Maryland
|
000-27045
|
36-4286069
|
(State or Other Jurisdiction
of Incorporation or Organization)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
Item
1.01
|
Entry
into a Material Definitive Agreement
|
Item 2.01 | Completion of Acquisition or Disposition of Assets |
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant |
Item 3.02 | Unregistered Sales of Equity Securities. |
(a)
|
Financial
statements of businesses acquired.
|
Lee
Oil Company’s audited financial statements with the auditor’s report are
attached to this report and are incorporated herein by
reference:
|
· Condensed
Consolidated Balance Sheets as of December 31, 2007 and
2006.
|
· Condensed
Consolidated Statements of Operations for years ended December 31, 2007
and 2006.
|
· Condensed
Consolidated Statements of Cash Flows for the years ended December 31,
2007 and 2006.
|
· Condensed
Consolidated Statements in Changes in Stockholders’ Equity for the years
ended December 31, 2007 and 2006.
|
· Notes
to Financial Statements
|
(b)
|
Pro
forma financial information.
|
Heartland’s
unaudited pro forma condensed consolidated financial
information:
|
• Unaudited
pro forma condensed consolidated statements of income for the year ended
December 31, 2007 and for the nine months ended September 30,
2008
• Unaudited
pro forma condensed consolidated balance sheet as of December 31, 2007 and
September 30, 2008.
• Notes
to Unaudited Pro Forma Financial Statements
|
Exhibit
No.
|
Description
of Exhibit
|
|
4.1
|
Loan
Agreement between Heartland, Inc. and Choice Financial Group dated October
1, 2008 (1)
|
|
4.2
|
Promissory
Note payable to Choice Financial Group (1)
|
|
4.3
|
Guaranty
by Lee Oil Company, Inc., Lee’s Food Mart, LLC, Lee Enterprises, Inc. and Mound
Technologies, Inc. in favor of Choice Financial Group
(1)
|
|
4.4
|
Form
of Pledge Agreement by and between Heartland, Inc. and Choice Financial
Group (1)
|
|
4.5
|
Form
of Third Party Assignment of leases, Rents and Purchase Agreements
(1)
|
|
4.6
|
Form
of Third Party Security Agreement (1)
|
|
4.7
|
Third
Party Mortgage by Mound Technologies, Inc. in favor of Choice Financial
Group (1)
|
|
4.8
|
Third
Party Mortgage by Lee’s Food Mart’s LLC in favor of Choice Financial Group
(1)
|
|
4.9
|
Third
Party Deed of Trust by Lee Oil Company, Inc. in favor of Choice Financial
Group (1)
|
|
10.1
|
Securities
Purchase Agreement Lee Holding Company LP and Gary Lee and Lee
Oil Company, Inc., Lee’s Food Mart, LLC
and Lee Enterprises, Inc. dated October 1, 2008
(1)
|
|
10.2
|
Employment,
Noncompetition and Nondisclosure Agreement by and between Terry Lee and
Heartland, Inc. dated October 1, 2008 (1)
|
|
10.3
|
Promissory
Note payable to Lee Holding Company LP (1)
|
|
10.4
|
Promissory
Note payable to Gary Lee (1)
|
HEARTLAND,
INC.
