**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-QSB**





**QUARTERLY
                REPORT**


**UNDER
                SECTION 13 OR 15(d)**


**OF
                THE SECURITIES EXCHANGE ACT OF
                1934**





**FOR
      QUARTER ENDED JUNE 30,  2007**







**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)








**124
      Brooklyn Street**


**Cumberland
      Gap, Tennessee 37724**


(Address
      of principal executive offices) (Zip Code)




**P.O.
        Box 4320**
 **Harrogate,
        Tennessee 37752**
 (Mailing
        address of principal executive offices) (Zip Code)


**423-526-7030**


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





**982
        Airport Road, Suite A**
 **Destin,
        Florida 32541**


**---------------------------------------------------------------------------**


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







**Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act during the past 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
      [  ]**







**Number
                  of shares of the registrant’s common stock outstanding as of August 22,
                  2007 was: 37,050,095**







**Traditional
                Small Business Disclosure Format:  Yes
                [  ]   No
                [X]**








**HEARTLAND,
      INC.**





**FORM
      10-QSB**


**TABLE
      OF CONTENTS**








PART
                I. FINANCIAL INFORMATION
            
            3ITEM
                1. FINANCIAL STATEMENTS
            
            3ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            
            12ITEM
                3. CONTROLS AND PROCEDURES
            
            21PART
                II. OTHER INFORMATION
            
            21ITEM
                1. - LEGAL PROCEEDINGS
            
            21ITEM
                2. - CHANGES IN SECURITIES AND USE OF
                PROCEEDS
            
            21ITEM
                3. - DEFAULTS UPON SENIOR
                SECURITIES
            
            21ITEM
                4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            
            22ITEM
                5. - OTHER INFORMATION
            
            22ITEM
                6. - EXHIBITS AND REPORTS ON FORM
                8-K
            
            22SIGNATURES
            
            22


2


PART  I.  FINANCIAL  INFORMATION








**ITEM
      1. FINANCIAL STATEMENTS**


**HEARTLAND,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEET**
 **JUNE
        30, 2007 (UNAUDITED)**
 
 **ASSETS**
 
  CURRENT
                      ASSETSCash
                  
                  $
                  449,161Accounts
                      receivable,
                      net
                  
                  
                  3,944,215Cost
                      and estimated earnings in
                      excess of billings onuncompleted
                      contracts
                  
                  
                  464,225Inventory
                  
                  
                  942,451Prepaid
                      expenses and
                      other
                  
                  
                  11,891Total
                      current
                      assets
                  
                  
                  5,811,943PROPERTY,
                      PLANT AND EQUIPMENT, net
                  
                  
                  940,111OTHER
                      ASSETSGoodwill
                  
                  
                  1,291,390Other
                      intangible assets,
                      net
                  
                  
                  15,470Other
                      assets
                  
                  
                  62,239Total
                      other
                      assets
                  
                  
                  1,369,099Total
                      assets
                  
                  $
                  8,121,153
 
  
 The
        accompanying notes are an integral part of the unaudited consolidated financial
        statements.
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEET**
 **JUNE
        30, 2007 (UNAUDITED)**
  **LIABILITIES
        AND STOCKHOLDERS’ EQUITY**
 
  CURRENT
                      LIABILITIESAccounts
                      payable
                  
                  $
                  2,314,656Acquisition
                      notes payable to
                      related parties
                  
                  
                  1,350,000Convertible
                      promissory notes
                      payable
                  
                  
                  53,450Current
                      portion of notes
                      payable
                  
                  
                  40,726Current
                      portion of notes payable
                      to related parties
                  
                  
                  87,387Obligations
                      to related
                      parties
                  
                  
                  12,008Accrued
                      payroll and related
                      taxes
                  
                  
                  595,088Accrued
                      interest
                  
                  
                  458,402Accrued
                      expenses
                  
                  
                  331,525Billings
                      in excess of costs and
                      estimated earnings onuncompleted
                      contracts
                  
                  
                  644,281Total
                      current
                      liabilities
                  
                  
                  5,887,523LONG-TERM
                      OBLIGATIONSNotes
                      payable, less current
                      portion
                  
                  
                  407,062Notes
                      payable to related parties,
                      less current portion
                  
                  
                  440,600Total
                      long term
                      liabilities
                  
                  
                  847,662STOCKHOLDERS’
                      EQUITYPreferred
                      stock $0.001 par value
                      5,000,000 sharesAuthorized
                      2,370,000 shares
                      issued and outstanding
                  
                  
                  2,370Additional
                      paid-in capital –
                      preferred stock
                  
                  
                  713,567Common
                      stock, $0.001 par value
                      100,000,000 sharesauthorized;
                      36,197, 105 shares
                      issued and outstanding
                  
                  
                  36,197Additional
                      paid-in capital –
                      common stock
                  
                  
                  16,048,954Accumulated
                      deficit
                  
                  
                  (14,994,237
                  )Deferred
                      compensation
                  
                  
                  (420,883
                  )Total
                      stockholders’
                      equity
                  
                  
                  1,385,968Total
                      Liabilities and
                      Stockholders’ Equity
                  
                  $
                  8,121,153
 
   The
        accompanying notes are an integral part of the unaudited consolidated financial
        statements
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**
 
 
 
