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 September 30, 2000
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 October 31, 2000.
Common Stock $.001333 par value - 1,828,845
<PAGE>
THE BEARD COMPANY
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheets - September 30, 2000 (Unaudited) and
December 31, 1999
Statements of Operations - Three Months and Nine Months
ended September 30, 2000 and 1999 (Unaudited)
Statements of Shareholders' Equity - Year ended
December 31, 1999 and Nine Months ended
September 30, 2000 (Unaudited)
Statements of Cash Flows - Nine Months ended
September 30, 2000 and 1999 (Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Balance Sheets
September 30, 2000 (Unaudited) and December 31, 1999
<CAPTION>
September 30, December 31,
Assets 2000 1999
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 221,000 $ 767,000
Investments - 280,000
Accounts receivable, less allowance for doubtful
receivables of $42,000 in 2000 and $13,000
in 1999 525,000 480,000
Inventory 201,000 103,000
Prepaid expenses and other assets 200,000 98,000
Current portion of notes receivable 81,000 80,000
------------ ------------
Total current assets 1,228,000 1,808,000
------------ ------------
Notes receivable 801,000 756,000
Investments and other assets 735,000 1,324,000
Property, plant and equipment, at cost 7,205,000 6,879,000
Less accumulated depreciation, depletion and
amortization 3,988,000 3,987,000
------------ ------------
Net property, plant and equipment 3,217,000 2,892,000
------------ ------------
Intangible assets, at cost 44,000 25,000
Less accumulated amortization 1,000 1,000
------------ ------------
Net intangible assets 43,000 24,000
------------ ------------
$ 6,024,000 $ 6,804,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Trade accounts payable $ 444,000 $ 262,000
Accrued expenses 822,000 606,000
Current maturities of long-term debt 21,000 17,000
------------ ------------
Total current liabilities 1,287,000 885,000
------------ ------------
Long-term debt less current maturities 995,000 13,000
Other long-term liabilities 342,000 351,000
Redeemable preferred stock of $100 stated value;
5,000,000 shares authorized; 27,838 shares
issued and outstanding (note 5) 889,000 889,000
Common shareholders' equity:
Common stock of $.001333 par value per share;
7,500,000 shares authorized; 2,124,096 shares
issued and outstanding in 2000 and 1999 (note 6) 3,000 3,000
Capital in excess of par value 37,723,000 37,723,000
Accumulated deficit (33,353,000) (31,218,000)
Accumulated other comprehensive income (loss) (16,000) 4,000
Treasury stock, 295,251 shares, at cost in 2000
and 1999 (note 6) (1,846,000) (1,846,000)
------------ ------------
Total common shareholders' equity 2,511,000 4,666,000
------------ ------------
Commitments and contingencies (note 8)
$ 6,024,000 $ 6,804,000
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Operations
(Unaudited)
<CAPTION>
For Three Months Ended For Nine Months Ended
---------------------- ---------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Coal reclamation $ 61,000 $ 49,000 $ 84,000 $ 841,000
Carbon dioxide 125,000 95,000 338,000 319,000
China - - - -
Environmental remediation - - - -
Natural gas well servicing - - 65,000 -
e-Commerce - - - -
Other 6,000 13,000 21,000 43,000
----------- ----------- ----------- -----------
192,000 157,000 508,000 1,203,000
----------- ----------- ----------- -----------
Expenses:
Coal reclamation 133,000 254,000 492,000 942,000
Carbon dioxide 33,000 19,000 69,000 73,000
China - - - -
Environmental remediation 11,000 40,000 92,000 142,000
Natural gas well servicing 4,000 - 52,000 -
e-Commerce - - - -
Selling, general and administrative 442,000 470,000 1,484,000 1,580,000
Depreciation, depletion &
amortization 28,000 23,000 82,000 227,000
Other 7,000 17,000 29,000 63,000
----------- ----------- ----------- -----------
658,000 823,000 2,300,000 3,027,000
----------- ----------- ----------- -----------
Operating profit (loss):
Coal reclamation (97,000) (238,000) (535,000) (417,000)
Carbon dioxide 84,000 68,000 245,000 222,000
China (100,000) (61,000) (291,000) (219,000)
Environmental remediation (14,000) (103,000) (131,000) (258,000)
Natural gas well servicing (57,000) - (133,000) -
e-Commerce (61,000) (33,000) (215,000) (69,000)
Other, primarily corporate (221,000) (299,000) (732,000) (1,083,000)
----------- ----------- ----------- -----------
(466,000) (666,000) (1,792,000) (1,824,000)
Other income (expense):
Interest income 41,000 48,000 98,000 168,000
Interest expense (22,000) (1,000) (30,000) (159,000)
Minority interest in operations of
subsidiary - - 16,000 -
Gain on sale of assets 196,000 2,000 206,000 5,000
Equity in earnings of unconsolidated
affiliates (200,000) 31,000 (584,000) 120,000
Other 4,000 (176,000) 9,000 (104,000)
----------- ----------- ----------- -----------
Loss from continuing operations
before income taxes (447,000) (762,000) (2,077,000) (1,794,000)
Income taxes (note 7) - - (14,000) (16,000)
----------- ----------- ----------- -----------
Loss from continuing operations (447,000) (762,000) (2,091,000) (1,810,000)
Loss from discontinued operations (44,000) (29,000) (44,000) (93,000)
----------- ----------- ----------- -----------
Net loss $ (491,000) $ (791,000) $(2,135,000) $(1,903,000)
=========== =========== =========== ===========
Net loss per average common share outstanding:
Basic and diluted:
Loss from continuing operations $ (0.24) $ (0.41) $ (1.14) $ (0.98)
Loss from discontinued operations (0.03) (0.02) (0.03) (0.05)
----------- ----------- ----------- -----------
Net loss $ (0.27) $ (0.43) $ (1.17) $ (1.03)
=========== =========== =========== ===========
Weighted average common shares outstanding -
basic and diluted (note 6) 1,829,000 1,844,000 1,829,000 1,848,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Shareholders' Equity
<CAPTION>
Accumulated Total
Capital in Other Common
Common Excess of Accumulated Comprehensive Treasury Shareholders'
Stock Par Value Deficit Income Stock Equity
------ ---------- ----------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $ 3,000 $37,747,000 $(27,819,000) $ - $(1,544,000) $ 8,387,000
Net loss - - (3,399,000) - - (3,399,000)
Comprehensive income:
Foreign currency translation
adjustment - - - 4,000 - 4,000
-----------
Comprehensive loss (3,395,000)
-----------
Issuance of 3,760 shares of treasury
stock for stock option exercises - (24,000) - - 24,000 -
Purchase of 86,275 shares of common
stock - - - - (326,000) (326,000)
------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1999 $ 3,000 $37,723,000 $(31,218,000) $ 4,000 $(1,846,000) $ 4,666,000
Net loss, nine months ended September
30, 2000 (unaudited) - - (2,135,000) - - (2,135,000)
Comprehensive loss:
Foreign currency translation
adjustment (unaudited) - - - (20,000) - (20,000)
-----------
Comprehensive loss (unaudited) (2,155,000)
-----------
------- ----------- ------------ ----------- ----------- -----------
Balance, September 30, 2000
(unaudited) $ 3,000 $37,723,000 $(33,353,000) $ (16,000) $(1,846,000) $ 2,511,000
======= =========== ============ =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
<CAPTION>
For the Nine Months Ended
-------------------------
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Operating activities:
Cash received from customers $ 2,167,000 $ 7,451,000
Cash paid to suppliers and employees (4,073,000) (8,222,000)
Interest received 74,000 155,000
Interest paid (32,000) (307,000)
Taxes paid (20,000) (48,000)
------------- -------------
Net cash used in operating activities (1,884,000) (971,000)
------------- -------------
Investing activities:
Acquisition of property, plant and equipment (268,000) (985,000)
Proceeds from sale of assets 424,000 45,000
Proceeds from redemptions of certificates of
deposit 280,000 -
Distribution from partnership 230,000 -
Investment in and advances to fifty percent-owned
subsidiary (343,000) (608,000)
Advances for notes receivable (302,000) (891,000)
Payments on notes receivable 143,000 341,000
Other 212,000 157,000
------------- -------------
Net cash provided by (used in) investing
activities 376,000 (1,941,000)
------------- -------------
Financing activities:
Payments on line of credit and term notes (63,000) (246,000)
Proceeds from notes 1,025,000 -
Purchase of treasury stock - (326,000)
------------- -------------
Net cash provided by (used in) financing
activities 962,000 (572,000)
------------- -------------