|
|||
December
9, 2008
|
By:
|
/s/ Mitchell
L. Cox
|
|
Mitchell
Cox
|
|||
CFO
|
|||
LEE
OIL COMPANY, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
ASSETS
|
||||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 2,149,788 | $ | 2,597,321 | ||||
Accounts
receivable, net
|
2,590,666 | 2,064,063 | ||||||
Inventory
|
1,778,675 | 1,555,689 | ||||||
Total
current assets
|
6,519,129 | 6,217,073 | ||||||
PROPERTY,
PLANT AND EQUIPMENT, net
|
4,448,488 | 4,877,239 | ||||||
OTHER
ASSETS
|
||||||||
Notes
receivable
|
25,000 | 18,000 | ||||||
Total
other assets
|
25,000 | 18,000 | ||||||
TOTAL
ASSETS
|
$ | 10,992,617 | $ | 11,112,312 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 1,380,705 | $ | 2,094,895 | ||||
Current
portion of notes payable
|
904,837 | 399,902 | ||||||
Refundable
security deposits
|
40,000 | 40,000 | ||||||
Accrued
interest
|
6,360 | 6,965 | ||||||
Obligation
to related party
|
11,049 | - | ||||||
Accrued
expenses
|
44,171 | 46,503 | ||||||
Unearned
supplier incentives, current portion
|
54,565 | 46,141 | ||||||
Total
current liabilities
|
2,441,687 | 2,634,406 | ||||||
LONG-TERM
OBLIGATIONS
|
||||||||
Notes
payable, less current portion
|
3,838,884 | 4,256,270 | ||||||
Unearned
supplier incentives, less current portion
|
327,388 | 276,849 | ||||||
Total
long term liabilities
|
4,166,272 | 4,533,119 | ||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Common
stock, $100.00 par value 500 shares
|
||||||||
authorized;
262 shares issued and outstanding
|
26,200 | 26,200 | ||||||
Additional
paid-in capital – common stock
|
32,508 | 32,508 | ||||||
Retained
Earnings
|
4,325,950 | 3,886,079 | ||||||
Total
stockholders’ equity
|
4,384,658 | 3,944,787 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 10,992,617 | $ | 11,112,312 | ||||
LEE
OIL COMPANY, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
Twelve
Months Ended
|
||||||||
December
31,
|
||||||||
2007
|
2006
|
|||||||
REVENUE
- SALES
|
$ | 87,412,247 | $ | 78,387,244 | ||||
COSTS
AND EXPENSES
|
||||||||
Cost
of goods sold
|
80,357,076 | 71,798,298 | ||||||
Selling,
general and administrative expenses
|
5,159,646 | 4,900,803 | ||||||
Depreciation
and amortization
|
846,343 | 857,221 | ||||||
Total
Costs and Expenses
|
86,363,065 | 77,556,322 | ||||||
NET
OPERATING INCOME
|
1,049,182 | 830,922 | ||||||
OTHER
INCOME (EXPENSE)
|
||||||||
Other
income
|
129,749 | 111,097 | ||||||
Interest
expense
|
(271,952 | ) | (291,826 | ) | ||||
Total
Other Expense
|
(142,203 | ) | (180,729 | ) | ||||
INCOME
FROM OPERATIONS BEFORE INCOME TAXES
|
906,979 | 650,193 | ||||||
State
income tax, current
|
(51,418 | ) | (49,895 | ) | ||||
Federal
income tax, current
|
(160,000 | ) | (200,484 | ) | ||||
NET
INCOME
|
695,561 | 399,814 | ||||||
LEE
OILCOMPANY, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
Twelve
Months Ended
|
||||||||
December
31,
|
||||||||
2007
|
2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income from operating activities
|
$ | 695,561 | $ | 399,814 | ||||
Adjustments
to reconcile net income to cash flows provided by operating
activities
|
||||||||
Depreciation
and amortization
|
846,343 | 857,221 | ||||||
