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 September 30, 2008





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE
      ACT OF 1934





HEARTLAND,
INC.


(Exact
name of small business 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 November 1, 2008, there were
41,783,107 shares of
common stock, $.0001 par value per share, outstanding.













HEARTLAND,
INC.





FORM
10-Q


TABLE
OF CONTENTS







PART
      I. FINANCIAL INFORMATION
            
            3ITEM
      1. FINANCIAL STATEMENTS
            
            3ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
    OPERATION
            
            11ITEM
      4T. CONTROLS AND PROCEDURES
            
            15PART
      II. OTHER INFORMATION
            
            15ITEM
      1. - LEGAL PROCEEDINGS
            
            16ITEM
      2. - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
            
            16ITEM
      3. - DEFAULTS UPON SENIOR SECURITIES
            
            16ITEM
      4. – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            16ITEM
      5. - OTHER INFORMATION
            
            17ITEM
      6. - EXHIBITS
            
            17SIGNATURES
            
            18




2


PART  I.  FINANCIAL  INFORMATION











ITEM
1. FINANCIAL STATEMENTS











HEARTLAND, INC. AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
BALANCE SHEETS


ASSETS




Sept.
      30,
            
            
            Dec.
      31,2008
            
            
            2007(Unaudited)CURRENT
      ASSETSCash
            
            $
            856,564
            
            
            $
            216,570Accounts
      receivable, net of allowance for doubtful accounts of $179,677 and
      $187,680,at September 30, 2008 and December 31, 2007,
      respectively
            
            
            3,341,634
            
            
            
            3,188,591Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
            
            
            298,743
            
            
            
            311,899InventoryRaw
      material
            
            
            1,539,505
            
            
            
            885,183Work
      in process
            
            
            9,506
            
            
            
            16,961Finished
      Goods
            
            
            -
            
            
            
            2,2651,549,011
            
            
            
            904,409Prepaid
      expenses and other
            
            
            24,020
            
            
            
            1,259Total
      current assets
            
            
            6,069,972
            
            
            
            4,622,728PROPERTY,
      PLANT AND EQUIPMENT, NET
            
            
            1,985,236
            
            
            
            701,168OTHER
      ASSETS
            
            
            -
            
            
            
            426,321TOTAL
      ASSETS
            
            $
            8,055,208
            
            
            $
            5,750,217






The accompanying notes are
an integral part of the unaudited condensed consolidated financial
statements




3





HEARTLAND, INC. AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
BALANCE SHEETS - continued


LIABILITIES AND
STOCKHOLDERS’ EQUITY





Sept.
      30,
            
            
            Dec.
      31,2008
            
            
            2007(Unaudited)CURRENT
      LIABILITIESConvertible
      promissory notes payable
            
            $
            12,450
            
            
            $
            53,450Current
      portion of notes payable
            
            
            134,660
            
            
            
            24,604Current
      portion of notes payable to related parties
            
            
            72,622
            
            
            
            89,156Current
      portion of capital lease
            
            
            -
            
            
            
            8,320Accounts
      payable and other accrued expenses
            
            
            2,801,453
            
            
            
            3,172,585Obligations
      to related parties
            
            
            12,008
            
            
            
            12,008Billings
      in excess of costs and estimated earnings on uncompleted
      contracts
            
            
            316,825
            
            
            
            195,432Total
      current liabilities
            
            
            3,350,018
            
            
            
            3,555,555LONG-TERM
      OBLIGATIONSNotes
      payable, less current portion
            
            
            929,914
            
            
            
            180,799Notes
      payable to related parties, less current portion
            
            
            345,296
            
            
            
            403,607Capital
      lease, less current portion
            
            
            -
            
            
            
            26,571Total
      long term liabilities
            
            
            1,275,210
            
            
            
            610,977STOCKHOLDERS’
      EQUITYPreferred
      stock $0.001 par value 5,000,000 sharesauthorized,
      2,370,000 shares issued and outstanding
            
            
            2,370
            
            
            
            2,370Additional
      paid-in capital – preferred stock
            
            
            713,567
            
            
            
            713,567Common
      stock, $0.001 par value 100,000,000 sharesauthorized;
      39,436,482 and 36,567,105 shares issuedand
      39,283,107 and 36,567,105 shares outstandingat
      September 30, 2008 and December 31, 2007, respectively
            
            
            39,407
            
            
            
            36,566Additional
      paid-in capital – common stock
            
            
            16,283,428
            
            
            
            15,789,790Accumulated
      deficit
            
            
            (13,616,265
            )
            
