Beard Co/OK · 10-K · For 12/31/00

Filed On 4/2/01 4:13pm ET   ·   SEC File 1-12396   ·   Accession Number 909334-1-75

Annual Report   ·   Form 10-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         79±   399K 
 2: EX-10       Indemnification                                        6±    30K 
 3: EX-10       Promissory Note                                        3±    14K 
 4: EX-21       Subsidiaries                                           1      8K 
 5: EX-23       Consent of Cole & Reed                                 1      6K 
 6: EX-23       Consent of Kpmg                                        1      6K 

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 
13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______________ to __________________

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 Number)   

 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           

 Securities registered pursuant to Section 12(b) of the Act:

(Title of each class)                                  (Name of each exchange on
     None                                                  which registered)

 Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001333 par value

     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 requirement for the past 90 days. Yes [X] No [ ]                         

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form l0-K or any amendment to this
Form 10-K. [ ]                                                                  

      The   aggregate   market  value  of  the  voting   common  stock  held  by
non-affiliates  of the  registrant,  computed  by using the last  sale  price of
registrant's  common stock on the OTC Bulletin Board as of the close of business
on February 28, 2001 was $522,000.                                              

     The number of shares  outstanding  of each of the  registrant's  classes of
common stock as of February 28, 2001 was                                        
Common Stock $.001333 par value - 1,828,845               

DOCUMENTS INCORPORATED BY REFERENCE:

     Portions of the  Registrant's  Proxy  Statement in connection with the 2001
Annual Meeting of Stockholders of The Beard Company are  incorporated  herein by
reference as to Part III, Items 10, 11, 12 and 13.                              

 THE BEARD COMPANY
 FORM 10-K
 For the Fiscal Year Ended December 31, 2000

 TABLE OF CONTENTS

PART I                                                                          
------                                                                          
Item 1.   Business                                                              
Item 2.   Properties                                                            
Item 3.   Legal Proceedings                                                     
Item 4.   Submission of Matters to a Vote of Security Holders                   
Item 4a   Executive officers and Significant Employees  of  the                 
Company                                                     

PART II                                                                         
-------                                                                         
Item 5.   Market  for the Company's Common Equity  and  Related                 
Stockholder Matters                                         
Item 6.   Selected Financial Data                                               
Item 7.   Management's  Discussion and  Analysis  of  Financial                 
Condition and Results of Operations                         
Item 7A.  Quantitative and Qualitative Disclosures About Market                 
Risk                                                        
Item 8.   Financial Statements and Supplementary Data                           
Item 9.   Changes  in  and Disagreements  with  Accountants  on                 
Accounting and Financial Disclosure                         
PART III                                                                        
--------                                                                        
Item 10.  Directors, Executive Officers and Significant Employees               
of the Registrant                                           
Item 11.  Executive Compensation                                                
Item 12.  Security Ownership of Certain Beneficial  Owners  and                 
Management                                                  
Item 13.  Certain Relationships and Related Transactions                        
PART IV                                                                         
-------                                                                         
Item 14.  Exhibits, Financial Statement Schedules, and Reports on               
Form 8-K                                                    
SIGNATURES                                                                      

 THE BEARD COMPANY

 FORM 10-K

 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 7.  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.                                                      

PART I

Item 1.  Business.                                                              

(a)   General development of business.                                          

     General.  Prior  to  October,  1993,  The  Beard  Company  ("Beard"  or the
"Company"),  then known as Beard Oil Company ("Beard Oil"), was primarily an oil
and gas  exploration  company.  During the late  1960's we made the  decision to
diversify.  In 1968 we started a hazardous waste management company, USPCI, Inc.
("USPCI"),  which  we  partially  spun  off to  shareholders  in  January  1984.
Following  two  public  offerings  and  several  acquisitions  USPCI  became  so
successful  that it  subsequently  listed on the New York Stock Exchange in 1986
and was later  acquired  by Union  Pacific  Corporation  in  1987-1988  for $396
million ($111 million to Beard Oil stockholders for their residual 28% interest,
of which $60 million was distributed to shareholders).                          

In 1989 Beard Oil founded Beard Investment Company (now The Beard Company) which
was formed for the purpose of building new businesses outside of the oil and gas
industry which Beard management believed to have either high growth potential or
better-than-average  profit  potential.  We have started or acquired a number of
new  businesses  and invested in new business  opportunities  with the intent of
growing  profitable  businesses and converting our investments  into shareholder
value,  perhaps through sale, a spin-off or rights offering to shareholders,  or
public offerings.                                                               

Our goal has been to nurture each investment to the point where it could sustain
its growth through internal cash flow while  cultivating its own outside funding
sources to supplement financing  requirements.  Under this scenario we formed in
1981 a joint venture for the  extraction,  production  and sale of crude iodine,
which we managed until the decision was made to discontinue  such  operations at
year-end  1999.  In 1987 we formed a dry ice company which we sold for a healthy
profit in 1997. In 1990 we bought a distressed real estate  development which we
successfully  operated  before  selling it in 1997.  In 1990 we also acquired an
alternative  fuels research and development  company which we sold in 1994 for a
profit while  retaining  certain  technology  which it patented  for  commercial
development.  In 1997 we invested in an environmental  remediation company which
we believed had  considerable  profit  potential  but which has not produced any
commercial results to date.                                                     

In 1998 we formed a  subsidiary  to enter the  interstate  travel  business  and
another to conduct  operations  in the  People's  Republic of China where we are
pursuing  environmental  opportunities,  coal reclamation and related  marketing
opportunities. In October 1998 we formed a subsidiary in Mexico which has worked
as a subcontractor testing natural gas wells which Petroleos Mexicanos ("Pemex")
is drilling in northeastern  Mexico.  In 1999 we formed  starpay(TRADEMARK).com,
inc., an  e-Commerce  startup  company that has developed a proprietary  payment
system  to  be  used  exclusively  for  Internet  transactions  and  to  provide
state-of-the-art security for purchasing transactions.  That same year we formed
another  Mexican  subsidiary  which  designed and furnished to Pemex five custom
fabricated sand separators for use in their operations.                         

     Along the way we've had our share of  unsuccessful  investments,  including
numerous oil  secondary  recovery  projects,  two  telecommunications  projects,
several  investments  in  the  drilling  contracting  business,  others  in  the
environmental  business,  plus our recent unsuccessful foray into the interstate
travel business.                                                                

     As can be seen from the above,  Beard  should be viewed as a company  whose
principal  business is  starting  and/or  acquiring  businesses,  nurturing  and
growing  them,  weeding out the losers,  and riding with the winners  until such
time as the  market  is  willing  to pay us more than the  Company's  management
thinks they are worth.                                                          

     Loss of  Significant  Contract.  The  Company's  current  results have been
severely impacted as a result of the loss of a major contract  effective January
31, 1999. The Company's  principal business is coal fines  reclamation,  and the
termination of the Coal Segment's  major  contract,  which  accounted for 53% of
consolidated  revenues  and  84% of  segment  revenues  in  1999  and for 93% of
consolidated  revenues and all of the segment's  revenues in 1998 had a material
detrimental effect upon the Company's profitability during the last 11 months of
1999   and  all  of   2000   (See   "Coal   Reclamation   Activities---The   MCN
Projects---Dependence of the Segment on a Single Customer").                    

     Operating  Segments.  In 2000 the  Company  operated  within the  following
operating segments:  (1) the coal reclamation ("Coal") Segment,  which is in the
business of operating coal fines reclamation  and/or  briquetting  facilities in
the U.S.  and is pursuing  the  development  of advanced  fine coal  preparation
processes;  (2) the carbon dioxide ("CO2") Segment,  comprised of the production
of CO2 gas; (3) the natural gas well servicing ("WS") Segment,  conducted by two
companies  operating  in  northeastern  Mexico,  comprised  of: (i) a  50%-owned
company  (accounted  for as an equity  investment)  involved in natural gas well
testing  operations,  and (ii) a  100%-owned  company  that has  designed a sand
separator  for use on gas  wells;  (4) the  China  ("China")  Segment,  which is
pursuing (i) environmental  opportunities,  (ii) the sale of technical services,
(iii)  the  sale of  coal  equipment,  and  (iv)  the  operation  of coal  fines
reclamation  facilities in China;  (5) the  e-Commerce  ("e-Commerce")  Segment,
consisting of the development  and  implementation  of systems and  technologies
related to  Internet  commerce;  and (6) the  environmental  remediation  ("ER")
Segment,  consisting  of the  remediation  of  polycyclic  aromatic  hydrocarbon
("PAH") contamination.                                                          

     Discontinued  Operations---ITF  Segment. In 1999 the Company adopted a plan
to  dispose  of  Interstate  Travel  Facilities,   Inc.,  whose  activities  had
previously been conducted as the "ITF" Segment.  Those operations were reflected
as  discontinued  operations in 1998 and the Company  recorded a $1,603,000 loss
from  discontinuing such operations that year. The majority of the assets of the
ITF Segment  were  disposed of in 1999 and the  Company  recorded an  additional
charge of  $434,000  related  to  discontinuing  such  operations.  The  Company
continued to operate the two remaining  facilities  during most of 2000 while it
was attempting to market them. The operation of both stores was suspended during
the fourth  quarter of 2000 in order to minimize  further  losses.  In 2000, the
Company  recorded losses totaling  $591,000,  including an additional  charge of
$420,000 related to discontinuing  such operations,  and does not expect further
charges in connection with such  activities.  At year-end 2000, the discontinued
ITF Segment had  $561,000 of assets  remaining,  consisting  of two  convenience
stores with related property,  plant,  equipment and inventory,  and liabilities
totaling $136,000  consisting  primarily of trade payables,  accrued liabilities
and long-term debt.                                                             

     Discontinued  Operations---BE/IM  Segment. In 1999 the Management Committee
of North  American Brine  Resources  ("NABR") made the decision to terminate the
business of the joint venture and liquidate its assets.  NABR's  operations  had
previously  comprised  the  Company's  Brine   Extraction/Iodine   Manufacturing
("BE/IM") Segment.  Beard owned 40% of NABR, which was not a consolidated entity
and had previously been accounted for as an equity investment.                  

     The joint  venture was  dissolved  effective  September  15, 2000,  and the
Japanese partners received their final  distribution of cash in December,  2000,
with the Company taking over the remaining assets and liabilities. The segment's
larger plant produced its last iodine in April 2000. Shut down of this plant was
completed  in September  2000,  and the Company is now working to dispose of its
equipment.  The Company intends to sell the smaller plant as a going concern. At
year-end  2000,  the  discontinued  segment had  $282,000  of assets  remaining,
consisting  primarily of cash, two iodine  extraction  plants,  brine collection
wells and iodine  inventory,  with liabilities  totaling  $282,000.  The Company
recorded  a  charge  of  $540,000  in  1999  and a gain of  $179,000  in 2000 in
connection with the  discontinuance of the BE/IM Segment and does not anticipate
further charges in connection with such activities.                             

     Net Operating Loss  Carryforwards.  Beard has  approximately $53 million of
unused net operating losses ("NOL's")  available for carryforward,  which expire
between 2004 and 2009. The loss of the NOL's would have a negative impact on the
Company's  future value.  The Company's  Certificate of  Incorporation  contains
provisions  to prevent the  triggering  of an  "ownership  change" as defined in
Section 382 of the  Internal  Revenue  Code by  restricting  transfers of shares
without  the Board of  Directors'  consent to any person if that  person was, or
would thereby become, a holder of 5% or more of the fair market value of Beard's
outstanding capital stock.                                                      

     Unless the context otherwise requires,  references to Beard and the Company
herein include Beard and its consolidated subsidiaries, including Beard Oil.    

Recent Developments                                                             

     Effect of Recent  Developments  on Liquidity.  The  termination  of the MCN
Projects  (see  "Loss of  Significant  Contract"  above  and  "Coal  Reclamation
Activities")  at January  31,  1999 had a material  detrimental  effect upon the
Company's  profitability  during  the  last 11  months  of 1999 and all of 2000.
Primarily as a result of the loss of its major revenue stream,  coupled with the
use  of  funds  required  to  support  the  activities  of its  various  startup
activities,  the Company's  working capital  decreased from $981,000 at year-end
1999 to ($159,000) at year-end 2000.                                            

     The Company continues to take steps to mitigate future funding requirements
by its poorly  performing  subsidiaries.  The Coal Segment is working on two new
pond reclamation  projects,  both of which are expected to mature into operating
projects for Beard  Technologies in the coming 12 months (see "Coal  Reclamation
Activities---Projects  in Advanced Stages" below). The discontinued ITF Segment,
which consumed  $2,239,000 of cash in 1998, $400,000 of cash in 1999 and $22,000
of cash in 2000, is expected to generate  cash in 2001 as its  remaining  assets
are sold. The  discontinued  BE/IM Segment  contributed  $482,000 of cash to the
Company in 2000 and is expected to contribute  $300,000 or more of cash to Beard
in 2001 as its remaining assets are liquidated.  The WS Segment,  which consumed
$1,251,000  of cash in 1999 and  $795,000 of cash in 2000 as the Company  funded
its investment as well as a portion of our partner's investment,  is targeted to
contribute  $375,000 or more of cash to Beard in 2001. In the meantime a related
party has provided $1.5 million of working  capital until the  contemplated  new
coal projects are underway and alternative financing currently being pursued has
been finalized and is in place.                                                 

 CONTINUING OPERATIONS

     Coal  Reclamation  Activities.  The Company's coal  reclamation  activities
comprise the ("Coal") Segment,  which is conducted by Beard  Technologies,  Inc.
("BTI").  BTI is in the  business of  operating  coal fines  reclamation  and/or
briquetting  facilities  in the U.S.  and  provides  slurry  pond core  drilling
services, fine coal laboratory analytical services and consulting services.     

     Carbon Dioxide Operations. The Company's carbon dioxide activities comprise
the ("CO2") Segment,  consisting of the production of CO2 gas which is conducted
through Beard.  The Company owns  non-operated  working and  overriding  royalty
interests in two producing CO2 gas units in Colorado and New Mexico.            

     Natural  Gas Well  Servicing  Operations.  The  Company's  natural gas well
servicing  activities  comprise  the ("WS")  Segment,  which is conducted by two
companies operating in northeastern  Mexico. These operations are carried on by:
(i) a 50%-owned  company  (accounted  for as an equity  investment)  involved in
natural gas well  testing  operations,  and (ii) a  100%-owned  company that has
designed  a sand  separator  for use on gas  wells  and has had five of the sand
separators custom fabricated for use on a trial basis.                          

     Operations  in  China.  The  Company's  activities  in China  comprise  the
("China") Segment, which is conducted by Beard Sino-American Resources Co., Inc.
("BSAR").  BSAR is pursuing  environmental  opportunities,  coal reclamation and
related marketing opportunities in the People's Republic of China.              

     e-Commerce.   The  Company's   e-Commerce   activities  comprise  the  ("e-
Commerce")  Segment,   which  is  conducted  by   starpay.com(TRADEMARK),   inc.
("starpay").  starpay is pursuing the development of a virtually  secure payment
system to be used exclusively for Internet transactions.                        

     Environmental   Remediation.   The  Company's   environmental   remediation
activities  comprise the ("ER")  Segment,  which is  conducted by ISITOP,  Inc.,
("ISITOP").  ISITOP  specializes  in  the  remediation  of  polycyclic  aromatic
hydrocarbon  ("PAH")  contamination,  and  has  been  attempting  to  develop  a
commercial  market  for the  chemical  process  for  which it is the  sole  U.S.
licensee.                                                                       

(b)   Financial information about industry segments.                            

     Financial   information   about  industry  segments  is  contained  in  the
Statements  of  Operations  and  Note 16 of  Notes  to the  Company's  Financial
Statements. See Part II, Item 8---Financial Statements and Supplementary Data.  

(c)   Narrative description of operating segments.                              

     The Company  currently has six operating  segments:  Coal,  CO2, WS, China,
e-Commerce  and ER.  All of such  activities,  with the exception of Beard's CO2
gas production  activities,  are conducted through subsidiaries.  Beard, through
its   corporate   staff,   performs   management,    financial,    consultative,
administrative and other services for its subsidiaries.                         

 COAL RECLAMATION ACTIVITIES

     History/Formation of Beard Technologies, Inc. In 1990, the Company acquired
more than 80% of Energy  International  Corporation,  a research and development
firm  specializing  in  coal-related  technologies.  In 1994 Beard  sold  Energy
International  to The Williams  Companies,  Inc.,  retaining the patented mulled
coal  technology  that Energy  International  had developed in the interim.  The
patent rights were contributed to a wholly-owned subsidiary, Beard Technologies,
Inc. The mulled coal  technology is an innovative and  inexpensive  process that
converts  wet fine coal into a mulled coal  material  that  handles,  stores and
transports like dry coal. But, unlike thermally dried fine coal,  mulled coal is
not dusty,  will not rewet,  will not  freeze,  and causes no  environmental  or
safety hazards related to fugitive coal dust.                                   

     Department  of  Energy  Contract;   Attempts  to   Commercialize   the  M/C
Technology..  From  March 1994 to March 1996 the  United  States  Department  of
Energy funded most of the cost of a project to  demonstrate  the  feasibility of
the mulled coal technology.  Results of the project were highly encouraging, and
Beard  Technologies  focused  most of its  attention  for the next two  years on
efforts  to make coal  producers  aware of the  technology  and its  advantages.
Although  a number of viable  projects  were  developed,  the  parties  involved
preferred to focus on Section 29 projects  which  appeared to offer much greater
profit potential.  As a result,  efforts to commercially  develop the technology
have been placed on hold.                                                       

     Impact of Section 29. In late 1997 and early 1998 significant  activity was
focused upon the development of fine coal waste  impoundment  recovery  projects
which qualified for Federal tax credits under Section 29 of the Internal Revenue
Code.  Such projects  involve  recovering the raw slurry with a dredge,  using a
sophisticated  washing plant to remove clay and other fine  impurities  from the
coal, and finally  producing a high BTU fine coal briquette  which qualifies for
the alternative fuels tax credit. In order to qualify for the tax credit,  which
may  amount  to as  much as $20 to $25 per  ton of  coal  briquettes  sold,  the
synthetic  fuel must be produced  (i) from a facility  placed in service  before
July 1, 1998; (ii) pursuant to a binding contract entered into before January 1,
1997; and (iii) before January 1, 2008.                                         

     In October of 2000 the Internal  Revenue  Service  announced  that it would
conduct a public  review of the Section 29 tax credit due to concerns  that some
synfuel  operators  are  violating  the spirit of the synfuel  credit by running
freshly mined coal through their plants instead of waste material.              

     The MCN Projects. On June 30, 1998, Beard Technologies finalized agreements
with MCNIC Pipeline & Processing Company  ("MCNIC"),  a subsidiary of MCN Energy
Group Inc. ("MCN"), to acquire  beneficiation  plants located at six coal slurry
impoundment  sites in West  Virginia,  Kentucky,  and  Ohio.  The  purchase  was
financed by a $24 million loan from MCNIC.  Under the  agreements,  which became
effective  April 1, 1998,  Beard  Technologies  operated and  maintained the six
beneficiation  plants and six  briquetting  plants for MCNIC  under a  cost-plus
arrangement,  receiving a minimum operating profit of $100,000 per month so long
as the contracts  remained in effect.  Since these were Section 29 projects,  it
was originally  contemplated that the contracts would last until the tax credits
expired on December 31, 2007.  However, in November of 1998 MCN became concerned
that the plants might not qualify for the tax credit,  and took a special charge
of  $133,782,000  to completely  write off the projects.  Effective  January 31,
1999,  MCNIC  terminated the operating  agreements and assumed  ownership of the
equipment, thereby relieving Beard Technologies of its debt obligation to MCNIC.

     During the time Beard  Technologies  was operating the 12 plants it was, to
the best of the  Company's  knowledge,  the largest  operator  of coal  recovery
plants in the world.  In its capacity as contract  operator,  BTI supervised the
last few months of  construction,  hired and trained 11 foremen and 71 equipment
operators,  obtained all necessary  permits,  negotiated and executed a contract
with the Union,  and brought each project into production of clean coal from the
ponds and alternative fuel from the briquetting plants by the required deadline.

     Current  Focus on Coal  Reclamation.  Since  the  termination  of the MCNIC
agreements  Beard  Technologies  has  continued  to focus  its  efforts  on coal
reclamation. During the past two years Beard Technologies has called on numerous
coal producers and utilities,  particularly those having ponds which it believes
have large reserves of recoverable coal fines.                                  

     Projects in Advanced  Stages.  Beard  Technologies  is continuing to pursue
other  reclamation  projects.  It recently  cored a slurry pond in West Virginia
owned by a Fortune  500  company  which has now made the  decision  to install a
preparation  plant to recover clean coal from the pond.  Beard  Technologies  is
negotiating  with third parties  concerning  the  installation  of the equipment
needed for the project. If such negotiations are successfully  concluded,  plant
construction is expected to commence in the third quarter of 2001.              

     Beard  Technologies  recently  completed the drilling of 50 core holes at a
large pond for a sizeable public company. Analysis of samples from the cores are
favorable  and we will  be  negotiating  with  the  pond  owner  concerning  the
installation and/or operation of a preparation plant at the pond site.          

     Although  negotiations  in  connection  with  both of  these  projects  are
underway,  no formal agreements have been signed.  Accordingly,  finalization of
definitive  agreements  and  commencement  of plant  operations  in 2001 are not
assured.                                                                        

     Improved  Drilling  and  Lab  Capabilities.  During  the  year  2000  Beard
Technologies  made  substantial  investments  to improve  its  slurry  pond core
drilling   equipment   and  its  fine  coal   laboratory   analytical   services
capabilities.   In  addition  to  supporting  its  own  pond  recovery   project
evaluations, by mid-year the company was able to offer state of the art drilling
and   analytical   services  to  commercial   clients  who  were   independently
investigating their own projects. During 2000 the company drilled 150 core holes
for eight different  commercial  clients,  and 80% of the cores were analyzed at
Beard Technologies'  laboratory.  The drilling and analytical business continued
strong  through  January  2001,  and there has been a  substantial  increase  in
consulting  revenues  during the same  period.  Consulting  revenues in 2001 are
expected to exceed $100,000, in addition to drilling and lab revenues.          

     Recent Developments:  Sharp Increase in Natural Gas Prices;  Effect on Coal
Pricing; Possible Impact of Change in National Energy Policy. The sharp increase
in natural gas prices beginning in late 1999 and continuing  throughout 2000 has
had a major impact upon the electric power generating  industry.  In particular,
during the last two months of 2000 and  continuing  into January of 2001 natural
gas has been in  extremely  short  supply and spot  prices for  natural gas have
increased  to  record  levels.  This has  caused  severe  problems  in  southern
California  with the cost of  electricity  in San  Diego up 200%.  The two major
electric  utilities serving the area have both threatened  bankruptcy because of
the gas supply problem and the sharp  increase in gas prices  resulting from the
previous  deregulation  of the industry.  Similar  imbalances have occurred to a
lesser  degree  over much of the  country.  As a result,  during  the last three
months  the spot  price  for coal has  moved up  sharply,  narrowing  the  price
differential between coal and natural gas on a btu basis.                       

     On February 8, 2001, the new Secretary of Energy  indicated that "enhancing
the future of coal-fired power is certain to be part of a comprehensive national
energy policy" under the Bush administration,  and that the Department of Energy
is offering $95 million in matching  grants to quickly  increase  efficiency and
decrease pollution at coal-fired power plants. The recent electricity  shortages
in California,  which have also threatened to impact other western states,  have
drawn  considerable  attention to the problems that can be caused by reliance on
natural gas as the sole power supply to generate electricity.                   

     Principal  Products  and  Services.  The  principal  products  and services
supplied by the Company's Coal Segment are (i) the capability to undertake large
reclamation  projects and the cleanup of slurry pond  recovery  sites;  (ii) the
operation of coal  briquetting  facilities  owned by third  parties;  (iii) core
drilling of slurry ponds and  evaluation  of  recoverable  coal  reserves;  (iv)
consulting reclamation technology;  (v) technical services; and (vi) proprietary
coal reclamation technology.                                                    

     Dependence of the Segment on a Single Customer.  The Coal Segment accounted
for the  following  percentages  of the  Company's  consolidated  revenues  from
continuing operations for each of the last three years.                         

    Percent of
      Consolidated
       Revenues from
Fiscal Year     Continuing            
Ended         Operations          
-----------     ----------------      

12/31/00         27.5%                
12/31/99         63.4%                
12/31/98         92.9%                

     Revenues  from the MCN  Projects  accounted  for 35% of the Coal  Segment's
revenues from  continuing  operations in 2000,  for 84% of such revenues in 1999
and for  all of such  revenues  in  1998.  Termination  of the  MCNIC  operating
agreements effective January 31, 1999 has had a material detrimental effect upon
the  Company's  profitability  since  that  date.  The  Company's  revenues  and
profitability  will continue to be negatively  impacted until  contracts for new
reclamation projects have been negotiated and finalized.                        

     Facilities.  Beard Technologies leases an office and laboratory  facilities
from the Applied Research Center at the University of Pittsburgh ("UPARC").  The
UPARC  facilities  give  the Coal  Segment  access  to a wide  range of coal and
mineral testing capabilities.                                                   

     Market  Demand and  Competition.  The coal  reclamation  industry is highly
competitive, and the Coal Segment must compete against larger companies, as well
as several small  independent  concerns.  Competition is largely on the basis of
technological expertise and customer service.                                   

     Seasonality.  The coal reclamation business is somewhat seasonal due to the
tendency for field activity to be reduced in cold and/or bad weather.           

