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, 2003

                                       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 by a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes [ ] No [X]

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock as of July 31, 2003.

                   Common Stock $.001333 par value - 2,178,845




                                THE BEARD COMPANY

                                      INDEX




PART I. FINANCIAL INFORMATION                                              Page

Item 1.   Financial Statements................................................3

    Balance Sheets - June 30, 2003 (Unaudited) and
       December 31, 2002......................................................3

    Statements of Operations - Three Months and Six Months
       ended June 30, 2003 and 2002 (Unaudited)...............................4

    Statements of Shareholders' Equity (Deficiency) -
       Year ended December 31, 2002
       and Six Months ended June 30, 2003 (Unaudited).........................5

    Statements of Cash Flows - Six Months ended
       June 30, 2003 and 2002 (Unaudited).....................................6

    Notes to Financial Statements (Unaudited).................................8

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations......................15

Item 3.   Quantitative and Qualitative Disclosures
          About Market Risk..................................................23

Item 4.   Controls and Procedures............................................23


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings..................................................23

Item 2.   Changes in Securities and Use of Proceeds..........................24

Item 6.   Exhibits and Reports on Form 8-K...................................24

Signatures...................................................................26



                                    THE BEARD COMPANY AND SUBSIDIARIES
                                              Balance Sheets
                                               (Unaudited)

                                                                        June 30,            December 31,
                                  Assets                                  2003                  2002
                                  ------                                  ----                  ----
                                                                                    
Current assets:
     Cash and cash equivalents                                      $       76,000        $       79,000
     Accounts receivable, less allowance for doubtful
        receivables of $80,000 in 2003 and 2002                            152,000               133,000
     Prepaid expenses and other assets                                      30,000                20,000
     Assets of discontinued operations held for resale                     200,000               343,000
                                                                    --------------        --------------
             Total current assets                                          458,000               575,000
                                                                    --------------        --------------

Notes receivable                                                            30,000                30,000

Investments and other assets                                                87,000                67,000

Property, plant and equipment, at cost                                   1,809,000             1,794,000
     Less accumulated depreciation, depletion and amortization           1,297,000             1,259,000
                                                                    --------------        --------------
             Net property, plant and equipment                             512,000               535,000
                                                                    --------------        --------------

Intangible assets, at cost                                                 181,000               114,000
     Less accumulated amortization                                         116,000                57,000
                                                                    --------------        --------------
             Net intangible assets                                          65,000                57,000
                                                                    --------------        --------------
                                                                    $    1,152,000        $    1,264,000
                                                                    ==============        ==============

                       Liabilities and Shareholders' Equity (Deficiency)
                       -------------------------------------------------

Current liabilities:
     Trade accounts payable                                         $      108,000        $      138,000
     Accrued expenses                                                      192,000               177,000
     Short-term debt                                                       325,000               300,000
     Short-term debt - related entities                                    245,000               111,000
     Current maturities of long-term debt                                    8,000                 8,000
     Liabilities of discontinued operations held for resale                118,000               125,000
                                                                    --------------        --------------
             Total current liabilities                                     996,000               859,000
                                                                    --------------        --------------

Long-term debt less current maturities                                   1,429,000               853,000

Long-term debt - related entities                                        3,589,000             3,388,000

Other long-term liabilities                                                103,000               108,000

Redeemable preferred stock of $100 stated value;
     5,000,0000 shares authorized; 27,838 shares issued
     and outstanding in 2002 (note 4)                                            -               889,000

Shareholders' equity (deficiency):
     Convertible preferred stock of $100 stated value;
        5,000,000 shares authorized; 27,838 shares issued
        and outstanding in 2003 (note 4)                                   889,000                     -
     Common stock of $.001333 par value per share; 7,500,000
        shares authorized; 2,178,845 and 2,123,898 shares issued
        and outstanding in 2003 and 2002, respectively                       3,000                 3,000
     Capital in excess of par value                                     37,833,000            38,207,000
     Accumulated deficit                                               (43,675,000)          (41,182,000)
     Accumulated other comprehensive loss                                  (15,000)              (15,000)
     Treasury stock, none in 2003; 295,053 shares, at cost, in 2002              -            (1,846,000)
                                                                    --------------        --------------
             Total shareholders' equity (deficiency)                    (4,965,000)           (4,833,000)
                                                                    --------------        --------------
Commitments and contingencies (note 7)
                                                                    $    1,152,000        $    1,264,000
                                                                    ==============        ==============

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,
                                                            2003             2002             2003             2002
                                                            ----             ----             ----             ----
                                                                                               
Revenues:
    Coal reclamation                                     $        -       $   11,000      $    42,000      $    12,000
    Carbon dioxide                                          116,000          109,000          243,000          195,000
    China                                                         -                -                -                -
    e-Commerce                                                    -                -           25,000                -
    Other                                                     1,000            7,000            1,000           10,000
                                                         ----------       ----------      -----------      -----------
                                                            117,000          127,000          311,000          217,000
                                                         ----------       ----------      -----------      -----------
Expenses:
    Coal reclamation                                        139,000          145,000          270,000          288,000
    Carbon dioxide                                           31,000           19,000           64,000           50,000
    China                                                   137,000                -          298,000                -
    e-Commerce                                               27,000           38,000           59,000           72,000
    Other                                                     3,000            4,000           18,000           20,000
    Selling, general and administrative                     239,000          238,000          448,000          432,000
    Depreciation, depletion & amortization                   52,000           36,000           98,000           59,000
                                                         ----------       ----------      -----------      -----------
                                                            628,000          480,000        1,255,000          921,000
                                                         ----------       ----------      -----------      -----------
Operating profit (loss):
    Coal reclamation                                       (139,000)        (139,000)        (228,000)        (286,000)
    Carbon dioxide                                           76,000           81,000          160,000          128,000
    China                                                  (137,000)               -         (299,000)               -
    e-Commerce                                              (29,000)         (39,000)         (37,000)         (75,000)
    Other, primarily corporate                             (282,000)        (256,000)        (540,000)        (471,000)
                                                         ----------       ----------      -----------      -----------
                                                           (511,000)        (353,000)        (944,000)        (704,000)
Other income (expense):
    Interest income                                           1,000           32,000            1,000           59,000
    Interest expense                                       (135,000)         (95,000)        (263,000)        (162,000)
    Equity in operations of unconsolidated affiliates        27,000          (89,000)          70,000         (120,000)
    Gain on sale of assets                                    1,000            1,000            1,000           10,000
    Other                                                    (5,000)          (1,000)          (5,000)          (1,000)
                                                         ----------       ----------      -----------      -----------
Loss from continuing operations before income taxes        (622,000)        (505,000)      (1,140,000)        (918,000)
Income taxes                                                      -                -                -                -
                                                         ----------       ----------      -----------      -----------
Loss from continuing operations                            (622,000)        (505,000)      (1,140,000)        (918,000)

    Earnings (loss) from discontinued operations            (15,000)         (55,000)           5,000         (103,000)
                                                         ----------       ----------      -----------      -----------
Net loss                                                 $ (637,000)      $ (560,000)     $(1,135,000)     $(1,021,000)
                                                         ==========       ==========      ===========      ===========

Net loss per average common share outstanding: Basic and diluted:
       Loss from continuing operations                   $    (0.29)      $    (0.28)     $     (0.54)     $     (0.50)
       Loss from discontinued operations                       0.00            (0.03)            0.00            (0.06)
                                                         ----------       ----------      -----------      -----------
       Net loss                                          $    (0.29)      $    (0.31)     $     (0.54)     $     (0.56)
                                                         ==========       ==========      ===========      ===========


Weighted average common shares outstanding -
    basic and diluted                                     2,179,000        1,829,000        2,121,000        1,829,000
                                                         ==========       ==========      ===========      ===========


See accompanying notes to financial statements.




                                                 THE BEARD COMPANY AND SUBSIDIARIES
                                          Statements of Shareholders' Equity (Deficiency)
                                                            (Unaudited)

                                                                                              Accumulated                 Total
                                                                    Capital in                   Other                Shareholders'
                                              Preferred    Common    Excess of   Accumulated Comprehensive Treasury     Equity
                                               Stock       Stock     Par Value     Deficit       Income     Stock     (Deficiency)
                                               -----       -----     ---------     -------       ------     -----     ------------
                                                                                                
Balance, December 31, 2001                     $      -   $ 3,000  $38,081,000  $(36,568,000) $(14,000) $(1,846,000) $(  344,000)

       Net loss                                       -         -            -    (4,614,000)        -            -   (4,614,000)
       Comprehensive income:
         Foreign currency translation
         adjustment                                   -         -            -             -    (1,000)           -       (1,000)

                                                                                                                     -----------
    Comprehensive loss                                -         -            -             -         -            -   (4,615,000)
                                                                                                                     -----------


    Issuance of stock warrants                        -         -       11,000             -         -            -       11,000

      Reservation of shares pursuant to deferred
         compensation plan                            -         -      115,000             -         -            -      115,000
                                              ---------   -------  -----------  ------------  --------  -----------  -----------
Balance, December 31, 2002                            -     3,000   38,207,000   (41,182,000)  (15,000)  (1,846,000)  (4,833,000)

    Net loss, six months ended June 30, 2003          -         -            -    (1,135,000)        -            -   (1,135,000)
       (unaudited) Comprehensive income:
         Foreign currency translation
         adjustment (unaudited)                       -         -            -             -         -            -            -
                                                                                                                     -----------
    Comprehensive loss (unaudited)                    -         -            -             -         -            -   (1,135,000)
                                                                                                                     -----------

    Expiration of mandatory redemption
         option for preferred stock (unaudited) 889,000         -            -             -         -            -      889,000

    Issuance of stock warrants (unaudited)            -         -       18,000             -         -            -       18,000

    Reservation of shares pursuant to deferred
         compensation plan (unaudited)                -         -       96,000             -         -            -       96,000

    Issuance of shares pursuant to termination
         of deferred stock compensation plan          -         -     (488,000)   (1,358,000)        -    1,846,000            -
                                              ---------   -------  -----------  ------------  --------  -----------  -----------
Balance, June 30, 2003 (unaudited)            $ 889,000   $ 3,000  $37,833,000  $(43,675,000) $(15,000) $         -  $(4,965,000)
                                              =========   =======  ===========  ============  ========  ===========  ===========

See accompanying notes to financial statements.




