UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-12396
THE BEARD COMPANY
(Exact name of registrant as specified in its charter)
Oklahoma 73-0970298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405) 842-2333
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 the number of shares outstanding of each of the registrant's
classes of common stock as of May 15, 1998.
Common Stock $.001 par value - 2,528,239
<PAGE>
THE BEARD COMPANY
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheets - March 31, 1998 (Unaudited) and
December 31, 1997
Statements of Operations - Three Months
ended March 31, 1998 and 1997 (Unaudited)
Statements of Shareholders' Equity, Year ended
December 31, 1997 and Three Months ended
March 31, 1998 (Unaudited)
Statements of Cash Flows - Three Months ended
March 31, 1998 and 1997 (Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
THE BEARD COMPANY AND SUBSIDIARIES
Financial Statements
March 31, 1998 (Unaudited) and December 31, 1997 and for the
Three Months Ended March 31, 1998, and 1997 (Unaudited)
PART I
FINANCIAL INFORMATION
<PAGE>
Item 1. Financial Statements
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Balance Sheets
March 31, 1998 (Unaudited) and December 31, 1997
<CAPTION>
March 31, December 31,
Assets 1998 1997
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,241,000 $13,955,000
Accounts receivable, less allowance for
doubtful receivables of $78,000 in 1998
and $75,000 in 1997 1,067,000 1,654,000
Other receivables (note 2) - 1,000,000
Inventories 372,000 227,000
Prepaid expense 110,000 84,000
Other assets 72,000 11,000
----------- -----------
Total current assets 9,862,000 16,931,000
Investments and other assets 1,604,000 1,580,000
Property, plant and equipment, at cost 8,487,000 6,247,000
Less accumulated depreciation,
depletion and amortization 4,385,000 4,300,000
----------- -----------
Net property, plant and equipment 4,102,000 1,947,000
Intangible assets, at cost 1,590,000 828,000
Less accumulated amortization 355,000 334,000
----------- -----------
Net intangible assets 1,235,000 494,000
$16,803,000 $20,952,000
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Trade accounts payable $ 268,000 $ 533,000
Accrued expenses (note 2) 683,000 892,000
Income taxes payable 341,000 541,000
Redeemable preferred stock
purchase and redemption obligation - 4,005,000
Other obligations (note 2) - 900,000
Current maturities of long-term debt 148,000 136,000
----------- -----------
Total current liabilities 1,440,000 7,007,000
Long-term debt less current maturities 2,193,000 519,000
Minority interest in consolidated subsidiaries 272,000 104,000
Redeemable preferred stock of
$100 stated value; 5,000,000 shares
authorized; 27,838 shares issued
and outstanding (note 4) 889,000 889,000
Common shareholders' equity:
Common stock of $.001 par value
per share; 10,000,000 shares
authorized; 2,832,129 shares
issued in 1998 and 1997 3,000 3,000
Capital in excess of par value 37,911,000 37,911,000
Accumulated deficit (24,386,000) (23,962,000)
Treasury stock, 303,890 shares, at cost (1,519,000) (1,519,000)
----------- -----------
Total common shareholders' equity 12,009,000 12,433,000
Commitments and contingencies (note 7) $16,803,000 $20,952,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Operations
(Unaudited)
<CAPTION>
For the Three Months Ended
--------------------------------
March 31, March 31,
1998 1997
---------- ---------
<S> <C> <C>
Revenues:
Environmental/resource recovery $ 965,000 $1,195,000
Interstate travel facilities 285,000 -
Carbon dioxide 160,000 118,000
Other 8,000 9,000
---------- ----------
1,418,000 1,322,000
Expenses:
Environmental/resource recovery
(exclusive of depreciation,
depletion, and amortization shown
separately below) 1,018,000 995,000
Interstate travel facilities
(exclusive of depreciation,
depletion, and amortization shown
separately below) 224,000 -
Carbon dioxide (exclusive of depreciation,
depletion, and amortization shown
separately below) 35,000 27,000
Selling, general and administrative 646,000 513,000
Depreciation, depletion and amortization 116,000 99,000
Other 5,000 6,000
----------- -----------
2,044,000 1,640,000
Operating profit (loss):
Environmental/resource recovery (390,000) (175,000)
Interstate travel facilities (37,000) -
Carbon dioxide 118,000 86,000
Other, principally corporate (317,000) (229,000)
----------- -----------
(626,000) (318,000)
Other income (expense):
Interest income 138,000 2,000
Interest expense (24,000) (58,000)
Gain on sale of assets 13,000 50,000
Equity in net earnings of unconsolidated
affiliates 109,000 28,000
Minority interest in operations of
consolidated subsidiaries 13,000 10,000
Other (47,000) (106,000)
----------- -----------
Loss from continuing operations before
income taxes (424,000) (392,000)
Income taxes (note 6) - -
----------- -----------
Loss from continuing operations (424,000) (392,000)
Loss from discontinued dry ice
manufacturing and distribution
business (note 2) - (32,000)
----------- -----------
Net loss $ (424,000) $ (424,000)
=========== ===========
Net loss attributable to common
shareholders $ (424,000) $ (424,000)
=========== ===========
Net loss per average common share outstanding:
Basic and diluted:
Loss from continuing operations $ (0.17) $ (0.14)
Loss from discontinued operations - (0.01)
----------- -----------
Net loss $ (0.17) $ (0.15)
=========== ===========
Weighted average common shares outstanding -
basic and diluted 2,528,000 2,799,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Shareholders' Equity
<CAPTION>
Total
Capital in Common
Common Excess of Accumulated Treasury Shareholders'
Stock Par Value Deficit Stock Equity
------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 3,000 $41,629,000 $(32,976,000) $ - $ 8,656,000
Net earnings, year ended December 31, 1997 - - 9,014,000 - 9,014,000
Issuance of 33,055 shares of common stock - 71,000 - - 71,000
Purchase of 303,890 shares of common stock - - - (1,519,000) (1,519,000)
Accretion of preferred stock - (3,789,000) - - (3,789,000)
------- ----------- ------------ ----------- -----------
Balance, December 31, 1997 3,000 37,911,000 (23,962,000) (1,519,000) 12,433,000
Net loss, three months ended March 31,
1998 (unaudited) - - (424,000) - (424,000)
------- ----------- ------------ ----------- -----------