     Employees. As of December 31, 2000, the Coal Segment employed six full time
employees.                                                                      

     Financial Information.  Financial information about the Coal Segment is set
forth in the Financial  Statements.  See Part II, Item 8---Financial  Statements
and Supplementary Data.                                                         

 CARBON DIOXIDE OPERATIONS

     General. The Company's carbon dioxide (CO2) gas operations are conducted by
the parent  company which owns working and overriding  royalty  interests in two
CO2 gas producing units.                                                        

Carbon Dioxide (CO2) Properties                                                 

     McElmo Dome.  The McElmo Dome field in western  Colorado is a  240,000-acre
unit from which CO2 gas is  produced.  Beard owns a 0.544690%  working  interest
(0.471157% net revenue interest) and an overriding  royalty interest  equivalent
to a 0.092190% net revenue interest in the Unit, giving it a total 0.563347% net
revenue interest.                                                               

     Deliveries of CO2 gas are  transported  through a 502-mile  pipeline to the
Permian Basin  oilfields in West Texas where such gas is utilized  primarily for
tertiary oil recovery.  In 2000, Kinder Morgan CO2 Company,  L.P. replaced Shell
CO2 Company Ltd. as operator of the unit. There are 44 producing wells,  ranging
from 7,634 feet to 8,026 feet in depth.  McElmo  Dome and Bravo Dome (see below)
are believed to be the two largest producing CO2 fields in the world. The gas is
approximately 98% CO2.                                                          

     In 2000 Beard sold 1,319,000 Mcf (thousand cubic feet)  attributable to its
working and overriding royalty interests at an average price of $.36 per Mcf. In
1999 Beard sold 1,536,000 Mcf attributable to its working and overriding royalty
interests at an average price of $.27 per Mcf. In 1998, Beard sold 2,187,000 Mcf
attributable to its working and overriding royalty interests at an average price
of $.28 per Mcf. Beard was  overproduced  by 76,000 Mcf on the sale of its share
of McElmo Dome gas at year-end 2000.                                            

     As the result of a  development  program  undertaken  by Shell in mid-1996,
McElmo Dome  production had increased to 935 million cubic feet per day in March
1998.  Following  the severe  decline in oil prices in late 1998 and early 1999,
CO2  demand  for  tertiary  recovery  decreased  sharply,  and  McElmo  Dome CO2
production  decreased to 657 million cubic feet per day in April 1999.  With the
sharp  increase in oil prices in late 1999 and  throughout  2000, CO2 demand for
tertiary recovery  increased  accordingly.  CO2 production had increased back to
777 million cubic feet per day in the fourth  quarter of 1999 and to 800 million
cubic feet per day in the fourth quarter of 2000.                               

     Beard  considers its ownership  interest in the McElmo Dome Field to be one
of its most valuable assets.  In November 2000 Hunt Oil Company sold its 0.0197%
working  interest  (0.0164% net revenue  interest)  and its  overriding  royalty
interest  equivalent to a 0.0356% net revenue  interest in the Unit for $225,000
at a public auction in Houston,  Texas. On an equivalent basis, Beard's interest
in the Unit is estimated to have an approximate value of $2.2 million.          

     Bravo  Dome.   Beard  also  owns  a  0.05863%   working   interest  in  the
1,000,000-acre  Bravo Dome CO2 gas unit in northeastern New Mexico.  At December
31,  2000,  Beard was  underproduced  by 337,000 Mcf on the sale of its share of
Bravo Dome gas.  The  Company  sold no CO2 gas from Bravo Dome in 2000,  1999 or
1998 despite being in an underproduced  status. The Company's solid CO2 segment,
which was sold in 1997, had previously  provided the market for such gas, and no
efforts have been made to market the Company's  share of the gas since the sale.
However, in view of the recent increase in CO2 prices, the Company has initiated
discussions to commence selling its CO2 and expects such sales to commence prior
to year-end 2001.                                                               

     Amoco  Production  Company operates a CO2 production plant in the middle of
the Bravo Dome field. The 350 producing wells are approximately 2,500 feet deep.
The gas is approximately 99% CO2.                                               

     Net  CO2  Production.  The  following  table  sets  forth  Beard's  net CO2
production for each of the last three fiscal years:                             

Fiscal         Net CO2              
Year         Production             
Ended          (Mcf)                
------       ----------             
12/31/00        1,319,000               
12/31/99        1,536,000               
12/31/98        2,187,000               

     Average Sales Price and  Production  Cost.  The following  table sets forth
Beard's  average  sales price per unit of CO2 produced  and the average  lifting
cost, lease operating  expenses and production taxes, per unit of production for
the last three fiscal years:                                                    

      Average            Average
Fiscal           Sales             Lifting          
Year          Price Per Mcf     Cost Per Mcf      
Ended            of CO2            of CO2           
------         -----------      -------------       
12/31/00          $0.36              $0.05            
12/31/99          $0.27              $0.06            
12/31/98          $0.28              $0.05            

     Dependence of the Segment on a Single Customer.  The CO2 Segment  accounted
for the  following  percentages  of the  Company's  consolidated  revenues  from
continuing  operations  for each of the last  three  years.  The  Company's  CO2
revenues are received  from two operators who market the CO2 gas to numerous end
users on behalf of the interest owners who elect to participate in such sales.  

          Percent of
            Consolidated
             Revenues from
Fiscal Year     Continuing      
Ended           Operations      
------------   --------------   
12/31/00         60.2%          
12/31/99         27.8%          
12/31/98         6.7%           

     Productive  Wells.  Beard's  principal CO2  properties are held through its
ownership of working  interests in oil and gas leases which  produce CO2 gas. As
of  December  31,  2000,  Beard held a working  interest in a total of 394 gross
(0.44 net) CO2 wells located in the continental  United States.  The table below
is a summary of such developed properties by state:                             

             Number of Wells
             ---------------
State              Gross        Net       
-----------------------------------       
Colorado.........      44       0.239           
New Mexico.......     350       0.205           
            ----      ------
           394       0.444
           ====      =====

Employees. As of December 31, 2000, the CO2 Segment had no employees. 

     Financial  Information.  Financial  information about the Company's CO2 gas
operations is contained in the Company's Financial Statements. See Part II, Item
8---Financial Statements and Supplementary Data.                                

 NATURAL GAS WELL SERVICING OPERATIONS

     TESTCO INC. de MEXICO,  S.A. de C.V. In 1998 the Company formed ITS-Testco,
L.L.C.,  an  Oklahoma  limited  liability  company in which the  Company has 50%
ownership ("ITS-Testco").  ITS-Testco owns 100% of a subsidiary,  TESTCO INC. de
MEXICO,  S.A.  de C.V.  ("Testco de  Mexico"),  which was also formed in 1998 to
conduct natural gas well testing  operations in northeastern  Mexico.  Testco de
Mexico has worked as a  subcontractor  to contractors  working for Pemex testing
natural gas wells which Pemex is drilling just south of the  southernmost  Texas
border.  ITS-Testco  owns most of the equipment  which is being  utilized by and
leased to Testco de Mexico.                                                     

     Neither the ITS-Testco nor Testco de Mexico had any operations,  other than
startup costs, in 1998.  ITS-Testco began leasing  equipment to Testco de Mexico
in  January  1999 when  Testco de  Mexico  commenced  its  actual  well  testing
operations.                                                                     

     Incorporated  Tank  Systems de Mexico,  S.A.  de C.V.  In 1999 the  Company
formed ITS, Inc. ("ITS"),  an Oklahoma  corporation which is wholly-owned by the
Company.  ITS owns 100% of a Mexican  subsidiary,  Incorporated  Tank Systems de
Mexico, S.A. de C.V. ("ITS de Mexico") which was also organized in 1999. ITS has
designed a sand separator (patent applied for) to meet the specific requirements
of Pemex.  ITS de Mexico had five of the separators  custom  fabricated which it
was  renting to Pemex prior to the  shutdown.  ITS de Mexico had  installed  the
separators  at  specific  locations  designated  by Pemex  and was  renting  the
separators to them on a trial basis.                                            

     Shutdown of Well Servicing Operations. In January of 2000 Pemex changed its
procedures  for the  handling  of well  servicing  contracts.  In the past these
contracts  had  usually  been  "rolled  over" and there had been  continuity  of
operations.  Under the new procedure these contracts were allowed to expire. The
two companies that comprise the WS Segment  joined with a large service  company
in bidding  on new  contracts  let  during  the year by Pemex,  but were not the
successful bidder.  Meanwhile, all of the WS Segment's operations in Mexico were
suspended  as of January  29,  2000,  and most of its  personnel  were placed on
furlough  with the balance on a severely  reduced  work  schedule.  At year-end,
following  unsuccessful  discussions  with  Pemex and with our  partner  service
company  that had  indicated  some  interest  in pooling  their  well  servicing
equipment  with  ours,  we made the  decision  to move  four of our  eight  well
servicing  units  back to south  Texas  where we expect  to put them to work.  A
decision will be made on the remaining equipment during the year.               

     Principal  Products  and  Services.  The  principal  products  and services
supplied  by  the  Company's  WS  Segment  are  the  services,  provided  by the
furnishing of (i) properly trained personnel,  (ii) specially designed equipment
and (iii) technological expertise,  which it provides to customers who need such
services  to  test  high  pressure  natural  gas  wells  or  to  solve  pipeline
maintenance problems.                                                           

     Dependence of the Segment on a Single  Customer.  The WS Segment  accounted
for the  following  percentages  of the  Company's  consolidated  revenues  from
continuing  operations for each of the last three years. All of the Company's WS
revenues  were  received  from  Pemex  in  connection  with  the  lease  of sand
separators.                                                                     
          Percent of
          Consolidated
           Revenues from
Fiscal Year       Continuing        
Ended          Operations     
-----------      --------------     
12/31/00           8.3%         
12/31/99           5.5%         
12/31/98           -0-%         

     Because the Company owns only 50% of ITS-Testco and thus only 50% of Testco
de Mexico it is not a  consolidated  entity and  accordingly  (i) the  Company's
investment in such  entities is accounted  for by the use of the equity  method,
and (ii) the  revenues  of such  entities  were not  included  in the  Company's
consolidated revenues. The Company recorded $1,069,000,  $229,000 and $35,000 of
losses as its share of  ITS-Testco's  operating  losses in 2000,  1999 and 1998,
respectively.  All of Testco de Mexico's  revenues (and thus  indirectly  all of
ITS-Testco's revenues) were from work performed for one subcontractor to Pemex. 

     It should  be noted  that all of the WS  Segment's  revenues  are  directly
attributable  to work  being  performed  by or for  Pemex,  and  that all of the
equipment  involved  has  been  specifically  designed  to meet  the  needs  and
requirements  of Pemex.  Accordingly,  future  results of  operations  of the WS
Segment in Mexico are totally dependent upon the Segment's continuing ability to
attain contracts and/or subcontracts from Pemex (see "Shutdown of Well Servicing
Operations" above).                                                             

     There is a shortage of well control  equipment in Mexico,  and we are still
hopeful  that the WS Segment  will  receive  new  contracts  and will resume its
activities.  However,  there is no assurance of this.  Meanwhile,  we have moved
four of our eight well  servicing  units to south  Texas  where  there is also a
shortage of such equipment and we expect to put the equipment to work there.    

     Facilities.  Testco de Mexico is occupying a small office and yard which it
leases in Reynosa,  Tamaulipas,  Mexico.  ITS de Mexico  leases office space and
personnel from Testco de Mexico.                                                

     Market  Demand  and  Competition.  The well  servicing  industry  is highly
competitive,  and the WS  Segment  must  compete  against  significantly  larger
companies, as well as several small independent concerns. Competition is largely
on the basis of technological expertise and customer service.                   

     Financial  Information.  Financial  information  about the  Company's  well
servicing  operations is contained in the Company's  Financial  Statements.  See
Part II, Item 8---Financial Statements and Supplementary Data.                  

 OPERATIONS IN CHINA

     Beard  Sino-American  Resources  Co.,  Inc. In 1998 the  Company  opened an
office in  Beijing,  People's  Republic  of China.  Later that year the  Company
formed  Beard  Sino-American   Resources  Co.,  Inc.  ("BSAR"),  a  wholly-owned
subsidiary  of  Beard,  to serve as the  joint  venture  partner  for all of the
Company's activities in China. In 1999 BSAR established a Representative  Office
in Beijing.                                                                     

     Environmental  Opportunities.   China  is  a  large  country  with  serious
environmental  problems  which  include  atmospheric  pollution,   ground  water
pollution and land  pollution.  To solve these  problems the government has made
the decision to bring in foreign  equipment and  technology.  To assist China in
its efforts we decided to focus our  initiatives  on  atmospheric  pollution and
land  pollution.  The  atmospheric  pollution  is  generated  by  China's  heavy
dependence on coal burning steam boiler electric power plants  compounded by the
burning of coal for heat by many Chinese residences.  Our focus here has been to
assist them with cleaning up the coal they are using to create the energy in the
coal burning  plants.  The  government  has decided to double the amount of wash
plants  currently in operation and update the equipment in the existing ones. To
date, however, funds have not been made available to proceed with such efforts. 

     Our second area of focus is on land pollution. The amount of arable land in
China is limited considering its dense population.  China is the largest user of
chemical fertilizers in the world.  Unfortunately,  the carryover of fertilizers
from one planting to the next and the considerable  runoff into lakes and rivers
has polluted much of China's arable land and fresh water resources.             

     Qitaihe Lushon Joint Venture. In 1998 the Company entered into a Memorandum
of  Understanding  to establish a joint venture to utilize  Beard  Technologies'
mulled coal technology in two coal preparation  plants in Heilongjiang  Province
in northeastern Manchuria.  Changes in the political and business environment in
China,  particularly  in the coal industry where the Coal Ministry has shut down
more than 1,000 coal mines in the last two years, have caused us to indefinitely
postpone the installation of these plants.                                      

     Centrifuge  Distributorship.  In 1999  the  Company  became  the  exclusive
distributor in China for Decanter Machine,  Inc.  ("Decanter").  Decanter is the
leading manufacturer of de-watering  equipment  (centrifuges) for the U. S. coal
industry.  Beard acts as an  independent  contractor  in  promoting  the sale of
Decanter  products  in  China  where  there  appears  to  be  significant  sales
potential.  China is the largest producer and consumer of coal in the world, and
it relies heavily on coal for creating electricity. Currently it washes only 25%
of its  production.  In order for the  country  to meet its  internal  goals for
decreasing atmospheric pollution,  it needs to start washing 100% of the coal it
produces.  It needs to re-manufacture the centrifuges it already has, which were
furnished by a competing  manufacturer  but have proven to be the wrong  machine
for the application.  The existing centrifuges could never de-water to less than
30%  moisture  content,  which is too much  moisture to sell the coal.  Decanter
believes that  re-manufacuring  those machines can improve their  efficiency and
enable  them to reduce the  moisture  content to the 15% to 18% range,  which is
marketable.  China  also needs to buy  additional  equipment.  We are  currently
attempting  to get  the  Decanter  centrifuges  approved  by the  various  local
governments,  which will then need to release the funds to re-manufacture and/or
purchase the needed equipment.                                                  

     Although  the need to upgrade old  equipment  and  install new  capacity is
great,  the government has been slow in releasing funds and no commitments  have
been received to date.  Accordingly,  marketing of the  centrifuges  has taken a
secondary position to the OCCF initiatives described below.                     

     Organic-Chemical  Compound  Fertilizer  Initiatives.  China,  which  is the
world's  fourth  largest  country  in area,  is also the  world's  most  heavily
populated country,  with a population of almost 1.4 billion.  For many years the
Chinese have boosted the production of food crops by applying  large  quantities
of nitrogen,  phosphate and potassium  fertilizers to their dwindling  amount of
arable land. This overuse of fertilizer has resulted in damaged, less productive
soil  and  high  rates  of  erosion.   Working  with  the  top  agronomists  and
academicians in the Chinese agricultural community, BSAR has developed a concept
to solve the problem by manufacturing  chemical fertilizers blended with compost
derived from organic wastes. The end result will be an organic-chemical compound
fertilizer  ("OCCF")  utilizing at least two types of organic  waste  materials:
sewage sludge and crop-residual agri-waste.                                     

     Cooperative Joint Ventures.  Through BSAR, the Company has signed contracts
and formed  Cooperative  Joint Ventures  ("CJV's") or similar  arrangements with
various  Chinese  partners  for  the  construction  of four  facilities  and the
marketing and sales of OCCF. Negotiations are also underway for the construction
of three  additional  facilities.  The  life of each CJV will be 20 years  after
which the  facilities  will  revert to the  Chinese  partners.  In each case the
Chinese  partners have  committed to provide the funding for the  facilities and
the  necessary  financing and working  capital.  BSAR will have an interest from
inception in each CJV determined by BSAR's equity  contribution for bringing the
technology  to China,  and will also  receive  an  operating  fee.  Progress  is
dependent upon the Chinese partners fulfilling their commitments.               

     Groundbreaking  on the  first  four  plants  is  tentatively  scheduled  as
follows:                                                                        

Location      Province          Date            
------------------------------------            
Baoding         Hebei        March  2001*       
Handan          Hebei        April  2001        
Shenyang        Luoyang        May  2001        
Qiqihaer        Heilongjiang   June 2001        

----------------------                                                          

*    Groundbreaking   for  this  plant  occurred  in  early  March,   and  plant
construction is expected to commence in early April.                  

     Construction of each facility is expected to be completed five months after
groundbreaking, at which point production is scheduled to start. Ramp up to full
production  is scheduled to occur three months after  production  startup.  Each
plant  will  be  comprised  of  an  AirLance  Compost  Systems  facility,  and a
granulating plant and other ancillary facilities. The plants will all be similar
in design  and  construction,  and are  targeted  to cost  approximately  US$3.1
million each,  including  pre-operating  expenses and working capital.  Targeted
output  of each  plant  is  about  70,000  metric  tons of OCCF per year at full
production.                                                                     

     The  formulation  of our  product  will be based on the  target  crops  and
determined by the leading soil scientists at Beijing Agricultural University and
agronomists in each province.  Our production  will amount to less than about 5%
of total fertilizer  demand in each of the provinces in which we are planning to
construct a facility.  Sale prices for our product will be commensurate with and
the quality  will be superior to other  similar  products  presently  available.
Furthermore,  we will receive  strong  support for our product from these senior
scientists.  Based on these and other factors, we are confident that our product
will be well received by the agricultural community.                            

     Principal  Products  and  Services.  The  principal  products  and services
supplied by the Company's China Segment are (i) environmental  technology;  (ii)
technical  services;  (iii)  sales of coal  equipment;  and (iv) the mulled coal
technology.                                                                     

     The  China  Segment  has  generated  no  revenues  to date and  accordingly
accounted  for  none of the  Company's  consolidated  revenues  from  continuing
operations during the last three years.                                         

     Facilities.  BSAR leases a small office located in Beijing Landmark Tower A
in Beijing, China.                                                              

     Market Demand and Competition. Both the environmental industry and the coal
reclamation industry are highly competitive,  and the China Segment must compete
against significantly larger companies, as well as a number of small independent
concerns,   in  both  businesses.   Competition  is  largely  on  the  basis  of
technological expertise and customer service.                                   

     Employees.  As of December 31, 2000, the China Segment  employed three full
time employees.                                                                 

     Financial Information. Financial information about the China Segment is set
forth in the Financial  Statements.  See Part II, Item 8---Financial  Statements
and Supplementary Data.                                                         

e-COMMERCE

     Formation of  starpay.com(TRADEMARK),  inc. In February  1999 Marc Messner,
Beard's VP-Corporate Development,  presented to Beard management his concept for
an easy,  inexpensive and virtually secure payment system to be used exclusively
for Internet transactions.  Shortly thereafter Beard entered into Memorandums of
Understanding with (i) a Web site development company and (ii) a patent attorney
who agreed to join forces to develop the concept.  The Memorandums provided that
the patent applications would be owned by Beard, Messner (the inventor), the Web
site company and the patent attorney (collectively, the "Patent Owners").       

     In mid-1999 three patent  applications were filed embodying the features of
the invention, and starpay.com(TRADEMARK), inc. ("starpay") was formed to pursue
the development of the payment system. A fourth patent  application was filed in
November 1999 which supplemented the earlier filings.  In 2000 the Patent Owners
converted their ownership in the patent  applications to ownership in starpay as
follows: Beard (78.4%); Messner (7.6%); patent attorney (7.0%); Web site company
(7.0%).  starpay filed two  additional  patent  applications  in 2000 which have
considerably  broadened the scope and,  starpay  believes,  the potential of its
patent claims.                                                                  

     The  starpay   Technology.   We  have  identified  and  investigated   many
opportunities  for  our  proprietary  authentication  technology  which  include
various  e-commerce  payment  systems,  security access  applications and secure
document transmission.  Although there are many applications for our technology,
we are focusing on the development of our  Internet-only  credit card because we
are  confident  that  this  product  will  get  immediate  response  in  today's
e-commerce marketplace.                                                         

     We believe that the starpay  payment  system offers safer,  easier and more
flexible purchasing options and account features than are presently available on
the Internet today.  Unlike  conventional  credit,  debit or prepaid cards,  the
patent-pending  starpay  system cannot be used in person,  nor can it be used to
order goods by telephone.  The starpay  system is an  Internet-only  application
that gives the user total  control over the use of their  e-Commerce  purchasing
account  and thus the  ultimate  feeling  of  security.  Cybertheft  of a user's
starpay  identification  number,  PIN number and other  transaction  information
during transmission from the user to the merchant is virtually impossible due to
the difficulty of overcoming starpay's proprietary back-end security technology.
Furthermore,  because of starpay's unique transaction methodology, if the user's
account  information  is stolen  from a  merchant's  web site  there is still no
liability  exposure to the user, the merchant or to starpay.  The starpay system
also addresses the merchant's exposure to non-repudiation issues associated with
Internet  purchasing.  We believe  starpay's  security  features and  associated
secure  transaction  technology  are more  advanced  and  secure  than any known
technology in use today.                                                        

     Review of starpay's Security Assessment.  starpay engaged a consulting firm
to  perform  a  security  assessment  of its  security  technology  and  applied
processes.  The assessment  compared and contrasted  starpay's security protocol
with the two industry primary "standard"  protocols (SSL and SET) and provided a
product  level  comparison  with  leading  credit,  debit  and  prepaid  payment
products.  The "white paper"---titled  "Protocol and Competitor  Analysis"---was
completed in April of 2000.                                                     

     Based upon its review of the document,  starpay's  management believes that
its  patent-pending  payment system is the most secure payment system  available
for use on the Internet. The starpay model significantly enhances the use of SSL
by  addressing  all  the  noted  security   risks   associated   with  SSL-based
transactions and meets all the goals of an SET-based transaction without the use
of SET's slow and costly high level  cryptographic  features.  In  summary,  the
starpay process provides  significant security components to both the vendor and
consumer,  with a focus  on ease of or  transparent  use to the  vendor  and the
potential for absolute transaction security for the consumer.  The "white paper"
concludes  that "the  starpay  process  meets or  exceeds  the  majority  of all
transaction qualities of the various (competing) Internet payment processes."   

     Current  Status of starpay  Development  and  Funding.  On the  development
track, we have  identified a strategic  banking partner to assist in developing,
implementing  and  beta  testing  our  technology  with  the  ultimate  goal  of
increasing their credit card portfolio because of starpay's unique Internet-only
credit card product. We are excited about the upstream and downstream  marketing
potentials this  relationship  can bring to starpay which will cost  effectively
strengthen our market  penetration  capability.  starpay and the banking partner
are now working with one of their strategic  partners to address  functionality,
integration  requirements  and  implementation  issues.  starpay  believes  that
finalizing   agreements  with  these  key  strategic   alliances  will  lead  to
procurement of the additional  funding  needed to complete the  programming  and
testing  of all  software,  the  purchase  and  installation  of  the  necessary
hardware,  the addition of necessary  personnel and the successful  launching of
the final product.                                                              

     starpay believes that its patent-pending  payment system is the most secure
payment  system  available for use on the Internet.  If starpay is successful in
its strategic  alliance efforts,  the e-Commerce Segment is expected to become a
major contributor to the Company's future success.  However, no assurance can be
given that starpay will  successfully  commercialize its Internet payment system
technology.                                                                     

     Facilities.  starpay  occupies a small portion of the office space occupied
by Beard at the  Company's  corporate  headquarters  located in  Oklahoma  City,
Oklahoma.                                                                       

     Market Demand and Competition.  The e-Commerce industry is rapidly changing
and  highly  competitive,  and  the  e-Commerce  Segment  must  compete  against
significantly  larger  companies,  as  well as a  number  of  small  independent
concerns.  Competition  is  largely  on the  basis of  technological  expertise,
customer  service,  capital  available  for product  branding and the ability to
react quickly to a constantly changing environment.                             

     Employees.  As of December 31, 2000,  the  e-Commerce  Segment had one full
time  employee and utilized two of the Company's  full time  employees on a part
time basis.                                                                     

     Financial  Information.  Financial information about the e-Commerce Segment
is set  forth in the  Financial  Statements.  See Part  II,  Item  8---Financial
Statements and Supplementary Data.                                              

 ENVIRONMENTAL REMEDIATION

       General.  The Company and its management have  considerable  expertise in
the  environmental  area stemming from  previous  experience as the founder,  as
officers and directors,  and as the principal  shareholder of USPCI, Inc. (NYSE)
from 1968 until its takeover by Union Pacific Corporation in 1987-88.           