                                        THE BEARD COMPANY AND SUBSIDIARIES
                                             Statements of Cash Flows
                                                   (Unaudited)

                                                                                   For the Six Months Ended
                                                                                   ------------------------
                                                                             June 30, 2003         June 30, 2002
                                                                             -------------         -------------
                                                                                             
Operating activities:
     Cash received from customers                                            $    283,000          $    173,000
     Cash paid to suppliers and employees                                      (1,144,000)             (727,000)
     Interest received                                                              1,000                57,000
     Interest paid                                                                (72,000)             (153,000)
     Operating cash flows of discontinued operations                              (22,000)             (252,000)
                                                                             ------------          ------------
          Net cash used in operating activities                                  (954,000)             (902,000)
                                                                             ------------          ------------

Investing activities:
     Acquisition of property, plant and equipment                                 (18,000)              (12,000)
     Acquisition of intangibles                                                         -                (1,000)
     Proceeds from sale of assets                                                   1,000                19,000
     Proceeds from sale of assets of discontinued operations                      216,000                58,000
     Investment in and advances to fifty percent-owned
        subsidiary in Mexico                                                       (1,000)              (10,000)
     Investment in and advances to fifty percent-owned
        subsidiary in China                                                       (35,000)             (403,000)
     Advances for notes receivable                                                 (2,000)               (7,000)
     Payments on notes receivable                                                   2,000                73,000
     Other                                                                         99,000                63,000
                                                                             ------------          ------------
          Net cash provided by (used in) investing activities                     262,000              (220,000)
                                                                             ------------          ------------

Financing activities:
     Proceeds from term notes                                                     874,000             1,189,000
     Payments on line of credit and term notes                                   (303,000)             (354,000)
     Proceeds from related party debt                                             376,000               493,000
     Payments on related party debt                                              (192,000)             (100,000)
     Capitalized costs associated with issuance of subordinated debt              (66,000)              (88,000)
                                                                             ------------          ------------
          Net cash provided by financing activities                               689,000             1,140,000
                                                                             ------------          ------------
Net increase in cash and cash equivalents                                          (3,000)               18,000

Cash and cash equivalents at beginning of period                                   79,000                55,000
                                                                             ------------          ------------
Cash and cash equivalents at end of period                                   $     76,000          $     73,000
                                                                             ============          ============


Continued


                                        THE BEARD COMPANY AND SUBSIDIARIES
                                             Statements of Cash Flows
                                                   (Unaudited)

Reconciliation of Net loss to Net Cash Used in Operating Activities

                                                                                   For the Six Months Ended
                                                                                   ------------------------
                                                                             June 30, 2003         June 30, 2002
                                                                             -------------         -------------
                                                                                             
Net loss                                                                     $ (1,135,000)         $ (1,021,000)
Adjustments to reconcile net loss to net cash
 used in operating activities:
     Depreciation, depletion and amortization                                      98,000                57,000
     Depreciation, depletion and amortization on assets of
       discontinued operations                                                          -                 2,000
     Gain on sale of assets                                                        (1,000)               (9,000)
     Gain on sale of assets of discontinued operations                            (51,000)              (49,000)
     Equity in operations of unconsolidated affiliates                            (70,000)              115,000
     Equity in operations of unconsolidated affiliates in
       discontinued operations                                                          -                 9,000
     Noncash compensation expense                                                  80,000                     -
     Net cash used by discontinued operations offsetting
       accrued impairment loss                                                     (7,000)               (6,000)
     Other                                                                          1,000                     -
     (Increase) decrease in accounts receivable, prepaid expenses and
        and other current assets                                                   16,000               (27,000)
     Decrease in inventories                                                            -                69,000
     Increase (decrease) in accounts payable, accrued
        expenses and other liabilities                                            115,000               (42,000)
                                                                             ------------          ------------
     Net cash used in operating activities                                   $   (954,000)         $   (902,000)
                                                                             ============          ============

See accompanying notes to financial statements.


                       THE BEARD COMPANY AND SUBSIDIARIES
                          Notes to Financial Statements

                             June 30, 2003 and 2002
                                   (Unaudited)


(1)  Summary of Significant Accounting Policies
     ------------------------------------------
     Basis of Presentation
     ---------------------
     The accompanying  financial statements and notes thereto have been prepared
     pursuant  to the rules  and  regulations  of the  Securities  and  Exchange
     Commission.   Accordingly,   certain   disclosures   normally  prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States have been omitted.  The accompanying  financial statements and notes
     thereto  should  be read  in  conjunction  with  the  audited  consolidated
     financial statements and notes thereto included in The Beard Company's 2002
     annual report on Form 10-K.

     The  accompanying  financial  statements  include the accounts of The Beard
     Company and its wholly and  majority-owned  subsidiaries in which The Beard
     Company has a controlling  financial  interest  ("Beard" or the "Company").
     Subsidiaries  and  investees in which Beard does not  exercise  control are
     accounted  for  using  the  equity  method.  All  significant  intercompany
     transactions have been eliminated in the accompanying financial statements.

     The  financial  information  included  herein is unaudited;  however,  such
     information reflects solely normal recurring  adjustments which are, in the
     opinion of management, necessary for a fair presentation of the results for
     the interim periods presented.

     The results of operations  for the three and  six-month  periods ended June
     30, 2003, are not necessarily  indicative of the results to be expected for
     the full year.

     The  Company's  current  significant  operations  are within the  following
     segments: (1) the Coal Reclamation ("Coal") Segment, (2) the Carbon Dioxide
     ("CO2") Segment,  (3) the China ("China")  Segment,  and (4) the e-Commerce
     ("e-Commerce") Segment.

     The Coal  Segment is in the business of  operating  coal fines  reclamation
     facilities  in the U.S. and provides  slurry pond core  drilling  services,
     fine coal laboratory  analytical services and consulting services.  The CO2
     Segment  consists  of the  production  of CO2 gas.  The  China  Segment  is
     continuing to pursue  environmental  opportunities in China focusing on the
     installation  and  construction of facilities which utilize the proprietary
     composting  technology  of Real Earth United States  Enterprises,  Inc. The
     e-Commerce Segment consists of a 71%-owned  subsidiary whose activities are
     aimed  at  developing  business   opportunities  to  leverage  starpay.com,
     l.l.c.'s  intellectual  property  portfolio of Internet payment methods and
     security technologies.

     As  discussed  in note 3: (1) In 1999,  the  Company's  Board of  Directors
     adopted a formal  plan to  discontinue  its  interstate  travel  facilities
     business (the "ITF" Segment); (2) in 1999 the Management Committee of North
     American Brine Resources  ("NABR")  adopted a plan to discontinue its brine
     extraction/iodine  manufacturing  business  which  comprised  the Company's
     ("BE/IM")  Segment;  and (3) in May 2001 the fixed assets of the  50%-owned
     company (accounted for as an equity investment) involved in the Natural Gas
     Well  Servicing  ("WS")  Segment were sold and in August 2001,  the Company
     ceased pursuing opportunities in Mexico and the segment was discontinued.

     Reclassifications
     -----------------
     Certain  2002  balances  have  been  reclassified  to  conform  to the 2003
     presentation.

(2)  Ability to Fund Operations and Continue as a Going Concern
     ----------------------------------------------------------
     Overview
     --------
     The  accompanying  financial  statements  have been prepared based upon the
     Company's belief that it will continue as a going concern. Despite the fact
     that the Company's  revenues from  continuing  operations  have declined in
     each of the last four years and the Company has incurred  operating  losses
     and negative cash flows from operations during each of the last five years,
     the  Company is of the belief  that it will  commence a project in both its
     Coal Segment and its China Segment during 2003. Moreover,  the long-awaited
     Settlement  in the McElmo Dome  litigation  is now a  certainty.  The first
     installment,  totaling  $1,162,000  was received on July 31, and the second
     installment,  totaling approximately  $2,814,000 is expected to be received
     on or about October 1 of this year.  Receipt of the Settlement ensures that
     2003 will be a profitable year while at the same time materially  enhancing
     the Company's liquidity and bolstering its balance sheet ratios. Meanwhile,
     negotiations  are currently in progress on a major coal project,  including
     the  financing  thereof,  which  would  enable  its Coal  Segment to become
     profitable  beginning  in  early  2004.  (See  Additional  Details  below).
     Negotiations are also underway for two new fertilizer projects in China and
     the  financing  therefor.  In  addition,  the Company  finalized  its first
     licensing  arrangement in its e-Commerce Segment in March of 2003. Although
     the e-Commerce  licensing  arrangement will not make the segment profitable
     this year, the Company  believes the  arrangement has the potential to make
     the segment profitable in 2004 or 2005.

     During  the 18 months  from  January 1, 2002  through  June 30,  2003,  the
     Company  took a number of steps to  reduce  its  negative  cash  flow.  The
     Company's  Chairman and  President  deferred a portion of their base salary
     into (i) the Company's  Deferred Stock  Compensation  Plan (the "DSC Plan")
     which  terminated on January 31, 2003 and (ii) the Company's  2003 Deferred
     Stock  Compensation  Plan (the "2003 Plan") which became  effective on such
     date. The Company's outside directors have deferred all of their directors'
     fees into such Plans.  The President of Beard  Technologies  has deferred a
     portion  of his salary  until the full  amount of the  Settlement  has been
     received. The Company has suspended its 100% matching contribution (up to a
     cap of 5% of gross  salary)  under its  401(k)  Plan.  In  addition,  three
     private debt  placements  raised gross  proceeds of $1,825,000  during such
     period.  All of these  measures have helped and will continue to help until
     the  Settlement  has  been  finalized.  The  negative  result  has  been  a
     substantial amount of dilution to the Company's common equity.  During such
     period 285,000  warrants were issued in connection  with two of the private
     debt placements,  and 215,000 Stock Units were accrued in the participants'
     accounts as a result of  deferrals of salary into the DSC Plan and the 2003
     Plan.  Additional  dilution  also  occurred  due  to an  adjustment  to the
     Preferred  Stock  conversion  ratio  resulting  from  the  issuance  of the
     warrants and the salary deferrals.  Termination of the DSC Plan resulted in
     the issuance of 350,000 common shares effective January 31, 2003.

     Meanwhile,  despite the recent poor financial results and the deterioration
     of its financial  condition,  the Company has  demonstrated  the ability to
     maintain  its  viability  as a going  concern.  During the 12 months  ended
     December 31, 2002 and through June 30, 2003,  the Company has  successfully
     completed  three  private  debt  placements   totaling   $1,825,000   while
     increasing  its lines of credit  from a total of  $2,650,000  to a total of
     $3,600,000.  During such period it has remained in compliance on all of its
     debt  obligations.  The Company  believes  that the proceeds from the first
     installment of the Settlement will be adequate to carry it until the second
     installment  of  $2,814,000  is  received.  Receipt of the  Settlement  has
     ensured  that the Company  will remain  viable as a going  concern at least
     through December 31, 2003.

