|
QUARTERLY
REPORT
|
|
UNDER
SECTION 13 OR 15(d)
|
|
OF
THE SECURITIES EXCHANGE ACT OF
1934
|
Maryland
--------------------------------
|
000-27045
--------------------------------
|
36-4286069
----------------------------------------------
|
(State
or other jurisdiction
of
incorporation or organization))
|
(Commission
File Number)
|
(I.R.S.
Employer Identification Number)
|
|
Number
of shares of the registrant’s common stock outstanding as of August 22,
2007 was: 37,050,095
|
|
Traditional
Small Business Disclosure Format: Yes
[ ] No
[X]
|
3
|
|||
3
|
|||
12
|
|||
21
|
|||
21
|
|||
21
|
|||
21
|
|||
21
|
|||
22
|
|||
22
|
|||
22
|
|||
22
|
CURRENT
ASSETS
|
||||
Cash
|
$ |
449,161
|
||
Accounts
receivable,
net
|
3,944,215
|
|||
Cost
and estimated earnings in
excess of billings on
|
||||
uncompleted
contracts
|
464,225
|
|||
Inventory
|
942,451
|
|||
Prepaid
expenses and
other
|
11,891
|
|||
Total
current
assets
|
5,811,943
|
|||
PROPERTY,
PLANT AND EQUIPMENT, net
|
940,111
|
|||
OTHER
ASSETS
|
||||
Goodwill
|
1,291,390
|
|||
Other
intangible assets,
net
|
15,470
|
|||
Other
assets
|
62,239
|
|||
Total
other
assets
|
1,369,099
|
|||
Total
assets
|
$ |
8,121,153
|
CURRENT
LIABILITIES
|
||||
Accounts
payable
|
$ |
2,314,656
|
||
Acquisition
notes payable to
related parties
|
1,350,000
|
|||
Convertible
promissory notes
payable
|
53,450
|
|||
Current
portion of notes
payable
|
40,726
|
|||
Current
portion of notes payable
to related parties
|
87,387
|
|||
Obligations
to related
parties
|
12,008
|
|||
Accrued
payroll and related
taxes
|
595,088
|
|||
Accrued
interest
|
458,402
|
|||
Accrued
expenses
|
331,525
|
|||
Billings
in excess of costs and
estimated earnings on
|
||||
uncompleted
contracts
|
644,281
|
|||
Total
current
liabilities
|
5,887,523
|
|||
LONG-TERM
OBLIGATIONS
|
||||
Notes
payable, less current
portion
|
407,062
|
|||
Notes
payable to related parties,
less current portion
|
440,600
|
|||
Total
long term
liabilities
|
847,662
|
|||
STOCKHOLDERS’
EQUITY
|
||||
Preferred
stock $0.001 par value
5,000,000 shares
|
||||
Authorized
2,370,000 shares
issued and outstanding
|
2,370
|
|||
Additional
paid-in capital –
preferred stock
|
713,567
|
|||
Common
stock, $0.001 par value
100,000,000 shares
|
||||
authorized;
36,197, 105 shares
issued and outstanding
|
36,197
|
|||
Additional
paid-in capital –
common stock
|
16,048,954
|
|||
Accumulated
deficit
|
(14,994,237 | ) | ||
Deferred
compensation
|
(420,883 | ) | ||
Total
stockholders’
equity
|
1,385,968
|
|||
Total
Liabilities and
Stockholders’ Equity
|
$ |
8,121,153
|
Three
months ended June 30,
|
Six
months ended June 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
REVENUE
- SALES
|
$ |
5,200,594
|
$ |
4,869,422
|
$ |
10,876,289
|
$ |
8,805,271
|
||||||||
COSTS
AND EXPENSES
|
||||||||||||||||
Cost
of goods sold
|
4,579,596
|
4,080,377