     ISITOP,  Inc. In 1997, Beard changed the name of an inactive  subsidiary to
ISITOP, Inc. ("ISITOP"). ISITOP has obtained an exclusive license for the United
States  from  a  company  (the  "Licensor")   which  has  developed  a  chemical
(54GO(TRADEMARK)  901) and has tested a process which utilizes such chemical for
the  remediation of PAH  contamination.  U.S.  Patent  #5,670,460 for method and
composition for 54GO(TRADEMARK) products was granted in 1997. This patent covers
all  applications  utilizing   54GO(TRADEMARK)   products,   including  ISITOP's
applications.                                                                   

     ISITOP is  80%-owned by Beard and  20%-owned  by three  members of ISITOP's
management  team,  two of whom are also the principals of the company from which
the license was obtained.  Although the management team are no longer employees,
they continue as officers and directors of the company and have retained options
to  acquire an  additional  30% of ISITOP  following  payout of all sums owed by
ISITOP to Beard.                                                                

     Attempts  to  Commercialize  ISITOP's  Technology.  For the first two years
following the  formation of ISITOP the company  focused its attention on efforts
to obtain  contracts to clean up old creosote  sites.  Such sites appeared to be
the ideal  target  for  ISITOP'S  technology  since the United  States  alone is
believed to have over 700 wood  preserving  plants which are estimated to use or
produce more than 495,000  tons of creosote  and creosote  byproducts  per year.
Creosote  mixtures  contain  many  compounds  made  up  of  polycyclic  aromatic
hydrocarbons  (PAH's) that are known to cause several forms of cancer.  However,
with the exception of a field test in Colorado in 1997 where ISITOP successfully
cleaned up a small  amount of creosote  contaminated  soil,  such  efforts  have
produced no commercial contracts.                                               

     In 1998 and 1999 ISITOP  focused  most of its efforts on one major  project
where it proposed  using a bioslurry  reactor  system which it had  developed to
remediate oil field hydrocarbon  materials for a major oil company.  ISITOP also
developed a process for cleaning  tanks at creosote  treating  facilities  and a
similar procedure to clean rail cars used to transport liquid creosote.  None of
these initiatives produced commercial contracts.                                

     At the  beginning  of 2000,  ISITOP  broadened  the scope of its  marketing
efforts  and entered  into a teaming  agreement  with a much  larger  company to
enhance its capabilities.  Again, these efforts failed to produce any commercial
contracts.  Although  two  members of the  management  team  continue  to pursue
commercial  contracts  for the  company,  the  Company  is no  longer  providing
financial support.                                                              

     Mexican  Initiative.  Another of the Licensor's  products,  54GO(TRADEMARK)
101, has been used with good success in the zone fracture treatment of oil wells
in the San Juan Basin of New Mexico.  Sample analyses of the heavy  hydrocarbons
encountered in many of the wells in northern  Mexico  indicate that this product
could be used with similar  success  there.  Licensor is currently  pursuing the
sale of its product in Mexico.  If it is successful in obtaining any  contracts,
it is contemplated that ITS de Mexico would become the wholesale distributor for
any 54GO(TRADEMARK) products sold in Mexico. In addition to its 80% ownership of
ISITOP, the Company owns a 22% interest in 54GO Products, Ltd. Co., which is the
marketing arm for all of Licensor's products.                                   

     Principal  Products  and  Services.  The  principal  products  and services
supplied  by  the   Company's  ER  Segment  are  its  licensed   54GO(TRADEMARK)
technology,  its bioslurry  reactor  system,  its process for cleaning  tanks at
creosote  treating  facilities,  its  process  for  cleaning  rail  cars used to
transport liquid creosote, and the distribution of products used in the fracture
treatment of oil wells.  None of these  products or services have  generated any
profits to date for the Company, nor can any assurance be given that ISITOP will
successfully commercialize any of them.                                         

     ISITOP had no revenues in 2000 or in 1999. It provided its services to only
one customer in 1998,  but such revenues  totaled only $8,000.  The loss of such
customer  would  not have a  material  adverse  effect  on the  Company  and its
subsidiaries as a whole.                                                        

     Facilities.  ISITOP is furnished office space in Farmington,  New Mexico as
part of its arrangement with the Licensor.                                      

     Market Demand and Competition.  The environmental  remediation  industry is
highly  competitive,  and in such  activities  ISITOP must compete against major
service  companies,   as  well  as  a  number  of  small  independent  concerns.
Competition  is largely on the basis of  technological  expertise  and  customer
service.                                                                        

     Availability of Raw Materials. Materials used in the ER Segment, as well as
products  purchased  for  resale,  are  available  from a number of  competitive
manufacturers.                                                                  

     Seasonality.  The environmental  remediation business is seasonal, as there
is a tendency for field operations to be reduced in bad weather.                

Employees. As of December 31, 2000, the ER Segment had no employees.  

     Financial  Information.  Financial  information about the ER Segment is set
forth in the Company's  Financial  Statements.  See Part II, Item  8---Financial
Statements and Supplementary Data.                                              

REGULATION

     General. The Company is subject to extensive regulation by federal,  state,
local, and foreign  governmental  authorities.  The Company's  operations in the
United States,  Mexico, and China are subject to political developments that the
Company cannot accurately predict. Adverse political developments and changes in
current laws and regulations affecting the Company could dramatically impact the
profitability of the Company's current and intended  operations.  More stringent
regulations  affecting  the  Company's  coal  reclamation  activities or adverse
changes  in  federal  tax laws  concerning  the  availability  of Section 29 tax
credits could adversely  impact the  profitability  of the Company's future coal
reclamation operations and the availability of those projects.                  

     Environmental  and Worker Safety Matters.  Federal,  state,  and local laws
concerning  the  protection of the  environment,  human health,  worker  safety,
natural  resources,  and wildlife  affect  virtually  all the  operations of the
Company,   especially  its  coal  reclamation  and   environmental   remediation
activities.  These laws affect the  Company's  profitability  and  increase  the
Company's exposure to third party claims.                                       

     It is not  possible  to  reliably  estimate  the  amount  or  timing of the
Company's  future  expenditures  relating to  environmental  matters  because of
continually  changing  laws and  regulations,  and the  nature of the  Company's
businesses.  The Company cannot accurately predict the scope of environmental or
worker safety  legislation  or regulations  that will be enacted.  The Company's
cost to comply with newly  enacted  legislation  or  regulations  affecting  its
business  operations  may require the Company to make material  expenditures  to
comply  with these  laws.  Although  management  believes  that it has  adequate
insurance to address probable environmental  contingencies,  it is possible that
coverage may be inadequate to satisfy future  environmental  liabilities.  As of
this date, the Company is not aware of any environmental liability or claim that
could  reasonably be expected to have a material adverse effect upon its present
financial condition.                                                            

OTHER CORPORATE ACTIVITIES

     Other Assets. Beard also has a number of other assets and investments which
it is in the process of liquidating as  opportunities  materialize.  Such assets
consist  primarily of two  convenience  store  locations with related  property,
plant,  equipment and a small amount of inventory,  iodine extraction plants and
related equipment,  brine collection wells,  drilling rig components and related
equipment,  land and  improvements,  wastewater  storage  tanks,  a real  estate
limited  partnership  in which  the  Company  is a  limited  partner  and  other
miscellaneous   investments.   As  excess  funds  become   available  from  such
liquidations  they will be utilized for working  capital,  reinvested in Beard's
ongoing  business  activities or redeployed  into newly targeted  opportunities.
Beard's  recorded  value for these  other  assets is less than or equal to their
estimated fair value.                                                           

     Office and Other  Leases.  Beard  leases  office  space in  Oklahoma  City,
Oklahoma,  aggregating  5,817 square feet under a lease  expiring  September 30,
2001, at a current annual rental of $80,000. In addition,  Beard's  subsidiaries
lease space at other locations as required to serve their respective needs.     

     Employees.  As of December 31, 2000,  Beard employed 23 full time and three
part  time  employees  in all of  its  operations,  including  seven  full  time
employees and three part time employees on the corporate staff.                 

     (d) Financial  information about foreign and domestic operations and export
sales.                                                                          

     See Item 1(c) for a  description  of foreign and  domestic  operations  and
export sales.                                                                   

Item 2.   Properties.                                                           

See Item 1(c) for a description of properties.                              

Item 3.   Legal Proceedings.                                                    

     Neither Beard nor any of its  subsidiaries are engaged in any litigation or
governmental  proceedings  which  Beard  believes  will have a material  adverse
effect upon the results of  operations  or  financial  condition  of any of such
companies.  However, the Company is a plaintiff in a lawsuit where the Company's
share  of  the  claims,  exclusive  of  interest  and  costs,  exceeded  10%  of
consolidated  current  assets at year-end  2000.  See "McElmo  Dome  Litigation"
below.                                                                          

     McElmo Dome Litigation. On October 22, 1996, the Company joined with others
(the  "CO2  Claims  Coalition,  LLC" or the  "Plaintiff"  or  collectively,  the
"Plaintiffs")  in filing in U.S.  District  Court for the District of Colorado a
suit against Shell Oil Company ("Shell"),  Shell Western E & P, Inc.  ("SWEPI"),
Mobil  Producing  Texas and New  Mexico,  Inc.  ("Mobil")  and  Cortez  Pipeline
Company, a partnership ("Cortez").                                              

     Plaintiffs in the litigation are small share CO2 working  interest  owners,
CO2 royalty owners and CO2 overriding  royalty  interest owners all of whom have
contract  interests in the value of the CO2 produced  from the McElmo Dome Field
(the  "Field"---see  "Carbon  Dioxide  Operations" at pages 10-12).  Plaintiffs'
complaint   alleges  damages  against  the  defendants   caused  by  defendants'
determination of the value of CO2 produced from the Field and the  corresponding
wrongful  underpayment to Plaintiffs.  The complaint  further alleges that Shell
and Mobil are (1) the  dominant  producers  of CO2 from the Field;  (2) partners
owning defendant Cortez;  (3) users of CO2 produced from the Field in west Texas
for the  production of crude oil; and that SWEPI is for all  practical  purposes
the alter ego of Shell and thus liable to the same extent as Shell.             

     Plaintiffs  further  allege  that  defendants  have a conflict  of interest
because they are  simultaneously  producers and users of CO2 from the Field, and
that they have  controlled  and depressed the price of CO2 from the Field by (i)
reducing the delivered price of CO2 while (ii) simultaneously inflating the cost
of transportation from the Field to West Texas.  Plaintiffs have alleged a total
of 10 claims against the defendants,  including  violations of the provisions of
the  antitrust  laws.  Should  Plaintiffs  prevail on all of their  claims,  the
maximum total damages (after trebling) would be approximately $51.3 million plus
Plaintiffs' reasonable attorneys' fees.                                         

     On  January  30,  2001,  the U.S.  Magistrate  Judge  in the  case  granted
Plaintiff's  Motion to Compel Re:  Crime-Fraud  Exception  and ordered Shell and
Mobil to produce to the Plaintiff all documents, from 1983 to the present, which
they had previously refused to deliver on or before February 12, 2001. The Judge
also  granted  Plaintiff's  Motion  to  Compel  Re:  Cortez  Pipeline  Company's
Privilege  Claims and ordered  Cortez to provide to the  Plaintiff  40 documents
previously  requested on or before the same date. In his order the Judge stated:
"In conclusion, the Plaintiff has demonstrated to this Court that probable cause
exists to believe that a fraud has been committed by Defendants  Shell and Mobil
and  therefore  the  attorney-client  privilege  and work  product  privilege is
waived."  Defendants' appeal of the Judge's order to the Tenth Circuit Court was
denied on March 19, 2001, and  defendants  were ordered to deliver the documents
to the Plaintiff. The trial will commence on July 2, 2001.                      

     When the Court denied  Plaintiffs'  class motion in March of 2000,  the CO2
Claims  Coalition  arranged  for the filing of three  additional  cases,  one on
behalf of each royalty owner, each overriding royalty owner and each small share
working  interest owner. The aggregate  Plaintiffs'  interests in these cases is
greater than the aggregate Plaintiffs' interests in the present case with damage
claims  proportionately  the same. The CO2 Claims Coalition is entitled to 5% of
any recovery in these cases to compensate it for the expenditures made to date. 

     From  1996  through  2000 the  Company  incurred  legal  expenses  totaling
$316,000 in  connection  with the suit.  Because many of the  Plaintiffs  in the
class have elected not to fund all or part of their share of the costs involved,
the Company has  incurred  more than its share of such costs for which it may be
entitled to recover a bonus amount. Plaintiffs' lawyers are handling the case on
a contingency basis and will receive 33-1/3% of any settlement or judgment after
deducting all out-of-pocket expenses.                                           

     The Company has joined with several other Plaintiffs in securing a $300,000
loan for the benefit of the  Plaintiffs'  group to assist in meeting its current
obligations.  The  Company  has  provided  a $75,000  certificate  of deposit as
collateral  for  one-fourth of the loan amount in addition to the legal expenses
recited above.                                                                  

Item 4.   Submission of Matters to a Vote of Security Holders.                  

     No matters  were  submitted  during the fourth  quarter of the fiscal  year
covered by this report to a vote of security  holders,  through the solicitation
of proxies or otherwise.                                                        

Item 4a. Executive Officers and Significant Employees of the Company.           

     The table below sets forth the age, positions with the Company and the year
in which each person first became an executive  officer or significant  employee
of the  Company.  All  positions  are held  with the  Company  unless  otherwise
indicated,  and such persons are part of the corporate staff serving the Company
and all of its subsidiaries  unless otherwise  indicated.                       

                           Executive Officer
                          Or Significant
                         Employee of
                          Beard or Beard
Name                    Position                Oil Since         Age           
---------------------------------------------------------------------           

W. M. Beard     Chairman of the Board and                                       
    Chief Executive Officer(AB)    June 1969          72

Herb Mee, Jr.       President & Chief        November 1973        72            
Financial Officer(AB)                     

Philip R. Jamison  President-Beard            February 1997       62            
Technologies, Inc.(CD)                      

Riza E. Murteza    President & CEO - Beard   November 1998        71            
Sino-American Resources                   
Co., Inc. (CD)                      

Marc A. Messner    President & CEO  -          April 1999         39            
starpay.com, inc.(CD)                     

Jack A. Martine   Controller and Chief       October 1996         51            
Accounting Officer                      

Rebecca G. Witcher Secretary and Treasurer(B)   July 1997         41            

---------------                                                                 
(A) Director of the Company.                                                    

(B) Trustee of certain  assets of the Company's  401(k) Trust.                  

(C) Devotes all of his time to this subsidiary.                                 

(D) Indicated entities are subsidiaries of the Registrant.                      

     Information  concerning  the  executive  officers  and certain  significant
employees of the Company is set forth below:                                    

     W. M.  Beard  has  served  Beard as its  Chairman  of the  Board  and Chief
Executive Officer since December 1992. He previously served as Beard's President
and Chief  Executive  Officer from the Company's  incorporation  in October 1974
until  January  1985.  He has served  Beard Oil as its Chairman of the Board and
Chief  Executive  Officer  since  its  incorporation.  He has also  served  as a
director of Beard and Beard Oil since their  incorporation.  Mr.  Beard has been
actively  involved  since 1952 in all  management  phases of Beard and Beard Oil
from their inception, and as a partner of their predecessor company.            

     Herb Mee, Jr. has served as Beard's President since October 1989 and as its
Chief Financial  Officer since June 1993. He has served as Beard Oil's President
since its incorporation,  and as its Chief Financial Officer since June 1993. He
has also served as a director of Beard and Beard Oil since their  incorporation.
Mr. Mee served as  President  of Woods  Corporation,  a New York Stock  Exchange
diversified  holding  company,  from  1968 to 1972  and as its  Chief  Executive
Officer from 1970 to 1972.                                                      

     Philip R. Jamison has served as President of Beard Technologies, Inc. since
August 1994. Mr. Jamison has been  associated with the coal industry since 1960,
working  in  various  positions.  From 1972 to 1977 he served as Vice  President
Operations for International Carbon and Minerals and as President and CEO of all
its coal  producing  subsidiaries.  From  1979 to 1988 he  served as CEO of four
small companies which were engaged in the production and sale of coal. From 1993
to 1995 he served as a consultant to Energy  International,  Inc.  ("EI") in its
development of the Mulled Coal technology and installed and operated the process
at an Alabama coal  preparation  plant in connection with EI's  performance of a
contract for the Department of Energy.                                          

     Riza E.  Murteza has served as  President  and Chief  Executive  Officer of
Beard  Sino-American  Resources  Co., Inc. since November 1998. He was appointed
Senior Advisor to the United Nations Development Project for China,  residing in
China for one year  (1996-1997),  assisting large Chinese  enterprises move to a
market  economy.  Prior to that he served as General Manager and Project Manager
for two large  projects in Indonesia and a large project in the Soviet Union for
periods  totaling nine years, and as a consultant to a number of other companies
during the interim periods.                                                     

     Marc A.  Messner has served as  President  and Chief  Executive  Officer of
starpay  since  April  1999.  He has also  served as Vice  President - Corporate
Development of Beard since August 1998. Mr. Messner is the inventor of starpay's
proprietary payment system technology.  From 1993 to 1998 he served as President
of Horizontal Drilling Technologies, Inc., a company he founded in 1993.        

     Jack A. Martine was elected as Controller, Chief Accounting Officer and Tax
Manager of Beard in October 1996.  Mr.  Martine  served as tax manager for Beard
Oil from June 1989 until  October 1993 at which time he joined Sensor Oil & Gas,
Inc. in a similar capacity. Mr. Martine is a certified public accountant.       

     Rebecca G.  Witcher has served as  Corporate  Secretary  of the Company and
Beard Oil since  October  1993,  and has served as Treasurer  of such  companies
since July 1997.                                                                

All executive officers serve at the pleasure of the Board of Directors.       

 PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder       
Matters.                                                        

(a)   Market information.                                                       

     Since September 28, 2000, the Company's  common stock has traded on the OTC
Bulletin  Board  ("OTCBB")(A)  under the ticker symbol BRCO.  From  September 21
through  September  27,  2000,  such shares were quoted in the  over-the-counter
market (Pink Sheets)(B) under the same symbol,  although no shares traded during
such period.  The following  table sets forth the range of reported high and low
bid quotations for such shares in the respective markets from September 21, 2000
through year-end:                                                               

2000                  High          Low                                   
----                  ----          ---                                   
Fourth quarter         $ 9/16        $ 3/16                                     
Third quarter            5/16          1/4                                      

-------------------                                                             
(A)  The reported quotations were obtained from the OTCBB Web Site.(C)          

(B)  The reported quotations were obtained from Pink Sheets LLC.(C)             

(C)  In both cases, such over-the-counter market quotations reflect inter-dealer
     prices,  without  retail  mark-up,  mark-down  or  commission  and  may not
necessarily represent actual transactions.                            

     Prior to  September  21,  2000,  the  Company's  common stock traded on the
American Stock Exchange ("ASE") under the ticker symbol BOC. The following table
sets  forth the high and low sales  price for the  Company's  common  stock,  as
reflected in the ASE monthly  detail  reports,  for each full  quarterly  period
within the two most recent fiscal years.                                        

2000                  High      Low                                       
----                  ----      ---                                       
Third quarter          $  2       $    5/8                                      
Second quarter            2-3/8      1-5/8                                      
First quarter             2-15/16    2                                          

1999                  High      Low                                       
----                  ----      ---                                       
Fourth quarter         $  2-15/16 $  1-3/4                                      
Third quarter             4-1/4      2-1/2                                      
Second quarter            3-7/8      3-1/8                                      
First quarter             4-3/8      3-3/8                                      

(b)   Holders.                                                                  

As of February 28, 2001, the Company had 441 record holders of common stock.    

(c)   Dividends.                                                                

     To date, the Company has not paid any cash  dividends.  The payment of cash
dividends  in the future  will be subject to the  financial  condition,  capital
requirements  and  earnings of the  Company.  The Company  intends to employ its
earnings,  if any,  primarily in its coal  reclamation  activities  and does not
expect  to pay  cash  dividends  for  the  foreseeable  future.  The  redemption
provisions of the Beard preferred stock limit the Company's  ability to pay cash
dividends.                                                                      

Item 6.  Selected Financial Data.                                               

     The following financial data are an integral part of, and should be read in
conjunction  with,  the  financial  statements  and notes  thereto.  Information
concerning  significant  trends  in  the  financial  condition  and  results  of
operations  is contained in  Management's  Discussion  and Analysis of Financial
Condition and Results of Operations on pages 23 through 35 of this report.      

                                                        [Enlarge/Download Table]

                                     2000           1999        1998       1997        1996  
                                     ----           ----        ----       ----        ----  
                                             (in thousands, except per share data)           
                                                                                             
Statement of operations data:                                                                
  Revenues from                                                                              
  continuing operations             $    782    $  1,503    $  9,246    $    575    $    377 

  Interest income                        136         228         400         183          12 

  Interest expense                       (60)       (170)       (964)       (134)        (62)

  Loss from continuing operations     (2,772)     (2,343)       (277)     (1,393)       (938)

  Earnings (loss) from                                                                       
   discontinued operations              (257)     (1,056)<F1> (3,580)<F2> 10,407<F3>     623 

  Net earnings (loss)                 (3,029)     (3,399)     (3,857)      9,014        (315)

  Net earnings (loss)                                                                        
   attributable to common                                                                    
   shareholders                       (3,029)     (3,399)     (3,857)      5,225        (315)
  Net earnings (loss) per share -                                                            
   basic and diluted:                                                                        
     Loss from continuing                                                                    
     operations                        (1.52)      (1.28)      (0.15)      (0.66)      (0.45)
     Net  earnings (loss)              (1.66)      (1.85)      (2.02)       2.48       (0.15)

Balance sheet data:                                                                          
  Working capital                       (159)        981       5,378      10,352       1,888 

Total assets                           5,087       6,804      37,337      20,952      16,473 

Long-term debt(excluding                                                                     
  current maturities)                  1,428          13      25,780         519       2,911 

Redeemable preferred stock               889         889         889         889       1,200 

Total common shareholders' equity      1,883       4,666       8,387      12,433       8,656 
-----------                                                                                  
<FN>                                                                                         
<F1> In  December  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  interest in NABR,  which             
     was accounted for under the equity method and  represented  Beard's  entire             
     brine extraction/iodine  manufacturing segment operations. Beard's share of             
     NABR's operating results have been reported as discontinued for all periods             
     presented. (See note 4 of notes to financial statements).                               

<F2> In  August  1998  Beard  adopted  a  plan  to  discontinue  the  Other  E/S             
     Operations.  In  April  1999  Beard  adopted  a  plan  to  discontinue  its             
     interstate travel facilities ("ITF") segment. The results of operations and             
     estimated  losses  to  discontinue  the other  E/S  Operations  and the ITF             
     segment,  including  an estimated  loss on  disposition,  were  reported as             
     discontinued  operations  in 1998 and for all prior  years.  (See note 4 of             
     notes to financial statements).                                                         

<F3> Beard sold the  business  and  substantially  all of the assets of Carbonic             
     Reserves,  an  85%-owned  subsidiary,  in 1997  with  the  results  of such             
     operations,  including  the 1997  gain on sale,  reported  as  discontinued             
     operations  in 1997  and for all  prior  years.  (See  note 4 of  notes  to             
     financial statements).                                                                  
</FN>                                                                                        

Item 7. Management's Discussion and Analysis of Financial Condition and Results 
of Operations.                                                  

     The following  discussion  addresses the significant  factors affecting the
results of operations,  financial condition,  liquidity and capital resources of
the Company.  Such discussion  should be read in conjunction  with the Company's
financial  statements  including the related  notes and the  Company's  selected
financial information.                                                          

Overview                                                                        

      General.  In 2000 the  Company  operated  within the  following  operating
segments:  (1) the Coal  Reclamation  ("Coal")  Segment,  (2) the Carbon Dioxide
("CO2")  Segment,  (3) the Natural Gas Well Servicing  ("WS")  Segment,  (4) the
China ("China") Segment, (5) the e-Commerce  ("e-Commerce") Segment, and (6) the
Environmental Remediation ("ER") Segment.                                       

     The Coal  Segment is in the business of  operating  coal fines  reclamation
and/or briquetting 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 WS Segment is conducted
by  two  companies  operating  in  northeastern  Mexico  and  consists  of (i) a
50%-owned company  (accounted for as an equity  investment)  involved in natural
gas well testing operations, and (ii) a wholly-owned company that has designed a
sand  separator  for use on  natural  gas wells and has had five of them  custom
fabricated  for  use on a  trial  basis.  The  China  Segment  is  pursuing  (i)
environmental opportunities,  (ii) the sale of coal equipment, (iii) the sale of
technical services,  and (iv) the operation of coal fines reclamation facilities
in China. The e-Commerce  Segment consists of a subsidiary which is pursuing the
development  of a  proprietary  Internet-only  payment  system.  The ER  Segment
consists of services to remediate polycyclic aromatic hydrocarbon contamination.

     The  Company's   continuing   operations   reflect  losses  of  $2,772,000,
$2,343,000, and $277,000 in 2000, 1999, and 1998, respectively.  In 1998 Beard's
Board   of   Directors   approved   a  plan   to   restructure   the   Company's
environmental/resource  recovery  segment.  As a  result,  the coal  reclamation
activities  conducted  by  Beard  Technologies,  Inc.  and  Beard  Sino-American
Resources  Co.,  Inc.  are now  included  in the Coal and China  Segments of the
Company,  respectively.  The environmental  remediation  activities conducted by
ISITOP,  Inc.  now  comprise  the ER Segment.  As part of the  restructure,  the
Company's "other environmental services operations" were discontinued.          