            
            (14,958,608
            )Dividends
      Distributable
            
            
            7,473
            
            
            
            -Total
      stockholders’ equity
            
            
            3,429,980
            
            
            
            1,583,685TOTAL
      LIABILITIES & STOCKHOLDERS’ EQUITY
            
            $
            8,055,208
            
            
            $
            5,750,217








The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements


4





HEARTLAND, INC. AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS


UNAUDITED








Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      30,
            
            
            September
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007REVENUE
      – SALES
            
            $
            5,425,498
            
            
            $
            3,168,965
            
            
            $
            15,684,082
            
            
            $
            9,656,306COST
      OF GOODS SOLD
            
            
            4,337,807
            
            
            
            2,920,674
            
            
            
            12,908,296
            
            
            
            8,613,1371,087,691
            
            
            
            248,291
            
            
            
            2,775,786
            
            
            
            1,043,169OPERATING
      COSTS AND EXPENSESSelling,
      general and administrative expenses
            
            
            431,052
            
            
            
            288,173
            
            
            
            1,248,433
            
            
            
            1,946,307Depreciation
      and amortization
            
            
            36,031
            
            
            
            15,256
            
            
            
            89,953
            
            
            
            52,026Total
      Operating Costs and Expenses
            
            
            467,083
            
            
            
            303,429
            
            
            
            1,338,386
            
            
            
            1,998,333NET
      OPERATING INCOME (LOSS)
            
            
            620,608
            
            
            
            (55,138
            )
            
            
            1,437,400
            
            
            
            (955,164
            )OTHER
      INCOME (EXPENSE)Other
      (expense) income
            
            
            (33,138
            )
            
            
            6,652
            
            
            
            7,988
            
            
            
            23,735Loss
      on disposal of property, plant and equipment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (19,432
            )Interest
      expense
            
            
            (31,007
            )
            
            
            (12,587
            )
            
            
            (57,669
            )
            
            
            (104,583
            )TOTAL
      OTHER EXPENSE
            
            
            (64,145
            )
            
            
            (5,935
            )
            
            
            (49,681
            )
            
            
            (100,280
            )INCOME
      (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
            
            
            556,463
            
            
            
            (61,073
            )
            
            
            1,387,719
            
            
            
            (1,055,444
            )FEDERAL
      AND STATE INCOME TAXES
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -INCOME
      (LOSS) FROM CONTINUING OPERATIONS
            
            
            556,463
            
            
            
            (61,073
            )
            
            
            1,387,719
            
            
            
            (1,055,444
            )




The accompanying notes are
an integral part of the unaudited condensed consolidated financial
statements




5





HEARTLAND, INC. AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS – Continued





UNAUDITED





Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      30,
            
            
            September
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007DISCONTINUED
      OPERATIONS:Income
      from discontinued operations (net of income tax expense of
    $0)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            82,196Gain
      on disposal of discontinued operations (net of income tax expense of
      $0)
            
            
            -
            
            
            
            131,525
            
            
            
            -
            
            
            
            131,525Total
      discontinued operations
            
            
            -
            
            
            
            131,525
            
            
            
            -
            
            
            
            213,721NET
      INCOME (LOSS)
            
            
            556,463
            
            
            
            70,452
            
            
            
            1,387,719
            
            
            
            (841,723
            )LESS:
      Preferred Dividends
            
            
            (14,812
            )
            
            
            (14,934
            )
            
            
            (44,438
            )
            
            
            (161,752
            )NET
      INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
            
            $
            541,651
            
            
            $
            55,518
            
            
            $
            1,343,281
            
            
            $
            (1,003,475
            )EARNINGS
      (LOSS) PER COMMON SHAREContinuing
      operations    : Basic
            
            $
            0.014
            
            
            $
            (0.002
            )
            
            $
            0.037
            
            
            $
            (0.030
            ):
      Diluted
            
            $
            0.013
            
            
            $
            (0.002
            )
            
            $
            0.035
            
            
            $
            (0.028
            )Discontinued
      operations :Basic
            
            $
            -
            
            
            $
            0.004
            
            
            $
            -
            
            
            $
            0.006:Diluted
            
            $
            -
            
            
            $
            0.003
            
            
            $
            -
            
            
            $
            0.006Net
      income
      (loss)            :
      Basic
            
            $
            0.014
            
            
            $
            0.002
            
            
            $
            0.037
            
            
            $
            (0.024
            ):Diluted
            
            $
            0.013
            
            
            $
            0.002
            
            
            $
            0.035
            
            
            $
            (0.022
            )WEIGHTED AVERAGE COMMON SHARES
      OUTSTANDING: Basic
            
            
            37,998,822
            
            
            