     Additional Details
     ------------------
     Despite  continuing  operating  losses during the past twelve  months,  the
     Company's cash and cash equivalents increased slightly from $73,000 at June
     30,  2002 to $76,000 at June 30,  2003.  To  mitigate  potential  liquidity
     problems,  the Company's lines of credit from an affiliate of the Company's
     chairman were increased from  $2,250,000 in September of 2001 to $2,500,000
     in January of 2002,  to  $2,625,000  in February of 2002,  to $3,000,000 in
     October of 2002,  to  $3,150,000  in November of 2002 and to  $3,300,000 in
     June of 2003.  As a result of the  private  debt  placements  completed  in
     February  and July of 2003,  the  Company  has  obtained  a net  additional
     $569,000  in working  capital.  The  funding of  operations,  however,  has
     resulted in a $254,000  reduction in the Company's working capital position
     during 2003.

     The Company's  principal  business is coal  reclamation,  and this is where
     management's  operating  attention is primarily  focused.  The Coal Segment
     currently  has several  projects in various  stages of  development  which,
     subject to arranging necessary financing, are ultimately expected to mature
     into operating  projects.  One of these projects,  on which the segment had
     entered into a memorandum  of  understanding,  was sold early this month to
     another  party.  We have been advised that such party intends to move ahead
     with  the  project,  and  are  hopeful  that  negotiations  to  finalize  a
     definitive  agreement will occur during the current  quarter.  Negotiations
     are in  progress  with a third  party to form a joint  venture  or  limited
     liability  company  that would  provide  the  initial  working  capital and
     guarantee the necessary  equipment  financing for the project.  We are also
     pursuing financing for this project separately through a third party in the
     event the joint venture arrangement fails to materialize. The timing of the
     project is uncertain but, subject to obtaining the necessary financing,  it
     is  considered  to  have  a  high  probability  of  activity.  However,  no
     definitive  contracts  have as yet been  signed,  and there is no assurance
     that the  required  financing  will be obtained  or that the  project  will
     materialize.

     In  September  of 2002 a  controversy  arose  between  the  Company and its
     technology  partner  concerning  their legal  rights and  relationships  in
     conducting  business in China.  Lengthy  negotiations  and discussions were
     unsuccessful in arriving at a mutually agreeable  solution.  In November of
     2002 the Company  filed suit to  terminate  the  relationship.  Our partner
     filed a counterclaim to which the Company has subsequently  responded.  The
     outcome of the litigation cannot presently be determined. On July 11, 2003,
     the Company filed a Motion to Compel Arbitration.  An impairment  provision
     in the amount of $759,000 was  established in the fourth quarter of 2002 to
     write down most of the Company's investment in China.  Accordingly,  all of
     the projects which were under  development in China are on indefinite  hold
     until the outcome of the  litigation has been  determined.  The segment has
     obtained an exclusive license agreement for another technology in China and
     is now  pursuing  new  projects.  Negotiations  are in progress on two such
     projects,  and there is ample room and an  adequate  market for a number of
     such projects in the same area.

     To further bolster working  capital,  the Company on May 31, 2002 completed
     the private placement of $1,200,000 of 10% subordinated notes due September
     30, 2003 (the "2002 Notes"), to "bridge the gap" until the settlement funds
     are  distributed or until the anticipated  Coal and China projects  achieve
     positive cash flow.  The Company has agreed to redeem the 2002 Notes within
     10 days of  receipt of the McElmo  Dome  Settlement.  In the event the 2002
     Notes  have  not  been  redeemed  by  the  maturity  date,   they  will  be
     automatically  extended  to March 31,  2005.  An  investment  banking  firm
     received warrants to purchase 45,000 shares of Company common stock as part
     of its sales compensation in connection with the offering. The note holders
     have the  contingent  right to receive up to  240,000  additional  warrants
     depending  upon the  length of time  their  notes are held.  As of July 31,
     2003,  a total of  195,250  of such  warrants  had been  issued to the note
     holders.  Related  parties  purchased  $320,000  of the  offering,  and had
     received a total of 53,000  warrants as of such date.  All of the  warrants
     issued in  connection  with the 2002 Notes  have a 5-year  term and have an
     exercise  price of $1.00 per share  during the first  three years and $1.25
     per share thereafter.

     On  February  21,  2003,  the  Company  completed  the sale of  $600,000 of
     subordinated notes (the "2003A Notes") to accredited investors.  A $550,000
     note was sold by an investment  banking firm which received a 5% commission
     thereon.  The purchaser  received a 5% Loan Fee on this note, which bears a
     5% coupon.  A $50,000  note was sold by the  Company to  affiliates  of the
     Company  and  bears a 10%  coupon.  The 2003A  Notes  were  accompanied  by
     warrants  to  purchase a total of 65,000  shares of Beard  common  stock at
     $0.50 per share. The Company has agreed to redeem the 2003A Notes within 10
     days of receipt of the second  installment  of the McElmo Dome  Settlement.
     The 2003A  Notes will  mature on April 1, 2004;  however,  if they have not
     been redeemed by such date they will  automatically  be extended to January
     1, 2005.

     On July 10, 2003, the Company completed the sale of $29,000 of subordinated
     notes (the "2003B Notes") to accredited  investors.  The $300,000  offering
     was terminated  early when the U. S. Supreme Court denied the appeal in the
     McElmo Dome  litigation,  and it became clear the Company would receive the
     first  installment  of the  Settlement  by August 1. The 2003B  Notes  bear
     interest  at 10% per anuum from the date of original  issuance,  payable at
     maturity.  The notes were subject to a 4% non-refundable  loan fee, payable
     upon  issuance  to the  investors.  The notes  are due  January  30,  2004;
     however,  they must be redeemed within 10 days of the receipt of the second
     installment  of proceeds of the McElmo Dome  Settlement.  A $4,000 note was
     sold by an investment banking firm which received a 5% commission thereon.

     In addition,  the Company  expects to generate cash from the disposition of
     the remaining assets from the discontinued ITF, BE/IM and WS Segments,  and
     can sell certain other assets to generate cash if necessary.

     The Company  believes that the cash generated  from the Settlement  will be
     sufficient  to enable the Company to continue  operations  through 2003 and
     until the  operations  of the projects  under  development  in the Coal and
     China  Segments have come on stream and the Company is generating  positive
     cash flow.

(3)  Discontinued Operations
     -----------------------
     ITF Segment
     -----------
     In  1999  the  Company's  Board  of  Directors  adopted  a  formal  plan to
     discontinue its interstate travel  facilities  ("ITF") Segment and recorded
     losses  totaling  $2,419,000  from  discontinuing  the segment in 1998. ITF
     disposed  of all of its  assets  in  1999  except  two  convenience  stores
     ("C-stores"),  including their remaining  equipment and inventory,  and was
     relieved of all outstanding indebtedness related to the assets.  Additional
     losses  of  $434,000,   $591,000,   and  $121,000   were  recorded  by  the
     discontinued  segment in 1999, 2000 and 2001,  respectively.  The 2001 loss
     included a $100,000  impairment in the carrying value of the facilities and
     $14,000 for anticipated operating losses through the expected disposal date
     of the remaining  assets.  In 2002, the Company  recorded  losses  totaling
     $85,000,  including a $1,000  gain on the sale of assets and an  additional
     charge of $77,000 to impair the carrying value of the remaining facilities.
     The Company  sold one of the  C-stores  with  related  property,  plant and
     equipment  in  November of 2002 for  $169,000.  The  remaining  C-store and
     related property, plant and equipment were sold on April 17, 2003, with net
     proceeds to the Company totaling $158,000.

     ITF recorded no revenues for the first half of 2002 and incurred $2,000 and
     $6,000 of losses for the three and six-month  periods ending June 30, 2002,
     respectively, which were charged against the loss accrual recorded in 2001.
     Included in the losses was a $2,000 gain on the sale of equipment. ITF also
     recorded  no  revenues  for the first six months  ended  June 30,  2003 and
     incurred  $3,000 of income and $5,000 of losses for the three and six-month
     periods, respectively.  This activity was recorded in operations.  Included
     in the  results  of  operations  was a gain of  $5,000  on the  sale of the
     remaining C-store and associated equipment.

     As of  June  30,  2003,  the  ITF  Segment  had no  significant  assets  or
     liabilities.

     BE/IM Segment
     -------------
     In 1999 the Management Committee of North American Brine Resources ("NABR")
     adopted a formal  plan to  discontinue  the  business  and  dispose  of its
     assets.  Beard had a 40%  ownership in NABR,  which was accounted for under
     the equity method.  As a result,  Beard's share of NABR's operating results
     has  been  reported  as  discontinued  for  all  periods  presented  in the
     accompanying  statements of operations.  The joint venture was dissolved in
     September 2000 and the Japanese partners received their final  distribution
     of cash in December 2000, with the Company taking over the remaining assets
     and liabilities.

     In 1999 Beard  recorded a $540,000  loss,  which  represented  its share of
     NABR's $1,350,000  estimated loss from the  discontinuation  of operations.
     NABR's loss included $572,000 of anticipated operating losses through April
     2000 (the date  operations  ceased  for the larger of its two  plants)  and
     costs of ceasing operations. NABR recorded no revenues for either the three
     or six-month  periods ended June 30, 2003. The net losses for the three and
     six-month periods ended thereon were $4,000 and $7,000,  respectively,  and
     were charged against the loss accrual.  Revenues for the smaller of the two
     plants were $43,000 and $120,000 for the three and six-month  periods ended
     June 30, 2002,  respectively.  The net losses for the three and  six-months
     ended June 30, 2002 were  $30,000 and $67,000,  respectively,  and were not
     anticipated  in the loss  accruals  recorded in 1999.  The Company  charged
     $5,000 and $7,000 for the three and six-month  periods ended June 30, 2002,
     respectively,  against the accrual for anticipated  expenses related to the
     shutdown of the larger of its two plants.

     As of June 30, 2003, the  significant  assets related to NABR's  operations
     consisted  primarily of equipment with an estimated net realizable value of
     $31,000. The significant liabilities related to NABR's operations consisted
     primarily of accrued  expenses  totaling $57,000 related to the shutdown of
     operations.  The Company is actively pursuing  opportunities to sell NABR's
     assets and expects the disposition to be completed by December 31, 2003.

