UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 000-27045
HEARTLAND, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 36-4286069
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25 Mound Park Drive, Springboro, Ohio 45066
-------------------------------------------------------------------------------
(Address of principal executive offices)
(937) 748-4217
--------------------------
(Issuer's telephone number)
INTERNATIONAL WIRELESS, INC.
---------------------------------------------------
(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 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 [ ]
As of August 24, 2004, the Company had 14,664,109 issued, and 13,977,299
outstanding shares of its $.001 par value common stock.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Documents incorporated by reference: None.
INTERNATIONAL WIRELESS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet (Unaudited) - June 30, 2004.
Consolidated Statement of Operations (Unaudited) - For the Three
Months Ended June 30, 2004 and Six Months Ended June 30, 2004.
Consolidated Statements of Cash Flows (Unaudited) - For the Three
Months Ended June 30, 2004 and Six Months Ended June 30, 2004.
Notes to Unaudited Condensed Financial Statements.
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
ITEM 1. FINANCIAL STATEMENTS
HEARTLAND, INC. AND SUBSIDIARIES
(Formerly International Wireless, Inc.)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2004
ASSETS
CURRENT ASSETS
Cash $ 46,233
Marketable Securities 3,020
Accounts receivable, 941,726
Inventory 801,806
Prepaid expenses 1,000
----------
Total Current Assets 1,793,785
PROPERTY AND EQUIPMENT, net of depreciation 2,131,673
GOODWILL 586,056
----------
$4,511,514
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 33,103
Accounts payable 1,519,094
Notes payable to related party 543,000
Accrued payroll taxes 527,207
Accrued payroll 96,892
Notes payable to vendors 130,000
Accrued expenses 186,113
----------
Total Current Liabilities 3,035,409
LONG-TERM DEBT 676,549
STOCKHOLDERS' EQUITY
Preferred stock $0.01 par value, 5,000,000
shares authorized, non issued and outstanding
Common stock $0.001 par value, 100,000,000
shares authorized, 14,164,106 issued and
outstanding at June 30, 2004 14,164
Paid-in-capital 1,193,905
Retained deficit (408,513)
----------
Stockholders' deficit 799,556
----------
$4,511,514
==========
See accompanying notes to consolidated financial statements.
3
HEARTLAND, INC. AND SUBSIDIARIES
(Formerly International Wireless, Inc.)
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Six Months
Ended Ended
June 30, 2004 June 30, 2004
------------- -------------
NET SALES $1,673,258 $3,493,249
COSTS AND EXPENSES
Cost of goods sold 1,511,555 2,875,016
Selling, general and administrative 127,658 347,957
Stock based compensation 6,188 6,188
Depreciation 2,749 30,667
---------- ----------
Total Costs and Expenses 1,648,150 3,259,828
---------- ----------
NET OPERATING INCOME 25,108 233,421
OTHER INCOME (EXPENSE)
Rental income 38,569 97,781
Interest income 439 439
Interest expense (12,323) (21,332)
Loss on disposal of equipment (2,489) (2,489)
---------- ----------
Total Other Income 24,196 74,399
---------- ----------
NET INCOME $ 49,304 $ 307,820
========== ==========
NET INCOME PER COMMON SHARE
(Basic and diluted) $ 0.004 $ 0.02
========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 13,572,710 13,505,322
========== ==========
Comparable data for the three and six months ended June 30,
2003 is not available.
See accompanying notes to consolidated financial statements.
