Edgar Filing: HEARTLAND, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A-2

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: December 27, 2004

(Date of earliest event reported)

HEARTLAND, INC.

(Exact name of registrant as specified in its charter)

Maryland

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

000-27045

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

36-4286069

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

(State of Incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

25 Mound Park Drive

Springboro, Ohio 45066

(Address of principal executive offices) (Zip Code)

763.557.2900

(Registrant’s telephone no., including area code)

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

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01

Financial Statements and Exhibits.

Financial Statements:

On or about June 29, 2005 the Registrant submitted a Form 8K/A relating to a previously filed Form 8K dated December 27, 2004 describing the acquisition of Monarch Homes, Inc. an Minnesota corporation, with its corporate headquarters located in Ramsey, Minnesota which the company no longer owns as of March 31, 2006.

The following are the audited financial statements (restated) relating to said acquisition.

		Page
(a) Financial Statements of Business Acquired

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		1

MONARCH HOMES, INC. FINANCIAL STATEMENTS DECEMBER 31, 2004 and 2003

Balance Sheets (restated)		2

Statements of Operations and Retained Earnings (restated)		3

Statements of Cash Flows (restated)		4

NOTES TO FINANCIAL STATEMENTS		5

(b) Pro Forma Financial Information.

Pro forma Consolidated Balance Sheet as of December 31, 2004.		11

MEYLER & COMPANY, LLC

CERTIFIED PUBLIC ACCOUNTANTS

ONE ARIN PARK

1715 HIGHWAY 35

MIDDLETOWN, NJ 07748

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Heartland, Inc.

Plymouth, MN

We have audited the accompanying balance sheets of Monarch Homes, Inc. as of December 31, 2004 (restated) and 2003 and the related statements of operations and retained earnings, and cash flows for the two years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2004 (restated) and 2003, and the results of its operations and its cash flows for each of the two years then ended in conformity with U.S. generally accepted accounting principles.

/s/ Meyler & Company, LLC

Middletown, NJ

March 20, 2005

(Except as to Notes B, Investments

in Joint Ventures, C and H as to

which the date is May 19, 2006)

MONARCH HOMES, INC.

BALANCE SHEET

	December 31,
	2004		2003
	(Restated)
ASSETS

CURRENT ASSETS
Cash	$	150,996	$	11,633
Inventory		3,419,153		3,607,434
Total Current Assets		3,570,149		3,619,067

EQUIPMENT, net of accumulated
depreciation of $108,250		160,834		181,906

OTHER ASSETS
Advances to related party		202,965
Investments in joint ventures		424,417		270,350
Total Other Assets		627,382		270,350

Total Assets	$	4,358,365	$	4,071,323

LIABILITIES AND STOCKHOLDER’S EQUITY

CURRENT LIABILITIES
Notes payable - land purchases	$	1,965,698	$	2,324,644
Accounts payable		215,995		199,224
Obligations to related parties		5,095		103,747
Accrued expenses		20,666		43,804
Customer deposits		21,068		50,500
Deferred income taxes		328,240
Total Current Liabilities		2,556,762		2,721,919

STOCKHOLDERS’ EQUITY
Common stock, $100 par value 250 shares
authorized and 100 shares outstanding
at December 31, 2004		10,000		10,000
Retained Earnings		1,791,603		1,339,404
Total Stockholders’ Equity		1,801,603		1,349,404

Total Liabilities and Stockholders’ Equity	$	4,358,365	$	4,071,323

See accompanying notes to financial statements.

MONARCH HOMES, INC.

STATEMENT OF OPERATIONS AND RETAINED EARNINGS

	For the Year Ended December 31,
	2004			2003
	(Restated)

REVENUE - SALES	$22,913,341				23,823,398

COSTS AND EXPENSES
Cost of goods sold		21,431,611			22,678,176
Selling, general and administrative expenses		467,014			392,245
Depreciation and amortization		51,155			49,954
Total Costs and Expenses		21,949,780			23,120,375

NET OPERATING INCOME		963,561			703,023

OTHER EXPENSE
Loss from joint ventures		(37,773	)
Interest expense		(45,349	)		(66,687	)
Total Other Expense		(83,122	)		(66,687	)

INCOME BEFORE INCOME TAXES		880,439			636,336

PROVISION FOR FEDERAL AND STATE INCOME TAXES		328,240			235,450

NET INCOME		552,199			400,886

RETAINED EARNINGS – Beginning of year		1,339,404			988,518

DIVIDENDS/DISTRIBUTIONS		(100,000	)		(50,000	)

RETAINED EARNINGS – End of year	$	1,791,603		$	1,339,404

See accompanying notes to financial statements.

