-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PK1OA+jGSPTmXdY4COVgiR8nB6Xs4jlqBkSVIX02Ke10R6tYvpq2N63IVNX7VTy9 DPQyYA0tXikGIc3rl8+qXA== 0000909334-04-000266.txt : 20040915 0000909334-04-000266.hdr.sgml : 20040915 20040915171838 ACCESSION NUMBER: 0000909334-04-000266 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040915 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20040915 DATE AS OF CHANGE: 20040915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEARD CO /OK CENTRAL INDEX KEY: 0000909992 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 730970298 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12396 FILM NUMBER: 041032305 BUSINESS ADDRESS: STREET 1: 5600 N MAY AVE STREET 2: STE 320 CITY: OKLAHOMA CITY STATE: OK ZIP: 73112 BUSINESS PHONE: 4058422333 MAIL ADDRESS: STREET 1: 5600 N MAY STREET 2: STE 320 CITY: OKLAHOMA CITY STATE: OK ZIP: 73112 FORMER COMPANY: FORMER CONFORMED NAME: BEARD INVESTMENT CO DATE OF NAME CHANGE: 19930730 8-K 1 bcform8k-091504.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report September 15, 2004 Date of earliest event reported September 15, 2004 THE BEARD COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) Oklahoma 0-12396 73-0970298 - ------------------------------- ------------------------ ---------------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification Number) Enterprise Plaza 5600 N. May Avenue Suite 320 Oklahoma City, Oklahoma 73112 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) N/A ------------------------------------------------------------- (Former name or former address, if changed since last report) THE BEARD COMPANY FORM 8-K Item 7.01 Regulation FD Disclosure. The Company has arranged for an investment banking firm to sell $1,800,000 of 9% convertible subordinated notes to accredited investors in a private placement on a best efforts basis. The Company or Additional Selling Agents may also sell some of the notes. The notes are convertible into shares of the Company's common stock at a Conversion Price of $1.50 per share. The investment banking firm will receive a 6% commission on the notes which they sell and will also receive a 1% commission on notes sold by the Company or by other parties. The purpose of the offering is to provide working capital to enable the Company to furnish the equity required to finance a coal reclamation project (the Pinnacle Project) which it expects to commence during the fourth quarter of 2004. It is contemplated that $1,700,000 of the net proceeds will be infused as working capital into a wholly-owned subsidiary of the Company to provide the equity needed to obtain a loan which the USDA would guaranty for such project. Any excess after costs and expenses will be retained as working capital by the Company. In connection with the private placement, the Company has disclosed material non-public information to the Private Placement Agent and will be disclosing such information to other parties who receive the Confidential Private Placement Memorandum (the "PPM"). The securities offered have not been and will not be registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold absent registration or an applicable exemption from the registration requirements. Included in the PPM is a schedule of five pending coal reclamation projects that Beard Technologies, Inc. ("BTI") is currently working on which sets forth the anticipated life of each project (ranging from four to eight years), together with the slurry reserves, anticipated clean coal production, anticipated gross revenues, anticipated capital costs and estimated free cash flow for such projects. Collectively the projects are estimated to have slurry reserves of 23,496,000 tons, recoverable clean coal of 11,640,000 tons, future gross revenues of $206,911,000, total capital costs of $28,400,000, and free cash flow of $84,850,000 during the life of the projects. Also included in the PPM were the Statements of Projected Operations and the accompanying Notes to the Statements of Projected Operations attached as Exhibit 99.1 under Item 9.01 hereof. The Statements of Projected Operations, which are set forth in Exhibit 99.1, were made based upon the assumptions set forth in the Notes to the Statements of Projected Operations, which assume that the projects described therein actually materialize and that the required financing therefor is obtained. However, as pointed out in the Notes to the Statements of Projected Operations, there is no assurance that the required financing will be obtained or that any of the projects will materialize. If less than $1,800,000 is raised in the offering, then the Company is prepared to seek project financing for the Pinnacle Project to provide any shortfall. PRESS RELEASE ANNOUNCING COMMENCEMENT OF THE CONVERTIBLE NOTE OFFERING On September 15, 2004, the Company issued a press release announcing the commencement of the convertible note offering. A copy of the press release is attached hereto as Exhibit 99.2. Item 9.01 Financial Statements and Exhibits. Exhibits. The following exhibits are filed with this Form 8-K and are identified by the