     WS Segment
     ----------
     In May 2001 the fixed assets of the 50%-owned company  (accounted for as an
     equity investment)  involved in natural gas well testing operations for the
     Natural Gas Well Servicing ("WS") Segment were sold for $1,550,000, subject
     to a holdback of  $150,000.  The Company  received  $86,000 of the holdback
     later  that  year.  In  May  2002  the  Company  received  $35,000,  net of
     attorney's fees of $29,000,  representing the remainder of the holdback. As
     a result of the sale all debt of the 50%-owned  company was retired and the
     Company was relieved of contingent liabilities totaling $512,000. In August
     2001 the Company  made the  decision  to cease  pursuing  opportunities  in
     Mexico and the WS Segment was  discontinued.  In  December  2001 all of the
     sand separators owned by the 100%-owned company in the WS Segment were sold
     for  $100,000.  The  Company  is now  pursuing  the  sale of all  remaining
     equipment owned by the segment.

     The segment recorded no revenues for either the first half of 2003 or 2002.
     Beard  recorded a loss of $17,000  and income of $11,000  for the three and
     six-month  periods  ended June 30,  2003,  respectively.  Included in these
     results was a $45,000 gain on the sale of  equipment  recorded in the first
     quarter of 2003.  Beard's share of operating  losses from the  discontinued
     segment was $25,000 and $36,000 for the three and  six-month  periods ended
     June 30, 2002,  respectively.  For the first half of 2002, Beard's share of
     operating losses from the 50%-owned  company was $9,000.  $10,000 of losses
     incurred  in the six months  ended June 30, 2002 were  associated  with the
     operations of the wholly-owned company and were not anticipated in the loss
     accrual.  All of the $11,000  income in 2003 and the  remaining  $17,000 of
     losses for the six  months  ended June 30,  2002 were  associated  with the
     subsidiary   holding   interests  in  these  entities  and  were  also  not
     anticipated in the loss accrual.

     As of June 30, 2003, the significant  assets of the WS Segment consisted of
     accounts receivable totaling $17,000 and fixed assets with a recorded value
     of $144,000.  The significant  liabilities of the entity consisted of trade
     accounts payable and accrued expenses totaling  $59,000.  It is anticipated
     that all  liabilities  of the segment  will be paid prior to  December  31,
     2003.

(4)  Convertible (formerly Redeemable) Preferred Stock
     -------------------------------------------------
     The Company's  preferred stock was mandatorily  redeemable through December
     31, 2002, from one-third of Beard's  "consolidated  net income" as defined.
     Each share of Beard  preferred  stock  ceased to be  redeemable  and became
     convertible  into Beard  common  stock on January 1, 2003.  Each  preferred
     share was convertible  into 4.59839154  (128,010)  shares on June 30, 2003.
     The conversion ratio will be adjusted as additional  warrants are issued or
     as additional shares of stock are credited to the accounts of the Company's
     Chairman or President in the  Company's  2003 Deferred  Stock  Compensation
     Plan.  Fractional  shares  will not be  issued,  and  cash  will be paid in
     redemption thereof.

(5)  Loss Per Share
     --------------
     Basic loss per share data is  computed  by dividing  loss  attributable  to
     common  shareholders  by the  weighted  average  number  of  common  shares
     outstanding for the period.

     Diluted loss per share in the  statements of operations  exclude  potential
     common shares  issuable upon  conversion of redeemable  preferred  stock or
     exercise of warrants or 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 Company  recorded no provision  for taxes for the
     three or six-month periods ended June 30, 2003 or 2002.



     At June 30, 2003, the Company  estimates  that it had the following  income
     tax  carryforwards  available for both income tax and  financial  reporting
     purposes (in thousands):



                                                        Expiration
                                                           Date             Amount
                                                           ----             ------
                                                                   
Federal regular tax operating loss carryforwards       2004-2009          $ 54,800

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.

     The Company has an  indemnity  obligation  to its  institutional  preferred
     stockholder  and one of its assignees for certain losses (i) arising out of
     the  ownership  and/or  operation of Beard Oil's former oil and gas assets,
     including  environmental  liabilities;  (ii)  arising  under  any  employee
     benefit or severance  plan; or (iii) relating to any  misrepresentation  or
     inaccuracy  in any  representation  made by the  Company  or  Beard  Oil in
     connection   with  a   corporate   restructure   which   occurred  in  1993
     (collectively, the "Obligations"). Neither Beard nor Beard Oil is presently
     aware of any material liabilities existing as a result of such Obligations.

     In November  of 2002,  the  Company  filed suit in the Western  District of
     Oklahoma to terminate  ABT-Beard  and the Company's  business  relationship
     with  American  Bio  Tech,  Inc.  ("ABT"),  the other  party in  ABT-Beard.
     Additionally,  the  Company  is seeking  recovery  of costs,  expenses  and
     attorney's  fees.  In  January of 2003,  ABT filed its answer and  asserted
     counterclaims  against the Company and  third-party  claims  against  Beard
     Sino-American Resources,  Co., Inc., Beijing Beard Biotech Engineering Co.,
     Inc., Cambridge/ABT Beard Handan Venture, L.L.C., William M. Beard, Riza E.
     Murteza,  and Mark E. Voth. The Company and the other defendants have filed
     an answer  denying  liability and intend to vigorously  defend such claims.
     Management  feels  that the claims of ABT are  without  merit and expect no
     material  liabilities as a result of ABT's suit against the Company and the
     other  defendants.  On July 11, 2003,  the Company filed a Motion to Compel
     Arbitration.

(8)  Business Segment Information
     ----------------------------
     The Company manages its business by products and services and by geographic
     location  (by  country).  The Company  evaluates  its  operating  segments'
     performance  based on earnings or loss from operations before income taxes.
     The  Company  had four  reportable  segments  in the first half of 2003 and
     2002: Coal, Carbon Dioxide, China and e-Commerce.

     The Coal  Segment is in the business of  operating  coal fines  reclamation
     facilities  in the U.S. and provides  slurry pond core  drilling  services,
     fine coal laboratory  analytical services and consulting services.  The CO2
     Segment  consists  of the  production  of CO2 gas.  The  China  Segment  is
     pursuing environmental  opportunities in China focusing on the installation
     and  construction of facilities  which utilize the  proprietary  composting
     technology of Real Earth United  States  Enterprises,  Inc. The  e-Commerce
     Segment  consists of a 71%-owned  subsidiary  whose activities are aimed at
     developing  business   opportunities  to  leverage  starpay.com,   l.l.c.'s
     intellectual  property  portfolio of Internet  payment methods and security
     technologies.

     The  following is certain  financial  information  regarding  the Company's
     reportable segments (presented in thousands of dollars).

     General  corporate  assets and  expenses  are not  allocated  to any of the
     Company's operating segments; therefore, they are included as a reconciling
     item to  consolidated  total  assets  and loss from  continuing  operations
     before  income  taxes  reported  in the  Company's  accompanying  financial
     statements.




                                              Carbon
                                  Coal       Dioxide     China     e-Commerce    Totals
                                  ----       -------     -----     ----------    ------
                                                                  
      Three months ended
      ------------------
        June 30, 2003
        -------------
     Revenues from
       external  customers      $    -      $  116        $   -       $   -      $  116
     Segment profit (loss)        (139)         76         (167)        (29)       (259)

      Three months ended
      ------------------
        June 30, 2002
        -------------
     Revenues from
       external  customers      $   11      $  109        $   -       $   -      $  120
     Segment profit (loss)        (139)         81         (243)        (40)       (341)

       Six months ended
       ----------------
        June 30, 2003
        -------------
     Revenues from
       external  customers      $   42      $  243        $   -      $   25      $  310
     Segment profit (loss)        (228)        160         (338)        (38)       (444)
     Segment assets                 27         479           57          13         576

       Six months ended
       ----------------
        June 30, 2002
        -------------
     Revenues from
       external  customers      $   12      $  195        $   -       $   -      $  207
     Segment profit (loss)        (277)        128         (390)        (76)       (615)
     Segment assets              1,582         467          429          62       2,540



     Reconciliation  of total reportable  segment loss to consolidated loss from
     continuing  operations  before income taxes is as follows for the three and
     six-months ended June 30, 2003 and 2002 in thousands):



                                                      For the Three Months Ended        For the Six Months Ended
                                                      ------------------------------ -----------------------------
                                                          June 30,        June 30,     June 30,       June 30,
                                                            2003            2002         2003           2002
                                                            ----            ----         ----           ----
                                                                                          
      Total loss for reportable segments                  $    (259)      $  (341)     $    (444)     $  (615)
      Eliminate loss from China operations accounted
          for as an equity investment                             -           243              -          390
      Equity in loss from China operations accounted
          for as an equity investment                             -          (122)             -         (195)
      Net corporate costs not allocated to segments            (363)         (285)          (696)        (498)
                                                          ---------       -------      ---------      -------
           Total consolidated loss for continuing
              operations                                  $    (622)      $  (505)     $  (1,140)     $  (918)
                                                          =========       =======      =========      =======



                       THE BEARD COMPANY AND SUBSIDIARIES


                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

     THIS REPORT  INCLUDES  "FORWARD-LOOKING  STATEMENTS"  WITHIN THE MEANING OF
SECTION 27A OF THE  SECURITIES  ACT OF 1933, AS AMENDED,  AND SECTION 21E OF THE
SECURITIES  EXCHANGE  ACT  OF  1934,  AS  AMENDED.  ALL  STATEMENTS  OTHER  THAN
STATEMENTS OF HISTORICAL  FACTS  INCLUDED OR  INCORPORATED  BY REFERENCE IN THIS
REPORT, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S FUTURE
FINANCIAL POSITION,  BUSINESS STRATEGY,  BUDGETS,  PROJECTED COSTS AND PLANS AND
OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING  STATEMENTS.
IN ADDITION,  FORWARD-LOOKING  STATEMENTS GENERALLY CAN BE IDENTIFIED BY THE USE
OF  FORWARD-LOOKING  TERMINOLOGY  SUCH AS  "MAY,"  "WILL,"  "EXPECT,"  "INTEND,"
"PROJECT,"  "ESTIMATE,"  "ANTICIPATE,"  "BELIEVE," OR "CONTINUE" OR THE NEGATIVE
THEREOF OR  VARIATIONS  THEREON OR SIMILAR  TERMINOLOGY.  ALTHOUGH  THE  COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING  STATEMENTS ARE
REASONABLE,  IT CAN GIVE NO ASSURANCE THAT SUCH  EXPECTATIONS WILL PROVE TO HAVE
BEEN  CORRECT.  IMPORTANT  FACTORS  THAT COULD  CAUSE  ACTUAL  RESULTS TO DIFFER
MATERIALLY  FROM  THE  COMPANY'S  EXPECTATIONS   ("CAUTIONARY  STATEMENTS")  ARE
DISCLOSED  UNDER "ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL
CONDITION  AND  RESULTS  OF  OPERATIONS"  AND  ELSEWHERE  IN  THIS  REPORT.  ALL
SUBSEQUENT  WRITTEN  AND ORAL  FORWARD-LOOKING  STATEMENTS  ATTRIBUTABLE  TO THE
COMPANY,  OR PERSONS  ACTING ON ITS BEHALF,  ARE  EXPRESSLY  QUALIFIED  IN THEIR
ENTIRETY BY THE CAUTIONARY STATEMENTS.  THE COMPANY ASSUMES NO DUTY TO UPDATE OR
REVISE ITS FORWARD-LOOKING  STATEMENTS BASED ON CHANGES IN INTERNAL ESTIMATES OR
EXPECTATIONS OR OTHERWISE.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

     The  following  discussion  focuses on  material  changes in the  Company's
financial  condition  since  December 31, 2002 and results of operations for the
quarter ended June 30, 2003,  compared to the prior year second  quarter and the
six months  ended June 30,  2003  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 2002 Form 10-K.