4
HEARTLAND, INC. AND SUBSIDIARIES
(Formerly International Wireless, Inc.)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Six Months
Ended Ended
June 30, 2004 June 30, 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 49,304 $307,820
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 2,749 30,667
Loss on deposit of equipment 2,489 2,489
Stock based compensation 6,188 6,188
Changes in operating assets and liabilities:
Accounts receivable 132,357 178,456
Inventory 72,732 (182,614)
Accounts payable (255,561) (23,204)
Accrued payroll taxes (1,426) (71,251)
Billings in excess of cost (18,908) (156,507)
Accrued payroll - (14,750)
Notes payable to vendors (78,479) (210,000)
Accrued expenses (20,993) (5,243)
-------- --------
Net Cash Used in Operating Activities (109,548) (137,949)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds 19,118 19,118
Loan repayments (14,066) (34,359)
Additional capital investments 152,500 197,500
-------- --------
Net Cash Provided by Financing Activities 157,552 182,259
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment (3,000) (3,000)
-------- --------
NET INCREASE IN CASH 45,004 41,310
CASH BEGINNING OF PERIOD 1,229 4,923
-------- --------
CASH END OF PERIOD $ 46,233 $ 46,233
======== ========
See accompanying notes to consolidated financial statements.
5
HEARTLAND, INC. AND SUBSIDIARIES
(Formerly International Wireless, Inc.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary in order to make the financial
statements not misleading have been included. Results for the three
and six months ended June 30, 2004 are not necessarily indicative of
the results that may be expected for the year ending December 31,
2004. For further information, refer to the financial statements and
footnotes thereto included in the Heartland, Inc. and Subsidiaries'
annual report on Form 10-KSB for the year ended December 31, 2003 and
its Form 8K-A filed on June 1, 2004 with the Securities and Exchange
Commission.
NOTE B - ACQUISITION OF MOUND TECHNOLOGIES
On December 15, 2003, the Company acquired 100% of the issued and
outstanding stock of Mound Technologies, Inc. ("Mound") for an
aggregate purchase price of 1,256,000 shares of the Company's common
stock to be issued to the stockholders of Mound. Mound, a Nevada
corporation, is a steel fabricator meeting industrial and
architectural standards for commercial buildings. The acquisition is
being accounted for as a purchase under SFAS No. 141, Business
Combinations. Since the acquisition occurred on December 15, 2003, the
results of operations were not included in the December 31, 2003
financial statements since the period of inclusion was not deemed
significant. However, effective January 1, 2004, the results of
operations for the three and six months ended June 30, 2004, have been
included.
The allocation of the purchase price was as follows:
Value of 1,256,000 shares of common stock at $0.01 per share $ 12,560
==========
Fair value of net assets allowed as follows:
Cash $ 4,923
Marketable securities 3,020
Accounts receivable 1,120,182
Inventory 619,192
Equipment 982,502
Deposits 1,000
Liabilities assumed (3,304,315)
Goodwill 586,056
----------
$ 12,560
==========
NOTE C - STOCKHOLDERS' EQUITY
The Company authorized the issuance of 322,098 shares as a correction
of previously issued shares in connection with the reverse merger
which occurred in December 2003.
On June 14, 2004, the company issued 245,500 shares for property
contributed to the Company having a fair market value of $980,000. The
shares were issued at a price of $4.00 per share.
On March 4, 2004, the company issued 123,750 shares in connection with
the settlement of a lawsuit against the company.
On June 30, 2004, the company approved the issuance of 395,000 shares
of its common stock for capital contributed by investors at a price of
$0.50 per share.
6
HEARTLAND, INC. AND SUBSIDIARIES
(Formerly International Wireless, Inc.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
NOTE D - LITIGATION
On November 20, 2001, a judgment in the amount of $10,497 was entered
against the Company and Omar A. Rizvi, the former Chairman of the
Board of Directors of Origin (a predecessor company of Heartland,
Inc.), by the Labor Commissioner in the State of California for past
wages, interest and penalties owed to a former employee of the Company
who claimed to have performed paralegal and bookkeeping services in
California for Origin. To date, this judgment has not been paid.
On February 20, 2003, a judgment in the amount of $28,750 was entered
against the Company for unpaid rent on behalf of Graham Paxton, the
former President and CEO of the Company as part of his employee
benefit plan.
On March 11, 2003, the Company received notice from Omar A. Rizvi, the
former Chairman of the Board of Origin, claiming breach of contract
for failure to deliver to him 100,000 shares for professional services
allegedly performed on behalf of the Company and wrongful cancellation
of additional warrants to purchase 200,000 shares of International
Wireless, Inc. for which he claimed damages. No suit has been filed to
date and the Company believes that if such a suit is filed, the
Company has a good defense and proper grounds for a counter-suit.