numbers indicated: Exhibit No. Description - ----------- ----------- 99.1 Statements of Projected Operations for 2004 through 2006 and accompanying Notes to Statements of Projected Operations 99.2 Press Release dated September 15, 2004 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 hereunto duly authorized. THE BEARD COMPANY /s/ Herb Mee, Jr. _______________________________ Herb Mee, Jr., President September 15, 2004 EXHIBIT INDEX Exhibit No. Description Method of Filing --- ----------- ---------------- 99.1 Statements of Projected Operations Filed herewith electronically for 2004 through 2006 and accompanying Notes to Statements of Projected Operations 99.2 Press Release dated September 15, 2004 Filed herewith electronically EX-99.1 2 bcform8kex991-091594.txt Exhibit 99.1 FORWARD-LOOKING STATEMENTS The Statements of Projected Operations include "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 are forward-looking statements. Although we believe that the expectations reflected in such statements are reasonable, we cannot assure you that such expectations will occur. Our actual future performance could differ materially from such statements as a result of many factors, including but not limited to coal prices, production costs, and recoverable reserves. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed herein and at pages 16-18 of the Company's Form 10-K for the fiscal year ended December 31, 2003. THE BEARD COMPANY AND SUBSIDIARIES Statements of Projected Operations (Unaudited)
Year Ending December 31, ---------------------------------------------------- 2004 2005 2006 ---- ---- ---- Revenues: Coal reclamation (a) $ 398,000 $ 8,940,000 $ 28,883,000 Carbon dioxide (b) 700,000 792,000 871,000 China (c) - 4,068,000 8,928,000 e-Commerce (d) 29,000 40,000 60,000 --------------- --------------- ---------------- 1,127,000 13,840,000 38,742,000 Operating expenses (e) 2,302,000 9,868,000 28,863,000 --------------- --------------- ---------------- Operating profit (loss) (1,175,000) 3,972,000 9,879,000 Other income (expense): Interest income 4,000 4,000 4,000 Interest expense (f) (499,000) (1,008,000) (1,911,000) Equity in net earnings of unconsolidated affiliate (g) 298,000 233,000 - Gain on settlement 2,943,000 - - Gain on sale of assets 76,000 - - Minority interest in operations of consolidated subsidiaries - (1,496,000) (3,897,000) Other 10,000 - - --------------- --------------- ---------------- Earnings before income taxes 1,657,000 1,705,000 4,075,000 Income taxes (99,000) - - --------------- --------------- ---------------- Net earnings (h) $ 1,558,000 $ 1,705,000 $ 4,075,000 =============== =============== ================ Net earnings per common share: Basic $ 0.29 $ 0.30 $ 0.66 =============== =============== ================ Diluted $ 0.23 $ 0.25 $ 0.51 =============== =============== ================ Weighted average common shares outstanding: Basic 5,364,000 5,600,000 6,200,000 =============== =============== ================ Diluted 6,800,000 6,800,000 8,000,000 =============== =============== ================
See accompanying notes to financial statements. THE BEARD COMPANY AND SUBSIDIARIES NOTES TO THE STATEMENTS OF PROJECTED OPERATIONS (Unaudited) (a) The Company's principal business is coal slurry pond reclamation. The Coal Segment is currently pursuing a number of different projects. On July 15, 2004 the Company announced that Beard Technologies, Inc. ("BTI") had signed an agreement to provide dredging services to a subsidiary of DTE Energy Company ("DTE") for an initial term of two years, extendible at DTE's option for up to an additional four years. On September 7, 2004 the Company announced that BTI had signed an agreement to reclaim slurry for Pinnacle Mining Company, LLC. This agreement has an initial term of six years, extendible for an additional four years if significant recoverable reserves remain at the end of the initial term. The Company is also pursuing other projects as reflected in the Schedule of Active Projects at Exhibit A. The projections reflect the DTE service contract beginning in August 2004 and assume that the contract will be extended at the end of the initial term. The projections also reflect Project A beginning in September 2004. The projections also assume that a second pond recovery project (Project B) starts in March 2005 and runs through July 2011, that a third pond recovery project (Project C) starts in May 2005 and runs through September 2009, and that a fourth pond recovery project (Project D) starts in August 2005 and runs through December 2013. On each of the four pond recovery projects, the projections assume that BTI receives an overhead charge of $50,000 per month for the first five months and $30,000 per month thereafter from the LLC operating the project. No assumptions have been made on the other project shown on Exhibit A. The projections assume that BTI owns Projects A, B and C 100%; Project D assumes that BTI has a 50% partner. On all four projects it is assumed that BTI obtains the required debt financing through loans guaranteed by the U.S. Department of Agriculture, Rural