     The Coal  Segment is in the business of  operating  coal fines  reclamation
facilities  in the U.S. and provides  slurry pond core drilling  services,  fine
coal laboratory  analytical  services and consulting  services.  The CO2 Segment
consists  of  the   production  of  CO2  gas.  The  China  Segment  is  pursuing
environmental   opportunities   in  China  focusing  on  the   installation  and
construction of fertilizer  production  facilities which utilize the proprietary
composting  technology of Real Earth United States  Enterprises,  Inc ("REUSE").
The e-Commerce  Segment consists of a 71%-owned  subsidiary whose activities are
aimed at developing  business  opportunities to leverage  starpay.com,  l.l.c.'s
intellectual  property  portfolio  of  Internet  payment  methods  and  security
technologies.

     In 1999 the Company  adopted a plan to  discontinue  its ITF  Segment,  and
those operations were reflected as discontinued operations in 1998. The majority
of the assets of the ITF  Segment  were  disposed  of in 1999 and the Company is
pursuing the sale of the remaining assets. In 1999 the Company adopted a plan to
discontinue its BE/IM Segment, and those operations have since been reflected as
discontinued.  The Company is now in the process of liquidating those assets. In
May 2001 the fixed assets of the 50%-owned  company  (accounted for as an equity
investment)  involved  in the WS Segment  were sold.  In August 2001 the Company
ceased  pursuing  opportunities  in Mexico related to the sand separator  assets
previously operated in Mexico in the WS Segment,  and the Company has since been
pursuing the sale of the segment's remaining assets. As a result, the operations
of the WS Segment have now been reflected as discontinued.


Material  changes  in  financial  condition  - June 30,  2003 as  compared  with
- --------------------------------------------------------------------------------
December 31, 2002.
- ------------------

     The following table reflects changes in the Company's  financial  condition
during the periods indicated:



                                June 30,            December 31,           Increase
                                  2003                  2002              (Decrease)
                                  ----                  ----              ----------
                                                                 
Cash and cash equivalents      $    76,000          $     79,000          $    (3,000)

Working capital                $  (538,000)         $   (284,000)         $  (254,000)

Current ratio                  0.46 to 1            0.67 to 1



     During the first six months of 2003,  the  Company  decreased  its  working
capital by $254,000 from  $(284,000)  as of December 31, 2002.  The placement of
the second and third issues of 10%  Subordinated  Debt infused over  $569,000 in
working capital in the first half of 2003. Net advances,  including purchases of
the 10%  Subordinated  Debt, from related  entities of the Chairman of the Board
totaled  $184,000.  Proceeds from the sale of assets totaled $217,000 during the
first half of 2003. Net revenue from the Company's interest in its CO2 producing
properties  provided  $160,000  of working  capital  for the first half of 2003.
$228,000 of working  capital were used to help fund the  operations  of the Coal
Segment. The China Segment,  including the joint venture involved in the pursuit
of  environmental  opportunities,  utilized  over  $338,000 of working  capital.
$37,000 were used to fund the startup activities of the e-Commerce Segment.  The
Company  received  distributions  of $99,000 from other  investments,  including
Cibola.  The  remainder  of the  working  capital  was  utilized  to fund  other
operations.

     The Company's  principal  business is coal  reclamation,  and this is where
management's   operating  attention  is  primarily  focused.  The  Coal  Segment
currently has several projects in various stages of development  which,  subject
to  arranging  necessary  financing,  are  ultimately  expected  to mature  into
operating projects. One of these projects, on which the segment had entered into
a memorandum of  understanding,  was sold early this month to another party.  We
have been  advised that such party  intends to move ahead with the project,  and
are hopeful  that  negotiations  to finalize a definitive  agreement  will occur
during the current  quarter.  Negotiations are in progress with a third party to
form a joint venture or limited liability company that would provide the initial
working capital and guarantee the necessary equipment financing for the project.
We are also pursuing financing for this project separately through a third party
in the event the joint venture  arrangement fails to materialize.  The timing of
the project is uncertain but, subject to obtaining the necessary  financing,  it
is considered to have a high  probability  of activity.  However,  no definitive
contracts  have as yet been signed,  and there is no assurance that the required
financing will be obtained or that the project will materialize.

     In  September  of 2002 a  controversy  arose  between  the  Company and its
technology partner concerning their legal rights and relationships in conducting
business in China.  In November of 2002 the Company  filed suit to terminate the
relationship.  Accordingly,  all of the projects which were under development in
China are on  indefinite  hold.  The segment has obtained an  exclusive  license
agreement  for another  technology  in China and is now pursuing  new  projects.
Negotiations  are in progress on two such projects,  and there is ample room and
an adequate market for a number of such projects in the same area.

     The  long-awaited  Settlement  in  the  McElmo  Dome  litigation  is  now a
certainty.  The first installment,  totaling $1,162,000 was received on July 31,
and the second installment,  totaling approximately $2,814,000 is expected to be
received on or about October 1 of this year.  These  installments do not include
an additional  $100,000 to $125,000 which the Company  expects to receive from a
litigation  reserve  which has been  established  in  connection  with a lawsuit
against  the  managers  of  the  Coalition.   (See  Part  II  -  Item  1.  Legal
Proceedings).  Receipt of the Settlement  ensures that 2003 will be a profitable
year while at the same time  materially  enhancing the  Company's  liquidity and
bolstering its balance sheet ratios.

     In 2002 the Company supplemented its $300,000 credit line with a commercial
bank by  arranging  for an increase in its credit line from an  affiliate of the
Company's  chairman.  The  long-term  line of credit from the related  party was
increased from $2,250,000 in September of 2001 to $2,500,000 in January of 2002,
to  $2,625,000  in February  of 2002,  and to  $3,000,000  in October of 2002 to
provide  additional  working  capital.  This line was supplemented by a $150,000
short-term  line of credit from the same party in  November  of 2002,  which was
increased  to  $300,000  in June of 2003.  The Company  recently  completed  the
private  placement  of $600,000 of  subordinated  notes due April 1, 2004,  with
warrants,  and another private  placement of $29,000 of  subordinated  notes due
January 30, 2004, to provide  additional  working capital and improve  liquidity
until the settlement funds have all been distributed.  In addition,  the Company
will be disposing of the remaining assets from the  discontinued  ITF, BE/IM and
WS Segments and can sell certain other assets to generate cash if necessary.

     The Company  believes that cash from the  Settlement  will be sufficient to
enable the Company to continue  operations through 2003 and until the operations
of the projects  under  development  in the Coal and China Segments have come on
stream and the Company is generating positive cash flow.

Material  changes in  results of  operations  - Quarter  ended June 30,  2003 as
- --------------------------------------------------------------------------------
compared with the Quarter ended June 30, 2002.
- ---------------------------------------------

     The net loss  for the  second  quarter  of 2003 was  $637,000  compared  to
$560,000 for the 2002 second quarter. Continuing operations posted a net loss of
$622,000 compared to a loss from continuing  operations of $505,000 for the same
period in 2002. In addition, the Company had a loss of $15,000 from discontinued
operations  for the second quarter of 2003 compared to a loss of $55,000 for the
comparable quarter of 2002.

     The operating loss in the Coal Segment remained static at $139,000 for both
the second  quarters  of 2003 and 2002 as  decreases  in revenue  were offset by
corresponding  reductions in expenses.  The operating  profit in the CO2 Segment
decreased  $5,000.  The China  Segment's  loss for the  second  quarter  of 2003
totaled  $137,000  compared to none for the same period in 2002.  The e-Commerce
Segment  incurred  operating  losses of $29,000  for the second  quarter of 2003
compared to $39,000 in the second  quarter of 2002.  The operating loss in Other
activities for the second quarter of 2003 increased $26,000 compared to the same
period  in  2002.  As a  result,  the  operating  loss for the  current  quarter
increased  $158,000 to $511,000 versus $353,000 in the corresponding  quarter of
the prior year.

     Operating results of the Company's primary operating Segments are reflected
below:



                                               2003           2002
                                               ----           ----
                                                       
        Operating profit (loss):
           Coal reclamation                   $(139,000)     $(139,000)
           Carbon dioxide                        76,000         81,000
           China                               (137,000)             -
           e-Commerce                           (29,000)       (39,000)
                                          --------------- --------------
                    Subtotal                   (229,000)       (97,000)
           Other                               (282,000)      (256,000)
                                          --------------- --------------
                                              $(511,000)     $(353,000)
                                          =============== ==============


     The "Other" in the above table  reflects  primarily  general and  corporate
activities, as well as other activities of the Company.

Coal reclamation

     The segment's  revenues decreased $11,000 to none for the second quarter of
2003  compared  to the same  period  in 2002 as a  result  of  performing  fewer
consulting and coring jobs in the year 2003. Operating costs decreased $6,000 to
$139,000 for the second quarter of 2003 compared to $145,000 for the same period
in 2002. The decrease was primarily  attributable to  significantly  lower labor
costs related to the drilling work  performed in 2003 versus 2002 as a result of
a reduction  in staffing  and the  reduction  in the number of jobs.  SG&A costs
increased  $4,000 for the second  quarter of 2003 compared to the same period in
2002. DD&A costs decreased $5,000 for the second quarter of 2003 compared to the
same  period in 2002 as the assets of the  segment  were fully  impaired  in the
fourth  quarter of 2002. As a result,  there was no change in the operating loss
of $139,000  for the second  quarter of 2003  compared to the second  quarter of
2002.