MONARCH HOMES, INC.

STATEMENT OF CASH FLOWS

	For the Years Ended December 31,
	2004			2003
	(Restated)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	552,199		$	400,886
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation		51,155			49,954
Loss on investments in joint ventures		37,773
Changes in assets and liabilities:
Decrease (increase) in inventory		188,281			(2,520,308	)
Decrease in deferred income tax benefit					201,789
Increase in accounts payable		16,771			175,761
(Decrease) increase in accrued interest		(23,138	)		38,678
(Decrease) increase in customer deposits		(29,432	)		33,275
Increase in deferred income taxes		328,240
Net Cash Provided by (Used in) Operating Activities		1,121,849			(1,619,965	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for equipment		(30,083	)		(68,992	)
Cash paid for investments in joint ventures		(191,840	)		(270,350	)
Payment of advances to related party		(202,965	)
Net Cash Used in Investing Activities		(424,888	)		(339,342	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on notes payable – land purchases		1,189,848			2,396,757
Payments on notes payable – land purchases		(1,548,794	)		(400,713	)
Payment on obligations to related party		(98,652	)
Cash distributions		(100,000	)		(50,000	)
Net Cash (Used in) Provided by Financing Activities		(557,598	)		1,946,044

INCREASE IN CASH		139,363			(13,263	)
CASH, BEGINNING OF PERIOD		11,633			24,896
CASH, END OF PERIOD	$	150,996		$	11,633

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid for:
Interest	$	68,487		$	28,009
Income taxes				$	33,611

NON-CASH INVESTING AND FINANCING ACTIVITIES
Cost of fully depreciated equipment disposed of	$	92,605

See accompanying notes to financial statements.

MONARCH HOMES, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2004

NOTE A - NATURE OF BUSINESS

Monarch Homes, Inc. (“the Company”) was organized on February 26, 1996, pursuant to the provisions of Minnesota Statutes Chapter 302A. The Company builds quality premium homes in Minnesota.

On December 27, 2004, the sole stockholder sold all of his shares in the Company to Heartland, Inc.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from these estimates.

Cash and Cash Equivalents

The company considers all highly-liquid investments, with a maturity of three months or less when purchased, to be cash equivalents. There were no cash equivalents at December 31, 2004 and 2003.

Equipment

Equipment is stated at cost and is depreciated using the straight line method over the estimated useful lives of the respective assets. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend the useful life of the assets are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in operations.

Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using the first-in, first-out (FIFO) method.

Investments in Joint Ventures

Investments in joint ventures represent two real estate joint ventures. In accordance with FIN 46, the Company has determined that it is not the primary beneficiary of these joint ventures and thus has not consolidated them. The Company utilizes the equity method to account for the joint ventures and includes its proportionate share of their income in the Statement of Operations.

Revenue Recognition

The Company recognized revenue from the sale of homes at the date of closing, in accordance with Statement of Financial Accounting Standards No. 66 “Accounting for Sales of Real Estate”.

MONARCH HOMES, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2004

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 151 (SFAS 151), “Inventory Costs.” SFAS 151 amends the guidance in APB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS 151 requires that those items be recognized as current period charges regardless of whether they meet the criteria of “so abnormal.” In addition, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for financial statements issued for fiscal years beginning after June 15, 2005. The adoption of SFAS 151 is not expected to have a material effect on the Company’s financial position or results of operations.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153 (SFAS 153), “Exchanges of Non-monetary Assets.” SFAS 153 amends the guidance in APB No. 29, “Accounting for Non-monetary Assets.” APB No. 29 was based on the principle that exchanges of non-monetary assets should be measured on the fair value of the assets exchanged. SFAS 153 amends APB No. 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 151 is effective for financial statements issued for fiscal years beginning after June 15, 2005. The adoption of SFAS 153 is not expected to have a material effect on the Company’s financial position or results of operations.

In December 2004, the FASB revised Statement of Financial Accounting Standards No. 123 (SFAS 123(R)), “Accounting for Stock-Based Compensation.” The SFAS 123(R) revision established standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services and focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. It does not change the accounting guidance for share-based payment transactions with parties other than employees. For public entities that file as small business issuers, the revisions to SFAS 123(R) are effective as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. The adoption of SFAS 123(R) is not expected to have a material effect on the Company’s financial position or results of operations.

