Exhibit 99.1
FORWARD-LOOKING STATEMENTS
The Statements of Projected Operations include "forward-looking statements"
within the meaning of Section 27a of the Securities Act of 1933, as amended, and
Section 21e of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts are forward-looking statements.
Although we believe that the expectations reflected in such statements are
reasonable, we cannot assure you that such expectations will occur. Our actual
future performance could differ materially from such statements as a result of
many factors, including but not limited to coal prices, production costs, and
recoverable reserves. Important factors that could cause actual results to
differ materially from the Company's expectations are disclosed herein and at
pages 16-18 of the Company's Form 10-K for the fiscal year ended December 31,
2003.
THE BEARD COMPANY AND SUBSIDIARIES
Statements of Projected Operations
(Unaudited)
Year Ending December 31,
----------------------------------------------------
2004 2005 2006
---- ---- ----
Revenues:
Coal reclamation (a) $ 398,000 $ 8,940,000 $ 28,883,000
Carbon dioxide (b) 700,000 792,000 871,000
China (c) - 4,068,000 8,928,000
e-Commerce (d) 29,000 40,000 60,000
--------------- --------------- ----------------
1,127,000 13,840,000 38,742,000
Operating expenses (e) 2,302,000 9,868,000 28,863,000
--------------- --------------- ----------------
Operating profit (loss) (1,175,000) 3,972,000 9,879,000
Other income (expense):
Interest income 4,000 4,000 4,000
Interest expense (f) (499,000) (1,008,000) (1,911,000)
Equity in net earnings of unconsolidated affiliate (g) 298,000 233,000 -
Gain on settlement 2,943,000 - -
Gain on sale of assets 76,000 - -
Minority interest in operations of consolidated subsidiaries - (1,496,000) (3,897,000)
Other 10,000 - -
--------------- --------------- ----------------
Earnings before income taxes 1,657,000 1,705,000 4,075,000
Income taxes (99,000) - -
--------------- --------------- ----------------
Net earnings (h) $ 1,558,000 $ 1,705,000 $ 4,075,000
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Net earnings per common share:
Basic $ 0.29 $ 0.30 $ 0.66
=============== =============== ================
Diluted $ 0.23 $ 0.25 $ 0.51
=============== =============== ================
Weighted average common shares outstanding:
Basic 5,364,000 5,600,000 6,200,000
=============== =============== ================
Diluted 6,800,000 6,800,000 8,000,000
=============== =============== ================
See accompanying notes to financial statements.
THE BEARD COMPANY AND SUBSIDIARIES
NOTES TO THE STATEMENTS OF PROJECTED OPERATIONS
(Unaudited)
(a) The Company's principal business is coal slurry pond reclamation. The
Coal Segment is currently pursuing a number of different projects. On July 15,
2004 the Company announced that Beard Technologies, Inc. ("BTI") had signed an
agreement to provide dredging services to a subsidiary of DTE Energy Company
("DTE") for an initial term of two years, extendible at DTE's option for up to
an additional four years. On September 7, 2004 the Company announced that BTI
had signed an agreement to reclaim slurry for Pinnacle Mining Company, LLC. This
agreement has an initial term of six years, extendible for an additional four
years if significant recoverable reserves remain at the end of the initial term.
The Company is also pursuing other projects as reflected in the Schedule of
Active Projects at Exhibit A.
The projections reflect the DTE service contract beginning in August 2004
and assume that the contract will be extended at the end of the initial term.
The projections also reflect Project A beginning in September 2004. The
projections also assume that a second pond recovery project (Project B) starts
in March 2005 and runs through July 2011, that a third pond recovery project
(Project C) starts in May 2005 and runs through September 2009, and that a
fourth pond recovery project (Project D) starts in August 2005 and runs through
December 2013. On each of the four pond recovery projects, the projections
assume that BTI receives an overhead charge of $50,000 per month for the first
five months and $30,000 per month thereafter from the LLC operating the project.
No assumptions have been made on the other project shown on Exhibit A.
The projections assume that BTI owns Projects A, B and C 100%; Project D
assumes that BTI has a 50% partner. On all four projects it is assumed that BTI
obtains the required debt financing through loans guaranteed by the U.S.
Department of Agriculture, Rural Development. Project A assumes that the Company
raises the required equity needed to secure the USDA-backed financing through
the offering which is the subject of this Memorandum. The Company will also need
to provide the equity portion of the financing for Project B. BTI has equipment
on hand which it believes is sufficient to provide the equity needed for Project
C. It is contemplated that a strong financial partner will provide the equity
needed for Project D. However, there is no assurance that the required financing
will be obtained or that any of the projects will materialize.
(b) 2004 revenues, expenses and profits of the CO2 Segment have been based
upon actual first half 2004 results, with anticipated improvement during the
second half of the year due to expected better marketing and pricing resulting
from the McElmo Dome Settlement. Beginning in late 2004 and continuing
thereafter, significant improvement in revenues and net profit are anticipated
as a result of reduced pipeline charges stemming from the settlement.
(c) In China the Company has been seeking financing for three large
projects costing several million dollars each. However, the projections assume
only that a "mini-plant", costing $1.6 million, is funded by outside investors
who get receive 90% of the cash flow from the project, with Beard Environmental
Engineering, LLC ("BEE") backing in for a 50% interest after investor payout.
The projections assume that the mini-plant is started in November 2004, with BEE
receiving a management fee of $15,000 per month during the project life
commencing with project startup. Payout is projected to occur in January 2006.
(d) Revenues and expenses for the e-Commerce Segment have also been
reflected in an anticipated worst case scenario. Revenues reflect the revenues
presently anticipated from starpay's existing license agreement. starpay's basic
overhead is assumed to remain at its present level of approximately $11,000 per
month pending the outcome of the Visa litigation. In addition, starpay's share
of the legal costs related to the lawsuit have been estimated at $32,000 for the
last six months of 2004, at $50,000 for 2005 and at $40,000 for 2006.
(e) Includes all of the operating expenses of the Coal, CO2, China and
e-Commerce Segments based upon the assumptions set forth in footnotes (a), (b),
(c) and (d). Also assumes that Beard (Parent) overhead is at $960,000 in 2004
and increases to $1,040,000 in 2005 and drops to $1,000,000 in 2006. The $80,000
increase in 2005 includes the estimated cost of complying with the new
Sarbanes-Oxley 404 requirements; in 2006 this cost is expected to be $40,000
less than in 2005.
(f) Interest expense includes the interest associated with the Parent
Company debt, including that associated with this offering, together with the
interest cost associated with the four Coal projects discussed in footnote (a).
(g) Reflects our current estimate of the net earnings expected to be
received from an unconsolidated subsidiary for the periods shown. It is
anticipated that this subsidiary will wind up its affairs in August of 2005.
(h) These projections have been included to indicate the profitability that
may be achieved if the projects outlined in footnotes (a) and (c) are
implemented within the indicated time frames and if the other assumptions
contained herein prove to be reasonably accurate.