 Three
                      months ended June 30,
                  
                  
                  Six
                      months ended June 30,2007
                  
                  
                  2006
                  
                  
                  2007
                  
                  
                  2006REVENUE
                      - SALES
                  
                  $
                  5,200,594
                  
                  
                  $
                  4,869,422
                  
                  
                  $
                  10,876,289
                  
                  
                  $
                  8,805,271COSTS
                      AND EXPENSESCost
                      of goods sold
                  
                  
                  4,579,596
                  
                  
                  
                  4,080,377
                  
                  
                  
                  9,496,551
                  
                  
                  
                  7,278,692Selling,
                      general and administrative expenses
                  
                  
                  819,740
                  
                  
                  
                  593,684
                  
                  
                  
                  2,161,625
                  
                  
                  
                  1,579,485Depreciation
                      and amortization
                  
                  
                  22,731
                  
                  
                  
                  4,851
                  
                  
                  
                  42,030
                  
                  
                  
                  26,483Total
                      costs and
                      expenses
                  
                  
                  5,422,067
                  
                  
                  
                  4,678,912
                  
                  
                  
                  11,700,206
                  
                  
                  
                  8,884,660NET
                      OPERATING INCOME (LOSS)
                  
                  
                  (221,473
                  )
                  
                  
                  190,510
                  
                  
                  
                  (823,917
                  )
                  
                  
                  (79,389
                  )OTHER
                      INCOME (EXPENSE)Other
                      income
                  
                  
                  8,536
                  
                  
                  
                  28,219
                  
                  
                  
                  23,170
                  
                  
                  
                  65,061Loss
                      on disposal of property,
                      plant and equipment
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  (19,432
                  )
                  
                  
                  --Interest
                      expense
                  
                  
                  (46,220
                  )
                  
                  
                  (70,653
                  )
                  
                  
                  (91,996
                  )
                  
                  
                  (194,508
                  )Total
                      other income
                      (expense)
                  
                  
                  (37,684
                  )
                  
                  
                  (42,434
                  )
                  
                  
                  (88,258
                  )
                  
                  
                  (129,447
                  )(LOSS)
                      INCOME FROM CONTINUIING OPERATIONSBEFORE  INCOME
                      TAXES
                  
                  
                  (259,157
                  )
                  
                  
                  148,076
                  
                  
                  
                  (912,175
                  )
                  
                  
                  (208,836
                  )FEDERAL
                      AND STATE INCOME TAX
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --(LOSS)
                      INCOME FROM CONTINUING OPERATIONS
                  
                  
                  (259,157
                  )
                  
                  
                  148,076
                  
                  
                  
                  (912,175
                  )
                  
                  
                  (208,836
                  )DISCONTINUED
                      OPERATIONS:Income
                      from discontinued
                      operations(net
                      of income tax expenses of
                      $0)
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  792Gain
                      on disposal of discontinued
                      operations(net
                      of income tax expenses of
                      $0)
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  4,004,060Loss
                      from discontinued operations
                      of VIEs(net
                      of income tax expenses of
                      $0)
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  (12,692
                  )Gain
                      on disposal of discontinued
                      operations of VIEs(net
                      of income tax expenses of
                      $0)
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  2,894,737Total
                      discontinued
                      operations
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  
                  
                  
                  
                  6,886,897NET
                      INCOME (LOSS)
                  
                  $
                  (259,157
                  )
                  
                  $
                  148,076
                  
                  
                  $
                  (912,175
                  )
                  
                  $
                  6,678,061LESS:  Preferred
                      dividends
                  
                  
                  (49,168
                  )
                  
                  
                  --
                  
                  
                  
                  (123,437
                  )
                  
                  
                  --Net
                      income (loss) available to common stockholders
                  
                  $
                  (308,325
                  )
                  
                  $
                  148,076
                  
                  
                  $
                  (1,035,612
                  )
                  
                  $
                  6,678,061
 
   The
        accompanying notes are an integral
        part of the unaudited consolidated financial statements
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
        (CONTINUED)**
 
  
 Three
                      months ended June 30,
                  
                  
                  Six
                      months ended June 30,2007
                  
                  
                  2006
                  
                  
                  2007
                  
                  
                  2006EARNINGS
                      (LOSS) PER COMMON SHAREContinuing
                      operationsBasic
                      and
                      diluted
                  
                  $
                  (.01
                  )
                  
                  $
                  .01
                  
                  
                  
                  (.03
                  )
                  
                  $
                  (.01
                  )Net
                      income (loss)Basic
                      and
                      diluted
                  
                  $
                  (.01
                  )
                  
                  $
                  .01
                  
                  
                  
                  (.03
                  )
                  
                  $
                  .27WEIGHTED
                      AVERAGE COMMON SHARESOUTSTANDINGBasic
                      and
                      diluted
                  
                  
                  34,742,160
                  
                  
                  
                  25,451,275
                  
                  
                  
                  34,133,127
                  
                  
                  
                  24,660,726
 
 
  The
        accompanying notes are an integral
        part of the unaudited consolidated financial statements
  
   **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**
 
 
 
 June
                      30,2007
                  
                  
                  2006(Unaudited)
                  
                  
                  (Unaudited)CASH
                      FLOWS FROM OPERATING ACTIVITIESContinuing
                      operations:Loss
                      before income
                      taxes
                  
                  $
                  (912,175
                  )
                  
