-----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, DGKg+flxCPalrrtNh9VGX0tKWhdQGawYRxfLB3Vg804ySqgtIEXN/ki2s48+EDcj nRC4bAdpkOFmSJ3S5lRxLg== 0000909334-98-000065.txt : 19980817 0000909334-98-000065.hdr.sgml : 19980817 ACCESSION NUMBER: 0000909334-98-000065 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-12396 FILM NUMBER: 98688679 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 10-Q 1 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 June 30, 1998 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-12396 THE BEARD COMPANY (Exact name of registrant as specified in its charter) Oklahoma 73-0970298 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Enterprise Plaza, Suite 320 5600 North May Avenue Oklahoma City, Oklahoma 73112 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (405) 842-2333 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the registrant's classes of common stock as of July 31, 1998. Common Stock $.001 par value - 2,565,739 THE BEARD COMPANY INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Balance Sheets - June 30, 1998 (Unaudited) and December 31, 1997 Statements of Operations - Three Months and Six Months ended June 30, 1998 and 1997 (Unaudited) Statements of Shareholders' Equity, Year ended December 31, 1997 and Six Months ended June 30, 1998 (Unaudited) Statements of Cash Flows - Six Months ended June 30, 1998 and 1997 (Unaudited) Notes to Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 2. Changes in Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE BEARD COMPANY AND SUBSIDIARIES Balance Sheets June 30, 1998 (Unaudited) and December 31, 1997
June 30, December 31, Assets 1998 1997 ----------- ------------- Current assets: Cash and cash equivalents $ 7,000,000 $ 13,955,000 Accounts receivable, less allowance for doubtful receivables of $80,000 in 1998 and $75,000 in 1997 1,332,000 1,654,000 Other receivables (note 2) - 1,000,000 Inventories 374,000 227,000 Prepaid expense 126,000 84,000 Other assets 151,000 11,000 ----------- ------------ Total current assets 8,983,000 16,931,000 Investments and other assets 1,725,000 1,580,000 Property, plant and equipment, at cost 34,006,000 6,247,000 Less accumulated depreciation, depletion and amortization 4,768,000 4,300,000 ----------- ------------ Net property, plant and equipment 29,238,000 1,947,000 Intangible assets, at cost 963,000 828,000 Less accumulated amortization 129,000 334,000 ----------- ------------ Net intangible assets 834,000 494,000 ----------- ------------ $40,780,000 $ 20,952,000 =========== ============ Liabilities and Shareholders' Equity Current liabilities: Trade accounts payable $ 401,000 $ 533,000 Accrued expenses (note 2) 1,025,000 892,000 Income taxes payable 354,000 541,000 Redeemable preferred stock purchase and redemption obligation - 4,005,000 Other obligations (note 2) - 900,000 Current maturities of long-term debt 1,685,000 136,000 ----------- ------------ Total current liabilities 3,465,000 7,007,000 Long-term debt, less current maturities 25,189,000 519,000 Minority interest in consolidated subsidiaries 128,000 104,000 Redeemable preferred stock of $100 stated value; 5,000,000 shares authorized; 27,838 shares issued and outstanding (note 4) 889,000 889,000 Common shareholders' equity: Common stock of $.001 par value per share; 10,000,000 shares authorized; 2,832,129 shares issued in 1998 and 1997 3,000 3,000 Capital in excess of par value 37,911,000 37,911,000 Accumulated deficit (25,286,000) (23,962,000) Treasury stock, 303,890 shares, at cost (1,519,000) (1,519,000) ----------- ------------ Total common shareholders' equity 11,109,000 12,433,000 ----------- ------------ Commitments and contingencies (note 7) $40,780,000 $ 20,952,000 =========== ============
See accompanying notes to financial statements. THE BEARD COMPANY AND SUBSIDIARIES Statements of Operations (Unaudited)
For Three Months Ended For Six Months Ended ---------------------- --------------------- June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ------- ------- ------- ------- Revenues: Coal reclamation $ 631,000 $ - $ 631,000 $ - Interstate travel facilities 1,022,000 - 1,307,000 - Carbon dioxide 157,000 138,000 317,000 256,000 Environmental remediation - 13,000 - 13,000 Other 9,000 15,000 17,000 24,000 ----------- ----------- ----------- ----------- 1,819,000 166,000 2,272,000 293,000 Expenses: Coal reclamation (exclusive of depreciation, depletion and amortization shown separately below) 228,000 30,000 263,000 61,000 Interstate travel facilities (exclusive of depreciation, depletion and amortization shown separately below) 842,000 - 1,066,000 - Carbon dioxide (exclusive of depreciation, depletion and amortization shown separately below) 34,000 28,000 69,000 55,000 Environmental remediation (exclusive of depreciation, and amortization shown separately below) 53,000 44,000 77,000 48,000 Selling, general and administrative 802,000 265,000 1,239,000 554,000 Depreciation, depletion & amortization 70,000 13,000 96,000 26,000 Other, principally corporate 8,000 10,000 14,000 16,000 ----------- ----------- ----------- ----------- 2,037,000 390,000 2,824,000 760,000 Operating profit (loss): Coal reclamation 281,000 (70,000) 212,000 (143,000) Interstate travel facilities (159,000) - (196,000) - Carbon dioxide 115,000 104,000 232,000 190,000 Environmental remediation (59,000) (20,000) (86,000) (47,000) Other, principally corporate (396,000) (238,000) (714,000) (467,000) ----------- ----------- ----------- ----------- (218,000) (224,000) (552,000) (467,000) Other income (expense): Interest income 107,000 2,000 244,000 4,000 Interest expense (43,000) (36,000) (59,000) (71,000) Gain (loss) on sale of assets (8,000) - 4,000 50,000 Equity in earnings of unconsolidated affiliates 90,000 120,000 199,000 148,000 Minority interest in operations of consolidated subsidiaries 54,000 - 53,000 - Other (60,000) (51,000) (109,000) (76,000) ----------- ----------- ----------- ----------- Loss from continuing operations before income taxes (78,000) (189,000) (220,000) (412,000) Income taxes (note 6) (56,000) (17,000) (56,000) (17,000) ----------- ----------- ----------- ----------- Loss from continuing operations (134,000) (206,000) (276,000) (429,000) Discontinued operations (note 2): Earnings (loss) from discontinued operations (142,000) 227,000 (424,000) 26,000 Estimated loss from discontinuing environmental services activities (624,000) - (624,000) - ----------- ----------- ----------- ----------- Earnings (loss) from discontinued operations (766,000) 227,000 (1,048,000) 26,000 ----------- ----------- ----------- ----------- Net earnings (loss) $ (900,000) 21,000 (1,324,000) (403,000) =========== =========== =========== =========== Net earnings (loss) attributable to common shareholders $ (900,000) 21,000 (1,324,000) (403,000) =========== =========== =========== =========== Net earnings (loss) per average common share outstanding: Basic and diluted: Loss from continuing operations $ (0.05) $ (0.07) $ (0.11) $ (0.15) Earnings (loss) from discontinued operations (0.31) 0.08 (0.41) 0.01 ----------- ----------- ----------- ----------- Net earnings (loss) $ (0.36) $ 0.01 $ (0.52) $ (0.14) =========== =========== =========== =========== Weighted average common shares outstanding - basic and diluted 2,528,000 2,799,000 2,528,000 2,799,000 =========== =========== =========== ===========
See accompanying notes to financial statements. THE BEARD COMPANY AND SUBSIDIARIES Statements of Shareholders' Equity
Total Capital in Common Common Excess of Accumulated Treasury Shareholders' Stock Par Value Deficit Stock Equity ----------- ----------- -------------- ------------ ------------ Balance, December 31, 1996 $ 3,000 $41,629,000 $(32,976,000) $ - $ 8,656,000 Net earnings, year ended December 31, 1997 - - 9,014,000 - 9,014,000 Issuance of 33,055 shares of common stock - 71,000 - - 71,000 Purchase of 303,890 shares of common stock - - - (1,519,000) (1,519,000) Accretion of preferred stock - (3,789,000) - - (3,789,000) ----------- ----------- ------------ ------------ ----------- Balance, December 31, 1997 3,000 37,911,000 (23,962,000) (1,519,000) 12,433,000 Net loss, six months ended June 30, 1998 (unaudited) - - ( 1,324,000) - (1,324,000) ----------- ----------- ------------ ------------ ----------- Balance, June 30, 1998 (unaudited) $ 3,000 $37,911,000 $(25,286,000) $ (1,519,000) $11,109,000 =========== =========== ============ ============ ===========
See accompanying notes to financial statements. THE BEARD COMPANY AND SUBSIDIARIES Statements of Cash Flows (Unaudited)
For the Six Months Ended ----------------------------- June 30, 1998 June 30, 1997 ------------- ------------- Operating activities: Cash received from customers $ 4,149,000 $ 10,493,000 Cash paid to suppliers and employees (5,085,000) (9,245,000) Interest received 301,000 6,000 Interest paid (96,000) (199,000) Taxes paid (244,000) - ------------ ------------ Net cash provided by (used in) operating activities (975,000) 1,055,000 ------------ ------------ Investing activities: Acquisition of property, plant and equipment (1,441,000) (904,000) Proceeds from sale of business 1,000,000 - Proceeds from sale of assets 45,000 58,000 Purchase of minority interest (900,000) - Acquisition of travel facilities, net of cash acquired of $49,000 (763,000) - Other (91,000) 22,000 ------------ ------------ Net cash used in investing activities (2,150,000) (824,000) ------------ ------------ Financing activities: Proceeds from line of credit and term notes 786,000 1,229,000 Payments on line of credit and short-term notes (611,000) (1,783,000) Preferred stock repurchase (4,005,000) - ------------ ------------ Net cash used in financing activities (3,830,000) (554,000) ------------ ------------ Net decrease in cash and cash equivalents (6,955,000) (323,000) Cash and cash equivalents at beginning of period 13,955,000 375,000 ------------ ------------ Cash and cash equivalents at end of period $ 7,000,000 $ 52,000 ============ ============
THE BEARD COMPANY AND SUBSIDIARIES Statement of Cash Flows (Unaudited) Reconciliation of Net loss to Net Cash Provided by (Used in) Operating Activities