On March 20, 2003, a judgment in the amount of $2,000 was entered
against the Company By Beyond Words Communication, Inc. for unpaid
marketing services rendered to the company.
On March 31, 2003, a judgment in the amount of $99,089, including
$50,000 security deposit replenishment, was entered against the
company for breach of contract for non-payment of rent on the
company's office facility in Woburn, Massachusetts. The company is
contingently liable for the balance of this lease in the total amount
of $428,000 through the lease expiration date of July 31, 2005.
In May 2003, certain former employees filed complaints with the
Commonwealth of Massachusetts Attorney General's office for unpaid
salaries and accrued vacation pay. The Company's records reflect a
liability of approximately $73,000 for back fees, gross salaries and
accrued vacation. Potential severance pay due to these employees in
accordance with their employment agreement totals an additional
$186,350 which the Company believes is not due.
In April 2004, a judgment was obtained against Mound Technologies,
Inc., a newly acquired subsidiary, in the amount of $175,000 by a
vendor. The Company has recently negotiated a settlement agreement
with payment of a reduced amount due by July 12, 2004.
Mound Technologies, Inc., a wholly owned subsidiary of the Company,
leases its manufacturing facility from Mound Properties, an
organization owned by the President of Mound Technologies, Inc. The
financial institution, which has a mortgage on the property, has
obtained a judgment on the property and the owners of Mound
Technologies, Inc. Should the financial institution institute
foreclosure procedures, the Company may be forced to relocate its
manufacturing facility. To date, the financial institution has not
instituted foreclosure procedures and the Company is working with
Mound Properties to refinance the mortgage.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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,
2004 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, 2004 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, 2003, 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, 2003 financial
statements, the disclosures are adequate to make the information presented not
misleading. The results of operations for the three months ended June 30, 2004
and for the six months ended June 30, 2004 are not necessarily indicative of the
operating results for the full fiscal year.
(A) THE COMPANY
The Company was incorporated in the State of Maryland on April 6, 1999 as
Origin Investment Group, Inc. On December 27, 2001, the Company went through a
reverse merger with International Wireless, Inc. Thereafter on January 2, 2002,
the Company changed its name from Origin to International Wireless, Inc. On
December 1, 2003, the Company went through another reverse merger with PMI
Wireless, Inc. Thereafter on June 14, 2004, the Company changed its name from
International Wireless, Inc. to Heartland, Inc.
The Company was originally formed as a non-diversified closed-end
management investment company, as those terms are used in the Investment Company
Act of 1940 ("1940 Act"). The Company at that time elected to be regulated as a
business development company under the 1940 Act. The 1940 Act defines a business
development company (a "BDC") as a closed-end management investment company that
provides small businesses that qualify as an "eligible portfolio company" with
investment capital and also significant managerial assistance. A BDC is required
under the 1940 Act to invest at least 70% of its total assets in "qualifying
assets" consisting of (a) "eligible portfolio companies" as defined in the 1940
Act and (b) certain other assets including cash and cash equivalents.
The Company's original investment strategy had been, since inception, to
invest in a diverse portfolio of private companies that in some way build the
Internet infrastructure by offering hardware, software and/or services which
enhance the use of the Internet. Prior to it's reverse merger with International
Wireless, the Company identified two eligible portfolio companies within which
they entered into agreements to acquire interests within such companies and to
further invest capital in these companies to further develop their business.
However, on each occasion and prior to each closing, the Company was either
8
unable to raise sufficient capital to consummate the transaction or discovered
information which modified its understanding of the eligible portfolio company's
financial status to such an extent where it was unadvisable for it to continue
and consummate the transaction. During the 2002 fiscal year, the Company entered
into a definitive share exchange agreement and investment agreement with
Vivocom, Inc., a San Jose, California based software company that had developed
a proprietary all media switching system which enables all forms of data to be
sent over a single IP channel. The Company intended on investing a minimum of
three million two hundred and fifty thousand dollars ($3,250,000) within Vivocom
over several months. Due to the Company's inability to raise this money, the
share exchange never took place and the agreement terminated.
