form10q.htm
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 quarterly period ended March 31, 2009
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
HEARTLAND,
INC.
(Exact
name of registrant as specified in its charter)
Maryland
|
000-27045
|
36-4286069
|
(State
or other jurisdiction of
incorporation or organization)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification Number)
|
P.O.
Box 4320
Harrogate,
TN 37752
(Address of principal executive offices)
(Zip Code)
606-248-7323
(Registrant’s
telephone no., including area code)
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 o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
Non
accelerated filer o (Do not check if
a smaller reporting company) Smaller reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo x
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: As of May 5, 2009, there were 44,456,196 shares of common
stock, $.0001 par value per share, outstanding.
HEARTLAND,
INC.
FORM
10-Q
TABLE
OF CONTENTS
PART
I. FINANCIAL INFORMATION
|
|
|
ITEM
1. FINANCIAL STATEMENTS
|
|
3
|
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
|
|
10
|
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
|
12
|
ITEM
4. CONTROLS AND PROCEDURES
|
|
12
|
PART
II. OTHER INFORMATION
|
|
|
ITEM
1. - LEGAL PROCEEDINGS
|
|
12
|
ITEM
1a – RISK FACTORS
|
|
13
|
ITEM
2. - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
|
13
|
ITEM
3. - DEFAULTS UPON SENIOR SECURITIES
|
|
13
|
ITEM
4. – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
|
13
|
ITEM
5. - OTHER INFORMATION
|
|
13
|
ITEM
6. - EXHIBITS
|
|
13
|
SIGNATURES
|
|
14
|
|
|
|
PART I. FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
HEARTLAND, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
ASSETS
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$ |
4,137,450 |
|
|
$ |
4,101,692 |
|
Accounts
receivable, net
|
|
|
5,680,448 |
|
|
|
4,885,878 |
|
Inventory
|
|
|
2,791,683 |
|
|
|
2,775,635 |
|
Other
current assets
|
|
|
833,898 |
|
|
|
817,666 |
|
Total
current assets
|
|
|
13,443,479 |
|
|
|
12,580,871 |
|
|
|
|
|
|
|
|
|
|
PROPERTY,
PLANT AND EQUIPMENT, net
|
|
|
10,167,422 |
|
|
|
10,256,234 |
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
63,601 |
|
|
|
68,112 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
23,674,502 |
|
|
$ |
22,905,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEARTLAND, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS - continued
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
3,030,738 |
|
|
$ |
2,741,435 |
|
Other
current liabilities
|
|
|
1,283,366 |
|
|
|
1,244,170 |
|
Current
portion of notes payable
|
|
|
1,545,594 |
|
|
|
1,205,594 |
|
Current
portion of notes payable to related parties
|
|
|
129,127 |
|
|
|
129,127 |
|
Total
current liabilities
|
|
|
5,988,825 |
|
|
|
5,320,326 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
OBLIGATIONS
|
|
|
|
|
|
|
|
|
Notes
payable, less current portion
|
|
|
8,114,690 |
|
|
|
8,204,783 |
|
Notes
payable to related parties, less current portion
|
|
|
3,300,721 |
|
|
|
3,330,872 |
|
Other
long-term liabilities
|
|
|
787,577 |
|
|
|
878,215 |
|
Total
long term liabilities
|
|
|
12,202,988 |
|
|
|
12,413,870 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
Preferred
stock $0.001 par value 5,000,000 shares
|
|
|
|
|
|
|
|
|
authorized,
2,370,000 shares issued and outstanding
|
|
|
2,370 |
|
|
|
2,370 |
|
Additional
paid-in capital – preferred stock
|
|
|
713,567 |
|
|
|
713,567 |
|
Common
stock, $0.001 par value 100,000,000 shares
|
|
|
|
|
|
|
|
|
authorized; 43,706,196
and 42,759,047 shares issued and
|
|
|
|
|
|
|
|
|
outstanding
at March 31, 2009 and December 31, 2008, respectively
|
|
|
43,706 |
|
|
|
42,759 |
|
Additional
paid-in capital – common stock
|
|
|
17,218,878 |
|
|
|
17,011,726 |
|
Accumulated
deficit
|
|
|
(12,495,832 |
) |
|
|
(12,599,401 |
) |
Total
stockholders’ equity
|
|
|
5,482,689 |
|
|
|
5,171,021 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$ |
23,674,502 |
|
|
$ |
22,905,217 |
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
HEARTLAND, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
UNAUDITED
|
|
|
|
|
|
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
SALES
|
|
$ |
19,737,679 |
|
|
$ |
4,058,796 |
|
Cost
of goods sold
|
|
|
(17,070,440 |
) |
|
|
(3,278,225 |
) |
Gross
profit
|
|
|
2,667,239 |
|
|
|
780,571 |
|
EXPENSES
|
|
|
2,426,286 |
|
|
|
380,357 |
|
NET
OPERATING INCOME
|
|
|
240,953 |
|
|
|
400,214 |
|
Other
(expense) income
|
|
|
(142,902 |
) |
|
|
1,542 |
|
INCOME
BEFORE INCOME TAXES
|
|
|
98,051 |
|
|
|
401,756 |
|
Federal
and state income taxes