For the Six Months Ended -------------------------------- June 30, 1998 June 30, 1997 ------------- ------------- Net loss $ (1,324,000) $ (403,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 276,000 734,000 (Gain) loss on sale of assets 22,000 (53,000) Equity in earnings of unconsolidated affiliates (199,000) (148,000) Loss from discontinued operations 624,000 - Impairment of assets - 60,000 Interest and other costs recognized on real estate project - 478,000 Minority interest in operations of consolidated subsidiaries (157,000) (30,000) Other 7,000 96,000 (Increase) decrease in accounts receivable, prepaids and other current assets 274,000 (308,000) Decrease in inventories 12,000 932,000 Decrease in accounts payable, accrued expenses and other liabilities (510,000) (303,000) ------------ ------------ Net cash provided by (used in) operating activities $ (975,000) $ 1,055,000 ============ ============ Supplemental Schedule of Noncash Investing and Financing Activities: Purchase of travel facilities through the sale of a subsidiary's common stock $ 181,000 $ - ============ ============ Purchase of travel facilities through the issuance of a debt obligation and assumption of debt obligations $ 1,743,000 $ - ============ ============ Sale of inventory for a note receivable $ - $ 87,000 ============ ============ Purchase of property, plant and equipment through the issuance of debt obligations $ 24,652,000 $ - ============ ============
See accompanying notes to financial statements. THE BEARD COMPANY AND SUBSIDIARIES Notes to Financial Statements (1) Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements and notes thereto have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain footnote disclosures normally prepared in accordance with generally accepted accounting principles have been omitted. The accompanying financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in Beard's 1997 annual report on Form 10-K. The accompanying financial statements include the accounts of The Beard Company and its wholly and majority- owned subsidiaries in which The Beard Company has a controlling financial interest ("Beard or the Company"). All significant intercompany transactions have been eliminated in the accompanying financial statements. The Company owns 80% of the outstanding common stock of Cibola Corporation, a natural gas marketing company, but does not consolidate the assets, liabilities, revenues or expenses of Cibola because Cibola's assets are controlled by the minority common stockholders and preferred stockholders of Cibola. The Company earned $63,000 and $128,000 for the three and six-month periods ended June 30, 1998, respectively, and $36,000 and $71,000 for the same periods in 1997, of pretax income from its ownership interest in Cibola. The financial information included herein is unaudited; however, such information reflects solely normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations for the three and six-month periods ended June 30, 1998, are not necessarily indicative of the results to be expected for the full year. The Company currently operates within four segments: (1) the coal reclamation ("CR") Segment, consisting of coal reclamation activities and services related to the Company's patented Mulled Coal Technology (the "M/C Technology"), (2) the interstate travel facilities ("ITF") Segment, consisting of businesses, such as service stations, convenience stores, restaurants and a truck wash, geared to the needs of the interstate highway traveler, (3) the carbon dioxide ("CO2") Segment, which consists of the production of CO2 gas, and (4) the environmental remediation ("ER") Segment, consisting of the remediation of creosote and polycyclic aromatic hydrocarbon ("PAH") contamination. The Company also owns 40% of a joint venture involved in the extraction, production and sale of crude iodine. The Company also operated in (i) the dry ice (solid CO2) manufacturing and distribution business, included in the CO2 Segment which was discontinued through sale in October of 1997 and (ii) the environmental/resource recovery ("E/RR") Segment which the Company elected to restructure pursuant to a plan adopted by the Company's Board of Directors in August, 1998. (See note 2 below). The resource recovery activities conducted by Beard Technologies, Inc. and its affiliates now comprise the CR Segment of the Company. The environmental remediation activities conducted by ISITOP, Inc. now comprise the ER Segment. As discussed in note 2 below, the Company's Board of Directors adopted a formal plan to discontinue its other environmental services operations (the "Other E/S Operations"), conducted principally by Whitetail Services, Inc. ("Whitetail") and Horizontal Drilling Technologies, Inc. ("HDT"). The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," on January 1, 1998. SFAS No. 130 was effective for fiscal years beginning after December 15, 1997. SFAS No. 130 establishes standards for reporting and display of "comprehensive income" and its components in a set of financial statements. It requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The Company had no comprehensive income as defined by SFAS No. 130 during the three and six-months ended June 30, 1998 and 1997, therefore, a statement of comprehensive income has not been presented in the accompanying financial statements. (2) Discontinued Operations In August, 1998, the Company's Board of Director's adopted a formal plan to restructure the E/RR Segment (see note 1) and to discontinue the Other E/S Operations. Accordingly, the results of the Other E/S Operations have been reported as discontinued for all periods presented in the accompanying statements of operations. Revenues applicable to the discontinued Other E/S Operations were $618,000 and $1,583,000 for the three and six-month periods ended June 30, 1998, respectively, and $1,316,000 and $2,512,000 for the three and six-month periods ended June 30, 1997, respectively. Losses from the discontinued Other E/S Operations were $142,000 and $424,000 for the three and six-month periods ended June 30, 1998, respectively, and $57,000 and $220,000 for the same periods in 1997. As of June 30, 1998, the significant assets related to the Other E/S Operations consist primarily of equipment and accounts receivable with a recorded value of $1,651,000. The significant liabilities related to the Other E/S Operations consist of trade accounts payables, accrued expenses and long-term debt obligations totaling $661,000. Included in the accompanying statements of operations for the three and six-months ended June 30, 1998, is a $624,000 estimated loss expected from the discontinuation of the Other E/S Operations. $534,000 of the loss represents the difference in the estimated amounts to be received from disposing of the Other E/S Operations' assets and the assets' recorded values as of June 30, 1998. $455,000 of the loss represents anticipated operating losses until disposal of such assets has been completed. Offsetting the expected losses is a $365,000 gain from early extinguishment of an obligation to the former sole shareholder of HDT. The obligation was originally incurred by the Company as a result of its acquisition of 80% of HDT's outstanding common stock and was payable only from 80% of the cash flows (prescribed under the Obligation Agreement) of HDT and Whitetail. The gain represents the discounted obligation balance as of June 30, 1998. Subsequent to June 30, 1998, the Company has sold a portion of the Other E/S Operations equipment for a total price of $437,000. The Company anticipates disposing of the remaining assets by June 30, 1999. In October 1997, the Company sold the business and substantially all of the assets of Carbonic Reserves, an 85%-owned subsidiary involved in the manufacturing and distribution of solid CO2 ("solid CO2 segment") for cash of $19,375,000 and the assumption of certain liabilities valued at $2,813,000 (the "Asset Sale"). The gain on the Asset Sale was $11,014,000 (after applicable income taxes of $522,000). Results of operations of the solid CO2 segment have been reported as discontinued operations for the three and six-month periods ended June 30, 1997 in the accompanying statements of operations. Revenues applicable to the discontinued solid CO2 Segment operations were $3,753,000 and $6,553,000 for the three and six-month periods ended June 30, 1997, respectively. The earnings from the discontinued solid CO2 segment were $284,000 and $246,000 for the three and six-month periods ended June 30, 1997, respectively. Pursuant to the closing of the Asset Sale, the Company received $18,375,000 in cash. The remaining $1,000,000 cash proceeds were held back (the "Holdback") to offset certain post closing adjustments for a maximum of 150 days from the closing date and was included in other receivables on the balance sheet as of December 31, 1997. The Company received the entire Holdback amount from the purchaser on March 12, 1998. Concurrent with the Asset Sale, the Company agreed to purchase the Carbonic Reserves minority shareholder's common stock for $900,000, which was paid by the Company in January 1998. The stock purchase obligation was included in other current obligations on the balance sheet as of December 31, 1997 and reduced the related gain. As of June 30, 1998, the solid CO2 segment had no significant assets. The significant liabilities of the solid CO2 segment consisted of accrued income and sales taxes of $307,000 and approximately $155,000 of accrued bonuses and employee severance compensation. (3) Acquisitions; Operating Agreements ITF Segment On February 9, 1998, the Company, through a newly formed subsidiary, Interstate Travel Facilities, Inc. ("ITF"), purchased two travel facilities located along Interstate Highway I-40 in eastern Oklahoma for a cash consideration of $490,000. Both travel facilities are geared toward the needs of interstate highway travelers and each included a service station, convenience store and a restaurant. The fair value of identifiable tangible and intangible net assets acquired approximated $628,000 on the acquisition