Balance, March 31, 1998 (unaudited) $ 3,000 $37,911,000 $(24,386,000) $(1,519,000) $12,009,000
======= =========== ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
<CAPTION>
For the Three Months Ended
-----------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Operating activities:
Cash received from customers $ 1,997,000 $ 5,332,000
Cash paid to suppliers and employees (2,387,000) (4,426,000)
Interest received 202,000 3,000
Interest paid (18,000) (136,000)
Taxes paid (200,000) -
----------- -----------
Net cash provided by (used in)
operating activities (406,000) 773,000
----------- -----------
Investing activities:
Acquisition of property, plant and equipment (460,000) (369,000)
Proceeds from sale of business 1,000,000 -
Proceeds from sale of assets 16,000 55,000
Purchase of minority interest (900,000) -
Payment of employee severance related
to sale of business (190,000) -
Acquisition of travel facilities,
net of cash acquired of $49,000 (763,000) -
Other 24,000 16,000
----------- -----------
Net cash used in investing activities (1,273,000) (298,000)
----------- -----------
Financing activities:
Payments on line of credit and short-term notes (30,000) (1,595,000)
Proceeds from line of credit and term notes - 985,000
Preferred stock repurchase (4,005,000) -
----------- -----------
Net cash used in financing activities (4,035,000) (610,000)
----------- -----------
Net decrease in cash and cash equivalents (5,714,000) (135,000)
Cash and cash equivalents at beginning of period 13,955,000 375,000
----------- -----------
Cash and cash equivalents at end of period $ 8,241,000 $ 240,000
=========== ===========
</TABLE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
Reconciliation of Net loss to Net Cash Provided by (Used in) Operating Activities
<CAPTION>
For the Three Months Ended
------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net loss $ (424,000) $ (424,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 116,000 361,000
Gain on sale of assets (13,000) (53,000)
Equity in net income of unconsolidated
affiliates (109,000) (28,000)
Interest and other costs recognized
on real estate project - 464,000
Other, including minority interest in
consolidated subsidiaries 13,000 111,000
(Increase) decrease in accounts receivable,
prepaids and other current assets 567,000 (3,000)
Decrease in inventories 15,000 541,000
Decrease in accounts payable, accrued
expenses and other liabilities (571,000) (196,000)
---------- ----------
Net cash provided by (used in) operating
activities $ (406,000) $ 773,000
========== ==========
Supplemental Schedule of Noncash Investing and Financing Activities:
Purchase of travel facilities
through the sale of a subsidiary's
common stock $ 181,000 $ -
========== ==========
Purchase of travel facilities through the
issuance of a debt obligation and
assumption of debt obligations $1,743,000 $ -
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE BEARD COMPANY AND SUBSIDIARIES
Notes to Financial Statements
March 31, 1998 and 1997
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements and notes thereto have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain footnote disclosures normally prepared in
accordance with generally accepted accounting principles have been omitted.
The accompanying financial statements and notes thereto should be read in
conjunction with the consolidated financial statements and notes thereto
included in Beard's 1997 annual report on Form 10-K.
The accompanying financial statements include the accounts of The Beard
Company and its wholly and majority-owned subsidiaries ("Beard or the
Company"). All significant intercompany transactions have been eliminated.
The financial information included herein is unaudited; however, such
information reflects solely normal recurring adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods presented.
The results of operations for the three-month period ended March 31, 1998,
are not necessarily indicative of the results to be expected for the full
year.
The Company operates within three segments: (1) the environmental/resource
recovery ("E/RR") Segment, consisting of environmental services and resource
recovery activities; (2) the interstate travel facilities ("ITF") Segment,
consisting of businesses, such as service stations, convenience stores and
restaurants, geared to the needs of the interstate highway traveler, and (3)
the carbon dioxide ("CO{2}") Segment, which consists of the production of CO{2}
gas. The Company also has other operations, including (i) a minority-owned
investment in a joint venture for the extraction, production and sale of crude
iodine, and (ii) various assets and investments which the Company has been
liquidating as opportunities have materialized. The Company also operated in
the dry ice (solid CO{2}) manufacturing and distribution business, included in
the CO{2} Segment which was discontinued in October of 1997.
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income," on January 1, 1998. SFAS No. 130
was effective for fiscal years beginning after December 15, 1997. SFAS No.
130 establishes standards for reporting and display of "comprehensive income"
and its components in a set of financial statements. It requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements. The
Company had no comprehensive income as defined by SFAS No. 130 during the
three months ended March 31, 1998 and 1997, therefore, a statement of
comprehensive income has not been presented in the accompanying financial
statements.
(2) DISCONTINUED OPERATIONS
In October 1997, the Company sold the business and substantially all of the
assets of Carbonic Reserves, an 85%-owned subsidiary involved in the
manufacturing and distribution of solid CO{2} ("solid CO{2} segment") for
cash of $19,375,000 and the assumption of certain liabilities valued at
$2,813,000 (the "Asset Sale").
The gain on the Asset Sale was $11,014,000 (after applicable income taxes
of $522,000). Results of operations of the solid CO{2} segment have been
reported as discontinued operations for the three months ended March 31,
1997 in the accompanying statements of operations. Revenues applicable to
the discontinued operations were $2,800,000 for the three months ended
March 31, 1997. The loss from the discontinued solid CO{2} segment was
$32,000 for the three months ended March 31, 1997.