Net decrease in cash and cash equivalents (546,000) (3,484,000)
Cash and cash equivalents at beginning of period 767,000 5,190,000
------------- -------------
Cash and cash equivalents at end of period $ 221,000 $ 1,706,000
============= =============
</TABLE>
Continued
<TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
Reconciliation of Net loss to Net Cash Used in Operating Activities
<CAPTION>
For the Nine Months Ended
-------------------------
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Net loss $ (2,135,000) $ (1,903,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, depletion and amortization 82,000 295,000
Gain on sale of assets (206,000) (13,000)
Equity in net (income) loss of unconsolidated
affiliates 584,000 (27,000)
Impairment of investment and other assets - 152,000
Net cash used by discontinued operations offsetting
accrued impairment loss (180,000) (347,000)
Minority interest in operations of consolidated
subsidiary (16,000) -
Noncash compensation expense 6,000 -
Other 1,000 (1,000)
(Increase) decrease in accounts receivable,
prepaid expenses and other current assets (63,000) 1,282,000
Decrease in inventories 1,000 133,000
Increase (decrease) in accounts payable, accrued
expenses and other liabilities 42,000 (542,000)
------------- -------------
Net cash used in operating activities $ (1,884,000) $ (971,000)
============= =============
Supplemental Schedule of Noncash Investing and Financing Activities:
Issuance of subsidiary common stock in exchange for
ownership in applied-for patents $ 10,000 $ -
============= =============
Exchange of coal extraction and beneficiation equipment
for release of debt obligation $ - $ 23,053,000
============= =============
Sale of property, plant and equipment for
notes receivable $ - $ 80,000
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE BEARD COMPANY AND SUBSIDIARIES
Notes to Financial Statements
September 30, 2000 and 1999
(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
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 audited consolidated financial
statements and notes thereto included in The Beard Company's
1999 annual report on Form 10-K.
The accompanying financial statements include the accounts of
The Beard Company and its wholly and majority-owned
subsidiaries in which The Beard Company has a controlling
financial interest ("Beard" or the "Company"). Subsidiaries
and investees in which Beard does not exercise control are
accounted for using the equity method. All significant
intercompany transactions have been eliminated in the
accompanying financial statements.
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 presentation of the results for the interim periods
presented.
The results of operations for the three and nine-month periods
ended September 30, 2000, are not necessarily indicative of
the results to be expected for the full year.
The Company's current significant operations are within the
following segments: (1) the Coal Reclamation ("Coal")
Segment, (2) the Carbon Dioxide ("CO2") Segment, (3) the China
("China") Segment, (4) the Environmental Remediation ("ER")
Segment, (5) the Natural Gas Well Servicing ("WS") Segment,
and (6) the e-Commerce ("e-Commerce") Segment.
The Coal Segment is in the business of operating coal fines
reclamation and/or briquetting facilities in the U.S. and is
pursuing the development of advanced fine coal preparation
processes. The CO2 Segment consists of the production of CO2
gas. The China Segment is pursuing (i) the sale of coal
equipment, (ii) environmental opportunities, (iii) the sale of
technical services, and (iv) the operation of coal fines
reclamation facilities in China. The ER Segment consists of
services to remediate creosote and polycyclic aromatic
hydrocarbon contamination. The WS Segment is conducted by two
companies operating in northeastern Mexico and consists of (i)
a 50%-owned company (accounted for as an equity investment)
involved in natural gas well testing operations, and (ii) a
wholly-owned company that has designed a sand separator for
use on natural gas wells and has had five of them custom
fabricated for use on a trial basis. The e-Commerce Segment
consists of a 78%-owned subsidiary in the process of
developing and executing an Internet payment system.
As discussed in note 4, in April 1999, the Company's Board of
Directors adopted a formal plan to discontinue its interstate
travel facilities business (the "ITF" Segment). As discussed
in note 4, in December 1999 the Management Committee of NABR
adopted a plan to discontinue its brine extraction/iodine
manufacturing business which comprised the Company's ("BE/IM")
Segment.
Reclassifications
Certain 1999 balances have been reclassified to conform to the
2000 presentation.
(2) Liquidity and Ability to Fund Operations
In January 1999, the Company's primary source of revenues and
cash flows was eliminated by the termination of the Operating
Agreements with MCNIC (see note 3). As a result of the
termination of the plant operating agreements, the requirement
to fund operating losses, and the decision to pursue other
investment opportunities, the Company's working capital and
cash and cash equivalents decreased significantly at September
30, 2000 compared to September 30, 1999. To mitigate
potential liquidity problems, the Company obtained stand-by
financing of $1.3 million in April 2000, of which $300,000 was
from a commercial bank and $1 million was from an affiliate of
the Company's chairman. Subsequent to its original
commitment, the bank extended the maturity date of its
original credit line from April 2001 to January 2002 in
exchange for a guaranty. The affiliate furnished the
guaranty, reduced its credit line to $700,000 and extended the
term thereof from July 2001 to February 2002 at a fixed
interest rate of 10%. Through September 30, 2000, the Company
had drawn down $700,000 of its available financing from this
affiliate and $275,000 of its available financing from the
commercial bank. The Company also expects to generate cash
from the disposition of assets of discontinued operations and
from the sale of certain real estate holdings.
The Company is focusing on replacing its Coal Segment's
revenues. In November 1999 the Company signed letters of
intent with a large coal company and a Section 29 operator
which called for the Company to build and operate two fine
coal preparation plants to recover clean coal from two ponds
and provide the feed stock for two briquetting plants (the
"LOI Projects"). Due to limited availability of qualified
Section 29 briquetters at reasonable prices, it presently
appears unlikely that the LOI Projects will be finalized.
Meanwhile, the Company has continued to pursue other
reclamation projects. Beard Technologies, Inc. ("BTI")
recently completed a coring job at a slurry pond in
West Virginia. However, the coal fines reserves were not as
great as anticipated and the Fortune 500 company whichs owns the
pond is now trying to decide whether or not to proceed with the
installation of a preparation plant to recover clean coal from
the pond. As a result, BTI's letter of intent for this
project is now on hold. We are currently drilling 50 core
holes at a large pond for a private company. If
the economics for recovery from this pond are as good as
anticipated, BTI will be negotiating with the owner to install
a preparation plant at the pond site, or alternatively, to
become the plant operator if the owner decides to install its
own plant.
The Company's project financing plans for the Coal Segment are
on hold pending the resolution of the two projects described
above. Meanwhile, working capital generated from the sale of
assets is expected to be sufficient to meet the Company's
working capital requirements through 2000.
(3) Termination of MCNIC Agreements
In June of 1998 the Company, through its wholly-owned
subsidiary, BTI, entered into agreements with affiliates of
MCNIC Pipeline & Processing Company ("MCNIC") pursuant to
which BTI acquired coal fines extraction and beneficiation
equipment located at six coal slurry impoundment sites for
$24,000,000. BTI financed the purchase with a $24,000,000
loan from MCNIC. BTI operated and maintained such equipment
and six briquetting plants for affiliates of MCNIC under a
cost-plus arrangement pursuant to which it received a minimum
profit of $100,000 per month. Effective January 31, 1999,
MCNIC terminated the operating agreements and assumed
ownership of the equipment, relieving BTI of its debt
obligation to MCNIC.