                  $
                  (208,836
                  )Adjustments
                      to reconcile net loss
                      to cash flows usedin
                      operating
                      activitiesStock
                      issued for services and
                      settlement
                  
                  
                  644,790
                  
                  
                  
                  455,782Loss
                      on disposal of property,
                      plant and equipment
                  
                  
                  19,432
                  
                  
                  
                  --Depreciation
                      and
                      amortization
                  
                  
                  42,030
                  
                  
                  
                  26,483Changes
                      in assets and
                      liabilities(Increase)
                      decrease
                      in:Accounts
                      receivable
                  
                  
                  (342,738
                  )
                  
                  
                  (435,320
                  )Costs
                      in excess of billings on
                      uncompleted contracts
                  
                  
                  170,462
                  
                  
                  
                  243,632Inventory
                  
                  
                  (84,260
                  )
                  
                  
                  (127,517
                  )Prepaids
                      and
                      other
                  
                  
                  6,418
                  
                  
                  
                  14,137Other
                      assets
                  
                  
                  --
                  
                  
                  
                  (44,499
                  )Increase
                      (decrease)
                      in:Accounts
                      payable
                  
                  
                  (637,274
                  )
                  
                  
                  (202,726
                  )Obligations
                      to related
                      parties
                  
                  
                  12,008
                  
                  
                  
                  --Accrued
                      payroll
                      taxes
                  
                  
                  (179,829
                  )
                  
                  
                  (217,951
                  )Accrued
                      interest
                  
                  
                  69,624
                  
                  
                  
                  93,276Accrued
                      expenses
                  
                  
                  154,558
                  
                  
                  
                  41,660Billings
                      in excess of costs on
                      uncompleted contracts
                  
                  
                  267,909
                  
                  
                  
                  (150,993
                  )Cash
                      provided by (used in)
                      continuing operation before income taxes
                  
                  
                  (769,045
                  )
                  
                  
                  (512,872
                  )Discontinued
                      operations:Income
                      (loss) before income
                      taxes
                  
                  
                  --
                  
                  
                  
                  6,886,897(Decrease)
                      in net liabilities of
                      entities discontinued
                  
                  
                  --
                  
                  
                  
                  (546,896
                  )Gain
                      on rescission of
                      acquisitions
                  
                  
                  --
                  
                  
                  
                  (6,335,000
                  )Cash
                      provided by discontinued
                      operations
                  
                  
                  --
                  
                  
                  
                  5,001NET
                      CASH PROVIDED BY (USED IN)
                      OPERATINGACTIVITIES
                  
                  
                  (769,045
                  )
                  
                  
                  (507,871
                  )CASH
                      FLOWS FROM INVESTING ACTIVITIESPayments
                      for property, plant and
                      equipment
                  
                  
                  (55,797
                  )
                  
                  
                  (39,206
                  )NET
                      CASH (USED IN) INVESTING
                      ACTIVITIES
                  
                  
                  (55,797
                  )
                  
                  
                  (39,206
                  )
 
 
 The
        accompanying notes are an integral part of the unaudited consolidated financial
        statements
  
 **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
        (CONTINUED)**
 
  June
                      30,2007
                  
                  
                  2006CASH
                      FLOWS FROM FINANCING ACTIVITIESPayments
                      on notes payable
                  
                  
                  (20,184
                  )
                  
                  
                  (18,002
                  )Payments
                      on notes payable to related parties
                  
                  
                  (34,921
                  )
                  
                  
                  (34,342
                  )Payments
                      on convertible promissory notes payable
                  
                  
                  (10,000
                  )
                  
                  
                  --Proceeds
                      from issuance of common stock
                  
                  
                  135,000
                  
                  
                  
                  306,963Proceeds
                      from issuance of preferred stock
                  
                  
                  562,500
                  
                  
                  
                  --Bank
                      over draft
                  
                  
                  --
                  
                  
                  
                  85,588NET
                      CASH PROVIDED BY FINANING
                      ACTIVITIES
                  
                  
                  632,395
                  
                  
                  
                  340,207INCREASE
                      (DECREASE) IN CASH
                  
                  
                  (192,447
                  )
                  
                  
                  (206,870
                  )CASH,
                      BEGINNING OF PERIOD
                  
                  
                  641,608
                  
                  
                  
                  232,902CASH,
                      END OF PERIOD
                  
                  $
                  449,161
                  
                  
                  $
                  26,032SUPPLEMENTAL
                      DISCLOSURES OF CASH FLOW INFORMATIONInterest
                      paid
                  
                  $
                  22,372
                  
                  
                  $
                  83,512Taxes
                      paid
                  
                  $
                  --
                  
                  
                  $
                  --NON
                      CASH INVESTING AND FINANCING ACTIVITIESIssuance
                      of common stock for
                      services and settlements
                  
                  $
                  644,790
                  
                  
                  $
                  455,782Issuance
                      of common stock in
                      payment of convertible promissorynotes
                      payable and accrued
                      interest
                  
                  $
                  --
                  
                  
                  $
                  1,088,640Issuance
                      of common stock for
                      payment of obligations torelated
                      parties
                  
                  $
                  50,000
                  
                  
                  $
                  --Preferred
                      stock dividend from
                      imbedded beneficial conversion feature
                  
                  $
                  123,437
                  
                  
                  $
                  --Issuance
                      of common stock and
                      options for executive compensation
                  
                  $
                  420,883
                  
                  
                  $
                  --
 
  
 The
        accompanying notes are an integral part of the unaudited consolidated financial
        statements.
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 JUNE
          30, 2007
 (UNAUDITED)
 
 NOTE
                  A
              BASIS
                  OF PRESENTATION
 
 The
        accompanying unaudited consolidated financial statements have been prepared
        in
        accordance with Regulation S-B promulgated by the Securities and Exchange
        Commission and do not include all of the information and footnotes 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 unaudted 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, 2006 as filed with the Securities and Exchange
        Commission on Form 10-KSB.
 