Pursuant to the closing of the Asset Sale, the Company received $18,375,000
in cash. The remaining $1,000,000 cash proceeds were held back (the
"Holdback") to offset certain post closing adjustments for a maximum of 150
days from the closing date and was included in other receivables on the
balance sheet as of December 31, 1997. The Company received the entire
Holdback amount from the purchaser on March 12, 1998.
Concurrent with the Asset Sale, the Company agreed to purchase the Carbonic
Reserves minority shareholder's common stock for $900,000, which was paid
by the Company in January 1998. The stock purchase obligation was included
in other current obligations on the balance sheet as of December 31, 1997
and reduced the related gain.
As of March 31, 1998, the significant asset of the solid CO{2 }segment
consisted of cash of $46,000. The significant liabilities of the solid
CO{2} segment consisted of accrued income taxes of $235,000 and
approximately $155,000 of accrued bonuses and employee severance
compensation.
(3) ACQUISITION
On February 9, 1998, the Company, through a newly formed subsidiary,
Interstate Travel Facilities, Inc. ("ITF"), purchased two travel facilities
located along Interstate Highway I-40 in eastern Oklahoma for a cash
consideration of $490,000. Both travel facilities are geared toward the
needs of interstate highway travelers and each included a service station,
convenience store and a restaurant. The fair value of identifiable
tangible and intangible net assets acquired approximated $628,000 on the
acquisition date. The excess of the fair value of the travel facilities'
assets acquired over the purchase price has been allocated among the long-
lived assets acquired.
On February 27, 1998, ITF acquired two additional travel facilities and an
undeveloped parcel of land located along Interstate Highway I-35 in central
Oklahoma. These travel facilities are also geared toward the needs of
interstate highway travelers. The first travel facility includes a service
station, convenience store and a restaurant. The second travel facility
includes a service station and a convenience store. The purchase price
consisted of cash of $322,000; a fifteen-year, unsecured, 5.93% $544,000
promissory note, valued at $407,000 (discounted using a 10% interest rate);
the assumption by ITF of three mortgage notes payable approximating
$1,336,000, owed by the former owner of the facilities; and 20% of the
Company's ownership in ITF, valued at $181,000. The three notes assumed by
ITF are secured by the travel facilities' assets, bear interest at rates
ranging from 9% to 10.5%, and mature from 2010 through 2013. The fair
value of identifiable tangible and intangible net assets acquired
approximated $1,489,000 on the acquisition date. The $757,000 excess
purchase price over the fair value of the assets acquired has been recorded
as goodwill and is being amortized on a straight-line basis over 15 years.
The acquisitions have been accounted for by the purchase method and
accordingly, the results of operations of the travel facilities have been
included in the Company's financial statements from their acquisition
dates.
The Company currently has been unable to obtain historical financial
operating information relating to the acquired travel facilities,
therefore, no pro forma financial information has been reported in the
accompanying financial statements.
(4) REDEEMABLE PREFERRED STOCK
The Company's preferred stock is mandatorily redeemable through December
31, 2002, from one-third of Beard's "consolidated net income" as defined.
The Company's operations through March 31, 1998, were not sufficient to
begin the sharing of the consolidated net income. Accordingly, one-third
of future "consolidated net income" will accrete directly to preferred
stockholders and reduce earnings per common share. To the extent that the
preferred stock is not redeemed by December 31, 2002, the shares of
preferred stock can be converted into shares of the Company's common stock.
(5) LOSS PER SHARE
Basic loss per share data is computed by dividing income available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted loss per share reflects the potential
dilution that could occur if the Company's outstanding stock options were
exercised (calculated using the treasury method) and if the Company's
preferred stock were converted to common stock.
Diluted loss per share in the statements of operations exclude potential
common shares issuable upon conversion of redeemable preferred stock or
exercise of stock options as a result of losses from continuing operations
for all periods presented.
(6) INCOME TAXES
In accordance with the provisions of the Statement of Financial Accounting
Standard No. 109, Accounting for Income Taxes ("SFAS No. 109"), the
Company's net deferred tax asset is being carried at zero book value, which
reflects the uncertainties of the Company's utilization of the net
deductible timing differences. There is no provision for income taxes for
the three months ended March 31, 1998 and 1997 due to the availability of
net operating losses and other carryforwards.
At March 31, 1998, the Company estimates that it had the following income
tax carryforwards available for both income tax and financial reporting
purposes (in thousands):
<TABLE>
<CAPTION>
Expiration
Date Amount
---------- ---------
<S> <C> <C>
Federal regular tax operating loss
carryforwards 2004-2010 $ 53,414
Investment tax credit carryforward 1998-2000 441
Tax depletion carryforward Indefinite 5,500
---------
Total $ 59,355
=========
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
In the normal course of business various actions and claims have been
brought or asserted against the Company. Management does not consider them
to be material to the Company's financial position, liquidity or results of
operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion focuses on material changes in the Company's
financial condition since December 31, 1997 and results of operations for the
quarter ended March 31, 1998 compared to the prior year first quarter. Such
discussion should be read in conjunction with the Company's financial
statements including the related footnotes.
In preparing the discussion and analysis, the Company has presumed readers
have read or have access to the discussion and analysis of the prior year's
results of operations, liquidity and capital resources as contained in the
Company's 1997 Form 10-K.
The Company's operating segments are: (1) the environmental/resource
recovery ("E/RR") Segment, consisting of environmental services and resource
recovery activities; (2) the interstate travel facilities ("ITF") Segment,
consisting of businesses, such as service stations, convenience stores and
restaurants, geared to the needs of the interstate highway traveler, and (3)
the carbon dioxide ("CO{2}") Segment, which consists of the production of CO{2}
gas. The Company also has other operations, including (i) a minority-owned
investment in a joint venture for the extraction, production and sale of crude
iodine, and (ii) various assets and investments which the Company has been
liquidating as opportunities have materialized. The Company also operated in
the dry ice (solid CO{2}) manufacturing and distribution business, included in
the CO{2} Segment which was discontinued in October of 1997.