date. The excess of the fair value of the travel facilities' assets acquired over the purchase price has been reallocated among the long-lived assets acquired. On February 27, 1998, ITF acquired two additional travel facilities and an undeveloped parcel of land located along Interstate Highway I-35 in central Oklahoma. These travel facilities are also geared toward the needs of interstate highway travelers. The first travel facility includes a service station, convenience store and a restaurant. The second travel facility includes a service station and a convenience store. The purchase price consisted of cash of $322,000; a fifteen-year, unsecured, 5.93% $544,000 promissory note, valued at $407,000 (discounted using a 10% interest rate); the assumption by ITF of three mortgage notes payable approximating $1,336,000, owed by the former owner of the facilities; and 20% of the Company's ownership in ITF, valued at $181,000. The three notes assumed by ITF are secured by the travel facilities' assets, bear interest at rates ranging from 9% to 10.5%, and mature from 2010 through 2013. The fair value of identifiable tangible and intangible net assets acquired approximated $1,489,000 on the acquisition date. The $757,000 excess purchase price over the fair value of the assets acquired has been recorded as goodwill and is being amortized on a straight-line basis over 15 years. On May 20, 1998, ITF acquired the assets of a truck wash located along Interstate Highway I-44 in Tulsa, Oklahoma for $699,000. The facility consists of two inside truck washing bays. The Company financed $576,000 of the asset acquisition with a fifteen-year, 8.5% promissory note. The note is secured by the acquired assets. The fair value of the identifiable tangible assets approximated $870,000 on the acquisition date. The excess of the fair value of the assets acquired over the purchase price has been reallocated among the long-lived assets acquired. CR Segment On June 30, 1998, the Company, through a newly formed subsidiary, Beard Mining, L.L.C. ("BMLLC"), acquired coal fines extraction and beneficiation equipment ("the Equipment") located at six coal slurry impoundment sites for a total purchase price estimated to be $24,000,000. The definitive purchase price cannot be ascertained until the seller of the Equipment provides BMLLC with a final accounting of the cost of certain components and installation of the Equipment. BMLLC is financing the purchase with a loan which requires principal payments of approximately $136,000 a month through July 1, 1999, at which time the remaining balance becomes due. The note is secured by the Equipment and bears interest at a per annum rate of 8%. BMLLC and the noteholder have agreed to discuss alternative permanent financing arrangements which could involve either a long-term loan from a third party or conversion to a third party leasing arrangement. BMLLC will lease the Equipment to Beard Technologies, Inc. ("BTI"), which is operating and maintaining the Equipment and six briquetting plants for six limited liability companies (the "LLC's"), each of which is a subsidiary of the noteholder. The noteholder has released the Company and BTI in connection with any claim resulting from the inaccuracy of any representation or warranty made by BMLLC in any loan document, or BMLLC's breach or failure to perform or satisfy any covenant, agreement, obligation or condition in any loan document. The monthly lease payments will equal the monthly payments due under the promissory note (except the final balloon payment) and are reimbursed costs by the LLC's under BTI's operating agreements with the LLC's. Concurrently with BMLLC's acquisition of the Equipment, BTI entered into operating agreements with the LLC's to provide services for which it is being compensated under a cost-plus arrangement pursuant to which it will receive a minimum profit of $100,000 per month so long as the contracts remain in effect. The initial term of the operating agreements expires on December 31, 1998, but will be automatically extended for unlimited successive one year periods unless terminated by either party at least 60 days prior to the expiration of any such period or for cause. The Company has guaranteed the performance of BTI's obligations under the operating agreements, but the Company has no liability under its guaranty unless BTI's failure to perform resulted from BTI's gross negligence, willful misconduct, improper handling or disbursement of funds, or failure to refund any overpayment to BTI by any of the six LLC's. The operating agreements provide that, solely for determining BTI's compensation thereunder, the agreements are deemed to have been effective April 1, 1998. The above acquisitions have been accounted for by the purchase method and accordingly, the results of operations of the travel facilities and other acquired assets have been included in the Company's financial statements from their acquisition dates. The Company currently has been unable to obtain historical financial operating information relating to the acquired travel facilities. The truck wash and coal fines extraction and beneficiation equipment assets acquired were either not operating or not commercially operating during a material portion of the three and six-month periods ended June 30, 1998. Accordingly, no pro forma financial information has been reported in the accompanying financial statements. (4) Redeemable Preferred Stock The Company's preferred stock is mandatorily redeemable through December 31, 2002, from one-third of Beard's "consolidated net income" as defined. The Company's 1998 operations through June 30 were not sufficient to begin the sharing of the consolidated net income. Accordingly, one-third of future "consolidated net income" will accrete directly to preferred stockholders and reduce earnings per common share. To the extent that the preferred stock is not redeemed by December 31, 2002, the shares of preferred stock can be converted into shares of the Company's common stock. (5) Earnings (loss) Per Share Basic earnings (loss) per share data is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if the Company's outstanding stock options were exercised (calculated using the treasury method) and if the Company's preferred stock were converted to common stock. Diluted earnings (loss) per share in the statements of operations exclude potential common shares issuable upon conversion of redeemable preferred stock or exercise of stock options as a result of losses from continuing operations for all periods presented. (6) Income Taxes In accordance with the provisions of the Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes ("SFAS No. 109"), the Company's net deferred tax asset is being carried at zero book value, which reflects the uncertainties of the Company's utilization of the future net deductible amounts. The provision for income taxes for the three and six-month periods ended June 30, 1998 consists of federal alternative minimum tax of $36,000 and state income tax of $20,000. The Company provided $17,000 in alternative minimum tax in the same periods in 1997. There was no provision for regular federal income taxes for the three and six-month periods in 1998 and 1997 due to the availability of net operating loss and other carryforwards. At June 30, 1998, the Company estimates that it had the following income tax carryforwards available for future use (in thousands): Expiration Date Amount ---------- --------- Federal regular tax operating loss carryforwards 2004-2010 $ 52,620 Investment tax credit carryforward 1998-2000 441 Tax depletion carryforward Indefinite 5,500 (7) Commitments and Contingencies In the normal course of business various actions and claims have been brought or asserted against the Company. Management does not consider them to be material to the Company's financial position, liquidity or results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion focuses on material changes in the Company's financial condition since December 31, 1997 and results of operations for the quarter ended June 30, 1998 compared to the prior year second quarter and the six months ended June 30, 1998 compared to the prior year six 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 1997 Form 10-K. The Company currently operates within four segments: (1) the coal reclamation ("CR") Segment, consisting of coal reclamation activities and services related to the Company's patented Mulled Coal Technology (the "M/C Technology"); (2) the interstate travel facilities ("ITF") Segment, consisting of businesses, such as service stations, convenience stores, restaurants and a truck wash, geared to the needs of the interstate highway traveler; (3) the carbon dioxide ("CO2") Segment, which consists of the production of CO2 gas; and (4) the environmental remediation ("ER") Segment, consisting of the remediation of creosote and polycyclic aromatic hydrocarbon ("PAH") contamination. The Company also has other operations, including a 40% minority-ownership investment in a joint venture for the extraction, production and sale of crude iodine. The Company also operated in (i) the dry ice (solid CO2) manufacturing and distribution business, included in the CO2 Segment which was discontinued in October of 1997 and (ii) the environmental/resource recovery ("E/RR") Segment which the Company restructured pursuant to a plan adopted by the Company's Board of Directors in August, 1998. The coal reclamation activities conducted by Beard Technologies, Inc. and Beard Mining, L.L.C. now comprise the CR Segment of the Company. The environmental remediation activities conducted by ISITOP, Inc. now comprise the ER Segment. As discussed in Note 2 to the financial statements, the Company's Board of Directors adopted a formal plan in August, 1998 to discontinue the other environmental services operations (the "Other E/S Operations") conducted principally by Whitetail Services, Inc. and Horizontal Drilling Technologies, Inc. Material changes in financial condition - June 30, 1998 as compared with December 31, 1997. The following table reflects changes in the Company's financial