            36,237,105
            
            
            
            37,017,096
            
            
            
            34,842,160:
      Diluted
            
            
            40,596,008
            
            
            
            38,946,039
            
            
            
            39,879,796
            
            
            
            37,551,094








The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements


6





HEARTLAND, INC. AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS


UNAUDITED





Nine
      Months EndedSeptember
      30,2008
            
            2007NET
      CASH PROVIDED BY (USED IN) OPERATINGACTIVITIES
            
            $
            1,216,816
            
            
            
            (544,152
            )INVESTING
      ACTIVITIESPayments
      for property, plant and equipment
            
            
            (1,374,020
            )
            
            
            (46,618
            )


FINANCING
      ACTIVITIESProceeds
      from (payments on) notes payable
            
            $
            686,934
            
            
            $
            (30,082
            )Payments
      on notes payable to related parties
            
            
            (74,845
            )
            
            
            (52,494
            )Payments
      on capital lease
            
            
            (34,891
            )
            
            
            -Payments
      on convertible promissory notes
            
            
            -
            
            
            
            (10,000
            )Proceeds
      from issuance of common stock
            
            
            220,000
            
            
            
            145,000Proceeds
      from issuance of preferred stock
            
            
            -
            
            
            
            552,500NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            797,198
            
            
            
            604,924INCREASE
      IN CASH
            
            
            639,994
            
            
            
            14,154CASH,
      BEGINNING OF PERIOD
            
            
            216,570
            
            
            
            249,209CASH,
      END OF PERIOD
            
            $
            856,564
            
            
            $
            263,363SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONInterest
      paid
            
            $
            57,669
            
            
            $
            33,554NON
      CASH INVESTING AND FINANCING ACTIVITIESPurchase
      of Mound Technologies facility by net settlement of amountdue
      to/from former landlord
            
            $
            141,657
            
            
            $
            -Settlement
      of amount due from former landlord
            
            
            426,321
            
            
            
            -Settlement of amount owed former landlord
            
            
            284,664
            
            
            
            -Issuance of common stock for payment of obligations to related
      parties
            
            
            -
            
            
            
            50,000Preferred
      stock dividend from embedded beneficial conversion feature
            
            
            -
            
            
            
            123,437Issuance
      common stock for dividends due on preferred shares
            
            
            83,379
            
            
            
            -Issuance of common stock for payment of convertible notes
            
            
            124,377
            
            
            
            -Issuance
      of common stock for services and settlements
            
            
            -
            
            
            
            614,790Issuance
      of preferred stock for services
            
            
            -
            
            
            
            30,000Issuance
      of common stock and options for
      executive compensation and boardcompensation
            
            
            90,000
            
            
            
            420,883





The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.






7




HEARTLAND, INC. AND
SUBSIDIARIES


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER 30,
2008










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, 2007 as filed with the Securities and Exchange
Commission on Form 10-KSB.





The
balance sheet at December 31, 2007 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
            ACCOUNTING
      POLICIES





The
accounting policies followed by the Company are set forth in Note B to the
Company’s audited consolidated financials statements in the Company’s Annual
Report for the year ended December 31, 2007 as filed with the Securities and
Exchange Commission on Form 10-KSB.





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
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an Amendment of FASB Statement No.
115, which permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective of SFAS 159 is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The Company adopted SFAS 159 on January 1, 2008, but the
implementation of SFAS 159 did not have a significant impact on the Company's
financial position or results of operations.






8







HEARTLAND, INC. AND
SUBSIDIARIES


NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER 30,
2008








NOTE
      B
            ACCOUNTING POLICIES
      (Continued)





During
June 2008, the FASB issued EITF Issue No. 07-05, “Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (the final
abstract is not available at this time) which is effective for fiscal years
beginning after December 15, 2008.  The Company has not yet determined
the impact the implementation of EITF 07-05 will have on the Company’s
consolidated financial statements.





During
June 2008, the FASB also issued EITF Issue No. 08-04, “Transition Guidance for
Conforming Changes to EITF Issue No. 98-5, ‘Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios” (the final abstract is not available at this time) which is
effective for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact the implementation of this EITF will
have on the Company’s consolidated financial statements.








NOTE
      C
            GOING
      CONCERN





As
reflected in the accompanying financial statements, the Company has an
accumulated deficit of $13,616,265.  The Company’s auditors, in their
opinion on the Company’s annual financial statements for 2007 dated April 10,
2008, included a “going concern” qualification related to substantial doubt
about the Company’s ability to continue as a going concern.