On December 7, 2001, the Company held a special meeting of its shareholders
in accordance with a filed Form DEF 14A with the Securities and Exchange
Commission whereby the shareholders voted on withdrawing the Company from being
regulated as a business development company and thereby no longer be subject to
the Investment Company Act of 1940 and to effect a one-for-nine reverse split of
its total issued and outstanding common stock. On December 14, 2001 the Company
filed a Form N-54C with the Securities and Exchange Commission formally
notifying its withdrawal from being regulated as a business development company.
The purpose of the withdrawal of the Company from being regulated as a business
development company and the one-for-nine reverse split of its total issued and
outstanding common stock was to allow the Company to merge with a potential
business in the future. By withdrawing from its status as a business development
company, the Company chose to be treated as a publicly traded "C" corporation.
On December 27, 2001, the Company went through a reverse merger whereby it
acquired all the outstanding shares of International Wireless. Under the said
reverse merger, the former Shareholders of International Wireless ended up
owning a 88.61% interest in the Company. Thereafter on January 2, 2002, the
Company changed its name from Origin to our current name, International
Wireless, Inc.
From December 27, 2001 through June 2003, the Company attempted to develop
its bar code technology and bring it to market. To that extent, the Company
moved its operations to Woburn, Massachusetts, hired numerous computer
programmers, developers and sales people in addition to support staff. Due to
the Company's inability to raise sufficient capital, the Company was unable to
pay current operating expenses and by June, 2003 shut down its operations
entirely.
On August 29, 2003, a change in control of the Company occurred in
conjunction with naming Attorney Jerry Gruenbaum of First Union Venture Group,
LLC as attorney of record for the purpose of overseeing the proper disposition
of the Company and its remaining assets and liabilities by any means
appropriate, including settling any and all liabilities to the U.S. Internal
Revenue Service and the Commonwealth of Massachusetts' Attorney General's office
for unpaid wages.
In conjunction with naming Attorney Jerry Gruenbaum of First Union Venture
Group, LLC as attorney of record for the purpose of overseeing the proper
disposition of the Company and its remaining assets and liabilities, the Company
issued First Union Venture Group, LLC, a Nevada Limited Liability Company,
Thirty Million (30,000,000) newly issued common shares as consideration for
their services. In addition, the Company canceled any and all outstanding
options, warrants, and/or debentures not exercised to date. The Company further
nullified any and all salaries, bonuses, and benefits including severance pay
and accrued salaries to Stanley A. Young and Michael Dewar.
9
On November 12, 2003, the Company approved the spin-off of the two
subsidiaries of the Company and any and all remaining assets of the Company,
including any intellectual property, to enable the Company to pursue a suitable
merger candidate. In addition, the Company approved a 30 to 1 reverse split of
all existing outstanding common shares of the Company.
On November 15, 2003, a change in control of the Company occurred whereby
the Company entered into an Acquisition Agreement to acquire one hundred percent
(100%) of PMI Wireless, Inc., a Delaware corporation with corporate headquarters
located in Cordova, Tennessee. The acquisition, in the form of a reverse merger,
took place on December 1, 2003 for the aggregate consideration of $50,000 in
cash, all of which was paid to the U.S. Internal Revenue Service for the
Company's prior obligations, plus assumption of the Company's existing debts,
for 9,938,466 newly issued common shares of the Company.
On December 10, 2003, the Company entered into an Acquisition Agreement to
acquire one hundred percent (100%) of Mound Technologies, Inc. ("Mound"), a
Nevada corporation with its corporate headquarters located in Springboro, Ohio.
The acquisition was a stock for stock exchange in which the Company acquired all
of the issued and outstanding common stock of Mound in exchange for 1,256,000
newly issued shares of its common stock. As a result of this transaction, Mound
became a wholly owned subsidiary of the Company.