Material changes in financial condition - March 31, 1998 as compared with
December 31, 1997.
The following table reflects some of the changes in the Company's financial
condition during the periods indicated:
<TABLE>
<CAPTION>
March 31, December 31, Increase
1998 1997 (Decrease)
------------- ------------- ------------
<S> <C> <C> <C>
Cash and cash equivalents $ 8,241,000 $ 13,955,000 $ (5,714,000)
Working capital $ 8,422,000 $ 9,924,000 $ (1,502,000)
Current ratio 6.85 to 1 2.42 to 1
</TABLE>
During the first quarter of 1998, the Company reduced its working capital
by $1.5 million from $9.9 million as of December 31, 1997. The decrease was
primarily the result of the Company, through a subsidiary, acquiring four
travel facilities and an undeveloped parcel of land, the purchase price of
which included a cash payment of $812,000. See further discussion of the
travel facilities' acquisition below. The Company also acquired property,
plant and equipment of $460,000 during the quarter, which included replacing
assets as they become fully-depreciated as well as remodeling one of its newly
acquired travel facilities. The remaining reduction in working capital is a
direct result of operating losses recognized by the Company's E/RR Segment for
the 1998 quarter. See further discussion of E/RR losses for the quarter in
the discussion of results of operations below. The Company's core operations
are affected by seasonality. The first quarter is normally characterized by
cold and/or rainy weather which causes a slowdown of sales in the E/RR
Segment.
In the first quarter of 1998 the Company paid $4,005,000 to repurchase and
redeem 62,318 shares of its mandatorily redeemable preferred stock. The
Company recorded the estimated repurchase and redemption as a redeemable
preferred stock purchase obligation as of December 31, 1997. The Company also
paid $900,000 to purchase the common shares of a minority shareholder and
$190,000 in accrued bonus and employee severance compensation, which were
recorded as other obligations and accrued expenses as of December 31, 1997.
Such payments were made pursuant to the terms of the agreement to sell the
business of Carbonic Reserves. On March 12, 1998, the Company received
$1,000,000 of the sales price of Carbonic Reserves which had been held back by
the purchaser for a period of 150 days after the closing of the sale. See
note 2 to the financial statements. These amounts accounted for 72% of the
$5,714,000 reduction in cash and cash equivalents from December 31, 1997 to
March 31, 1998.
In February of 1998, the Company, through an 80% owned subsidiary,
Interstate Travel Facilities, Inc. ("ITF"), acquired four travel facilities
and a parcel of land located along Interstate Highway I-40 in eastern
Oklahoma, and Interstate Highway I-35 in central Oklahoma. The travel
facilities are geared to the needs of interstate highway travelers. Three of
the travel facilities include a service station, convenience store and a
restaurant. The fourth travel facility includes a service station and a
convenience store. The purchase price of the travel facilities consisted of
cash of $812,000, the issuance of debt valued at $407,000, the assumption of
three mortgage notes payable approximating $1,336,000, owed by the former
owner of the travel facilities, and 20% of the Company's ownership in ITF,
valued at $181,000. See note 3 to the financial statements.
The Company incurred $2,257,000 of capital expenditures during the first
three months of 1998 in the following segments:
Environmental/resource recovery $ 65,000
Interstate travel facilities 2,174,000
Carbon dioxide 11,000
Other 7,000
-----------
$ 2,257,000
===========
$1,790,000 of the capital expenditures for the quarter were financed by the
Company issuing debt, assuming debt and issuing stock of a subsidiary. See
note 3 to the financial statements.
The Company's cash reserves, cash flow and credit lines will be adequate
to fund the $4,218,000 of capital expenditures projected for the Company for
the last nine months of the year. The Company anticipates spending
$3,800,000, or 90% of the $4,218,000, on projects involving its patented
Mulled Coal technology during this period. Negotiations on the plants
utilizing this technology are currently in process. The remaining $418,000
will be spent in the remaining segments to replace assets as they become
fully-depreciated and no longer useful and to expand operations in areas that
demonstrate profit potential.
The sale of Carbonic Reserves in October of 1997 has continued to provide
the Company with significant liquid resources. Future cash flows and
availability of credit are subject to a number of variables, including
continuing private and governmental demand for environmental services, and
continuing demand for CO{2} gas and for the services provided by the Company's
interstate travel facilities. The Company anticipates that its current
resources, future cash flows and enhanced availability of credit due to the
significant improvement in the Company's balance sheet will enable it to meet
its planned operating costs and capital spending requirements.
Through the period ending December 31, 2002, the Company's liquidity will
be reduced to the extent it is required to redeem any of the Beard preferred
stock pursuant to the mandatory redemption provisions. See Note 4 to the
accompanying financial statements.
Material changes in results of operations - Quarter ended March 31, 1998 as
compared with the Quarter ended March 31, 1997.
The loss for the first quarter of 1998 was $424,000, the same as recorded
in the 1997 first quarter. There were declines in operating margins in all
segments except the CO{2} Segment which improved by $32,000. The E/RR Segment
declined by $215,000 and Other---principally corporate---activities declined
by $88,000. The new ITF Segment generated a $37,000 operating loss for the
first two months of operations in 1998. As a result, the operating loss for
the current quarter increased 97% to $626,000 versus $318,000 in the
corresponding quarter of the prior year.
Operating results of the Company's three Segments are reflected below:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Operating profit (loss):
Environmental/resource
recovery $(390,000) $(175,000)
Interstate travel
facilities (37,000) -
Carbon dioxide 118,000 86,000
--------- ---------
Subtotal (309,000) (89,000)
Other (317,000) (229,000)
--------- ---------
$(626,000) $(318,000)
========= =========
</TABLE>
The "Other" in the above table reflects primarily general and corporate
activities, as well as other activities and investments of the Company.