     In  1999  the  Company  adopted  a plan to  dispose  of  Interstate  Travel
Facilities,  Inc.,  whose  activities had previously been conducted as the "ITF"
Segment. Those operations were reflected as discontinued  operations in 1998 and
the Company recorded a $1,603,000 loss from  discontinuing  such operations that
year. The majority of the assets of the ITF Segment were disposed of in 1999 and
the Company  recorded an  additional  charge of  $434,000  that year  related to
discontinuing  such  operations.  The  Company  continued  to  operate  the  two
remaining facilities during most of 2000 while it was attempting to market them.
The operation of both stores was suspended  during the fourth quarter of 2000 in
order to minimize further losses.  In 2000, the Company recorded losses totaling
$591,000,  including an additional  charge of $420,000  related to discontinuing
such  operations  and does not expect  further  charges in connection  with such
activities.  At year-end  2000,  the  discontinued  ITF Segment had  $561,000 of
assets remaining,  consisting  primarily of two convenience  stores with related
property,  plant,  equipment and inventory,  and liabilities  totaling  $136,000
consisting primarily of trade payables,  accrued liabilities and long-term debt.
See Note 4 to the financial statements.                                         

     In 1999 the Management Committee of North American Brine Resources ("NABR")
made the decision to terminate  the business of the joint  venture and liquidate
its assets.  NABR's  operations  had  previously  comprised the Company's  brine
extraction/iodine  manufacturing segment. Beard owned 40% of NABR, which was not
a  consolidated  entity  and had  previously  been  accounted  for as an  equity
investment.  Beard's share of NABR's operating results were $82,000 and $296,000
of losses in 1999 and 1998, respectively, which are reported as discontinued. In
addition,  in December 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  $778,000 which  represented the difference in
the estimated amounts to be received from the assets disposition and the asset's
recorded  values as of December 31, 1999, and $572,000 of anticipated  operating
losses through April 2000 (the date operations  ceased) and the costs of ceasing
operations.  The joint venture was dissolved  effective  September 15, 2000, and
the Japanese  partners  received their final  distribution  of cash in December,
2000,  with the Company taking over the remaining  assets and  liabilities.  The
segment's  larger plant produced its last iodine in April 2000. Shut down of the
segment's  larger plant was  completed in September  2000 and the Company is now
working to dispose of its  equipment.  The  Company  intends to sell the smaller
plant as a going concern. In 2000, the Company recorded income of $179,000 which
represented the excess of the amounts received by the Company over the remaining
basis of the Company's  investment in the joint venture.  No further charges are
anticipated  in  connection  with  such   activities.   At  year-end  2000,  the
significant assets related to NABR's operations consisted primarily of equipment
and inventory  with  estimated net  realizable  values of $158,000 and $124,000,
respectively. The significant liabilities related to NABR's operations consisted
primarily of accounts and royalties payable totaling $282,000. See Note 4 to the
financial statements.                                                           

     The Company is now  focusing  its primary  attention  on the Coal and China
Segments, along with its e-Commerce Segment, which it believes have the greatest
potential for growth and profitability.                                         

     The Company has other operations,  including various assets and investments
that it has been liquidating as opportunities have materialized.                

     The results of operations  for 2000 and 1999 were severely  impacted by the
termination  of a major  contract,  which had  guaranteed  the Company a minimum
operating profit of $100,000 per month, on January 31, 1999.  Termination of the
contract  were  reflected in the sharp decline in the Coal  Segment's  revenues,
from  $8,585,000  in 1998 to $953,000  in 1999 down to  $215,000  in 2000.  As a
result,  the segment  generated a $1,678,000  operating  profit in 1998,  versus
operating losses of $508,000 in 1999 and $625,000 in 2000.                      

     2000 results of operations  reflected  improvement in the operating margins
of the CO2 Segment, which is presently the Company's largest segment in terms of
revenues.  The segment had a $60,000  increase in its  operating  profit  versus
1999,  principally  as the result of higher  prices for CO2.  The China  Segment
generated  no  revenues,   and  incurred   $400,000  of  selling,   general  and
administrative  expenses related to its continuing startup activities.  This was
an increase of $121,000 over 1999,  reflecting the expanded level of activity by
this  segment.  The WS Segment had  $65,000 in  revenues  and a loss of $204,000
reflecting  the shut down of the  segment's  activities  at the end of  January,
2000. Additionally,  this segment incurred a loss of $1,069,000 in 2000 compared
to a loss of $229,000 in 1999, from its equity  investee which provides  natural
gas well  testing  services  in  northeastern  Mexico.  The  e-Commerce  Segment
generated no revenues but  incurred  $275,000 of SG&A  expenses as it stepped up
its  marketing  activities.  The ER Segment  reflected  a $175,000  decrease  in
operating  losses as a result of a reduction in staffing and SG&A expenses as it
cut back its marketing efforts.  The operating loss from corporate activities at
the parent  company  level  decreased  $248,000 from 1999  reflecting  decreased
salary,  legal and other SG&A costs as the Company  found ways to reduce  costs.
The  Company's  total  net loss  decreased  $370,000,  reflecting  the  $799,000
decrease in losses from discontinued operations.                                

     1999 results of operations  reflected a $170,000 reduction in the operating
profit of the CO2 Segment  versus 1998  reflecting  decreased CO2 production and
demand.  The China  Segment  generated  no revenues,  but  incurred  $279,000 of
selling,  general and administrative expenses related to its startup activities.
The WS Segment had  $82,000 in  revenues  and a loss of $213,000 as it started a
new  subsidiary  engaged in the rental of sand  separators.  Additionally,  this
segment  incurred a loss of  $229,000  in 1999  compared to a loss of $35,000 in
1998, from its equity investee. The e-Commerce Segment generated no revenues but
incurred  $129,000 of SG&A expenses  related to its startup  activities.  The ER
Segment  reflected  a  $93,000  increase  in  operating  losses  as a result  of
increased  staffing and SG&A  expenses as it stepped up its  marketing  efforts.
Despite the fact that the Company's loss from  continuing  operations  increased
$2,066,000,  its total net loss  decreased  $458,000,  reflecting the $2,524,000
decrease in losses from discontinued operations.                                

     1998  results of  operations  showed a $198,000  improvement  in  operating
margins of the CO2 Segment versus 1997 reflecting increased CO2 production.  The
China Segment generated no revenues,  but incurred $277,000 of selling,  general
and administrative  expenses related to its startup  activities.  The ER Segment
reflected  a $115,000  increase  in  operating  losses as a result of  increased
staffing and SG&A  expenses as it stepped up its  marketing  efforts.  Corporate
activities at the parent company level  reflected (i) increased  staffing;  (ii)
higher  health  care and fringe  benefit  costs;  and (iii)  higher  legal costs
associated with the McElmo Dome litigation.                                     

Liquidity and capital resources                                                 

     Capital  investments.   The  Company's  capital  investment  programs  have
required more cash than has been generated from operations during the past three
years.  Cash  flows  used  in  operations  during  2000,  1999,  and  1998  were
$(2,552,000),   $(1,709,000),  and  $(854,000),   respectively,   while  capital
additions from continuing operations were $461,000, $1,392,000, and $24,175,000,
respectively, as indicated in the table below:                                  

                          2000               1999               1998
                          ----               ----               ----
Coal                        $371,000            $1,135,000         $24,072,000  
Carbon dioxide                 4,000                10,000              41,000  
Natural gas well servicing    38,000               216,000              -       
e-Commerce                     8,000                  -                 -       
Environmental remediation      1,000                  -                  6,000  
Other                         39,000                31,000              56,000  
                         -------------------------------------------------
    Total                 $461,000            $1,392,000         $24,175,000
                          ==================================================

     Capital  additions  in  the  discontinued  "other  environmental   services
operations"  were $143,000 in 1998.  Capital  additions in the  discontinued ITF
segment were $13,000 and $59,000 in 2000 and 1999, respectively.                

     The Company's 2001 capital  expenditure  budget has tentatively been set at
$14,000,  representing  anticipated  capital  expenditures for the coal segment.
This does not include an estimated $1,853,000 to $2,504,000 of plant costs which
may be incurred  by the  segment  for the  Fortune  500  project  subject to the
availability of financing.                                                      

     Liquidity. The sale of the Company's dry ice manufacturing and distribution
business  in 1997  provided  the  Company  with  significant  liquid  resources.
However,  such funds had been  substantially  utilized  by  year-end  1999.  The
Company's  activities in 2000 were primarily funded by a bank line of credit, by
loans  from a related  party and by the sale of  assets.  Future  cash flows and
availability  of credit are subject to a number of variables,  including  demand
for the Company's coal reclamation  services and technology,  continuing  demand
for CO2 gas and for the services provided by the Company's WS operations, demand
for the sale of the Company's environmental and technology services and for coal
equipment in China,  demand for the Company's secure payment system for Internet
transactions and private and governmental  demand for environmental  remediation
services in the U.S.                                                            

     During 2000 the Company  reduced its  working  capital by  $1,140,000  from
$981,000 at year-end  1999.  $371,000  was used by the Coal  Segment to purchase
equipment.  $625,000 was used to fund the  operating  loss of the Coal  Segment.
$666,000 was used to fund net advances to the Company's well testing  venture in
Mexico. In addition, the Company loaned a net additional $129,000 to its partner
which operates the joint venture to fund a portion of its  investment.  $147,000
was used to fund the natural gas well servicing operations. $351,000 was used to
fund the  operations of the  discontinued  ITF Segment.  $400,000,  $275,000 and
$142,000,  respectively,  were used to fund the startup activities of the China,
e-Commerce  and E/R Segments.  The bulk of these  expenditures  were funded by a
$1,428,000 increase in debt, $561,000 from the sale of assets,  distributions of
$482,000  from the  discontinued  BE/IM  Segment,  and $114,000 from payments on
notes receivable.                                                               

     As a result,  at December 31, 2000,  the Company was in a negative  working
capital position with working capital of ($159,000), and a current ratio of 0.79
to 1.                                                                           

     Despite the fact that the Company has had losses from continuing operations
for the past five years,  its total net loss during  such  period  totaled  only
$1,586,000.  The last three years have been particularly  disappointing,  as the
Company  generated  net  losses  totaling  $10,285,000,  including  losses  from
continuing  operations totaling $5,392,000.  Termination of the MCN Projects was
especially  discouraging  since it came at a time when the Coal Segment had just
established   itself  as  the  world's  largest  operator  of  coal  reclamation
facilities.   Discontinuation  of  the  interstate  travel  facilities  business
accounted for $2,628,000 of the losses, but those problems are now behind us and
management  expects to dispose of the remaining assets in 2001.  Discontinuation
of the iodine business  impacted  earnings the last two years, but again,  those
problems  are  behind  us, and  management  expects to dispose of the  remaining
assets in 2001.                                                                 

     The Company's  principal  business is coal  reclamation,  and this is where
management's  attention is primarily  focused.  The Coal Segment is pursuing two
major  coal  projects  at  this  time.  If  we  are   successful  in  concluding
negotiations  with third parties  concerning the  installation  of the equipment
needed,  plant  construction of the first project is expected to commence in the
third  quarter of 2001.  However,  there is no  assurance  this will occur.  The
second  project is not nearly as far along and definitive  negotiations  on this
project are not expected to occur until late 2001.                              

     Meanwhile,  the outlook for the China Segment has brightened  considerably.
After almost three years of  development  activity,  it appears that its efforts
are finally  starting to bear fruit. The segment has signed contracts and formed
Cooperative  Joint  Ventures  ("CJV's")  or similar  arrangements  with  various
Chinese partners for the construction of four compost  manufacturing  facilities
in which the Company  will own an interest  and will also  receive an  operating
fee. Groundbreaking for the initial plant, located at Baoding in Hebei Province,
occurred in early March and plant  construction is expected to commence in early
April.  Assuming  we  are  able  to  meet  our  anticipated  timetable  for  the
construction  of the four  composting  plants,  the China Segment is expected to
achieve a breakeven  or better  cash flow  during  2001 and the Company  will no
longer need to infuse  capital to subsidize  the segment's  ongoing  operations.
This will improve liquidity to the extent of $400,000 or more over 2000.        

     In 2000 the Company  replaced its $650,000 bank credit line with a $300,000
credit line at a different  bank. We have also arranged for  borrowings of up to
$1,500,000  from a  related  party to  provide  working  capital  while the coal
projects are being pursued and until the construction of the plants in China can
be successfully  concluded.  The Company is currently pursuing a $1,500,000 loan
on its CO2 reserves in order to provide  additional  working capital and improve
liquidity until the  contemplated  Coal and China projects achieve positive cash
flow.  In  addition,  the  Company  will be  disposing  of the  assets  from the
discontinued  ITF and  BE/IM  Segments  and can sell  certain  other  assets  to
generate cash if necessary.                                                     

     Selected liquidity  highlights for the Company for the past three years are
summarized below:                                                               

                                                                [Download Table]

                                        2000          1999           1998       
                                        ----          ----           ----       
                                                                                
Cash and cash equivalents            $    31,000   $   767,000   $  5,190,000   
Accounts and other receivables, net      337,000       480,000      1,386,000   
Inventory                                129,000       103,000        365,000   
Trade accounts payable                   167,000       262,000        677,000   
Current  maturities  of long-term debt    30,000        17,000        119,000   
Long-term debt <F1>                    1,428,000        13,000     25,780,000   
Working capital                        (159,000)       981,000      5,378,000   
Current ratio                          0.79 to 1     2.19 to 1      3.84 to 1   
Net cash used in operations          $(2,552,000)  $(1,709,000)  $   (854,000)  

--------------                                                                  
<FN>                                                                            
<F1> In 1999 the Company terminated certain debt agreements that resulted in the
     removal of $23,053,000 of debt from its balance sheet, and disposed of most
     of the assets of its interstate travel facilities segment, resulting in the
     removal of $2,563,000 of debt from its balance sheet.                      
</FN>                                                                           

     In 2000, the Company had negative cash flow of $736,000.  Operations of the
Coal,  W/S,  China,  e-Commerce  and E/R Segments  resulted in cash  outflows of
$1,646,000. (See "Results of operations---Other activities" below).             

     The  Company's  investing  activities  provided  cash of  $499,000 in 2000.
Proceeds from the sale of assets provided cash of $561,000,  distributions  from
the discontinued  BE/IM Segment  provided net cash of $482,000,  and payments on
notes receivable provided cash of $360,000. Net distributions from the Company's
investment in Cibola provided cash of $310,000.  Acquisitions of property, plant
and  equipment  primarily  related to the  Company's  Coal  Segment used cash of
$513,000  of the cash  outflow,  while (i)  investments  in and (ii)  loans to a
partner in the W/S Segment utilized cash of $699,000.                           

     The  Company's  financing  activities  provided cash flows of $1,317,000 in
2000. The Company  received  $1,386,000 from its borrowings and utilized $69,000
for payments on lines of credit and term notes.                                 

     At  year-end  2000 the  Company  had fully  utilized  the parent  company's
$300,000  bank line of credit which expires on January 15, 2002. At December 31,
2000 the  Company  had also  fully  utilized a  $700,000  line of credit  from a
related party which bears  interest at 10% until  maturity at February 28, 2002,
and had $464,000 of credit available from the same party which bears interest at
10%  until  maturity  at April 1,  2002.  The  Company  believes  that  cash and
available  credit,  together  with  proceeds  from the sale of  assets,  will be
adequate  to  meet  the  Company's   liquidity  needs,   including   anticipated
requirements  for working capital,  until the $1,500,000 of financing  currently
being pursued has been finalized and is in place.                               

     Effect of Recent  Developments on Liquidity.  The Company's  debt-to-equity
ratio,  which stood at 0.01 to 1 at  year-end  1999,  increased  to 0.77 to 1 at
year-end  2000.  Consolidated  debt,  which  totaled  $30,000 at year-end  1999,
increased to  $1,458,000  at year-end  2000. If the Company is successful in its
efforts to obtain the $1,500,000  CO2  production  loan, it plans to pay off its
present  indebtedness  with the bank and the  related  party and  negotiate  new
credit lines with them.  This should give the Company ample  working  capital to
operate  until the  contemplated  coal projects and the  composting  projects in
China are generating positive cash flow.                                        

     The Company is  negotiating  with a party that has an available  coal plant
that is  ideally  suited  for the  Fortune  500  company  project.  The party is
considering financing the purchase of the plant and may also assist in financing
the funds  necessary to dismantle,  move and reassemble  the plant.  The Company
believes that  contracts  for this project will be finalized  and executed,  and
that it  will  be  successful  in its  funding  efforts.  However,  there  is no
assurance that such events will occur.                                          

     Effect of Reorganization  on Liquidity.  Through the period ending December
31, 2002,  the Company's  liquidity will be reduced to the extent it is required
to redeem any of the Beard preferred stock pursuant to the mandatory  redemption
provisions (see note 5 to the financial statements).                            

Results of operations                                                           

     General. The period from 1997 to 2000 has been a time of transition for the
Company. In 1997 the Company divested itself of its real estate construction and
development  activities,   sold  its  dry  ice  manufacturing  and  distribution
business,  and  restructured  its E/RR Segment,  shifting its principal focus to
coal  reclamation  and  discontinuing   most  of  its   environmental   services
activities.  The  Company  also made a brief  and  unsuccessful  foray  into the
interstate  travel  business  in  1998,  which  it  discontinued  in  1999.  The
Management  Committee  directing  the  operations  of a 40%-owned  joint venture
engaged  in the  extraction,  production  and sale of crude  iodine  decided  to
discontinue  operations of the joint venture in 1999. As a result, the corporate
staff is now focusing most of its attention on the management of the Coal, China
and e-Commerce Segments, which we believe hold the greatest potential for future
growth and profits.  The CO2 Segment's operating results remain profitable;  the
degree  of  profitability   primarily   reflecting  changes  in  demand  due  to
fluctuations in oil pricing. The China Segment appears to be on the threshold of
a major  breakout.  The e-Commerce and WS Segments are  experiencing  the normal
problems and delays encountered when starting new businesses.  In addition,  the
Company  continues  to  liquidate  assets no  longer in line with the  Company's
strategic  objectives.  Operating profit (loss) for the last three years for the
Company's  remaining  principal operating segments which the Company controls is
set forth below:                                                                

                                 2000         1999            1998
                                 ----         ----            ----
Operating profit (loss):                                                        
 Coal  reclamation             $  (625,000)  $   (508,000)   $ 1,678,000
 Carbon dioxide                    356,000        296,000        466,000
 Natural gas well servicing       (204,000)      (213,000)             -
  China                            (400,000)      (279,000)      (277,000)
 e-Commerce                       (275,000)      (129,000)             -
  Environmental remediation        (142,000)      (317,000)      (224,000)
                               -----------------------------------------
           Subtotal             (1,290,000)    (1,150,000)     1,643,000
  Other - principally corporate  (1,076,000)    (1,324,000)    (1,402,000)
                               -----------------------------------------
         Total                 $(2,366,000)  $ (2,474,000)   $   241,000
                               =========================================

     Following  is a  discussion  of results of  operations  for the  three-year
period ended December 31, 2000.                                                 

     Coal  reclamation.  As a result  of the  recent  change of  direction,  the
Company has focused its primary attention on coal reclamation.  In January 1999,
Beard Technologies  completed a 10-month contract as the operator of coal waste 
recovery  projects (the "MCN Projects")  located at six sites in three states in
the  eastern  U.S.  Now that such  contracts  have been  terminated  (see  "Coal
Reclamation   Activities---The   MCN   Projects"  in  Part  I,  Item  1),  Beard
Technologies  is again  pursuing coal recovery  projects  where it will serve as
either owner or operator.                                                       

     The MCN Projects  generated 35% and 84% of the Coal Segment's 2000 and 1999
revenues,  respectively.  Operating  revenues  in this  segment  were  $215,000,
$953,000, and $8,585,000 in 2000, 1999, and 1998,  respectively,  with the sharp
decreases  in 2000  and  1999  reflecting  the  impact  of  terminating  the MCN
Projects.  Operating costs decreased to $663,000 in 2000 from $1,064,000 in 1999
and from  $5,110,000 in 1998.  SG&A expenses  decreased to $158,000 in 2000 from
$204,000 in 1999 and from  $985,000 in 1998.  The  decrease in costs in 2000 and
1999  reflect the effect of the  termination  of the MCN  Projects.  The segment
produced an  operating  loss of $625,000 in 2000 and  $508,000 in 1999 versus an
operating  profit of $1,678,000 in 1998,  again reflecting the effect of the MCN
Projects.                                                                       

     Carbon dioxide. 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 were $471,000,  $418,000,  and $616,000 in 2000,  1999,
and 1998, respectively,  while operating profits totaled $356,000, $296,000, and
$466,000,  respectively,  for the  three  years.  CO2  net  sales  volumes  were
1,319,000  Mcf,  1,536,000  Mcf  and  2,187,000  Mcf in  2000,  1999  and  1998,
respectively. The increase in revenues and operating profits in 2000 versus 1999
reflect the sharp increase in oil prices in late 1999 and  throughout  2000, and
the  resultant  increased  demand for CO2 used for  tertiary oil  recovery.  The
decrease in revenues and operating  profits in 1999 compared to 1998 reflect the
decreased  demand for CO2 as a result of the severe  deterioration in oil prices
in late 1998 and early 1999 and the resultant  decreased demand for CO2 used for
tertiary oil recovery.                                                          

     Natural gas well  servicing.  In 1998 the  Company  invested in a 50%-owned
subsidiary,   ITS-Testco,  L.L.C.,  which  conducts  natural  gas  well  testing
operations in Mexico through a wholly-owned  subsidiary,  Testco Inc. de Mexico,
S.A. de C.V.; the operations of these  entities are not  consolidated  since the
LLC is managed by our 50% partner. The Company recorded $1,069,000, $229,000 and
$35,000 in 2000, 1999 and 1998, respectively,  as its share of the LLC's losses.
In 1999 the Company formed a 100%-owned subsidiary,  ITS. Inc., which designed a
proprietary   sand  separator  for  use  in  Mexico  through  its   wholly-owned
subsidiary,  Incorporated Tank Systems de Mexico, S.A. de C.V. This consolidated
subsidiary  generated $65,000 and $82,000 of revenues and $65,000 and $56,000 of
operating  costs,  respectively,  in 2000 and 1999. The WS Segment also incurred
$160,000  and  $223,000  of SG&A  expenses in 2000 and 1999  resulting  from the
Company's  continued  pursuit of natural  gas well  servicing  opportunities  in
Mexico.                                                                         

     China.  In 1998 the Company  activated Beard  Sino-American  Resources Co.,
Inc. ("BSAR") to pursue coal reclamation  opportunities in China utilizing BTI's
patented  mulled coal  technology in China.  Due to changes in the political and
business  environment  in  China,  BSAR  shifted  its  direction  in 1999.  Coal
reclamation  activities  have  been  put on hold  and  BSAR is now  focusing  on
environmental  technology  and  other  technical  services  and the sale of coal
equipment.  BSAR had no revenues in 2000,  1999 or 1998, and recorded  $400,000,
$279,000  and  $277,000  of SG&A  expenses,  respectively,  in such years  while
pursuing its various marketing efforts.                                         

     e-Commerce.  In early 1999, the Company began  developing  its  proprietary
concept for an Internet payment system through  starpay.com,  inc.  ("starpay").
starpay had no revenues in 2000 or 1999,  and recorded  $275,000 and $129,000 of
SG&A expenses, respectively, in such years while pursuing the development of its
technology.                                                                     

     Environmental  remediation.  In 1997  the  Company  changed  the name of an
inactive subsidiary to ISITOP, Inc.  ("ISITOP").  ISITOP utilizes a chemical for
which it is the sole U.S.  licensee  of a  process  for the  remediation  of PAH
contamination.  This is essentially still a startup operation,  having generated
no  revenues in 2000 or 1999,  and only $8,000 of revenues in 1998.  The segment
produced operating losses of $142,000, $317,000 and $224,000,  respectively,  in
2000,  1999 and 1998. The increased loss in 1999 reflected the sharp increase in
SG&A expenses as the segment  stepped up its level of marketing  activities that
year. The decreased loss in 2000 reflected the sharp  reduction in SG&A expenses
as the Company phased out its financial support for the segment.                

     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
$1,076,000  in 2000,  $1,324,000 in 1999 and  $1,402,000 in 1998.  The operating
loss decreased  $248,000 in 2000 versus 1999 due to several  factors,  including
reduced salary and benefit costs,  legal and  professional  expenses,  and other
SG&A items as the  Company  continued  to search for ways to reduce  costs.  The
operating  loss  decreased  $78,000 in 1999 compared to 1998 as a portion of the
SG&A  expenses  incurred  were  allocated  to the  e-Commerce  Segment  for  the
development of the starpay Internet payment system. Additionally,  the year 1999
saw the Company incur markedly lower benefit  expenses while incurring  slightly
higher legal expenses as the Company  continued to pursue the CO2 litigation.  A
higher level of general and administrative  expenses impacted the bottom line in
1998 as the Company continued its pursuit of additional business opportunities. 