|
9,496,551
|
7,278,692
|
||||||||||||
Selling,
general and administrative expenses
|
819,740
|
593,684
|
2,161,625
|
1,579,485
|
||||||||||||
Depreciation
and amortization
|
22,731
|
4,851
|
42,030
|
26,483
|
||||||||||||
Total
costs and
expenses
|
5,422,067
|
4,678,912
|
11,700,206
|
8,884,660
|
||||||||||||
NET
OPERATING INCOME (LOSS)
|
(221,473 | ) |
190,510
|
(823,917 | ) | (79,389 | ) | |||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Other
income
|
8,536
|
28,219
|
23,170
|
65,061
|
||||||||||||
Loss
on disposal of property,
plant and equipment
|
--
|
--
|
(19,432 | ) |
--
|
|||||||||||
Interest
expense
|
(46,220 | ) | (70,653 | ) | (91,996 | ) | (194,508 | ) | ||||||||
Total
other income
(expense)
|
(37,684 | ) | (42,434 | ) | (88,258 | ) | (129,447 | ) | ||||||||
(LOSS)
INCOME FROM CONTINUIING OPERATIONS
|
||||||||||||||||
BEFORE INCOME
TAXES
|
(259,157 | ) |
148,076
|
(912,175 | ) | (208,836 | ) | |||||||||
FEDERAL
AND STATE INCOME TAX
|
--
|
--
|
--
|
--
|
||||||||||||
(LOSS)
INCOME FROM CONTINUING OPERATIONS
|
(259,157 | ) |
148,076
|
(912,175 | ) | (208,836 | ) | |||||||||
DISCONTINUED
OPERATIONS:
|
||||||||||||||||
Income
from discontinued
operations
|
||||||||||||||||
(net
of income tax expenses of
$0)
|
--
|
--
|
--
|
792
|
||||||||||||
Gain
on disposal of discontinued
operations
|
||||||||||||||||
(net
of income tax expenses of
$0)
|
--
|
--
|
--
|
4,004,060
|
||||||||||||
Loss
from discontinued operations
of VIEs
|
||||||||||||||||
(net
of income tax expenses of
$0)
|
--
|
--
|
--
|
(12,692 | ) | |||||||||||
Gain
on disposal of discontinued
operations of VIEs
|
||||||||||||||||
(net
of income tax expenses of
$0)
|
--
|
--
|
--
|
2,894,737
|
||||||||||||
Total
discontinued
operations
|
--
|
--
|
6,886,897
|
|||||||||||||
NET
INCOME (LOSS)
|
$ | (259,157 | ) | $ |
148,076
|
$ | (912,175 | ) | $ |
6,678,061
|
||||||
LESS: Preferred
dividends
|
(49,168 | ) |
--
|
(123,437 | ) |
--
|
||||||||||
Net
income (loss) available to common stockholders
|
$ | (308,325 | ) | $ |
148,076
|
$ | (1,035,612 | ) | $ |
6,678,061
|
Three
months ended June 30,
|
Six
months ended June 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
EARNINGS
(LOSS) PER COMMON SHARE
|
||||||||||||||||
Continuing
operations
|
||||||||||||||||
Basic
and
diluted
|
$ | (.01 | ) | $ |
.01
|
(.03 | ) | $ | (.01 | ) | ||||||
Net
income (loss)
|
||||||||||||||||
Basic
and
diluted
|
$ | (.01 | ) | $ |
.01
|
(.03 | ) | $ |
.27
|
|||||||
WEIGHTED
AVERAGE COMMON SHARES
|
||||||||||||||||
OUTSTANDING
|
||||||||||||||||
Basic
and
diluted
|
34,742,160
|
25,451,275
|
34,133,127
|
24,660,726
|
June
30,
|
||||||||
2007
|
2006
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Continuing
operations:
|
||||||||
Loss
before income
taxes
|
$ | (912,175 | ) | $ | (208,836 | ) | ||
Adjustments
to reconcile net loss