Environmental/resource recovery
A 30% decrease in revenues of $230,000 generated by the E/RR Segment offset
slightly by a $15,000 decrease in operating costs led to a sharply increased
operating loss by this Segment in the first quarter of 1998 as compared to the
same period in 1997. The 1997 quarter benefited from a large remediation
project which incurred smaller than expected expenses while the 1998 quarter
had no comparable projects. Additionally, the segment increased its
remediation personnel during the second quarter of 1997 in anticipation of a
continued workload which did not materialize for the 1998 quarter.
Interstate Travel Facilities
The new operating segment experienced an operating loss of $37,000 for
the first quarter of 1998. As discussed above, the principal operating assets
of ITF were acquired in February of 1998, therefore, the Company did not
recognize operations for the full quarter ended March 31, 1998. ITF also
began renovating one of its four travel facilities during the quarter which
reduced its hours of operation and negatively impacted ITF's profitability for
the quarter.
Carbon dioxide
First quarter 1998 operations reflected an operating profit of $118,000
compared to $86,000 for the 1997 first quarter. The sole component of
revenues for this Segment is the sale of CO{2} gas from the working and
overriding royalty interests of the Company's two carbon dioxide producing
units in Colorado and New Mexico. Operating revenues in this segment
increased $42,000 or 36% to $160,000 for the first three months of 1998
compared to $118,000 for the same period in 1997. This increase was due to
increased production of 565,000 MCF of CO{2} gas in the first three months of
1998 compared to production of 467,000 MCF in the same period in 1997. The
production increase was due to the development program in the McElmo Dome
field in Colorado which was begun in 1996 and is now winding down. Slight
increases in CO{2} prices have also contributed to the increased revenues.
Other activities
Other operations, consisting primarily of general and corporate
activities, generated a larger operating loss for the first quarter of 1998 as
compared to the same period last year. The majority of the increase was
related to the increased cost of health insurance caused by an increase in the
Company's reinsurance levels.
Selling, general and administrative expenses
The Company's selling, general and administrative expenses ("SG&A") in the
current quarter increased to $646,000 from $513,000 in the 1997 first quarter.
The primary reason for this was the increase in health insurance expenses
mentioned above in Other corporate activities and the addition of ITF's SG&A
expenses in the quarter which did not exist for the same period in 1997.
Depreciation, depletion and amortization expenses
DD&A expense increased $17,000, or 17%, from $99,000 to $116,000 from the
first quarter of 1997 to the same period in 1998, reflecting additions to
property, plant and equipment made during the past year.
Other income and expenses
The other income and expenses for the first quarter of 1998 netted to
$202,000 in earnings compared to a $74,000 loss for the same period in 1997.
Interest income was up $136,000 for the first quarter of 1998 compared to the
same period in 1997 reflecting the income from investments in commercial paper
of cash realized from the sale of the assets of Carbonic Reserves. Interest
expense was down $34,000 as a result of the reduction in outstanding debt in
the fourth quarter of 1997, also a result of the asset sale. The Company's
equity in the earnings of unconsolidated affiliates was up $81,000 for the
first quarter of 1998 compared to 1997 primarily as a result of the increased
operations and profitability of its investment in the joint venture engaged in
the production and sale of crude iodine. The decline in other expenses
included a reduction in impairments of other assets in the amount of $30,000
for the first three months of 1998 compared to the first three months of 1997.
Offsetting these increases was a decline of $37,000 in the gain on sale of
assets from $50,000 in the first quarter of 1997 to $13,000 for the same
period in 1998.
Discontinued operations
In October of 1997 the Company sold the business and substantially all of
the assets of Carbonic Reserves, an 85%-owned subsidiary engaged in the
manufacture and distribution of solid CO{2} for cash of $19,375,000 and the
assumption of certain liabilities valued at $2,813,000. The gain on the sale
was $11,014,000 after deducting income taxes of $522,000. Revenues applicable
to and the loss from the discontinued operations of Carbonic Reserves were
$2,800,000 and $32,000, respectively, in the first quarter of 1997.
Impact of Recently Issued Accounting Standards
In June 1997, Statement of Financial Accounting Standards ("SFAS") No. 131,
"Disclosures about Segments of an Enterprise and Related Information," was
issued by the Financial Accounting Standards Board. SFAS No. 131 is effective
for periods beginning after December 15, 1997. SFAS No. 131 requires a public
company to report financial and descriptive information about its reportable
segments which are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company will adopt SFAS No. 131 in the fourth quarter of
1998 but has not, as yet, determined its reportable segments under SFAS No.
131.
Impact of Year 2000 Issue
Companies that use computers face an issue as the year 2000 draws near.
The problem is due to a common programming practice of using only two digits
to represent a year. Without proper modification, for example, many programs
may interpret the year 2000 as the year 1900. During the year 1998, the
Company will install the proper commercial software releases and upgrades to
its hardware, as necessary, to become year 2000 compliant. The Company
anticipates that these expenses will not be material.
PART II
OTHER INFORMATION
Item 2. Changes in Securities.
The Company's preferred stock is mandatorily redeemable through December
31, 2002 from one-third of Beard's "consolidated net income" as defined in the
Stock Purchase Agreement. Accordingly, one-third of future "consolidated net
income" will accrete directly to preferred stockholders and reduce earnings
per common share. As a result of these redemption requirements, the payment
of any dividends to the common stockholders in the near future is very
unlikely. See Note 4 to the accompanying financial statements.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this Form 10-Q and are identified
by the numbers indicated:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2 Plan of acquisition, reorganization, arrangement, liquidation or succession:
2(a) Agreement and Plan of Reorganization by and among Registrant, Beard Oil
Company ("Beard Oil") and New Beard, Inc., dated as of July 12, 1993 (see
Addendum A to Part I, which is incorporated herein by reference; schedules to
the Agreement have been omitted). (This Exhibit has been previously filed as
Exhibit 3(b), filed on July 27, 1993 to Registrant's Registration Statement
on Form S-4, File No. 33-66598, and same is incorporated by reference).