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses  ("SG&A")  decreased  to $1.7 million in 2000 from $1.9
million in 1999 and from $2.4 million in 1998. Most of the sharp fluctuation was
attributable  to the Coal  Segment,  which  incurred  SG&A  expense of $158,000,
$204,000 and $985,000 in 2000, 1999 and 1998, respectively. The large expense in
1998 was due to the high level of staffing and  operations  required to meet the
demands of the MCN Projects.  The WS Segment incurred  $160,000 of SG&A expenses
in 2000  versus  $223,000 in 1999 as it  continued  to pursue  opportunities  in
Mexico.  SG&A expense  incurred by the China  Segment  during 2000  increased to
$400,000 from $279,000 in 1999 and $277,000 in 1998 as the segment  expanded its
marketing efforts. SG&A expense incurred by the ER Segment during 2000 decreased
to $42,000 versus $87,000 in 1999 and $42,000 in 1998,  reflecting the segment's
level of marketing  activity.  SG&A expense  incurred by the e-Commerce  Segment
increased to $272,000 in 2000 from  $129,000 in 1999  reflecting  the  segment's
level of marketing  activity.  Other  corporate  SG&A decreased to $1,048,000 in
2000  from  $1,333,000  in 1999 and  $1,430,000  in  1998.  The  variances  were
attributable primarily to reductions in the Company's benefits and to changes in
the level of costs incurred as the Company pursued investment opportunities that
failed to materialize.                                                          

     Depreciation,  depletion  and  amortization.  The  Company's  depreciation,
depletion and amortization  expenses  decreased 69% in 2000 from 1999 and 59% in
1999  from  1998.  The  fluctuations  in DD&A  expense  for 2000  and 1999  were
primarily  attributable  to the  lower  depreciable  basis of assets in the Coal
Segment as the Company  sold its  ownership  interest  in the entity  owning the
equipment for the MCN projects  effective in January,  1999. The fluctuations in
DD&A expense for 1999 and 1998 were primarily  attributable to the significantly
higher  depreciable  basis of the assets in the Coal  Segment  during the period
that such assets were owned in connection with the MCN Projects.                

     Interest  income.  Interest  income  decreased  to  $136,000  in 2000  from
$228,000 in 1999 and from $400,000 in 1998. The Company had considerable cash at
the beginning of 1998 remaining from the sale of the assets of its  discontinued
solid CO2  segment  in 1997.  The  decreases  in 2000 and 1999  from the  amount
realized in 1998 reflect the  decreased  amount  available to invest as cash was
used to fund other investments and operations.                                  

     Interest  expense.  Interest  expense  decreased  from  $964,000 in 1998 to
$170,000 in 1999 and to $60,000 in 2000.  The high expense in 1998  reflects the
high  level of debt  incurred  by the Coal  Segment to fund the  acquisition  of
equipment for the MCN Projects in such year. The sharp decrease in 1999 reflects
the Coal Segment  being  relieved of such  indebtedness  as of January 31, 1999.
Although  the  Company  had less  than  $100,000  of debt  for most of 1999,  it
incurred  considerable interest expense in January of that year when it had more
than  $23  million  of  debt.  The  Company's  indebtedness  increased  steadily
throughout 2000, but it still incurred less interest expense than it incurred in
1999.                                                                           

     Equity in earnings of unconsolidated affiliates. The Company's share of the
operating loss of its 50%-owned natural gas well testing investee was $1,069,000
in 2000 and $229,000 in 1999.  The losses  resulted from startup,  operating and
interest costs.  Offsetting the Company's share of the losses of ITS-Testco,  L.
L. C. was the Company's share of the earnings of Cibola Corporation  ("Cibola").
Although the Company owns 80% of the common stock of Cibola Corporation, it does
not have  operating  or  financial  control  of this gas  marketing  subsidiary.
Cibola, formed in 1996,  contributed $237,000,  $308,000 and $274,000 of pre-tax
net income to the Company for fiscal  years 2000,  1999 and 1998,  respectively,
pursuant to a tax sharing agreement. Such income was down in 2000 due to capital
losses incurred on Cibola's investments.                                        

     Gain on sale of assets.  Gains on the sale of assets  totaled  $334,000  in
2000, $56,000 in 1999 and $8,000 in 1998. Such gains reflected proceeds from the
sale of certain assets that are in the process of being liquidated.  Most of the
increase  in 2000  resulted  from the sale of the  Company's  interest in a real
estate limited partnership which generated a gain of $194,000.                  

     Impairment of  investments  and other assets.  In 2000,  1999, and 1998 the
Company  recognized  $71,000,  $110,000  and  $154,000  for  impairments  to the
carrying values of investments  and other assets relating to the  recoverability
of such investments or assets.                                                  

     Income taxes. The Company has approximately  $58.1 million of net operating
loss  carryforwards  and depletion  carryforwards to reduce future income taxes.
Based on the Company's  historical results of operations,  it is not likely that
the  Company  will be able to  realize  the  benefit of its net  operating  loss
carryforwards  before  they begin to expire in 2004.  At  December  31, 2000 and
1999,  the Company has not reflected as a deferred tax asset any future  benefit
it may  realize as a result of its tax credits  and loss  carryforwards.  Future
regular taxable income of the Company will be effectively  sheltered from tax as
a result  of the  Company's  substantial  tax  credits  and loss  carryforwards.
Continuing  operations reflect foreign and state income and federal  alternative
minimum  taxes of  $8,000,  $48,000  and  $100,000  for  2000,  1999  and  1998,
respectively.  It is  anticipated  that the Company will continue to incur minor
alternative minimum tax in the future,  despite the Company's  carryforwards and
credits.                                                                        

     Discontinued operations. In 1999 the Management Committee of North American
Brine  Resources  ("NABR")  made the decision to  terminate  the business of the
joint  venture  and  liquidate  its assets.  NABR's  operations  had  previously
comprised the Company's Brine  Extraction/Iodine  Manufacturing  Segment.  Beard
owned 40% of NABR,  which was not a consolidated  entity and had previously been
accounted for as an equity investment. The joint venture was dissolved effective
September  15, 2000.  Shut down of the  segment's  larger plant was completed in
September 2000 and the Company is now working to dispose of its  equipment.  The
Company  intends to sell the smaller plant as a going concern.  Beard's share of
NABR's  operating  results were $82,000 and $296,000 of losses in 1999 and 1998,
respectively,  which  have  been  reported  as  discontinued  in  the  Company's
statements of operations. In addition, the Company recorded a charge of $540,000
in 1999 and a gain of $179,000 in 2000 in connection with the  discontinuance of
the segment's operations.  No further charges are anticipated in connection with
such activities. See Note 4 to the financial statements.                        

     In  1999  the  Company  adopted  a plan to  dispose  of  Interstate  Travel
Facilities,  Inc.,  whose  activities had previously been conducted as the "ITF"
Segment. Those operations were reflected as discontinued  operations in 1998 and
the Company recorded a $1,603,000 loss from  discontinuing  such operations that
year. The majority of the assets of the ITF Segment were disposed of in 1999 and
the Company  recorded an  additional  charge of  $434,000  that year  related to
discontinuing  such  operations.  The  Company  continued  to  operate  the  two
remaining facilities during most of 2000 while it was attempting to market them.
The operation of both stores was suspended  during the fourth quarter of 2000 in
order to minimize further losses. In 2000, the discontinued ITF segment incurred
operating  losses totaling  $351,000.  The  discontinued ITF segment charged the
first $180,000 of these operating  losses against a loss accrual  established in
1999 and  recognized  $44,000 in  September,  2000.  The  remaining  $127,000 in
operating  losses  were  recognized  during  the  fourth  quarter  of 2000.  The
discontinued ITF segment recorded an additional $420,000 loss in December, 2000;
$60,000  represented  losses  expected  to be  incurred  by ITF from the date of
shutdown  through the  anticipated  disposal date of the remaining  assets;  and
$360,000  of the loss  represented  an  additional  reduction  in the  estimated
realizable value of the remaining C-stores and related assets as of December 31,
2000.  The total loss recorded in 2000 related to the  discontinued  ITF Segment
was $591,000.  The Company does not anticipate any further charges in connection
with such  activities.  At  year-end  2000,  the  discontinued  ITF  Segment had
$561,000 of assets remaining,  consisting of two convenience stores with related
property,  plant,  equipment and inventory,  and liabilities  totaling  $136,000
consisting primarily of trade payables,  accrued liabilities and long-term debt.
See Note 4 to the financial statements.                                         

     ITF's operating losses for 1999 were $567,000. $347,000 of such losses were
charged  against the loss accrual  recorded in 1998 with the remaining  $220,000
reflected  in  loss  from  discontinued  operations  in the  1999  statement  of
operations.  Beard  also  recorded  an  additional  $214,000  loss in the fourth
quarter of 1999; $180,000 of the loss represented  anticipated  operating losses
of ITF from  December  31, 1999  through the  anticipated  disposal  date of the
remaining  assets;  $34,000 of the loss represented a reduction in the estimated
realizable values of the remaining assets as of December 31, 1999.              

     In 1998 the Company's Board of Directors  adopted a plan to restructure its
environmental/resource   recovery   segment  and  to   discontinue   the  "other
environmental   services   operations".   Losses  from  the  discontinued  other
environmental services operations were $424,000 in 1998 and were included in the
Company's  1998  statements of  operations.  The Company  recorded an additional
charge of  $684,000  that year  related to  discontinuing  such  operations.  At
December 31, 2000, the  significant  assets  related to the other  environmental
services  operations  consist  primarily of equipment  with a recorded  value of
$152,000.  The  significant  liabilities  related  to  the  other  environmental
services  operations  consist of accrued expenses totaling $7,000. See Note 4 to
the financial statements.                                                       

     Forward looking  statements.  The previous  discussions  include statements
that are not purely historical and are  "forward-looking  statements" within the
meaning of Section 27A of the  Securities  Act and  Section 21E of the  Exchange
Act, including statements regarding the Company's expectations,  hopes, beliefs,
intentions and  strategies  regarding the future.  The Company's  actual results
could differ materially from its expectations  discussed herein,  and particular
attention   is  called  to  the   discussion   under   "Liquidity   and  Capital
Resources---Effect  of Recent Developments on Liquidity"  contained in this Item
7.                                                                              

Impact of Recently Issued Accounting Standards Not Yet Adopted                  

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 133,  "Accounting for
Derivative   Instruments  and  Hedging   Activities."  SFAS  No.133  establishes
accounting and reporting standards for derivative instruments, including certain
recognition  of all  derivatives  as either assets or liabilities in the balance
sheet and measurement of those instruments at fair value. If certain  conditions
are met, a derivative may be specifically  designated as a hedge. The accounting
for  changes  in the fair  value of a  derivative  (that is,  gains and  losses)
depends on the  intended  use of the  derivative  and whether it  qualifies as a
hedge.  A subsequent  pronouncement,  SFAS 137, was issued in July,  1999,  that
delayed the effective date of SFAS 133 until fiscal years  beginning  after June
15, 2000. In June 2000,  the FASB issued SFAS No. 138,  "Accounting  for Certain
Derivative Instruments and Certain Hedging Activities", an amendment to SFAS No.
133.  If the  provisions  of SFAS No.  133 and No.  138 were to be applied as of
December  31,  2000,  it  would  not have a  material  impact  on the  Company's
financial  position as of such date, or the results of  operations  for the year
then ended.                                                                     

     The Company plans to adopt the  provisions of SFAS 133 in the first quarter
of the year ending  December 31, 2001, and such adoption is not expected to have
a material  impact on the  Company's  financial  position  or future  results of
operations.                                                                     

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.            

     At December  31,  2000,  the Company had notes  receivable  of $869,000 and
total debt of $1,458,000.  The notes  receivable and $1,158,000 of the debt have
fixed  interest  rates and, to such extent,  the Company's  interest  income and
expense  and  operating  results  would not be affected by an increase in market
interest rates.  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 December
31, 2000, 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 debt by $14,000.                                                            

The Company has no other market risk sensitive instruments.           

Item 8. Financial Statements and Supplementary Data                             

The Beard Company and Subsidiaries                
Index to Financial Statements               
Forming a Part of Form 10-K Annual Report               
to the Securities and Exchange Commission               

Independent Auditors' Report                                                    

Independent Auditors' Report                                                    

Financial Statements:                                                           

Balance Sheets, December 31, 2000 and 1999                                    

Statements of Operations, Years ended December 31, 2000, 1999                 
and 1998                                                                    

Statements of Shareholders' Equity, Years ended December 31,                  
2000, 1999 and 1998                                                         

Statements of Cash Flows, Years ended December 31, 2000, 1999                 
and 1998                                                                    

Notes to Financial Statements, December 31, 2000, 1999 and 1998               

Independent Auditors' Report                  

The Board of Directors and Stockholders                                         
The Beard Company:                                                              

     We have audited the accompanying  consolidated  balance sheets of The Beard
Company and  subsidiaries as of December 31, 2000, and the related  consolidated
statements of operations, shareholders' equity, and cash flows for the year then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit. The financial statements of The Beard Company and
subsidiaries  as of December 31, 1999 and for the years ended  December 31, 1999
and 1998,  were  audited by other  auditors,  whose  report dated April 7, 2000,
expressed an unqualified opinion on those statements.                           

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.          

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  financial  position  of The Beard  Company and
subsidiaries at December 31, 2000, and the results of their operations and their
cash flows for the year ended  December 31, 2000, in conformity  with  generally
accepted accounting principles.                                                 

                           Cole & Reed, P.C.

Oklahoma City, Oklahoma                                                         
March 19, 2001                                                                  

Independent Auditors' Report

The Board of Directors and Stockholders                                         
The Beard Company:                                                              

     We have audited the balance sheet of The Beard Company and  subsidiaries as
of December 31, 1999, and the related  statements of  operations,  shareholders'
equity,  and cash flows for the years ended  December  31, 1999 and 1998.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.                                                                     

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.                                               

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  financial  position  of The Beard  Company and
subsidiaries at December 31, 1999 and 1998, and the results of their  operations
and  their  cash  flows for the  years  ended  December  31,  1999 and 1998,  in
conformity with accounting principles generally accepted in the United States of
America.                                                                        

                          KPMG LLP

Oklahoma City, Oklahoma                                                         
April 7, 2000                                                                   

                                                        [Enlarge/Download Table]
                       THE BEARD COMPANY AND SUBSIDIARIES                                
                                 Balance Sheets                                          


                                                              December 31,   December 31,
                Assets                                           2000            1999    
                ------                                           ----            ----    
                                                                                         
Current assets:                                                                          
  Cash and cash equivalents                                  $     31,000   $    767,000 
  Investments (note 6)                                                  -        280,000 
  Accounts receivable, less allowance for doubtful                                       
     receivables of $292,000 in 2000 and $13,000 in 1999          337,000        480,000 
  Inventory                                                       129,000        103,000 
  Prepaid expenses and other assets                                39,000         98,000 
  Current portion of notes receivable (note 7)                     80,000         80,000 
                                                             ------------   ------------ 
          Total current assets                                    616,000      1,808,000 
                                                             ------------   ------------ 
Notes receivable (note 7)                                         789,000        756,000 

Investments and other assets (note 6)                             467,000      1,324,000 

Property, plant and equipment, at cost (note 8)                 5,364,000      5,010,000 
  Less accumulated depreciation, depletion and amortization     2,198,000      2,118,000 
                                                             ------------   ------------ 
          Net property, plant and equipment                     3,166,000      2,892,000 
                                                             ------------   ------------ 
Intangible assets, at cost (note 9)                                50,000         25,000 
  Less accumulated amortization                                     1,000          1,000 
                                                             ------------   ------------ 
          Net intangible assets                                    49,000         24,000 
                                                             ------------   ------------ 
                                                             $  5,087,000   $  6,804,000 
                                                             ============   ============ 

                Liabilities and Shareholders' Equity                                     

Current liabilities:                                                                     
  Trade accounts payable                                     $    167,000   $    262,000 
  Accrued expenses (note 4)                                       578,000        460,000 
  Income taxes payable (note 12)                                        -         88,000 
  Current maturities of long-term debt (note 10)                   30,000         17,000 
                                                             ------------   ------------ 
          Total current liabilities                               775,000        827,000 
                                                             ------------   ------------ 
Long-term debt less current maturities (note 10)                  347,000         13,000 

Long-term debt - related entity (note 10)                       1,081,000              - 

Other long-term liabilities                                       112,000        409,000 

Redeemable preferred stock of $100 stated value;                                         
  5,000,000 shares authorized; 27,838 shares issued and                                  
  outstanding in 2000 and 1999 (note 5)                           889,000        889,000 

Common shareholders' equity:                                                             
  Common stock of $.001333 par value per share; 7,500,000                                
    shares authorized; 2,123,898 shares issued                                           
    and outstanding in 2000 and 1999                                3,000          3,000 
  Capital in excess of par value                               37,986,000     37,723,000 
  Accumulated deficit                                         (34,247,000)   (31,218,000)
  Accumulated other comprehensive income                          (13,000)         4,000 
  Treasury stock, 295,053, at cost, in 2000 and 1999           (1,846,000)    (1,846,000)
                                                             ------------   ------------ 
          Total common shareholders' equity                     1,883,000      4,666,000 
                                                             ------------   ------------ 
Commitments and contingencies (notes 5, 11, and 15)                                      
                                                             $  5,087,000   $  6,804,000 
                                                             ============   ============ 

See accompanying notes to financial statements.                                 

                                                        [Enlarge/Download Table]
                       THE BEARD COMPANY AND SUBSIDIARIES                                            
                            Statements of Operations                                                 

                                                                     Year Ended December 31,         
                                                                     -----------------------         
                                                              2000            1999            1998   
                                                              ----            ----            ----   
                                                                                                     
Revenues:                                                                                            
  Coal reclamation                                         $   215,000    $   953,000    $ 8,585,000 
  Carbon dioxide                                               471,000        418,000        616,000 
  Natural gas well servicing                                    65,000         82,000              - 
  China                                                              -              -              - 
  e-Commerce                                                         -              -              - 
  Environmental remediation                                          -              -          8,000 
  Other                                                         31,000         50,000         37,000 
                                                           -----------    -----------    ----------- 
                                                               782,000      1,503,000      9,246,000 
                                                           -----------    -----------    ----------- 
Expenses:                                                                                            
  Coal reclamation                                             663,000      1,064,000      5,110,000 
  Carbon dioxide                                                82,000         89,000        119,000 
  Natural gas well servicing                                    65,000         56,000              - 
  China                                                        400,000        279,000        277,000 
  e-Commerce                                                         -              -              - 
  Environmental remediation                                     98,000        184,000        185,000 
  Selling, general and administrative                        1,701,000      1,915,000      2,400,000 
  Depreciation, depletion and amortization                     111,000        354,000        869,000 
  Other                                                         28,000         36,000         45,000 
                                                           -----------    -----------    ----------- 
                                                             3,148,000      3,977,000      9,005,000 
                                                           -----------    -----------    ----------- 
Operating profit (loss):                                                                             
  Coal reclamation                                            (625,000)      (508,000)     1,678,000 
  Carbon dioxide                                               356,000        296,000        466,000 
  Natural gas well servicing                                  (204,000)      (213,000)             - 
  China                                                       (400,000)      (279,000)      (277,000)
  e-Commerce                                                  (275,000)      (129,000)             - 
  Environmental remediation                                   (142,000)      (317,000)      (224,000)
  Other, principally corporate                              (1,076,000)    (1,324,000)    (1,402,000)
                                                           -----------    -----------    ----------- 
                                                            (2,366,000)    (2,474,000)       241,000 

Other income (expense):                                                                              
  Interest income                                              136,000        228,000        400,000 
  Interest expense                                             (60,000)      (170,000)      (964,000)
  Equity in net earnings (loss) of unconsolidated                                                    
    affiliates                                                (834,000)        80,000        225,000 
  Gain on sale of assets                                       334,000         56,000          8,000 
  Impairment of investments and other assets (notes                                                  
    1 and 17)                                                  (71,000)      (110,000)      (154,000)
  Minority interest in operations of consolidated                                                    
    subsidiaries                                                16,000              -              - 
  Other                                                         81,000         95,000         67,000 
                                                           -----------    -----------    ----------- 
Loss from continuing operations before income taxes         (2,764,000)    (2,295,000)      (177,000)

Income taxes (note 12)                                          (8,000)       (48,000)      (100,000)
                                                           -----------    -----------    ----------- 
Loss from continuing operations                             (2,772,000)    (2,343,000)      (277,000)

Discontinued operations (note 4):                                                                    
  Gain (loss) from discontinued operations                     155,000        (82,000)    (1,461,000)
  Gain (loss) from discontinuing brine extraction/iodine                                             
    manufacturing activities                                   179,000       (540,000)             - 
  Loss from discontinuing other environmental services                                               
    activities                                                       -              -       (684,000)
  Loss from discontinuing interstate travel facilities                                               
    activities                                                (591,000)      (434,000)    (1,603,000)
  Gain on sale of dry ice manufacturing and distribution                                             
    business                                                         -              -        168,000 
                                                           -----------    -----------    ----------- 
  Loss from discontinued operations                           (257,000)    (1,056,000)    (3,580,000)
                                                           -----------    -----------    ----------- 
Net loss                                                   $(3,029,000)   $(3,399,000)   $(3,857,000)
                                                           ===========    ===========    =========== 
Net loss attributable to common shareholders (note 5)      $(3,029,000)   $(3,399,000)   $(3,857,000)
                                                           ===========    ===========    =========== 
Net loss per average common share outstanding:                                                       
  Basic and diluted (notes 1 and 13):                                                                
  Loss from continuing operations                          $     (1.52)   $     (1.28)   $     (0.15)
  Loss from discontinued operations                              (0.14)         (0.57)         (1.87)
                                                           -----------    -----------    ----------- 
  Net loss                                                 $     (1.66)   $     (1.85)   $     (2.02)
                                                           ===========    ===========    =========== 
Weighted average common shares outstanding - basic                                                   
  and diluted                                                1,829,000      1,839,000      1,907,000 
                                                           ===========    ===========    =========== 

See accompanying notes to financial statements.                                 

                                                        [Enlarge/Download Table]
                       THE BEARD COMPANY AND SUBSIDIARIES                                                                           
                       Statements of Shareholders' Equity                                                                           

                                                                                            Accumulated                    Total    
                                                              Capital in                       Other                      Common    
                                                  Common      Excess of     Accumulated    Comprehensive Treasury     Shareholders' 
                                                  Stock       Par Value        Deficit         Income     Stock           Equity    
                                                  -----       ---------        -------         ------     -----           ------    
                                                                                                                                    
Balance, December 31, 1997                     $    3,000   $ 37,911,000    $(23,962,000) $       -    $ (1,519,000)   $ 12,433,000 

  Net loss                                              -              -      (3,857,000)         -               -      (3,857,000)

  Sale of 28,125 shares of treasury stock<F1>           -       (112,000)              -          -         188,000          76,000 

  Issuance of 8,250 shares of treasury stock                                                                                        
    for stock option exercises<F1>                      -        (52,000)              -          -          52,000               - 

  Purchase of 41,625 shares of common                                                                                               
    stock <F1>                                          -              -               -          -        (265,000)       (265,000)
                                               ----------   ------------    ------------  ---------    ------------    ------------ 

Balance, December 31, 1998                          3,000     37,747,000     (27,819,000)         -      (1,544,000)      8,387,000 

  Net loss                                              -              -      (3,399,000)         -               -      (3,399,000)
  Comprehensive income:                                                                                                             
    Foreign currency translation adjustment             -              -               -      4,000               -           4,000 
                                                                                                                       ------------ 
  Comprehensive loss                                    -              -               -          -               -      (3,395,000)
                                                                                                                       ------------ 
  Issuance of 2,820 shares of treasury stock                                                                                        
    for stock option exercises<F1>                      -        (24,000)              -          -          24,000               - 

  Purchase of 64,706 shares of common                                                                                               
    stock <F1>                                          -              -               -          -        (326,000)       (326,000)
                                               ----------   ------------    ------------  ---------    ------------    ------------ 

Balance, December 31, 1999                          3,000     37,723,000     (31,218,000)     4,000      (1,846,000)      4,666,000 

  Net loss                                              -              -      (3,029,000)         -               -      (3,029,000)
  Comprehensive income:                                                                                                             
    Foreign currency translation adjustment             -              -               -    (17,000)              -         (17,000)
                                                                                                                       -------------
  Comprehensive loss                                    -              -               -          -               -      (3,046,000)
                                                                                                                       -------------
  Reservation of shares pursuant to deferred                                                                                        
    compensation plan (note 13)                         -        263,000               -          -               -         263,000 
                                               ----------   ------------    ------------  ---------    ------------    ------------ 

Balance, December 31, 2000                     $    3,000   $ 37,986,000    $(34,247,000) $ (13,000)   $ (1,846,000)   $  1,883,000 
                                               ==========   ============    ============  =========    ============    ============ 

<FN>                                                                                                                                
<F1> Adjusted to reflect the 3-for-4 reverse stock split effected in September 2000.                                                
</FN>                                                                                                                               

See accompanying notes to financial statements.                                 

                                                        [Enlarge/Download Table]
                       THE BEARD COMPANY AND SUBSIDIARIES                                              
                            Statements of Cash Flows                                                   

                                                                       Year Ended December 31,         
                                                                       -----------------------         
                                                                2000            1999            1998   
                                                                ----            ----            ----   
                                                                                                       
Operating activities:                                                                                  
  Cash received from customers                            $  2,538,000    $  8,953,000    $ 15,615,000 
  Cash paid to suppliers and employees                      (5,158,000)    (10,488,000)    (15,472,000)
  Interest received                                             88,000         232,000         512,000 
  Interest paid                                                (12,000)       (346,000)     (1,151,000)
  Taxes paid                                                    (8,000)        (60,000)       (358,000)
                                                          ------------    ------------    ------------ 
             Net cash used in operating activities          (2,552,000)     (1,709,000)       (854,000)
                                                          ------------    ------------    ------------ 

Investing activities:                                                                                  
  Acquisition of property, plant and equipment                (513,000)     (1,445,000)     (1,792,000)
  Proceeds from sale of business                                     -               -       1,000,000 
  Proceeds from sale of assets                                 561,000          88,000         275,000 
  Purchase of minority interest                                      -               -        (900,000)
  Acquisition of travel facilities, net of cash                                                        
    acquired of $49,000                                              -               -        (886,000)
  Advances for notes receivable                               (325,000)       (960,000)              - 
  Payments on notes receivable                                 360,000         561,000           6,000 
  Investment in and advances to fifty percent-owned                                                    
    subsidiary                                                (619,000)       (552,000)       (333,000)
  Net purchase of certificates of deposit                            -         (25,000)       (327,000)
  Proceeds from redemptions of certificates of deposit         280,000               -               - 
  Distribution from partnership                                482,000               -               - 
  Other investments                                            273,000         199,000          76,000 
                                                          ------------    ------------    ------------ 
    Net cash provided by (used in) investing activities        499,000      (2,134,000)     (2,881,000)
                                                          ------------    ------------    ------------ 

Financing activities:                                                                                  
  Proceeds from line of credit and term notes                1,386,000               -         328,000 
  Payments on line of credit and term notes                    (69,000)       (253,000)     (1,165,000)
  Purchase of treasury stock                                         -        (326,000)       (265,000)
  Preferred stock repurchase                                         -               -      (4,005,000)
  Proceeds from issuance of common stock                             -               -          76,000 
  Other                                                              -          (1,000)          1,000 
                                                          ------------    ------------    ------------ 
    Net cash provided by (used in) financing activities      1,317,000        (580,000)     (5,030,000)
                                                          ------------    ------------    ------------ 

Net decrease in cash and cash equivalents                     (736,000)     (4,423,000)     (8,765,000)

Cash and cash equivalents at beginning of year                 767,000       5,190,000      13,955,000 
                                                          ------------    ------------    ------------ 

Cash and cash equivalents at end of year                  $     31,000    $    767,000    $  5,190,000 
                                                          ============    ============    ============ 

See accompanying notes to financial statements.                                 