Changes
in assets and liabilities
|
||||||||
(Increase)
decrease in accounts receivable
|
(526,603 | ) | 47,705 | |||||
(Increase)
in inventory
|
(222,986 | ) | (213,474 | ) | ||||
(Increase)
in advances to related parties
|
(7,000 | ) | - | |||||
(Decrease)
in accounts payable
|
(714,190 | ) | (33,738 | ) | ||||
(Decrease)
increase in accrued interest
|
(605 | ) | 2,816 | |||||
(Decrease)
in accrued expenses
|
(2,332 | ) | (8,411 | ) | ||||
Increase
in unearned supplier incentives
|
58,963 | 155,832 | ||||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
127,151 | 1,207,765 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Net
payments for property, plant and equipment
|
(417,595 | ) | (342,494 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net
proceeds from (payments toward) notes payable
|
98,598 | (281,711 | ) | |||||
Dividends
declared and paid
|
(255,687 | ) | (162,357 | ) | ||||
NET
CASH USED IN FINANING ACTIVITIES
|
(157,089 | ) | (444,068 | ) | ||||
(DECREASE)
INCREASE IN CASH
|
(447,533 | ) | 421,203 | |||||
CASH,
BEGINNING OF PERIOD
|
2,597,321 | 2,176,118 | ||||||
CASH,
END OF PERIOD
|
$ | 2,149,788 | $ | 2,597,321 | ||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Interest
paid
|
$ | 271,952 | $ | 291,826 | ||||
Taxes
paid
|
$ | 211,418 | $ | 250,379 |
LEE
OILCOMPANY, INC. AND SUBSIDIARIES
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||
Years
Ended December 31, 2006 and 2007
|
||||||||||||||||
Additional
|
||||||||||||||||
Common
|
Paid-In
|
Retained
|
||||||||||||||
Stock
|
Capital
|
Earnings
|
Total
|
|||||||||||||
Balance,
December 31, 2005
|
$ | 26,200 | $ | 32,508 | $ | 3,648,619 | $ | 3,707,327 | ||||||||
Net
Income
|
399,814 | 399,814 | ||||||||||||||
Dividends
Declared and Paid
|
(162,357 | ) | (162,357 | ) | ||||||||||||
Balance,
December 31, 2006
|
26,200 | 32,508 | 3,886,076 | 3,944,784 | ||||||||||||
Net
Income
|
695,561 | 695,561 | ||||||||||||||
Dividends
Declared and Paid
|
(255,687 | ) | (255,687 | ) | ||||||||||||
Balance,
December 31, 2007
|
$ | 26,200 | $ | 32,508 | $ | 4,325,950 | $ | 4,384,658 | ||||||||
Years
|
||||
Vehicles |
3 - 5
|
|||
Machinery & Equipment |
5 - 7
|
|||
Furniture & Fixtures |
7 - 10
|
|||
Buildings & Improvements |
15 - 40
|
2007
|
2006
|
|||||||
Equipment | 6,167,910 | 5,843,903 | ||||||
Buildings | 3,074,014 | 2,941,738 | ||||||
Plant Equipment | 414,843 | 414,843 | ||||||
Other Assets | 53,286 | 192,079 | ||||||
Land | 1,240,713 | 1,190,713 | ||||||
Less: Accumulated | ||||||||
Depreciation
|
(6,502,278 | ) | (5,706,037 | ) | ||||
Totals | 4,448,488 | 4,877,239 |
2007
|
2006
|
|||||||
$6,500 promissory note from a former customer | ||||||||
with
monthly payments until the note is paid in full.
|
$ | 6,000$ | - | |||||
$18,000 promissory note from a customer to be repaid | ||||||||
over a four year period, ending September 30, 2008. | ||||||||
Thereafter, any balance remaining will be repaid over | ||||||||
six years ending September 30, 2014. | 18,000 | 18,000 | ||||||
Other notes receivable | 1,000 | - | ||||||
Totals è | $ | 25,000 | $ | 18,000 |
12/31/07
|
12/31/06
|
Maturity
|
||||||||||||||||||
