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


                                    Form 10-Q



[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the period ended September 30, 2003
                                        or
[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934


                         Commission File Number 1-12396


                                THE BEARD COMPANY
             (Exact name of registrant as specified in its charter)


          Oklahoma                                             73-0970298
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


                           Enterprise Plaza, Suite 320
                              5600 North May Avenue
                          Oklahoma City, Oklahoma          73112
               (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:  (405) 842-2333

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

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


                   Common Stock $.001333 par value - 2,328,845
<PAGE>
                                THE BEARD COMPANY

                                      INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                                           Page
-----------------------------                                                           ----

<S>                                                                                       <C>
Item 1.   Financial Statements.............................................................3

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

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

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

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

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

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations...................................16

Item 3.   Quantitative and Qualitative Disclosures About Market Risk......................24

Item 4.   Controls and Procedures.........................................................25


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings...............................................................25

Item 2.   Changes in Securities and Use of Proceeds.......................................26

Item 4.   Submission of Matters to a Vote of Security Holders.............................26

Item 6.   Exhibits and Reports on Form 8-K................................................27

Signature.................................................................................28
</TABLE>

<PAGE>
<TABLE>
                                    THE BEARD COMPANY AND SUBSIDIARIES
                                              Balance Sheets
                                                (Unaudited)
<CAPTION>
                                                                  September 30,         December 31,
                                  Assets                              2003                  2002
                                                               --------------------  --------------------
<S>                                                                 <C>                   <C>
Current assets:
     Cash and cash equivalents                                      $      161,000        $       79,000
     Accounts receivable, less allowance for doubtful
        receivables of $80,000 in 2003 and 2002                            166,000               133,000
     Prepaid expenses and other assets                                      36,000                20,000
     Assets of discontinued operations held for resale                     181,000               343,000
                                                                    ---------------       ---------------
             Total current assets                                          544,000               575,000
                                                                    ---------------       ---------------

Notes receivable                                                            30,000                30,000

Investments and other assets                                               140,000                67,000

Property, plant and equipment, at cost                                   1,835,000             1,794,000
     Less accumulated depreciation, depletion and amortization           1,378,000             1,259,000
                                                                    ---------------       ---------------
             Net property, plant and equipment                             457,000               535,000
                                                                    ---------------       ---------------

Intangible assets, at cost                                                 209,000               114,000
     Less accumulated amortization                                         176,000                57,000
                                                                    ---------------       ---------------
             Net intangible assets                                          33,000                57,000
                                                                    ---------------       ---------------

                                                                    $    1,204,000        $    1,264,000
                                                                    ===============       ===============


             Liabilities and Shareholders' Equity (Deficiency)

Current liabilities:
     Trade accounts payable                                         $       84,000        $      138,000
     Accrued expenses                                                      385,000               177,000
     Short-term debt                                                        32,000               300,000
     Short-term debt - related entities                                    252,000               111,000
     Current maturities of long-term debt                                    6,000                 8,000
     Liabilities of discontinued operations held for resale                116,000               125,000
                                                                    ---------------       ---------------
             Total current liabilities                                     875,000               859,000
                                                                    ---------------       ---------------

Long-term debt less current maturities                                   1,219,000               853,000

Long-term debt - related entities                                        3,592,000             3,388,000

Other long-term liabilities                                                173,000               108,000

Redeemable preferred stock of $100 stated value;
     5,000,0000 shares authorized; 27,838 shares issued
     and outstanding in 2002 (note4)                                             -               889,000

Shareholders' equity (deficiency):
     Convertible preferred stock of $100 stated value;
        5,000,000 shares authorized; 27,838 shares issued
        and outstanding in 2003 (note 4)                                    889,000                    -
     Common stock of $.001333 par value per share; 7,500,000
        shares authorized; 2,328,845 and 2,123,898 shares issued
        and outstanding in 2003 and 2002, respectively                       3,000                 3,000
     Capital in excess of par value                                     37,887,000            38,207,000
     Accumulated deficit                                               (43,419,000)          (41,182,000)
     Accumulated other comprehensive loss                                  (15,000)              (15,000)
     Treasury stock, none in 2003; 295,053 shares, at cost, in 2002              -            (1,846,000)
                                                                    ---------------       ---------------
             Total shareholders' equity (deficiency)                    (4,655,000)           (4,833,000)
                                                                    ---------------       ---------------

Commitments and contingencies (note 7)
                                                                    $    1,204,000        $    1,264,000
                                                                    ===============       ===============
</TABLE>
See accompanying notes to financial statements.

<PAGE>
<TABLE>

                                           THE BEARD COMPANY AND SUBSIDIARIES
                                                Statements of Operations
                                                       (Unaudited)
<CAPTION>
                                                          For Three Months Ended            For Nine Months Ended
                                                      -------------------------------   -------------------------------
                                                      September 30,   September 30,     September 30,    September 30,
                                                          2003             2002             2003             2002
                                                      --------------  ---------------   --------------   --------------
<S>                                                   <C>             <C>               <C>              <C>
Revenues:
    Coal reclamation                                  $      17,000   $            -    $      59,000    $      12,000
    Carbon dioxide                                          120,000          129,000          363,000          324,000
    China                                                         -                -                -                -
    e-Commerce                                                    -                -           25,000                -
    Other                                                         -            2,000            1,000           12,000
                                                      --------------  ---------------   --------------   --------------
                                                            137,000          131,000          448,000          348,000
                                                      --------------  ---------------   --------------   --------------
Expenses:
    Coal reclamation                                        139,000          133,000          409,000          421,000
    Carbon dioxide                                           26,000           35,000           90,000           85,000
    China                                                   140,000                -          438,000                -
    e-Commerce                                               28,000           46,000           87,000          118,000
    Other                                                     4,000            6,000           22,000           26,000
    Selling, general and administrative                     219,000          197,000          667,000          629,000
    Depreciation, depletion & amortization                   50,000           41,000          148,000          100,000
    Impairment of long-lived assets                          64,000                -           64,000                -
                                                      --------------  ---------------   --------------   --------------
                                                            670,000          458,000        1,925,000        1,379,000
                                                      --------------  ---------------   --------------   --------------
Operating profit (loss):
    Coal reclamation                                       (122,000)        (139,000)        (350,000)        (425,000)
    Carbon dioxide                                           85,000           85,000          245,000          213,000
    China                                                  (138,000)               -         (437,000)               -
    e-Commerce                                              (30,000)         (48,000)         (67,000)        (123,000)
    Other, primarily corporate                             (328,000)        (225,000)        (868,000)        (696,000)
                                                      --------------  ---------------   --------------   --------------
                                                           (533,000)        (327,000)      (1,477,000)      (1,031,000)
Other income (expense):
    Interest income                                           1,000           36,000            2,000           95,000
    Interest expense                                       (136,000)        (114,000)        (399,000)        (276,000)
    Equity in operations of unconsolidated affiliates        13,000          (45,000)          83,000         (165,000)
    Gain on settlement                                    1,151,000                -        1,151,000                -
    Gain on sale of assets                                        -                -            1,000           10,000
    Other                                                  (222,000)               -         (227,000)          (1,000)
                                                      --------------  ---------------   --------------   --------------

Earnings (loss) from continuing operations
    before income taxes                                     274,000         (450,000)        (866,000)      (1,368,000)
Income taxes                                                      -                -                -                -
                                                      --------------  ---------------   --------------   --------------

Earnings (loss) from continuing operations                  274,000         (450,000)        (866,000)      (1,368,000)