                                                        [Enlarge/Download Table]
                       THE BEARD COMPANY AND SUBSIDIARIES                                              
                            Statements of Cash Flows                                                   

Reconciliation of Net Loss to Net Cash Used In Operating Activities:                                   

                                                                       Year Ended December 31,         
                                                                       -----------------------         
                                                                2000            1999            1998   
                                                                ----            ----            ----   
                                                                                                       
Net loss                                                  $ (3,029,000)   $ (3,399,000)   $ (3,857,000)
Adjustments to reconcile net loss to net cash                                                          
  used in operating activities:                                                                        
    Depreciation, depletion and amortization                   111,000         354,000       1,366,000 
    Gain on sale of assets                                    (328,000)        (56,000)        (16,000)
    Gain from discontinued operations                         (334,000)              -               - 
    Provision for uncollectible accounts and notes              99,000          11,000          19,000 
    Impairment of investments and other assets                 491,000         110,000         154,000 
    Net cash used by discontinued operations offsetting                                                
      accrued losses                                          (180,000)       (347,000)       (300,000)
    Loss from discontinued operations                                -         974,000       2,119,000 
    Equity in net loss of unconsolidated affiliates            834,000           3,000          71,000 
    Minority interest in operations of consolidated                                                    
      subsidiaries                                             (16,000)              -        (285,000)
    Other                                                        6,000         (64,000)         33,000 
    Decrease in accounts receivable, other                                                             
      receivables, prepaid expenses and other current assets   190,000       1,138,000          79,000 
    (Increase) decrease in inventories                          73,000         132,000          (8,000)
    Decrease in trade accounts payable,                                                                
      accrued expenses and other liabilities                  (469,000)       (565,000)       (229,000)
                                                          ------------    ------------    ------------ 
    Net cash used in operating activities                 $ (2,552,000)   $ (1,709,000)   $   (854,000)
                                                          ============    ============    ============ 

Supplemental Schedule of Noncash Investing and Financing Activities:                                   

Exchange of coal extraction and beneficiation equipment                                                
  for release of debt obligation                          $          -    $ 23,053,000    $          - 
                                                          ============    ============    ============ 
Accounts payable, accrued expenses and other debt                                                      
  obligations assumed or cancelled by the purchaser of                                                 
  the interstate travel facilities' assets                $          -    $  2,715,000    $          - 
                                                          ============    ============    ============ 
Sale of property, plant and equipment for notes                                                        
  receivable                                              $          -    $     80,000    $    359,000 
                                                          ============    ============    ============ 
Purchase of property, plant and equipment and intangible                                               
  assets through issuance of debt obligations             $          -    $          -    $ 24,127,000 
                                                          ============    ============    ============ 
Purchase of travel facilities through the sale of a subsidiary's                                       
  common stock                                            $          -    $          -    $    181,000 
                                                          ============    ============    ============ 
Purchase of travel facilities through the issuance of a debt                                           
  obligation and assumption of debt obligations           $          -    $          -    $  2,319,000 
                                                          ============    ============    ============ 
Contribution of equipment for equity investment           $          -    $          -    $     20,000 
                                                          ============    ============    ============ 

See accompanying notes to financial statements.                                 

THE BEARD COMPANY AND SUBSIDIARIES

 Notes to Financial Statements

December 31, 2000, 1999 and 1998

(1)  Summary of Significant Accounting Policies                                 
The Beard  Company's  ("Beard" or the  "Company")  accounting  policies  reflect
industry practices and conform to generally accepted accounting principles.  The
more significant of such policies are briefly described below.                  

Nature of Business                                                              
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  Natural  Gas Well  Servicing  ("WS")  Segment,  (4) the China
("China")  Segment,  (5)  the  e-Commerce  ("e-Commerce")  Segment,  and (6) the
Environmental Remediation ("ER") Segment.                                       

The Coal Segment is in the business of operating coal fines  reclamation  and/or
briquetting  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 WS Segment is conducted
by  two  companies  operating  in  northeastern  Mexico  and  consists  of (i) a
50%-owned company  (accounted for as an equity  investment)  involved in natural
gas well testing operations, and (ii) a wholly-owned company that has designed a
sand  separator  for use on  natural  gas wells and has had five of them  custom
fabricated  for  use on a  trial  basis.  The  China  Segment  is  pursuing  (i)
environmental opportunities, (ii) the sale of technical services, (iii) the sale
of coal equipment,  and (iv) the operation of coal fines reclamation  facilities
in China.  The e-Commerce  Segment  consists of a 78.4%-owned  subsidiary in the
process of  developing  and  implementing  systems and  technologies  related to
Internet commerce. The ER Segment consists of services to remediate creosote and
polycyclic aromatic hydrocarbon contamination.                                  

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

The Company  operated  in the Brine  Extraction/Iodine  Manufacturing  ("BE/IM")
Segment,  consisting  of  the  Company's  40%-ownership  investment  in a  joint
venture, North American Brine Resources ("NABR"), for the extraction, production
and  sale of  crude  iodine.  As  discussed  in note 4, in  December  1999,  the
Management Committee of NABR adopted a formal plan to discontinue the business. 

The Company  operated in the interstate  travel  facilities  business (the "ITF"
Segment)  following its acquisition of four travel  facilities in February 1998.
As discussed in note 4, in April 1999, the Company's Board of Directors  adopted
a formal plan to discontinue  the ITF Segment.  Also, as discussed in note 4, in
August  1998  the  Company's  Board  of  Directors  adopted  a  formal  plan  to
discontinue  its  other  environmental   services  operations  (the  "Other  E/S
Operations"),  conducted principally by Whitetail Services,  Inc. ("Whitetail"),
Horizontal Drilling Technologies, Inc. ("HDT") and Incorporated Tank Systems.   

Use of estimates                                                                
Management  of the  Company  has  made a number  of  estimates  and  assumptions
relating  to the  reporting  of assets and  liabilities  and the  disclosure  of
contingent  assets and  liabilities  to prepare  these  financial  statements in
conformity with generally accepted accounting  principles.  Actual results could
differ from those estimates.                                                    

Cash and Cash Equivalents                                                       
Cash  equivalents  approximated  $525,000 at December 31, 1999 and  consisted of
investments in short-term  commercial  paper and  certificates  of deposit whose
remaining  terms at the date of purchase  were less than 90 days.  There were no
cash  equivalents  at December 31, 2000.  For purposes of the statements of cash
flows,  the Company  considers all highly liquid debt  instruments with original
maturities  of  three  months  or  less  at the  date  of  purchase  to be  cash
equivalents.                                                                    

Inventory                                                                       
As  of  December  31,  2000,  inventory  consisted  of  iodine  located  at  the
manufacturing   facilities  which  was  distributed  to  the  Company  upon  the
dissolution  of the joint venture in which the Company had an interest,  at cost
of  $124,000,  and  gasoline  and grocery  items  located at the  Company's  two
remaining interstate travel facilities,  at a fair market value of $5,000. As of
December 31, 1999,  inventory  consisted primarily of gasoline and grocery items
located at the Company's two remaining interstate travel facilities,  at cost of
$103,000.                                                                       

Property, Plant and Equipment                                                   
Property, plant and equipment are depreciated by use of the straight-line method
using estimated asset lives of 3 to 40 years.                                   

The Company  charges  maintenance  and  repairs  directly to expense as incurred
while  betterments  and renewals are  generally  capitalized.  When  property is
retired  or  otherwise   disposed  of,  the  cost  and  applicable   accumulated
depreciation,  depletion  and  amortization  are  removed  from  the  respective
accounts and the resulting gain or loss is reflected in operations.             

Intangible Assets                                                               
Identifiable intangible assets, comprised primarily of patents, are amortized on
a straight-line basis over their respective estimated useful lives, ranging from
five to 17 years.                                                               

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of         
Long-lived  assets  and  certain  identifiable   intangibles  are  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying  amount of an asset
to future net cash flows  expected to be generated by the asset.  If such assets
are  considered to be impaired,  the  impairment to be recognized is measured by
the amount by which the carrying  amount of the assets exceeds the fair value of
the assets.  Assets to be disposed of are  reported at the lower of the carrying
amount or fair value less costs to sell.                                        

In 2000, 1999, and 1998 the Company  recognized  $71,000,  $110,000 and $154,000
for  impairments to the carrying values of investments and other assets relating
to the recoverability of such investments or assets.                            

Other Long-Term Liabilities                                                     
Other  long-term  liabilities  consist of various  items  which are not  payable
within the next calendar year.                                                  

Fair Value of Financial Instruments                                             
The  carrying  amounts  of the  Company's  cash and cash  equivalents,  accounts
receivable,  other current assets, trade accounts payables, and accrued expenses
approximate  fair value because of the short maturity of those  instruments.  At
December  31,  2000 and 1999,  the fair  value of the  long-term  debt and notes
receivable  were not  significantly  different  than their carrying value due to
interest rates relating to the instruments  approximating  market rates on those
dates. Redeemable preferred stock is carried at estimated fair value.           

Income Taxes                                                                    
Income taxes are accounted for under the asset and  liability  method.  Deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases and operating
loss and tax credit  carryforwards.  Deferred  tax assets  and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The Company provides a valuation allowance for deferred tax assets for
which it does not  consider  realization  of such  assets to be more likely than
not. The effect on deferred tax assets and  liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.         

Treasury Stock                                                                  
In September  1998,  the Company  announced a plan to  repurchase  up to 150,000
shares  of its  outstanding  common  stock.  In 1999,  the  Company  repurchased
approximately  64,700 shares for $326,000 and in 1998 repurchased  approximately
41,600  shares for  $265,000.  In 1997,  the Company  repurchased  approximately
228,000  shares of its common stock for  approximately  $1,519,000.  The Company
holds  repurchased  stock as treasury stock.  The number of shares purchased and
remaining as treasury  shares as of December 31, 2000 have been restated to give
effect to the 3-for-4 reverse split in September, 2000.                         

Stock Option Plan                                                               
The Company  applies the  intrinsic  value method of  accounting  prescribed  by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations, in accounting for its stock options.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying  stock exceeded the exercise price.  SFAS
No. 123, "Accounting for Stock-Based Compensation,"  established accounting and 
disclosure  requirements  using a fair  value-based  method  of  accounting  for
stock-based employee compensation plans. As allowed by SFAS No. 123, the Company
has  elected to  continue  to apply the  intrinsic  value  method of  accounting
described above, and has adopted the disclosure requirements of SFAS No. 123.   

Mandatorily Redeemable Preferred Stock                                          
The  Company's  preferred  stock is accounted for at estimated  fair value.  The
excess of the  estimated  redeemable  value  over the fair  value at the date of
issuance  is  accreted  over the  redemption  term.  The  carrying  value of the
preferred stock is increased annually, if necessary, for the estimated accretion
with a corresponding  reduction of capital in excess of par value. The accretion
of carrying  value  decreases  net income or increases  net loss for purposes of
calculating net income (loss) attributable to common shareholders. No additional
accretion was recorded in 2000, 1999, or 1998.                                  

Earnings (Loss) Per Share                                                       
Basic  earnings  (loss) per share data is computed by dividing  earnings  (loss)
attributable  to common  shareholders  by the weighted  average number of common
shares  outstanding  for the  period.  Diluted  earnings  per share  reflect the
potential  dilution that could occur if the Company's  outstanding stock options
were exercised (calculated using the treasury stock method) and if the Company's
preferred stock were converted to common stock.                                 

Diluted  loss  per  share  from  continuing  operations  in  the  statements  of
operations   exclude   potential  common  shares  issuable  upon  conversion  of
redeemable  preferred  stock or exercise of stock  options as a result of losses
from continuing operations for all years presented.                             

Concentrations of Credit Risk                                                   
Financial  instruments that potentially subject the Company to concentrations of
credit risk  consist  primarily  of accounts  and notes  receivable,  and equity
investments in unconsolidated  affiliates. Net advances for operations in Mexico
comprised  approximately  52% of the  balances  in  accounts  receivable,  notes
receivable,  and  investments  and other assets at December 31, 2000.  Notes and
leases receivable from three parties comprised approximately 15% of the December
31, 2000 balances of accounts receivable,  notes receivable, and investments and
other  assets.  Generally,  the Company does not require  collateral  to support
accounts and notes receivable.                                                  

Comprehensive Income                                                            
SFAS No. 130 establishes  standards for reporting and display of  "comprehensive
income" and its  components in a set of financial  statements.  It requires that
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be reported in a financial statement that is
displayed with the same  prominence as other financial  statements.  During 2000
and 1999,  the Company's only items of  comprehensive  income related to foreign
currency  translation  adjustments  resulting  from  its  equity  investment  in
ITS-Testco.  The assets and  liabilities  of Testco de  Mexico,  a  wholly-owned
subsidiary of  ITS-Testco,  are stated in the local  currency (the Mexican peso)
and are translated into U.S.  dollars using the current  exchange rate in effect
at the balance sheet date,  while income and expenses are  translated at average
rates for the respective periods.  Translation adjustments have no effect on net
loss and are included in accumulated other  comprehensive  loss. The Company had
no items of comprehensive  income as defined by SFAS No. 130 not included in the
accompanying statements of operations in 1998.                                  

Reclassifications                                                               
Certain 1999 and 1998  balances  have been  reclassified  to conform to the 2000
presentation.                                                                   

(2)  Ability to Fund Operations                                                 
In January  1999,  the Company's  primary  source of revenues and cash flows was
eliminated by the  termination of the Operating  Agreements with MCNIC (see note
3).  As a result  of the  termination  of the plant  operating  agreements,  the
requirement  to  fund  operating  losses,  and  the  decision  to  pursue  other
investment  opportunities,  the  Company's  working  capital  and  cash and cash
equivalents  decreased  significantly  at December 31, 2000 compared to December
31,  1999.  To mitigate  potential  liquidity  problems,  the  Company  obtained
financing of $1.8  million in 2000,  $1.5 million of which was from an affiliate
of the  Company's  chairman (see note 10). In addition,  the Company  expects to
generate cash from the disposition of assets of discontinued operations and from
the pay down of notes receivable.  It is also currently  pursuing a $1.5 million
loan backed by its CO2 reserves at McElmo Dome.                                 

The  Company  is  focusing  on  replacing  its Coal  Segment's  revenues  and is
currently  working  on two new pond  reclamation  projects,  both of  which  are
expected  to mature  into  operating  projects  for the  segment  in the next 12
months.  The segment is currently  negotiating  with a Fortune 500 company which
has made the  decision  to install a clean coal  preparation  plant at a pond in
West  Virginia.  The segment is  negotiating  with third parties  concerning the
installation of the equipment needed for the project.  If such  negotiations are
successfully concluded,  plant construction is expected to commence in the third
quarter of 2001. The second project is longer range, with negotiations  expected
to  commence in the second half of 2001.  The  Company  expects  that cash to be
generated from the sale of assets and from the $1.5 million loan currently being
pursued will be  sufficient  to continue  operations  through 2001 and until the
operations of the new coal projects have come on stream.                        

(3)  Acquisitions                                                               
ITF Segment                                                                     
In 1998 the  Company,  through  a newly  formed  subsidiary,  Interstate  Travel
Facilities,  Inc.  ("ITF"),  acquired  four travel  facilities  and a truck wash
bordering  the   Interstate   Highway  system  in  Oklahoma  for  a  total  cash
consideration  of $935,000,  notes  totaling  $1,120,000  (valued at  $983,000),
assumption of debt  totaling  $1,336,000  and 20% of the Company's  ownership in
ITF.                                                                            

As discussed in note 4, in April 1999 the Company's Board of Directors  approved
a plan to discontinue its ITF Segment.                                          

Coal Segment                                                                    
In June 1998,  the Company,  through a newly formed  subsidiary,  Beard  Mining,
L.L.C.  ("BMLLC"),  acquired coal fines extraction and  beneficiation  equipment
("the Equipment")  located at six coal slurry impoundment sites for $24,000,000.
BMLLC  financed  the  purchase  with a  $24,000,000  loan from MCNIC  Pipeline &
Processing  Company  ("MCNIC") which was secured solely by the Equipment.  BMLLC
leased  the  Equipment  to  Beard  Technologies,  Inc.  ("BTI")  a  wholly-owned
subsidiary  of Beard,  which  operated  and  maintained  the  Equipment  and six
briquetting  plants for six limited liability  companies (the "LLC's"),  each of
which was a subsidiary of MCNIC.  The monthly lease payments equaled the monthly
payments due under the promissory  note and were  reimbursed  costs by the LLC's
under BTI's operating agreements with the LLC's.                                

Concurrent with BMLLC's acquisition of the Equipment, BTI entered into operating
agreements with the LLC's to provide services for which it was being compensated
in 1998 under a  cost-plus  arrangement  pursuant to which it received a minimum
profit of  $100,000  per  month  (the  "Operating  Agreements").  The  operating
agreements provided that, solely for determining BTI's compensation  thereunder,
the agreements were deemed to have been effective April 1, 1998.                

In December  1998,  the LLC's  terminated  the  Operating  Agreements  effective
January 31,  1999.  BTI retained a reduced work force at the plants for security
reasons through April 30, 1999.                                                 

In March 1999,  BTI and MCNIC entered into an agreement,  effective  January 31,
1999, whereby BTI assigned its 100% interest in BMLLC to MCNIC in exchange for a
release from MCNIC of any  obligations  BTI had or would have had as an interest
owner  in  BMLLC  (the  "Exchange  Agreement").  As a  result  of  the  Exchange
Agreement, the Company was relieved of its obligations under the promissory note
and the related loan  documents in exchange for its ownership in the  Equipment.
The remaining net book value of the  Equipment  exchanged  equaled the remaining
principal  balance of the promissory note forgiven.  Therefore,  no gain or loss
resulted from the transaction.                                                  

The  above   acquisitions   were  accounted  for  by  the  purchase  method  and
accordingly,  the  results  of  operations  of the travel  facilities  and other
acquired  assets have been included in the Company's  financial  statements from
their respective acquisition dates.                                             

The Company considers the acquisition of the travel facilities and the Equipment
as asset acquisitions;  therefore,  no pro forma financial  information has been
reported in the accompanying financial statements.                              

(4)  Discontinued Operations                                                    
BE/IM Segment                                                                   
In December  1999,  the  Management  Committee  of 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 of NABR's
discontinuation, Beard's share of NABR's operating results have been reported as
discontinued  for  all  periods  presented  in the  accompanying  statements  of
operations.  Beard's share of NABR's operating results were $82,000 and $296,000
of  losses  in 1999 and 1998  respectively.  The  joint  venture  was  dissolved
effective  September  15, 2000 and the Japanese  partners  received  their final
distribution  of cash in  December,  2000,  with  the  Company  taking  over the
remaining  assets and  liabilities.  The  Company  recorded  $179,000  in income
representing  the  excess  of the  amounts  received  by the  Company  over  the
remaining basis of the Company's investment in the joint venture.               

In addition,  in December 1999, Beard recorded a $540,000 loss, which represents
its share of NABR's $1,350,000  estimated loss expected from the discontinuation
of operations. NABR's loss included $778,000 which represented the difference in
the estimated  amounts expected to be received from the assets'  disposition and
the assets' recorded values as of December 31, 1999, and $572,000 of anticipated
operating  losses through April 2000 (the date  operations  ceased) and costs of
ceasing operations.                                                             

As of December 31, 2000, the  significant  assets  related to NABR's  operations
consisted  primarily of equipment and inventory  with  estimated net  realizable
values of $158,000  and  $124,000,  respectively.  The  significant  liabilities
related to NABR's  operations  consisted  primarily  of accounts  and  royalties
payable totaling  $282,000.  The Company is actively  pursuing  opportunities to
sell NABR's assets and expects the  disposition  to be completed by December 31,
2001.                                                                           

ITF Segment                                                                     
In April 1999,  Beard's Board of Directors  adopted a formal plan to discontinue
its ITF Segment.  That same month Beard  entered into an agreement  with ITF and
its minority  shareholders  which would have  resulted in the sale of ITF to the
minority  shareholders.  The agreement  failed to close,  and in September  1999
Beard, ITF and the minority  shareholders entered into new agreements which were
closed  in  November  1999.  As a  result,  ITF  disposed  of two of its  travel
facilities and its truck wash.  The purchaser  assumed the  outstanding  debt of
$2,149,000  on the  properties  and  equipment  and  accounts  payable  totaling
$126,000;  the minority shareholders gave up their 20% interest in ITF; $327,000
of C/D's formerly securing the debt were assigned to the Company; and a $440,000
note ($544,000 face value) to the minority shareholders was cancelled. Beard now
has 100% ownership of ITF which owns two C-stores, including their equipment and
remaining inventory, and has no outstanding indebtedness with the exception of a
lease purchase arrangement totaling $41,000 on some equipment.                  

Revenues and operating  losses from the discontinued ITF Segment were $4,437,000
and $741,000, respectively in 1998.                                             

Beard recorded a $1,603,000 estimated loss from discontinuing the ITF Segment in
1998,  including a provision of $347,000  for losses  expected to be incurred by
ITF from  January  1,  1999  through  disposition.  ITF's  revenues  and  actual
operating losses for 1999 were $6,487,000 and $567,000, respectively.  Losses of
$347,000  were  charged  against  the loss  accrual  recorded  in 1998  with the
remaining  $220,000  reflected in the loss from  discontinued  operations in the
1999 statement of operations.  Beard recorded an additional $214,000 loss in the
fourth quarter of 1999; including $180,000 of anticipated  operating losses from
December 31, 1999 through the disposal date of the remaining assets; and $34,000
representing  a  further  reduction  in the  estimated  realizable  value of the
remaining  C-stores as of December 31, 1999.  Revenues and operating losses from
the discontinued ITF Segment were $1,826,000 and $351,000, respectively in 2000.
The Company charged  $180,000 of these operating losses against the loss accrual
established  in 1999 and  recognized  $44,000 in September,  2000. The remaining
$127,000 in operating  losses were recognized  during the fourth quarter.  Beard
recorded an  additional  $420,000  loss in December  2000;  $60,000  represented
losses  expected to be  incurred  by ITF from the date of  shutdown  through the
anticipated  disposal  date of the  remaining  assets;  and $360,000 of the loss
represented  an additional  reduction in the estimated  realizable  value of the
remaining  C-stores and related  assets as of December 31, 2000.  The total loss
recorded in 2000 related to the discontinued ITF Segment was $591,000.          

As of December  31,  2000,  the  significant  assets  related to the ITF Segment
consisted  of  cash,  inventory  and the  two  remaining  C-stores  with a total
estimated net realizable value of $561,000.  The significant  liabilities of the
segment consist of trade accounts  payable,  accrued expenses and long-term debt
totaling $136,000. Beard is actively seeking opportunities to sell the remaining
C-stores and expects the C-stores to be sold by mid-year 2001.                  

Other E/S Operations In August 1998, the Company's Board of Directors  adopted a
formal plan to  restructure  the E/RR Segment and to  discontinue  the Other E/S
Operations.  Accordingly,  the  results  of the Other E/S  Operations  have been
reported  as  discontinued  for  all  periods   presented  in  the  accompanying
statements of operations. Revenues and losses from the discontinued segment were
$1,536,000  and  $424,000,  respectively,  for 1998.  Losses  from  discontinued
operations  approximated  $300,000 from the date operations were discontinued to
December 31, 1998, and reduced the accrued  liability  established in the second
quarter for such losses by a corresponding  amount. No such losses were realized
in 2000 or 1999.                                                                

As of  December  31,  2000,  the  significant  assets  related  to the Other E/S
Operations consist primarily of equipment with a recorded value of $152,000. The
significant  liabilities  related to the Other E/S Operations consist of accrued
expenses totaling $7,000.                                                       

In 1998, the Company recorded a $684,000 loss expected from the  discontinuation
of the Other E/S Operations.  The loss included  $749,000 which  represented the
difference in the estimated  amounts to be received from  disposing of the Other
E/S Operations'  assets and the assets' recorded values as of June 30, 1998, and
$300,000 of the loss represented  anticipated operating losses until disposal of
such assets had been  completed.  Offsetting the expected  losses was a $365,000
gain from early  extinguishment of an obligation to the former owner of HDT. The
obligation was originally incurred by the Company as a result of its acquisition
of 80% of HDT's  outstanding  common  stock and was payable only from 80% of the
cash  flows  (prescribed  under the  obligation  agreement)  of HDT and  another
company  included in Other E/S Operations.  The gain  represented the discounted
obligation balance as of June 30, 1998.                                         

The Company has sold a significant portion of the Other E/S Operations equipment
for a total price of $750,000 since its date of discontinuance.  Equipment sales
totaling  $439,000  were for various  notes  receivable  with terms ranging from
three to seven years. The Company is actively seeking  opportunities to sell the
remaining Other E/S Operations equipment.                                       

Solid CO2 Segment                                                               
In 1997 the Company  sold the business  and  substantially  all of the assets of
Carbonic  Reserves,  an 85%-owned  subsidiary  involved in the manufacturing and
distribution  of solid CO2 ("solid CO2 segment") for cash of $19,375,000 and the
assumption of certain liabilities valued at $2,813,000 (the "Asset Sale").      