As of
September 30, 2008, 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. In
addition, the Company has declared and paid the common stock dividend that had
been shown as in arrears for 2007 as well as having converted the majority of
the convertible notes over into common stock.  It is the Company’s
belief that having cleaned up the balance sheet and having sufficient cash flow
from operations will allow any issue relating to going concern to be removed in
future accounting periods.








NOTE
      D
            STOCKHOLDERS’
      EQUITY





Preferred
Stock




In
January 2007, the Board of Directors approved the authorization of 5,000,000
shares of Series A Convertible Preferred Stock - par value
$0.001.  The preferred stock has a face value of $0.25 per share and
the basis of conversion is one share of the Company’s common stock for each
share of preferred stock.  The preferred stock has liquidation
priority rights over all other stockholders.  The preferred shares can
be converted at any time at the option of the stockholder, but will convert
automatically at the end of three years into the Company’s common
stock.





9




HEARTLAND, INC. AND
SUBSIDIARIES


NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER 30,
2008








NOTE
      D
            STOCKHOLDERS EQUITY
      (Continued)





Preferred Stock
(continued)





As of
September 30, 2008, the Company has 2,370,000 shares of Series A Convertible
Preferred Stock issued and outstanding.  The preferred shares carry a
10% annual stock dividend for the three years they are outstanding prior to
conversion. The preferred dividend in arrears at September 30, 2008 and 2007 was
$51,910 and $38,315, respectively. Of the amounts shown, only $7,473 remains in
arrears from 2007 and the Company has obtained the needed information in order
to have those shares issued. The remaining balance shown in arrears for 2008
should be taken care of at the earliest practicable after December 15,
2008.





Common
Stock




During
the quarter ended March 30, 2008, the Company issued 580,000 shares of common
stock for cash of $290,000.





During
the quarter ended June 30, 2008, the Company authorized the issuance of 185,718
shares of common stock for director compensation. These shares were authorized
as two separate issuances and were based on the closing price of the common
shares on May 31, 2008 and June 30, 2008. The number of shares authorized on May
31, 2008 was 100,002 shares. The number of shares authorized on June 30, 2008
was 85,716. The non-cash compensation represented by these shares was
$60,000.





During
the quarter ended September 30, 2008, the Company authorized the issuance of
2,115,398 shares of common stock. The issuance related to the
following:





Description
            
            Quantity
            
            Closing
      Price DateStock
      Dividend
            
            
            172,314
            
            September
      24, 2008Conversion
      of Debt & Related Interested
            
            
            27,503
            
            September
      23, 2008Conversion
      of Debt & Related Interested
            
            
            55,857
            
            September
      24, 2008Board
      Compensation
            
            
            124,998
            
            September
      30, 2008Board
      Approved Adjustments
            
            
            1,734,726
            
            Various2,115,398





NOTE
      E
            BUILDING
      PURCHASE





During
the quarter ended June 30, 2008, the Company finalized the purchase of the
property located at 25 Mound Park Drive in Springboro, OH. The gross selling
price of the property was $1,112,983 and was funded through a loan of $900,000
provided through Commercial Bank of Harrogate, TN. The remaining net settlement
is from amounts due from the former landlord of $426,321, the amounts due to the
former landlord of $284,664, and Company generated funds. The note is for a term
of 60 months, a fixed interest rate of 7.5% and consists of 59 monthly payments
of $7,250 and one payment due on April 18, 2013 of $794,989. This is the same
property which Mount Technologies uses for its operations and had been renting
from a related party for $16,250 per month. The Company’s CEO is also the CEO of
Commercial Bank. Allocation of the purchase price was $271,055 for land and
$841,928 to the buildings.


10


HEARTLAND, INC. AND
SUBSIDIARIES


NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER 30,
2008








NOTE
      F
            SUBSEQUENT
      EVENT




The
Company finalized the acquisition of the Lee Oil Company, Inc., Lee’s Food Mart,
LLC, and Lee Enterprises, Inc. on October 1, 2008. The gross purchase price was
$7,000,000 and was funded with a loan of $3,250,000 from Choice Financial Group,
two loans totaling an additional $3,250,000 from Lee Holding Company, LP, and
Gary Lee, and an issuance of common stock making up the $500,000 balance. Terry
Lee is the Company’s Chief Executive Officer as well as being the principal
partner in Lee Holding Company, LP. Gary Lee is Terry Lee’s brother. Form 8-K
was filed with the SEC on October 3, 2008 disclosing all the details of the
purchase.