 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, 2006 as filed with the Securities
        and
        Exchange Commission on Form 10-KSB.
 
 NOTE
                  C
              GOING
                  CONCERN
 
 As
        reflected in the accompanying financial statements, the Company has negative
        working capital of $75,580 and an accumulated deficit of
        $14,994,237.  The Company’s auditors, in their opinion on the
        Company’s annual financial statements for 2006 dated April 16, 2007, included a
“going concern” qualification related to substantial doubt about the Company’s
        ability to continue as a going concern.
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 JUNE
          30, 2007
 (UNAUDITED)
 
 NOTE
                  D
              STOCKHOLDERS
                  EQUITY
 
 **Preferred
        Stock**
 In
        January 2007, the Board of Directors approved the authorization of 2,000,000
        shares of Series A Convertible Preferred Stock - par value $0.001.  As
        of June 30, 2007, the Company has 2,370,000 shares of Series A Convertible
        Preferred Stock issued and outstanding.  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.
 
 The
        preferred shares carry a 10% annual stock dividend for the three years they
        are
        outstanding prior to conversion.
 
 The
        preferred shares include a Series A and Series B common stock purchase
        warrant.  The Series A warrant allows the holder to purchase 20% of
        the number of preferred shares purchased at $0.75 per share; the Series B
        warrant allows the holder to purchase 20% of the number of preferred shares
        purchased at $1.00 per share. Both series of warrants are exercisable over
        a
        three year period.  The Company can call in the warrants after 12
        months if the price of the common stock in the market is 150% of the warrant
        price for 10 consecutive days (i.e. $1.13 for the A warrant and $1.50 for
        the B
        warrant).
 
 During
        the quarter ended June 30, 2007, the Company sold 1,640,000 shares of Series
        A
        Convertible Preferred Stock [“Series A Preferred”] and received proceeds of
        $410,000.  In addition, 120,000 Series A Convertible Preferred Shares
        were issued for services valued at $30,000.
 
 Included
        with the Series A Preferred was 352,000 Series A warrants and 352,000 Series
        B
        warrants.  The Series A and Series B warrants were valued at $69,091
        using the Black-Scholes option-pricing model and such amount is included
        in
        Additional Paid in Capital – Preferred Stock. The assumptions used were as
        follows:
 
 Expected
        Life                                    3
        years
 Expected
        Volatility                         111.84%
 Risk
        Free
        Interest
        Rate                         2.5%
 Expected
        Dividends                                   --
 
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 JUNE
          30, 2007
 (UNAUDITED)
  
 NOTE
                  D
              STOCKHOLDERS
                  EQUITY (Continued)
 
 **Preferred
        Stock (Continued)**
 At
        June
        30, 2007, there were 474,000 Series A warrants and 474,000 Series B warrants
        outstanding.
 
 In
        accordance with EMERGING ISSUES TAX FORCE ISSUE 98-5, ACCOUNTING FOR CONVERTIBLE
        SECURITIES WITH A BENEFICAL CONVERSION FEATURES OR CONTINGENTLY ADJUSTABLE
        CONVERSION RATIOS (“EITF 98-5), the Company recognized an imbedded beneficial
        conversion feature present in the Series A Convertible Preferred
        Stock.  The Company allocated a portion of the proceeds equal to the
        intrinsic value of that feature to additional paid in capital.  The
        Company recognized and measured an aggregate of $49,168 of the proceeds,
        which
        is equal to the intrinsic value of the imbedded beneficial conversion feature,
        to additional paid-in capital and as a dividend to the holders of the Series
        A
        Convertible Preferred Stock issued during the three months ended June 30,
        2007.
 
 **Common
        Stock**
 
 The
        Company has authorized 100,000,000 shares of common stock with a par value
        of
        $.001 per share.  As of June 30, 2007, the Company was 36,197,105
        shares of common stock issued and outstanding.
 
 During
        the quarter ended June 30, 2007, the Company’s common stock transactions were as
        follows:
 
 Issued
        600,000 common shares for services valued at $115,500.
 
 Per
        Executive Employee Agreement (see Note H):
 Issued
        1,000,000 common shares valued at $180,000.
 Granted
        five year employee non-statutory stock options to purchase 1,822,504 shares
        of
        common stock at an exercise price of $.33 per share.  The options were
        valued at $240,883 using the Black- Scholes option–pricing model and such amount
        is included in Additional Paid-in Capital.  The assumptions used were
        as follows
 
 Expected
        Life 5 years
 Expected
        Volatility111.84%
 Risk
        Free
        Interest Rate2.5%
 Expected
        Dividends --
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 JUNE
          30, 2007
 (UNAUDITED)
 
 
 NOTE
                  E
              INVENTORY
 
 Inventory
        consists of the following at June 30, 2007:
 Raw
                                material
                            
                            $
                            935,044Work
                                in process - manufacturing
                            
                            
                            7,407$
                            942,451
 NOTE
                  F
              OPERATING
                  SEGMENTS
 
 The
        Company presently organizes its business units into two reportable segments:
        steel fabrication and construction and property management.  The steel
        fabrication segment focuses on the fabrication of metal products.  The
        construction and property management segment functions as a general contractor
        in the greater St. Paul and Minneapolis, Minnesota area and also owns and
        manages industrial property in Ohio.
 