    Loss from discontinued operations                       (18,000)         (78,000)         (13,000)        (181,000)
                                                      --------------  ---------------   --------------   --------------
Net earnings (loss)                                   $     256,000   $     (528,000)   $    (879,000)   $  (1,549,000)
                                                      ==============  ===============   ==============   ==============

Net earnings (loss) per average common share outstanding:
    Basic:
       Earnings (loss) from continuing operations     $        0.13   $        (0.25)   $       (0.40)   $       (0.75)
       Loss from discontinued operations                      (0.01)           (0.04)           (0.01)           (0.10)
                                                      --------------  ---------------   --------------   --------------
       Net earnings (loss)                            $        0.12   $        (0.29)   $       (0.41)   $       (0.85)
                                                      ==============  ===============   ==============   ==============

Net earnings (loss) per average common share outstanding:
    Diluted:
       Earnings (loss) from continuing operations     $        0.12   $        (0.25)   $       (0.40)   $       (0.75)
       Loss from discontinued operations                      (0.01)           (0.04)           (0.01)           (0.10)
                                                      --------------  ---------------   --------------   --------------
       Net earnings (loss)                            $        0.11   $        (0.29)   $       (0.41)   $       (0.85)
                                                      ==============  ===============   ==============   ==============

Weighted average common shares outstanding -
    Basic                                                 2,181,000        1,829,000        2,142,000        1,829,000
                                                      ==============  ===============   ==============   ==============
    Diluted                                               2,309,000        1,829,000        2,142,000        1,829,000
                                                      ==============  ===============   ==============   ==============
</TABLE>
See accompanying notes to financial statements.

<PAGE>

<TABLE>
                                                 THE BEARD COMPANY AND SUBSIDIARIES
                                           Statements of Shareholders' Equity (Deficiency)
                                                             (Unaudited)
<CAPTION>
                                                                                             Accumulated                   Total
                                                                 Capital in                     Other                  Shareholders'
                                             Preferred  Common    Excess of    Accumulated  Comprehensive    Treasury      Equity
                                               Stock     Stock    Par Value     Deficit         Loss          Stock     (Deficiency)
                                             ---------- -------- ------------ ------------- ------------- ------------- ------------

<S>                                          <C>        <C>      <C>          <C>           <C>           <C>           <C>
Balance, December 31, 2001                   $        - $  3,000 $ 38,081,000 $(36,568,000) $(   14,000)  $( 1,846,000) $(  344,000)

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

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

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

      Reservation of shares pursuant to deferred
         compensation plan                            -        -      115,000            -            -             -       115,000

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

Balance, December 31, 2002                            -    3,000   38,207,000  (41,182,000)     (15,000)   (1,846,000)   (4,833,000)

    Net loss, nine months ended September 30, 2003    -        -            -     (879,000)           -             -      (879,000)
       (unaudited)
    Comprehensive income:
         Foreign currency translation
         adjustment (unaudited)                       -        -            -            -            -             -             -

                                                                                                                        ------------
    Comprehensive loss (unaudited)                    -        -            -            -            -             -      (879,000)
                                                                                                                        ------------

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

    Issuance of stock warrants (unaudited)            -        -       25,000            -            -             -        25,000

    Reservation of shares pursuant to deferred
         compensation plan (unaudited)                -        -      143,000            -            -             -       143,000

    Issuance of shares pursuant to termination
         of deferred stock compensation plan          -        -     (488,000)  (1,358,000)           -     1,846,000             -

                                             ---------- -------- ------------ ------------- ------------  ------------- ------------
Balance, September 30, 2003 (unaudited)       $ 889,000 $  3,000 $ 37,887,000 $(43,419,000) $(   15,000)  $         -   $(4,655,000)
                                             ========== ======== ============ ============= ============  ============= ============
</TABLE>
See accompanying notes to financial statements.

<PAGE>

<TABLE>
                                          THE BEARD COMPANY AND SUBSIDIARIES
                                               Statements of Cash Flows
                                                      (Unaudited)
<CAPTION>
                                                                             For the Nine Months Ended
                                                                        -----------------------------------
                                                                      September 30, 2003 September 30, 2002
                                                                      ------------------ ------------------
<S>                                                                     <C>               <C>
Operating activities:
     Cash received from customers                                       $      352,000    $       525,000
     Gain on settlement                                                      1,162,000                  -
     Cash paid to suppliers and employees                                   (1,589,000)        (1,150,000)
     Interest received                                                           1,000             30,000
     Interest paid                                                            (129,000)          (201,000)
     Operating cash flows of discontinued operations                           (59,000)          (302,000)
                                                                        ---------------   ----------------
          Net cash used in operating activities                               (262,000)        (1,098,000)
                                                                        ---------------   ----------------

Investing activities:
     Acquisition of property, plant and equipment                              (20,000)           (17,000)
     Acquisition of intangibles                                                      -             (2,000)
     Proceeds from sale of assets                                                1,000             27,000
     Proceeds from sale of assets of discontinued operations                   231,000            102,000
     Investment in and advances to fifty percent-owned
        subsidiary in Mexico                                                    (2,000)           (10,000)
     Investment in and advances to fifty percent-owned
        investment in China                                                    (83,000)          (539,000)
     Advances for notes receivable                                              (2,000)            (7,000)
     Payments on notes receivable                                                2,000            109,000
     Other                                                                     126,000            109,000
                                                                        ---------------   ----------------
          Net cash provided by (used in) investing activities                  253,000           (228,000)
                                                                        ---------------   ----------------

Financing activities:
     Proceeds from term notes                                                  879,000          1,361,000
     Payments on line of credit and term notes                                (826,000)          (356,000)
     Proceeds from related party debt                                          406,000            497,000
     Payments on related party debt                                           (302,000)          (100,000)
     Capitalized costs associated with issuance of subordinated debt           (66,000)          (109,000)
                                                                        ---------------   ----------------
        Net cash provided by financing activities                               91,000          1,293,000
                                                                        ---------------   ----------------

Net increase (decrease) in cash and cash equivalents                            82,000            (33,000)

Cash and cash equivalents at beginning of period                                79,000             55,000
                                                                        ---------------   ----------------

Cash and cash equivalents at end of period                              $      161,000    $        22,000
                                                                        ===============   ================

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

Reconciliation of Net loss to Net Cash Used in Operating Activities

                                                                              For the Nine Months Ended
                                                                        ------------------------------------
                                                                       September 30, 2003 September 30, 2002
                                                                       ------------------ ------------------

Net loss                                                                $     (879,000)   $    (1,549,000)
Adjustments to reconcile net loss to net cash
 used in operating activities:
     Depreciation, depletion and amortization                                  148,000             98,000
     Depreciation, depletion and amortization on assets of
       discontinued operations                                                       -              2,000
     (Gain) loss on sale of assets                                               1,000             (9,000)
     Gain on sale of assets of discontinued operations                         (50,000)           (88,000)
     Equity in net (earnings ) loss of unconsolidated affiliates               (83,000)           165,000
     Equity in net (earnings ) loss of unconsolidated affiliates in
       discontinued operations                                                       -             10,000
     Impairment of long-lived assets                                            64,000             77,000
     Net cash used by discontinued operations offsetting
       accrued impairment loss                                                  (9,000)            (9,000)
     Noncash compensation expense                                              168,000              5,000
                                                                        ---------------   ----------------
       Net cash used in operations before
          changes in current assets and liabilities                           (640,000)        (1,298,000)
     Increase (decrease) in accounts receivable, prepaid expenses
        and other current assets                                                (4,000)           103,000
     Decrease in inventories                                                         -             70,000
     Increase in accounts payable, accrued
        expenses and other liabilities                                         382,000             27,000
                                                                        ---------------   ----------------
     Net cash used in operating activities                              $     (262,000)   $    (1,098,000)
                                                                        ===============   ================
</TABLE>
See accompanying notes to financial statements.