2(b) Agreement and Plan of Merger by and between The Beard Company and The New
Beard Company, dated as of September 16, 1997. (This Exhibit has been
previously filed as Exhibit B to Registrant's Proxy Statement filed on
September 12, 1997, and same is incorporated by reference).
2(c) Certificate of Merger merging The Beard Company into The New Beard Company as
filed with the Secretary of State of Oklahoma on November 26, 1997. (This
Exhibit has been previously filed as Exhibit 2.1 to Registrant's Form 8-K,
filed on December 8, 1997, and same is incorporated by reference).
2(d) Asset Purchase Agreement by and among Airgas Carbonic Reserves, Inc.
("Airgas"), and Registrant, Carbonic Reserves ("Carbonics"), and Clifford H.
Collen, Jr. ("Collen"). (This Exhibit has been previously filed as Exhibit
A, filed on September 11, 1997 to Registrant's Proxy Statement dated
September 12, 1997, and same is incorporated by reference).
2(e) Asset Purchase Agreement by and among Registrant, Toby B. Tindell, Cristie R.
Tindell and Interstate Travel Facilities, Inc. ("ITF"), dated as of February
27, 1998. (This Exhibit has been previously filed as Exhibit 2 to
Registrant's Form 8-K, filed on March 16, 1998, and same is incorporated by
reference).
3(i) Certificate of Incorporation of The New Beard Company as filed with the
Secretary of State of Oklahoma on September 11, 1997. (This Exhibit has
been previously filed as Exhibit C to Registrant's Proxy Statement filed
on September 12, 1997, and same is incorporated by reference).
3(ii) Registrant's By-Laws as currently in effect. (This Exhibit has been
previously filed as Exhibit 3(ii) to Registrant's Form 10-K for the period
ended December 31, 1997, filed on March 31, 1998, and same is incorporated
herein by reference).
4 Instruments defining the rights of security holders:
4(a) Agreement of Sale and Purchase by and between Beard Oil and Sensor Oil & Gas,
Inc. ("Sensor"). (This Exhibit has been previously filed as Addendum B to
Amendment No. 1, filed on September 3, 1993 to Registrant's Registration
Statement on Form S-4, File No. 33-66598, and same is incorporated by
reference).
4(b) Certificate of Designations, Powers, Preferences and Relative, Participating,
Option and Other Special Rights, and the Qualifications, Limitations or
Restrictions Thereof of the Series A Convertible Voting Preferred Stock of
the Registrant. (This Exhibit has been previously filed as Exhibit 3(c) to
Amendment No. 2, filed on September 17, 1993 to Registrant's Registration
Statement on Form S-4, File No. 33-66598, and same is incorporated by
reference).
4(c) Settlement Agreement, with Certificate of Amendment attached thereto, by and
among Registrant, Beard Oil, New York Life Insurance Company, New York Life
Insurance and Annuity Company, John Hancock Mutual Life Insurance Company,
Memorial Drive Trust and Sensor, dated as of April 13, 1995. (This Exhibit
has been previously filed as Exhibit 4(g) to Registrant's Form 10-K for the
period ended December 31, 1994, and same is incorporated by reference).
10 Material contracts:
10(a) Amendment No. One to The Beard Company 1993 Stock Option Plan dated August
27, 1993, as amended June 4, 1998 (The Amended Plan supersedes the original
Plan adopted on August 27, 1993. This Exhibit has previously been filed as
Exhibit A, filed on April 30, 1998 to Registrant's Proxy Statement dated
April 30, 1998, and same is incorporated by reference).<F1>
10(b) The Beard Company 1994 Phantom Stock Units Plan adopted November 1, 1994.
(This Exhibit has been previously filed as Exhibit 10(h) to Registrant's
Form 10-K for the period ended December 31, 1994, filed on April 17, 1995, and
same is incorporated by reference).<F1>
10(c) Stockholders' Agreement made as of January 27, 1993 by and among Registrant,
Carbonics and Collen. (This Exhibit has been previously filed as Exhibit
10(i) to Registrant's Form 10-K for the period ended December 31, 1994, filed
on April 17, 1995, and same is incorporated by reference).<F1>
10(d) Stock Purchase Agreement dated as of December 15, 1991 by and among
Registrant (formerly known as Beard Investment Company), Carbonics and
Collen. (This Exhibit has been previously filed as Exhibit 10.9 of Item
14(a) to Beard Oil's Form 8, Amendment No. 1, Form 10-K for the fiscal year
ended December 31, 1991, and same is incorporated herein by reference).<F1>
10(e) Conversion Agreement dated as of January 31, 1995 by and among Registrant,
Carbonics and Collen. (This Exhibit has been previously filed as Exhibit
10(k) to Registrant's Form 10-K for the period ended December 31, 1994, filed
on April 17, 1995, and same is incorporated herein by reference).<F1>
10(f) Employment Agreement dated April 3, 1995 by and among Registrant, Carbonics,
Collen and Beard Oil. (This Exhibit has been previously filed as Exhibit
10(l) to Registrant's Form 10-K for the period ended December 31, 1994, filed
on April 17, 1995, and same is incorporated herein by reference).<F1>
10(g) The Beard Company Deferred Stock Compensation Plan. (This Exhibit has been
previously filed as Exhibit 10(k) to Registrant's Form 10-K for the period
ended December 31, 1995, filed on April 1, 1996, and same is incorporated by
reference).<F1>
10(h) Form of Change in Control Compensation Agreement dated as of January 24,
1997, by and between Carbonics and three employees. (This Exhibit has been
previously filed as Exhibit 10(l) to Registrant's Form 10-Q for the period
