-----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, SEZbFo/WkU118fYCydRVDxcm3V0KfCYQe9voIqOkWTqAunRBZi+ULKGNd7oynpij p5eAwmEr6ipqenGjdnrn0w== 0000909334-05-000228.txt : 20050630 0000909334-05-000228.hdr.sgml : 20050630 20050629181903 ACCESSION NUMBER: 0000909334-05-000228 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050629 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050630 DATE AS OF CHANGE: 20050629 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: 05926308 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 bc8k-062905.txt 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: (Date of earliest event reported) June 29, 2005 THE BEARD COMPANY (Exact name of registrant as specified in its charter) Oklahoma 1-12396 73-0970298 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) Enterprise Plaza 5600 N. May Avenue Suite 320 Oklahoma City, Oklahoma 73112 (Address of principal executive offices) (Zip Code) (405) 842-2333 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b)) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Information to be Included in the Report: Item 7.01 Regulation FD Disclosure We have arranged for an investment banking firm to sell $1,200,000 of 12% convertible subordinated notes (the "Notes") to accredited investors in a private placement on a best efforts basis; some of the Notes will also be sold by us. We are also allowing holders of our outstanding 10% participating notes (the "10% Notes") due 2006 to tender their 10% Notes in exchange for the Notes. As of the date of the offering there was an aggregate principal amount of $804,102 of the 10% Notes outstanding. The investment banking firm will receive a commission of 6% of the principal amount of Notes sold by it, 2% of the principal amount of 10% Notes exchanged by it, and 1% of the principal amount of Notes sold by us. 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. The purpose of the offering is to provide working capital to fund our operations until (i) the coal projects described below have been commenced, (ii) the plant in China has reached full production, and (iii) such projects are producing positive cash flow. 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"). On September 7, 2004 we announced the execution of an agreement with Pinnacle Mining, LLC for a coal slurry reclamation project (the "Pinnacle Project"), which we expect to commence during the third quarter of 2005. Approximately eight months has been spent in securing the necessary permits for the Pinnacle Project. In the interim (i) significant cost increases have occurred since the contract was first negotiated, (ii) we have re-negotiated the price we will receive for the coal recovered from the pond in the Pinnacle Project, and (iii) the pond owner and affiliated investors have agreed to provide us with $2,800,000 of equity in exchange for a 57% interest in the Pinnacle Project. Additionally, we have received a term sheet for $5,000,000 of the debt required for the Pinnacle Project, and the lender has indicated a willingness to increase its commitment to $9,000,000 subject to obtaining a USDA guaranty for 70% of such amount. Subject to successfully entering into a definitive agreement with the pond owner and affiliated investors to provide the required equity needed, we expect that our efforts to obtain the $9,000,000 loan will quickly be brought to a successful conclusion. However, we can not assure you that we will be able to finalize a definitive agreement with the pond owners and affiliated investors to provide us with the equity required to obtain the USDA guaranteed loan, that we will obtain the USDA-guaranteed loan, or that any of the pond recovery projects will proceed. 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 coal 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 coal projects will materialize. As set forth in the Notes to the Statements of Projected Operations, the financing for our initial plant in China has already been arranged, and such plant is expected to be in full production in October of 2005. The projections assume that Phase 1 of Plant #1 will generate sufficient cash flow to finance the doubling of capacity of Plant #1, that the increased cash flow from Plant #1 will generate sufficient cash flow to finance Plant #2, that the increased cash flow from Plants #1 and #2 will generate sufficient cash flow to finance Plant #3, and that the increased cash flow from Plants #1, #2 and #3 will generate sufficient cash flow to finance Plant #4. However, there is no assurance that the projected cash flow will materialize or that, to the extent it does materialize, it will be sufficient to generate the cash required to build the three additional plants. PRESS RELEASE ANNOUNCING COMMENCEMENT OF NOTE OFFERING On June 29, 2005 we issued a press release announcing the commencement of the note offering. A copy of the press release is attached hereto as Exhibit 99.2. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. The following exhibit is filed with this Form 8-K and are identified by the numbers indicated: Exhibit No. Description - ----------- ----------- 99.1 Statements of Projected Operations for 2005 through 2008 and accompanying Notes to Statements of Projected Operations 99.2 Press Release dated June 29, 2005 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 June 29, 2005 EX-99.1 2 bc8kex991-062905.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 statement 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 our expectations are disclosed herein and at pages 11-18 of the PPM and at pages 16-17 of our Form 10-K for the fiscal year ended December 31, 2004.