<PAGE>

                       THE BEARD COMPANY AND SUBSIDIARIES
                          Notes to Financial Statements

                           September 30, 2003 and 2002
                                   (Unaudited)



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

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

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

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

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

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

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

     Impairment of Long-Lived Assets
     -------------------------------
     In the third quarter of 2003, the Company recorded a $64,000 impairment of
     long-lived assets in other operations. There were no such impairments in
     the prior year through the third quarter.

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

(2)  Ability to Fund Operations and Continue as a Going Concern
---  ----------------------------------------------------------
     Overview
     --------
     The accompanying financial statements have been prepared based upon the
     Company's belief that it will continue as a going concern. Despite the fact
     that the Company's revenues from continuing operations have declined in
     each of the last four years and the Company has incurred operating losses
     and negative cash flows from operations during each of the last five years,
     the Company is of the belief that it will commence a project in both its
     Coal and China Segments in early 2004. Moreover, the long-awaited
     Settlement in the McElmo Dome litigation is now a certainty. The first
     installment, totaling $1,162,000 and including an $11,000 payment on
     accounts receivable, was received on July 31, and the second installment,
     totaling approximately $2,814,000 is expected to be received between the
     17th and the 24th of December 2003. Receipt of the Settlement ensures that
     2003 will be a profitable year while at the same time enhancing the
     Company's liquidity and bolstering its balance sheet ratios. Meanwhile,
     negotiations are currently in progress on a major coal project, including
     the financing thereof, which would enable its Coal Segment to become
     profitable beginning in early 2004. (See Additional Details below).
     Negotiations are also underway for two new fertilizer projects in China and
     the financing therefor. In addition, the Company finalized its first
     licensing arrangement in its e-Commerce Segment in March of 2003. Although
     the e-Commerce licensing arrangement will not make the segment profitable
     this year, the Company believes the arrangement has the potential to make
     the segment profitable in 2004 or 2005.

     During the 21 months from January 1, 2002 through September 30, 2003, the
     Company took a number of steps to reduce its negative cash flow. The
     Company's Chairman and President deferred a portion of their base salary
     into (i) the Company's Deferred Stock Compensation Plan (the "DSC Plan")
     which terminated on January 31, 2003, (ii) the Company's 2003 Deferred
     Stock Compensation Plan (the "2003 Plan") which was terminated on September
     30, 2003 and (iii) the Company's 2003-2 Deferred Stock Compensation Plan
     (the "2003-2 Plan") which became effective on September 30, 2003. The
     Company's outside directors have deferred all of their directors' fees into
     such Plans. The President of Beard Technologies has deferred a portion of
     his salary until the full amount of the Settlement has been received. The
     Company has suspended its 100% matching contribution (up to a cap of 5% of
     gross salary) under its 401(k) Plan. In addition, three private debt
     placements raised gross proceeds of $1,829,000 during such period. All of
     these measures have helped and will continue to help until the Settlement
     has been finalized. The negative result has been a substantial amount of
     dilution to the Company's common equity. During such period 339,000
     warrants were issued in connection with two of the private debt placements,
     and 275,000 Stock Units were accrued in the participants' accounts as a
     result of deferrals of salary into the DSC Plan, the 2003 Plan and the
     2003-2 Plan. Additional dilution also occurred due to an adjustment to the
     Preferred Stock conversion ratio resulting from the issuance of the
     warrants and the salary deferrals. Termination of the DSC Plan and the 2003
     Plan resulted in the issuance of 350,000 and 150,000 common shares
     effective January 31, 2003 and September 30, 2003, respectively.

     Meanwhile, despite the recent poor financial results and the deterioration
     of its financial condition, the Company has demonstrated the ability to
     maintain its viability as a going concern. During the 12 months ended
     December 31, 2002 and through September 30, 2003, the Company has
     successfully completed three private debt placements totaling $1,829,000
     while increasing its lines of credit from a total of $2,650,000 to a total
     of $3,600,000. During such period it has remained in compliance on all of
     its debt obligations.

     The Company received the first installment of the Settlement on July 31,
     2003. Based upon information furnished to us by the counsel for the
     Coalition at that time it appeared that in a worst case we would receive
     the second installment no later than October 31, 2003. We paid down our
     $300,000 bank line and elected to prepay $300,000 of our 2002 Notes on
     August 1 in order to minimize interest expense going forward. Due to
     subsequent delays encountered by the Settlement Administrator and timing
     delays encountered in dealing with the Federal Court system, it now appears
     that we will not receive the second installment until the December 17 to
     December 24 time frame. This will necessitate the Company's borrowing
     approximately $300,000 to carry it through until the second installment is
     received. The Unitrust has agreed to loan an additional $100,000 and the
     Company is in the process of arranging borrowings from third parties for
     the balance.

     Additional Details
     ------------------
     Despite continuing operating losses during the past twelve months, the
     Company's cash and cash equivalents increased from $22,000 at September 30,
     2002 to $161,000 at September 30, 2003. To mitigate potential liquidity
     problems, the Company's lines of credit from an affiliate of the Company's
     chairman were increased from $2,250,000 in September of 2001 to $2,500,000
     in January of 2002, to $2,625,000 in February of 2002, to $3,000,000 in
     October of 2002, to $3,150,000 in November of 2002 and to $3,300,000 in
     June of 2003. As a result of the private debt placements completed in
     February and July of 2003, the Company obtained a net additional $545,000
     in working capital. The funding of operations and the repayment of a
     portion of the Company's debt, however, has resulted in a $47,000 reduction
     in the Company's working capital position during 2003.

     The Company's principal business is coal reclamation, and this is where
     management's operating attention is primarily focused. The Coal Segment
     currently has several projects in various stages of development which,
     subject to arranging necessary financing, are ultimately expected to mature
     into operating projects. One of these projects, on which the segment had
     entered into a memorandum of understanding, was sold early in July 2003 to
     another party. We have been advised that such party intends to move ahead
     with the project, and are hopeful that negotiations to finalize a
     definitive agreement will occur during the current quarter. We are
     currently pursuing financing for this project. The timing of the project is
     uncertain but, subject to obtaining the necessary financing, it is
     considered to have a high probability of activity. However, no definitive
     contracts have as yet been signed, and there is no assurance that the
     required financing will be obtained or that the project will materialize.

     In September of 2002 a controversy arose between the Company and its
     technology partner concerning their legal rights and relationships in
     conducting business in China. Lengthy negotiations and discussions were
     unsuccessful in arriving at a mutually agreeable solution. In November of
     2002 the Company filed suit to terminate the relationship. Our partner
     filed a counterclaim to which the Company has subsequently responded. On
     July 11, 2003, the Company filed a Motion to Compel Arbitration. An
     impairment provision in the amount of $759,000 was established in the
     fourth quarter of 2002 to write down most of the Company's investment in
     China. In October of 2003 a settlement was reached on the matter, the terms
     of which are subject to a confidentiality agreement. However, under the
     terms of the agreement the Company can continue its composting business in
     China and elsewhere using technology other than that of its former
     technology partner. The segment has obtained an exclusive license agreement
     for another technology in China and is now pursuing new projects.
     Negotiations are in progress on two such projects, and there is ample room
     and an adequate market for a number of such projects in the same area.