(B) BUSINESS OF THE ISSUER
The Company is in the early stages of business formation and operation. In
its present form, the Company's mission is to become a leading diversified
company with business interests in well established service organizations and
capital goods manufacturing companies. The Company plans to successfully grow 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, the Company expects to become the facilitator for future growth
and higher long-term profits. In the process, the Company expects to develop new
synergies among the acquired companies, which should allow for greater cost
effectiveness and efficiencies, and thus further enhancing each individual
company's strengths. To date, the Company has completed company acquisitions in
the wireless technology, steel fabrication and heavy machinery industries.
(1) PMI WIRELESS, INC.
PMI Wireless, Inc. is an emerging technology company, incorporated in
September 2003, which plans to deliver Customer Premise Equipment (CPE) for
Broadband Wireless Access Systems in the ISM, WLL, MMDS and UNII frequency
bands. PMI expects to provide a reduction of build-out costs for Broadband
Wireless Access Systems while accelerating the speed of deployment. PMI also
expects to deliver next-generation wireless services that support expanded
coverage, seamless global roaming, higher voice quality, high-speed data and a
full range of broadband multimedia services, including full motion video, video
conferencing, and high-speed Internet access. Additional services are expected
to include on-demand medical imaging, real-time road maps, and anytime, anywhere
video conferencing.
10
PMI is also a licensed reseller for Turbowave, Inc. Turbowave develops,
manufactures, and markets certain hardware, software, and related materials for
use with certain personal computers, wireline and wireless devices. PMI expects
to utilize the Turbowave manufactured products in developing and marketing its
products and services.
To date, PMI has not produced or sold any products or services.
(2) MOUND TECHNOLOGIES, INC.
Mound was incorporated in the state of Nevada in November of 2002, with its
corporate offices located in Springboro, Ohio. Mound is actively involved in the
fabricated metals industry as well as property management. This business
includes two divisions and Freedom Products of Ohio ("Freedom"), a wholly owned
subsidiary.
The Steel Fabrication Division is located in Springboro, Ohio. This
division 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 6000 tons per year of
structural and miscellaneous steel. This division had been previously known as
Mound Steel Corporation which was started at the same location in 1964.
The Property Management Division is also located in Springboro, Ohio. This
division presently owns two properties and manages three other properties, all
in Ohio, which includes 37,000 square feet of light and heavy manufacturing
buildings on approximately 6 acres. An additional 33 acres of industrial
property is managed but not owned, all in Ohio.
Freedom is a wholly owned subsidiary of Mound. Freedom manufactures
products for the heavy machinery industry and has the ability to do complete
assembly and testing if required. This includes machine bases, breeching,
pollution control abatement fabrications and material handling fabrications.
Freedom has the capacity to fabricate weldments and assemblies up to 50 tons
total weight. Freedom is located in Middletown, Ohio.
(3) STEEL FABRICATION DIVISION:
The Steel Fabrication Division is focused on the fabrication of metal
products. This Division produces structural steel, miscellaneous metals, steel
stairs, railings, bar joists, metal decks and the erection thereof. This
Division produced net sales of $4.4 million in 2003.
The State of Ohio is the second largest producing state for fabricated
metal products in the country. The fabricated metal component of the Ohio Gross
State Product was $8.995 million for 2001. Over the past three years, from the
first quarter of 2001 to the first quarter of 2003, the economic downturn has
hit this manufacturing segment hard. A substantial number of factory jobs have
been lost in this Division's operating region. During this time, nearly 60% of
the durable goods manufacturers were concentrated in these two struggling
industries - fabricated metal and machinery manufacturing. Along with the
11
economic manufacturing downturn, intense competition from China also contributed
to the challenging economic climate of this industry. With the economy emerging
out of its doldrums in late 2003, coupled with steel tariffs being ended,
business prospects for the metal fabrication industry have improved. For the
first quarter of 2004, this Division has approximately $3,300,000 in order
backlog.