|
|
|
|
|
|
|
|
|
Income
taxes, current
|
|
|
(13,897 |
) |
|
|
- |
|
Income
tax benefit, deferred
|
|
|
26,886 |
|
|
|
- |
|
NET
INCOME
|
|
|
111,040 |
|
|
|
401,756 |
|
LESS:
Preferred Dividends
|
|
|
(14,813 |
) |
|
|
(14,813 |
) |
NET
INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
|
$ |
96,227 |
|
|
$ |
386,943 |
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
HEARTLAND, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
UNAUDITED
|
Three
Months Ended
|
|
|
March
31,
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
18,949 |
|
|
|
582,732 |
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Payments
for property, plant and equipment
|
|
|
(202,947 |
) |
|
|
(93,492 |
) |
Proceeds
from disposition of other assets
|
|
|
- |
|
|
|
(31,000 |
) |
NET
CASH USED IN INVESTING ACTIVITIES
|
|
|
(202,947 |
) |
|
|
(124,492 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
proceeds from notes payable
|
|
$ |
249,907 |
|
|
$ |
(6,091 |
) |
Net
proceeds on notes to related parties
|
|
|
(30,151 |
) |
|
|
(31,289 |
) |
Payments
on capital lease
|
|
|
- |
|
|
|
(3,949 |
) |
Proceeds
from issuance of common stock
|
|
|
- |
|
|
|
290,000 |
|
NET
CASH PROVIDED BY FINANING ACTIVITIES
|
|
|
219,756 |
|
|
|
248,671 |
|
|
|
|
|
|
|
|
|
|
INCREASE
IN CASH
|
|
|
35,758 |
|
|
|
706,911 |
|
|
|
|
|
|
|
|
|
|
CASH,
BEGINNING OF PERIOD
|
|
|
4,101,692 |
|
|
|
216,570 |
|
|
|
|
|
|
|
|
|
|
CASH,
END OF PERIOD
|
|
$ |
4,137,450 |
|
|
$ |
923,481 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
219,212 |
|
|
$ |
6,678 |
|
Taxes
paid
|
|
$ |
12,000 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
NON
CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Amortization
of deferred compensation as share based compensation
|
|
$ |
23,088 |
|
|
$ |
21,732 |
|
Issuance
of common stock for services and settlement
|
|
$ |
142,500 |
|
|
$ |
- |
|
Issuance of common stock in payment of convertible promissory notes &
accrued interest
|
|
$ |
32,490 |
|
|
$ |
- |
|
Issuance
of common stock for dividends
|
|
$ |
7,473 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
HEARTLAND, INC. AND
SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,
2009
NOTE A
|
BASIS OF
PRESENTATION
|
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with Regulation S-K promulgated by the Securities and Exchange
Commission and do not include all of the information and notes required by
generally accepted accounting principles in the United States for complete
financial statements. In the opinion of management, these interim
financial statements include all adjustments, which include only normal
recurring adjustments, necessary in order to make the financial statements not
misleading. The results of operations for such interim periods are
not necessarily indicative of results of operations for a full
year. The unaudited consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and notes
thereto of the Company and management’s discussion and analysis of financial
condition and results of operations included in the Company’s Annual Report for
the year ended December 31, 2008 as filed with the Securities and Exchange
Commission on Form 10-K.
The
balance sheet at December 31, 2008 has been derived from the audited financial
statement of that date, but does not include all of the information and notes
required by accounting principles generally accepted in United States of America
for complete financial statements.
NOTE B
|
RECENT ACCOUNTING
DEVELOPMENTS
|
During
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, Fair Value Measurements, which is effective for fiscal years beginning
after November 15, 2007, with earlier adoption encouraged. SFAS 157 defines fair
value, establishes a framework for measuring fair value in GAAP, and expands
disclosures about fair value measurements. In February 2008, the FASB issued
FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which
delayed the effective date of SFAS 157 for all non-financial assets and
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis, until January 1,
2009. The Company adopted SFAS 157 on January 1, 2008, for all
financial assets and liabilities, but the implementation did not have a
significant impact on the Company’s financial position or results of
operations. The Company has not yet determined the impact the
implementation of SFAS 157 will have on the Company’s non-financial assets and
liabilities which are not recognized or disclosed on a recurring
basis. However, the Company does not anticipate that the full
adoption of SFAS 157 will significantly impact its consolidated financial
statements.
