SB-2

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

HEARTLAND OIL AND GAS CORP.

(Exact name of registrant as specified in its charter)

Nevada	1221	91-1918326
State or jurisdiction of incorporation or organization	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

Suite 1925, 200 Burrard Street, Vancouver, British Columbia, Canada V6C 3L6 (604) 693-0177

(Address and telephone number of registrant's principal executive offices)

Richard Coglon, President
Suite 1925, 200 Burrard Street, Vancouver, British Columbia, Canada V6C 3L6 (604) 693-0177

(Name, address and telephone number of agent for service)

Copy of communications to:

William L. Macdonald, Esq.
Clark, Wilson
Suite 800 - 885 West Georgia Street
Vancouver, British Columbia, Canada V6C 3H1
Telephone: 604-687-5700

Approximate date of proposed sale to the public:  From time to time after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

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CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered(1)	Amount to be registered	Proposed maximum offering price per share	Proposed maximum aggregate offering price (US$)	Amount of registration fee(2)
Common Stock to be offered for resale by selling stockholders	22,305,693	$2.15	$47,957,239.00	$6,076.18
Total Registration Fee				$6,076.18

(1) In the event of a stock split, stock dividend, or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.

(2) Fee calculated in accordance with Rule 457(c) of the Securities Act. Estimated for the sole purpose of calculating the registration fee. We have based the fee calculation on the average of the last reported bid and ask price for our common stock on the OTC Bulletin Board on November 10, 2004.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON THE DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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PROSPECTUS

Subject to Completion
____________, 2004

HEARTLAND OIL AND GAS CORP.
A NEVADA CORPORATION

SHARES OF COMMON STOCK OF HEARTLAND OIL AND GAS CORP.
_________________________________

The prospectus relates to the resale by certain selling stockholders of Heartland Oil and Gas Corp. of up to 22,305,693 shares of our common stock in connection with the resale of:

- 19,927,575 shares of our common stock which were issued on September 27, 2004 in connection with private placements; and

- 2,378,118 shares of our common stock which were issued upon the conversion of Series A Convertible Preferred Stock, which Preferred Stock was issued on January 13, 2004 in a private placement.

The selling stockholders may offer to sell the shares of common stock being offered in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. We will not receive any proceeds from the resale of shares of our common stock by the selling stockholders.

Our common stock is traded on the National Association of Securities Dealers OTC Bulletin Board under the symbol "HOGC". On November 10, 2004, the closing bid price of our common stock was $2.19.

Our business is subject to many risks and an investment in our common stock will also involve a high degree of risk. You should invest in our common stock only if you can afford to lose your entire investment. You should carefully consider the various Risk Factors described beginning on page 8 before investing in our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The information in this prospectus is not complete and may be changed. The selling stockholder may not sell or offer these securities until this registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

The date of this prospectus is ___________________, 2004.

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The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus.

TABLE OF CONTENTS

	PAGE NUMBER
PROSPECTUS SUMMARY	6
RISK FACTORS	7
RISKS RELATED TO THIS OFFERING	8
Sales of a substantial number of shares of our common stock into the public market by the selling stockholders may result in significant downward pressure on the price of our common stock and could affect the ability of our stockholders to realize the current trading price of our common stock	8
Trading on the OTC Bulletin Board may be sporadic because it is not a stock exchange, and stockholders may have difficulty reselling their shares	8
RISKS RELATED TO OUR BUSINESS	8
We have had negative cash flows from operations and if we are not able to obtain further financing our business operations may fail	8
A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations	9
If we issue additional shares in the future this may result in dilution to our existing stockholders.	9
We have a history of losses and fluctuating operating results which raise substantial doubt about our ability to continue as a going concern	9
Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.	10
NASD sales practice requirements may also limit a stockholder's ability to buy and sell our stock	10
We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations	10
A majority of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of or directors or officers	10
Because of the early stage of development and the nature of our business, our securities are considered highly speculative	11
As our properties are in the exploration and development stage there can be no assurance that we will establish commercial discoveries on our properties	11
The potential profitability of oil and gas ventures depends upon factors beyond the control of our company	11
Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring the leases	11
The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable	12
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Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company	12
Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations	12
Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position	12
Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability	13
FORWARD-LOOKING STATEMENTS	13
THE OFFERING	13
USE OF PROCEEDS	14
SELLING STOCKHOLDERS	14
PLAN OF DISTRIBUTION	18
PRIVATE PLACEMENTS	19
LEGAL PROCEEDINGS	20
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS	20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	22
DESCRIPTION OF COMMON STOCK	24
INTEREST OF NAMED EXPERTS AND COUNSEL	24
EXPERTS	24
DISCLOSURE OF SEC POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	24
DESCRIPTION OF PROPERTY	25
DESCRIPTION OF BUSINESS	25
MANAGEMENT'S DISCUSSION AND ANALYSIS	30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	37
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	37
DIVIDEND POLICY	38
EXECUTIVE COMPENSATION	38
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS	41
FINANCIAL STATEMENTS	41
WHERE YOU CAN FIND MORE INFORMATION	43