     To further bolster working capital, the Company on May 31, 2002 completed
     the private placement of $1,200,000 of 10% subordinated notes due September
     30, 2003 (the "2002 Notes"), to "bridge the gap" until the settlement funds
     have been fully distributed or until the anticipated Coal and China
     projects achieve positive cash flow. The Company has agreed to redeem the
     2002 Notes within 10 days of receipt of the second installment of the
     McElmo Dome Settlement. Since the 2002 Notes were not redeemed on their
     maturity date, such date was automatically extended to March 31, 2005. On
     August 1, 2003 the Company redeemed $300,000 of the notes on a pro-rata
     basis to the holders. An investment banking firm received warrants to
     purchase 45,000 shares of Company common stock as part of its sales
     compensation in connection with the offering. In addition, the note holders
     received a total of 228,812 warrants. Related parties purchased $320,000 of
     the offering, and received a total of 61,250 of such warrants. All of the
     warrants issued in connection with the 2002 Notes have a 5-year term and
     have exercise prices ranging from $0.739868 to $0.75 per share during the
     first three years and from $.924835 to $.9375 per share thereafter.

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

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

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

     The Company has retained two different investment banking firms who are
     independently pursuing, on a non-exclusive basis, financing for the coal
     and China projects. One of the firms is pursuing a total of $15.3 million
     of funding for the projects; the other firm is seeking $16.0 million. To
     date no financing commitments have been received, and there is no assurance
     that their efforts will be successful.

     The Company believes that if the current financing efforts are successful,
     they will provide sufficient working capital to sustain the Company's
     activities until the operations of the projects under development in the
     Coal and China Segments have come on stream and the Company is generating
     positive cash flow. If such efforts are not successful or are only
     partially successful, then a major restructuring of the Company's
     operations will become necessary in order that the Company can continue as
     a going concern.

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

     ITF recorded no revenues for the first nine months ended September 30,
     2003. The losses for the three and nine-month periods ending September 30,
     2003 were none and $5,000, respectively. This activity was recorded in
     operations. Included in the results of operations was a gain of $5,000 on
     the sale of the remaining C-store and associated equipment. ITF also
     recorded no revenues for the first nine months of 2002 and incurred $3,000
     and $9,000 of losses for the three and nine-month periods ending September
     30, 2002, respectively, which were charged against the loss accrual
     recorded in 2001. Included in the losses was a $2,000 gain on the sale of
     equipment.

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

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

     In 1999 Beard recorded a $540,000 loss, which represented its share of
     NABR's $1,350,000 estimated loss from the discontinuation of operations.
     NABR's loss included $572,000 of anticipated operating losses through April
     2000 (the date operations ceased for the larger of its two plants) and
     costs of ceasing operations. NABR recorded no revenues for the smaller of
     the two plants for either of the three-month periods ended September 30,
     2003 or 2002, respectively. NABR's operating losses for the three months
     ended September 30, 2003 were $2,000 and were charged against the loss
     accrual. NABR's operating loss for the three months ended September 30,
     2002 was $17,000 and was not anticipated in the loss accrual recorded in
     1999. NABR charged $18,000 for the three months ended September, 2002
     against the accrual for anticipated expenses related to the shutdown of the
     larger of its two plants.

     As of September 30, 2003, the significant assets related to NABR's
     operations consisted primarily of equipment with an estimated net
     realizable value of $16,000. The significant liabilities related to NABR's
     operations consisted primarily of accrued expenses related to the shutdown
     of operations totaling $55,000. The Company is actively pursuing
     opportunities to sell NABR's assets and expects the disposition to be
     completed by December 31, 2003.

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

     The segment recorded no revenues for either the first nine months of 2003
     or 2002. Beard recorded losses of $18,000 and $8,000 for the three and
     nine-month periods ended September 30, 2003, respectively. Included in
     these results was a $43,000 gain on the sale of equipment. Beard's share of
     operating results from the discontinued segment were a loss of $20,000 and
     income of $16,000 for the three and nine-month periods ended September 30,
     2002, respectively. For the first nine months of 2002, Beard's share of
     operating losses from the 50%-owned company was $10,000. $10,000 of losses
     incurred in the nine months ended September 30, 2002 were associated with
     the operations of the wholly-owned company and were not anticipated in the
     loss accrual. All of the $18,000 in losses in 2003 were associated with the
     subsidiary holding interests in these entities and were also not
     anticipated in the loss accrual.

     As of September 30, 2003, the significant assets of the WS Segment
     consisted of accounts receivable totaling $17,000 and fixed assets with a
     recorded value of $142,000. The significant liabilities of the entity
     consisted of trade accounts payable and accrued expenses totaling $59,000.
     It is anticipated that all liabilities of the segment will be paid prior to
     December 31, 2003.

(4)  Convertible (formerly Redeemable) Preferred Stock
---  -------------------------------------------------
     The Company's preferred stock was mandatorily redeemable through December
     31, 2002, from one-third of Beard's "consolidated net income" as defined.
     Each share of Beard preferred stock ceased to be redeemable and became
     convertible into Beard common stock on January 1, 2003. Each preferred
     share was convertible into 4.58933842 (127,758) shares on September 30,
     2003. The conversion ratio will be adjusted as additional warrants are
     issued or as additional shares of stock are credited to the accounts of the
     Company's Chairman or President in the Company's 2003-2 Deferred Stock
     Compensation Plan. Fractional shares will not be issued, and cash will be
     paid in redemption thereof.

(5)  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 and warrants 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
     convertible preferred stock as the effect would be anti-dilutive. Diluted
     earnings (loss) per share exclude potential common shares issuable upon
     exercise of stock options and warrants, as the effect would be
     anti-dilutive. Weighted average shares of 2,309,000 for the diluted
     earnings per share calculation for the three months ended September 30,
     2003 are composed of basic common shares of 2,181,000 and 128,000 shares of
     preferred stock converted to common shares.

(6)  Income Taxes
---  ------------
     In accordance with the provisions of the Statement of Financial Accounting
     Standard No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), the
     Company's net deferred tax asset is being carried at zero book value, which
     reflects the uncertainties of the Company's utilization of the future net
     deductible amounts. The Company recorded no provision for taxes for the
     three or nine-month periods ended September 30, 2003 or 2002.

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

<TABLE>
<CAPTION>
                                                  Expiration
                                                     Date             Amount
                                                     ----             ------
<S>                                               <C>                <C>
Federal regular tax operating loss carryforwards   2004-2009         $ 55,000

Tax depletion carryforward                        Indefinite         $  3,400
</TABLE>

(7)  Commitments and Contingencies
---  -----------------------------
     In the normal course of business various actions and claims have been
     brought or asserted against the Company. Management does not consider them
     to be material to the Company's financial position, liquidity or results of
     operations.