ended March 31, 1997, filed on May 14, 1997, and same is incorporated by
reference).<F1>
10(i) Nonqualified Stock Option Agreement by and between Richard D. Neely and
ISITOP, Inc. ("ISITOP"), dated April 1, 1997. (This Exhibit has been
previously filed as Exhibit 10(i) to Registrant's Form 10-K for the period
ended December 31, 1997, filed on March 31, 1998, and same is incorporated
herein by reference).<F1>
10(j) Nonqualified Stock Option Agreement by and between Jerry S. Neely and ISITOP,
dated April 1, 1997. (This Exhibit has been previously filed as Exhibit
10(j) to Registrant's Form 10-K for the period ended December 31, 1997, filed
on March 31, 1998, and same is incorporated herein by reference).<F1>
10(k) Letter Agreement dated August 15, 1997 by and among Collen, Carbonics, Beard
Oil and Registrant. (This Exhibit has been previously filed as Exhibit 10(m)
to Registrant's Form 10-Q for the period ended September 30, 1997, filed on
November 13, 1997, and same is incorporated by reference).<F1>
10(l) Letter Agreement dated October 8, 1997 by and among Randy D. Thacker,
Carbonics and Registrant. (This Exhibit has been previously filed as Exhibit
10(n) to Registrant's Form 10-Q for the period ended September 30, 1997,
filed on November 13, 1997, and same is incorporated by reference).<F1>
10(m) Nonqualified Stock Option Agreement by and between Toby Tindell and ITF,
dated February 27, 1998. (This Exhibit has been previously filed as Exhibit
10(n) to Registrant's Form 10-K for the period ended December 31, 1997, filed
on March 31, 1998, and same is incorporated herein by reference).<F1>
10(n) Subscription Agreement by and between Cibola Corporation ("Cibola") and
Registrant, dated April 10, 1996. (This Exhibit has been previously filed as
Exhibit 10.1 to Registrant's Form 10-Q for the period ended June 30, 1996,
filed on August 14, 1996, and same is incorporated by reference).
10(o) Nonrecourse Secured Promissory Note from Registrant to Cibola, dated April
10, 1996. (This Exhibit has been previously filed as Exhibit 10.2 to
Registrant's Form 10-Q for the period ended June 30, 1996, filed on August
14, 1996, and same is incorporated by reference).
10(p) Security Agreement by and among Registrant, Cibola and the Cibola
shareholders, dated April 10, 1996. (This Exhibit has been previously filed
as Exhibit 10.3 to Registrant's Form 10-Q for the period ended June 30, 1996,
filed on August 14, 1996, and same is incorporated by reference).
10(q) Tax Sharing Agreement by and among Registrant, Cibola and the Cibola
shareholders, dated April 10, 1996. (This Exhibit has been previously filed
as Exhibit 10.4 to Registrant's Form 10-Q for the period ended June 30, 1996,
filed on August 14, 1996, and same is incorporated by reference).
10(r) Compensation Agreement by and between Registrant and the Trustees of the
William M. Beard and Lu Beard 1988 Charitable Unitrust (the "Trustees") dated
April 17, 1997. (This Exhibit has been previously filed as Exhibit 10(s) to
Registrant's Form 10-K for the period ended December 31, 1997, filed on March
31, 1998, and same is incorporated herein by reference).
10(s) Indemnity Agreement by and between Registrant and the Trustees dated April
17, 1997. (This Exhibit has been previously filed as Exhibit 10(t) to
Registrant's Form 10-K for the period ended December 31, 1997, filed on March
31, 1998, and same is incorporated herein by reference).
11 Statement re computation of per share earnings.
27 Financial Data Schedule
_____________________
<FN>
<F1> Compensatory plan or arrangement.
</FN>
</TABLE>
(b) One report on Form 8-K was filed during the period covered by this report.
On March 2, 1998 the Company reported the formation of a new
subsidiary which, effective as of February 28, 1998, purchased three
properties involved in the interstate travel facilities business for
$2,384,500. The purchase price was comprised of a 15-year, unsecured
5.93% promissory note for $543,750, the assumption of debt by the
subsidiary of $1,659,000, and 20% of the common stock of the company
valued at $181,750. Additionally, this subsidiary had, on February 9,
1998, purchased two other properties in the same line of business for
cash of $490,000.
The report on Form 8-K was dated and filed March 16, 1998, with the
earliest event reported on February 27, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
(Registrant) THE BEARD COMPANY
(Date) May 19, 1998 HERB MEE, JR.
Herb Mee, Jr., President and
Chief Financial Officer
(Date) May 19, 1998 JACK A. MARTINE
Jack A. Martine, Controller and
Chief Accounting Officer
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
2(a) Agreement and Plan of Reorgani- Incorporated herein by reference
zation by and among Registrant,
Beard Oil Company ("Beard Oil")
and New Beard, Inc., dated as of
July 12, 1993 (see Addendum A
to Part I, which is incorporated
herein by reference; schedules to
the Agreement have been omitted).
2(b) Agreement and Plan of Merger by Incorporated herein by reference
and between The Beard Company
and The New Beard Company, dated
as of September 16, 1997.
2(c) Certificate of Merger merging The Incorporated herein by reference
Beard Company into The New Beard
Company as filed with the Secretary
of State of Oklahoma on November
26, 1997.
2(d) Asset Purchase Agreement by and Incorporated herein by reference
among Airgas Carbonic Reserves, Inc.
("Airgas"), and Registrant,
Carbonic Reserves ("Carbonics"),
and Clifford H. Collen, Jr. ("Collen").