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As used in this prospectus, the terms "we", "us", "our", and "Heartland" mean Heartland Oil and Gas Corp., unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

PROSPECTUS SUMMARY

Our Business

We are an oil and gas company engaged in the exploration for and development of Coal Bed Methane in the "Soldier Creek Prospect" located in the Forest City Basin of northeast Kansas. Our "Soldier Creek" project encompasses approximately 252,000 acres of prospective frontier coal bed methane (CBM) Lands. Our subsidiary, Heartland Oil and Gas Inc., holds the leases and operates the project. Effective September 27, 2004 we acquired leases covering an additional 766,000 acres of prospective CBM lands, also in the Forest City Basin. Our company, Heartland Oil and Gas Corp., was incorporated in the State of Nevada on July 9, 1998, under the name Adriatic Holdings Ltd. Our principal executive offices are located at Suite 1925, 200 Burrard Street, Vancouver, British Columbia, Canada, V6C 3L6. Our telephone number is (604) 693-0177. We maintain a website at www.heartlandoilandgas.com. Information contained on our website does not form part of this prospectus.

We have one wholly-owned subsidiary, Heartland Oil and Gas Inc., a Nevada corporation incorporated on August 11, 2000. We acquired our subsidiary on September 17, 2002 and our subsidiary became our predecessor company.

Number of Shares Being Offered

The prospectus relates to the resale by certain selling stockholders of Heartland Oil and Gas Corp. of up to 22,305,693 shares of our common stock in connection with the resale of:

- 19,927,575 shares of our common stock which were issued on September 27, 2004 in connection with private placements; and

- 2,378,118 shares of our common stock which were issued upon the conversion of Series A Convertible Preferred Stock, which Preferred Stock was issued on January 13, 2004 in a private placement.

The selling stockholders may sell these shares of common stock in the public market or through privately negotiated transactions or otherwise. The selling shareholders may sell these shares of common stock through ordinary brokerage transactions, directly to market makers or through any other means described in the section entitled "Plan of Distribution".

Number of Shares Outstanding

There were 50,070,347 shares of our common stock issued and outstanding as at October 31, 2004.

Use of Proceeds

We will not receive any of the proceeds from the sale of the shares of our common stock being offered for sale by the selling stockholders. We will incur all costs associated with this registration statement and prospectus.

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Summary of Financial Data

The summarized consolidated financial data presented below is derived from and should be read in conjunction with our audited consolidated financial statements for the years ended December 31, 2003 and 2002, and the interim consolidated financial statements for the six month period ended June 30, 2004 including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled "Management's Discussion and Analysis" beginning on page 29 of this prospectus.

	For the year ended December 31, 2003	For the year ended December 31, 2002
Revenue	Nil	Nil
Net Loss for the Period	$1,219,393	$428,554
Loss Per Share - basic and diluted	$0.06	$0.03
	As at December 31, 2003	As at December 31, 2002
Working Capital (Deficiency)	$7,806,122	($422,518)
Total Assets	$12,589,731	$2,243,941
Total Number of Issued Shares of Common Stock	24,301,320	19,582,429
Deficit	$1,701,538	$482,145
Total Stockholders' Equity	$12,089,368	$1,495,208

	For the six months ended June 30, 2004 (unaudited)	For the six months ended June 30, 2003 (unaudited)
Revenue	Nil	Nil
Net Loss for the Period	$746,575	$544,641
Loss Per Share - basic and diluted	$0.03	$0.03
	As at June 30, 2004 (unaudited)
Working Capital	$6,979,559
Total Assets	$15,060,036
Total Number of Issued Shares of Common Stock	24,421,320
Deficit	$2,448,113
Total Stockholders' Equity	$14,627,215

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RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our company's common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below are all of the material risks that we are currently aware of that are facing our company. Additional risks not presently known to us may also impair our business operations. You could lose all or part of your investment due to any of these risks.

RISKS RELATED TO THIS OFFERING

Sales of a substantial number of shares of our common stock into the public market by the selling stockholders may result in significant downward pressure on the price of our common stock and could affect the ability of our stockholders to realize the current trading price of our common stock.