Carbon dioxide

     Second  quarter 2003  operations  reflected an operating  profit of $76,000
compared to $81,000 for the 2002 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 $7,000 to $116,000 for
the second quarter of 2003 compared to $109,000 for the same period in 2002. The
increase in revenue  for the current  quarter  was  primarily  due to  increased
pricing, with the Company receiving an average of $0.33 per mcf sold in the 2003
quarter versus $0.30 per mcf in the year earlier quarter.

China

     The China  Segment  incurred an  operating  loss of $137,000 for the second
quarter of 2003  compared to none for the same period in 2002. In the prior year
quarter and through  November  of 2002,  the  operations  of this  segment  were
conducted  through an unconsolidated  affiliate.  As a result of the controversy
which  arose in the latter  part of 2002 and the  lawsuit  which  followed,  the
Company  is  now  conducting  its  operations  in  China  through   wholly-owned
affiliates.  The loss in 2003 is  attributable  to operating  expenses  incurred
while  the  Company  seeks  to  develop  projects  to  utilize  the  proprietary
composting  technology of REUSE.  The Company is still charging some expenses to
the  unconsolidated  affiliate while the  controversy is being settled.  For the
second quarter of 2002, the Company recorded a $122,000 loss as its 50% share of
the equity in operating results of the unconsolidated affiliate.

e-Commerce

     The e-Commerce Segment incurred an operating loss of $29,000 for the second
quarter of 2003 versus an operating  loss of $39,000 in the prior year  quarter.
An $11,000 reduction in operating expenses accounted for most of the difference.
The segment  had no revenues in either the second  quarter of 2003 or 2002 while
attempting  to develop  business  opportunities  to  leverage  its  intellectual
property portfolio of Internet payment methods and security technologies.

Other corporate activities

     Other corporate  activities  include general and corporate  operations,  as
well as  assets  unrelated  to the  Company's  operating  segments  or held  for
investment.  These  activities  generated  operating  losses of $282,000 for the
second quarter of 2003 as compared to $256,000 for the same period of 2002. This
increase in operating losses was due primarily to increased amortization expense
associated with the capitalized cost of issuing the 10% subordinated debt.

Selling, general and administrative expenses

     The Company's selling,  general and administrative expenses ("SG&A") in the
current quarter increased  slightly to $239,000 from $238,000 in the 2002 second
quarter.

Depreciation, depletion and amortization expenses

     DD&A expense  increased  $16,000 from $36,000 in the second quarter of 2002
to  $52,000  in the same  period  of 2003.  The  increase  was due to  increased
amortization  expense  associated with the capitalized  costs of issuing the 10%
subordinated debt.

Other income and expenses

     The other income and  expenses  for the second  quarter of 2003 netted to a
loss of $111,000  compared  to a loss of  $152,000  for the same period in 2002.
Interest  income was down $31,000 for the second quarter of 2003 compared to the
same period in 2002.  Interest  expense  was  $40,000  higher as a result of the
increase  in  debt,  primarily  to  related  parties  and  the  issuance  of the
subordinated debt.

     The Company's equity in operations of unconsolidated  affiliates  reflected
income of $27,000 for the second  quarter of 2003  compared to a loss of $89,000
for the same period in 2002. The Company reflected a loss of $30,000  associated
with the affiliate in China for the second quarter of 2003 compared to a loss of
$122,000  for the  same  period  in 2002.  The  losses  represent  100% and 50%,
respectively,  of the losses  recorded by the affiliate in China.  As discussed,
the Company is involved in litigation with its former partner in this entity and
is seeking  dissolution  of the entity and recovery of certain costs  associated
with its  operation.  In the  interim  and  starting  in 2003,  the  Company  is
recording 100% of costs  associated with leased office space and a computer that
the  Company is paying for on behalf of the  affiliate,  along with those  legal
expenses directly attributable to the affiliate.  Offsetting the Company's share
of losses of the affiliate in China was the  Company's  share of the earnings of
Cibola  Corporation  ("Cibola").  Cibola  contributed  $56,000 in income for the
second quarter of 2003 compared to $33,000 for the same period in 2002.

Income taxes

     The Company  made no provision  for income  taxes in the second  quarter of
2003 or 2002. The Company has not recorded any financial benefit attributable to
its various tax carryforwards due to uncertainty regarding their utilization and
realization.

Discontinued operations

ITF Segment
- -----------
     In  1999  the  Company's  Board  of  Directors  adopted  a  formal  plan to
discontinue its interstate travel facilities ("ITF") Segment and recorded losses
totaling  $2,419,000 from  discontinuing  the segment in 1998. ITF disposed of a
majority of its assets in 1999,  retaining two convenience stores  ("C-stores"),
including  their  equipment and  inventory,  and Beard became 100% owner of ITF.
Beard  recorded  additional  losses of  $420,000  in 2000 and  $114,000  in 2001
related to the segment.

     ITF recorded no revenues for either the second quarter of 2003 or 2002. ITF
recorded $3,000 in income for the second quarter of 2003.  Included in this loss
was a gain of $5,000 on the sale of the last C-store and  associated  equipment.
ITF  incurred  $2,000 in losses for the three  months  ended June 30, 2002 which
were charged against a loss accrual recorded in 2001.  Included in this loss was
a $2,000 gain on the sale of equipment.

     The ITF Segment had no  significant  assets or  liabilities  as of June 30,
2003.

BE/IM Segment
- -------------
     In 1999 the Management Committee of North American Brine Resources ("NABR")
adopted a formal plan to  discontinue  the  business  and dispose of its assets.
Beard had a 40%  ownership  in NABR,  which was  accounted  for under the equity
method. As a result, Beard's share of NABR's operating results has been reported
as  discontinued  for all periods  presented in the  accompanying  statements of
operations.  The joint venture was dissolved in 2000 with the Japanese  partners
receiving a final distribution of cash and the Company taking over the remaining
assets and liabilities.

     In 1999 Beard  recorded a $540,000  loss,  which  represented  its share of
NABR's $1,350,000 estimated loss from the discontinuation of operations.  NABR's
loss  included  a loss  accrual  to cover the costs of  ceasing  operations  and
shutting down the larger of its two plants. The smaller plant was sold in August
of 2002. NABR's revenues for the smaller of the two plants were none and $43,000
for the  three  months  ended  June 30,  2003  and  2002,  respectively.  NABR's
operating  losses for the three  months ended June 30, 2003 were $3,000 and were
charged  against the loss accrual.  NABR's  operating  loss for the three months
ended June 30,  2002 was  $30,000 and was not  anticipated  in the loss  accrual
recorded in 1999.  NABR charged $5,000 for the three months ended June 30, 2002,
against the  accrual for  anticipated  expenses  related to the  shutdown of the
larger of its two plants.

     As of June 30, 2003, the  significant  assets related to NABR's  operations
consisted  primarily of  equipment  with an estimated  net  realizable  value of
$31,000.  The significant  liabilities  related to NABR's  operations  consisted
primarily of accrued  expenses  related to the shutdown of  operations  totaling
$57,000.  The Company is actively  pursuing  opportunities to sell NABR's assets
and expects the disposition to be completed by December 31, 2003.

WS Segment
- ----------
     In May 2001 the fixed assets of the 50%-owned company  (accounted for as an
equity  investment)  involved in natural  gas well  testing  operations  for the
Natural Gas Well Servicing ("WS") Segment were sold for $1,550,000, subject to a
holdback of $150,000.  The Company  received  $86,000 of the holdback later that
year.  In May 2002 the  Company  received  $35,000,  net of  attorney's  fees of
$29,000, representing the remainder of the holdback. As a result of the sale all
debt of the  50%-owned  company was  retired  and the  Company  was  relieved of
contingent  liabilities  totaling $512,000.  In August 2001 the Company made the
decision  to cease  pursuing  opportunities  in Mexico  and the WS  Segment  was
discontinued.  In  December  2001  all  of  the  sand  separators  owned  by the
100%-owned company in the WS Segment were sold for $100,000.  The Company is now
pursuing the sale of all remaining equipment owned by the segment.

     The segment  recorded no revenues for either the second  quarter of 2003 or
2002.  Beard's  share of  operating  losses from the  discontinued  segment were
$17,000  and  $25,000  for the  three  months  ended  June 30,  2003  and  2002,
respectively.  For the second quarter of 2002, Beard's share of operating losses
from the 50%-owned company were $5,000. The remaining $20,000 of losses incurred
in the three months ended June 30, 2002 were  associated  with the operations of
the subsidiary  holding  interests in these entities and were not anticipated in
the loss accrual.

     As of June 30, 2003, the significant  assets of the WS Segment consisted of
accounts  receivable  totaling $17,000 and fixed assets with a recorded value of
$144,000. The significant liabilities of the segment consisted of trade accounts
payable  and accrued  expenses  totaling  $59,000.  It is  anticipated  that all
liabilities of the segment will be paid prior to December 31, 2003.


Material  changes in results of  operations  - Six months ended June 30, 2003 as
- --------------------------------------------------------------------------------
compared with the Six months ended June 30, 2002.
- ------------------------------------------------

     The net loss  for the six  months  ended  June  30,  2003  was  $1,135,000,
compared to a net loss of $1,021,000 for the first six months of the prior year.
Continuing  operations posted a net loss of $1,140,000 compared to a net loss of
$918,000  for the same period in 2002.  In  addition,  the Company had income of
$5,000 and losses of $103,000 from discontinued operations for the first half of
2003 and 2002, respectively.

     Operating results of the Company's primary operating segments are reflected
below:



                                              2003                2002
                                         ----------------    ----------------
                                                           
       Operating profit (loss):
         Coal reclamation                    $ (228,000)         $ (286,000)
         Carbon dioxide                          160,000             128,000
         China                                 (299,000)                   -
         e-Commerce                             (37,000)            (75,000)
                                         ----------------    ----------------
                   Subtotal                    (404,000)           (233,000)
         Other                                 (540,000)           (471,000)
                                         ----------------    ----------------
                    Total                    $ (944,000)         $ (704,000)
                                         ================    ================


     The "Other" in the above table  reflects  primarily  general and  corporate
activities, as well as other activities and investments of the Company.

Coal reclamation

     The Company's coal reclamation  revenues  increased  $30,000 to $42,000 for
the first six months of 2003  compared to $12,000 for the same period in 2002 as
the result of  additional  small  consulting  and coring  jobs in the year 2003.
Operating costs  decreased  $18,000 to $215,000 for the first six months of 2003
compared to $233,000  for the same period in 2002 as a result of a reduction  in
lab-related labor expenses.  SG&A costs remained static at $55,000 for the first
six months of 2003 and the same period in 2002. DD&A expenses  decreased $10,000
for the first half of 2003 compared to the first half of 2002 as the depreciable
assets of the segment were fully  impaired in the fourth  quarter of 2002.  As a
result, the operating loss for the first six months of 2003 decreased $58,000 to
$228,000 compared to $286,000 in the first six months of 2002.