to cash flows used
|
||||||||
in
operating
activities
|
||||||||
Stock
issued for services and
settlement
|
644,790
|
455,782
|
||||||
Loss
on disposal of property,
plant and equipment
|
19,432
|
--
|
||||||
Depreciation
and
amortization
|
42,030
|
26,483
|
||||||
Changes
in assets and
liabilities
|
||||||||
(Increase)
decrease
in:
|
||||||||
Accounts
receivable
|
(342,738 | ) | (435,320 | ) | ||||
Costs
in excess of billings on
uncompleted contracts
|
170,462
|
243,632
|
||||||
Inventory
|
(84,260 | ) | (127,517 | ) | ||||
Prepaids
and
other
|
6,418
|
14,137
|
||||||
Other
assets
|
--
|
(44,499 | ) | |||||
Increase
(decrease)
in:
|
||||||||
Accounts
payable
|
(637,274 | ) | (202,726 | ) | ||||
Obligations
to related
parties
|
12,008
|
--
|
||||||
Accrued
payroll
taxes
|
(179,829 | ) | (217,951 | ) | ||||
Accrued
interest
|
69,624
|
93,276
|
||||||
Accrued
expenses
|
154,558
|
41,660
|
||||||
Billings
in excess of costs on
uncompleted contracts
|
267,909
|
(150,993 | ) | |||||
Cash
provided by (used in)
continuing operation before income taxes
|
(769,045 | ) | (512,872 | ) | ||||
Discontinued
operations:
|
||||||||
Income
(loss) before income
taxes
|
--
|
6,886,897
|
||||||
(Decrease)
in net liabilities of
entities discontinued
|
--
|
(546,896 | ) | |||||
Gain
on rescission of
acquisitions
|
--
|
(6,335,000 | ) | |||||
Cash
provided by discontinued
operations
|
--
|
5,001
|
||||||
NET
CASH PROVIDED BY (USED IN)
OPERATING
|
||||||||
ACTIVITIES
|
(769,045 | ) | (507,871 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Payments
for property, plant and
equipment
|
(55,797 | ) | (39,206 | ) | ||||
NET
CASH (USED IN) INVESTING
ACTIVITIES
|
(55,797 | ) | (39,206 | ) |
June
30,
|
||||||||
2007
|
2006
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Payments
on notes payable
|
(20,184 | ) | (18,002 | ) | ||||
Payments
on notes payable to related parties
|
(34,921 | ) | (34,342 | ) | ||||
Payments
on convertible promissory notes payable
|
(10,000 | ) |
--
|
|||||
Proceeds
from issuance of common stock
|
135,000
|
306,963
|
||||||
Proceeds
from issuance of preferred stock
|
562,500
|
--
|
||||||
Bank
over draft
|
--
|
85,588
|
||||||
NET
CASH PROVIDED BY FINANING
ACTIVITIES
|
632,395
|
340,207
|
||||||
INCREASE
(DECREASE) IN CASH
|
(192,447 | ) | (206,870 | ) | ||||
CASH,
BEGINNING OF PERIOD
|
641,608
|
232,902
|
||||||
CASH,
END OF PERIOD
|
$ |
449,161
|
$ |
26,032
|
||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Interest
paid
|
$ |
22,372
|
$ |
83,512
|
||||
Taxes
paid
|
$ |
--
|
$ |
--
|
||||
NON
CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
Issuance
of common stock for
services and settlements
|
$ |
644,790
|
$ |
455,782
|
||||
Issuance
of common stock in
payment of convertible promissory
|
||||||||
notes
payable and accrued
interest
|
$ |
--
|
$ |
1,088,640
|
||||
Issuance
of common stock for