NOTE
      G
            RECLASSIFICATIONS





Certain
amounts in the September 30, 2007 Financial Statements have been reclassified to
conform to the presentation used in the September 30, 2008 Financial
Statements.








ITEM
2.         MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OERATION.





Safe
Harbor Provisions


Cautionary
Statement Pursuant to Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995:


This
Quarterly Report on Form 10-Q contains "forward-looking" statements within the
meaning of the Federal securities laws.  These forward-looking
statements include, among others, statements concerning the Company's
expectations regarding sales trends, gross and net operating margin trends,
political and economic matters, statements concerning the availability of equity
capital to fund the Company's capital requirements, and other statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts.  The forward-looking statements in this Quarterly Report on
Form 10-Q are subject to risks and uncertainties that could cause actual results
to differ materially from those results expressed in or implied by the
statements contained herein.








Introduction


Our
Management’s Discussion and Analysis of Financial Condition and Results of
Operations (“MD&A”) is intended to provide investors and others with
information we believe is necessary to understand the Company’s financial
condition, changes in financial condition, results of operations and cash flows.
Our MD&A should be read in conjunction with the Company’s Consolidated
Financial Statements and related Notes to Consolidated Financial Statements and
other information included in this Quarterly Report on Form 10-Q. This Quarterly
Report on Form 10-Q should also be read in conjunction with our most recently
filed Form 10-K.





Unless
the context otherwise requires, references in this MD&A to the “Company”,”
“Corporate”, “Heartland,” and “we” refer to Heartland, Inc. and its consolidated
subsidiaries when applicable.





The
interim financial statements have been prepared by Heartland, Inc. and in the
opinion of management, reflect all material adjustments which are necessary in
order to present a fair statement of results for the interim periods presented,
including normal recurring adjustments.  Certain information and
footnote disclosures made in the most recent annual
financial  statements included in the Company's Form 10-KSB for the
year ended December 31, 2007, have been condensed or omitted for the interim
statements.  It is the Company's opinion that, when the interim
statements are read in conjunction with the December 31, 2007 financial
statements, the disclosures are adequate to make the information presented not
misleading.  The results of operations for the three months ended
September 30, 2008 are not necessarily indicative of the operating results for
the full fiscal year.




11





Overview


Mound
Technologies, Inc. (“Mound”), a Nevada corporation with its corporate
headquarters located in Springboro, Ohio is a wholly owned subsidiary of the
Company.





Mound is
a full service structural and miscellaneous steel fabricator. It also
manufactures steel stairs and railings, both industrial and architectural
quality. The present capacity of the facility is approximately 6,000 tons per
year of structural and miscellaneous steel.





Mound is
focused on the fabrication of metal products and produces structural steel,
miscellaneous metals, steel stairs, railings, bar joists, metal decks and the
erection thereof. In the steel products segment, steel joists and joist girders,
and steel deck are sold to general contractors and fabricators throughout the
United States. Substantially all work is to order and no unsold inventories of
finished products are maintained. All sales contracts are firm fixed-price
contracts and are normally competitively bid against other suppliers. Cold
finished steel and steel fasteners are manufactured in standard sizes and
inventories are maintained. As of September 30, 2008, Mound is the only
operational segment of the business.





On July
17, 2008, the Company entered into a Letter of Intent to purchase all the assets
of Lee Oil Company, Inc., Lee’s Food Mart, LLC, and Lee Enterprises, Inc. Terry
Lee, the CEO and Chairman of the Company, is also an owner of the Lee Companies.
Mr. Lee has abstained from any negotiating or structuring of the acquisition.
Form 8-K was filed on July 17, 2008 with the SEC detailing the purchase price
and how the company expects to fund the purchase along with allowing both
parties time to perform due diligence on the proposed acquisition. The parties
completed the acquisition as of October 1, 2008 and Form 8-K was filed on
October 3, 2008 with the SEC detailing the acquisition. The company will be
filing pro forma financial statements for the past two years within the allotted
70 day timeframe as well as filing all future financials as consolidated
financial statements to include this now wholly owned subsidiary.





Our
mission is to become a leading diversified company with business interests in
well established industries. We plan to successfully grow our revenues by
acquiring companies with historically profitable results, strong balance sheets,
high profit margins, and solid management teams in place. By providing access to
financial markets, expanded marketing opportunities and operating expense
efficiencies, we hope to become the facilitator for future growth and higher
long-term profits. In the process, we hope to develop new synergies among the
acquired companies, which should allow for greater cost effectiveness and
efficiencies, thus further enhancing each individual company’s
strengths.