 The
        Company’s reportable business segments are strategic business units that offer
        different products and services.  Each segment is managed separately
        because they require different technologies and market to different classes
        of
        customers.
 
 Six
          months ended June 30, 2007:
 Parent
                                  Company
                              
                              
                              Steel
                                  Fabrication
                              
                              
                              Construction
                              
                              
                              TotalRevenue
                              
                              $
                              --
                              
                              
                              $
                              6,487,341
                              
                              
                              $
                              4,388,948
                              
                              
                              $
                              10,876,289Net
                                income (loss)
                              
                              
                              (1,283,535
                              )
                              
                              
                              289,164
                              
                              
                              
                              82,196
                              
                              
                              
                              (912,175
                              )Total
                                assets
                              
                              
                              153,388
                              
                              
                              
                              5,483,646
                              
                              
                              
                              2,483,919
                              
                              
                              
                              8,121,153Other
                                significant itemsDepreciation and
                                amortization
                              
                              
                              --
                              
                              
                              
                              36,770
                              
                              
                              
                              5,260
                              
                              
                              
                              42,030Interest
                              
                              
                              69,624
                              
                              
                              
                              22,373
                              
                              
                              
                              --
                              
                              
                              
                              91,996Expenditures for assets
                              
                              
                              --
                              
                              
                              
                              46,617
                              
                              
                              
                              9,180
                              
                              
                              
                              55,797
  Six months ended June 30, 2006:
 Parent
                                    Company
                                
                                
                                Steel
                                    Fabrication
                                
                                
                                Construction
                                
                                
                                TotalRevenue
                                
                                $
                                --
                                
                                
                                $
                                5,052,062
                                
                                
                                $
                                3,753,209
                                
                                
                                $
                                8,805,271Net
                                  income (loss)
                                
                                
                                (816,684
                                )
                                
                                
                                653,889
                                
                                
                                
                                (46,041
                                )
                                
                                
                                (208,836
                                )Other
                                  significant itemsDepreciation and
                                  amortization
                                
                                
                                --
                                
                                
                                
                                25,077
                                
                                
                                
                                1,406
                                
                                
                                
                                26,483Interest
                                
                                
                                158,515
                                
                                
                                
                                35,993
                                
                                
                                
                                --
                                
                                
                                
                                194,508Expenditures for assets
                                
                                
                                --
                                
                                
                                
                                36,196
                                
                                
                                
                                3,010
                                
                                
                                
                                39,206
  
  **HEARTLAND,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 JUNE
          30, 2007
 (UNAUDITED)
 
  NOTE
                  G
              DISCONTINUED
                  OPERATIONS
 
 On
        June
        21, 2006, the Company agreed to accept rescissions of the December 2004
        acquisition agreement from Evans Columbus, LLC effective March 31, 2006 and
        from
        Monarch Homes, Inc. effective June 1, 2006.  Additionally, in the
        second quarter of 2006, the Company concluded that it was no longer the primary
        beneficiary of the three entities previously reported as VIE’s, Mundus, Wyncrest
        and PAR.  Evans business was manufacturing and Monarch was included in
        the construction and property management segment.  Revenues, pre tax
        profit (loss) and net assets (liabilities) on the discontinued entities are
        as
        follows:
 
 2006
                          
                          Evans
                          
                          
                          Monarch
                          
                          
                          PAR
                          
                          
                          Wyncrest
                          
                          
                          MondusRevenues
                          
                          $
                          2,416,738
                          
                          
                          $
                          1,844,709
                          
                          
                          $
                          --
                          
                          
                          $
                          --
                          
                          
                          $
                          --Pre
                              tax profit (loss)
                          
                          
                          792
                          
                          
                          
                          --
                          
                          
                          
                          (12,692
                          )
                          
                          
                          --
                          
                          
                          
                          --Net
                                assets
                                (liabilities)
                          
                          
                          --
                          
                          
                          
                          --
                          
                          
                          
                          --
                          
                          
                          
                          --
                          
                          
                          
                          --
 NOTE
                  H
              EMPLOYEMENT
                  AGREEMENT
 
 Effective
        June 27, 2007, the Company entered into an employment agreement with its
        new
        chief executive officer.  The Agreement has a five year term with an
        annual base salary of $120,000.  Additional terms include the issuance
        of 1,000,000 shares of common stock and five year non-statutory stock options
        to
        purchase 1,823,504 shares of common stock at an exercise price of $.33 per
        share
        to executive.
 
 The
        fair
        value of the common stock ($180,000) and employee non-statutory and stock
        option
        ($240,883) have been recorded as deferred compensation and will be expensed
        over
        the five year term of the agreement.
  