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

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

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

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

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

<TABLE>
<CAPTION>
                                              Carbon
                                  Coal       Dioxide     China     e-Commerce    Totals
                                  ----       -------     -----     ----------    ------
<S>                               <C>        <C>        <C>         <C>        <C>
      Three months ended
      ------------------
      September 30, 2003
      ------------------
     Revenues from
       external  customers        $    17    $  120     $   -       $   -      $  137
     Segment profit (loss)           (122)       85      (188)        (30)       (255)

      Three months ended
      ------------------
      September 30, 2002
      ------------------
     Revenues from
       external  customers        $     -    $  129     $   -       $   -      $  129
     Segment profit (loss)           (140)       85      (191)        (48)       (294)

      Nine months ended
      -----------------
      September 30, 2003
      ------------------
     Revenues from
       external  customers        $    59    $  363     $   -       $  25      $  447
     Segment profit (loss)           (350)      245      (526)        (68)       (699)
     Segment assets                    40       491        58          11         600

      Nine months ended
      -----------------
      September 30, 2002
      ------------------
     Revenues from
       external  customers        $    12    $  324     $   -       $   -      $  336
     Segment profit (loss)           (417)      213      (581)       (124)       (909)
     Segment assets                 1,561       443       434          61       2,499
</TABLE>

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

<TABLE>
<CAPTION>
                                                          For the Three Months               For the Nine Months
                                                                  Ended                             Ended
                                                   ----------------------------------- ----------------------------------
                                                        September         September        September         September
                                                        30, 2003           30, 2002         30, 2003         30, 2002
                                                   -----------------  ---------------  ----------------  ----------------
<S>                                                     <C>               <C>              <C>               <C>
    Total loss for reportable segments                  $     (255)       $    (294)       $    (699)        $    (909)
    Eliminate loss from China operations
       accounted for as an equity investment                     -               191               -               581
    Equity in loss from China operations
       accounted for as an equity investment                     -              (95)               -              (290)
    Net corporate income (costs)
        not allocated to segments                              529             (252)            (167)             (750)
                                                        -----------       -----------      -----------       -----------
         Total consolidated earnings (loss) from
           continuing operations before income taxes    $      274        $    (450)       $    (866)        $  (1,368)
                                                        ===========       ===========      ===========       ===========
</TABLE>

                       THE BEARD COMPANY AND SUBSIDIARIES

                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

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


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

     The following discussion focuses on material changes in the Company's
financial condition since December 31, 2002 and results of operations for the
quarter ended September 30, 2003 compared to the prior year third quarter, and
the nine months ended September 30, 2003 compared to the prior year nine months.
Such discussion should be read in conjunction with the Company's financial
statements including the related footnotes.

     In preparing the discussion and analysis, the Company has presumed readers
have read or have access to the discussion and analysis of the prior year's
results of operations, liquidity and capital resources as contained in the
Company's 2002 Form 10-K.

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

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


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

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

<TABLE>
<CAPTION>
                                September 30,    December 31,        Increase
                                    2003            2002            (Decrease)
                                    ----            ----            ----------
<S>                             <C>              <C>               <C>
Cash and cash equivalents       $    161,000     $     79,000      $    82,000

Working capital                 $   (331,000)    $   (284,000)     $   (47,000)

Current ratio                        0.62 to 1        0.67 to 1
</TABLE>

     During the first nine months of 2003, the Company decreased its working
capital by $47,000 from $(284,000) as of December 31, 2002. The placement of the
second issue of 10% Subordinated Debt infused over $540,000 in working capital
in the first nine months of 2003. Net advances, including purchases of the 10%
Subordinated Debt, from related entities of the Chairman of the Board totaled
$184,000. Proceeds from the sale of assets totaled $232,000 during the first
nine months of 2003. Net revenue from the Company's interest in its CO2
producing properties provided $273,000 of working capital for the first nine
months of 2003. The Company received distributions of $1,290,000 from other
investments, including $1,151,000 from the partial settlement of the McElmo Dome
litigation and the remainder from Cibola. The Company used $350,000 of working
capital to help fund the operations of the Coal Segment. The China Segment,
including the joint venture involved in the pursuit of environmental
opportunities, utilized over $525,000 of working capital. The Company used
$67,000 to fund the activities of the e-Commerce Segment. The Company utilized
$300,000 to paydown its line of credit with the bank and another $300,000 to
repay a portion of the 10% Subordinated Debt. The remainder of the working
capital was utilized to fund other operations.

     The Company's principal business is coal reclamation, and this is where
management's operating attention is primarily focused. The Coal Segment
currently has several projects in various stages of development which, subject
to arranging necessary financing, are ultimately expected to mature into
operating projects. One of these projects, on which the segment had entered into
a memorandum of understanding, was sold in July 2003 to another party. We have
been advised that such party intends to move ahead with the project, and are
hopeful that negotiations to finalize a definitive agreement will occur during
the current quarter. We are currently pursuing financing for this project. The
timing of the project is uncertain but, subject to obtaining the necessary
financing, it is considered to have a high probability of activity. However, no
definitive contracts have, as yet been signed, and there is no assurance that
the required financing will be obtained or that the project will materialize.

     In September of 2002 a controversy arose between the Company and its
technology partner concerning their legal rights and relationships in conducting
business in China. In November of 2002 the Company filed suit to terminate the
relationship. In October of 2003 a settlement was reached on the matter, the
terms of which are subject to a confidentiality agreement. However, the Company
can continue its composting business in China and elsewhere using technology
other than that of its former technology partner. The segment has obtained an
exclusive license agreement for another technology in China and is now pursuing
new projects. Several projects are currently under development, subject to
obtaining the necessary financing. However, there is no assurance that the
required financing will be obtained or that the projects will materialize.

     The long-awaited Settlement in the McElmo Dome litigation is now a
certainty. The first installment, totaling $1,162,000 was received on July 31,
and the second installment, totaling approximately $2,814,000 is expected to be
received between the 17th and the 24th of December 2003. These installments do
not include an additional $100,000 to $125,000 which the Company expects to
receive from a litigation reserve which has been established in connection with
a lawsuit against the managers of the Coalition. (See Part II - Item 1. Legal
Proceedings). Receipt of the Settlement ensures that 2003 will be a profitable
year while at the same time enhancing the Company's liquidity and bolstering its
balance sheet ratios.

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

     The Company has retained two different investment banking firms who are
independently pursuing, on a non-exclusive basis, financing for the coal and
China projects. One of the firms is pursuing a total of $15.3 million of funding
for the projects; the other firm is seeking $16.0 million. To date no financing
commitments have been received, and there is no assurance that their efforts
will be successful.

     The Company believes that if the current financing efforts are successful,
they will provide sufficient working capital to sustain the Company's activities
until the operations of the projects under development in the Coal and China
Segments have come on stream and the Company is generating positive cash flow.
If such efforts are not successful or are only partially successful, then a
major restructuring of the Company's operations will become necessary in order
that the Company can continue as a going concern.

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

     The Company realized net earnings for the quarter ended September 30, 2003
of $256,000, compared to a net loss of $528,000 for the third quarter of the
prior year. Discontinued operations accounted for $18,000 of the loss in the
third quarter of 2003 compared to $78,000 for the same period in 2002. The Coal
Segment reported a $17,000 decrease in operating loss for the quarter. The CO2
Segment's operating margin was unchanged---$85,000 for both quarters---as a
$9,000 decrease in revenue was offset by a $9,000 decrease in operating
expenses. The China Segment's loss for the third quarter of 2003 totaled
$138,000 compared to none for the same period in 2002. The e-Commerce Segment
had an operating loss of $30,000 in the third quarter of 2003 versus $48,000 in
the 2002 third quarter. Other activities generated a $103,000 greater loss in
the third quarter of 2003 than in 2002. As a result, the operating loss in the
third quarter of 2003 was $206,000 greater than in the same period of 2002.
Operating results of the Company's primary operating Segments are reflected
below:

<TABLE>
<CAPTION>
                                                  2003               2002
                                             ---------------    ---------------
<S>                                          <C>                <C>
           Operating profit (loss):
             Coal reclamation                $    (122,000)     $    (139,000)
             Carbon dioxide                         85,000             85,000
             China                                (138,000)                 -
             e-Commerce                            (30,000)           (48,000)
                                             ---------------    ---------------
                       Subtotal                   (205,000)          (102,000)
             Other                                (328,000)          (225,000)
                                             ---------------    ---------------
                        Total                $    (533,000)     $    (327,000)
                                             ===============    ===============
</TABLE>

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

Coal reclamation

     The segment's revenues increased to $17,000 in the third quarter of 2003
versus none in the same period of 2002. Operating costs increased $6,000 to
$139,000 for the third quarter of 2003 compared to $133,000 for the same period
in 2002 due to increased level of activity. SG&A costs increased $1,000 for the
third quarter of 2003 compared to the same period in 2002 as personnel in the
segment increased their efforts to develop the market for the segment's
technology. DD&A costs decreased $6,000 for the third quarter of 2003 compared
to the same period in 2002 as the assets of the segment were fully impaired in
the fourth quarter of 2002. As a result, the operating loss for the third
quarter of 2003 decreased $17,000 to $122,000 compared to $139,000 in the third
quarter of 2002.