condition during the periods indicated: June 30, December 31, Increase 1998 1997 (Decrease) ---------- ------------ ----------- Cash and cash equivalents $7,000,000 $13,955,000 $(6,955,000) Working capital $5,518,000 $ 9,924,000 $(4,406,000) Current ratio 2.59 to 1 2.42 to 1 During the first six months of 1998, the Company reduced its working capital by $4.4 million from $9.9 million as of December 31, 1997. The decrease was attributable, in part, to the Company, through a subsidiary, acquiring four travel facilities, an undeveloped parcel of land, and a truck wash, the purchase price of which included cash payments of $935,000. See further discussion of the travel facilities' acquisition below. The Company also used cash to acquire property, plant and equipment of $1,318,000 during the six months, which included replacing assets as well as remodelling three of its newly acquired travel facilities. The remaining reduction in working capital is a direct result of operating losses recognized by the Company's discontinued Other E/S Operations for the first six months of 1998. See further discussion of results of operations below. In the first six months of 1998 the Company paid $4,005,000 to repurchase and redeem 62,318 shares of its mandatorily redeemable preferred stock. The Company recorded the estimated repurchase and redemption as a redeemable preferred stock purchase obligation as of December 31, 1997. The Company also paid $900,000 to purchase the common shares of Carbonic Reserves not owned by the Company and $190,000 in accrued bonus and employee severance compensation, which were recorded as other obligations and accrued expenses as of December 31, 1997. Such payments were made pursuant to the terms of the agreement to sell the business of Carbonic Reserves. On March 12, 1998, the Company received $1,000,000 of the sales price of Carbonic Reserves which had been held back by the purchaser for a period of 150 days after the closing of the sale. See note 2 to the financial statements. These amounts accounted for 91% of the $6,955,000 reduction in cash and cash equivalents from December 31, 1997 to June 30, 1998. In February of 1998, the Company, through an 80% owned subsidiary, Interstate Travel Facilities, Inc. ("ITF"), acquired four travel facilities and a parcel of land located along Interstate Highway I-40 in eastern Oklahoma, and Interstate Highway I-35 in central Oklahoma. The travel facilities are geared to the needs of interstate highway travelers. Three of the travel facilities include a service station, convenience store and a restaurant. The fourth travel facility includes a service station and a convenience store. The purchase price of the travel facilities consisted of cash of $812,000, the issuance of debt valued at $407,000, the assumption of three mortgage notes payable approximating $1,336,000, owed by the former owner of the travel facilities, and 20% of the Company's ownership in ITF, valued at $181,000. In May of 1998, ITF acquired the assets of a truck wash along Interstate Highway I-44 in Tulsa, Oklahoma. The purchase price of $699,000 was financed by a cash payment of $123,000 and a promissory note payable of $576,000. See note 3 to the financial statements. On June 30, 1998, the Company, through a newly formed subsidiary, Beard Mining, L.L.C. ("BMLLC"), acquired coal fines extraction and beneficiation equipment ("the Equipment") located at six coal slurry impoundment sites for a total purchase price estimated to be $24,000,000. The definitive purchase price cannot be ascertained until the seller of the Equipment provides BMLLC with a final accounting of the cost of certain components and installation of the Equipment. BMLLC is financing the purchase with a loan which requires principal payments of approximately $136,000 a month through July 1, 1999, at which time the remaining balance becomes due. The note is secured by the Equipment and bears interest at a per annum rate of 8%. BMLLC and the noteholder have agreed to discuss alternative permanent financing arrangements which could involve either a long-term loan from a third party or conversion to a third party leasing arrangement. BMLLC will lease the Equipment to Beard Technologies, Inc. ("BTI"), which is operating and maintaining the Equipment and six briquetting plants for six limited liability companies (the "LLC's"), each of which is a subsidiary of the noteholder. The noteholder has released the Company and BTI in connection with any claim resulting from the inaccuracy of any representation or warranty made by BMLLC in any loan document, or BMLLC's breach or failure to perform or satisfy any covenant, agreement, obligation or condition in any loan document. The monthly lease payments will equal the monthly payments due under the promissory note (except the final balloon payment) and are reimbursed costs by the LLC's under BTI's operating agreements with the LLC's. The following segments made capital additions of approximately $27,847,000 during the first six months of 1998, as reflected in the table below: Coal reclamation $ 24,011,000 Interstate travel facilities 3,722,000 Carbon dioxide 14,000 Environmental remediation - Other 100,000 -------------- $ 27,847,000 ============== The Company financed $25,643,000 of the above capital expenditures for the six months by issuing debt, assuming debt and issuing stock of a subsidiary. See note 3 to the financial statements. The Company's cash reserves, cash flow and credit lines will be adequate to fund the $875,000 of capital expenditures projected for the Company for the last six months of the year. The Company anticipates spending $500,000 on a coal fines plant in China which will utilize the Company's patented Mulled Coal technology during this period. Negotiations are currently in progress in connection with this project. The other $375,000 will be spent in the ITF Segment as the renovations of the travel facilities and truck wash are completed. The Company's decision to discontinue the Other E/S Operations will have a beneficial impact on future operations and liquidity since the Company will no longer be faced with the necessity of funding the losses generated by such operations (see note 2 to the financial statements). The coal plant operating agreements entered into by BTI, which will generate monthly operating profits of at least $100,000 to this subsidiary, have put BTI on an entirely new footing going forward and have positioned it to move forward aggressively to pursue the commercial development of its patented Mulled Coal technology both domestically and overseas (see note 3). The sale of Carbonic Reserves in October of 1997 has continued to provide the Company with significant liquid resources. Future cash flows and availability of credit are subject to a number of variables, including continuing private and governmental demand for coal reclamation and environmental remediation services, continuing demand for CO2 gas and for the services provided by the Company's interstate travel facilities. The Company anticipates that its current resources, future cash flows and enhanced availability of credit due to the significant improvement in the Company's balance sheet will enable it to meet its planned operating costs and capital spending requirements. Through the period ending December 31, 2002, the Company's liquidity will be reduced to the extent it is required to redeem any of the Beard preferred stock pursuant to the mandatory redemption provisions. See note 4 to the accompanying financial statements. Material changes in results of operations - Quarter ended June 30, 1998 as compared with the Quarter ended June 30, 1997. The loss for the quarter ended June 30, 1998 was $900,000, compared to income of $21,000 for the second quarter of the prior year. The CR Segment reported a $351,000 increase in operating profit for the quarter as BTI began billing for services for the operation of six coal beneficiation and briquetting plants in the second quarter of 1998 under terms of its contracts with a large midwestern utility company. The CO2 Segment also had an $11,000 increase in its operating margin due to continued improvement in revenue from its interests in the McElmo Dome field. These improvements were offset by an operating loss in the interstate travel facilities segment of $159,000 as a result of ongoing renovations at three of its travel facilities and minor renovations at its newly acquired truck wash. The ER Segment also experienced an increase in operating losses of $39,000 primarily as a result of expanded activities in seeking contracts for its PAH technology. There was a $158,000 increase in operating losses for the three months ended June 30, 1998 compared to the same period in 1997 in "Other", primarily corporate activities of the Company, due principally to an increase in and a change in allocation of certain benefit expenses among members of the consolidated group. As a result, the operating loss in the second quarter of 1998 was virtually the same as that in the same period in 1997. Operating results of the Company's four segments are reflected below: 1998 1997 ---- ---- Operating profit (loss): Coal reclamation $ 281,000 $ (70,000) Interstate travel facilities (159,000) - Carbon dioxide 115,000 104,000 Environmental remediation (59,000) (20,000) ---------- ---------- Subtotal 178,000 14,000 Other (396,000) (238,000) ---------- ---------- Total $ (218,000) $(224,000) ========== ========== Coal reclamation Second quarter 1998 operations reflected an operating profit of $281,000 compared to a $70,000 loss for the 1997 second quarter. Starting in April of 1998, Beard Technologies, Inc. ("BTI") began billing for its services in connection with the operation of certain coal fines projects in Kentucky, Ohio, and West Virginia. (See discussion of operating agreements in "Material Changes in Financial Condition" and note 3 to the financial statements). BTI has been retained as an independent contractor to dredge, excavate, recover, remove and extract mine waste contained in coal slurry impoundments at six sites in the above states. The projects involve the recovery