Bank Notes |
Rate
|
Payment
|
Balance
|
Balance
|
Date
|
|||||||||||||||
First
Tennessee – Line of Credit
|
6.13%
|
- | 500,000 | - |
-
|
|||||||||||||||
Commercial
Bank – Line of Credit
|
- | 15,320 | 7,777 |
-
|
||||||||||||||||
Ford
Motor Credit
|
0.00%
|
425.00 | - | 5,135 |
12/25/07
|
|||||||||||||||
Paccar
Financing
|
7.50%
|
1,531.57 | 11,913 | 27,843 |
09/06/08
|
|||||||||||||||
Commercial
Bank #28594752
|
6.55%
|
6,226.73 | 622,687 | 661,498 |
03/24/19
|
|||||||||||||||
Peoples
Community #20586005
|
5.50%
|
6,100.00 | 895,889 | 918,169 |
08/01/08
|
|||||||||||||||
First
Tennessee #30029576
|
5.97%
|
14,469.87 | 1,059,513 | 1,165,318 |
08/17/15
|
|||||||||||||||
Third
Party Notes
|
||||||||||||||||||||
Sam
Mars, Jr. - Lee #7
|
7.0%
|
1,903.52 | 86,553 | 102,718 |
05/01/12
|
|||||||||||||||
Sam
Mars, Jr. – Lee #16
|
7.0%
|
2,793.94 | 276,105 | 289,517 |
05/16/20
|
|||||||||||||||
Sam
Mars, Jr. – Plant
|
7.0%
|
2,710.40 | 241,366 | 256,418 |
06/25/18
|
|||||||||||||||
Mars
Properties
|
6.0%
|
6,821.04 | 352,770 | 411,532 |
12/25/12
|
|||||||||||||||
Shoemaker
Distributing
|
6.0%
|
6,083.49 | 351,217 | 447,713 |
10/01/13
|
|||||||||||||||
Petro
Marketing
|
6.3%
|
4,491.20 | 330,388 | 362,535 |
09/30/15
|
2007
|
||||
2008 | 897,008 | |||
2009 | 402,509 | |||
2010 | 430,464 | |||
2011 | 457,462 | |||
2012 | 472,070 | |||
Thereafter | 2,084,208 | |||
Total Due | 4,743,721 |
2007
|
2006
|
|||||||
Income
from Operations before Income Taxes
|
$ | 906,979 | $ | 650,193 | ||||
Less: Income
from Lee Enterprises, Inc. operations
|
(189,741 | ) | (158,651 | ) | ||||
Income
from Lee Food Mart, LLC
operations
|
(195,809 | ) | (18,949 | ) | ||||
Income
subject to federal income tax
|
$ | 521,429 | $ | 472,593 |
HEARTLAND,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED PRO FORMA BALANCE SHEETS
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
December
31, 2007
|
||||||||||||||||
Pro
Forma Adjustments
|
||||||||||||||||
Heartland,
Inc.
|
Lee
Oil
|
Purchase
|
Heartland,
Inc.
|
|||||||||||||
Historical
|
Historical
|
Adjustments
|
Pro
Forma
|
|||||||||||||
ASSETS
|
||||||||||||||||
CURRENT
ASSETS
|
||||||||||||||||
Cash
|
$ | 216,570 | $ | 2,149,788 | $ | - | $ | 2,366,358 | ||||||||
Accounts
receivable, net
|
3,188,591 | 2,590,666 | - | 5,779,257 | ||||||||||||
Costs
and estimated earnings in excess of billings
|
311,899 | - | - | 311,899 | ||||||||||||
Inventory
|
904,409 | 1,778,675 | - | 2,683,084 | ||||||||||||
Prepaid
expenses and other
|
1,259 | - | - | 1,259 | ||||||||||||
Total
current assets
|
4,622,728 | 6,519,129 | - | 11,141,857 | ||||||||||||
PROPERTY,
PLANT AND EQUIPMENT, net
|
701,168 | 4,448,488 | 2,072,351 | 7,222,007 | ||||||||||||
OTHER
ASSETS
|
426,321 | 25,000 | - | 451,321 | ||||||||||||
Total
assets
|
$ | 5,750,217 | $ | 10,992,617 | $ | 2,072,351 | $ | 18,815,185 | ||||||||
HEARTLAND,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED PRO FORMA BALANCE SHEETS- continued
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
December
31, 2007
|
||||||||||||||||
Pro
Forma Adjustments
|
||||||||||||||||
Heartland,
Inc.
|
Lee
Oil
|
Purchase
|
Heartland,
Inc.