NOTE C - INVENTORY

Inventory consists of the following at December 31:

	2004		2003
Land held for development	$	2,310,261	$	2,360,200
Work in process – home construction		1,108,892		1,247,234
	$	3,419,153	$	3,607,434

MONARCH HOMES, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2004

NOTE D - EQUIPMENT

Equipment consists of the following at December 31:

					Years of
					Average
	2004		2003		Useful Life

Machinery and equipment	$	73,486	$	94,722	10-15
Automotive equipment		195,598		236,884	7
		269,084		331,606
Less: accumulated depreciation		108,250		149,700
	$	160,834	$	181,906

Depreciation expense for the years ended December 31, 2004 and 2003 amounted to $51,155 and $49,954, respectively.

NOTE E - NOTES PAYABLE - LAND PURCHASES

The Company acquires improved building lots for future home construction. The purchases are financed through a financial institution - Contractors Capital Corporation. At December 31, 2004 and 2003, the Company’s outstanding indebtedness for these purchases aggregated $1,965,698 and $2,324,644, respectively. The loans are secured by the land. See Note C - Inventory - land held for development. The notes bear interest at 2.5% at December 31, 2004 and at rates of 2.5% to 2.75% at December 31, 2003 and are payable at the closing for the sale of the constructed homes.

NOTE F- RELATED PARTY TRANSACTIONS

Advances to Related Party

In December, 2004, the Company, made a loan to a joint venture partnership in the amount of $202,965. The sole stockholder and President of the Company is a one third partner in the joint venture. The loan is non-interest bearing and has no stated terms of repayment.

Obligations to Related Party

The sole stockholder and President of the Company has made loans to the Company for working capital. During 2004, the Company repaid $98,652 of the loans. The loans are non-interest bearing and have no stated terms of repayment. At December 31, 2004 and 2003, the outstanding balance was $5,095 and $103,747, respectively.

NOTE G - INCOME TAXES

The Company has adopted Financial Accounting Standards No. 109, Accounting for Income Taxes for financial reporting purposes. Under this method, the Company recognizes a deferred tax asset or liability for temporary differences between the tax basis of an asset or liability and the related amount reported on the financial statements. The principal types of differences, which are measured at the current tax rates, are differences in reporting year ends for financial and tax purposes and preparing its corporate income tax returns on the cash basis of accounting.

MONARCH HOMES, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2004

NOTE G - INCOME TAXES (CONTINUED)

Federal and State income tax expense is as follows:

	2004		2003
Current:
Federal			$	33,661
State
Total Current Expense			$	33,661

Deferred:
Federal	$	241,960		139,429
State		86,280		62,360
Total Deferred Expense		328,240		201,789

Federal and State Income Tax Expense	$	328,240	$	235,450

Federal

NOTE H – RESTATEMENTS

The balance sheet at December 31, 2004, was restated to properly reflect investments in joint ventures which were erroneously included in inventory. The effect of this change was to decrease inventory and record investments in joint ventures in the amount of $424,417.

The statement of operations for the year ended December 31, 2004 was restated to properly reflect the loss on investment in joint ventures in the amount of $37,773 which was erroneously included in cost of goods sold. This change had no effect on the net income previously reported.

HEARTLAND, INC. AND SUBSIDIARIES

PROFORMA - CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2004

									Variable Interest Entities
			Evans		Karkela		Monarch		PAR		Wyncrest
	Heartland		Columbus,		Construction		Homes		Investments,		Group		Eliminating
	Inc.		LLC		Inc.		Inc.		LLC		Inc.		Adjustments				Consolidated

Cash	$	119,921	$	114,016	$	193,421	$	150,996	$	22,806	$	2,291					$	603,451
Accounts receivable, net		1,366,959		637,060		1,446,951												3,450,970
Costs in excess of billings on uncompleted contracts		113,724				73,897												187,621
Inventory		509,297		579,762				3,419,153										4,508,212
Prepaid expenses and other		3,970		37,179		71,058												112,207

Total Current Assets		2,113,871		1,368,017		1,785,327		3,570,149		22,806		2,291	$	-				8,862,461

Property, Plant and Equipment, net		1,219,321		388,734		34,655		160,834		1,907,692				1,691,871		3		5,403,107

Other Assets
Advances to related party				78,157				202,965				17,000		(95,157	)	6		202,965
Goodwill														3,083,390		1		7,217,268
														3,293,397		2
														840,481		3
Other Intangible Assets														22,500		1		520,000
														240,000		2
														257,500		3
Investments in joint ventures								424,417										424,417
Other assets		3,020								63,242								66,262
Security deposits		11,520		2,267		5,356												19,143

		14,540		80,424		5,356		627,382		63,242		17,000		7,642,111				8,450,055

Investment in subsidiaries		11,840,000												(3,500,000	)	1		-
														(5,335,000	)	2
														(3,005,000	)
Total Assets	$	15,187,732	$	1,837,175	$	1,825,338	$	4,358,365	$	1,993,740	$	19,291	$	(2,506,018	)		$	22,715,623

Legend:

To record goodwill and other intangible assets and eliminate investment in Karkela Construction, Inc.