of particles of coal that are a wasted by-product of previous coal mining, and the chemical processing of those particles to create briquettes for sale into existing coal markets. All of the segments' $631,000 in revenues for the six months ended June 30, 1998, were billed in the second quarter of 1998. The segment had no revenues for the quarter ended June 30, 1997. The segment incurred $228,000 of operating expenses and $120,000 of SG&A expenses in the second quarter of 1998 compared to $30,000 of operating expenses and $38,000 of SG&A expenses for the same period in 1997 as BTI expanded its staffing and scope of operations to meet the demands of the contracts. Approximately $24,000 of the SG&A expenses were non-reimbursable legal costs incurred in connection with the coal fines agreements. Interstate travel facilities The second quarter of 1998 was the first full quarter for the ITF Segment as the initial four properties were acquired in February, 1998. Revenues for the segment were $1,022,000 for the three months ended June 30, 1998. Three of the four travel facilities underwent extensive renovations and remodeling during all or a part of the second quarter of 1998. After its acquisition in May, 1998, the newly acquired truck wash also began some minor refurbishing. This had a negative impact on revenues as those facilities were not fully operational for the entire quarter. In addition, the truck wash reflected normal startup losses of a new operation. The segment incurred $842,000 of operating costs and $284,000 of SG&A expenses during the second quarter of 1998. Carbon dioxide Second quarter 1998 operations reflected an operating profit of $115,000 compared to a $104,000 profit for the 1997 second 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 $19,000 or 14% to $157,000 for the second quarter of 1998 compared to $138,000 for the same period in 1997. This increase was due to increased production of 569,000 MCF of CO2 gas in the second quarter of 1998 compared to production of 421,000 MCF in the same period in 1997. The production increase was due to the development program in the McElmo Dome field in Colorado which was begun in 1996 and is now winding down. The segment experienced increases in operating costs, also attributable to the development program, of $6,000 for the second quarter of 1998 compared to the same period in 1997. Environmental remediation The ER Segment generated a larger operating loss in the second quarter of 1998 as compared with the same period in 1997. The segment recorded no revenues in the second quarter of 1998 compared to $13,000 in the same period of 1997. The 1997 revenues were the result of the segment's first field test of its chemical process. Since that time personnel employed in the segment have been involved in expanding the market for the process and the chemical product involved by demonstrating the benefits of the process to potential customers. The segment has hired a consultant who had been heavily involved in the marketing process and who, subsequent to the end of the quarter, has joined the staff full time. The additional costs associated with the increased effort has led to an increase in operating expenses of approximately $9,000, and an increase of SG&A expenses of $17,000 for the second quarter of 1998 compared to the same period in 1997. Other activities Other operations, consisting principally of general and corporate activities, generated a $158,000 larger operating loss for the second quarter of 1998 than the same period of last year. The primary reason for the increase in the loss is due to an increase in and a change in allocating certain benefit expenses among various members of the consolidated group. Certain medical expenses were previously billed to the various subsidiaries and the practice was not continued for the second quarter of 1998. Selling, general and administrative expenses The Company's selling, general and administrative expenses ("SG&A") in the current quarter increased to $802,000 from $265,000 in the 1997 second quarter. The new ITF Segment accounted for $284,000, or 53%, of the $537,000 increase. The CR Segment had an increase in SG&A expenses of $82,000 due to increased staffing and administrative expenses and legal costs incurred to meet the demands of the contracts relating to the coal projects in the Appalachian region of the country. The ER Segment incurred increased SG&A expenses of $17,000 for the second quarter of 1998 compared to 1997 as a result of its increased efforts to market its technology and products. Other operations incurred approximately $181,000 more in SG&A for the second quarter of 1998 compared to the same period in 1997 as a result of the change in allocating benefit expenses among members of the group. Depreciation, depletion and amortization expenses The second quarter of 1998 reported an increase in DD&A expense of $57,000, reflecting additions to property, plant and equipment made since June 30, 1997, primarily in the new ITF Segment. Other income and expenses Other income and expenses netted to a total income of $140,000 for the second quarter of 1998, up sharply from the $35,000 in income recorded for such items in the same period of 1997. Interest income was up $105,000 for the second quarter of 1998 compared to the same period in 1997 reflecting the income from investments in commercial paper of cash realized from the sale of the assets of Carbonic Reserves. Interest expense was up $7,000 as a result of the increase in debt associated with the acquisition of the travel facilities during the first six months of 1998. The Company's ITF subsidiary is 80% owned. The minority shareholder's share of the net loss of the subsidiary was $54,000 for the second quarter of 1998. The subsidiary did not commence operations until February, 1998. The decline in other expenses included a reduction in impairments of other assets in the amount of $30,000 for the second quarter of 1998 compared to the same period in 1997. The Company's equity in the earnings of unconsolidated affiliates, including a joint venture for the extraction, production and sale of crude iodine and an investment in a natural gas marketing company, was $90,000 for the second quarter of 1998 compared to $120,000 for the same period in 1997. Income taxes The Company provided for federal alternative minimum tax expense of $36,000 and state income tax expense of $20,000 for the second quarter of 1998 compared to $17,000 in state income tax expense in the same period in 1997. The Company has not provided for regular federal income taxes due to the availability of net operating loss and other carryforwards. The state income provision for 1998 relates to profitable operations begun by the CR Segment in new states in the second quarter of 1998. Discontinued operations In October of 1997 the Company sold the business and substantially all of the assets of Carbonic Reserves, an 85%-owned subsidiary engaged in the manufacture and distribution of solid CO2 for cash of $19,375,000 and the assumption of certain liabilities valued at $2,813,000. The gain on the sale was $11,014,000 after deducting income taxes of $522,000. Revenues applicable to and the earnings from the discontinued operations of Carbonic Reserves were $3,753,000 and $284,000, respectively, for the second quarter of 1997. In August of 1998, the Company's Board of Directors adopted a formal plan to dispose of the Other E/S Operations. The Company estimated that it will incur a loss of $624,000 from discontinuing such activities. The entire loss was recorded in the second quarter of 1998 and represented the difference between the estimated amounts to be received from disposing of the assets involved and the assets' recorded values as of June 30, 1998 and certain estimated costs of operations pending disposal of the assets. Such losses were partially offset by a $365,000 gain recognized by the Company from the extinguishment of debt resulting from the discontinuance of the Other E/S Operations. Revenues applicable to discontinued operations were $618,000 and $1,316,000 for the three months ended June 30, 1998 and 1997, respectively. Losses applicable to discontinued E/S Operations were $142,000 and $57,000 for the three months ended June 30, 1998 and 1997, respectively. Material changes in results of operations - Six months ended June 30, 1998 as compared with the Six months ended June 30, 1997. The loss for the six months ended June 30, 1998 was $1,324,000, compared to a loss of $403,000 for the first six months of the prior year. $1,048,000 of the loss for the first half of 1998 related to discontinued operations. Continuing operations posted a net loss of $276,000 after taxes of $56,000 compared to a loss of $429,000 after taxes of $17,000 for the same period in 1997. Operating results of the Company's four segments are reflected below: 1998 1997 ------------ ------------ Operating profit (loss): Coal reclamation $ 212,000 $ (143,000) Interstate travel facilities (196,000) - Carbon dioxide 232,000 190,000 Environmental remediation (86,000) (47,000) ------------ ------------ Subtotal 162,000 - Other (714,000) (467,000) ------------ ------------ Total $ (552,000) $ (467,000) ============ ============ The "Other" in the above table reflects primarily general and corporate activities of the Company. Coal reclamation Operations for the first six months of 1998 resulted in an operating profit of $212,000 compared to a $143,000 loss for the same period in 1997. As noted previously, BTI began billing, effective April 1, 1998, for its services pertaining to the operation of six coal projects in the eastern United States. All of BTI's $631,000 in revenues for the six-month period in 1998 were billed in the second quarter. BTI had no billings for the same period in 1997. BTI incurred $263,000 of operating costs in the six-month period ending June 30, 1998, compared to $61,000 for the same period in 1997. The increase was due to increased staffing and increased expenditures for chemicals and supplies to operate the plants at the several sites. Interstate travel facilities The segment incurred $196,000 in operating losses during the first six months of 1998. The principal operating assets were acquired in February and May of 1998; accordingly, the Company did not recognize operations for the full six months of 1998. ITF also renovated three of the four travel facilities during this period which reduced the facilities' hours of full operation and negatively impacted ITF's profitability for the six month period. ITF recorded revenues of $1,307,000 during the period. Operating expenses of $1,066,000, SG&A expenses of $372,000, and depreciation and amortization expenses of $65,000 resulted in the operating loss. Carbon dioxide Operations for the first six months of 1998 resulted in an operating profit of $232,000 compared to a $190,000 operating profit for the 1997 first half. 