   **ITEM
      2.         MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OERATION.**





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





This
      Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007
      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, 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-QSB for the quarterly period ended June 30, 2007
      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.





The
      interim financial statements have been prepared by Heartland, Inc. and in the
      opinion of management, reflect all material adjustments which are necessary
      to 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, 2006, 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,
      2006 financial statements, the disclosures are adequate to make the information
      presented not misleading.  The results of operations for the three
      months and six months ended June 30, 2007 are not necessarily indicative of
      the
      operating results for the full fiscal year.





(A)          
        THE COMPANY
 
  
  
    
  
   
  (B)           BUSINESS
        DEVELOPMENT
 
  
  
  
  
  
  
  
  
  *
              a promissory note of $1,900,000 payable on
                  or before
                  February 15, 2005 which, if not paid by that date, interest shall
                  be due
                  from then to actual payment at 8%, simple interest, compounded
                  annually,
                  and
 *
              six hundred sixty-seven thousand (667,000)
                  restricted
                  newly issued shares of the Company’s common stock provided at
                  closing.
  
   
   
  
  
     
  
  
  
  
  
   
   
  
  
  
 (C)           BUSINESS
 
  
  
  
   
 STEEL
        FABRICATION
 
  
  
   
   
  
 Competition
        and Other Factors
 
  
  
  
  
  
  
 Raw
        Materials
 
   
  UNFAIR
        TRADE PRACTICES AND TRADE REMEDIES
 
 Under
        international agreement and U.S. law, remedies are available to domestic
        industries where imports are “dumped” or “subsidized” and such imports cause
        material injury to a domestic industry. Dumping involves selling for export
        a
        product at a price lower than the same or similar product is sold in the
        home
        market of the exporter or where the export prices are lower than a value
        that
        typically must be at or above the full cost of production. Subsidies from
        governments (including, among other things, grants and loans at artificially
        low
        interest rates) under certain circumstances are similarly actionable. The
        remedy
        available is an antidumping duty order or suspension agreement where injurious
        dumping is found and a countervailing duty order or suspension agreement
        where
        injurious subsidization is found. When dumping or subsidies continue after
        the
        issuance of an order, a duty equal to the amount of dumping or subsidization
        is
        imposed on the importer of the product. Such orders and suspension agreements
        do
        not prevent the importation of product, but rather require either that the
        product be priced at an un-dumped level or without the benefit of subsidies
        or
        that the importer pay the difference between such undumped or unsubsidized
        price
        and the actual price to the U.S. government as a duty.
 
 SECTION
        201 TARIFFS
 
 On
        March
        20, 2002, in response to an investigation initiated by the office of the
        President of the United States under Section 201 of the Trade Act of 1974,
        the
        President of the United States imposed a remedy to address the serious injury
        to
        the domestic steel industry that was found. The remedy was an additional
        tariff
        on specific products up to 30% (as low as 9%) in the first year and subject
        to
        reductions each year. The remedy provided was potentially for three years
        and a
        day, subject to an interim review after 18 months as to continued need. On
        December 4, 2003 by Proclamation 7741, the President of the United States
        terminated the import relief provided under this law pursuant to Section
        204(b)
        (1) (A) of the Trade Act of 1974 on the basis that “the effectiveness of the
        action taken under Section 203 has been impaired by changed economic
        circumstances” based upon a report from the U.S. International Trade Commission
        and the advice from the Secretary of Commerce and the Secretary of Labor.
        Thus,
        no relief under this law was provided to domestic producers during
        2004.
  ENVIRONMENTAL MATTERS
 
 Mound’s
        operations are subject to a broad range of laws and regulations relating
        to the
        protection of human health and the environment. Mound expects to expend in
        the
        future, substantial amounts to achieve or maintain ongoing compliance with
        U.S.
        federal, state, and local laws and regulations, including the Resource
        Conservation and Recovery Act (RCRA), the Clean Air Act, and the Clean Water
        Act. These environmental expenditures are not projected to have a material
        adverse effect on Mound’s financial position or on Mound’s competitive position
        with respect to other similarly situated U.S. steelmakers subject to the
        same
        environmental requirements.
 
 CONSTRUCTION
 
 Karkala
        Construction, Inc.
 
 Karkela
        Construction, Inc. (“Karkela”) was acquired in December 2004 and is located in
        St. Louis Park, MN. Karkela was acquired in December 2004 and is a general
        contractor in the greater St. Paul and Minneapolis, Minnesota area specializing
        in commercial, industrial, hospitality or multi-family space. More specifically,
        Karkela is a designer and builder of custom office buildings for medical,
        financial and other service type businesses. Karkela was originally founded
        in
        1983 and incorporated in 1990. During fiscal year 2005, Karkela had revenues
        of
        approximately $8.6 million. It is the intent of Heartland to expand that
        territory to include those geographies where the company can benefit from
        its
        reputation.
 
  
  Competition
        and Other Factors
 
  
  
  
  
 GENERAL
 
  
  
 Employees
 
 As
        of
        August 20, 2007, we employed 89 employees. From time to time, we also
        retain consultants, independent contractors, and temporary and part-time
        workers.
 
 We
        believe our relationship with our current employees is good. Our employees
        are
        not represented by a labor union. Our success is dependent, in part, upon
        our
        ability to attract and retain qualified management technical personnel and
        subcontractors. Competition for these personnel is intense, and we will be
        adversely affected if we are unable to attract key employees. We presently
        do
        not have a stock option plan for key employees and consultants.
 