Critical Accounting Policies
and Estimates




Critical
accounting policies are defined as those that are reflective of significant
judgments and uncertainties, and potentially result in materially different
results under different assumptions and conditions. Application of these
policies is particularly important to the portrayal of our financial condition
and results of operations. The discussion and analysis of our financial
condition and results of operations are based on our consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these consolidated
financial statements requires management to make estimates and judgments that
affect the reported amount of assets, liabilities, revenues and expenses. Actual
results may differ from these estimates under different assumptions or
conditions. Our significant accounting policies, including the critical policies
listed below, are fully described and discussed in our annual report on Form
10-KSB for the fiscal year ended December 31, 2007, previously filed with
the SEC.




12






Revenue
Recognition and Cost Estimation


Our
revenues consist primarily of services provided by our employees and the pass
through of costs for materials and subcontract efforts under contracts with our
customers. Cost of services consists primarily of compensation expenses for
program personnel, the fringe benefits associated with this compensation, and
other direct expenses incurred to complete programs, including cost of materials
and subcontract efforts.





For
long-term contracts which are specifically described in the scope section of
SOP 81-1 or other appropriate accounting literature we apply the percentage
of completion method. Under the percentage of completion method, income is
recognized at a consistent profit margin over the period of performance based on
estimated profit margins at completion of the contract. This method of
accounting requires estimating the total revenues and total contract cost at
completion of the contract. During the performance of long-term contracts, these
estimates are periodically reviewed and revisions are made as required. The
impact on revenue and contract profit as a result of these revisions is included
in the periods in which the revisions are made. This method can result in the
deferral of costs or the deferral of profit on these contracts. Because we
assume the risk of performing a fixed-price contract at a set price, the failure
to accurately estimate ultimate costs or to control costs during performance of
the work could result, and in some instances has resulted, in reduced profits or
losses for such contracts. Estimated losses on contracts at completion are
recognized when identified. In certain circumstances, revenues are recognized
when contract amendments have not been finalized.





The
asset, “Costs in excess of billings,” represents revenues recognized in excess
of amounts billed. The liability, “Billings in excess of costs,” represents
billings in excess of revenues recognized.





Allowance for
Doubtful Accounts




We reduce
accounts receivable by an allowance for amounts that may become uncollectible in
the future. Estimates are used in determining the allowance for doubtful
accounts and are based on historical collection experience and current trends.
In determining these amounts, we look at the historical write-offs of our
receivables. We monitor our collections and write-off experience to assess
whether adjustments are necessary. Management periodically evaluates the
standard allowance estimation methodology for appropriateness and modifies as
necessary. In doing so, we believe our allowance for doubtful accounts reflects
the most recent collections experience and is responsive to changes in trends.
Our accounts receivable are written off once the account is deemed to be
uncollectible. This typically occurs once we have exhausted all efforts to
collect the account, which include collection attempts by our employees and
outside collection agencies.








RESULTS
OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008
COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
2007.




Results
of Operations




Three
Months


Revenues
for the three months ended September 30, 2008 were $5,425,498 compared to
$3,168,965 for the same period in 2007, which represents an increase of
$2,256,533.  The increase in revenues for the period ending September
30, 2008 as compared to the three months ended September 30, 2007 was partially
the result of increases in the price of the raw materials during the past twelve
months used in the manufacturing process and those increases being passed along
to the customers. The Company has also been able to maintain a high backlog of
projects over the last quarter and this has allowed management to be more
efficient in the use of the resources available. Total selling, general, and
administrative expenses were $467,083 for the three months ended September
30, 2008 compared to $303,429 for the same period in 2007. This would be
expected since a lot of those expenses are semi-variable in nature and would
increase as the amount of sales increased. Maintaining a better control over the
administrative costs along with the heavy backlog of projects have allowed the
Company to generate operating income of approximately 11% in the current period
versus an operating loss of about 2% in the same period of
2007.   Our costs of goods sold increased from $2,920,674 for the
three months ended September 30, 2007 to $4,337,807 for the three months ended
September 30, 2008.




13




Interest
expense for the three months ended September 30, 2008 was $31,007 compared to
$12,587 for the same period in 2007.   The Company saw an
increase in the interest expense in the third quarter from the same quarter last
year  primarily due to the purchase of the Mound property in April.
The interest expense relating to this purchase should remain fairly constant
during the first five years of the loan.