|
|||||||||||||
Historical
|
Historical
|
Adjustments
|
Pro
Forma
|
|||||||||||||
CURRENT
LIABILITIES
|
||||||||||||||||
Convertible
promissory notes payable
|
$ | 53,450 | $ | - | $ | - | $ | 53,450 | ||||||||
Current
portion of notes payable
|
24,604 | 904,837 | 466,667 | 1,396,108 | ||||||||||||
Current
portion of notes payable to
related parties
|
89,156 | - | - | 89,156 | ||||||||||||
Refundable
customer deposit
|
- | 40,000 | - | 40,000 | ||||||||||||
Accounts
payable
|
3,172,585 | 1,380,705 | - | 4,553,290 | ||||||||||||
Obligations
to related parties
|
12,008 | 11,049 | - | 23,057 | ||||||||||||
Current
portion of capital lease
|
8,320 | - | - | 8,320 | ||||||||||||
Accrued
interest
|
- | 6,360 | - | 6,360 | ||||||||||||
Accrued
expenses
|
- | 44,171 | - | 44,171 | ||||||||||||
Unearned
supplier incentives, current portion
|
- | 54,565 | 54,565 | |||||||||||||
Billings
in excess of costs and estimated earnings
|
195,432 | - | - | 195,432 | ||||||||||||
Total
current liabilities
|
3,555,555 | 2,441,687 | 466,667 | 6,463,909 | ||||||||||||
LONG-TERM
OBLIGATIONS
|
||||||||||||||||
Notes
payable, less current portion
|
180,799 | 3,838,884 | 6,033,333 | 10,053,016 | ||||||||||||
Notes
payable to related parties, less current portion
|
403,607 | - | - | 403,607 | ||||||||||||
Capital
Lease, less current portion
|
26,571 | - | - | 26,571 | ||||||||||||
Unearned
supplier incentives, less current portion
|
- | 327,388 | - | 327,388 | ||||||||||||
Total
long term liabilities
|
610,977 | 4,166,272 | 6,033,333 | 10,810,582 | ||||||||||||
STOCKHOLDERS’
EQUITY
|
||||||||||||||||
Preferred
stockholders' equity
|
715,937 | - | - | 715,937 | ||||||||||||
Common
stockholders' equity
|
15,826,356 | 58,708 | 441,292 | 16,326,356 | ||||||||||||
(Accumulated
deficit) Retained earnings
|
(14,958,608 | ) | 4,325,950 | (4,868,941 | ) | (15,501,599 | ) | |||||||||
Total
stockholders’ equity
|
1,583,685 | 4,384,658 | (4,427,649 | ) | 1,540,694 | |||||||||||
Total
Liabilities and Stockholders’ Equity
|
$ | 5,750,217 | $ | 10,992,617 | $ | 2,072,351 | $ | 18,815,185 | ||||||||
HEARTLAND,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED PRO FORMA STATEMENT OF INCOME
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
Twelve
Months Ended December 31, 2007
|
||||||||||||||||
Pro
Forma Adjustments
|
||||||||||||||||
Heartland,
Inc.
|
Lee
Oil
|
Purchase
|
Heartland,
Inc.
|
|||||||||||||
Historical
|
Historical
|
Adjustments
|
Pro
Forma
|
|||||||||||||
REVENUE
- SALES
|
$ | 14,112,726 | $ | 87,412,247 | $ | - | $ | 101,524,973 | ||||||||
COSTS
AND EXPENSES
|
||||||||||||||||
Cost
of goods sold
|
12,641,424 | 80,357,076 | - | 92,998,500 | ||||||||||||
Selling,
general and administrative expenses
|
2,419,976 | 5,159,646 | - | 7,579,622 | ||||||||||||
Depreciation
and amortization
|
67,557 | 846,343 | - | 913,900 | ||||||||||||
Total
Costs and Expenses
|
15,128,957 | 86,363,065 | - | 101,492,022 | ||||||||||||
NET
OPERATING INCOME (LOSS)
|
(1,016,231 | ) | 1,049,182 | - | 32,951 | |||||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Other
income
|
224,666 | 129,749 | - | 354,415 | ||||||||||||
Gain
(loss) on disposal of property, plant and equipment
|
32,763 | - | - | 32,763 | ||||||||||||
Interest
expense
|
(117,744 | ) | (271,952 | ) | - | (389,696 | ) | |||||||||
Total
Other Income (Expense)
|
139,685 | (142,203 | ) | - | (2,518 | ) | ||||||||||
INCOME
(LOSS) BEFORE INCOME TAXES
|
(876,546 | ) | 906,979 | - | 30,433 | |||||||||||
Federal
Income Tax, current
|
- | (160,000 | ) | - | (160,000 | ) | ||||||||||
State
Income Tax, current
|
- | (51,418 | ) | - | (51,418 | ) | ||||||||||
NET
INCOME
|
(876,546 | ) | 695,561 | - | (180,985 | ) | ||||||||||
LESS:
Preferred Dividends
|
(162,286 | ) | - | - | (162,286 | ) | ||||||||||
NET
INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$ | (1,038,832 | ) | $ | 695,561 | $ | - | $ | (343,271 | ) | ||||||
EARNINGS
(LOSS) PER COMMON SHARE
|
$ | (0.029 | ) | $ | 2,654.813 | $ | - | $ | (0.009 | ) | ||||||
HEARTLAND,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED PRO FORMA BALANCE SHEETS
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
September
30, 2008
|
||||||||||||||||
Pro
Forma Adjustments
|
||||||||||||||||
Heartland,
Inc.