This Division's customers are typically U.S. based companies that require
large structural steel fabrication, with needs such as building additions, new
non-residential construction, etc. Customers are typically located within a
one-day drive from the Company's facilities. The Company is able to reach 70% of
the U.S. population, yielding a significant potential customer base. Marketing
of our products is done by advertising in industry directories, word-of-mouth
from existing customers, and by the dedicated efforts of in-house sales staff
monitoring business developments opportunities within the Company's region.
Large clients typically work with the Company on a continual basis for all their
fabricated metal needs.
Competition overall in the U.S. steel fabrication industry has been reduced
by approximately 50% over the last few years due to economic conditions leading
to the lack of sustained work. The number of regional competitors has gone from
ten down to three over the past five years. Larger substantial work projects
have declined dramatically with the downturn in the economy. Given the
geographical operating territory of the Company, foreign competition is not a
major factor. In addition to competition, steel pricing represents another
significant challenge. The cost of steel, our highest input cost, has seen
significant increases in recent years. The Company will manage this challenge by
stockpiling the most common steel component products and incorporating price
increases in job pricing as deemed appropriate.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
------------------
On November 20, 2001 a judgment in the amount of $10,497 was entered
against the Company, and Omar A. Rizvi, the former Chairman of the Board of
Directors of Origin, by the Labor Commissioner in the State of California for
past wages, interest and penalties owed to a former employee of the Company who
alleged to have performed paralegal and bookkeeping services in California for
Origin. To date the judgment has not been paid.
On February 20, 2003 a judgment in the amount of $28,750 was entered
against the Company for unpaid rent on behalf of Graham Paxton, the former
President and CEO of the Company as part of his employee benefit plan. To date
the judgment has not been paid.
On March 20, 2003 a judgment in the amount of $2,000 was entered against
the Company by Beyond Words Communication, Inc. for prior unpaid marketing
services rendered to the Company. To date the judgment has not been paid.
12
On March 31, 2003 a judgment in the amount of $99,090 was entered against
the Company for breach of contract for non payment of rent on the Company's
former office facility in Woburn, Massachusetts. To date the judgment has not
been paid. The company is contingently liable for the balance of this lease in
the total amount of $428,000 through the lease expiration date of July 31, 2005.
In May, 2003 certain former employees filed complaints with the
Commonwealth of Massachusetts Attorney General's office for unpaid salaries and
accrued vacation pay. In accordance with Company's records, the Company owes a
total of approximately $73,000 for back fees, gross salaries and accrued
vacation. From its records, which the employees dispute, the Company owes the
following to individuals who filed a complaint with the Attorney General's
Office:
Thomas C. Antognini $12,273.03
John Poupolo $14,344.44
James K. Levinger $11,454.31
Tom Gosselin $ 5,332.40
----------
Total $41,404.18
==========
In April 2004, a judgment was obtained against Mound Technologies, Inc., a
newly acquired subsidiary, in the amount of $175,000 by a vendor. The Company
has recently negotiated a settlement agreement with payment of a reduced amount
due by July 12, 2004.
Mound Technologies, Inc., a wholly owned subsidiary of the Company, leases
its manufacturing facility from Mound Properties, an organization owned by the
President of Mound Technologies, Inc. The financial institution, which has a
mortgage on the property, has obtained a judgment on the property and the owners
of Mound Technologies, Inc. Should the financial institution institute
foreclosure procedures, the Company may be forced to relocate its manufacturing
facility. The Company is working on acquiring the manufacturing facilities from
Mound Properties. On August 24, 2004 the Company, received a commitment letter
from a lending institution for up to $1,300,000 to acquire said properties. The
Company is working with the financial institution that currently has the
mortgage on said properties to close this transaction in the very near future.