As a
result, income from continuing operations was $556,463 for the three
months ended September 30, 2008, compared to a loss of
$61,073 for the same period in 2007.








Nine
Months


Revenues
for the nine months ended September 30, 2008 were $15,684,082 compared to
$9,656,306 for the same period in 2007, which represents an increase of
$6,027,776.  The increase in revenues for the nine month period ending
September 30, 2008 as compared to the nine months ended September 30, 2007 was
partially the result of increases in the price of the raw materials during the
past twelve months used in the manufacturing process and those increases being
passed along to the customers. The Company has also been able to maintain a high
backlog of projects over the four quarters and this has allowed management to be
more efficient in the use of the resources available. Total selling, general,
and administrative expenses were $1,338,386 for the nine months ended
September 30, 2008 compared to $1,998,333 for the same period in 2007. This
would be expected since most of the expenses making up the difference were
related to services and settlements charged to operations in the first and
second quarter of 2007. Maintaining a better control over the administrative
costs along with the heavy backlog of projects have allowed the Company to
generate operating income of approximately 9% in the current nine month period
versus an operating loss of about 10% in the same nine month period of
2007.





LIQUIDITY
AND CAPITAL RESOURCES




At
September 30, 2008, the Company had working capital, which represents current
assets less current liabilities, of $2,719,954 and an increase of $1,652,781
from the working capital of $1,067,173 at December 31, 2007. The increase in
working capital is primarily attributable to net income during the
period.






The
Company finances its operations and growth primarily with cash flow from
operations, borrowings under its revolving credit facility and other loans,
operating leases and normal trade credit terms from operating activities. At
September 30, 2008, the Company had $856,564 of cash and cash
equivalents.







Net cash
provided from operating activities was $1,216,816 for the nine months ended
September 30, 2008.  The Company did obtain new funding in the form of
a note from Commercial Bank in the original amount of $900,000 to purchase the
Mound property. This note along with company generated funds of approximately
$500,000 was used to make the acquisition.





Total
liabilities at September 30, 2008 were $4,625,228 and total shareholders’ equity
was $3,429,980. As of September 30, 2008, 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.





Inflation


We are
subject to the effects of inflation and changing prices. We experienced
rising prices for steel and other commodities during fiscal 2007 and for the
first nine months of 2008 that had an impact on our gross revenues and net
earnings.  In the remainder of fiscal 2008, we expect average prices
of steel and other commodities to be higher than the average prices paid in
fiscal 2007.  We will attempt to mitigate the impact of these
anticipated increases in steel and other commodity prices and other inflationary
pressures by actively pursuing internal cost reduction efforts and introducing
price increases.





14







OFF-BALANCE
SHEET ARRANGEMENTS





We have
no off-balance sheet arrangements that have or are reasonably likely to have a
current or future material effect on us.





Item
4T. 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. Based on that evaluation,
the Company’s  Chief Executive Officer and the Company’s Chief
Financial Officer and Secretary have concluded that:





a.  information
required to be disclosed by the Company in this Quarterly Report on Form 10-Q
and the other reports that the Company files or submits under the Exchange Act
would be accumulated and communicated to the Company’s management, including its
principal executive officer and its principal financial officer, as appropriate
to allow timely decisions regarding required disclosure;


b.  information
required to be disclosed by the Company in this Quarterly Report on Form 10-Q
and the other reports that it files or submits under the Exchange Act would be
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms; and


c.  the Company’s
disclosure controls and procedures were effective as of the end of the quarterly
period covered by this Quarterly Report on Form 10-Q.





Changes
in Internal Control Over Financial Reporting


There
were no changes in the Company’s internal control over financial reporting (as
defined in Rule 13a-15(f) under the Exchange Act) that occurred during the
Company’s quarterly period ended September 30, 2008, that have materially
affected, or are reasonably likely to materially affect, the Company’s 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.




15




ITEM  2.  
   UNREGISTER SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





During
the quarter ended March 30, 2008, the Company issued 568,261 shares of common
stock for cash of $290,000.  The Company used the proceeds from the
sale of these securities towards the acquisition of Lee Oil Company, Inc. that
took place on October 1, 2008. The proceeds were used primarily toward the legal
and accounting fees relating to the acquisition.





During
the quarter ended June 30, 2008, the Company authorized the issuance of 185,718
shares of common stock for director compensation. These shares were authorized
as two separate issuances and were based on the closing price of the common
shares on May 31, 2008 and June 30, 2008. The number of shares authorized on May
31, 2008 was 100,002 shares. The number of shares authorized on June 30, 2008
was 85,716. The non-cash compensation represented by these shares was
$60,000.60.