(4) Discontinued Operations
BE/IM Segment
In December 1999, the Management Committee of North American
Brine Resources ("NABR") adopted a formal plan to discontinue
the business and dispose of its assets. Beard has a 40%
ownership in NABR, which is accounted for under the equity
method. As a result of NABR's planned discontinuation,
Beard's share of NABR's operating results have been reported
as discontinued for all periods presented in the accompanying
statements of operations. Beard's share of NABR's operating
results for the three and nine-month periods ended September
30, 1999 were losses of $29,000 and $93,000, respectively.
In December 1999, Beard recorded a $540,000 loss, which
represents its share of NABR's $1,350,000 estimated loss
expected from the discontinuation of operations. NABR's loss
included $778,000 related to the difference in the estimated
amounts expected to be received from the assets' disposition
and the assets' recorded values as of December 31, 1999, and
$572,000 related to anticipated operating losses through April
2000 (the date operations ceased) and costs of ceasing
operations. NABR's actual losses for the three and nine-month
periods ended September 30, 2000 were $139,000 and $276,000
respectively, the Company's share of which was charged against
the loss accrual recorded in 1999.
Pursuant to an agreement executed among the partners effective
as of September 15, 2000, the majority of the assets and
liabilities of the partnership were distributed to Beard. The
partnership will be dissolved when the proceeds from the sale
of the inventory are received and the final distribution made
to the former partners. The Company received assets
consisting of cash, accounts receivable, and fixed assets
totaling $441,000 and liabilities consisting primarily of
accounts payable and accrued expenses totaling $348,000. As
of September 30, 2000, Beard's remaining investment in NABR
was $66,000.
ITF Segment
On April 9, 1999, the Company's Board of Directors adopted a
formal plan to discontinue its interstate travel facilities
("ITF") Segment and recorded a $1,603,000 estimated loss for
the discontinuance in 1998. In April 1999, Beard entered into
an agreement with ITF and its minority shareholders which
failed to close. In September 1999 Beard, ITF and the
minority shareholders entered into new agreements which were
completed on November 18, 1999. As a result of the
transaction, ITF disposed of a majority of its assets, and was
relieved of its outstanding debt of $2,149,000 and accounts
payable of $126,000, retained two convenience stores ("C-
stores"), including their equipment and inventory, and Beard
became 100% owner of ITF.
In the fourth quarter of 1999, Beard recorded an additional
$214,000 loss related to the discontinued ITF Segment. This
loss included $180,000 related to additional expected
operating losses of ITF through the disposal date of the
remaining assets; and $34,000 related to a further reduction
in the estimated realizable value of the remaining C-stores as
of December 31, 1999. Revenues from the discontinued ITF
Segment were $534,000 and $1,653,000, respectively, for the
three and nine-month periods ended September 30, 2000. ITF's
actual operating losses for the three and nine-month periods
ended September 30, 2000 were $75,000 and $224,000,
respectively. The actual losses for the three and nine-month
periods ended September 30, 2000 were charged against the loss
accrual recorded in the fourth quarter of 1999. The Company
recorded an additional loss of $44,000 in the third quarter of
2000.
As of September 30, 2000, the assets related to the ITF
Segment consist primarily of cash, accounts receivable,
inventory, prepaid expenses and the two remaining C-stores
with a total recorded value of $1,051,000. The significant
liabilities of the segment consist of trade accounts payable
and accrued expenses totaling $116,000. Beard is actively
seeking opportunities to sell the remaining C-stores and
expects the C-stores to be sold by mid-year 2001.
(5) 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. Accordingly, one-third
of future "consolidated net income" will accrete directly to
preferred stockholders and reduce earnings per common share.
The Company's 2000 operations through September 30 were not
sufficient to begin the sharing of consolidated net income.
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.
(6) Loss Per Share
Basic loss per share data is computed by dividing loss
attributable to common shareholders by the weighted average
number of common shares outstanding for the period.
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.
The number of shares outstanding, the number of treasury
shares and the weighted average number of common shares
outstanding for all periods presented have been restated to
give effect to a three-for-four reverse stock split effective
as the close of business on September 20, 2000.
(7) 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 future net
deductible amounts. The Company made no provision for income
taxes for the three months ended September 30, 2000. The
provision for income taxes for the nine-month period ended
September 30, 2000 consists of federal alternative minimum tax
of $14,000. The Company recorded a $16,000 provision for
alternative minimum taxes for the nine months ended September
30, 1999.
At September 30, 2000, 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 2004-2009 $ 52,416
Investment tax credit
carryforward 2000 $ 104
Tax depletion carryforward Indefinite $ 5,500
</TABLE>
(8) 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.
The Company is a guarantor of an 11%, $535,000 promissory note
to a bank. The note is an obligation of ITS-Testco, the
Company's 50%-owned equity investment engaged in well testing
operations in northeastern Mexico. The note's due date has
been extended until December 2000 and is separately guaranteed
in full by the other 50% corporate owner of the joint venture
and the owners of that company, as individuals.
(9) Business Segment Information
The Company manages its business by products and services and
by geographic location (by country). The Company evaluates
its operating segments' performance based on earnings or loss
from operations before income taxes. The Company had five
reportable segments during the three and nine-month periods
ended September 30, 2000 and 1999: Coal, Carbon Dioxide,
China, Natural Gas Well Servicing, and Environmental
Remediation.
The Coal Segment is in the business of operating coal fines
reclamation and/or briquetting facilities in the U.S. and is
pursuing the development of advanced fine coal preparation
processes. The Carbon Dioxide Segment consists of the
production of CO2 gas. The China Segment is pursuing (i) the
sale of coal equipment, (ii) environmental opportunities,
(iii) the sale of technical services, and (iv) the operation
of coal fines reclamation facilities in China. The Natural
Gas Well Servicing Segment is conducted by two companies
operating in northeastern Mexico and consists of (i) a 50%-
owned company (accounted for as an equity investment) involved
in natural gas well testing operations and (ii) a wholly-owned
company that has designed a sand separator for use on natural
gas wells and has had five custom fabricated for use on a
trial basis. The Environmental Remediation Segment consists
of services to remediate creosote and polycyclic aromatic
hydrocarbon contamination.
The following is certain financial information regarding the
Company's reportable segments (presented in thousands of
dollars). The information contained in "Other" relates to the
Company's e-Commerce Segment and consists of start-up costs.
General corporate assets and expenses are not allocated to any
of the Company's operating segments; therefore, they are
included as a reconciling item to consolidated total assets
and loss from continuing operations before income taxes
reported in the Company's accompanying financial statements.