Carbon dioxide

     Operations for the first six months of 2003 resulted in an operating profit
of $160,000 compared to a $128,000 operating profit for the 2002 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  $48,000 or 25% to $243,000 for the first six months of 2003  compared
to $195,000 for the same period in 2002.  The Company  recorded  $14,000 more in
operating  costs  associated  with  the  properties  in the  first  half of 2003
compared  to the same  period in 2002.  Production  volumes  for the McElmo Dome
field  decreased for the first six months of 2003 compared to the same period in
2002.  The  increase in revenue for the current six months was  entirely  due to
higher pricing,  with the Company  receiving an average of $0.35 per mcf sold in
the first six months of 2003 versus  $0.26 per mcf in the year  earlier  period.
Paid  volumes  were down 47,000 mcf in the current six months  versus a year ago
due to makeup of underproduction in the prior year.

China

     The China Segment incurred an operating loss of $299,000 for the first half
months of 2003 compared to none for the same period in 2002.  Another $39,000 of
loss  for the  first  half of  2003 is  included  in  equity  in  operations  of
unconsolidated  affiliates  relating to China. In the prior year six months, the
operations of this segment were conducted through an  unconsolidated  affiliate.
As a result of the  controversy  which  arose in the latter part of 2002 and the
lawsuit which  followed,  the Company is now  conducting its operations in China
through  wholly-owned  affiliates.  The  loss in 2003  is  attributable  to SG&A
expenses as the Company  seeks  projects to utilize the  proprietary  composting
technology of REUSE.  For the first six months of 2002,  the Company  recorded a
$195,000  loss as its 50%  share  of the  equity  in  operating  results  of the
unconsolidated affiliate.

e-Commerce

     The e-Commerce  Segment incurred an operating loss of $37,000 for the first
half of 2003 versus an  operating  loss of $75,000 in the prior year  period.  A
$13,000 reduction in operating expenses accounted for part of the difference;  a
$25,000  license  fee  recorded  in the  first  half of 2003  accounted  for the
balance.

Other corporate activities

     Other corporate  activities  include general and corporate  operations,  as
well as  assets  unrelated  to the  Company's  operating  segments  or held  for
investment.  These  activities  generated  operating  losses of $540,000 for the
first  half of 2003  as  compared  to  $471,000  in the  same  period  of  2002.
Reductions of $17,000 in employee  benefit costs and reductions in  professional
fees of $2,000 were more than offset by increases  totaling  $49,000 in DD&A and
other types of SG&A costs, including higher insurance costs.

Selling, general and administrative expenses

     The Company's selling,  general and administrative expenses ("SG&A") in the
first half of 2003  increased to $448,000 from $432,000 for the 2002 six months.
Other operations incurred  approximately $14,000 more in SG&A for the six months
of 2003  compared  to the same  period in 2002 as a result of a net  increase in
numerous types of expenses, none of which were large individually.

Depreciation, depletion and amortization expenses

     DD&A expense  increased  $39,000 from $59,000 for the six months ended June
30, 2002 to $98,000 for the same period in 2003.  The increase was due primarily
to increased  amortization  expense  associated  with the  capitalized  costs of
issuing the 10% subordinated debt.

Other income and expense

     The other  income and expenses for the first six months of 2003 netted to a
loss of $196,000  compared  to a loss of  $214,000  for the same period in 2002.
Interest income was down $58,000 for the first half of 2003 compared to the same
period in 2002.  Interest expense was up $101,000 as a result of the increase in
debt to related  parties and the  issuance  of the 10%  subordinated  debt.  The
Company  realized  gains on sale of  assets  for the  first  six  months of 2002
totaling $10,000 versus $1,000 in the current year period.

     The Company's equity in the operations of unconsolidated  affiliates netted
to income of  $70,000  for the first six  months of 2003  compared  to a loss of
$120,000 for the same period in 2002.  The  Company's  equity in the earnings of
Cibola  increased  $34,000  from  $75,000  for the first  six  months of 2002 to
$109,000  for the same period in 2003.  The Company  reflected a loss of $39,000
associated  with the affiliate in China for the first half of 2003 compared to a
loss of $195,000 for the same period in 2002. The losses represent 100% and 50%,
respectively, of the losses recorded by the Chinese affiliate. As discussed, the
Company is involved in litigation  with its former partner in this entity and is
seeking  dissolution of the entity and recovery of certain costs associated with
its  operation.  In the interim and  starting in 2003,  the Company is recording
100% of costs  associated  with  leased  office  space and a  computer  that the
Company  is paying  for on behalf  of the  affiliate,  along  with  those  legal
expenses directly attributable to the affiliate.

Income taxes

     The Company  recorded no  provision  for taxes in the either  first half of
2003 or 2002. The Company has not recorded any financial benefit attributable to
its various tax carryforwards due to uncertainty regarding their utilization and
realization.

Discontinued operations

     ITF  Segment
     ------------
     Complete details  concerning the  discontinuance  of the interstate  travel
facilities  ("ITF")  Segment are  contained in  "Material  changes in results of
operations - Quarter ended June 30, 2003 as compared with the Quarter ended June
30, 2002" under the "Discontinued Operations - ITF Segment" heading.

     ITF's  revenues  and  actual   operating   losses  were  none  and  $5,000,
respectively,  for the six months ended June 30, 2003. The actual losses for the
six months ended June 30, 2003 were charged to operations.

     ITF's  revenues  and  actual   operating   losses  were  none  and  $6,000,
respectively,  for the six months ended June 30, 2002. The actual losses for the
six months ended June 30, 2002 were charged against the loss accrual recorded in
the fourth quarter of 2001.

     BE/IM Segment
     -------------
     Complete  details  concerning the  discontinuance  of NABR are contained in
"Material  changes in results of  operations  - Quarter  ended June 30,  2003 as
compared  with  the  Quarter  ended  June  30,  2002"  under  the  "Discontinued
Operations - BE/IM Segment" heading.

     The  revenues  and actual loss for the six months  ended June 30, 2003 were
none and  $7,000,  respectively.  These  losses  were  charged  against the loss
accrual  recorded in 1999. The revenues and actual loss for the six months ended
June 30, 2002 were  $120,000  and $67,000,  respectively.  These losses were not
anticipated in the loss accrual  recorded in 1999. The Company charged $7,000 in
losses against the accrual for anticipated  expenses  related to the shutdown of
the larger of its two plants.

     WS Segment
     ----------
     Complete details concerning the discontinuance of the Company's natural gas
well testing  operations in Mexico are contained in "Material changes in results
of  operations - Quarter  ended June 30, 2003 as compared with the Quarter ended
June 30, 2002" under the "Discontinued Operations - WS Segment" heading.

     The segment  recorded no revenues for the first six months of 2003 or 2002.
Beard  recorded  income of $11,000 for the first six months of 2003  compared to
operating  losses of $36,000 for the six-month  period ended June 30, 2002.  The
income for 2003 included $45,000 from the sale of assets.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

     At June 30, 2003, the Company had notes receivable of $30,000 and long-term
debt of $5,039,000,  including accrued interest to related entities of $225,000.
The notes  receivable  and  $4,814,000 of the long-term debt have fixed interest
rates;  therefore,  the  Company's  interest  income and expense  and  operating
results would not be affected by an increase in market  interest rates for these
items.  The Company's  outstanding  bank debt totaling  $300,000 floats with the
prime rate, and a 10% increase in market interest rates would have increased the
Company's  interest  expense by  approximately  $1,000.  At June 30, 2003, a 10%
increase  in market  interest  rates  would have  reduced  the fair value of the
Company's notes receivable by $3,000 and reduced the fair value of its long-term
debt by $56,000.

     The Company has no other market risk sensitive instruments.

Item 4.  Controls and Procedures.

     Our  principal  executive  officer and  principal  financial  officer  have
participated in and supervised the evaluation of The Beard Company's  disclosure
controls and procedures that are designed to ensure that information required to
be  disclosed  by the  issuer in the  reports it files is  recorded,  processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules and  forms.  Disclosure  controls  and  procedures
include controls and procedures designed to ensure that the information required
to be disclosed in the reports that it files is accumulated and  communicated to
our  management,  including  our  principal  executive  officer or officers  and
principal  financial  officer  to  allow  timely  decisions  regarding  required
disclosure.  Based on their  evaluation of those controls and procedures as of a
date within 90 days of the date of this filing,  our CEO and CFO determined that
the controls and procedures are adequate and effective.  The evaluation resulted
in no  significant  changes in those  controls  or in other  factors  that could
significantly  affect the  controls,  and no  corrective  actions with regard to
significant deficiencies and material weaknesses.


PART II.     OTHER INFORMATION.

Item 1.   Legal Proceedings.

McElmo Dome Litigation
- ----------------------
     The  long-awaited  Settlement  in  the  McElmo  Dome  litigation  is  now a
certainty. The first installment, totaling approximately $1,162,000 was received
by the Company on July 31, 2003. The second installment,  totaling approximately
$2,814,000 is expected to be received on or about October 1, 2003.

     In a separate  suit,  in which the Company is not a defendant,  the parties
who objected to the Settlement have sued the managers of the Coalition  alleging
all sorts of ridiculous  claims which defendants have denied.  The Coalition has
held back  approximately  $800,000 as a litigation  reserve until this matter is
resolved to pay for  defense of the case and winding up costs of the  Coalition.
The  Company  expects  that  this  matter  will  be  resolved  in  favor  of the
defendants,  and that the Company will ultimately receive an additional $100,000
to $125,000  from the  holdback in  addition to the two  installments  described
above.

ABT Beard Litigation
- --------------------
       In  September  of 2002 a  controversy  arose  between the Company and its
technology  partner  concerning  their legal rights and  relationships.  Lengthy
negotiations  and  discussions  were  unsuccessful  in  arriving  at a  mutually
agreeable solution. In November of 2002, the Company filed suit against American
Bio-Tech,  Inc. ("ABT") seeking judicial  termination of the partnership between
the  Company  and ABT.  In  January of 2003,  ABT filed its answer and  asserted
counterclaims against the Company and third-party claims against various Company
affiliates  seeking an unspecified  amount of damages plus  attorneys'  fees and
costs.  The Company and the third-party  defendants have filed an answer denying
liability  and stating  their  intention to  vigorously  defend the claims.  The
outcome of the litigation cannot presently be determined.  On July 11, 2003, the
Company filed a Motion to Compel Arbitration.