  
  Customers
 
 Overall,
        our management believes that long-term we are not dependent on a single customer
        for any of the segments results. While the loss of any substantial customer
        could have a material short-term impact on a segment, we believe that our
        diverse distribution channels and customer base should reduce the long-term
        impact of any such loss.
 **RESULTS
        OF OPERATIONS FOR THE THREE MONTHS  ENDED MARCH 31, 2007 COMPARED TO THE
        THREE MONTHS ENDED MARCH 31, 2006.**





We
      are a
      company with operations in steel fabrication, and
      construction.  Revenues for the three months ended June 30, 2007
      were $5,200,594 and for the six months ended June 30, 2007 were $10,876,289
      compared to $4,869,422 and $8,805,271 for the same periods in
      2006.  Total operating expenses were $5,422,067 for the three
      months ended June 30, 2007 and $11,700,206 for the six months ended June
      30, 2007 compared to $4,678,912 and $8,884,660 for the same periods in
      2006.  The increases in operating expenses were primarily a result of
      increase in cost of goods sold.





Interest
      expense for the three months ended June 30, 2007 was $46,220 and for the
      six months ended June 30, 2007 was $91,996 compared to $70,653 and
      $194,508 for the same periods in 2006.  The decreases were
      primarily due to the conversion of convertible promissory notes.





As
      a
      result, Income (Loss) Prior to continued operations was ($259,157) for the
      three months ended June 30, 2007 and ($912,175) for the six months ended
      June 30, 2007, compared to $148,076 and ($208,836) for the same
      periods in 2006.





**LIQUIDITY
      AND CAPITAL RESOURCES**





Net
      cash
      used in operating activities was ($769,045) for the six months ended June 30,
      2007.  This was primarily related to the increase in billings in
      excess of costs on uncompleted contracts and increase in accrued
      expenses.





Total
      short-term and long-term debt at June 30, 2007 was $2,379,225 and total
      shareholders’ equity was $1,385,968.





Our
      businesses are seasonally working capital intensive and require funding for
      purchases of raw materials used in production, replacement parts inventory,
      capital expenditures, expansion and upgrading of existing facilities, as well
      as
      for financing receivables from customers.  Additionally, our auditors,
      in their opinion on our financial statements for the year ended December 31,
      2006 issued a “going concern” qualification to their report dated April 21,
      2007.  We believe that cash generated from operations, together with
      our bank credit lines, and cash on hand, will provide us with a majority of
      our
      liquidity to meet our operating requirements.  We believe that the
      combination of funds available through future anticipated financing
      arrangements, as discussed below, coupled with forecasted cash flows, will
      be
      sufficient to provide the necessary capital resources for our anticipated
      working capital, capital expenditures, and debt repayments for at least the
      next
      twelve months.





We
      are
      seeking to raise up to $20 million of additional capital from private investors
      and institutional money managers in the next few months, but there can be no
      assurance that we will be successful in doing so.  If we are not
      successful in raising any of this additional capital, our current cash resources
      may not sufficient to fund our current operations.





We
      may
      experience problems, delays, expenses, and difficulties sometimes encountered
      by
      an enterprise in our stage of development, many of which are beyond our
      control.  For potential acquisitions, these include, but are not
      limited to, unanticipated problems relating to the identifying partner(s),
      obtaining financing, culminating the identified partner due to a number of
      possibilities (prices, dates, terms, etc).  Due to limited experience
      in operating the combined entities for the Company, we may experience production
      and marketing problems, incur additional costs and expenses that may exceed
      current estimates, and competition.





21


Our
      businesses are seasonally working capital intensive and require funding for
      purchases of raw materials used in production, replacement parts inventory,
      capital expenditures, expansion and upgrading of existing facilities, as well
      as
      for financing receivables from customers.  During the three months
      ended June 30, 2007, the Company has not engaged in:





-
      Material off-balance sheet
      activities, including the use of structured finance or special purpose
      entities;


-
                Trading activities in non-exchange traded contracts;
                or


-
                Transactions with persons or entities that benefit from their
                non-independent relationship with the
                Company.





**Inflation**





We
      are
      subject to the effects of inflation and changing prices.  As
      previously mentioned, we experienced rising prices for steel and other
      commodities during fiscal 2006 and for the second three months of 2007 that
      had
      a negative impact on our gross margins and net earnings.  In the
      remainder of fiscal 2007, we expect average prices of steel and other
      commodities to be higher than the average prices paid in fiscal 2006 and for
      the
      second three months of 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.





**Critical
      Accounting Policies and Estimates**





In
      preparing our consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America, we must make
      decisions that impact the reported amounts of assets, liabilities, revenues
      and
      expenses, and related disclosures.  Such decisions include the
      selection of the appropriate accounting principles to be applied and the
      assumptions on which to base accounting estimates.  In reaching such
      decisions, we apply judgments based on our understanding and analysis of the
      relevant circumstances, historical experience, and actuarial valuations. Actual
      amounts could differ from those estimated at the time the consolidated financial
      statements are prepared.