During
the quarter ended September 30, 2008, the Company authorized the issuance of
2,115,398shares of common stock. Included in this were the shares issued for the
conversion of convertible debt and related interest, the issuance of the 2007
annual stock dividend payable to the preferred shareholders, settlement of
amounts previously owed, and non-cash Board compensation in the amount of
$30,000.





On
October 1, 2008, the Company" entered into and closed a Securities
Purchase  Agreement  (the  "Lee Agreement") with
Lee Holding Company LP and Gary Lee ("Sellers") and Lee Oil Company, Inc. (“Lee
Oil”), Lee’s Food Mart, LLC (“Lee Food”), and Lee Enterprises, Inc. (“Lee,” and
together with Lee Oil and Lee Food, the “Lee Companies”).  Pursuant to
the Lee Agreement, the Company acquired and, the Sellers sold, 100% of the
outstanding securities in the Lee Companies.  Terry Lee, the Company’s
Chief Executive Officer and a director of the Company, is the principal partner
of Lee Holding Company LP.  Gary Lee is the brother of Terry
Lee.





In
consideration for 100% of the outstanding securities in the Lee Companies, the
Company paid the Sellers $3,250,000 in cash, issued the Sellers promissory notes
for an aggregate of $3,250,000 (the “Lee Companies Notes”) and issued the
Sellers 2,500,000 shares of common stock of the Company. The Lee Companies Notes
carry interest of 8% per year and the Company is required to pay the Sellers an
aggregate of $27,418 per month until the Lee Companies Notes are paid in
full.





No other
unregistered sales of equity securities have taken place since the first
quarter.





The
offering and sale was deemed to be exempt under Rule 506 of Regulation D and/or
Section 4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the securities. The offerings and
sales were made to a limited number of persons, all of whom were accredited
investors or a limited number of unaccredited investors, business associates of
the Company or executive officers of the Company, and transfer was restricted by
the Company in accordance with the requirements of the Securities Act of 1933.
In addition to representations by the above-referenced persons, the Company has
made independent determinations that all of the above-referenced persons were
accredited or sophisticated investors, and that they were capable of analyzing
the merits and risks of their investment, and that they understood the
speculative nature of their investment. Furthermore, all of the above-referenced
persons were provided with access to our Securities and Exchange Commission
filings.








ITEM  3.     
DEFAULTS UPON SENIOR SECURITIES





None








ITEM  4.  SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS





None




16





ITEM  5.  OTHER
INFORMATION





The
Company finalized the purchase of the property located at 25 Mound Park Drive in
Springboro, OH on April 18, 2008. The gross selling price of the property was
$1,112,983 and was funded through self-generated funds and a loan of $900,000
provided through Commercial Bank of Harrogate, TN. This is the same property
which Mound Technologies currently uses for its operations and had been renting
from a related party for $16,250 per month. The Company’s CEO is also the CEO of
Commercial Bank. Allocation of the purchase price was $271,055 for land and
$841,928 allocated to the buildings.





The
acquisition of Lee Oil Company, Inc., Lee’s Food Mart, LLC, And Lee Enterprises,
Inc. was completed as of October 1, 2008. Form 8-K was filed on October 3, 2008
with the Securities and Exchange Commission detailing the acquisition including
all the related documentation. The gross selling price of the property was
$7,000,000 and was funded through notes totaling $6,500,000 and issuance of
common stock with a value of $500,000. Allocation of the purchase price will be
based on fair market value of the assets determined by outside independent
parties.








ITEM  6.  EXHIBITS
AND REPORTS ON FORM 8-K




Exhibit
      31.1
            Certification of
      Terry L. Lee, Chief Executive Officer & Chairman of the
  BoardExhibit
      31.2
            Certification of
      Mitchell L Cox, CPA, Chief Financial OfficerExhibit
      32.1
            Certification of
      Terry L. Lee, Chief Executive Officer& Chairman of the
  BoardExhibit
      32.2
            Certification of
      Mitchell L. Cox, CPA, Chief Financial
Officer




17











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.







HEARTLAND,
      INC.
              (Registrant)November
      14, 2008
            By:
            /s/ Terry
      L. LeeTerry
      L. LeeChief
      Executive Officer and Chairman
      of the Board (Duly
      Authorized Officer)





November
      14, 2008
            By:
            /s/ Mitchell
      L. Cox, CPAMitchell
      L. CoxChief
      Financial Officer (Principal
      Financial and
      Accounting Officer)










18