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 $61,000 or 24% to $317,000 for the first six months of 1998 compared to $256,000 for the same period in 1997. This increase was due to increased production of 1,133,000 MCF of CO2 gas in the first six months of 1998 compared to production of 887,000 MCF in the same period in 1997. The production increase was due to the development program in the McElmo Dome field in Colorado which was begun in 1996 and is now winding down. Environmental remediation The ER Segment's operating loss increased $39,000 for the first six months of 1998 as compared to the same period in 1997. The segment recorded no revenues in the first half of 1998 compared to $13,000 in the same period of 1997. The 1997 revenues were the result of the first field test of its chemical process. Since that time personnel employed in the segment have been involved in expanding the market for the process and the chemical product involved by demonstrating the benefits of the process to potential customers. The segment has hired a consultant who, subsequent to the end of the quarter, has joined the staff full time and who has been heavily involved in the marketing process. The additional costs associated with the increased marketing efforts has led to an increase in operating expenses of approximately $29,000 for the six months of 1998 compared to the same period in 1997. Other activities Other operations, consisting principally of general and corporate activities, generated a $247,000 increase in operating loss for the first half of 1998 as compared to the same period last year. The primary reason for the increased loss was an increase in and a change in allocating certain benefit expenses among various members of the consolidated group. Certain medical expenses were previously billed to the various subsidiaries in the consolidated group and the practice was not continued for the first six months of 1998. Additionally, the segment has incurred higher travel costs as it seeks to promote other segments' technologies to new customers and to seek new investment opportunities. Selling, general and administrative expenses The Company's selling, general and administrative expenses ("SG&A") in the first half of 1998 increased to $1,239,000 from $554,000 in the 1997 six months. The acquisition of ITF resulted in $372,000, or 54%, of the $685,000 increase. The CR Segment had an increase in SG&A expenses of $71,000 due to increased staffing and operations to meet the demands of the contracts relating to the coal projects in the Appalachian region of the United States. Other operations incurred approximately $242,000 more in SG&A for the second quarter of 1998 compared to the same period in 1997 primarily as a result of the change in allocating benefit expenses among members of the group. Depreciation, depletion and amortization expenses The first half of 1998 reported an increase in DD&A expense of $70,000, reflecting additions to property, plant and equipment made since June 30, 1997, primarily in the ITF and CO2 segments. Other income and expenses The other income and expenses for the first six months of 1998 netted to a total income of $332,000 compared to $55,000 in net income for the same period in 1997. Interest income was up $240,000 for the for the first half of 1998 compared to the same period in 1997 reflecting the income from investments in commercial paper of cash realized from the sale of the assets of Carbonic Reserves. Interest expense was down $12,000 also as a result of the decreased levels of debt outstanding during the six-month period ended June 30, 1998 compared to the same period in 1997. The Company's ITF subsidiary is 80% owned. The minority shareholder's share of the net loss the subsidiary was $53,000 for the six-month period ended June 30, 1998. The subsidiary did not commence operations until February, 1998. The Company's equity in the earnings of unconsolidated affiliates was up $51,000 for the first six months of 1998 compared to the same period in 1997. The joint venture engaged in the production and sale of crude iodine, in which the Company has a 40% interest, contributed an additional $19,000 in income for the period and the Company's investment in a natural gas marketing company contributed an additional $41,000 in income for the first half of 1998. Offsetting these increases was a decline of $46,000 in the gain on sale of assets for the first half of 1998 compared to the first half of 1997. Income taxes The Company provided for federal alternative minimum tax expense of $36,000 and state income tax expense of $20,000 for the first half of 1998 compared to $17,000 in state income tax expense in the same period in 1997. The Company has not provided for regular federal income taxes due to the availability of net operating loss and other carryforwards. The state income tax provision for 1998 relates to profitable operations begun by the CR Segment in new states in the second quarter of 1998. Discontinued operations In October of 1997 the Company sold the business and substantially all of the assets of Carbonic Reserves, an 85%- owned subsidiary engaged in the manufacture and distribution of solid CO2 for cash of $19,375,000 and the assumption of certain liabilities valued at $2,813,000. The gain on the sale was $11,014,000 after deducting income taxes of $522,000. Revenues applicable to and the earnings from the discontinued operations of Carbonic Reserves were $6,553,000 and $246,000, respectively, for the first half of 1997. In August of 1998, the Company's Board of Directors adopted a formal plan to dispose of the Other E/S Operations. The Company estimated that it will incur a loss of $624,000 from discontinuing such activities. The entire loss was recorded in the second quarter of 1998 and represented the difference between the estimated amounts to be received from disposing of the assets involved and the assets' recorded values as of June 30, 1998 and certain estimated costs of operations pending disposal of the assets. This loss was partially offset by a $365,000 gain recognized by the Company from the extinguishment of debt resulting from the discontinuance of the Other E/S Operations. Revenues applicable to discontinued operations were $1,583,000 and $2,512,000 for the six months ended June 30, 1998 and 1997, respectively. Losses applicable to discontinued E/S Operations were $424,000 and $220,000 for the six months ended June 30, 1998 and 1997, respectively. Impact of Recently Issued Accounting Standards Not Yet Adopted In June 1998, the Financial Accounting Standards Board 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 derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure 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 the resulting designation. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. It is expected that the Company will adopt the provisions of SFAS No. 133 as of January 1, 2000. If the provisions of SFAS No. 133 were to be applied as of June 30, 1998, it would not have a material impact on the Company's financial position as of such date, or the results of operations for the six month period then ended. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-up Activities." SOP 98-5 establishes reporting standards for start-up and organization costs. It broadly defines start-up activities and requires an entity to expense costs of start-up activities and organization costs as they are incurred. SOP 98-5 is effective for financial statements issued for fiscal years beginning after December 15, 1998. The Company will adopt the provisions of SOP 98-5 as of January 1, 1999. The Company does not expect the adoption of the provisions of SOP 98-5 to have a material impact on the Company's future financial position or results of operations. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 requires that an enterprise report certain information about the revenues that it derives from each of its products and services (or groups of similar products and services) and about the countries in which it earns revenues and holds assets, regardless of how the enterprise is organized. SFAS No. 131 is effective for financial statements issued for fiscal years beginning after December 15, 1997. The Company will report the required information beginning with its financial statements for the fiscal year ending December 31, 1998. Impact of Year 2000 Issue Companies that use computers face an issue as the year 2000 draws near. The problem is due to a common programming practice of using only two digits to represent a year. Without proper modification, for example, many programs may interpret the year 2000 as the year 1900. During the year 1998, the Company will install the proper commercial software releases and upgrades to its hardware, as necessary, to become year 2000 compliant. The Company anticipates that these expenses will not be material. PART II. OTHER INFORMATION. Item 2. Changes in Securities. The Company's preferred stock is mandatorily redeemable through December 31, 2002 from one-third of Beard's "consolidated net income" as defined in the 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 4 to the accompanying financial statements. Item 4. Submission of Matters to a Vote of Security Holders. Commencing on April 30, 1998, proxies were solicited on behalf of the Board of Directors of the Company in connection with the Company's Annual Meeting of Stockholders. (a) This annual meeting was held on June 4, 1998(1). (b) The business of the meeting included the election of Harlon E. Martin, Jr. and Herb Mee, Jr. 