Visa Litigation
- ---------------
     On May 8, 2003, the Company's 71%-owned  subsidiary,  starpay.com,  l.l.c.,
joined with VIMachine, Inc. in filing a suit in the U. S. District Court for the
Northern District of Texas,  Dallas Division against Visa International  Service
Association  and Visa USA, Inc.,  both d/b/a Visa (Case No.  CIV:3-03-CV0976-L).
VIMachine is the holder of a U.S. Patent (the  "VIMachine  Patent") that covers,
among other things, an improved method of authenticating the cardholder involved
in an Internet payment transaction. On July 25, 2003, the Plaintiffs filed, with
the express written consent of the Defendants, an Amended Complaint. The suit as
amended  seeks  damages  and  injunctive  relief (i)  related to Visa's  willful
infringement of the VIMachine  Patent;  (ii) under  California's  common law and
statutory doctrines of unfair trade practices,  misappropriation and/or theft of
starpay's  intellectual  property  and/or trade  secrets;  and (iii)  related to
Visa's breach of certain  confidentiality  agreements  expressed or implied.  In
addition,  Plaintiffs  are  seeking  attorney  fees  and  costs  related  to the
foregoing claims.

     During the first quarter of 2000  starpay's  technology was relayed to Visa
verbally,  in  face-to-face  conferences,  telephone  calls,  in e-mails  and in
regular  correspondence.  The  suit  alleges  that,  after  receiving  starpay's
technology and ideas,  Visa filed a provisional  patent  application in April of
2000 using  information  supplied by starpay.  The suit also alleges that Visa's
payer authentication service ("VPAS") infringes the VIMachine Patent. From early
2000 until recently, starpay tried on several occasions to enter into meaningful
negotiations with Visa to resolve their intellectual property concerns. Visa has
continually  denied their  infringement  of the  VIMachine  Patent and starpay's
assertion that Visa has appropriated starpay's technology.

     In November of 2000 Visa  publicly  announced  that it was testing VPAS. In
September of 2001 Visa stated that,  once rolled out globally,  it expected VPAS
to reduce Internet  payment disputes by at least 50%.  Plaintiffs  allege in the
suit that, based upon Visa's  transaction  volume of about $2 trillion per year,
this could easily  result in savings of $100  million or more per year.  VPAS is
the payment system currently being widely  advertised as "Verified by Visa" with
Emmitt Smith as a spokesperson.

Item 2.  Changes in Securities.

     The Company's  preferred stock was mandatorily  redeemable through December
31, 2002,  from one-third of Beard's  "consolidated  net income" as defined.  On
January 1, 2003 each share of Beard  preferred stock ceased to be redeemable and
became convertible into Beard common stock. Each preferred share was convertible
into 4.59839154  (128,010)  common shares on June 30, 2003. The conversion ratio
will be adjusted as additional  warrants are issued or as  additional  shares of
stock are credited to the accounts of the Company's Chairman or President in the
Company's 2003 Deferred Stock Compensation  Plan.  Fractional shares will not be
issued, and cash will be paid in redemption thereof.

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 herein 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 herein by reference).

2(c)   Certificate  of  Merger  merging  The  Beard  Company  into The New Beard
       Company as filed with the  Secretary of State of Oklahoma on November 26,
       1997.  (This  Exhibit  has  been  previously  filed  as  Exhibit  2.1  to
       Registrant's   Form  8-K,   filed  on  December  8,  1997,  and  same  is
       incorporated herein 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 herein 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)   Certificate   of   Designations,   Powers,   Preferences   and  Relative,
       Participating,  Option and Other Special Rights, and the  Qualifications,
       Limitations or  Restrictions  Thereof of the Series A Convertible  Voting
       Preferred  Stock of the  Registrant.  (This  Exhibit has been  previously
       filed as Exhibit 3(c) to Amendment  No. 2, filed on September 17, 1993 to
       Registrant's  Registration  Statement on Form S-4, File No. 33-66598, and
       same is incorporated herein by reference).

4(b)   Settlement Agreement,  with Certificate of Amendment attached thereto, by
       and among  Registrant,  Beard Oil, New York Life Insurance  Company,  New
       York Life  Insurance  and  Annuity  Company,  John  Hancock  Mutual  Life
       Insurance Company, Memorial Drive Trust and Sensor, dated as of April 13,
       1995.  (This  Exhibit  has  been  previously  filed  as  Exhibit  4(g) to
       Registrant's Form 10-K for the period ended December 31, 1994 and same is
       incorporated herein by reference).

10     Material contracts:

10(a)  The Beard Company 2003 Deferred Stock  Compensation  Plan, adopted by the
       Board  of  Directors  effective  January  31,  2003 and  approved  by the
       stockholders on July 31, 2003. (This Exhibit has been previously filed as
       Exhibit "A" to  Registrant's  Proxy Statement filed on June 17, 2003, and
       same is incorporated herein by reference).*

10(b)  Supplemental  Letter Loan  Agreement  by and between  Registrant  and the
       William M. Beard and Lu Beard 1988 Charitable  Unitrust (the  "Unitrust")
       dated June 6, 2003.

10(c)  Supplemental  Promissory  Note from  Registrant  to the  Trustees  of the
       Unitrust dated June 6, 2003.

10(d)  Extension  Promissory  Note from  Registrant  to Bank of  Oklahoma,  N.A.
       ("BOK") dated May 15, 2003.

31     Rule 13a-14(a)/15d-14(a) Certifications:

31(a)  Chief Executive Officer Certification  required by Rule 13a-14(a) or Rule
       15d-14(a).

31(b)  Chief Financial Officer Certification  required by Rule 13a-14(a) or Rule
       15d-14(a).

32     Section 1350 Certifications:

32(a)  Chief Executive Officer Certification  required by Rule 13a-14(b) or Rule
       15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States
       Code.

32(b)  Chief Financial Officer Certification  required by Rule 13a-14(b) or Rule
       15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States
       Code.

       The Company  will furnish to any  shareholder  a copy of any of the above
exhibits  upon the payment of $.25 per page.  Any request  should be sent to The
Beard  Company,  Enterprise  Plaza,  Suite 320, 5600 North May Avenue,  Oklahoma
City, Oklahoma 73112.

       (b) Five reports on Form 8-K were filed by the Company during the quarter
for which this report is filed.  An 8-K filed on April 15, 2003  included a news
release setting forth fiscal year 2002 financial results. An 8-K filed on May 7,
2003 included a news release  announcing  the  finalization  of a patent license
agreement  by the  Company's  e-Commerce  Segment.  An 8-K filed on May 12, 2003
included a news release  concerning  the filing of  litigation  by  Registrant's
e-Commerce  subsidiary against Visa USA. An 8-K filed on May 16, 2003 included a
news release  setting forth the Company's  first quarter  financial  results and
contained a status report concerning the Company's litigation at McElmo Dome. An
8-K filed on June 16, 2003 contained an additional  update concerning the status
of the McElmo Dome litigation.



                                  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

                                                 /s/Herb Mee, Jr.
     (Date)   August 13, 2003
                                                 Herb Mee, Jr., President and
                                                 Chief Financial Officer

                                                 /s/Jack A. Martine
     (Date)   August 13, 2003
                                                 Jack A. Martine, Controller and
                                                 Chief Accounting Officer

                                 EXHIBIT INDEX

Exhibit
No.        Description                      Method of Filing
- ---        -----------                      ----------------

2(a)   Agreement and Plan of Reorganization by  Incorporated herein by reference
       and among Registrant, Beard Oil Company
       ("Beard  Oil")  and  New  Beard,  Inc.,
       dated as of July 12, 1993 (see Addendum
       A to  Part  I,  which  is  incorporated
       herein by  reference;  schedules to the
       Agreement have been omitted).

2(b)   Agreement  and  Plan of  Merger  by and  Incorporated herein by reference
       between  The Beard  Company and The New
       Beard  Company,  dated as of  September
       16, 1997.

2(c)   Certificate of Merger merging The Beard  Incorporated herein by reference
       Company  into The New Beard  Company as
       filed  with the  Secretary  of State of
       Oklahoma on November 26, 1997.

3(i)   Certificate of Incorporation of The New  Incorporated herein by reference
       Beard   Company   as  filed   with  the
       Secretary   of  State  of  Oklahoma  on
       September 11, 1997.

3(ii)  Registrant's  By-Laws as  currently  in  Incorporated herein by reference
       effect.

4(a)   Certificate  of  Designations,  Powers,  Incorporated herein by reference
       Preferences        and        Relative,
       Participating, Option and Other Special
       Rights,    and   the    Qualifications,
       Limitations or Restrictions  Thereof of
       the   Series   A   Convertible   Voting
       Preferred Stock of the Registrant.

4(b)   Settlement Agreement,  with Certificate  Incorporated herein by reference
       of Amendment  attached thereto,  by and
       among  Registrant,  Beard Oil, New York
       Life Insurance  Company,  New York Life
       Insurance  and  Annuity  Company,  John
       Hancock Mutual Life Insurance  Company,
       Memorial Drive Trust and Sensor,  dated
       as of April 13, 1995.

10(a)  The Beard Company 2003  Deferred  Stock  Incorporated herein by reference
       Compensation Plan, adopted by the Board
       of Directors effective January 31, 2003
       and  approved  by the  stockholders  on
       July 31, 2003.

10(b)  Supplemental  Letter Loan  Agreement by  Filed herewith electronically
       and between  Registrant and the William
       M. Beard and Lu Beard  1988  Charitable
       Unitrust (the "Unitrust") dated June 6,
       2003.

10(c)  Supplemental   Promissory   Note   from  Filed herewith electronically
       Registrant   to  the  Trustees  of  the
       Unitrust dated June 6, 2003.

10(d)  Extension    Promissory    Note    from  Filed herewith electronically
       Registrant  to Bank of  Oklahoma,  N.A.
       ("BOK") dated May 15, 2003.

31(a)  Chief Executive  Officer  Certification  Filed herewith electronically
       required  by  Rule  13a-14(a)  or  Rule
       15d-14(a).

31(b)  Chief Financial  Officer  Certification  Filed herewith electronically
       required  by  Rule  13a-14(a)  or  Rule
       15d-14(a).

32(a)  Chief Executive  Officer  Certification  Filed herewith electronically
       required  by  Rule  13a-14(b)  or  Rule
       15d-14(b)  and Section  1350 of Chapter
       63 of  Title  18 of the  United  States
       Code.

32(b)  Chief Financial  Officer  Certification  Filed herewith electronically
       required  by  Rule  13a-14(b)  or  Rule
       15d-14(b)  and Section  1350 of Chapter
       63 of  Title  18 of the  United  States
       Code.