History of The Beard Company

Governance

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History

In October of 1921, J. G. Beard (the Chairman's father) completed the No. 1 Hall oil well in Stephens County, Oklahoma, marking the beginning of what became Beard Oil Company, and ultimately, The Beard Company. From 1921 to 1993 we were 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. which was partially spun off to shareholders in 1984. It became so successful that it subsequently listed on the New York Stock Exchange in 1986. In 1987-88 Union Pacific Corporation acquired USPCI for $396 million. $111 million went to Beard Oil and its stockholders for their residual 28% interest, of which $58 million cash was distributed directly to Beard stockholders.

Following an IPO in 1974 Beard Oil shares started trading over-the-counter. In 1981 the shares commenced trading on the American Stock Exchange. The Company's shares traded on the AMEX® as either Beard Oil Company or The Beard Company until September 2000. Our shares now trade on the OTC Bulletin Board under the symbol BRCO.

Following the sale of USPCI in 1987 we formed Carbonic Reserves ("Carbonics") and diversified into the dry ice manufacturing and distribution business This became our principal business in 1993 when we left the oil and gas business. Carbonics grew and prospered. In early 1997 we lined up the financing for an aggressive acquisition program designed to make it the largest company in the dry ice business. Our goal was shattered when Airgas, Inc. (NYSE) acquired Carbonics' largest target company at a high P/E multiple for stock. In October 1997 we abandoned our acquisition strategy and sold Carbonics to Airgas instead.

In 1989 Beard Investment Company (now The Beard Company) was formed to build new businesses which Beard management believed to have either high growth potential or better-than-average profit potential. 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 its financing requirements.

In 1990 we acquired Energy International Corporation ("EI"), which was the nucleus of the old Gulf Oil Research Company headquartered in Pittsburgh, Pennsylvania. In 1994 we sold EI to The Williams Companies, Inc., retaining a patent which they developed on what is called our Mulled Coal technology. The patent was placed in a newly formed subsidiary called Beard Technologies, Inc. ("BTI").

Following the sale of Carbonics we decided to focus on coal reclamation. Beginning in April 1998 BTI operated six pond recovery/Section 29 briquetting projects in West Virginia, Kentucky and Ohio for a subsidiary of MCN Energy Group Inc. (NYSE). This made us, at the time, the largest operator of coal recovery plants in the world. Unfortunately MCN became concerned that the projects might not qualify for the $20-$25 per ton tax credits necessary to make them economic and terminated the contracts in January 1999. (They later qualified). This was a major setback to BTI and had a severe negative impact on the Company's income and cash flow.

Current Activities

Our McElmo Dome litigation was successful, and we expect to receive the final installment of our settlement, totaling approximately $2,814,000 in February 2004.

We are now focusing primarily on coal reclamation projects, carbon dioxide production, the construction of fertilizer plants in China and the development of business opportunities to leverage starpay's intellectual property portfolio of Internet payments methods and security technologies.

We are diligently pursuing financing for several coal projects and fertilizer plants. We expect to be successful in these efforts; if so, we should see improved financial performance in all segments of our operations in 2004 and subsequent years.

Recent Financial Highlights

Our recent earnings (loss in thousands) results were as follows:

Statements regarding future profitability and operations, including the timing of those activities, are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act. The statements involve risks that could significantly impact The Beard Company. These risks include, but are not limited to, adverse general economic conditions, unexpected costs or delays or other unexpected events, as well as other risks discussed in detail in The Beard Company's filings with the Securities and Exchange Commission.

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