2005 2006 2007 2008 Revenues: Coal reclamation (a) $ 15,000 $ 7,759,000 $18,173,000 $29,513,000 Carbon dioxide (b) 1,000,000 1,080,000 1,080,000 1,080,000 China (c) 1,803,000 9,758,000 24,892,000 37,362,000 Oil and gas (d) 212,000 476,000 457,000 404,000 e-Commerce (e) 29,000 6,000 9,000 14,000 -------------------------------------------------------------- 3,059,000 19,079,000 44,611,000 68,643,000 -------------------------------------------------------------- Operating profit (loss) (a)(b)(c)(d)(e)(f)(g) (1,127,000) 3,683,000 11,274,000 18,716,000 -------------------------------------------------------------- Other income (expense): Interest income 7,000 2,000 1,000 - Interest expense (h) (1,089,000) (1,621,000) (2,740,000) (3,308,000) Equity in net earnings of unconsolidated affiliate (i) 336,000 - - - Gain on settlement (j) 250,000 - - - Gain on sale of assets 100,000 - - - Minority interest in operations of consolidated subsidiaries 5,000 (1,703,000) (4,827,000) (6,208,000) -------------------------------------------------------------- Earnings before income taxes (1,128,000) 361,000 3,708,000 9,200,000 Income tax benefit (expense) (58,000) (7,000) (74,000) (184,000) -------------------------------------------------------------- Net earnings (k) $ (1,186,000) $ 354,000 $ 3,634,000 $ 9,016,000 ============================================================== Net earnings per common share: Basic $ (0.20) $ 0.06 $ 0.48 $ 1.02 ============================================================== Diluted $ (0.20) $ 0.04 $ 0.39 $ 0.97 ============================================================== Weighted average common shares outstanding: Basic 5,900,000 6,195,000 7,540,000 8,880,000 ============================================================== Diluted 5,900,000 9,200,000 9,279,000 9,335,000 ==============================================================
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. In September of 2004 BTI signed an agreement to reclaim slurry for Pinnacle Mining Company, LLC. Significant cost increases have occurred since the agreement was negotiated. As a result, BTI has had to re-negotiate the price we will receive for the coal. This has now been accomplished. The pond owner and affiliated investors have agreed to provide $2.8 million of equity for a 57% interest in the Pinnacle Project. The Company is diligently pursuing a $9 million USDA-guaranteed loan to finance the balance of the Pinnacle Project. At this juncture we can give no assurances that such loan will be obtained. The projections reflect Project A (Pinnacle) beginning in September of 2005 and commencing production in January of 2006. The projections also assume that a second pond recovery project (Project B) starts in June of 2006 and commences production in October of 2006, that a third pond recovery project (Project C) starts in March of 2007 and commences production in July of 2007, and that a fourth pond recovery project (Project D) starts in September of 2007 and commences production in January of 2008. 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 projects. It is further assumed that we are able to negotiate a price for the coal on Projects B, C and D that will be sufficient to enable BTI to meet or exceed its projections. The Pinnacle investors will have the preferential right to participate in Project B on the same basis as the Pinnacle Project. Accordingly, the projections assume that the Company owns 43% of the first two Projects and that investors own 57%. We anticipate that the Company will be able to finance Projects C and D by itself and own them 100%. Meanwhile, the Company will continue to diligently pursue both debt and equity financing for Projects B, C and D through several different sources. We have retained three different firms who are currently seeking financing for our coal projects: (i) a New York City-based firm which specializes in energy financing that is pursuing both debt and equity financing for the projects; (ii) a Maryland-based firm that has already obtained a terms sheet from a bank for the USDA-guaranteed portion of the financing needed for the Pinnacle Project; and (iii) a third firm that specializes in USDA-guaranteed financing. However, there is no assurance that the required equity or debt financing will be obtained, that the USDA-guaranteed loans will be obtained or that any of the projects will materialize. The projections also assume that BTI's basic overhead, which was approximately $49,000 per month in 2004, increases by $3,000 per month in 2005, by $18,000 per month in 2006, by $10,000 per month in 2007 and by $10,000 per month in 2008. (b) 2005 revenues, expenses and profits of the CO2 Segment have been based upon actual results for 2004, with anticipated improvement in revenues and net profit in 2005 due to expected better marketing and pricing and reduced pipeline charges resulting from the McElmo Dome Settlement. (c) In China the projections reflect the construction and operation of our initial plant to manufacture organic chemical compound fertilizer. Our wholly-owned subsidiary, Beard Environmental Engineering ("BEE"), and an outside investor have each contributed US$50,000 to an LLC that (i) will manage and operate the facility, and (ii) is owned 50% by BEE and 50% by the investor. The outside investor has loaned an additional US$850,000 to the LLC to fund the additional capital costs and pre-operating costs of the 32,000 metric ton facility. Such loan is non-recourse to BEE and the Company. The projections assume that the facility commences production in August of 2005 with full production achieved in October of 2005. The projections also assume that the plant capacity is doubled in 2006, with initial production in February and full production in April of 2006. The projections further assume that (i) Plant #2 (64,000 tons) starts in July 2006, with initial production in November of 2006 and full production in January of 2007, (ii) that a third 64,000 ton plant (Plant #3) starts in January of 2007 with initial production in May and full production in July of 2007, and (iv) that a fourth 64,000 ton plant (Plant #4) starts in July 2007, with initial production in November of 2007 and full production in January of 2008 . The projections also assume that the sales price for the production from all plants is reduced by 8.125% when