Carbon dioxide

     The operating profit for the 2003 and 2002 quarters was the same at
$85,000. 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 decreased $9,000 or 7% to $120,000 for the third quarter of 2003
compared to $129,000 for the same period in 2002. The decrease in revenue, which
was primarily due to a decrease in price for the paid volumes to the Company's
interest for CO2 gas during the quarter, was offset by a $9,000 decrease in
lifting costs for the current quarter.

China

     The China Segment incurred an operating loss of $138,000 for the third
quarter of 2003 compared to none for the same period in 2002. In the prior year
quarter and through November of 2002, the operations of this segment were
conducted through an unconsolidated affiliate. As a result of the controversy
which arose in the latter part of 2002 and the lawsuit which followed, the
Company is now conducting its operations in China through wholly-owned
affiliates. The loss in 2003 is attributable to operating expenses incurred
while the Company seeks to develop projects to utilize the proprietary
composting technology of REUSE. Prior to the finalization of the settlement
agreement in October, the Company was still charging some expenses to the
unconsolidated affiliate while the controversy was being settled. For the third
quarter of 2002, the Company recorded a $96,000 loss as its 50% share of the
equity in operating results of the unconsolidated affiliate.

e-Commerce

     The e-Commerce Segment incurred an operating loss of $30,000 for the third
quarter of 2003 versus an operating loss of $48,000 in the prior year quarter.
An $18,000 reduction in operating expenses accounted for the difference. The
segment had no revenues in either the third quarter of 2003 or 2002 while
attempting to develop business opportunities to leverage its intellectual
property portfolio of Internet payment methods and security technologies.

Other 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 $328,000 for the
third quarter of 2003 as compared to $225,000 for the same period of 2002. This
increase in operating losses was due primarily to increased amortization expense
associated with the capitalized cost of issuing the 10% subordinated debt,
together with a $64,000 impairment of certain oil & gas leases held by the
Company.

Selling, general and administrative expenses

     The Company's selling, general and administrative expenses ("SG&A") in the
current quarter increased $22,000 to $219,000 from $197,000 in the 2002 third
quarter. The primary reason for the increase was a reduction in the amount of
compensation expense allocated to the China Segment during the three months
ended September 30, 2003 compared to the prior year quarter.

Depreciation, depletion and amortization expenses

     The third quarter of 2003 reported an increase in DD&A expense of $9,000,
reflecting the increased amortization of the capitalized costs associated with
the issuance of the subordinated debt in the first quarter of 2003.

Impairment of long-lived assets

     The Company recorded a $64,000 impairment of its oil and gas leases in the
third quarter of 2003. There was no such expense recorded in the same period of
the prior year. The leases are being held for future development or sale.

Other income and expense

     Other income and expenses for the third quarter of 2003 netted to earnings
of $807,000 compared to a loss of $123,000 for the same period in 2002. Interest
income was down $35,000 for the third quarter of 2003 compared to the same
period in 2002. Interest expense was $22,000 higher as a result of the increase
in debt, primarily resulting from the issuance of the subordinated debt.

     The Company's equity in operations of unconsolidated affiliates reflected
income of $13,000 for the third quarter of 2003 compared to a loss of $45,000
for the same period in 2002. The Company reflected a loss of $49,000 associated
with the affiliate in China for the third quarter of 2003 compared to a loss of
$95,000 for the same period in 2002. The losses represent 100% and 50%,
respectively, of the losses recorded by the affiliate in China. As discussed,
the Company has been in litigation with its former technology partner since
November of 2002. Starting in 2003, the Company began recording 100% of the
costs associated with leased office space and a computer that the Company is
paying for on hehalf of the affiliate, along with those legal expenses directly
attributable to the affiliate. In October of 2003 a settlement was reached on
the matter, the terms of which are subject to a confidentiality agreement.
However, the Company can continue its composting business in China and elsewhere
using technology other than that of its former technology partner. Offsetting
the Company's share of losses of the affiliate in China was the Company's share
of the earnings of Cibola Corporation ("Cibola"). Cibola contributed $62,000 in
income for the third quarter of 2003 compared to $50,000 for the same period in
2002.

     In July of 2003, the Company received $1,151,000 as the first payment in
the McElmo Dome litigation, representing its share as a member of the LLC
Coalition which participated in the suit against the operator. The Company
expects to receive the remainder of the settlement between the 17th and the 24th
of December 2003. The Company recorded no income from this Coalition in 2002.

Income taxes

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

Discontinued operations

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

     ITF recorded no revenues for either the third quarter of 2003 or 2002. ITF
recorded no losses for the third quarter of 2003 and a $77,000 impairment
provision in the third quarter of 2002 related to losses expected at an auction
of segment assets in November of 2002.

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

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

     In 1999 Beard recorded a $540,000 loss, which represented its share of
NABR's $1,350,000 estimated loss from the discontinuation of operations. NABR's
loss included a loss accrual to cover the costs of ceasing operations and
shutting down the larger of its two plants. The smaller plant was sold in August
of 2002. NABR recorded no revenues for the smaller of the two plants for either
of the three-month periods ended September 30, 2003 or 2002, respectively.
NABR's operating losses for the three months ended September 30, 2003 were
$2,000 and were charged against the loss accrual. NABR's operating loss for the
three months ended September 30, 2002 was $17,000 and was not anticipated in the
loss accrual recorded in 1999. NABR charged $18,000 for the three months ended
September, 2002 against the accrual for anticipated expenses related to the
shutdown of the larger of its two plants.

     As of September 30, 2003, the significant assets related to NABR's
operations consisted primarily of equipment with an estimated net realizable
value of $16,000. The significant liabilities related to NABR's operations
consisted primarily of accrued expenses related to the shutdown of operations
totaling $55,000. The Company is actively pursuing opportunities to sell NABR's
assets and expects the disposition to be completed by December 31, 2003.

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

     The segment recorded no revenues for either the third quarter of 2003 or
2002. Beard's share of operating losses from the discontinued segment were
$18,000 for the three months ended September 30, 2003. Beard recorded income of
$16,000 from this discontinued segment for the three months ended September 30,
2002 as a portion of the segment's assets were sold for a gain of $39,000 which
more than offset the losses incurred during this period.

     As of September 30, 2003, the significant assets of the WS Segment
consisted of accounts receivable totaling $17,000 and fixed assets with a
recorded value of $142,000. The significant liabilities of the segment consisted
of trade accounts payable and accrued expenses totaling $59,000. It is
anticipated that all liabilities of the segment will be paid prior to December
31, 2003.

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

     The net loss for the nine months ended September 30, 2003 was $879,000
compared to a net loss of $1,549,000 for the first nine months of the prior
year. Continuing operations posted a net loss of $866,000 compared to a loss
from continuing operations of $1,368,000 for the same period in 2002.
Discontinued operations accounted for $13,000 of the net loss for the 2003
period versus $181,000 in the 2002 period.