Our
      significant accounting policies are described in Note A to the consolidated
      financial statements.  Some of those significant accounting policies
      require us to make difficult subjective or complex judgments or estimates.
      An
      accounting estimate is considered to be critical if it meets both of the
      following criteria: (i) the estimate requires assumptions about matters that
      are
      highly uncertain at the time the accounting estimate is made, and (ii) different
      estimates that reasonably could have been used, or changes in the estimate
      that
      are reasonably likely to occur from period to period, would have a material
      impact on the presentation of our financial condition, changes in financial
      condition or results of operations.





Accounts
      Receivable Valuation. We value accounts receivable, net of an allowance for
      doubtful accounts. Each quarter, we estimate our ability to collect outstanding
      receivables that provides a basis for an allowance estimate for doubtful
      accounts. In doing so, we evaluate the age of our receivables, past collection
      history, current financial conditions of key customers, and economic
      conditions.  Based on this evaluation, we establish a reserve for
      specific accounts receivable that we believe are uncollectible, as well as
      an
      estimate of uncollectible receivables not specifically known.  A
      deterioration in the financial condition of any key customer or a significant
      slow down in the economy could have a material negative impact on our ability
      to
      collect a portion or all of the accounts and notes receivable.




**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.








22


**ITEM
      3.      CONTROLS AND
      PROCEDURES.**





Management
        after reviewing comments raised by the Securities and Exchange Commission
        in
        March 2006 with respect to its financial reporting and the related adequacy
        of
        the Company’s disclosure controls and procedures, has determined that its
        disclosure controls and procedures were not effective as of December 31,
        2004
        and 2005 and there were material deficiencies in its disclosure controls
        and
        procedures.  A “material weakness” is a reportable condition in which
        the design or operation of one or more of the specific control components
        has a
        defect or defects that could have a material adverse effect on our ability
        to
        record, process, summarize and report financial data in the financial statements
        in a timely manner.  These material weaknesses are: (1) limited
        resources and manpower in the preparation and review of the financial statements
        in a timely manner, and  (2) inadequacy of the financial review
        process as it pertains to various account analyses.  While we believe
        that we have adequate policies, we believe that our implementation of those
        policies should be improved.  We are re-evaluating these various
        factors and are implementing additional procedures to alleviate these
        weaknesses.  The impacts of the above conditions were relevant to the
        quarter ended June 30, 2007.


**PART
      II. OTHER INFORMATION**








**ITEM  1.     
LEGAL
      PROCEEDINGS**





In
      the
      normal course of our business, we and/or our subsidiaries are named as
      defendants in suits filed in various state and federal courts. We believe that
      none of the litigation matters in which we, or any of our subsidiaries, are
      involved would have a material adverse effect on our consolidated financial
      condition or operations.





There
      is
      no past, pending or, to our knowledge, threatened litigation or administrative
      action which has or is expected by our management to have a material effect
      upon
      our business, financial condition or operations, including any litigation or
      action involving our officers, directors, or other key personnel.








**ITEM  2.  
  
CHANGES
      IN
      SECURITIES AND USE OF PROCEEDS**




During the quarter ended June 30, 2007, the Company sold 1,640,000 shares
        of
        Series A Convertible Preferred Stock ["Series A Preferred"] and received
        proceeds of $410,000.  In addition, 120,000 Series A Preferred Shares were
        issued for services valued at $30,000




The Company issued 600,000 common shares for services valued at
      $115,500.




Each
      of
      the above issuances were made to accrediterd investors in reliance of Section
      4(2) of the Securities Act of 1933.





**ITEM  3.     
DEFAULTS
      UPON
      SENIOR SECURITIES**





None








23


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





None








**ITEM  5.  OTHER
      INFORMATION**





The
      Company is obligated under the terms of a lease dated February 25, 2005 with
      the
      Receivership of Mound Properties, LP in Springboro, Ohio owned by a related
      party on behalf of Mound for a month to month term beginning January 2005 at
      a
      monthly rent of $16,250.  Each party has the right to terminate this
      lease with 30 days notice.  Under the terms of the lease, the Company
      is responsible for utilities, personal property taxes, repairs and
      maintenance.








**ITEM  6.  EXHIBITS
      AND REPORTS ON FORM
      8-K**





(a)            Exhibits:





Exhibit
      31.1                                Certification
      of Terry Lee, Chief Executive Officer& Chairman of the Board


Exhibit
      31.2                                Certification
      of Jerry Gruenbaum, Chief Financial Officer & Director





Exhibit
      32.1                                Certification
      of Terry Lee, Chief Executive Officer& Chairman of the Board


Exhibit
      32.2                                Certification
      of Jerry Gruenbaum, Chief Financial Officer & Director





(b)            Reports
      on Form 8-K:





Three
      Months Ended June 30, 2007





The
      Company filed a Form 8-K on April 3, 2007 relating to Item 4.01 Change in
      Registrant's certifying accountant.


The
      Company filed a Form 8-K on June 27, 2007 relating to Item 5.02 electing
      Terry Lee to the Registrant's Board of Directors as its new Chairman, ans
      appointing him as its new CEO.




**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)Date:
                August 20, 2007
            
            By:
                /s/ TERRY LEETerry
                LeeChief
                Executive Officer andChairman
                of the Board(Duly
                Authorized Officer)Date:
                August 20, 2007
            
            By:
                /s/ JERRY GRUENBAUMJerry
                GruenbaumChief
                Financial Officer and Director(Principal
                Financialand
                Accounting Officer)





24