2(e) Asset Purchase Agreement by and Incorporated herein by reference
among Registrant, Toby B. Tindell,
Cristie R. Tindell and Interstate
Travel Facilities, Inc. ("ITF"),
dated as of February 27, 1998.
3(i) Certificate of Incorporation of Incorporated herein by reference
The New Beard Company as filed
with the Secretary of State of
Oklahoma on September 11, 1997.
3(ii) Registrant's By-Laws as currently Incorporated herein by reference
in effect.
4(a) Agreement of Sale and Purchase by Incorporated herein by reference
and between Beard Oil and Sensor
Oil & Gas, Inc. ("Sensor").
4(b) Certificate of Designations, Incorporated herein by reference
Powers, Preferences and Relative,
Participating, Option and Other
Special Rights, and the Qualifica-
tions, Limitations or Restrictions
Thereof of the Series A Convertible
Voting Preferred Stock of the
Registrant.
4(c) Settlement Agreement, with Certif-Incorporated herein by reference
icate of Amendment attached thereto,
by and among Registrant, Beard Oil,
New York Life Insurance Company,
New York Life Insurance and Annuity
Company, John Hancock Mutual Life
Insurance Company, Memorial Drive
Trust and Sensor, dated as of April
13, 1995.
10(a) Amendment No. One to The Beard Incorporated herein by reference
Company 1993 Stock Option Plan
dated August 27, 1993, as amended
June 4, 1998 (The Amended Plan
supersedes the original Plan
adopted on August 27, 1993.)
10(b) The Beard Company 1994 Phantom Incorporated herein by reference
Stock Units Plan adopted November
1, 1994.
10(c) Stockholders' Agreement made as Incorporated herein by reference
of January 27, 1993 by and among
Registrant, Carbonics and Collen.
10(d) Stock Purchase Agreement dated as Incorporated herein by reference
of December 15, 1991 by and among
Registrant (formerly known as Beard
Investment Company), Carbonics and
Collen.
10(e) Conversion Agreement dated as of Incorporated herein by reference
January 31, 1995 by and among
Registrant, Carbonics and Collen.
10(f) Employment Agreement dated April Incorporated herein by reference
3, 1995 by and among Registrant,
Carbonics, Collen and Beard Oil.
10(g) The Beard Company Deferred Stock Incorporated herein by reference
Compensation Plan.
10(h) Form of Change in Control Compen- Incorporated herein by reference
sation Agreement dated as of January
24, 1997, by and between Carbonics
and three employees.
10(i) Nonqualified Stock Option Agree- Incorporated herein by reference
ment by and between Richard D.
Neely and ISITOP, Inc.
("ISITOP"), dated April 1, 1997.
10(j) Nonqualified Stock Option Agree- Incorporated herein by reference
ment by and between Jerry S. Neely
and ISITOP, dated April 1, 1997.
10(k) Letter Agreement dated August 15, Incorporated herein by reference
1997 by and among Collen, Carbonics,
Beard Oil and Registrant.
10(l) Letter Agreement dated October 8, Incorporated herein by reference
1997 by and among Randy D. Thacker,
Carbonics and Registrant.
10(m) Nonqualified Stock Option Agree- Incorporated herein by reference
ment by and between Toby Tindell
and ITF, dated February 27, 1998.
10(n) Subscription Agreement by and Incorporated herein by reference
between Cibola Corporation ("Cibola")
and Registrant, dated April 10, 1996.
10(o) Nonrecourse Secured Promissory Incorporated herein by reference
Note from Registrant to Cibola,
dated April 10, 1996.
10(p) Security Agreement by and among Incorporated herein by reference
Registrant, Cibola and the Cibola
shareholders, dated April 10, 1996.
10(q) Tax Sharing Agreement by and Incorporated herein by reference
among Registrant, Cibola and the
Cibola shareholders, dated
April 10, 1996.
10(r) Compensation Agreement by and Incorporated herein by reference
between Registrant and the
Trustees of the William M.
Beard and Lu Beard 1988
Charitable Unitrust (the
"Trustees") dated April 17, 1997.
10(s) Indemnity Agreement by and Incorporated herein by reference
between Registrant and the
Trustees dated April 17, 1997.
11 Statement re computation of Filed herewith electronically
per share earnings.
27 Financial Data Schedule Filed herewith electronially
</TABLE>
<TABLE>
The Beard Company
Computation of Loss Per Share
<CAPTION>
For the Three Months Ended
--------------------------
March 31, March 31,
1998 1997
---------- ---------
<S> <C> <C>
Basic and Diluted Loss Per Share:
Loss from continuing operations
per statement of operations $ (424,000) $ (392,000)
========== ==========
Net loss per statement of operations $ (424,000) $ (424,000)
========== ==========
Net loss attributable to common
shareholders per statement of operations $ (424,000) $ (424,000)
========== ==========
Weighted average common shares outstanding 2,528,000 2,799,000
========== ==========
Basic and diluted loss per share:
Loss from continuing operations $ (0.17) $ (0.14)
Loss from discontinued operations - (0.01)
---------- ----------
Net loss $ (0.17) $ (0.15)
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,241
<SECURITIES> 0
<RECEIVABLES> 1,067
<ALLOWANCES> (78)
<INVENTORY> 372
<CURRENT-ASSETS> 9,862
<PP&E> 8,487
<DEPRECIATION> (4,385)
<TOTAL-ASSETS> 16,803
<CURRENT-LIABILITIES> 1,440
<BONDS> 0
889
0
<COMMON> 3
<OTHER-SE> 12,006
<TOTAL-LIABILITY-AND-EQUITY> 16,803
<SALES> 285
<TOTAL-REVENUES> 1,418
<CGS> 224
<TOTAL-COSTS> 2,044
<OTHER-EXPENSES> (223)
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> (424)
<INCOME-TAX> 0
<INCOME-CONTINUING> (424)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (424)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