During
the quarter ended March 31, 2009, the Company authorized the issuance of 947,149
shares of common stock. The issuance related to the following:
Description
|
|
Quantity
|
|
Closing
Price Date
|
Stock
Dividend
|
|
|
28,377 |
|
Monthly
average
|
Conversion
of Debt & Related Interested
|
|
|
32,410 |
|
Set
by note at $1/share
|
Board
Compensation
|
|
|
136,362 |
|
March
15, 2009
|
Employment
Contract – Heartland Steel
|
|
|
750,000 |
|
Valued
at $0.15/share
|
|
|
|
947,149 |
|
|
|
|
|
|
|
|
HEARTLAND, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,
2009
NOTE D
|
EARNINGS PER
SHARE
|
Basic
earnings per share assumes no dilution and is computed by dividing net income
available to common stockholders by the weighted average number of common shares
outstanding during each period. Diluted earnings per share reflect, in periods
in which they have a dilutive effect, the effect of common shares issuable upon
the exercise of stock options and warrants, using the treasury stock method of
computing such effects.
The
following table sets forth the computation of basic and diluted earnings per
share for the three months ended March 31:
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Net
income available to common
stockholders
|
|
$
|
96,227
|
|
|
$
|
386,943
|
|
Average
shares outstanding
|
|
|
43,005,489
|
|
|
|
36,997,661
|
|
Basic
earnings per share
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Net
income available to common
stockholders
|
|
$
|
96,227
|
|
|
$
|
(1,038,832
|
)
|
Average
shares outstanding
|
|
|
45,375,489
|
|
|
|
39,997,661
|
|
Basic
earnings per share
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
The
consolidated financial statements include the accounts of Heartland, Inc.
(“Heartland”) and its wholly owned subsidiaries, Mound Technologies, Inc.
(“Mound”), Lee Oil Company, Inc. (“Lee Oil”), and Heartland Steel, Inc.
(“HS”).
All
significant intercompany accounts and transactions have been
eliminated.
The
following table reflects the Company’s segments at March 31,
2009:
|
|
Holding
|
|
|
Oil
|
|
|
Steel
|
|
|
Steel
|
|
|
|
|
|
|
Company
|
|
|
Distributor
|
|
|
Fabricator
|
|
|
Distributor
|
|
|
|
|
|
|
(Heartland)
|
|
|
(Lee
Oil)
|
|
|
(Mound)
|
|
|
(HS)
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
- |
|
|
$ |
16,218,967 |
|
|
$ |
3,108,148 |
|
|
$ |
410,564 |
|
|
$ |
19,737,679 |
|
Gross
Margins
|
|
|
- |
|
|
|
2,004,044 |
|
|
|
649,049 |
|
|
|
14,146 |
|
|
|
2,667,239 |
|
Income
From Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before
Income Taxes
|
|
|
(365,323 |
) |
|
|
165,700 |
|
|
|
497,528 |
|
|
|
(199,854 |
) |
|
|
98,051 |
|
Total
Assets
|
|
|
2,827,058 |
|
|
|
12,259,905 |
|
|
|
7,614,904 |
|
|
|
972,635 |
|
|
|
23,674,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEARTLAND, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,
2009
The
Company executed an employment agreement with Thomas Miller, the current
President of Mound, as of April 1, 2009. This employment agreement called for
the issuance of 750,000 shares upon execution of the agreement and those shares
were issued on April 1, 2009.
On April
9, 2009, the Company entered into a $2 million construction note with a related
party bank for the construction of the future home of HS. Construction is
scheduled to begin in late May. The note bears interest of 7.75% and will be
converted into a long-term note once construction is completed (not to exceed
two years). At the time of conversion, the note will have a term of 20 years.
The note is collateralized by the building that is being
constructed.
Certain
amounts in the March 31, 2008 Financial Statements have been reclassified to
conform to the presentation used in the March 31, 2009 Financial
Statements.
ITEM
2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OERATION.