|
Lee
Oil
|
Purchase
|
Heartland,
Inc.
|
|||||||||||||
Historical
|
Historical
|
Adjustments
|
Pro
Forma
|
|||||||||||||
ASSETS
|
||||||||||||||||
CURRENT
ASSETS
|
||||||||||||||||
Cash
|
$ | 856,564 | $ | 2,099,687 | $ | - | $ | 2,956,251 | ||||||||
Accounts
receivable, net
|
3,341,634 | 4,215,880 | - | 7,557,514 | ||||||||||||
Costs
and estimated earnings in excess of billings
|
298,743 | - | - | 298,743 | ||||||||||||
Inventory
|
1,549,011 | 2,030,018 | - | 3,579,029 | ||||||||||||
Prepaid
expenses and other
|
24,020 | 2,088 | - | 26,108 | ||||||||||||
Total
current assets
|
6,069,972 | 8,347,673 | - | 14,417,645 | ||||||||||||
PROPERTY,
PLANT AND EQUIPMENT, net
|
1,985,236 | 4,846,824 | 2,072,351 | 8,904,411 | ||||||||||||
OTHER
ASSETS
|
- | 20,826 | - | 20,826 | ||||||||||||
Total
assets
|
$ | 8,055,208 | $ | 13,215,323 | $ | 2,072,351 | $ | 23,342,882 |
HEARTLAND,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED PRO FORMA BALANCE SHEETS - continued
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
September
30, 2008
|
||||||||||||||||
Pro
Forma Adjustments
|
||||||||||||||||
Heartland,
Inc.
|
Lee
Oil
|
Purchase
|
Heartland,
Inc.
|
|||||||||||||
Historical
|
Historical
|
Adjustments
|
Pro
Forma
|
|||||||||||||
CURRENT
LIABILITIES
|
||||||||||||||||
Convertible
promissory notes payable
|
$ | 12,450 | $ | - | $ | - | $ | 12,450 | ||||||||
Current
portion of notes payable
|
134,660 | 882,314 | 466,667 | 1,483,641 | ||||||||||||
Current
portion of notes payable to related parties
|
72,622 | - | - | 72,622 | ||||||||||||
Refundable
customer deposit
|
- | 10,000 | - | 10,000 | ||||||||||||
Accounts
payable
|
2,128,046 | 2,529,895 | - | 4,657,941 | ||||||||||||
Obligations
to related parties
|
12,008 | - | - | 12,008 | ||||||||||||
Accrued
payroll and related taxes
|
264,341 | - | - | 264,341 | ||||||||||||
Accrued
interest
|
113,928 | 6,360 | - | 120,288 | ||||||||||||
Accrued
expenses
|
295,138 | 126,686 | - | 421,824 | ||||||||||||
Unearned
supplier incentives, current portion
|
- | 57,656 | 57,656 | |||||||||||||
Billings
in excess of costs and estimated earnings
|
316,825 | - | - | 316,825 | ||||||||||||
Total
current liabilities
|
3,350,018 | 3,612,911 | 466,667 | 7,429,596 | ||||||||||||
LONG-TERM
OBLIGATIONS
|
||||||||||||||||
Notes
payable, less current portion
|
929,914 | 4,328,828 | 6,033,333 | 11,292,075 | ||||||||||||
Notes
payable to related parties, less current portion
|
345,296 | - | - | 345,296 | ||||||||||||
Unearned
supplier incentives, less current portion
|
- | 345,935 | - | 345,935 | ||||||||||||
Total
long term liabilities
|
1,275,210 | 4,686,763 | 6,033,333 | 11,983,306 | ||||||||||||
STOCKHOLDERS’
EQUITY
|
||||||||||||||||
Preferred
stockholders' equity
|
715,937 | - | - | 715,937 | ||||||||||||
Common
stockholders' equity
|
16,322,835 | 58,708 | 441,292 | 16,822,835 | ||||||||||||
(Accumulated
deficit) Retained earnings
|
(13,608,792 | ) | 4,868,941 | (4,868,941 | ) | (13,608,792 | ) | |||||||||
Total
stockholders’ equity
|
3,429,980 | 4,927,,649 | (4,427,649 | ) | 3,929,980 | |||||||||||
Total
Liabilities and Stockholders’ Equity
|
$ | 8,055,208 | $ | 13,256,539 | $ | 2,072,351 | $ | 23,342,882 |
HEARTLAND,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED PRO FORMA STATEMENT OF INCOME
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
Nine
Months Ended September 30, 2008
|
||||||||||||||||
Pro
Forma Adjustments
|
||||||||||||||||
Heartland,
Inc.