Development. Project A assumes that the Company raises the required equity needed to secure the USDA-backed financing through the offering which is the subject of this Memorandum. The Company will also need to provide the equity portion of the financing for Project B. BTI has equipment on hand which it believes is sufficient to provide the equity needed for Project C. It is contemplated that a strong financial partner will provide the equity needed for Project D. However, there is no assurance that the required financing will be obtained or that any of the projects will materialize. (b) 2004 revenues, expenses and profits of the CO2 Segment have been based upon actual first half 2004 results, with anticipated improvement during the second half of the year due to expected better marketing and pricing resulting from the McElmo Dome Settlement. Beginning in late 2004 and continuing thereafter, significant improvement in revenues and net profit are anticipated as a result of reduced pipeline charges stemming from the settlement. (c) In China the Company has been seeking financing for three large projects costing several million dollars each. However, the projections assume only that a "mini-plant", costing $1.6 million, is funded by outside investors who get receive 90% of the cash flow from the project, with Beard Environmental Engineering, LLC ("BEE") backing in for a 50% interest after investor payout. The projections assume that the mini-plant is started in November 2004, with BEE receiving a management fee of $15,000 per month during the project life commencing with project startup. Payout is projected to occur in January 2006. (d) Revenues and expenses for the e-Commerce Segment have also been reflected in an anticipated worst case scenario. Revenues reflect the revenues presently anticipated from starpay's existing license agreement. starpay's basic overhead is assumed to remain at its present level of approximately $11,000 per month pending the outcome of the Visa litigation. In addition, starpay's share of the legal costs related to the lawsuit have been estimated at $32,000 for the last six months of 2004, at $50,000 for 2005 and at $40,000 for 2006. (e) Includes all of the operating expenses of the Coal, CO2, China and e-Commerce Segments based upon the assumptions set forth in footnotes (a), (b), (c) and (d). Also assumes that Beard (Parent) overhead is at $960,000 in 2004 and increases to $1,040,000 in 2005 and drops to $1,000,000 in 2006. The $80,000 increase in 2005 includes the estimated cost of complying with the new Sarbanes-Oxley 404 requirements; in 2006 this cost is expected to be $40,000 less than in 2005. (f) Interest expense includes the interest associated with the Parent Company debt, including that associated with this offering, together with the interest cost associated with the four Coal projects discussed in footnote (a). (g) Reflects our current estimate of the net earnings expected to be received from an unconsolidated subsidiary for the periods shown. It is anticipated that this subsidiary will wind up its affairs in August of 2005. (h) These projections have been included to indicate the profitability that may be achieved if the projects outlined in footnotes (a) and (c) are implemented within the indicated time frames and if the other assumptions contained herein prove to be reasonably accurate. EX-99.2 3 bcform8kex992-091504.txt Exhibit 99.2 THE BEARD COMPANY News Release Enterprise Plaza, Suite 320 5600 North May Avenue Herb Mee, Jr., President Oklahoma City, Oklahoma 73112 (405) 842-2333 OTCBB: BRCO THE BEARD COMPANY COMMENCES $1,800,000 CONVERTIBLE NOTE OFFERING FOR IMMEDIATE RELEASE: September 15, 2004 Oklahoma City, Oklahoma --- During the past 60 days the Company announced the execution of a services agreement and a pond fines recovery agreement for projects to be undertaken by Beard Technologies, Inc. In order to provide the equity required to secure the debt financing needed for the pond fines recovery project, The Beard Company (OTCBB:BRCO) today announced that it has arranged for an investment banking firm to sell $1,800,000 of 9% 5-year subordinated notes to accredited investors in a private placement on a best efforts basis. The notes are convertible into shares of the Company's common stock at a conversion price of $1.50 per share. Some of the notes will also be sold by the Company. Neither the 9% convertible notes nor the underlying common stock into which they are convertible have been registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Beard Company's common stock is traded on the OTC Bulletin Board under the symbol: BRCO. Its operations consist principally of coal reclamation activities, carbon dioxide (CO2) gas production, the construction of fertilizer plants in China, and its e-commerce activities aimed at developing business opportunities to leverage starpay(TM)'s intellectual property portfolio of Internet payment methods and security technologies. # # # # # FOR FURTHER INFORMATION CONTACT: Herb Mee, Jr. Fax Number (405) 842-9901 Email: hmee@beardco.com -----END PRIVACY-ENHANCED MESSAGE-----