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: W. M. Beard (1999) Allan R. Hallock (2000) Ford C. Price (2000) 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: Broker Votes Votes Votes --------- Name of Nominee For Against Withheld Abstentions Non-Votes - --------------- --------- ------- -------- ----------- --------- Harlon E. Martin, Jr. 2,418,591 -0- 5,661 -0- 246,779 Herb Mee, Jr. 2,418,492 -0- 5,760 -0- 246,779 (c) The business of the meeting also included a proposal to approve an Amendment to The Beard Company 1993 Stock Option Plan which was adopted by the Board of Directors in April 1998 subject to stockholder approval. The table below sets forth the voting for such proposal: Votes Votes Broker For Against Abstentions Non-Votes ----- ------- ---------- --------- 2,356,054 67,243 955 246,779 (d) At the meeting the stockholders also voted to approve the appointment of KPMG Peat Marwick LLP as independent certified public accountants for fiscal 1998. Broker Votes Votes Votes ------ For Against Withheld Abstentions Non-Votes --------- ------- -------- ----------- --------- 2,416,460 4,716 -0- 3,076 246,779 ________ (1) 2,424,252 votes (90.76% of those eligible) were cast at the meeting, including 2,281,460 of 2,528,239 eligible votes (90.24%) by the common stockholders and 142,792 of 142,792 eligible votes (100.00%) by the preferred stockholders. Item 5. Other Information Discretionary Voting of Proxies at Annual Meeting. The Company will exercise discretionary authority to vote proxies at the Company's next annual meeting of shareholders on any shareholder proposal for which the shareholder has not requested inclusion in the Company's proxy statement unless the shareholder notifies the Company of the proposal and the share- holder's intention to present the proposal from the floor of the meeting not later than March 16, 1999. 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 and The New Beard Company, dated as of September 16, 1997. (This Exhibit has been previously filed as Exhibit B to Registrant's Proxy Statement filed on September 12, 1997, and same is incorporated by reference). 2(c) Certificate of Merger merging The Beard Company into The New Beard Company as filed with the Secretary of State of Oklahoma on November 26, 1997. (This Exhibit has been previously filed as Exhibit 2.1 to Registrant's Form 8-K, filed on December 8, 1997, and same is incorpo- rated by reference). 2(d) Asset Purchase Agreement by and among Airgas Carbonic Reserves, Inc. ("Airgas"), and Registrant, Carbonic Reserves ("Carbonics"), and Clifford H. Collen, Jr. ("Collen"). (This Exhibit has been pre- viously filed as Exhibit A, filed on September 11, 1997 to Registrant's Proxy Statement dated September 12, 1997, and same is incorporated by reference). 2(e) Asset Purchase Agreement by and among Registrant, Toby B. Tindell, Cristie R. Tindell and Interstate Travel Facilities, Inc. ("ITF"), dated as of February 27, 1998. (This Exhibit has been previously filed as Exhibit 2 to Registrant's Form 8-K, filed on March 16, 1998, and same is incorporated by reference). 3(i) Certificate of Incorporation of The New Beard Company as filed with the Secretary of State of Oklahoma on September 11, 1997. (This Exhibit has been previously filed as Exhibit C to Registrant's Proxy Statement filed on September 12, 1997, and same is incorporated by reference). 3(ii) Registrant's By-Laws as currently in effect. (This Exhibit has been previously filed as Exhibit 3(ii) to Registrant's Form 10-K for the period ended December 31, 1997, filed on March 31, 1998, and same is incorporated herein by reference). 4 Instruments defining the rights of security holders: 4(a) Agreement of Sale and Purchase by and between Beard Oil and Sensor Oil & Gas, Inc. ("Sensor"). (This Exhibit has been previously filed as Addendum B to Amendment No. 1, filed on September 3, 1993 to Registrant's Registration Statement on Form S-4, File No. 33-66598, and same is incorporated by reference). 4(b) Certificate of Designations, Powers, Preferences and Relative, Partici- pating, Option and Other Special Rights, and the Qualifications, Limitations or Restrictions Thereof of the Series A Convertible Voting Preferred Stock of the Registrant. (This Exhibit has been previously filed as Exhibit 3(c) to Amendment No. 2, filed on September 17, 1993 to Registrant's Registration Statement on Form S-4, File No. 33-66598, and same is incorporated by reference). 4(c) Settlement Agreement, with Certificate of Amendment attached thereto, by and among Registrant, Beard Oil, New York Life Insurance Company, New York Life Insurance and Annuity Company, John Hancock Mutual Life Insurance Company, Memorial Drive Trust and Sensor, dated as of April 13, 1995. (This Exhibit has been previously filed as Exhibit 4(g) to Registrant's Form 10-K for the period ended December 31, 1994 and same is incorporated by reference). 10 Material contracts: 10(a) Amendment No. One to The Beard Company 1993 Stock Option Plan dated August 27, 1993, as amended June 4, 1998 (The Amended Plan supersedes the original Plan adopted on August 27, 1993. This Exhibit has pre- viously 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 adopted November 1, 1994. (This Exhibit has been previously filed as Exhibit 10(h) to Registrant's Form 10-K for the period ended December 31, 1994, filed on April 17, 1995, and same is incorporated by reference).* 10(c) Stockholders' Agreement made as of January 27, 1993 by and among Registrant, Carbonics and Collen. (This Exhibit has been previously filed as Exhibit 10(i) to Registrant's Form 10-K for the period ended December 31, 1994, filed on April 17, 1995, and same is incorporated by reference).* 10(d) Stock Purchase Agreement dated as of December 15, 1991 by and among Registrant (formerly known as Beard Investment Company), Carbonics and Collen. (This Exhibit has been previously filed as Exhibit 10.9 of Item 14(a) to Beard Oil's Form 8, Amendment No. 1, Form 10-K for the fiscal year ended December 31, 1991 and same is incorporated herein by reference).* 10(e) Conversion Agreement dated as of January 31, 1995 by and among Registrant, Carbonics and Collen. (This Exhibit has been previously filed as Exhibit 10(k) to Registrant's Form 10-K for the period ended December 31, 1994, filed on April 17, 1995, and same is incorporated herein by reference).* 10(f) Employment Agreement dated April 3, 1995 by and among Registrant, Carbonics, Collen and Beard Oil. (This Exhibit has been previously filed as Exhibit 10(l) to Registrant's Form 10-K for the period ended December 31, 1994, filed on April 17, 1995, and same is incorporated herein by reference).* 10(g) The Beard Company Deferred Stock Compensation Plan. (This Exhibit has been previously filed as Exhibit 10(k) to Registrant's Form 10-K for the period ended December 31, 1995, filed on April 1, 1996, and same is incorporated by reference).* 10(h) Form of Change in Control Compensation Agreement dated as of January 24, 1997, by and between Carbonics and three employees. (This Exhibit has been previously filed as Exhibit 10(l) to Registrant's Form 10-Q for the period ended March 31, 1997, filed on May 14, 1997, and same is incorporated by reference).* 10(i) Nonqualified Stock Option Agreement by and between Richard D. Neely and ISITOP, Inc. ("ISITOP"), dated April 1, 1997. (This Exhibit has been previously filed as Exhibit 10(i) to Registrant's Form 10-K for the period ended December 31, 1997, filed on March 31, 1998, and same is incorporated herein by reference).* 10(j) Nonqualified Stock Option Agreement by and between Jerry S. Neely and ISITOP, dated April 1, 1997. (This Exhibit has been previously filed as Exhibit 10(j) to Registrant's Form 10-K for the period ended December 31, 1997, filed on March 31, 1998, and same is incorporated herein by reference).* 10(k) Letter Agreement dated August 15, 1997 by and among Collen, Carbonics, Beard Oil and Registrant. (This Exhibit has been previously filed as Exhibit 10(m) to Registrant's Form 10-Q for the period ended September 30, 1997, filed on November 13, 1997, and same is incorporated by reference).* 10(l) Letter Agreement dated October 8, 1997 by and among Randy D. Thacker, Carbonics and Registrant. (This Exhibit has been previously filed as Exhibit 10(n) to Registrant's Form 10-Q for the period ended September 30, 1997, filed on November 13, 1997, and same is incorporated by reference).* 10(m) Nonqualified Stock Option Agreement by and between Toby Tindell and ITF, dated February 27, 1998. (This Exhibit has been previously filed as Exhibit 10(n) to Registrant's Form 10-K for the period ended December 31, 1997, filed on March 31, 1998, and same is incorporated herein by reference).* 10(n) Subscription Agreement by and between Cibola Corporation ("Cibola") and Registrant, dated April 10, 1996. (This Exhibit has been previously filed as Exhibit 10.1 to Registrant's Form 10-Q for the period ended June 30, 1996, filed on August 14, 1996, and same is incorporated by reference). 10(o) Nonrecourse Secured Promissory Note from Registrant to Cibola, dated April 10, 1996. (This Exhibit has been previously filed as Exhibit 10.2 to Registrant's Form 10-Q for the period ended June 30, 1996, filed on August 14, 1996, and same is incorporated by reference. 10(p) Security Agreement by and among Registrant, Cibola and the Cibola shareholders, dated April 10, 1996. (This Exhibit has been previously filed as Exhibit 10.3 to Registrant's Form 10-Q for the period ended June 30, 1996, filed on August 14, 1996, and same is incorporated by reference). 10(q) Tax Sharing Agreement by and among Registrant, Cibola and the Cibola shareholders, dated April 10, 1996. (This Exhibit has been previously filed as Exhibit 10.4 to Registrant's Form 10-Q for the period ended June 30, 1996, filed on August 14, 1996, and same is incorporated by reference). 