Other than the matters above, there is no other past, pending or, to the
Company's knowledge, threatened litigation or administrative action which has or
is expected by the Company's management to have a material effect upon our
Company's business, financial condition or operations, including any litigation
or action involving our Company's officers, directors, or other key personnel.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
The Company has entered into agreements to acquire four commercial parcels
of real estate for newly issued stock of the Company. The first parcel located
at 109 Industrial Drive, Ripley, Tennessee, consisted of 31,000 + sq. ft. of
commercial property on 6 acres for which the Company will be paying $650,000.00
by assuming $155,000.00 of existing first loan, plus issue 123,750 newly
restricted shares of the Company. The second parcel located at 306 Demers, East
Grand Forks, Minnesota, consists of commercial retail and residential facility
valued at around $365,000.00. The third parcel located at Walle Township, Grand
Forks County, North Dakota consists of 2.75 acres with frontage on 21st Street
SE which has been appraised for $60,000.00. The fourth parcel located at
Edgewood Estates, Addition to City Grand Forks, North Dakota consists of 2.7
acres with frontage on Belmont Road which has been appraised for $60,000.00. The
Registrant has agreed to pay 121,750 newly restricted shares of the Registrant
for the Minnesota and North Dakota properties.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
A Special Meeting of the Shareholders of the Company was held at the
Company's corporate office at 25 Mound Park Drive, Springboro, Ohio 45066, on
the 11th day of June, 2004 at 10 o'clock A.M. pursuant to call to meeting by the
directors of the Company on June 1, 2004, fixing said time and place. A quorum,
representing 8,700,000 issued shares was present in person or by telephone which
represents a majority authorized to vote at such meeting.
13
At the meeting, the shareholders by unanimous vote approved the Articles of
Amendment that has been prior approved by the officers and directors of the
Company by a similar unanimous vote, to change the name of the Company from
International Wireless, Inc. to Heartland, Inc. to reflect the true nature of
the business of the Company. Said change in name was filed with the State
Department of Assessments and Taxation of Maryland on June 14, 2004, and became
effective immediately upon approval of said change and receiving the new trading
symbol from the National Association of Securities Dealers. The trading symbol
as a consquence changed from IWLJ.PK to HTLJ.PK.
In addition, the shareholders approved the change in the par value of the
Common Stock from $0.009 to $0.001. Said change in par value has been filed with
the State Department of Assessments and Taxation of Maryland on June 14, 2004
and becomes effective immediately.
ITEM 5. OTHER INFORMATION
-----------------
The Company is in the process of filing Form 15c-211 with the National
Association of Securities Dealers ("NASD") to be quoted on the OTC Bulletin
Board. The Company is working with Public Securities, Inc. of Spokane,
Washington, a firm qualified to act as the Company's market maker to accomplish
said goal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
(b) Reports on Form 8-K:
Three Months Ended June 30, 2004
The Company filed a Form 8-K on April 23, 2004 announcing it cancelled
the Acquisition Agreement entered into on December 11, 2003, to
acquire one hundred percent of Precision Metal Industries.
The Company filed a Form 8-K on April 23, 2004 approved Jeffrey
Brandeis as president of the Company and Craig Pietruszewski as the
Chief Financial Officer of the Company
The Company filed a Form 8-K/A on May 26, 2004 providing audited
financials of the December 11, 2003 acquisition of Mound Technologies,
Inc.
The Company filed a Form 8-K on June 14, 2004 announcing change of
name from International Wireless, Inc. to Heartland, Inc.
The Company filed a Form 8-K on June 17, 2004 anouncing it acquired
four commercial parcels of real estate for newly issued stock of the
Company.. In addition, Craig Pietruszewski resigned as the Company's
CFO.
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.
INTERNIONAL WIRELESS, INC.
(Registrant)
Date: August 24, 2004 By: /s/ TRENT SOMMERVILLE
--------------------------
Trent Sommerville
Chief Executive Officer, and
Chairman of the Board
Date: August 24, 2004 By: /s/ JEFFREY BRANDEIS
-------------------------
Jeffrey Brandeis
President
Date: August 24, 2004 By: /s/ JERRY GRUENBAUM
-------------------------
Jerry Gruenbaum
Interim Chief Financial
Officer, Secretary and
Director.
14