|
Lee
Oil
|
Purchase
|
Heartland,
Inc.
|
|||||||||||||
Historical
|
Historical
|
Adjustments
|
Pro
Forma
|
|||||||||||||
REVENUE
- SALES
|
$ | 15,684,082 | $ | 94,062,947 | $ | - | $ | 109,747,029 | ||||||||
COSTS
AND EXPENSES
|
||||||||||||||||
Cost
of goods sold
|
12,908,296 | 87,713,803 | - | 100,622,099 | ||||||||||||
Selling,
general and administrative expenses
|
1,248,433 | 4,639,524 | - | 5,887,957 | ||||||||||||
Depreciation
and amortization
|
89,953 | 587,589 | - | 677,542 | ||||||||||||
Total
Costs and Expenses
|
14,246,682 | 92,940,916 | - | 107,187,598 | ||||||||||||
NET
OPERATING INCOME (LOSS)
|
1,437,400 | 1,122,031 | - | 2,559,431 | ||||||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Other
income
|
7,988 | 70,898 | - | 78,886 | ||||||||||||
Gain
(loss) on disposal of property, plant and equipment
|
- | - | - | - | ||||||||||||
Interest
expense
|
(57,669 | ) | (228,377 | ) | - | (286,046 | ) | |||||||||
Total
Other Income (Expense)
|
(49,681 | ) | (157,479 | ) | - | (207,160 | ) | |||||||||
INCOME
(LOSS) BEFORE INCOME TAXES
|
1,387,719 | 964,552 | - | 2,352,271 | ||||||||||||
Federal
Income Tax, current
|
- | (152,164 | ) | - | (152,164 | ) | ||||||||||
State
Income Tax, current
|
- | (44,089 | ) | - | (44,089 | ) | ||||||||||
NET
INCOME
|
1,387,719 | 768,299 | - | 2,156,018 | ||||||||||||
LESS:
Preferred Dividends
|
(44,438 | ) | - | - | (44,438 | ) | ||||||||||
NET
INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$ | 1,343,281 | $ | 768,299 | $ | - | $ | 2,111,580 | ||||||||
EARNINGS
PER COMMON SHARE
|
$ | 0.036 | $ | 2,932.439 | $ | - | $ | 0.053 |
1.
|
Basis
of Presentation
|
2.
|
Summary
of Significant Accounting Policies
|
3.
|
Pro
Forma Adjustments and Assumptions
|
·
|
Reflects
Heartland’s 100% interest in the pro forma earnings of Lee Oil for the
year ended December 31, 2007 and the nine months ended September 30,
2008.
|
·
|
Reflects
the reclassification of the equity shown on Lee Oil’s balance sheet as of
October 1, 2008 and the obligations arising from the October 1, 2008
acquisition being shown on the balance sheet for the year ended December
31, 2007 and the nine months ended September 30,
2008.
|
·
|
Reflects
the issuance of the 2,500,000 common shares of Heartland common stock and
the cancellation of the 262 shares of Lee Oil stock. The weighted average
number of shares for the year ended December 31, 2007 and the nine months
ended September 30, 2008 would have been 37,723,242 and 39,517,016
respectively.
|
·
|
The
pro forma earnings for the year ended December 31, 2007 and the nine
months ended September 30, 2008 do not reflect any interest expense
relating to creation of the direct financial
obligation.
|
·
|
The
pro forma earnings for the year ended December 31, 2007 and the nine
months ended September 30, 2008 do not reflect any amortization expense
relating to the difference in fair market value and book value as of
October 1, 2008.
|
4.
|
Commitments
and Contingencies
|