10(r) Compensation Agreement by and between Registrant and the Trustees of the William M. Beard and Lu Beard 1988 Charitable Unitrust (the "Trustees") dated April 17, 1997. (This Exhibit has been previously filed as Exhibit 10(s) to Registrant's Form 10-K for the period ended December 31, 1997, filed on March 31, 1998, and same is incorporated herein by reference). 10(s) Indemnity Agreement by and between Registrant and the Trustees dated April 17, 1997. (This Exhibit has been previously filed as Exhibit 10(t) to Registrant's Form 10-K for the period ended December 31, 1997, filed on March 31, 1998, and same is incorporated herein by reference). 10(t) Coal Fines Extraction and Beneficiation Agreement among CRC NO. 1 LLC, CRC NO. 2 LLC, CRC NO. 3 LLC, CRC NO. 4 LLC, CRC NO. 5 LLC, CRC NO. 6 LLC, (the "Six LLC's") and Beard Technologies, Inc. ("BTI"), dated as of June 24, 1998. 10(u) Operation and Maintenance Agreement among the Six LLC's and BTI, dated as of June 24, 1998. (This Exhibit has been previously filed as Exhibit 10.1 to Registrant's Form 8-K, filed on July 15, 1998, and same is incorporated herein by reference). 10(v) Guaranty Agreement among Registrant and the Six LLC's, dated as of June 24, 1998. (This Exhibit has been previously filed as Exhibit 10.3 to Registrant's Form 8-K, filed on July 15, 1998, and same is incorporated herein by reference). 10(w) Guaranty Agreement between MCNIC Pipeline & Processing Company ("MCNIC") and BTI, dated as of June 24, 1998. (This Exhibit has been previously filed as Exhibit 10.4 to Registrant's Form 8-K, filed on July 15, 1998, and same is incorporated herein by reference). 10(x) Loan Agreement between MCNIC and Beard Mining, L.L.C. ("BMLLC"), dated as of June 24, 1998. (This Exhibit has been previously filed as Exhibit 10.5 to Registrant's Form 8-K, filed on July 15, 1998, and same is incorporated herein by reference). 10(y) Promissory Note from BMLLC to MCNIC, dated as of June 24, 1998. This Exhibit has been previously filed as Exhibit 10.6 to Registrant's Form 8-K, filed on July 15, 1998, and same is incorporated herein by reference). 11 Statement re computation of per share earnings. 27 Financial Data Schedule - --------------- * Compensatory plan or arrangement. (b) One report on Form 8-K was filed during the period covered by this report. The registrant filed an 8-K dated July 15, 1998, including Item 2, Acquisition of Assets; Item 5, Other Events; and Item 7, Exhibits and Pro Forma Financial Information. 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) August 14, 1998 Herb Mee, Jr., President and Chief Financial Officer (Date) August 14, 1998 JACK A. MARTINE Jack A. Martine, Controller and Chief Accounting Officer EXHIBIT INDEX
Exhibit No. Description Method of Filing 2(a) Agreement and Plan of Reorgani- Incorporated herein zation by and among Registrant, by reference Beard Oil Company ("Beard Oil") and New Beard, Inc., dated as of July 12, 1993 (see Addendum A to Part I, which is incorporated herein by reference; schedules to the Agreement have been omitted). 2(b) Agreement and Plan of Merger Incorporated herein by and between The Beard Company by reference and The New Beard Company, dated as of September 16, 1997. 2(c) Certificate of Merger merging Incorporated herein The Beard Company into The by reference New Beard Company as filed with the Secretary of State of Oklahoma on November 26, 1997. 2(d) Asset Purchase Agreement by Incorporated herein and among Airgas Carbonic by reference Reserves,Inc. ("Airgas"), and Registrant, Carbonic Reserves ("Carbonics"), and Clifford H. Collen. 2(e) Asset Purchase Agreement Incorporated herein by and among Registrant, by reference Toby B. Tindell, Cristie R. Tindell and Interstate Travel Facilities, Inc. ("ITF"), dated as of February 27, 1998. 3(i) Certificate of Incorporation Incorporated herein of The New Beard Company by reference as filed with the Secretary of State of Oklahoma on September 11, 1997. 3(ii) Registrant's By-Laws as Incorporated herein currently in effect. by reference 4(a) Agreement of Sale and Incorporated herein Purchase by and between by reference Beard Oil and Sensor Oil & Gas, Inc. ("Sensor"). 4(b) Certificate of Designations, Incorporated herein Powers, Preferences and by reference Relative, Participating, Option and Other Special Rights, and the Qualifi- cations, Limitations Re- strictions Thereof of the Series A Convertible Voting Preferred Stock of the Registrant. 4(c) Settlement Agreement, with Incorporated herein Certificate of Amendment by reference attached thereto, by and among Registrant, Beard Oil, New York Life Insurance Company, New York 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 Beard Company 1993 Stock by reference Option Plan dated August 27, 1993, as amended June 4, 1998 (The Amended Plan supersedes he original Plan adopted on August 27, 1993. 10(b) The Beard Company 1994 Incorporated herein Phantom Stock Units Plan by reference adopted November 1, 1994. 10(c) Stockholders' Agreement Incorporated herein made as of January 27, by reference 1993 by and among Registrant, Carbonics and Collen. 10(d) Stock Purchase Agreement Incorporated herein dated as of December 15, by reference 1991 by and among Registrant (formerly known as Beard Investment Company), Carbonics and Collen. 10(e) Conversion Agreement dated Incorporated herein as of January 31, 1995 by reference by and among Registrant, Carbonics and Collen. 10(f) Employment Agreement Incorporated herein dated April 3, 1995 by by reference and among Registrant, Carbonics, Collen and Beard Oil. 10(g) The Beard Company Deferred Incorporated herein Stock Compensation Plan. by reference 10(h) Form of Change in Control Incorporated herein Compensation Agreement by reference dated as of January 24, 1997, by and between Carbonics and three employees. 10(i) Nonqualified Stock Option Incorporated herein Agreement by and between by reference Richard D. Neely and ISITOP, Inc. ("ISITOP"), dated April 1,1997. 10(j) Nonqualified Stock Option Incorporated herein Agreement by and between by reference Jerry S. Neely and ISITOP, dated April 1, 1997. 10(k) Letter Agreement dated Incorporated herein August 15, 1997 by and by reference among Collen, Carbonics, Beard Oil and Registrant. 10(l) Letter Agreement dated Incorporated herein October 8, 1997 by and by reference among Randy D. Thacker, Carbonics and Registrant. 10(m) Nonqualified Stock Option Incorporated herein Agreement by and between by reference Toby Tindell and ITF,dated February 27, 1998. 10(n) Subscription Agreement by Incorporated herein and between Cibola Corporation by reference ("Cibola") and Registrant, dated April 10, 1996. 10(o) Nonrecourse Secured Promissory Incorporated herein Note from Registrant to Tax by reference Sharing Agreement by and among Registrant, Cibola and the Cibola shareholders, dated April 10, 1996. 10(p) Security Agreement by and among Incorporated herein Registrant, Cibola and the Cibola by reference shareholders, dated April 10, 1996. 10(q) Tax Sharing Agreement by and among Incorporated herein Registrant, Cibola and the Cibola by reference shareholders, dated April 10, 1996. 10(r) Compensation Agreement by and Incorporated herein between Registrant and the by reference Trustees of the William M. Beard and Lu Beard 1988 Charitable Unitrust (the "Trustees") dated April 17, 1997. 10(s) Indemnity Agreement by and Incorporated herein between Registrant and the by reference Trustees dated April 17, 1997. 10(t) Coal Fines Extraction and Incorporated herein Beneficiation Agreement among by reference CRC NO. 1 LLC, CRC NO. 2 LLC, CRC NO. 3 LLC, CRC NO. 4 LLC, CRC NO. 5 LLC, CRC NO. 6 LLC, (the "Six LLC's") and Beard Technologies, Inc. ("BTI"), dated as of June 24, 1998. 10(u) Operation and Maintenance Incorporated herein Agreement among the Six by reference LLC's and BTI, dated as of June 24, 1998. 10(v) Guaranty Agreement among Incorporated herein Registrant and the Six LLC's, by reference dated as of June 24, 1998. 10(w) Guaranty Agreement between Incorporated herein MCNIC Pipeline & Processing by reference Company ("MCNIC") and BTI, dated as of June 24, 1998. 10(x) Loan Agreement between MCNIC Incorporated herein and Beard Mining, L.L.C. ("BMLLC"), by reference dated as of June 24, 1998. 10(y) Promissory Note from BMLLC to Incorporated herein MCNIC, dated as of June 24, by reference 1998. 11 Statement re computation of per Filed herewith share earnings. electronically 27 Financial Data Schedule Filed herewith electronically
EX-11 2 THE BEARD COMPANY COMPUTATION OF LOSS PER SHARE
For the Three Months Ended For the Six Months Ended -------------------------- ------------------------ June 30, June 30, June 30, June 30, 1998 1997 1998 1997 -------- -------- -------- -------- Basic and Diluted Earnings (Loss) Per Share: Loss from continuing per statement of operations $ (134,000) $ (206,000) $ (276,000) $ (429,000) ============ ============ ============ ============ Earnings (loss) from discontinued operations $ (766,000) $ 227,000 $ (1,048,000) $ 26,000 ============ ============ ============ ============ Net earnings (loss) per statement of operations $ 900,000 $ 21,000 $ (1,324,000) $ (403,000) ============= ============ ============ ============ Net earnings (loss) attributable to common shareholders per statement of operations $ (900,000) $ 21,000 $ (1,324,000 $ (403,000) ============ ============ ============ ============ Weighted average common shares outstanding: Basic and diluted 2,528,000 2,799,000 2,528,000 2,799,000 ============ ============ ============ ============ Net earnings (loss) per average common share outstanding: Basic and diluted Loss from continuing $ (0.05) $ (0.07) $ (0.11) $ (0.15) Earnings (loss) from discontinued operations (0.31) 0.08 (0.41) 0.01 ----------- ----------- ----------- ----------- Net earnings (loss) $ (0.36) $ 0.01 $ (0.52) $ (0.14) =========== =========== =========== ===========
EX-27 3
5 1,000 6-MOS DEC-31-1998 JUN-30-1998 7,000 0 1,412 (80) 374 8,983 34,006 (4,768) 40,780 3,465 0 889 0 3 11,106 40,780 1,022 2,272 1,066 2,824 (500) 5 59 (220) (56) (276) (1,048) 0 0 (1,324) (0.52) (0.52)
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