<TABLE>
<CAPTION>
Natural
Carbon Environmental Gas Well
Coal Dioxide China Remediation Servicing Other Total
---- ------- ----- ----------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Three months ended
------------------
September 30, 2000
------------------
Revenues from
external customers $ 61 $ 125 $ - $ - $ 50 $ - $ 236
Segment profit
(loss) (97) 84 (100) (14) (572) (63) (762)
Three months ended
------------------
September 30, 1999
------------------
Revenues from
external customers $ 49 $ 95 $ - $ - $ 628 $ - $ 772
Segment profit
(loss) (232) 68 (61) (88) (96) (33) (442)
Nine months ended
-----------------
September 30, 2000
------------------
Revenues from
external customers$ 84 $ 338 $ - $ - $ 284 $ - $ 706
Segment profit
(loss) (537) 245 (291) (131) (1,703) (215) (2,632)
Segment assets 1,699 455 - 7 1,894 59 4,114
Nine months ended
-----------------
September 30, 1999
------------------
Revenues from
external customers$ 841 $ 319 $ - $ - $ 1,528 $ - $2,688
Segment profit
(loss) (557) 286 (219) (258) (177) (69) (994)
Segment assets 1,495 558 - 10 2,798 - 4,861
</TABLE>
Reconciliation of total reportable segment loss to
consolidated loss from continuing operations before income
taxes is as follows for the three and nine months ended
September 30, 2000 and 1999 (in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended Ended
-------------------- -------------------
September September September September
30, 2000 30, 1999 30, 2000 30, 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Total loss for
reportable segments $ (762) $ (442) $(2,632) $ (994)
Eliminate loss
from Natural Gas Well
Servicing operations
accounted for as an
equity investment 529 96 1,585 177
Equity in loss
from Natural Gas Well
Servicing operations
accounted for as an
equity investment (264) (48) (792) (86)
Net corporate costs not
allocated to segments 50 (368) (238) (891)
------- ------- ------- -------
Total consolidated
loss from
continuing operations
before income taxes $ (447) $ (762) $(2,077) $(1,794)
======= ======= ======= =======
</TABLE>
THE BEARD COMPANY AND SUBSIDIARIES
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS REPORT INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL
FACTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS REPORT,
INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S
FUTURE FINANCIAL POSITION, BUSINESS STRATEGY, BUDGETS, PROJECTED
COSTS AND PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE
OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, FORWARD-
LOOKING STATEMENTS GENERALLY CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECT,"
"INTEND," "PROJECT," "ESTIMATE," "ANTICIPATE," "BELIEVE," OR
"CONTINUE" OR THE NEGATIVE THEREOF OR VARIATIONS THEREON OR
SIMILAR TERMINOLOGY. ALTHOUGH THE COMPANY BELIEVES THAT THE
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED UNDER "ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS REPORT. ALL
SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY, OR PERSONS ACTING ON ITS BEHALF, ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS. THE COMPANY ASSUMES NO DUTY TO UPDATE OR REVISE ITS
FORWARD-LOOKING STATEMENTS BASED ON CHANGES IN INTERNAL ESTIMATES
OR EXPECTATIONS OR OTHERWISE.
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, 1999 and results
of operations for the quarter ended September 30, 2000 compared
to the prior year third quarter and the nine months ended
September 30, 2000 compared to the prior year nine months. 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 1999 Form 10-K.
The Company's current significant operations are within the
following segments: (1) the coal reclamation ("Coal") Segment,
which is in the business of operating coal fines reclamation
and/or briquetting facilities in the U.S. and is pursuing the
development of advanced fine coal preparation processes; (2) the
carbon dioxide ("CO2") Segment, comprised of the production of
CO2 gas; (3) the natural gas well servicing ("WS") Segment,
conducted by two companies operating in northeastern Mexico,
comprised of: (i) a 50%-owned company (accounted for as an
equity investment) involved in natural gas well testing
operations, and (ii) a 100%-owned company that has designed a
sand separator for use on gas wells; (4) the environmental
remediation ("ER") Segment, consisting of the remediation of
polycyclic aromatic hydrocarbon ("PAH") contamination; (5) the
China ("China") Segment, which is pursuing (i) the sale of coal
equipment, (ii) environmental opportunities, (iii) the sale of
technical services, and (iv) the operation of coal fines
reclamation facilities in China; and (6) the e-Commerce ("e-
Commerce") Segment, consisting of the development and
implementation of systems and technologies related to Internet
commerce.
In April 1999 the Company adopted a plan to discontinue its
"ITF" Segment, and those operations were reflected as
discontinued operations in 1998. The majority of the assets of
the ITF Segment were disposed of in November 1999 and the Company
is pursuing the sale of the remaining assets. In December 1999
the Company adopted a plan to discontinue its "BE/IM" Segment,
and those operations were reflected as discontinued operations in
1999. The Company is now in the process of liquidating those
assets.
Material changes in financial condition - September 30, 2000 as
compared with December 31, 1999.
The following table reflects changes in the Company's
financial condition during the periods indicated:
<TABLE>
<CAPTION>
September 30, December 31, Increase
2000 1999 (Decrease)
------------- ------------ ----------
<S> <C> <C> <C>
Cash and cash equivalents $ 221,000 $ 767,000 $(546,000)
Working capital $ (59,000) $ 923,000 $(982,000)
Current ratio .95 to 1 2.04 to 1
</TABLE>
During the first nine months of 2000, the Company reduced its
working capital by $982,000 from $923,000 as of December 31,
1999. $145,000 of the decrease was attributable to purchases of
equipment by the Coal Segment. $42,000 of working capital was
used to pay for equipment utilized by the Company's subsidiary
which rents sand separators in northeastern Mexico. There were
net advances of $343,000 to the Company's joint venture involved
in natural gas well testing in northeastern Mexico. $131,000,
$291,000 and $215,000, respectively, were used to fund the
startup activities of the E/R, China and e-Commerce Segments.
The Company received proceeds from the sale of assets totaling
$424,000 for the nine months partially offsetting the above de-
creases in working capital. The remainder of the working capital
was utilized to fund other operations.
Termination of the agreements to operate the MCNIC coal fines
projects effective January 31, 1999 (see Note 3 to the
accompanying financial statements) had a material detrimental
effect upon the Company's profitability during the first quarter
of 1999 as well as the subsequent periods. In November 1999 the
Company signed letters of intent with a large coal company and a
Section 29 operator which called for the Company to build and
operate two fine coal preparation plants to recover clean coal
from two ponds and provide the feed stock for two briquetting
plants (the "LOI Projects"). Due to limited availability of
qualified Section 29 briquetters at reasonable prices, it
presently appears unlikely that the LOI Projects will be
finalized.
Meanwhile, the Company has continued to pursue other
reclamation projects. Beard Technologies, Inc. ("BTI") recently
completed a coring job at a slurry pond in West Virginia.
However, the coal fines reserves were not as great as anticipated
and the Fortune 500 company which owns the pond is now trying to
decide whether or not to proceed with the installation of a
preparation plant to recover clean coal from the pond. As a
result, BTI's letter of intent for this project is now on hold.
We are currently drilling 50 core holes at a large pond for a
private company. If the economics for recovery from this
pond are as good as anticipated, BTI will be negotiating with the
owner to install a preparation plant at the pond site, or
alternatively, to become the plant operator if the owner decides
to install its own plant.
The Company's project financing plans for the Coal Segment are
on hold pending the resolution of the two projects described
above. Meanwhile, working capital generated from the sale of
assets is expected to be sufficient to meet the Company's working
capital requirements through 2000. Such assets are composed
primarily of the remaining assets of the discontinued ITF and
BE/IM Segments. The discontinuance of these segments will
benefit liquidity by generating cash from the liquidation of the
assets and by eliminating the funding of losses resulting from
the operations of the ITF Segment.
The Company's future cash flows and availability of credit are
subject to a number of variables, including demand for the
Company's coal reclamation services and technology, continuing
demand for CO2 gas and the services provided by the Company's WS
Segment, private and governmental demand for environmental
remediation services, demand for the services and technology
being offered in China, and the degree to which the Company is
successful in bringing its Internet technology to a favorable
conclusion. The Company anticipates that its current resources
are sufficient to enable it to fund its operations through 2000.
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 5 to the accompanying financial
statements.
Material changes in results of operations - Quarter ended
September 30, 2000 as compared with the Quarter ended September
30, 1999.
The net loss for the quarter ended September 30, 2000 was
$491,000, compared to a net loss of $791,000 for the third
quarter of the prior year. Discontinued operations accounted for
$44,000 of the loss in the third quarter of 2000 compared to
$29,000 for the same period in 1999. The Coal Segment reported a
$141,000 decrease in operating loss for the quarter. The CO2
Segment had a $16,000 increase in its operating margin due
primarily to a slight increase in revenue from its interests in
the McElmo Dome field. The operating loss in China increased
$39,000 to $100,000 for the third quarter of 2000 compared to the
same period in 1999. There was an $89,000 reduction in the
operating loss of the ER Segment for the third quarter of 2000
compared to the third quarter of 1999. The operating loss of the
WS Segment increased $57,000 in the current quarter compared to
the same period in 1999. The new e-Commerce Segment incurred
operating losses of $61,000 for the third quarter of 2000
compared to $33,000 in the third quarter of 1999. The operating
loss in Other activities for the third quarter of 2000 decreased
$78,000 compared to the same period in 1999. As a result, the
operating loss in the third quarter of 2000 was $200,000 smaller
than in the same period in 1999.