payment of obligations to
|
||||||||
related
parties
|
$ |
50,000
|
$ |
--
|
||||
Preferred
stock dividend from
imbedded beneficial conversion feature
|
$ |
123,437
|
$ |
--
|
||||
Issuance
of common stock and
options for executive compensation
|
$ |
420,883
|
$ |
--
|
||||
NOTE
A
|
BASIS
OF PRESENTATION
|
NOTE
B
|
ACCOUNTING
POLICIES
|
NOTE
C
|
GOING
CONCERN
|
NOTE
D
|
STOCKHOLDERS
EQUITY
|
NOTE
D
|
STOCKHOLDERS
EQUITY (Continued)
|
NOTE
E
|
INVENTORY
|
Raw
material
|
$ |
935,044
|
||
Work
in process - manufacturing
|
7,407
|
|||
$ |
942,451
|
NOTE
F
|
OPERATING
SEGMENTS
|
Parent
Company
|
Steel
Fabrication
|
Construction
|
Total
|
|||||||||||||
Revenue | $ |
--
|
$ |
6,487,341
|
$ |
4,388,948
|
$ |
10,876,289
|
||||||||
Net income (loss) | (1,283,535 | ) |
289,164
|
82,196
|
(912,175 | ) | ||||||||||
Total assets |
153,388
|
5,483,646
|
2,483,919
|
8,121,153
|
||||||||||||
Other significant items | ||||||||||||||||
Depreciation and amortization |
--
|
36,770
|
5,260
|
42,030
|
||||||||||||
Interest |
69,624
|
22,373
|
--
|
91,996
|
||||||||||||
Expenditures for assets |
--
|
46,617
|
9,180
|
55,797
|
Parent
Company
|
Steel
Fabrication
|
Construction
|
Total
|
|||||||||||||
Revenue | $ |
--
|
$ |
5,052,062
|
$ |
3,753,209
|
$ |
8,805,271
|
||||||||
Net income (loss) | (816,684 | ) |
653,889
|
(46,041 | ) | (208,836 | ) | |||||||||
Other significant items | ||||||||||||||||
Depreciation and amortization |
--
|
25,077
|
1,406
|
26,483
|
||||||||||||
Interest |
158,515
|
35,993
|
--
|
194,508
|
||||||||||||
Expenditures for assets |
--
|
36,196
|
3,010
|
39,206
|
NOTE
G
|
DISCONTINUED
OPERATIONS
|
2006 |
Evans
|
Monarch
|
PAR
|
Wyncrest
|
Mondus
|
|||||||||||||||
|
||||||||||||||||||||
Revenues
|
$ |
2,416,738
|
$ |
1,844,709
|
$ |
--
|
$ |
--
|
$ |
--
|
||||||||||
Pre
tax profit (loss)
|
792
|
--
|
(12,692
|
) |
--
|
--
|
||||||||||||||
Net
assets
(liabilities)
|
--
|
--
|
--
|
--
|
--
|
NOTE
H
|
EMPLOYEMENT
AGREEMENT
|
|
*
|
a promissory note of $1,900,000 payable on
or before
February 15, 2005 which, if not paid by that date, interest shall
be due
from then to actual payment at 8%, simple interest, compounded
annually,
and
|
|
*
|
six hundred sixty-seven thousand (667,000)
restricted
newly issued shares of the Company’s common stock provided at
closing.
|
|
-
Trading activities in non-exchange traded contracts;
or
|
|
-
Transactions with persons or entities that benefit from their
non-independent relationship with the
Company.
|
HEARTLAND,
INC.
|
||
(Registrant)
|
||
Date:
August 20, 2007
|
By:
/s/ TERRY LEE
|
|
Terry
Lee
|
||
Chief
Executive Officer and
|
||
Chairman
of the Board
|
||
(Duly
Authorized Officer)
|
||
Date:
August 20, 2007
|
By:
/s/ JERRY GRUENBAUM
|
|
Jerry
Gruenbaum
|
||
Chief
Financial Officer and Director
|
||
(Principal
Financial
|
||
and
Accounting Officer)
|
||