The gain on the Asset Sale was  $11,014,000  (after  applicable  income taxes of
$522,000).  In 1998 the Company determined it overestimated its state income tax
liability  thereby  reducing the gain  recognized in 1997 from the Asset Sale by
$168,000.  The Company  reduced its  estimated  state income tax  liability  and
recognized  an additional  $168,000 gain on the Asset Sale in 1998.  The gain is
presented in  discontinued  operations  in the  accompanying  1998  statement of
operations.  The Company  recorded  $155,000 in income in October  2000,  as the
result of the lapse of an option for accrued employee severance compensation.   

As of December  31,  2000,  the solid CO2 segment had no  significant  assets or
liabilities.                                                                    

(5)  1993 Restructure; Redeemable Preferred Stock                               
As a result of a  restructure  (the  "Restructure")  effected in October of 1993
with four institutional lenders (the  "Institutions"):  (a) substantially all of
the oil and gas assets of Beard's  subsidiary,  Beard Oil Company  ("Beard Oil")
were sold to a company owned by the Institutions;  (b) $101,498,000 of long-term
debt and other obligations were effectively eliminated; and (c) the Institutions
received 25% of Beard's then  outstanding  common  stock and  $9,125,000  stated
value (91,250 shares, or 100%) of Beard's preferred stock.                      

The Company's  preferred stock is mandatorily  redeemable  through  December 31,
2002 from  one-third  of  Beard's  "consolidated  net  income" as defined in the
Restructure  agreements.  Accordingly,  one-third  of future  "consolidated  net
income" through such date will accrete directly to the preferred stockholder and
reduce earnings per common share.  Each share of Beard preferred stock which has
not previously  been redeemed may be converted into  3.84706875  shares of Beard
common stock after December 31, 2002.  Fractional shares will not be issued, and
cash will be paid in redemption thereof.                                        

In 1997, three of the four  Institutions  sold their common and preferred shares
to five  individuals  (the  "Sellers")  who  thereafter  sold such shares to the
Company. Repurchase of the common shares was effected by the Company in 1997 and
repurchase of the preferred  (47,729  shares) was effected in 1998.  The Company
redeemed 16,411 of the preferred shares at stated value ($100 per share) in lieu
of the Sellers'  share of the  required  redemption  from  one-third of 1997 net
income.  The Sellers'  remaining  31,318  preferred  shares were  purchased  for
$1,000,000 or $31.93 per share.                                                 

At December 31, 2000 and 1999,  the redeemable  preferred  stock was recorded at
its  estimated  fair value of $889,000 or $31.93 per share and had an  aggregate
redemption value of $2,784,000.                                                 

(6)  Investments and Other Assets                                               
Investments and other assets consisted of the following:                        

                                          December 31,
                                          ------------
                                         2000         1999
                                         ----         ----

Certificates of deposit                 $    75,000   $   355,000 
Investment in and advances to ITS-                                
 Testco, L.L.C                             241,000       645,000
Investment  in  North American  Brine                             
 Resources (see note 4)                          -       225,000
Investment in Cibola Corporation             38,000       109,000 
Investment  in  real  estate  limited                             
 partnerships                               52,000       201,000
Other assets                                 61,000        69,000 
                                       -----------   -----------
                                           467,000     1,604,000
Current investments                               -      (280,000)
                                       -----------   -----------
                                       $   467,000   $ 1,324,000
                                       ===========   ===========

Certificates of Deposit                                                         
Included in  investments  and other  assets at  December  31, 2000 and 1999 is a
certificate of deposit of $75,000.  The  certificate of deposit has been pledged
as collateral  to secure a note payable for the plaintiff  group in a lawsuit in
which the Company is a participant.                                             

Investment in and Advances to ITS-Testco, L.L.C.                                
In 1998,  the Company  contributed  $353,000 for a 50% ownership in  ITS-Testco,
L.L.C.  ("ITS-Testco").  During  1999,  the Company  contributed  an  additional
$301,000 to ITS-Testco.  ITS-Testco, through its wholly-owned subsidiary, Testco
Inc de Mexico,  S.A. de C.V., is involved in natural gas well testing operations
in northeastern  Mexico.  The Company does not control  ITS-Testco's  operations
and,  therefore,  accounts  for  its  investment  using  the  equity  method  of
accounting.  The  Company's  carrying  value of its  investment in ITS-Testco at
December 31, 2000 and 1999 approximated  ($675,000) and $394,000,  respectively,
which exceeds its 50% ownership in the underlying equity (deficit) of ITS-Testco
by $29,000  and  $15,000 as of December  31,  2000 and 1999,  respectively.  The
difference  is a result of the  Company's  capital  contributions  exceeding the
other partner's capital  contributions.  Such difference will be realized by the
Company through future distributions from ITS-Testco to the owners.             

The Company also had $917,000 and $251,000 of receivables due from ITS-Testco at
December  31,  2000  and  1999,  respectively,   related  to  advances  to  fund
operations.  The receivables are due on demand and accrued interest at an annual
rate of  8.25%  through  December  31,  1999  and has  been  increased  to 8.75%
effective  January 1, 2000.  The Company  does not expect the  receivable  to be
repaid in 2001.  Because the Company is committed to funding the  operations  of
ITS-Testco,  the Company's  equity (deficit) in its investment in ITS-Testco and
advances due from ITS-Testco are combined in the consolidated balance sheets.   

The summarized unaudited financial  information of ITS-Testco as of December 31,
2000 and 1999 and for the years ended December 31, 2000 and 1999 is as follows: 

                              2000            1999
                              ----            ----
Current assets                 $   253,000    $   989,000 

Current liabilities               (367,000)      (318,000)
                              -----------    -----------
Working capital (deficit)         (114,000)       671,000 

Equipment, net                   1,197,000      1,451,000 
Other assets                        70,000              - 
Advances from members           (1,984,000)      (627,000)
Long-term debt                    (576,000)      (738,000)
                              -----------    -----------
Members equity (deficit)       $(1,407,000)   $   757,000 
                              ===========    ===========

Revenue                        $   344,000    $ 2,378,000 
                              ===========    ===========

Net loss                       $(2,129,000)   $  (457,000)
Foreign currency translation       (34,000)         8,000 
                              -----------    -----------
Comprehensive loss             $(2,163,000)   $  (449,000)
                              ===========    ===========

Investment in Cibola Corporation                                                
The  Company  owns 80% of the  outstanding  common  stock of Cibola  Corporation
("Cibola"),  a natural  gas  marketing  company,  but does not  consolidate  the
assets, liabilities,  revenues or expenses of Cibola because Cibola's assets are
controlled by its minority common stockholders and preferred  stockholders.  The
Company's equity in the earnings of Cibola were $237,000, $308,000, and $274,000
in 2000, 1999 and 1998, respectively.                                           

Investment in Real Estate Limited Partnerships                                  
The  Company  owns a  limited  partnership  interest  in a real  estate  limited
partnership,  and had a limited  partnership  interest  in another  real  estate
limited   partnership  which  was  sold  in  2000.  The  limited   partnerships'
significant assets consist of undeveloped land near Houston,  Texas. The Company
recorded $2,000 and $4,000 of loss in 2000 and 1998, respectively, and $5,000 of
income in 1999 resulting from its share of the limited partnerships'  operations
for those years. Additionally,  in 2000, the Company realized income of $194,000
as the result of the sale of property  owned by one of the two  partnerships  in
which the Company had an interest.                                              

Other assets                                                                    
The Company  recorded  provisions  of $71,000,  $110,000,  and $154,000 in 2000,
1999, and 1998, respectively, for economic impairment of other investments.     

(7) Notes  Receivable                                                           
As of December  31, 2000 and 1999,  the  Company  had various  notes  receivable
totaling $253,000 resulting from the sale of Other E/S Operations equipment. The
notes bear  interest at rates ranging from 5.85% to 8%  (discounted  using a 10%
interest rate) at December 31, 2000 and 1999. The notes mature from July 2001 to
February 2005, and are secured by the sold  equipment.  At December 31, 2000 and
1999, $80,000 and $80,000,  respectively,  were due within one year. At December
31, 2000, the Company had a $586,000 note receivable due from Testco,  Inc., the
other 50% owner of ITS-Testco,  L.L.C. At December 31, 1999, the note receivable
balance was  $457,000.  The note accrues  interest at one percent over the prime
rate, matures in June 2001 and is secured by a personal guaranty of the owner of
Testco,  Inc. If the note has not been  repaid at  maturity,  the  Company  will
extend the maturity and establish a monthly  payment  schedule;  therefore,  the
note is presented as non-current.                                               

(8)  Property, Plant and Equipment                                              
Property, plant and equipment consisted of the following:                       

                              December 31,
                              ------------
                               2000         1999
                               ----         ----

Land                                      $  245,000   $  270,000               
Proved and unproved carbon                                                      
properties                               1,144,000    1,139,000             
Buildings                                     82,000       82,000               
Buildings and land improvements              301,000      264,000               
Machinery and equipment                    1,688,000    1,727,000               
Other                                        411,000      404,000               
Coal fines extraction and beneficiation                                         
equipment                                  1,493,000    1,124,000               
                            ---------    ---------
                           $5,364,000   $5,010,000
                           ==========   ==========

(9)  Intangible Assets                                                          
Intangible assets are summarized as follows:                                    

                              December 31,
                              ------------
                               2000         1999
                               ----         ----

Patent costs                                 $47,000     $25,000                
Other                                          3,000           -                
                             -------     -------
                             $50,000     $25,000
                             =======     =======

(10)  Long-term Debt                                                            
Long-term debt is summarized as follows:                                        

                              December 31,
                              ------------
                               2000         1999
                               ----         ----

Coal (a)                                    $ 13,000    $ 30,000                
e-Commerce (b)                                22,000           -                
Interstate Travel Facilities Segment (c)      42,000           -                
Line of credit (d)                           300,000           -                
                            --------    --------
                             377,000      30,000
Less current maturities                       30,000      17,000                
                            --------    --------
Long-term debt                          $347,000    $ 13,000            
                            ========    ========

(a)  At December 31, 2000 and 1999,  the Company's  Coal Segment had $13,000 and
     $30,000 of various notes  payable.  The note payable  remaining at December
     31, 2000 bears interest at 14%,  requires  monthly payments of interest and
     principal and matures in September  2001.  The note is secured by equipment
with an approximate book value of $26,000 at December 31, 2000.       

(b)  At December 31, 2000, the Company's e-Commerce Segment had one note payable
     with a balance due of  $22,000.  The note bears  interest at 12%,  requires
     monthly  payments of interest and principal  and matures in July 2005.  The
     note is secured by an automobile with an approximate  book value of $25,000
at December 31, 2000.                                                 

(c)  At December 31, 2000,  the Company's  discontinued  ITF Segment had a lease
     purchase obligation with a balance due of $42,000.  The obligation requires
     monthly payments of principal and interest  totaling  approximately  $1,000
and matures in March, 2004.                                           

(d)  At December 31,  2000,  the Company had fully  utilized a $300,000  line of
     credit at a bank. The line bears  interest at prime plus one-half  percent,
     requires  monthly  payments of interest and matures  January 15, 2002.  The
note is guaranteed by a related party.                                

At December 31, 2000,  the Company has borrowed  $1,036,000  from an  affiliated
entity  of the  Chairman  of the  Company  under  terms of two  unsecured  notes
totaling  $1,500,000 which bear interest at 10%. The principal of the first note
of $700,000  and accrued  interest are due to be repaid  February 28, 2002.  The
amounts borrowed on the second note of $800,000 and any accrued interest are due
to be repaid on April 1, 2002.                                                  

The annual  maturities  of long-term  debt  subsequent  to December 31, 2000 are
$30,000 for 2001,  $1,353,000 for 2002,  $18,000 for 2003,  $8,000 for 2004, and
$3,000 for 2005.                                                                

(11)  Operating Leases                                                          
Noncancelable  operating leases relate principally to office space, vehicles and
operating  equipment.  Future minimum  payments under such leases as of December
31, 2000 are summarized as follows:                                             

2001   $101,000 
2002     16,000 
2003     10,000 
      --------
      $127,000
      ========

Rent expense under operating leases aggregated $201,000,  $197,000, and $185,000
in 2000, 1999 and 1998, respectively.                                           

(12)  Income Taxes                                                              
Total income tax expense (benefit) was allocated as follows:                    

                         Year ended December 31,
                         -----------------------
                         2000        1999         1998
                         ----        ----         ----

Continuing operations     $   8,000   $  48,000    $ 100,000  
Discontinued operations           -           -     (168,000) 
                        ---------   ----------   ---------
                         $   8,000   $  48,000    $ (68,000)
                        =========   =========    =========

Current income tax expense from continuing operations consisted of:             

                   Year ended December 31,
                   -----------------------
                    2000       1999       1998
                    ----       ----       ----

U. S. federal        $  8,000   $ 34,000   $ 41,000 
Various states              -      2,000     59,000 
Republic of Mexico          -     12,000          - 
                    --------   --------   --------
                    $  8,000   $ 48,000   $100,000
                    ========   ========   ========

Total income tax expense  allocated to continuing  operations  differed from the
amounts  computed by  applying  the U. S.  federal  income tax rate to loss from
continuing operations before income taxes as a result of the following:         

                             Year ended December 31,
                             -----------------------
                             2000         1999          1998
                             ----         ----          ----
Computed  U.S. federal                                            
statutory benefit           $(886,000)   $(780,000)   $(161,000)
Federal alternative                                               
minimum taxes                   8,000       34,000       41,000 
Increase in the valuation                                         
allowance for deferred tax                                      
assets                        886,000      780,000      161,000 
State income taxes                   -        2,000       59,000  
Republic of Mexico taxes             -       12,000            -  
                           ---------    ---------    ---------
                           $   8,000    $  48,000    $ 100,000
                           =========    =========    =========

The components of deferred tax assets and liabilities are as follows:           

                                          December 31,
                                          ------------
                                          2000            1999
                                          ----            ----
Deferred tax assets - tax effect of:                                        
Net operating loss carryforwards           $ 20,180,000    $ 19,988,000 
Statutory depletion and investment                                      
tax credit carryforwards                     2,081,000       2,129,000
Other, principally investments and                                      
property, plant and equipment                    8,000         651,000
                                          ------------    ------------
 Total gross deferred tax assets            22,269,000      22,768,000
     Less valuation allowance               (22,269,000)    (22,768,000)
Deferred tax liabilities                                -               -   
                                          ------------    ------------
 Net deferred tax asset/liability         $          -    $          -
                                          ============    ============

In assessing the  recoverability  of deferred tax assets,  management  considers
whether it is more  likely  than not that some  portion or all of the tax assets
will not be  realized.  The  ultimate  realization  of  deferred  tax  assets is
dependent  upon the  generation of future  taxable  income during the periods in
which those temporary  differences become deductible.  Management  considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment.                          

At  December  31,  2000,  the Company had  federal  regular tax  operating  loss
carryforwards of  approximately  $52.6 million that expire from 2004 to 2009 and
tax depletion  carryforwards of approximately $5.5 million.  These carryforwards
may be limited if the Company undergoes a significant ownership change.         

(13)  Stock Option and Deferred Compensation Plans                              
The Company  reserved  175,000  shares of its common  stock for  issuance to key
management,  professional  employees and directors  under The Beard Company 1993
Stock  Option Plan (the "1993 Plan")  adopted in August 1993.  In April 1998 the
Board of Directors voted to increase the number of shares  authorized  under the
1993 Plan to 275,000,  and the shareholders  approved the increase in June 1998.
As a result of the 3-for-4 reverse stock split effected in September  2000, the 
number of shares authorized under the 1993 Plan was reduced to 206,250. The 1993
Plan is  administered  by the  Compensation  and  Stock  Option  Committee  (the
"Committee")  of the Board of  Directors.  The option price is determined by the
Committee  but cannot be less than the fair market  value of the common stock of
the  Company at the date of grant for  incentive  stock  options and 75% of fair
market value of the common  stock for  non-qualified  options.  All options have
ten-year  terms and become  exercisable  one year after the date of grant at the
rate  of 25%  each  year  until  fully  exercisable.  Directors  who are not key
management  employees  of the  Company or  subsidiaries  of the Company are only
eligible to be granted  non-qualified stock options. At December 31, 2000, there
were 93,750 additional shares available for grant under the Plan.               

The per share  weighted-average  fair value of stock options granted during 1997
was $2.67 on the date of grant using the Black-Scholes option pricing model with
the following  assumptions:  no expected dividend yield; risk-free interest rate
of 6.5%;  expected life of ten years; and expected volatility of 39%. No options
were granted in 1998, 1999 or 2000.                                             

The Company  applies APB Opinion No. 25 in accounting for its stock options and,
accordingly,  no compensation  cost has been recognized for its stock options in
the financial statements.  Had the Company determined compensation cost based on
the fair value at the grant date for its stock  options  under SFAS No. 123, the
net loss would have  increased  $8,000 in 2000, and $9,000 in 1999 and 1998. Net
earnings  (loss) per share would not have been affected for any years  presented
in the accompanying financial statements.                                       

Stock option activity during the periods indicated is as follows:               

                                           Number     Weighted-Average
                                         of Shares    Exercise Price
                                         ---------    --------------

   Balance at December 31, 1997(A)    93,750    $   2.89
     Granted                            -        -
        Exercised(A)                 (41,250)       2.67
     Forfeited                          -        -
     Expired                            -        -
                                    --------------------
   Balance at December 31, 1998(A)    52,500    $   3.05
     Granted                            -        -
        Exercised(A)                  (6,000)       2.67
     Forfeited                          -        -
     Expired                            -        -
                                    --------------------
   Balance at December 31, 1999(A)    46,500    $   3.09
     Granted                            -        -
     Exercised                          -        -
     Forfeited                          -        -
        Expired(A)                    (5,625)       2.67
                                    --------------------
   Balance at December 31, 2000       40,875    $   3.14
                                    ====================
-----------------                                                               

(A)  Adjusted to reflect the 3-for-4  reverse stock split  effected in September
2000.                                                                 

At  December  31,  2000,  the  range of  exercise  prices  and  weighted-average
remaining  contractual  life of outstanding  options was $2.67 - $5.83 and three
years, respectively.                                                            

At December  31, 2000 and 1999,  the number of options  exercisable  was 40,000,
after giving effect to the 3-for-4  reverse split in September 2000, and 42,000,
respectively, and the weighted-average exercise price of those options was $3.10
and $2.95, respectively.                                                        

The Company has a deferred  compensation plan for certain key executives and the
board of  directors  which  provide for  payments  in the form of the  Company's
common  stock upon the  death,  disability,  retirement  or  termination  of the
participant.  The  number  of  shares of stock  credited  to each  participant's
account  is equal to the  amount of  compensation  deferred  divided by the fair
market value of the stock on the deferral  date. As of December 31, 2000,  there
were 105,000 shares reserved for distribution under the plan.                   

(14)  Employee Benefit Plan                                                     
Employees of the Company participate in either of two defined contribution plans
with features under Section 401(k) of the Internal  Revenue Code. The purpose of
the  Plans is to  provide  retirement,  disability  and death  benefits  for all
full-time employees of the Company who meet certain service requirements. One of
the plans allows voluntary  "savings"  contributions up to a maximum of 15%, and
the  Company  matches  100% of  each  employee's  contribution  up to 5% of such
employee's  compensation.  The second plan covers  those  employees  in the Coal
Segment and allows  voluntary  "savings"  contributions  up to a maximum of 15%.
Under this plan, the Company contributes $1.00 per hour of service performed for
hourly employees and up to 6% of compensation for salaried employees  regardless
of the employees contribution.  The Company's contributions under both plans are
limited to the  maximum  amount that can be  deducted  for income tax  purposes.
Benefits  payable  under the  plans are  limited  to the  amount of plan  assets
allocable to the account of each plan participant. The Company retains the right
to modify, amend or terminate the plans at any time. During 2000, 1999 and 1998,
the Company  made  matching  contributions  of $40,000,  $73,000,  and  $54,000,
respectively, to the plans.                                                     

(15)  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 future results of operations. 

At December 31, 2000, the Company is a guarantor of an 11%, $535,000  promissory
note to a bank. The note is an obligation of ITS-Testco, the Company's 50%-owned
equity investment engaged in well testing operations in northeastern Mexico. The
note becomes due in June 2001 and is separately  guaranteed in full by the other
50%  corporate  owner of the joint  venture and the owners of that  company,  as
individuals.                                                                    

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  the
Restructure  (collectively,  the "Obligations").  Neither Beard nor Beard Oil is
presently  aware  of any  material  liabilities  existing  as a  result  of such
Obligations.                                                                    

(16)  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
five  reportable  segments  in 2000,  1999 and 1998:  Coal  Reclamation,  Carbon
Dioxide, Natural Gas Well Servicing, China, and Environmental Remediation.      

The Coal Segment is in the business of operating coal fines  reclamation  and/or
briquetting  facilities in the U.S. and is pursuing the  development of advanced
fine coal  preparation  processes.  The Carbon Dioxide  Segment  consists of the
production  of CO2 gas. The Natural Gas Well  Servicing  Segment is conducted by
two companies  operating in northeastern  Mexico and consists of (i) a 50%-owned
company  (accounted  for as an equity  investment)  involved in natural gas well
testing  operations,  and (ii) a wholly  owned  company that has designed a sand
separator  for use on natural gas wells and has had five custom  fabricated  for
use  on  a  trial  basis.  The  China  Segment  is  pursuing  (i)  environmental
opportunities,  (ii)  the sale of  technical  services,  (iii)  the sale of coal
equipment, and (iv) the operation of coal fines reclamation facilities in China.
The Environmental Remediation Segment consists of services to remediate creosote
and polycyclic aromatic hydrocarbon contamination.                              

The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies in note 1.                           

The  following  is  certain  financial   information   regarding  the  Company's
reportable  segments  (presented  in  thousands  of  dollars).  The  information
contained in "other" relates to the Company's e-Commerce Segment and consists of
start-up costs.                                                                 

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.              