Operating results of the Company's primary operating Segments
are reflected below:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Operating profit (loss):
Coal reclamation $ (97,000) $(238,000)
Carbon dioxide 84,000 68,000
China (100,000) (61,000)
Environmental remediation (14,000) (103,000)
Natural gas well servicing (57,000) -
e-Commerce (61,000) (33,000)
--------- ---------
Subtotal (245,000) (367,000)
Other (221,000) (299,000)
--------- ---------
Total $(466,000) $(666,000)
========= =========
</TABLE>
The "Other" in the above table reflects primarily general and
corporate activities, as well as other activities and investments
of the Company.
Coal reclamation
As discussed in Note 3 to the accompanying financial
statements, since April 1998, the Company had been operating six
coal slurry impoundment sites for a subsidiary of a large
midwestern utility company under a cost-plus arrangement which
guaranteed the Company a minimum profit of $100,000 per month.
The arrangement was terminated on January 31, 1999. The CR
Segment generated operating losses of $97,000 and $238,000 for
the third quarter of 2000 and 1999, respectively, reflecting the
effects of the termination of this contract while maintaining its
corporate staff as it continued to pursue new reclamation
contracts.
Carbon dioxide
Third quarter 2000 operations reflected an operating profit of
$84,000 compared to $68,000 in the 1999 third quarter. The sole
component of revenues for this segment is the sale of CO2 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 $30,000 or
32% to $125,000 for the third quarter of 2000 compared to $95,000
for the same period in 1999.
China
The operating loss of the China Segment increased to $100,000
in the current quarter versus $61,000 in the 1999 third quarter
as Beard Sino-American Resources Co., Inc. stepped up its level
of activity to promote centrifuge sales and the installation of
composting facilities.
Environmental remediation
The subsidiary which comprises this segment utilizes a
chemical for which it is the sole U.S. licensee of a process for
the remediation of creosote and PAH contamination. The ER
Segment generated an $89,000 smaller operating loss in the third
quarter of 2000 as compared with the same period in 1999. The
segment recorded no revenues in the third quarter of 2000 or
1999. Since 1997 personnel employed in the segment have been
attempting to develop a market for the process and the chemical
product involved by demonstrating the benefits of the process to
potential customers. The subsidiary incurred less operating and
SG&A costs as its marketing budget was decreased due to lack of
sales.
Natural gas well servicing
The operations of both of the companies comprising the WS
Segment, which conduct natural gas well servicing operations in
northeastern Mexico, were suspended in late January 2000 after
contracts with Petroleos Mexicanos ("Pemex") were allowed to
expire by Pemex rather than being "rolled over" as has been the
practice in the past. The two companies were unsuccessful
bidders as subcontractors to Schlumberger on two new contracts
for Pemex in August. However, the well testing company is
currently negotiating to participate in an existing contract
which Schlumberger has with Pemex and put four of its eight units
to work. The sand separator company and Schlumberger are
negotiating with Pemex on a contract that could put the company's
five separators to work. The results of these negotiations will
determine whether or not the two companies will continue to
operate in Mexico. If the negotiations are not successful, the
companies will move their equipment back to the U.S. where there
is a strong market for this type of equipment due to the
resurgence of gas prices.
The WS Segment, including the sand separator company which was
formed late in the third quarter of 1999, incurred an operating
loss of $57,000 for the third quarter of 2000. The Company's
share of the loss for its 50%-owned natural gas well testing
investee was $264,000 for the third quarter of 2000 versus a
loss of $48,000 for the same period in 1999, with the suspension
of operations accounting for the deterioration in results.
e-Commerce
The Company's startup company involved in the development of a
secure Internet purchasing system incurred an operating loss of
$61,000 in the third quarter of 2000 versus an operating loss of
$33,000 in the prior year quarter reflecting the stepup in its
activity level as it pursues its development strategy.
starpay.com, inc. has temporarily put its pursuit of venture
capital funding on hold. starpay's revised strategy is to pursue
the development of an Internet-only credit card product using
existing transaction infrastructure as a backbone. Meanwhile it
has been pursuing a strategic alliance with a regional banking
group which has indicated strong interest in moving forward with
product development.
Other activities
Other operations, consisting principally of general and
corporate activities, generated a $78,000 reduction in the loss
for the third quarter of 2000 compared to the same period in
1999. The Company was able to achieve cost reductions in many
areas, primarily salaries and benefits expense, insurance costs,
and contract labor.
Selling, general and administrative expenses
The Company's selling, general and administrative expenses
("SG&A") were $28,000 less in the third quarter of 2000 compared
to the same period in 1999. The Coal Segment had a decrease in
SG&A expenses of $5,000 due to a reduction in personnel. The
China Segment incurred increased SG&A expenses of $39,000 as the
Company accelerated efforts to secure contracts in China. The WS
Segment's SG&A expenses decreased $6,000 for the third quarter of
2000 compared to the same period in 1999. The e-Commerce Segment
incurred an additional $28,000 in SG&A expenses as the segment
pursued the market for its technology. The ER Segment incurred
decreased SG&A expenses of $19,000 for the third quarter of 2000
compared to 1999 as a result of a reduction in its marketing
budget. Other operations, primarily corporate, incurred
approximately $65,000 less in SG&A for the third quarter of 2000
compared to the same period in 1999.
Depreciation, depletion and amortization expenses
The third quarter of 2000 reported an increase in DD&A expense
of $5,000, reflecting additions to property, plant and equipment
made since September 30, 1999, primarily in the Coal Segment.
Other income and expense
Other income and expenses netted to income of $19,000 for
the third quarter of 2000, up sharply from the $96,000 loss
recorded for such items in the same period of 1999. Interest
income was down $7,000 for the third quarter of 2000 compared to
the same period in 1999 primarily as a result of the reduction in
cash available for investment. Interest expense was up $21,000
reflecting the Company's increased level of indebtedness. The
Company realized an increase of $194,000 in gain on sale of
assets primarily as a result of the sale of the property owned by
a real estate partnership in which the Company had an interest.
The Company recorded a loss of $264,000 for the third quarter of
2000 compared to a loss of $48,000 for the same period in 1999 on
its investment in an entity engaged in natural gas well testing
operations in northeastern Mexico. The operations of this entity
were severely curtailed in January 2000 as Pemex allowed the
contracts for its subcontractors providing services to expire
rather than have them automatically renew. The contracts had not
been renewed through the third quarter of 2000. See the
discussion regarding the WS Segment above. The Company's equity
in the earnings of Cibola decreased $8,000 from $78,000 for the
third quarter of 1999 to $70,000 for the same period in 2000
reflecting losses on certain outside investments by Cibola. The
third quarter of 1999 was negatively impacted by an impairment of
$110,000 relating to the Company's investment in a company manufacturing
the chemical used by its subsidiary in the ER Segment and an impairment
of $42,000 relating to the license rights owned by that subsidiary
with no comparable adjustments in the third quarter of 2000.
Income taxes
The Company made no provision for income taxes in either the
third quarter of 2000 or the same period in 1999. The Company
has not recorded any financial benefit attributable to its
various tax carryforwards due to uncertainty regarding their
utilization and realization.
Discontinued operations
In December 1999, the Management Committee of North American
Brine Resources ("NABR") adopted a formal plan to discontinue the
business and dispose of its assets. Beard has a 40% ownership in
NABR, which was accounted for under the equity method. As a
result of NABR's planned discontinuation, Beard's share of NABR's
operating results have been reported as discontinued for all
periods presented in the accompanying statements of operations.
Beard's share of NABR's operating results was a $29,000 loss for
the 1999 third quarter.