The
following discussion should be read in conjunction with the financial statements
included in this Form 10-Q. The following discussion and analysis
provides certain information, which the Company’s management believes is
relevant to an assessment and understanding of the Company’s results of
operations and financial condition for the quarterly period ended March 31,
2009. The statements contained in this section that are not historical
facts are forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and
uncertainties. Such forward-looking statements may be identified by,
among other things, the use of forward-looking terminology such
as “believes,” “expects,” “may,” “will,” should” or “anticipates” or
the negative thereof or other variations thereon or comparable terminology, or
by discussions of strategy that involve risks and uncertainties. From
time to time, we or our representatives have made or may make forward-looking
statements, orally or in writing. Such forward-looking statements may
be included in our various filings with the SEC, or press releases or oral
statements made by or with the approval of our authorized executive
officers.
These
forward-looking statements, such as statements regarding anticipated future
revenues, capital expenditures and other statements regarding matters that are
not historical facts, involve predictions. Our actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. We do not
undertake any obligation to publicly release any revisions to these
forward-looking statements or to reflect the occurrence of unanticipated
events. Many important factors affect our ability to achieve our
objectives, including, among other things, technological and other developments
within a given field, intense and evolving competition, the lack of an
“established trading market” for our shares, and our ability to obtain
additional financing, as well as other risks detailed from time to time in our
public disclosure filings with the SEC.
Overview
The
Company currently manages its business as three operational segments and files
as a consolidated entity. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision makers. The three
operational segments we currently report are:
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Mound
– Steel Fabrication – Primarily focused on the fabrication of metal
products including structural steel, steel stairs and railings, bar
joists, metal decks, and other miscellaneous steel
products.
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·
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Lee
Oil – Oil Distribution – Primarily focused on the wholesale and retail
distribution of petroleum products including those sold to the motoring
public through our retail
locations.
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·
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Heartland
Steel – Wholesale Steel – This is a startup segment of the business that
we are working to develop into full fledged service center for the
distribution of steel products. This segment of the business will not be
fully operational until later in the
year.
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Three
Months ended March 31, 2009 as compared to the three months ended March 31,
2008
The main
differences between the results of operations from the first quarter of 2008 to
the first quarter of 2009 can be attributed primarily to the Lee Oil acquisition
that took place in the fourth quarter of 2008 and the startup of operations
relating to Heartland Steel. A further breakdown is provided in NOTE E –
BUSINESS SEGMENTS of the financial statements.
Revenues.
Revenues increased for the three months ended March 31, 2009 to
$19,737,679 from $4,058,796 for the three months ended March 31,
2008.
Cost of Goods
Sold. Cost of Goods Sold increased for three months ended March 31, 2009
to $17,070,440 from $3,278,225 for the three months ended March 31,
2008.
Gross Profit.
Gross Profits increased for three months ended March 31, 2009 to
$2,667,239 from $780,571 for the three months ended March 31,
2008.
Expenses.
Expenses increased for three months ended March 31, 2009 to $2,426,286
from $380,357 for the three months ended March 31, 2008.
Net Operating
Income. Net Operating Income decreased for three months ended March 31,
2009 to $240,953 from $400,214 for the three months ended March 31,
2008.
Other (expense)
income. Other (expense) income increased for three months ended March 31,
2009 to $(142,902) from $1,542 for the three months ended March 31,
2008. This was primarily attributable to the interest associated with
the acquisition of Lee Oil. Interest expense increased from $8,013 in the first
quarter of 2008 to $219,212 in the first quarter of 2009.
Net Income Before
income Taxes. Net Income before Income Taxes decreased for the three
months ended March 31, 2009 to $98,051 from $401,756 for the three months ended
March 31, 2008. This decrease is primarily attributable some costs associated
with the startup at Heartland Steel, additional interest expense,
and a lower gross profit from the Mound
operations.
Liquidity and Capital
Resources
As of
March 31, 2009, the Company had accumulated deficit of
$12,495,832. As of December 31, 2008, the Company had accumulated
deficit of $12,599,401. The Company generated a profit in cash flow from
operating activities of $18,949 for the three months ended March 31,
2009.
The
Company generated a deficit from investing activities of $202,947 for the three
months ended March 31, 2009. This deficit is primarily attributable
to the purchase of various property, plant, and equipment during the
quarter.
The
Company’s generated cash flow from financing activities of $219,756 for the
three months ended March 31, 2009.
Our
principal sources of liquidity would be cash on hand and the conversion of
accounts receivable into cash. We also believe cash provided from operating
activities will be a great source of liquidity going forward, but would seek
outside financing for any major expansion, betterment project, or possible
future acquisitions as these would be considered long term
projects.
As of
March 31, 2009, the Company believes that cash on hand, cash generated by
operations, and available bank borrowings will be sufficient to pay trade
creditors, operating expenses in the normal course of business, and meet all of
its bank and subordinate debt obligations for the next 12 to 24
months.