                                                        [Enlarge/Download Table]

                                Carbon    Gas Well         Environmental                 
                        Coal    Dioxide  Servicing  China   Remediation  Other   Totals  
                        ----    -------  ---------  -----   -----------  -----   ------  
                                                                                         
       2000                                                                              
Revenues from                                                                            
 external customers   $   215   $   471  $   409    $  -     $    -       $  -   $ 1,095 
Interest income             -         -        -       -          -          -         - 
 Interest expense           3         -      180       -          -          1       184 
Depreciation,                                                                            
 depletion and                                                                           
 Amortization              19        33      286       -          2          3       343 
Segment profit(loss)     (625)      356   (2,297)   (400)      (197)      (275)   (3,438)
Segment assets          1,746       453    1,751       -          6         59     4,015 
Expenditures for                                                                         
 segment assets           371         4       43       -          1          8       427 

       1999                                                                              
Revenues from                                                                            
 external customers   $   953   $   418  $ 2,460    $  -     $    -       $  -   $ 3,831 
Interest income            24         -        -       -          -          -        24 
 Interest expense         160         -       91       -          -          -       251 
Depreciation,                                                                            
 depletion and                                                                           
 Amortization             194        33      257       -         46          -       530 
Segment profit(loss)     (614)      360     (642)   (279)      (317)      (129)   (1,621)
Segment assets          1,407       463    2,786       -          8         13     4,677 
Expenditures for                                                                         
 segment assets         1,135        10    1,335       -          -          -     2,480 

       1998                                                                              
Revenues from                                                                            
 external customers   $ 8,585   $   616  $     -    $  -     $    8       $  -   $ 9,209 
Interest income             2         -        -       -          -       -            2 
 Interest expense         949         -        -       -          -       -          949 
Depreciation,                                                                            
 depletion and                                                                           
 Amortization             815        31        -       -          4       -          850 
Segment profit(loss)      672       466      (70)   (277)      (238)      -          553 
Segment assets         25,148       603      607       -         55       -       26,413 
Expenditures for                                                                         
 segment assets        24,072        41      548       -          6       -       24,667 

Reconciliation of reportable  segment  revenues to consolidated  revenues is as 
follows (in thousands):                                                         

                                2000       1999       1998
                                ----       ----       ----

Total revenues for reportable segments     1,095      3,831      9,209          
Revenues from Natural Gas Well                                                  
Servicing operations accounted for                                          
as an equity investment                   (344)    (2,378)         -        
Revenues from corporate                                                         
activities not allocated to segments        31         50         37        
                               -------    -------    -------
Total consolidated revenues            $   782    $ 1,503    $ 9,246        
                               =======    =======    =======

Reconciliation of reportable  segment interest expense to consolidated  interest
expense is as follows (in thousands):                                           

                     2000      1999     1998
                     ----      ----     ----
Total interest expense for                                                      
reportable segments                   $ 184    $ 251    $ 949                 
Natural Gas Well Servicing                                                      
operations accounted for as an                                                
equity investment                      (180)     (91)       -                 
Interest expense from                                                           
corporate activities not                                                      
allocated to segments                    56       10       15                 
                     -----    -----    -----
Total consolidated interest expense   $  60    $ 170    $ 964                 
                     =====    =====    =====

Reconciliation of reportable segment depreciation, depletion and amortization to
consolidated  depreciation,   depletion  and  amortization  is  as  follows  (in
thousands):                                                                     

            2000    1999    1998
            ----    ----    ----
Total depreciation,                                                             
depletion and amortization                                                    
for reportable segments          $  343   $  530   $  850                     
Depreciation and amortization                                                   
of Natural Gas Well Servicing      (261)    (222)       -                     
operations accounted for as an                                                
equity investment                                                             
Corporate depreciation and                                                      
amortization not allocated to                                                 
segments                             29       46       19                     
            ------   ------   ------
Total consolidated depreciation,                                              
depletion and Amortization      $  111   $  354   $  869                    
            ======   ======   ======

Reconciliation  of total reportable  segment profit (loss) to consolidated  loss
from continuing operations is as follows (in thousands):                        

                              2000       1999       1998
                              ----       ----       ----
Total profit (loss) for                                                         
reportable segments                    $ (3,438)  $ (1,621)  $    553         
Eliminate loss from Natural                                                     
Gas Well Servicing operations                                                 
accounted for as an equity investment     2,129        433         70         
Equity in loss from Natural                                                     
Gas Well Servicing operations                                                 
accounted for as an equity investment    (1,069)      (217)       (35)        
Net corporate costs not                                                         
allocated to segments                      (394)      (938)      (865)        
                              --------   --------   --------
Total consolidated loss                                                       
from continuing Operations            $ (2,772)  $ (2,343)   $  (277)       
                              ========   ========    =======

Reconciliation of reportable segment assets to consolidated assets is as follows
(in thousands):                                                                 

                                              2000        1999        1998
                                              ----        ----        ----

Total  assets for  reportable segments       $  4,015    $  4,677    $ 26,413   
Assets of discontinued operations               1,230       1,380       6,287   
Assets from Natural Gas  Well Servicing                                         
operations accounted for as an equity                                         
investment                                    (1,520)     (2,440)       (607) 
Investment in equity investee                                                   
(Natural Gas Well Servicing operations)         (675)        394         318  
Corporate assets not allocated to segments      2,037       2,793       4,926   
                                          --------    --------    --------
Total consolidated assets                 $  5,087    $  6,804    $ 37,337
                                          ========    ========    ========

Reconciliation  of  expenditures  for segment assets to total  expenditures  for
assets is as follows (in thousands):                                            

                               2000       1999        1998
                               ----       ----        ----
Total expenditures for                                                          
assets for reportable Segments         $   427    $  2,480    $ 24,667        
Capital expenditures of                                                         
discontinued operations                      -           -       4,034        
Expenditures for Natural Gas                                                    
Well Servicing assets accounted                                               
or as an equity investment                  (5)     (1,119)       (547)       
Corporate expenditures not                                                      
allocated to segments                       39          31          55        
                               -------    --------    --------
Total expenditures for assets          $   461    $  1,392    $ 28,209        
                               =======    ========    ========

38% of 2000's and 64% of 1999's segment  revenues were derived from customers in
Mexico.  The remaining 1999, and all of 1998 segment  revenues were derived from
customers in the United States.  Certain  long-lived assets with recorded values
approximating   $1,797,000  and  $1,385,000  at  December  31,  2000  and  1999,
respectively, are located in Mexico. All remaining segment assets are located in
the United States.                                                              

During 2000,  two  customers  accounted  for 18% of the Company's and 65% of the
Coal  Segment's  revenues.  During 1999,  one customer  accounted for 53% of the
Company's and 84% of the Coal Segment's revenues. The customer accounted for 93%
of the Company's and all of the Coal Segment's 1998 revenues.  The Company's CO2
revenues are received  from two  operators in the CO2 Segment who market the CO2
gas to  numerous  end  users on  behalf  of the  interest  owners  who  elect to
participate  in such  sales.  During  2000,  1999 and  1998,  sales by these two
operators  accounted  for  60%,  28%,  and 7%,  respectively,  of the  Company's
revenues and all of the Carbon Dioxide  Segment's  revenues.  All of the Natural
Gas Well  Servicing  Segment's  2000 and 1999  revenues  were  derived  from one
customer.                                                                       

(17)  Fourth Quarter Adjustments                                                
During the fourth  quarter of 2000,  the Company  recorded  economic  impairment
losses on certain investments and an additional accrual for loss relating to the
Company's  investment in the discontinued  interstate travel business of $71,000
and  $420,000,  respectively.  The Company  recorded  adjustments  in the fourth
quarter of 1999 and 1998 resulting from the  discontinuance  of NABR  (accounted
for under the equity method of accounting) and the interstate  travel facilities
operations (see note 4).                                                        

Item 9. Changes in and  Disagreements  with  Accountants  on Accounting and     
Financial Disclosure.                                           

Not applicable                                                        

PART III

Item 10.  Directors and Executive Officers of the Registrant.                   

     The information  regarding directors of the registrant will be contained in
the definitive  proxy  statement  which will be filed pursuant to Regulation 14A
with the  Commission  not later than 120 days  after the end of the fiscal  year
covered  by this Form  10-K,  and the  information  to be  contained  therein is
incorporated herein by reference.                                               

     The  information  regarding  executive  officers of the registrant has been
furnished in a separate  item  captioned  "Executive  Officers  and  Significant
Employees  of the  Company"  and included as Item 4a in Part I of this report at
pages 21 through 22.                                                            

Item 11.  Executive Compensation.                                               

     The information  regarding executive  compensation will be contained in the
definitive  proxy  statement which will be filed pursuant to Regulation 14A with
the  Commission not later than 120 days after the end of the fiscal year covered
by this Form 10-K, and the  information to be contained  therein is incorporated
herein by reference.                                                            

Item 12.  Security Ownership of Certain Beneficial Owners and Management.       

     The information  regarding  security ownership of certain beneficial owners
and management will be contained in the definitive proxy statement which will be
filed  pursuant to Regulation  14A with the  Commission  not later than 120 days
after the end of the fiscal year covered by this Form 10-K, and the  information
to be contained therein is incorporated herein by reference.                    

Item 13.  Certain Relationships and Related Transactions.                       

     The information  regarding  transactions with management and others will be
contained in the  definitive  proxy  statement  which will be filed  pursuant to
Regulation  14A with the Commission not later than 120 days after the end of the
fiscal  year  covered by this Form 10-K,  and the  information  to be  contained
therein is incorporated herein by reference.                                    

 PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.     

(a)  The following documents are filed as part of this report:        

          1.   Financial Statements. Reference is made to the Index to Financial
Statements and Financial Statement                

          2.   Financial Statement Schedules.  Financial Statement Schedules are
               omitted  as  inapplicable  or  not  required,   or  the  required
               information is shown in the financial  statements or in the notes
thereto.                                          

          3.   Exhibits.  The  following  exhibits are filed with this Form 10-K
and are identified by the numbers indicated:      

2    Plan  of   acquisition,   reorganization,   arrangement,   liquidation   or
succession:                                                           

2(a) Agreement and Plan of  Reorganization  by and among  Registrant,  Beard Oil
     Company ("Beard Oil") and New Beard,  Inc.,  dated as of July 12, 1993 (see
     Addendum A to Part I, which is incorporated herein by reference;  schedules
     to the Agreement  have been  omitted).  (This  Exhibit has been  previously
     filed as Exhibit 3(b), filed on July 27, 1993 to Registrant's  Registration
     Statement  on Form S-4,  File No.  33-66598,  and same is  incorporated  by
reference).                                                           

2(b) Agreement and Plan of Merger by and between The Beard Company ("Beard") and
     The New Beard Company ("New Beard"),  dated as of September 16, 1997. (This
     Exhibit  has been  previously  filed as  Exhibit  B to  Registrant's  Proxy
     Statement  filed  on  September  12,  1997,  and  same is  incorporated  by
reference).                                                           

2(c) Certificate  of Merger  merging Beard into New Beard as filed with the     
     Secretary of State of Oklahoma on 2(c) 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 by reference).             

3(i) Restated  Certificate  of  Incorporation  of Beard  (formerly New Beard) as
     filed with the Secretary of State of Oklahoma on September 20, 2000.  (This
     Exhibit has been previously filed as Exhibit 3(i) to Registrant's Form 10-Q
     for the period ended  September 30, 2000,  filed on November 20, 2000,  and
same is incorporated by reference).                                   

3(ii)Registrant's  By-Laws  as  currently  in  effect.  (This  Exhibit  has been
     previously filed as Exhibit 3(ii) to Registrant's  Form 10-K for the period
     ended December 31, 1997,  filed on March 31, 1998, and same is incorporated
herein by reference).                                                 

4    Instruments defining the rights of security holders:                       

4(a) 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 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  by
reference).                                                           

10   Material contracts:                                                        

10(a)Amendment  No. One to The Beard Company 1993 Stock Option Plan dated August
     27, 1993, as amended June 4, 1998 (The Amended Plan supersedes the original
     Plan adopted on August 27, 1993.  This Exhibit has previously been filed as
     Exhibit A, filed on April 30, 1998 to  Registrant's  Proxy  Statement dated
April 30, 1998, and same is incorporated by reference).*              

10(b)Form of  Indemnification  Agreement dated December 15, 1994, by and between
Registrant and eight directors.                                       

10(c)The Beard  Company  1994  Phantom  Stock  Units Plan as  amended  effective
     October 23, 1997 (The Amended Plan  supersedes the original Plan adopted on
     November 1, 1994.  This Exhibit has previously  been filed as Exhibit 10(b)
     to Registrant's  Form 10-K for the period ended December 31, 1999, Filed on
April 14, 2000, and same is incorporated by reference).*              

10(d)Amendment No. One to The Beard Company  Deferred  Stock  Compensation  Plan
     dated  November  1,  1995,  as  amended  July 21,  1999 (The  Amended  Plan
     supersedes  the  original  Plan  adopted on June 3, 1996.  This Exhibit has
     previously  been filed as Exhibit A, filed on May 11, 1999, to Registrant's
     Proxy   Statement   dated  May  11,  1999,  and  same  is  incorporated  by
reference).*                                                          

10(e)Form of Change in Control  Compensation  Agreement  dated as of January 24,
     1997, by and between Carbonics and three employees.  (This Exhibit has been
     previously filed as Exhibit 10(l) to Registrant's  Form 10-Q for the period
     ended March 31, 1997,  filed on May 14, 1997, and same is  incorporated  by
reference).*                                                          

10(f)Amended and Restated  Nonqualified  Stock  Option  Agreement by and between
     Richard D. Neely and ISITOP,  Inc.  ("ISITOP"),  dated  November  12, 1998.
     (This Exhibit has been  previously  filed as Exhibit 10(g) to  Registrant's
     Form 10-K for the period ended December 31, 1998,  filed on April 15, 1999,
and same is incorporated herein by reference).*                       

10(g)Amended and Restated  Nonqualified  Stock  Option  Agreement by and between
     Jerry S. Neely and ISITOP,  dated November 12, 1998. (This Exhibit has been
     previously filed as Exhibit 10(h) to Registrant's  Form 10-K for the period
     ended December 31, 1998,  filed on April 15, 1999, and same is incorporated
herein by reference).*                                                

10(h)Nonqualified  Stock Option  Agreement by and between Robert A. McDonald and
     ISITOP, dated November 12, 1998. (This Exhibit has been previously filed as
     Exhibit 10(i) to  Registrant's  Form 10-K for the period ended December 31,
     1998,  filed  on  April  15,  1999,  and  same is  incorporated  herein  by
reference).*                                                          

10(i)Incentive  Stock  Option  Agreement  by and between  Philip R.  Jamison and
     Beard  Technologies,  Inc.  ("BTI"),  dated May 18, 1998. (This Exhibit has
     been previously  filed as Exhibit 10(k) to  Registrant's  Form 10-K for the
     period  ended  December  31,  1998,  filed on April 15,  1999,  and same is
     incorporated  herein by reference).*  10(j)  Subscription  Agreement by and
     between Cibola Corporation ("Cibola") and Registrant, dated April 10, 1996.
     (This  Exhibit has been  previously  filed as Exhibit 10.1 to  Registrant's
     Form 10-Q for the period ended June 30, 1996, filed on August 14, 1996, and
same is incorporated by reference).                                   

10(j)Subscription  Agreement by and between  Cibola  Corporation  ("Cibola") and
     Registrant,  dated April 10, 1996.  (This Exhibit has been previously filed
     as Exhibit 10(k) to  Registrant's  Form 10-K for the period ended  December
     31,  1998,  filed on April 15,  1999,  and same is  incorporated  herein by
reference).*                                                          

10(k)Nonrecourse Secured Promissory Note from Registrant to Cibola,  dated April
     10,  1996.  (This  Exhibit  has been  previously  filed as Exhibit  10.2 to
     Registrant's  Form 10-Q for the period ended June 30, 1996, filed on August
14, 1996, and same is incorporated by reference).                     

10(l)Security  Agreement  by  and  among  Registrant,   Cibola  and  the  Cibola
     shareholders, dated April 10, 1996. (This Exhibit has been previously filed
     as Exhibit  10.3 to  Registrant's  Form 10-Q for the period  ended June 30,
 1996, filed on August 14, 1996, and same is incorporated by reference).

10(m)Tax  Sharing  Agreement  by and among  Registrant,  Cibola  and the  Cibola
     shareholders, dated April 10, 1996. (This Exhibit has been previously filed
     as Exhibit  10.4 to  Registrant's  Form 10-Q for the period  ended June 30,
 1996, filed on August 14, 1996, and same is incorporated by reference).

10(n)Guaranty  Agreement between Registrant and Oklahoma Bank and Trust Company,
     dated  as of June 7,  1999.  (This  Exhibit  has been  previously  filed as
     Exhibit 10(bb) to Registrant's Form 10-Q for the period ended June 30,1999,
  filed on August 20, 1999, and same is incorporated herein by reference).

10(o)Letter Loan  Agreement by and between  Registrant  and The William M. Beard
     and Lu Beard 1988 Charitable Unitrust (the "Unitrust") dated April 3, 2000.
     (This Exhibit has been  previously  filed as Exhibit 10(cc) to Registrant's
     Form 10-K for the period ended December 31, 1999,  filed on April 14, 2000,
and same is incorporated herein by reference).                        

10(p)Amended  Letter Loan  Agreement by and between  Registrant and the Unitrust
     dated September 1, 2000. (This Exhibit has been previously filed as Exhibit
     10(o) to  Registrant's  Form 10-Q for the period ended  September 30, 2000,
filed on November 20, 2000, and same is incorporated by reference).   

10(q)Promissory  Note from  Registrant  to the  Trustees of the  Unitrust  dated
     April 3, 2000. (This Exhibit has been previously filed as Exhibit 10(dd) to
     Registrant's  Form 10-K for the period ended  December  31, 1999,  filed on
April 14, 2000, and same is incorporated herein by reference).        

10(r)Renewal  Promissory  Note from  Registrant  to the Trustees of the Unitrust
     dated September 1, 2000. (This Exhibit has been previously filed as Exhibit
     10(q) to  Registrant's  Form 10-Q for the period ended  September 30, 2000,
filed on November 20, 2000, and same is incorporated by reference).   

10(s)Promissory  Note from  Registrant to Bank of Oklahoma,  N.A.  ("BOK") dated
     August 30, 2000.  (This Exhibit has been previously  filed as Exhibit 10(r)
     to Registrant's Form 10-Q for the period ended September 30, 2000, filed on
November 20, 2000, and same is incorporated by reference).            

10(t)Extension  Promissory Note from Registrant to BOK dated September 30, 2000.
     (This Exhibit has been  previously  filed as Exhibit 10(s) to  Registrant's
     Form 10-Q for the period ended  September  30, 2000,  filed on November 20,
2000, and same is incorporated by reference).                         

10(u)Guaranty  Agreement  between the  Unitrust  and BOK dated  August 30, 2000.
     (This Exhibit has been  previously  filed as Exhibit 10(t) to  Registrant's
     Form 10-Q for the period ended  September  30, 2000,  filed on November 20,
2000, and same is incorporated by reference).                         

10(v)Guaranty  Agreement  between  W. M. Beard and BOK dated  August  30,  2000.
     (This Exhibit has been  previously  filed as Exhibit 10(u) to  Registrant's
     Form 10-Q for the period ended  September  30, 2000,  filed on November 20,
2000, and same is incorporated by reference).                         

10(w)Promissory  Note from  Registrant  to the  Trustees of the  Unitrust  dated
October 20, 2000.                                                     

21   Subsidiaries of the Registrant.                                            

23   Consents:                                                                  

23(a) Consent of Cole & Reed, P.C.                                              

23(b) Consent of KPMG LLP                                                       
_____________                                                                   

*Compensatory plan or arrangement.                                              

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) No  reports  on Form 8-K were  filed  during  the  period  during the fourth
quarter of the period covered by this report.                                   

SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.                       

                                 THE BEARD COMPANY
                            (Registrant)

                                 By  HERB MEE, JR.
                                   (President)

DATE:  March 27, 2001                                                           

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended,  this report has been signed by the following  persons on behalf of the
Registrant and in the capacities and on the dates indicated below.              

Signature                            Title                       Date       
---------                            -----                       ----       

W.M. BEARD                   Chief Executive Officer       March 27, 2001   

HERB MEE, JR.                President and Chief           March 27, 2001   
 Financial Officer

JACK A. MARTINE              Controller and Chief          March 27, 2001   
  Accounting Officer

W.M. BEARD                   Chairman of the Board         March 27, 2001   

HERB MEE, JR                 Director                      March 27, 2001   

ALLAN R. HALLOCK             Director                      March 21, 2001   

HARLON E. MARTIN, JR.        Director                      March 20, 2001   

FORD C. PRICE                Director                      March 18, 2001   

MICHAEL E. CARR              Director                      March 22, 2001   

10-K
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EXHIBIT INDEX                 

                                                                [Download Table]

Exhibit                                                              
Number    Description                Method of Filing                
--------  -----------                ----------------                
                                                                     
2(a)  Agreement and Plan of          Incorporated herein by reference
      Reorganization by and among                                    
      Registrant, Beard Oil Company                                  
      ("Beard Oil") and New Beard,                                   
      Inc., dated as of July 12,                                     
      1993.                                                          

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

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

3(i)  Restated Certificate of        Filed herewith electronically   
      Incorporation of Beard                                         
      (formerly New Beard) as filed                                  
      with the Secretary of State                                    
      of Oklahoma on September 20,                                   
      2000.                                                          

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

4(a)  Certificate of Designations,   Incorporated herein by reference
      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.                                                    

4(b)  Settlement Agreement, with     Incorporated herein by reference
      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.                                                          

10(a) Amendment No. One to The       Incorporated herein by reference
      Beard Company 1993 Stock                                       
      Option Plan dated August 27,                                   
      1993, as amended June 4,                                       
      1998.                                                          

10(b) Form of Indemnification        Filed herewith electronically   
      Agreement dated December                                       
      15, 1995, by and between                                       
      Registrant and eight                                           
      directors                                                      

10(c) The Beard Company 1994         Incorporated herein by reference
      Phantom Stock Units Plan as                                    
      amended effective October 23,                                  
      1997.                                                          

10(d) Amendment No. One to The       Incorporated herein by reference
      Beard Company Deferred Stock                                   
      Compensation Plan dated                                        
      November 1, 1995, as amended                                   
      July 21, 1999.                                                 

10(e) Form of Change in Control      Incorporated herein by reference
      Compensation Agreement dated                                   
      as of January 24, 1997, by                                     
      and between Carbonics and                                      
      three employees.                                               

10(f) Amended and Restated           Incorporated herein by reference
      Nonqualified Stock Option                                      
      Agreement by and between                                       
      Richard D. Neely and ISITOP,                                   
      Inc. ("ISITOP"), dated                                         
      November 12, 1998.                                             

10(g) Amended and Restated           Incorporated herein by reference
      Nonqualified Stock Option                                      
      Agreement by and between                                       
      Jerry S. Neely and ISITOP,                                     
      dated November 12, 1998.                                       

10(h) Nonqualified Stock Option      Incorporated herein by reference
      Agreement by and between                                       
      Robert A. McDonald and                                         
      ISITOP, dated November 12,                                     
      1998.                                                          

10(i) Incentive Stock Option         Incorporated herein by reference
      Agreement by and between                                       
      Philip R. Jamison and Beard                                    
      Technologies, Inc. ("BTI"),                                    
      dated May 18, 1998.                                            

10(j) Subscription Agreement by and  Incorporated herein by reference
      between Cibola Corporation                                     
      ("Cibola") and Registrant,                                     
      dated April 10, 1996.                                          

10(k) Nonrecourse Secured            Incorporated herein by reference
      Promissory Note from                                           
      Registrant to Cibola, dated                                    
      April 10, 1996.                                                

10(l) Security Agreement by and      Incorporated herein by reference
      among Registrant, Cibola and                                   
      the Cibola shareholders,                                       
      dated April 10, 1996.                                          

10(m) Tax Sharing Agreement by and   Incorporated herein by reference
      among Registrant, Cibola and                                   
      the Cibola shareholders,                                       
      dated April 10, 1996.                                          

10(n) Guaranty Agreement between     Incorporated herein by reference
      Registrant and Oklahoma Bank                                   
      and Trust Company, dated as                                    
      of June 7, 1999.                                               

10(o) Letter Loan Agreement by and   Incorporated herein by reference
      between Registrant and The                                     
      William M. Beard and Lu Beard                                  
      1988 Charitable Unitrust (the                                  
      " Unitrust") dated April 3,                                    
      2000.                                                          

10(p) Amended Letter Loan Agreement  Incorporated herein by reference
      by and between Registrant and                                  
      The William M. Beard and Lu                                    
      Beard 1988 Charitable                                          
      Unitrust (the " Unitrust")                                     
      dated September 1, 2000.                                       

10(q) Promissory Note from           Incorporated herein by reference
      Registrant to the Trustees of                                  
      the Unitrust dated April 3,                                    
      2000.                                                          

10(r) Renewal Promissory Note from   Incorporated herein by reference
      Registrant to the Trustees of                                  
      the Unitrust dated September                                   
      1, 2000.                                                       

10(s) Promissory Note from           Incorporated herein by reference
      Registrant to Bank of                                          
      Oklahoma, N.A. ("BOK") dated                                   
      August 30, 2000.                                               

10(t) Extension Promissory Note      Incorporated herein by reference
      from Registrant to BOK dated                                   
      September 30, 2000.                                            

10(u) Guaranty Agreement between     Incorporated herein by reference
      the Unitrust and BOK dated                                     
      August 30, 2000.                                               

10(v) Guaranty Agreement between     Incorporated herein by reference
      W.M. Beard and BOK dated                                       
      August 30, 2000.                                               

10(w) Promissory Note from           Filed herewith electronically   
      Registrant to the                                              
      Trustees of the Unitrust                                       
      dated October 20, 2000.                                        

21    Subsidiaries of the            Filed herewith electronically   
      Registrant                                                     

23(a) Consent of Cole & Reed, P.C.   Filed herewith electronically   

23(b) Consent of KPMG LLP            Filed herewith electronically   

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		7/12/93		1		2
		7/27/93		1
		8/27/93		1		2
		9/17/93		1
		11/1/94		1
		12/15/94		1
		12/31/94		1
		4/13/95		1		2
		11/1/95		1		2
		12/15/95		2
		4/10/96		1		2
		6/3/96		1
		6/30/96		1					10-Q
		8/14/96		1					10-Q
		10/22/96		1
		1/1/97		1
		1/24/97		1		2
		3/31/97		1					10-Q, 10-K, 10-Q/A
		5/14/97		1					10-Q
		9/12/97		1
		9/16/97		1		2
		10/23/97		1		2
		11/26/97		1		2			8-K
		12/8/97		1					8-K
		12/31/97		1					10-K405
		3/31/98		1					10-K405, NT 10-Q, 10-Q
		4/1/98		1
		4/30/98		1
		5/18/98		1		2
		6/4/98		1		2			DEF 14A
		6/30/98		1					10-Q
		7/1/98		1
		11/12/98		1		2
		12/31/98		1					NT 10-K, 10-K
		1/1/99		1
		1/31/99		1
		4/15/99		1					10-K
		4/30/99		1
		5/11/99		1					DEF 14A
		6/7/99		1		2
		7/21/99		1		2			DEF 14A
		8/20/99		1
		12/31/99		1					NT 10-K, 10-K
		1/1/00		1
		1/29/00		1
		4/3/00		1		2
		4/7/00		1
		4/14/00		1					10-K
		6/15/00		1
		8/30/00		1		2
		9/1/00		1		2			DEF 14A, PRES14A
		9/15/00		1
		9/20/00		1		2
		9/21/00		1
		9/27/00		1
		9/28/00		1
		9/30/00		1		2			10-Q, NT 10-Q
		10/20/00		1		2
		11/20/00		1					10-Q
For The Period Ended		12/31/00		1					5
		1/30/01		1
		2/8/01		1
		2/12/01		1					5
		2/28/01		1
		3/18/01		1
		3/19/01		1
		3/20/01		1
		3/21/01		1
		3/22/01		1
		3/27/01		1
Filed On / Filed As Of		4/2/01
		7/2/01		1
		9/30/01		1					10-Q, NT 10-Q
		12/31/01		1					10-K, NT 10-K
		1/15/02		1
		2/28/02		1
		4/1/02		1					NT 10-K
		12/31/02		1					NT 10-K, 10-K
		12/31/07		1
		1/1/08		1
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