In December 1999, Beard recorded a $540,000 loss, which
represented its share of NABR's $1,350,000 estimated loss
expected from the discontinuation of operations. $778,000 of
NABR's loss represented the difference in the estimated amounts
expected to be received from the assets' disposition and the
assets' recorded values as of December 31, 1999. $572,000 of
NABR's loss represented anticipated operating losses through
April 2000 (the date operations ceased) and the estimated costs
of ceasing operations. NABR's actual loss for the three months
ended September 30, 2000 was $139,000, the Company's share of
which was charged against the loss accrual it recorded in 1999.
See Note 4 to the accompanying financial statements.
Pursuant to an agreement executed among the partners effective
as of September 15, 2000, the majority of the assets and
liabilities of NABR were distributed to Beard. The partnership
will be dissolved when the proceeds from the sale of the
inventory are received and the final distribution made to the
former partners. The Company received assets consisting of cash,
accounts receivable, and fixed assets totaling $441,000 and
liabilities consisting primarily of accounts payable and accrued
expenses totaling $348,000. As of September 30, 2000, Beard's
remaining investment in NABR was $66,000.
Material changes in results of operations - Nine months ended
September 30, 2000 as compared with the Nine months ended
September 30, 1999.
The net loss for the nine months ended September 30, 2000 was
$2,135,000, compared to a net loss of $1,903,000 for the first
nine months of the prior year. Continuing operations posted a
net loss of $2,091,000 after taxes of $14,000 compared to a loss
from continuing operations of $1,810,000 after taxes of $16,000
for the same period in 1999. Discontinued operations accounted
for $44,000 of the net loss for the 2000 period versus $93,000 in
the 1999 period.
Operating results of the Company's primary operating segments
are reflected below:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Operating profit (loss):
Coal reclamation $ (535,000) $ (417,000)
Carbon dioxide 245,000 222,000
China (291,000) (219,000)
Environmental remediation (131,000) (258,000)
Natural gas well servicing (133,000) -
e-Commerce (215,000) (69,000)
----------- -----------
Subtotal (1,060,000) (741,000)
Other (732,000) (1,083,000)
----------- -----------
Total $(1,792,000) $(1,824,000)
=========== ===========
</TABLE>
The "Other" in the above table reflects primarily general and
corporate activities, as well as other activities and investments
of the Company.
Coal reclamation
As discussed in Note 3 to the accompanying financial
statements, since April of 1998 the Company had been operating
six coal slurry impoundment sites for a subsidiary of a large
midwestern utility company under a cost-plus arrangement which
guaranteed the Company a minimum operating profit of $100,000 per
month. The arrangement was terminated on January 31, 1999. The
$118,000 increase in the operating loss for the first nine months
of 2000 compared to the same period in 1999 reflects the effect
of losing the guaranteed profit realized from these contracts for
nine months in 2000, versus having eight months of such losses
plus one month of profit in 1999.
Carbon dioxide
Operations for the first nine months of 2000 resulted in an
operating profit of $245,000 compared to a $222,000 operating
profit for the first nine months of 1999. The sole component of
revenues for this segment is the sale of CO2 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 $19,000 or 6% to $338,000 for
the first nine months of 2000 compared to $319,000 for the same
period in 1999. The Company recorded $4,000 less in operating
costs associated with the properties in the first nine months of
2000 compared to the same period in 1999. While production
volumes for the field increased for the first nine months of 2000
compared to the same period in 1999, paid volumes to the
Company's interest decreased as the Company reduced its
overproduced status.
China
The operating loss of the China Segment increased to $291,000
in the current nine months versus $219,000 in the 1999 first nine
months as Beard Sino-American Resources Co., Inc. stepped up its
level of activity to promote centrifuge sales and the
installation of composting facilities.
Environmental remediation
The ER Segment's operating loss decreased $127,000 to $131,000
for the first nine months of 2000 compared to $258,000 for the
same period in 1999. The segment recorded no revenues in the
first nine months of 2000 or 1999. Personnel employed in the
segment have been attempting to expand the market for the process
and the chemical product involved by demonstrating the benefits
of the process to potential customers. The segment incurred less
operating and SG&A costs in the current nine months period as its
marketing budget was decreased due to lack of sales.
Natural gas well servicing
The operations of both of the companies comprising the WS
Segment, which conduct natural gas well servicing operations in
northeastern Mexico, were suspended in late January, 2000 after
contracts with Petroleos Mexicanos ("Pemex") were allowed to
expire by Pemex rather than being "rolled over" as has been the
practice in the past. The two companies were unsuccessful bidders
as subcontractors to Schlumberger on two new contracts for Pemex
in August. However, the well testing company is currently
negotiating to participate in an existing contract which
Schlumberger has with Pemex and put four of its eight units to
work. The sand separator company and Schlumberger are
negotiating with Pemex on a contract that could put the company's
five separators to work. The results of these negotiations will
determine whether or not the two companies will continue to
operate in Mexico. If the negotiations are not successful, the
companies will move their equipment back to the U.S. where there
is a strong market for this type of equipment due to the
resurgence of gas prices.
The WS Segment, including the sand separator company which was
formed late in the third quarter of 1999, incurred an operating
loss of $133,000 for the nine months ended September 30, 2000.
The Company's share of the loss for its 50%-owned natural gas
well testing investee was $792,000 for the first nine months of
2000 versus a loss of $86,000 for the same period in 1999, with
the suspension of operations accounting for the deterioration in
results.
e-Commerce
The Company's startup company involved in the development of a
secure Internet purchasing system incurred an operating loss of
$215,000 for the first nine months of 2000 versus an operating
loss of $69,000 in the prior year period reflecting the stepup in
its activity level as it pursues its development strategy.
starpay.com, inc. has temporarily put its pursuit of venture
capital funding on hold. starpay's revised strategy is to pursue
the development of an Internet-only credit card product using
existing transaction infrastructure as a backbone. Meanwhile it
has been pursuing a strategic alliance with a regional banking
group which has indicated strong interest in moving forward with
product development.
Other activities
Other operations, consisting principally of general and
corporate activities, generated a $351,000 reduction in the
operating loss for the first nine months of 2000 as compared to
the same period last year. Reasons for the decreased loss
include a reduction of $45,000 in legal costs, primarily those
associated with the McElmo Dome Litigation, decreases in salary
and related costs of $137,000, decreases in contract labor costs
of $43,000, and reductions in several other expense categories as
the Company found ways to reduce costs.
Selling, general and administrative expenses
The Company's selling, general and administrative expenses
("SG&A") in the first nine months of 2000 decreased to $1,484,000
from $1,580,000 for the first nine months of 1999. The Coal
Segment had a decrease in SG&A expenses of $48,000 due primarily
to reductions in staff and other expenses. The China Segment had
an increase of $71,000 of SG&A costs while segment personnel
accelerated their efforts to secure contracts in China. The ER
Segment's SG&A decreased $33,000 for the nine months of 2000
compared to the same period in 1999 as personnel found ways to
reduce costs as they continued to seek a market for the products
and services of the segment. The WS Segment incurred $20,000
more SG&A expenses for the nine months of 2000 compared to the
same period of the prior year as personnel in Mexico continued to
pursue the contracts with Pemex and other subcontractors in the
region. The new e-Commerce Segment incurred $145,000 in
additional SG&A costs as segment personnel sought partners to
develop the technology involved with the Internet purchasing
system. Other operations incurred approximately $251,000 less in
SG&A for the nine months of 2000 compared to the same period in
1999 primarily as a result of decreased legal costs and the
reduction in other expenses discussed above.
Depreciation, depletion and amortization expenses
DD&A expense decreased $145,000 from $227,000 to $82,000 for
the nine months of 1999 compared to the same period in 2000,
reflecting primarily a $133,000 reduction in depreciation on coal
fines extraction and beneficiation equipment in the Coal Segment
during the past year. On March 19, 1999, the Company assigned
all its membership interest in the company owning the equipment
to the noteholder in exchange for a release on the debt for which
the property was security. See note 3 to the accompanying
financial statements.