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

<TABLE>
<CAPTION>
                                                2003               2002
                                          ----------------    ----------------
<S>                                       <C>                 <C>
        Operating profit (loss):
          Coal reclamation                $     (350,000)     $     (425,000)
          Carbon dioxide                         245,000             213,000
          China                                 (437,000)                  -
          e-Commerce                             (67,000)           (123,000)
                                          ----------------    ----------------
                    Subtotal                    (609,000)           (335,000)
        Other                                   (868,000)           (696,000)
                                          ----------------    ----------------
                     Total                $   (1,477,000)     $   (1,031,000)
                                          ================    ================
</TABLE>

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

Coal reclamation

     The Company's coal reclamation revenues increased $47,000 to $59,000 for
the first nine months of 2003 compared to $12,000 for the same period in 2002.
The segment performed more small consulting and coring jobs in the 2003 period
than in the 2002 period. Operating costs decreased $12,000 to $409,000 for the
first nine months of 2003 compared to $421,000 for the same period in 2002. The
decrease was primarily attributable to reductions in labor and other overhead
costs achieved in the interim period. SG&A costs increased slightly, rising
$1,000 to $84,000 for the first nine months of 2003 from $83,000 in the same
period of 2002. DD&A costs decreased $16,000 for the first nine months of 2003
compared to the same period in 2002 as the assets of the segment were fully
impaired in the fourth quarter of 2002. As a result, the operating loss for the
first nine months of 2003 decreased $75,000 to $350,000 for the first nine
months of 2003 compared to $425,000 in the first nine months of 2002.

Carbon dioxide

     Operations for the first nine months of 2003 resulted in an operating
profit of $245,000 compared to a $213,000 operating profit for the first nine
months of 2002. The sole component of revenues for this segment is the sale of
CO2 gas from the working and overriding royalty interests of the Company's two
carbon dioxide producing units in Colorado and New Mexico. Operating revenues in
this segment increased $39,000 to $363,000 for the first nine months of 2003
compared to $324,000 for the same period in 2002. The Company recorded $5,000
more in operating costs associated with the properties in the first nine months
of 2003 compared to the same period in 2002. Both paid and production volumes
for the McElmo Dome field decreased slightly for the first nine months of 2003
compared to the same period in 2002. The increase in revenue for the current
nine months was due primarily to higher pricing paid to the Company's interest
offset by the slightly lower volumes, with the Company receiving an average of
$0.34 per mcf sold in the first nine months of 2003 versus $0.28 per mcf in the
year later period.

China

     The China Segment incurred an operating loss of $437,000 for the first nine
months of 2003 compared to none for the same period in 2002. Another $88,000 of
loss for the first three quarters of 2003 is included in equity in operations of
unconsolidated affiliates relating to China. In the prior year nine months, the
operations of this segment were conducted through an unconsolidated affiliate.
As a result of the controversy which arose in the latter part of 2002 and the
lawsuit which followed, the Company is now conducting its operations in China
through wholly-owned affiliates. The loss in 2003 is attributable to SG&A
expenses as the Company seeks projects to utilize the proprietary composting
technology of REUSE. For the first nine months of 2002, the Company recorded a
$290,000 loss as its 50% share of the equity in operating results of the
unconsolidated affiliate.

e-Commerce

     The e-Commerce Segment incurred an operating loss of $67,000 for the first
nine months of 2003 versus an operating loss of $123,000 in the prior year
period. A $31,000 reduction in operating expenses accounted for part of the
difference; a $25,000 license fee recorded in the first nine months of 2003
accounted for the balance.

Other activities

     Other operations, consisting principally of general and corporate
activities, generated a $172,000 greater operating loss for the first nine
months of 2003 than in the same period last year. The primary reason for the
increase in the loss is a $62,000 increase in amortization expense associated
with the issuance of the subordinated debt and a $64,000 impairment of oil and
gas leases. The Company experienced minor cost increases in numerous other
expense classifications.

Selling, general and administrative expenses

     The Company's selling, general and administrative expenses ("SG&A") in the
first nine months of 2003 increased to $667,000 from $629,000 for the 2002 nine
months. Other operations incurred approximately $46,000 more in SG&A for the
nine months of 2003 compared to the same period in 2002 as a result of a net
increase in numerous types of expenses, primarily increases in insurance
expenses totaling $14,000 and an increase of $21,000 in financing costs.

Depreciation, depletion and amortization expenses

     DD&A expense increased $48,000 to $148,000 from $100,000 for the nine
months of 2003 compared to the same period in 2002, primarily as a result of
greater amortization expense relating to the capitalized costs associated with
the issuance of the subordinated debt in the second quarter of 2002 and the
second issue in the first quarter of 2003.

Impairment of long-lived assets

     The Company recorded a $64,000 impairment of its oil and gas leases in the
third quarter of 2003. There was no such expense recorded during the first nine
months of the prior year. The leases are being held for future development or
sale.

Other income and expenses

     The other income and expenses for the first nine months of 2003 netted to
earnings of $611,000 compared to a loss of $337,000 for the same period in 2002.
Interest income was down $93,000 for the first nine months of 2003 compared to
the same period in 2002. Interest expense was up $123,000 as a result of the
increase in debt, primarily as a result of the issuance of the 10% subordinated
debt and the debt to related parties. Gains on sale of assets for the first nine
months of 2003 decreased $9,000 to $1,000 compared to $10,000 in the prior year
period.

     The Company's equity in the operations of unconsolidated affiliates
reflected earnings of $83,000 for the first nine months of 2003 compared to a
loss of $165,000 for the same period in 2002. The Company's equity in the
earnings of Cibola increased $46,000 from $125,000 for the first nine months of
2002 to $171,000 for the same period in 2003 reflecting Cibola's improvement in
operating results. The Company reflected a loss of $88,000 associated with the
affiliate in China for the first nine months of 2003 compared to a loss of
$290,000 for the same period in 2002. The losses represent 100% and 50%,
respectively, of the losses recorded by the Chinese affiliate. In October of
2003 a settlement was reached on the matter, the terms of which are subject to a
confidentiality agreement. However, the Company can continue its composting
business in China and elsewhere using technology other than that of its former
technology partner.

     In July of 2003, the Company received $1,151,000 as the first payment in
the McElmo Dome litigation, representing its share as a member of the LLC
Coalition which participated in the suit against the operator. The Company
expects to receive the remainder of the settlement between the 17th and the 24th
of December 2003. The Company recorded no income from this Coalition in 2002.

Income taxes

     The Company recorded no provision for taxes for the nine months ended
September 30, 2003 or 2002. The Company has not recorded any financial benefit
attributable to its various tax carryforwards due to uncertainty regarding their
utilization and realization.

Discontinued operations

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

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

     ITF's revenues and actual operating losses were none and $9,000,
respectively, for the nine months ended September 30, 2002. The actual losses
for the nine months ended September 30, 2002 were charged against the loss
accrual recorded in the fourth quarter of 2001. In November of 2002 the majority
of the ITF assets were sold at auction with net proceeds totaling $303,000,
after estimated expenses of $34,000. The Company recorded an impairment
provision of $77,000 as of September 30, 2002 relating to this auction.

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

     The revenues and actual loss for the nine months ended September 30, 2003
were none and $9,000, respectively. These losses were charged against the loss
accrual recorded in 1999. The revenues and actual loss for the nine months ended
September 30, 2002 were $120,000 and $25,000, respectively. These losses were
also charged against the 1999 loss accrual. In addition, the Company recorded
losses of $84,000 for the nine-month period ended September 30, 2002 for the
operations of the smaller of the two plants distributed from NABR. These losses
were not anticipated in the loss accrual of 1999.