To record goodwill and other intangible assets and eliminate investment in Monarch Homes, Inc.

To adjust property, plant and equipment to appraised value, record goodwill and other intangible assets and eliminate investment in Evans Columbus, LLC.

To record non-controlling interest and eliminate equity upon consolidation of Par Investments, LLC as a variable interest entity.

To record non-controlling interest and eliminate equity upon consolidation of Wyncrest Group, Inc. as a variable interest entity.

To eliminate intercompany receivables and payables.

HEARTLAND, INC. AND SUBSIDIARIES

PROFORMA - CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2004

										Variable Interest Entities
				Evans		Karkela		Monarch		PAR		Wyncrest
	Heartland			Columbus,		Construction		Homes		Investments,		Group			Eliminating
	Inc.			LLC		Inc.		Inc.		LLC		Inc.			Adjustments				Consolidated

CURRENT LIABILITIES
Bank lines of credit				$	810,989														$	810,989
Notes payable – land purchases								$	1,965,698											1,965,698
Convertible promissory notes payable	$	1,026,550										$	295,500							1,322,050
Current portion of notes payable		35,833			9,300					$	77,004									122,137
Current portion of capitalized lease obligations					115,423															115,423
Accounts payable		1,433,279			278,063	$	936,975		215,995				44,243							2,908,555
Acquisition notes payable to related parties		3,300,000																		3,300,000
Obligations to related parties		465,812					200,000		5,095		78,157		17,000		$	(95,157	)			670,907
Accrued interest		18,886																		18,886
Accrued payroll taxes		693,630																		693,630
Accrued expenses		343,458			101,945		106,179		20,666											572,248
Billings in excess of costs on uncompleted contracts		8,942					144,437													153,379
Customer deposits									21,068											21,068
Deferred income taxes							43,637		328,240											371,877
Total Current Liabilities		7,326,390			1,315,720		1,431,228		2,556,762		155,161		356,743			(95,157	)			13,046,847

LONG-TERM OBLIGATIONS
Notes payable, less current portion		504,106			37,207						1,595,165									2,136,478
Capital lease obligation, less current portion					269,100															269,100
Notes Payable to an individual		150,000																		150,000
Non-controlling interest of variable interest entities																243,414		4		267,171
																23,757		5
Deferred Income Taxes		36,126																		36,126
Total Long-Tern Liabilities		690,232			306,307		-		-		1,595,165		-			267,171				2,858,875

STOCKHOLDERS’ EQUITY
Preferred stock
Common Stock		18,244					1,000		10,000				659			(1,000	)	1		18,244
																(10,000	)	2
																(659	)	5
Additional paid-in capital		13,161,421											170,196			(170,196	)	5		13,161,421
Accumulated Deficit		(6,008,555	)		215,148		393,110		1,791,603		243,414		(508,307	)		(393,110	)	1		(6,369,764	)
																(1,791,603	)	2
																(215,148	)	3
																(243,414	)	4
																147,098		5
Total Stockholders’ Equity		7,171,110			215,148		394,110		1,801,603		243,414		(337,452	)		(2,678,032	)			6,809,901
Total Liabilities and Stockholders’ Equity	$	15,187,732		$	1,837,175	$	1,825,338	$	4,358,365	$	1,993,740	$	19,292		$	(2,506,018	)		$	22,715,623

Legend:

To record goodwill and other intangible assets and eliminate investment in Karkela Construction, Inc.

To record goodwill and other intangible assets and eliminate investment in Monarch Homes, Inc.

To adjust property, plant and equipment to appraised value, record goodwill and other intangible assets and eliminate investment in Evans Columbus, LLC.

To record non-controlling interest and eliminate equity upon consolidation of Par Investments, LLC as a variable interest entity.

To record non-controlling interest and eliminate equity upon consolidation of Wyncrest Group, Inc. as a variable interest entity.

To eliminate intercompany receivables and payables.

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 hereunto duly authorized.

HEARTLAND, INC.

(Registrant)

Date: November 15, 2006

By: /s/ TRENT SOMMERVILLE

Trent Sommerville

Chief Executive Officer

(Duly Authorized Officer)

Date: November 15, 2006

By: /s/ JERRY GRUENBAUM

Jerry Gruenbaum

Secretary and Interim

Chief Financial Officer

(Principal Financial

and Accounting Officer)