SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) December 13, 2004
THE BEARD COMPANY
(Exact name of registrant as specified in its charter)
Oklahoma 001-12396 73-0970298
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Enterprise Plaza
5600 N. May Avenue
Suite 320
Oklahoma City, Oklahoma 73112
(Address of principal executive offices) (Zip Code)
(405) 842-2333
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17
CFR 240.14a-12(b))
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Information to be Included in the Report
Item 8.01 Other Events
The Beard Company is currently conducting a private placement of its 9%
Convertible Subordinated Notes due October 15, 2009 (the "Notes"). The
Company has supplemented its private offering memorandum relating to
the Notes with the following information:
"Compliance with Sarbanes-Oxley:
Section 404 of Sarbanes-Oxley ("SOX 404") and the regulations by the
Securities and Exchange Commission thereunder will require the Company
to establish and maintain an adequate internal control structure and
procedures for financial reporting, include in its annual report a
report of management on the Company's internal controls over financial
reporting, and include an attestation from the public accounting firm
that prepares or issues its audit reports reporting on the assessment
thereof made by management. "Significant deficiencies" and "material
weaknesses," as defined by the PCAOB ("Public Company Accounting
Oversight Board") Auditing Standard No. 2, must be identified. Although
the requirements are not in effect for the Company's current fiscal
year, in connection with its financial planning the Company has had
conversations with its certified public accountants concerning
implementation of Section 404 and the regulations and the estimated
costs of compliance for fiscal year 2005.
Although it is impossible to assess the actual costs at this
preliminary date, based on information from the Company's accountants,
the Company has estimated that the costs of compliance could be as much
as $400,000 for fiscal year 2005 based on the Company's present
operations, and could be even higher if the Company's Coal and/or China
Segments become significantly more active. Such costs for small
businesses such as the Company would be prohibitive. While the Company
hopes that some relief will be granted to small businesses, there can
be no assurances such relief will, in fact, be granted. In "Frequently
Asked Questions" (revised October 6, 2004), the Office of Chief
Accountant, Division of Corporate Finance, in answer to question 16,
noted that the Commission has recognized that many smaller issuers
might encounter difficulties in evaluating their internal controls over
financial reporting, and stated that the Commission staff "would
support efforts by bodies such as COSO ("The Committee of Sponsoring
Organizations of the Treadway Commission") to develop an internal
control framework specifically for small issuers."
If it is ultimately determined by the Company that compliance is
financially impracticable, and no relief from such requirements is
granted, the Company will have to consider the possibility of "going
private." "Going private" means that Company would, by reverse split or
otherwise, reduce the number of its shareholders of record such that it
would no longer be subject to the reporting requirements of the
Securities Exchange Act of 1934 and, therefore, SOX 404. In that event,
there would no longer be an established trading market for the
Company's common stock, a factor which could be expected to adversely
impact the fair market value of the Company's common stock.
The Company's Position on SOX 404:
The Company strongly believes that the compliance cost for small
companies under SOX 404 are prohibitive. It also believes that many
small companies are not yet aware of the costs they will be facing.
Further, the Company believes that small business has
been the primary engine that has powered the growth of the United
States. Many companies are started with the intention of going public
if the company is successful. The Company further believes that without
total or significant relief for small business from the requirements of
SOX 404, many small regional investment banking firms may ultimately be
forced to merge or go out of business, and a primary exit vehicle for
venture capital startups will be gone. In order to avoid such a
possibility, the Company believes that tremendous pressure is going to
be put on both Congress and the Securities and Exchange Commission to
alleviate the problem during the next six to nine months before small
businesses are faced with shouldering the burden of compliance.
If it becomes apparent that no substantial relief is forthcoming, the
Company would have to face the possibility of going private. The
Company currently intends to take this step only as a last resort. If
the Company was forced to take such a step, it would take such step in
a manner so as to affect the least number of stockholders, leaving the
door open to "going public" again by meeting all of the necessary
reporting requirements as soon thereafter as the Company determined
that the cost of compliance was reasonably affordable in light of the
Company's then current operations."
Item 9.01 Financial Statements and Exhibits
(c) Exhibits. The following exhibits are filed with this Form 8-K and are
identified by the numbers attached
Exhibit No. Description
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99 Press Release dated December 13, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE BEARD COMPANY
HERB MEE, JR.
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Herb Mee, Jr., President
December 13, 2004
INDEX TO EXHIBITS
Exhibit No. Description Method of Filing
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99 Press Release dated December Filed herewith electronically
13, 2004