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

     The segment recorded no revenues for the first nine months of 2003 or 2002.
Beard recorded losses of $8,000 for the first nine months of 2003 compared to
operating losses of $20,000 for the nine-month period ended September 30, 2002.
The loss for 2003 included a $43,000 gain from the sale of assets.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

     At September 30, 2003, the Company had notes receivable of $30,000 and
long-term debt of $4,822,000, including accrued interest to related entities of
$310,000. The notes receivable and $4,512,000 of the long-term debt have fixed
interest rates; therefore, the Company's interest income and expense and
operating results would not be affected by an increase in market interest rates
for these items. At September 30, 2003, a 10% increase in market interest rates
would have reduced the fair value of the Company's notes receivable by less than
$1,000 and reduced the fair value of its long-term debt by $53,000.

     The Company has no other market risk sensitive instruments.

Item 4.  Controls and Procedures.

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

PART II.     OTHER INFORMATION.

Item 1.   Legal Proceedings.

McElmo Dome Litigation
----------------------
     The long-awaited Settlement in the McElmo Dome litigation is now a
certainty. The first installment, totaling approximately $1,162,000 was received
by the Company on July 31, 2003. The second installment, totaling approximately
$2,814,000 is expected to be received between the 17th and the 24th of December
2003.

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

ABT Beard Litigation
--------------------
     In September of 2002 a controversy arose between the Company and its
technology partner concerning their legal rights and relationships. Lengthy
negotiations and discussions were unsuccessful in arriving at a mutually
agreeable solution. In November of 2002, the Company filed suit against American
Bio-Tech, Inc. ("ABT") seeking judicial termination of the partnership between
the Company and ABT. In January of 2003, ABT filed its answer and asserted
counterclaims against the Company and third-party claims against various Company
affiliates seeking an unspecified amount of damages plus attorneys' fees and
costs. The Company and the third-party defendants filed an answer denying
liability and stating their intention to vigorously defend the claims. In
October of 2003 a settlement was reached on the matter, the terms of which are
subject to a confidentiality agreement. However, the Company can continue its
composting business in China and elsewhere using technology other than that of
ABT.

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

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

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

Item 2.  Changes in Securities.

     The Company's preferred stock was mandatorily redeemable through December
31, 2002, from one-third of Beard's "consolidated net income" as defined. On
January 1, 2003 each share of Beard preferred stock ceased to be redeemable and
became convertible into Beard common stock. Each preferred share was convertible
into 4.58933842 (127,758) common shares on September 30, 2003. The conversion
ratio will be adjusted as additional warrants are issued or as additional shares
of stock are credited to the accounts of the Company's Chairman or President in
the Company's 2003 Deferred Stock Compensation Plan. Fractional shares will not
be issued, and cash will be paid in redemption thereof.

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

     Commencing on June 20, 2003, proxies were solicited on behalf of the Board
of Directors of the Company in connection with the Annual Meeting of
Stockholders.

     (a) The annual meeting was held on July 31, 2003.

     (b) The business of the meeting included the election of Allan R. Hallock
and Ford C. Price to serve as directors for three-year terms or until their
successors have been elected and qualified.

     In addition, the following persons continue to serve as directors for terms
expiring on the dates indicated or until their successors have been elected and
qualified:

        Harlon E. Martin, Jr.   (2004)        Herb Mee, Jr.    (2004)
        W. M. Beard             (2005)

     To date the preferred stockholder has not elected to fill the vacancy
created by the resignation of Michael E. Carr who resigned effective February 1,
2002.

     The table below sets forth the voting for election of directors:

<TABLE>
<CAPTION>
                        Votes      Votes     Votes                     Broker
 Name of Nominee         For      Against   Withheld   Abstentions   Non-Votes
 ---------------         ---      -------   --------   -----------   ---------
<S>                   <C>           <C>       <C>          <C>        <C>
Allan R. Hallock      2,055,787     -0-       654          -0-        250,165
Ford C. Price         2,055,787     -0-       654          -0-        250,165
</TABLE>

     (c) At the meeting the stockholders also voted to approve the adoption of
The Beard Company 2003 Deferred Stock Compensation Plan. The table below sets
forth the voting for such proposal:

<TABLE>
<CAPTION>
      Votes              Votes                              Broker
       For              Against         Abstentions       Non-Votes
       ---              -------         -----------       ---------
<S>                      <C>               <C>             <C>
    1,749,583            11,159            2,614           543,250
</TABLE>

     (d) At the meeting the stockholders also voted to approve the appointment
of Cole & Reed, P.C. as independent certified public accountants for fiscal year
2003. The table below sets forth the voting for such proposal:

<TABLE>
<CAPTION>
      Votes              Votes                              Broker
       For              Against         Abstentions       Non-Votes
       ---              -------         -----------       ---------
<S>                       <C>              <C>              <C>
    2,051,428             336              4,677            250,165
</TABLE>

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

     (a) The following exhibits are filed with this Form 10-Q and are identified
by the numbers indicated:

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

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

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

2(c)   Certificate of Merger merging The Beard Company into The New Beard
       Company as filed with the Secretary of State of Oklahoma on November 26,
       1997. (This Exhibit has been previously filed as Exhibit 2.1 to
       Registrant's Form 8-K, filed on December 8, 1997, and same is
       incorporated herein by reference).


3(i)   Certificate of Incorporation of The New Beard Company as filed with the
       Secretary of State of Oklahoma on September 11, 1997. (This Exhibit has
       been previously filed as Exhibit C to Registrant's Proxy Statement filed
       on September 12, 1997, and same is incorporated herein by reference).

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

4      Instruments defining the rights of security holders:

4(a)   Certificate of Designations, Powers, Preferences and Relative,
       Participating, Option and Other Special Rights, and the Qualifications,
       Limitations or Restrictions Thereof of the Series A Convertible Voting
       Preferred Stock of the Registrant. (This Exhibit has been previously
       filed as Exhibit 3(c) to Amendment No. 2, filed on September 17, 1993 to
       Registrant's Registration Statement on Form S-4, File No. 33-66598, and
       same is incorporated herein by reference).

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

10     Material contracts:

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

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

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

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

32     Section 1350 Certifications:

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

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

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

     (b) Two reports on Form 8-K were filed during the period covered by this
report. An 8-K filed on July 10, 2003 included a news release reporting that the
McElmo Dome litigation was over. An 8-K filed on August 13, 2003 included a news
release setting forth the Company's financial results for the three and
six-month periods ended June 30, 2003 and reporting that the first installment
of the McElmo Dome settlement had been received.
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      (Registrant)   THE BEARD COMPANY

                                                /s/Herb Mee, Jr.
     (Date)   November 14, 2003       ___________________________________
                                            Herb Mee, Jr., President and
                                            Chief Financial Officer

                                               /s/Jack A. Martine
     (Date)   November 14, 2003       ___________________________________
                                            Jack A. Martine, Controller and
                                            Chief Accounting Officer
<PAGE>
<TABLE>
                                 EXHIBIT INDEX
<CAPTION>
Exhibit
  No.     Description                             Method of Filing
  ---     -----------                             ----------------
<S>    <C>                                      <C>
2(a)   Agreement and Plan of Reorganization by  Incorporated herein by reference
       and among Registrant, Beard Oil Company
       ("Beard Oil") and New Beard, Inc., dated
       as of July 12, 1993

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

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

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

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

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

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

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

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

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

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

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