Other income and expenses
The other income and expenses for the first nine months of
2000 netted to a total net loss of $285,000 compared to $30,000
of net income for the same period in 1999. Interest income was
down $70,000 for the first nine months of 2000 compared to the
same period in 1999 primarily as a result of the reduction in
cash available for investment. Interest expense was down
$129,000 as a result of the release, effective January 31, 1999,
of the debt incurred to purchase the coal fines and beneficiation
equipment on June 30, 1998.
The Company realized an increase of $201,000 in gain on sale
of assets primarily as a result of the sale of the property owned
by a real estate partnership in which the Company had an
interest. The Company's equity in the earnings of unconsolidated
affiliates was down $704,000 for the first nine months of 2000
compared to 1999. The Company recorded a loss of $792,000 on its
investment in an entity engaged in natural gas well testing
operations in northeastern Mexico (the WS Segment) compared to a
loss of $86,000 for the same period in 1999. The operations of
this entity were severely curtailed in January 2000 as Pemex
allowed the contracts for its subcontractors providing services
to expire rather than have them automatically renew. See the
discussion regarding the WS Segment above. The Company's equity
in the earnings of Cibola increased $2,000 from $211,000 for the
first nine months of 1999 to $213,000 for the same period in 2000
reflecting Cibola's improved operating results. The first nine months
of 1999 were negatively impacted by the impairment of $110,000 relating
to the Company's investment in a company manufacturing the chemical
used by its subsidiary in the ER Segment and an impairment of $42,000
relating to the license rights owned by that subsidiary with no comparable
adjustments in the year 2000.
Income taxes
The Company provided for federal alternative minimum tax
expense of $14,000 for the first nine months of 2000 compared to
$16,000 in alternative minimum tax expense in the same period in
1999. The Company has not recorded any financial benefit
attributable to its various tax carryforwards due to uncertainty
regarding their utilization and realization.
Discontinued operations
In December 1999, the Management Committee of North American
Brine Resources ("NABR") adopted a formal plan to discontinue the
business and dispose of its assets. Beard has a 40% ownership in
NABR, which is accounted for under the equity method. As a
result of NABR's planned discontinuation, Beard's share of NABR's
operating results have been reported as discontinued for all
periods presented in the accompanying statements of operations.
Beard's share of NABR's operating results was a $93,000 loss for
the nine months ended September 30, 1999.
In December 1999, Beard recorded a $540,000 loss, which
represented its share of NABR's $1,350,000 estimated loss
expected from the discontinuation of operations. NABR's loss
included $778,000 which represented the difference in the
estimated amounts expected to be received from the assets'
disposition and the assets' recorded values as of December 31,
1999, and $572,000 related to anticipated operating losses
through April 2000 (the date operations ceased) and costs of
ceasing operations. NABR's actual loss for the nine months ended
September 30, 2000 was $276,000, the Company's share of which was
charged against the loss accrual it recorded in 1999. See Note 4
to the accompanying financial statements.
Pursuant to an agreement executed among the partners effective
as of September 15, 2000, the majority of the assets and
liabilities of NABR were distributed to Beard. The partnership
will be dissolved when the proceeds from the sale of the
inventory are received and the final distribution made to the
former partners. The Company received assets consisting of cash,
accounts receivable, and fixed assets totaling $441,000 and
liabilities consisting primarily of accounts payable and accrued
expenses totaling $348,000. As of September 30, 2000, Beard's
remaining investment in NABR was $66,000.
Impact of Recently Issued Accounting Standards Not Yet Adopted
In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No.133 establishes accounting and
reporting standards for derivative instruments, including certain
recognition of all derivatives as either assets or liabilities in
the balance sheet and measurement of those instruments at fair
value. If certain conditions are met, a derivative may be
specifically designated as a hedge. The accounting for changes
in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and whether it
qualifies as a hedge. A subsequent pronouncement, SFAS 137, was
issued in July 1999 that delayed the effective date of SFAS 133
until the fiscal year beginning after June 15, 2000. In June
2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities", an
amendment to SFAS No. 133. If the provisions of SFAS No. 133 and
No. 138 were to be applied as of September 30, 2000, it would not
have a material impact on the Company's financial position as of
such date, or the results of operations for the three and nine-
month periods then ended.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
At September 30, 2000, the Company had notes receivable of
$801,000 and long-term debt of $995,000. The notes receivable
and long-term debt have fixed interest rates and therefore,
the Company's interest income and expense and operating results
would not be affected by an increase in market interest rates.
At September 30, 2000, a 10% increase in market interest rates
would have reduced the fair value of the Company's notes
receivable by an amount less than $5,000 and reduced the
fair value of its fixed rate long-term debt by an amount less
than $2,000.
The Company has no other market risk sensitive instruments.
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 instrument governing the rights of the
preferred stockholders. 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 5 to the accompanying financial statements.
Item 4. Submission of Matters to a Vote of Security Holders.
Commencing on August 7, 2000, proxies were solicited on behalf
of the Board of Directors of the Company in connection with a
Special Meeting in Lieu of Annual Meeting of Stockholders.
(a) This special meeting was held on September 1, 2000.
(b) The business of the meeting included the election of
Allan R. Hallock and Ford C. Price to serve as directors for
three year terms or until their successors have been elected and
qualified.
In addition, the following persons continue to serve as
directors for terms expiring on the dates indicated or until
their successors have been elected and qualified:
Harlon E. Martin, Jr. (2001) Herb Mee, Jr. (2001)
W. M. Beard (2002)
In addition to the above, Michael E. Carr, elected in 1994 to
serve as a director by the preferred stockholders, will continue
to serve until his successor has been elected and qualified.
The table below sets forth the voting for election of directors:
<TABLE>
<CAPTION>
Votes Votes Votes Broker
Name of Nominee For Against Withheld Abstentions Non-Votes
--------------- ----- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Allan R. Hallock 2,306,827 -0- 20,589 -0- 254,100
Ford C. Price 2,306,836 -0- 20,580 -0- 254,100
</TABLE>
(c) The business of the meeting also included a proposal to
approve a 3-for-4 reverse stock split of the Company's common
stock and to amend the Company's Certificate of Incorporation to
decrease the number of shares of common stock authorized for
issuance from 10,000,000 to 7,500,000 and to increase the par
value of the shares from $0.00l to $0.001333 per share. The
table below sets forth the voting for such proposal:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
----- ------- ----------- ---------
<S> <C> <C> <C>
2,302,067 24,808 541 254,100
</TABLE>
(d) At the meeting the stockholders also voted to approve the
appointment of Cole & Reed, P.C. as independent certified public
accountants for fiscal year 2000. The table below sets forth the
voting for such proposal:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
----- ------- ----------- ---------
<S> <C> <C> <C>
2,317,485 766 9,165 254,100
</TABLE>
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:
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 ("Beard") and The New Beard Company ("New Beard"),
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 Beard into New Beard 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).
3(i) Restated Certificate of Incorporation of Beard (formerly
New Beard) as filed with the Secretary of State of
Oklahoma on September 20, 2000.
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) 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(b) 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).*
10(b) The Beard Company 1994 Phantom Stock Units Plan as amended
effective October 23, 1997. (This Exhibit has been
previously filed as Exhibit 10(b) to Registrant's Form 10-
K for the period ended December 31, 1999, filed on April
14, 2000, and same is incorporated by reference).*
10(c) Amendment No. One to The Beard Company Deferred Stock
Compensation Plan dated November 1, 1995, as amended July
21, 1999. (The Amended Plan supersedes the original Plan
adopted on June 3, 1996. This Exhibit has previously
been filed as Exhibit A, filed on May 11, 1999 to
Registrant's Proxy Statement dated May 11, 1999, and same
is incorporated by reference).*
10(d) 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).*
10(e) Amended and Restated Nonqualified Stock Option Agreement
by and between Richard D. Neely and ISITOP, Inc.
