for H. Terry Snowday and Charles Taylor as follows: President, H.
Terry Snowday - an annual base salary of twenty thousand
($20,000) dollars plus a yearly bonus as recommended by the
committee based on annual profits per the audited financial
statements. Charles Taylor - to be paid his normal consulting
rates for time worked on behalf of General Energy with a minimum
of ten thousand ($10,000) dollars per year. Charles Taylor
resigned as consultant on January 1, 1995. Terry Snowday was
placed on lay-off on March 8, 1996 and is paid $10.00 per hour as
needed.
Combined compensation expense of seventy seven thousand eight
hundred ninety two ($77,892) dollars for H. Terry Snowday and
Charles Taylor has been accrued but not paid.
Directors and Officers of the Company have in the past and may in
the future participate, directly or through partnerships, in the
Company's drilling activities.
SUMMARY COMPENSATION TABLE
Long Term Compensation
_____________________________
Annual Compensation Awards Payouts
_________________________ ___________________ _______
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Annual Restricted LTIP All Other
Principal Salary Bonus Compensation Stock Award(s) Options/ Payouts Compensation
Position Year ($) ($) ($) ($) SARS (#) ($) ($)
________ ____ _____ _____ _______ _______ ________ _______ _______
CEO 1998 6,400
1997 10,400
1996 8,976
Stock Option Plan
There is no current Stock Option Plan in effect.
Stock Option Agreement
There are no outstanding stock option agreements.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides information with respect to the
shares of common stock of the Company beneficially owned by each
beneficial owner of more than 5% of such shares, each director
and officer of the Company, and all directors and officers as a
group as of December 31, 1998.
Number of Shares Percent of Common
Name Of Common Stock Stock Outstanding
____ _______________ _________________
H. Terry Snowday, Jr. 190,335 2.38%
Robert M. Andrews 548,765 6.87%
12683 S. Marina Village Dr.
Traverse City, MI 49684
Richard E. Calvert 457,873 5.73%
7784 E. Shore Road
Traverse City, MI 49686
Leslie L. Guernsey 6,700 (4)
Armond Hansen 502,118 6.28%
P.O. Box 6007
Mesa, AZ 85216-6007
Rosalie A. Herman 10,309 (4)
Edgar R. Puthuff 941,998 (1) 11.79%
John G. Ross 75,649 (2) (4)
Charles W. Taylor 1,102,146 (3) 13.79%
Edward A. Ward II 65,149 (4)
all directors and officers
as a group (7 in the group) 2,392,286 29.93%
(1) Includes 10,000 shares owned by Edgar Puthuff & William
Miller Trust of the Miller Puthuff Associates, Inc. Employees
Pension Profit Sharing Plan, 17,649 shares owned by Edgar R.
Puthuff Trust Miller Puthuff Associates Employees Pension Plan,
575,015 shares owned by Miller Puthuff Associates Pension Plan
Profit Sharing Plan Profit Sharing Plan Trust and 100,000 shares
owned by Edgar Puthuff Tr of the Miller Puthuff Associates
Employees Pension Profit Sharing Plan.
(2) Includes 35,649 shares held by Patricia E. Ross, his wife.
(3) Includes 1,102,146 shares held by Penteco Corporation.
(4) Less than 1%
The above list includes officers and directors who have a
beneficial ownership in the securities of the Company. All
officers and directors are voting FOR on all proposals. It is not
known how the other 5% shareholders intend to vote their proxies.
ITEM 13. - CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
There are no family relationships between the officers and/or
directors of the Company other than Edward A. Ward II is a
brother-in-law of H. Terry Snowday.
Director Charles W. Taylor is Chairman of the Board and Chief
Executive Officer of Penteco Corporation.
In 1987, the Company entered into a Management Agreement with
Penteco Corporation to analyze the Company's financial position
and provide management services to the Company. Mr. Charles
Taylor, a director of the Company, owns 25% of the outstanding
shares of Penteco and is a director and officer of that Company.
Director's Snowday, Puthuff and Ward are minority investors in
Penteco Corporation. Mr. Taylor abstained from voting for the
Management Agreement considering his position with Penteco.
Effective January 1993, the Management Agreement with Penteco
Corporation was terminated and those responsible for management
duties became salaried employees or advisors to the Company.
In July of 1990, Penteco Corporation agreed to accept 1,891,182
shares of General Energy Resources and Technology Corporation
stock as payment for management fees for the period November,
1987, to May, 1990, totaling $94,559.10. The Company had a two
year buy-back option and in September 1992, the Company
repurchased the 1,891,182 shares of General Energy Corporation
stock at $.06 per share. The Company then issued 886,040 shares
at $.20 to replace the shares purchased and as payment for
additional management fees accrued through August, 1992.
As of December 31, 1998, the Company has a liability to Penteco
of $13,262 for management fees and out-of-pocket costs.
In 1991, the Company loaned $350,000 to American Barter. American
Barter agreed to repay this loan, with interest at the Company's
borrowing rate and to assign a 25% working interest in the Tulare
Lakes Field. The Tulare Lakes Field was purchased from Chevron by
Penteco and American Barter in 1991. The agreement between
Chevron and Penteco and American Barter states that the note owed
to Chevron will be repaid from production from the Tulare Lakes
Field. If production does not cover debt payments, General Energy
is not liable to Chevron or other third parties. The Company
booked 25% of the purchase price as proved oil and gas
properties, approximately $875,900. The Company also recorded 25%
of the liabilities for Penteco and American Barter's purchase of
the field along with 25% of American Barter's $350,000 debt to
General Energy, borrowed for costs of revitalizing the field.
During 1992, and 1993, additional debt has been recorded for
Society Bank loans used to pay off the original $350,000 and for
operating expenses and accrued interest. In 1993, the Company
sold a 1% interest to a company shareholder for $10,000. The
Company's 25% interest was to be paid from Penteco Corporation's
working interest percentage, net of expenses. As of December 31,
1995, the total revenue from the field continued to be less than
the total expenses with no expectation of improvement within the
next twelve months. Management determined the asset and liability
to be unrealistically presented on the financial statements and
the outstanding debt balance of $908,410, which included accrued
interest, and the asset balance of $717,288, net of accumulated
DD&A, were written off.
The Company sold several turnkey working interests to major
shareholders and directors during 1996. Accounts receivable from
these related parties totaled $10,191 at December 31, 1998 while
related party accounts payable amounted to $8,993. No interest
has been accrued on any of the above amounts.
Pursuant to the requirements of Section 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, on the 15th day of April, 1999.
GENERAL ENERGY RESOURCES AND
TECHNOLOGY CORPORATION
By: H.TERRY SNOWDAY, JR.
_____________________________
H. Terry Snowday, Jr.
President
Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been signed below by the following
person(s) on behalf of the registrant and in the capacities and
on the date(s) indicated.
Signature Title Date
_________ _____ ____
H. TERRY SNOWDAY, JR. President, Chairman of the 04/15/99
_____________________ Board, Chief Executive
H. Terry Snowday, Jr. Officer and Director
ROSALIE A. NEWMAN Chief Financial Officer and 04/15/99
_____________________ Treasurer
Rosalie A. Newman
EDGAR R. PUTHUFF Director 04/15/99
_____________________
Edgar R. Puthuff
JOHN G. ROSS Director 04/15/99
_____________________
John G. Ross
CHARLES W. TAYLOR Director 04/15/99
_____________________
Charles W. Taylor
EDWARD A. WARD Director 04/15/99
_____________________
Edward A. Ward