Plant #2 commences production, and that the reduced price is maintained throughout the remainder of the projections. It is further assumed that market demand for fertilizer remains strong throughout the periods covered, and that market supply will not reduce the market price for fertilizer below our target price. Under the terms of our agreement, the LLC will cover $30,000 per month of the China Segment's overhead beginning in February 2005, $50,000 per month when the plant capacity has doubled, and will increase thereafter as Plant #2 and subsequent plants come on stream to cover all of the overhead of the China Segment. If the market forecasts of our China Segment prove to be correct, our projections indicate that we can finance the doubling of the plant capacity of Plant #1 and, if adequate leased space is available, the building of Plant #2 and Plant #3 from available cash flow. The projections also assume that the China Segment's basic overhead, which was approximately $41,300 per month in the first quarter of 2005, averages $43,000 per month in 2005, $48,000 per month in 2006, $54,000 per month in 2007 and $60,000 per month in 2008. (d) Includes the anticipated revenues and expenses from the Company's 22.5% working interest in six new gas wells in eastern Colorado which are expected to come on stream in July of 2005. We will receive runs for five wells from date of first production, and from the other well after payout which is estimated to occur after the seventh month. (e) Revenues and expenses for the e-Commerce Segment have 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 2004 level of approximately $10,000 per month pending the outcome of the Visa litigation. In addition, starpay's 50% share of the legal costs related to the lawsuit have been estimated at $55,000 for 2005 and at $45,000 for 2006. (f) Includes all of the operating expenses of the Coal, CO2, China, Oil and Gas, and e-Commerce Segments based upon the assumptions set forth in footnotes (a), (b), (c), (d) and (e). Also includes the Parent Company overhead. (g) Assumes that Beard (Parent) overhead, which was $930,000 in 2004, increases to $980,000 in 2005, to $1,150,000 in 2006, decreases to $1,100,000 in 2007 and increases to $1,200,000 in 2008. The increases reflect anticipated increases in salaries and fringe benefits of the Parent, increased audit costs due to the expanded scope of the Company's Coal, China and Oil and Gas operations, and increased internal audit costs as the Company gears up to meet the new Sarbanes-Oxley 404 internal control requirements. It is anticipated that the cost of SOX 404 compliance will be less after 2006. (h) Interest expense includes the interest associated with the present Parent Company debt, the estimated interest cost associated with the four Coal projects discussed in footnote (a), together with the interest attributable to the China LLC discussed in footnote (c). Interest cost associated with the current offering is not included since the amount of borrowings has not yet been determined. (i) Includes our current estimate of the net earnings expected to be received from an unconsolidated gas marketing subsidiary in 2005. This subsidiary will wind up its affairs in December of 2005. Accordingly, no income is projected in subsequent years. (j) The Company expects to receive at least $250,000 prior to year-end 2005 as a result of mediation/arbitration involving some ongoing issues stemming from the Settlement Agreement relative to pipeline tariffs on carbon dioxide production from the McElmo Dome Field. (k) 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 bc8kex992-062905.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 ANNOUNCES COMMENCEMENT OF $2,004,102 CONVERTIBLE NOTE OFFERING FOR IMMEDIATE RELEASE: Wednesday, June 29, 2005 Oklahoma City, Oklahoma --- The Beard Company (OTCBB:BRCO) today announced that it has arranged for an investment banking firm to offer up to $2,004,102 aggregate principal amount of 12% Convertible Subordinated Notes (the "Notes") which are convertible into shares of our common stock (the "Underlying Common Stock"). The Notes, which mature on August 31, 2009, will be offered to accredited investors in a private placement on a best efforts basis. The minimum investment for the offering will be $25,000. The offering may be closed in one or more stages upon the earlier to occur of (i) acceptance of a minimum of $200,000 of subscriptions, or (ii) August 31, 2005. The Notes are convertible into shares of our common stock. The conversion price for the Notes will be determined by the weighted average price of our common stock during the 90-day period preceding the date each subscription is received by us, subject to a floor of $2.25 per share; provided, however, that notes issued in connection with subscriptions received on or before July 15, 2005 will have a conversion price of $2.25. We may force conversion of the Notes after February 28, 2007 if the weighted average sales price of our common stock has been more than two times the Conversion Price for more than sixty (60) consecutive trading days. We are also allowing holders of our outstanding 10% Participating Notes due 2006 (the "10% Notes") to tender their 10% Notes in exchange for the Notes. There are presently $804,102 of the 10% Notes outstanding. Holders who exchange their 10% Notes will also have the right to purchase the Notes for a minimum investment of $5,000. 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. 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. - -------------------------- Statements regarding future profitability and operations, including the timing of those activities, are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act. The statements involve risks that could significantly impact The Beard Company. These risks include, but are not limited to, adverse general economic conditions, unexpected costs or delays or other unexpected events, as well as other risks discussed in detail in The Beard Company's filings with the Securities and Exchange Commission. The Beard Company assumes no duty to update or revise its forward-looking statements based on changes in internal estimates or otherwise. # # # # # FOR FURTHER INFORMATION CONTACT: Herb Mee, Jr. Fax Number (405) 842-9901 Email: hmee@beardco.com -----END PRIVACY-ENHANCED MESSAGE-----