("ISITOP"), dated November 12, 1998. (This Exhibit has
been previously filed as Exhibit 10(g) to Registrant's
Form 10-K for the period ended December 31, 1998, filed on
April 15, 1999, and same is incorporated herein by
reference).*
10(f) Amended and Restated Nonqualified Stock Option Agreement
by and between Jerry S. Neely and ISITOP, dated November
12, 1998. (This Exhibit has been previously filed as
Exhibit 10(h) to Registrant's Form 10-K for the period
ended December 31, 1998, filed on April 15, 1999, and same
is incorporated herein by reference).*
10(g) Nonqualified Stock Option Agreement by and between Robert
A. McDonald and ISITOP, dated November 12, 1998. (This
Exhibit has been previously filed as Exhibit 10(i) to
Registrant's Form 10-K for the period ended December 31,
1998, filed on April 15, 1999, and same is incorporated
herein by reference).*
10(h) Incentive Stock Option Agreement by and between Philip R.
Jamison and Beard Technologies, Inc. ("BTI"), dated May
18, 1998. (This Exhibit has been previously filed as
Exhibit 10(k) to Registrant's Form 10-K for the period
ended December 31, 1998, filed on April 15, 1999, and same
is incorporated herein by reference).*
10(i) 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(j) 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(k) 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(l) 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(m) Guaranty Agreement between Registrant and Oklahoma Bank
and Trust Company, dated as of June 7, 1999. (This
Exhibit has been previously filed as Exhibit 10(bb) to
Registrant's Form 10-Q for the period ended June 30, 1999,
filed on August 20, 1999, and same is incorporated herein
by reference).
10(n) Letter Loan Agreement by and between Registrant and The
William M. Beard and Lu Beard 1988 Charitable Unitrust
(the "Unitrust") dated April 3, 2000. (This Exhibit has
been previously filed as Exhibit 10(cc) to Registrant's
Form 10-K for the period ended December 31, 1999, filed on
April 14, 2000, and same is incorporated by reference).
10(o) Amended Letter Loan Agreement by and between Registrant
and The William M. Beard and Lu Beard 1988 Charitable
Unitrust (the " Unitrust") dated September 1, 2000.
10(p) Promissory Note from Registrant to the Trustees of the
Unitrust dated April 3, 2000. (This Exhibit has been
previously filed as Exhibit 10(dd) to Registrant's Form 10-
K for the period ended December 31, 1999, filed on April
14, 2000, and same is incorporated by reference).
10(q) Renewal Promissory Note from Registrant to the Trustees of
the Unitrust dated September 1, 2000.
10(r) Promissory Note from Registrant to Bank of Oklahoma, N.A.
("BOK") dated August 30, 2000.
10(s) Extension Promissory Note from Registrant to BOK dated
September 30, 2000.
10(t) Guaranty Agreement between the Unitrust and BOK dated
August 30, 2000.
10(u) Guaranty Agreement between W.M. Beard and BOK dated August
30, 2000.
27 Financial Data Schedule
---------------
*Compensatory plan or arrangement.
The Company will furnish to any shareholder a copy of any of the
above exhibits upon the payment of $.25 per page. Any request
should be sent to The Beard Company, Enterprise Plaza, Suite 320,
5600 North May Avenue, Oklahoma City, Oklahoma 73112.
(b) No reports on Form 8-K were filed during the period covered
by this report.
<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
HERB MEE, JR.
(Date) November 20, 2000 Herb Mee, Jr., President and
Chief Financial Officer
JACK A. MARTINE
(Date) November 20, 2000 Jack A. Martine, Controller and
Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Method of Filing
-------- ----------- ----------------
<S> <C> <C>
2 Plan of acquisition, Incorporated herein by reference
reorganization, arrangement,
liquidation or succession:
2(a) Agreement and Plan of Incorporated herein by reference
Reorganization by and among
Registrant, Beard Oil Company
("Beard Oil") and New Beard,
Inc., dated as of July 12,
1993.
2(b) Agreement and Plan of Merger Incorporated herein by reference
by and between The Beard
Company ("Beard") and The New
Beard Company ("New Beard"),
dated as of September 16,
1997.
2(c) Certificate of Merger merging Incorporated herein by reference
Beard into New Beard as filed
with the Secretary of State
of Oklahoma on November 26,
1997.
3(i) Restated Certificate of Filed herewith electronically
Incorporation of Beard
(formerly New Beard) as filed
with the Secretary of State
of Oklahoma on September 20,
2000.
3(ii) Registrant's By-Laws as Incorporated herein by reference
currently in effect.
4(a) Certificate of Designations, Incorporated herein by reference
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.
4(b) Settlement Agreement, with Incorporated herein by reference
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.
10(a) Amendment No. One to The Incorporated herein by reference
Beard Company 1993 Stock
Option Plan dated August 27,
1993, as amended June 4,
1998.
10(b) The Beard Company 1994 Incorporated herein by reference
Phantom Stock Units Plan as
amended effective October 23,
1997.
10(c) Amendment No. One to The Incorporated herein by reference
Beard Company Deferred Stock
Compensation Plan dated
November 1, 1995, as amended
July 21, 1999.
10(d) Form of Change in Control Incorporated herein by reference
Compensation Agreement dated
as of January 24, 1997, by
and between Carbonics and
three employees.
10(e) Amended and Restated Incorporated herein by reference
Nonqualified Stock Option
Agreement by and between
Richard D. Neely and ISITOP,
Inc. ("ISITOP"), dated
November 12, 1998.
10(f) Amended and Restated Incorporated herein by reference
Nonqualified Stock Option
Agreement by and between
Jerry S. Neely and ISITOP,
dated November 12, 1998.
10(g) Nonqualified Stock Option Incorporated herein by reference
Agreement by and between
Robert A. McDonald and
ISITOP, dated November 12,
1998.
10(h) Incentive Stock Option Incorporated herein by reference
Agreement by and between
Philip R. Jamison and Beard
Technologies, Inc. ("BTI"),
dated May 18, 1998.
10(i) Subscription Agreement by and Incorporated herein by reference
between Cibola Corporation
("Cibola") and Registrant,
dated April 10, 1996.
10(j) Nonrecourse Secured Incorporated herein by reference
Promissory Note from
Registrant to Cibola, dated
April 10, 1996.
10(k) Security Agreement by and Incorporated herein by reference
among Registrant, Cibola and
the Cibola shareholders,
dated April 10, 1996.
10(l) Tax Sharing Agreement by and Incorporated herein by reference
among Registrant, Cibola and
the Cibola shareholders,
dated April 10, 1996.
10(m) Guaranty Agreement between Incorporated herein by reference
Registrant and Oklahoma Bank
and Trust Company, dated as
of June 7, 1999.
10(n) Letter Loan Agreement by and Incorporated herein by reference
between Registrant and The
William M. Beard and Lu Beard
1988 Charitable Unitrust (the
" Unitrust") dated April 3,
2000.
10(o) Amended Letter Loan Agreement Filed herewith electronically
by and between Registrant and
The William M. Beard and Lu
Beard 1988 Charitable
Unitrust (the " Unitrust")
dated September 1, 2000.
10(p) Promissory Note from Incorporated herein by reference
Registrant to the Trustees of
the Unitrust dated April 3,
2000.
10(q) Renewal Promissory Note from Filed herewith electronically
Registrant to the Trustees of
the Unitrust dated September
1, 2000.
10(r) Promissory Note from Filed herewith electronically
Registrant to Bank of
Oklahoma, N.A. ("BOK") dated
August 30, 2000.
10(s) Extension Promissory Note Filed herewith electronically
from Registrant to BOK dated
September 30, 2000.
10(t) Guaranty Agreement between Filed herewith electronically
the Unitrust and BOK dated
August 30, 2000.
10(u) Guaranty Agreement between Filed herewith electronically
W.M. Beard and BOK dated
August 30, 2000.
27 Financial Data Schedule Filed herewith electronically
</TABLE>