It is our
belief that our stock is currently undervalued and that we are better suited to
fund current projects through cash provided from operations and financing rather
than attempting to sell what we belief to be an undervalued asset and further
dilute the securities.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and, as such, are not required to provide the information under this
Item.
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
With the
participation of the Chief Executive Officer (the principal executive officer)
and Chief Financial Officer (the principal financial officer); the Company’s
management has evaluated the effectiveness of the Company’s disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), as of the end of the quarterly
period covered by this Quarterly Report on Form 10-Q. As of the end of the
period covered by this Report, we conducted an evaluation, under the supervision
and with the participation of our chief executive officer and chief financial
officer, of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934).
Based on this evaluation, our chief financial officer concluded that our
disclosure controls and procedures are not effective to ensure that information
required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and
forms. The ineffectiveness of our disclosure controls and
procedures is the result of certain deficiencies in internal controls
constituting material weaknesses as discussed below. The material
weaknesses identified did not result in the restatement of any previously
reported financial statements or any other related financial disclosure, nor
does management believe that it had any effect on the accuracy of the Company's
financial statements for the current reporting period. We lack segregation
of duties in the period-end financial reporting process. The Company has
historically had limited accounting and limited operating revenue and, as such,
all accounting and financial reporting operations have been and are currently
performed by one individual. The party that performs the accounting and
financial reporting operations is the only individual with any significant
knowledge of generally accepted accounting principles. In addition, the
lack of additional staff with significant knowledge of generally accepted
accounting principles has resulted in ineffective oversight and
monitoring.
We lack segregation of
duties in the period-end financial reporting process. This lack of additional
accounting/auditing staff with significant knowledge of generally accepted
accounting principles in order to properly segregate duties could result in
ineffective oversight and monitoring and the possibility of a misstatement
within the financial statements. However, the material weaknesses
identified did not result in the restatement of any previously reported
financial statements or any other related financial disclosure, nor does
management believe that it had any effect on the accuracy of the Company's
financial statements for the current reporting
period.
The
Company is currently reviewing its policies and is evaluating its disclosure
controls and procedures so that it will be able to determine the changes it can
and should make to make such controls more effective.
Changes
in Internal Controls over Financial Reporting
There has
been no change in our internal control over financial reporting that occurred
during our last fiscal quarter that has materially affected, or is reasonably
likely to material affect, our internal control over financial
reporting.
PART
II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
In the
normal course of our business, we and/or our subsidiaries are named as
defendants in suits filed in various state and federal courts. We believe that
none of the litigation matters in which we, or any of our subsidiaries, are
involved would have a material adverse effect on our consolidated financial
condition or operations.
There is
no past, pending or, to our knowledge, threatened litigation or administrative
action which has or is expected by our management to have a material effect upon
our business, financial condition or operations, including any litigation or
action involving our officers, directors, or other key personnel.
ITEM
1A. RISK FACTORS
We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and, as such, are not required to provide the information under this
Item.
ITEM 2.
UNREGISTER SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
During
the quarter ended March 31, 2009, the Company authorized the issuance of 947,149
shares of common stock. A chart showing these issuances is detailed in Note C of
the financial statements.
On April
1, 2009, the Company issued 750,000 shares of stock relating to the employment
agreement as described in Note F of the financial statements.
No other
unregistered sales of equity securities have taken place since the first
quarter.
The
shares were issued pursuant to an exemption under Section 4(2) of the Securities
Act of 1933, as amended.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER
INFORMATION
None
ITEM 6. EXHIBITS
AND REPORTS ON FORM 8-K
Exhibit
31.1 |
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Certification of
Terry L. Lee, Chief Executive Officer & Chairman of the
Board |
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Exhibit
31.2 |
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Certification of
Mitchell L Cox, CPA, Chief Financial Officer |
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Exhibit
32.1 |
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Certification of
Terry L. Lee, Chief Executive Officer& Chairman of the
Board |
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Exhibit
32.2 |
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Certification of
Mitchell L. Cox, CPA, Chief Financial
Officer |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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HEARTLAND,
INC.
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(Registrant)
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Date:
May 14, 2009
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By:
/s/ Terry L. Lee
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Terry
L. Lee
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Chief
Executive Officer and
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Chairman
of the Board
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(Duly
Authorized Officer)
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Date:
May 14, 2009
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By:
/s/ Mitchell L. Cox, CPA
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Mitchell
L. Cox
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Chief
Financial Officer
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(Principal
Financial
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and
Accounting Officer)
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