Sales of a substantial number of shares of our common stock in the public market could cause a reduction in the market price of our common stock. We had 50,070,347 shares of common stock issued and outstanding as of October 31, 2004. When this registration statement is declared effective, the selling stockholders may be reselling up to 22,305,693 shares of our common stock. As a result of such registration statement, a substantial number of our shares of common stock may be issued and may be available for immediate resale, which could have an adverse effect on the price of our common stock. As a result of any such decreases in price of our common stock, purchasers who acquire shares from the selling stockholders may lose some or all of their investment.

To the extent any of the selling stockholders exercise any of their share purchase warrants, and then resell the shares of common stock issued to them upon such exercise, the price of our common stock may decrease due to the additional shares of common stock in the market.

Any significant downward pressure on the price of our common stock as the selling stockholders sell the shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock.

Trading on the OTC Bulletin Board may be sporadic because it is not a stock exchange, and stockholders may have difficulty reselling their shares.

Our common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with the company's operations or business prospects. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly, you may have difficulty reselling any of the shares you purchase from the selling stockholders.

RISKS RELATED TO OUR BUSINESS

We have had negative cash flows from operations and if we are not able to continue to obtain further financing our business operations may fail.

To date we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements and have incurred losses totalling approximately $387,302 for the three months ending June 30, 2004, and accumulative losses of $2,448,113 since inception to June 30, 2004. As of June 30, 2004 we had working capital of $6,979,559 as a result of recent financing activities. We do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that:

- the costs to acquire further acreage are more than we currently anticipate;

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- drilling and completion costs for further wells increase beyond our expectations; or

- we encounter greater costs associated with general and administrative expenses or offering costs.

The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans.

We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because our operations have been primarily financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new products and continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

If we issue additional shares in the future this may result in dilution to our existing stockholders.

Our Certificate of Incorporation authorizes the issuance of 100,000,000 shares of common stock and 5,000,000 shares of preferred stock. Our board of directors have the authority to issue additional shares up to the authorized capital stated in the certificate of incorporation. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such dilution, if you acquire shares from the selling shareholders, your proportionate ownership interest and voting power will be decreased accordingly. Further, any such issuance may result in a change of control of our corporation.

We have a history of losses and fluctuating operating results which raise substantial doubt about our ability to continue as a going concern.

Since inception through June 30, 2004, we have incurred aggregate losses of $2,448,113. There is no assurance that we will operate profitably or will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of when customers will purchase our services, the size of customers' purchases, the demand for our services, and the level of competition and general economic conditions. If we cannot generate positive cash flows in the future, or raise sufficient financing to continue our normal operations, then we may be forced to scale down or even close our operations.

Until such time as we generate revenues, we expect an increase in development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flow until our properties enter commercial production.

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Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and leve l of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the sec ondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

NASD sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the "penny stock" rules described above, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.

We have no history of revenues from operations and have no significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited operating history and must be considered in the development stage. The success of the company is significantly dependent on a successful acquisition, drilling, completion and production program. Our company's operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to locate recoverable reserves or operate on a profitable basis. We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.

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A majority of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.

A majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on our directors or officers, or enforce within the United States or Canada any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them. In addition, investors may not be able to commence an action in a Canadian court predicated upon the civil liability provisions of the securities laws of the United States. The foregoing risks also apply to those experts identified in this prospectus that are not residents of the United States.

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We are engaged in the business of exploring and, if warranted, developing commercial reserves of oil and gas. Our properties are in the exploration stage only and are without known reserves of oil and gas. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

As our properties are in the exploration and development stage there can be no assurance that we will establish commercial discoveries on our properties.

Exploration for economic reserves of oil and gas is subject to a number of risk factors. Few properties that are explored are ultimately developed into producing oil and/or gas wells. Our properties are in the exploration and development stage only and are without proven reserves of oil and gas. We may not establish commercial discoveries on any of our properties.

The potential profitability of oil and gas ventures depends upon factors beyond the control of our company

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance.

Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital.

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Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring the leases.

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed. Our budget anticipates our acquisition of additional acreage in the Forest City basin. This acreage may not become available or if it is available for leasing, that we may not be successful in acquiring the leases. There are other competitors that have operations in the Forest City basin and the presence of these competitors could adversely affect our ability to acquire additional leases.

The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and gas and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.

Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environment al damages which it may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations.

In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

We believe that our operations comply, in all material respects, with all applicable environmental regulations. However, we are not fully insured against all possible environmental risks.

Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position.

Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labour, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

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Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.

The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitably.

Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information provided by the prospectus is accurate as of any date other than the date on the front of this prospectus.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" on pages 8 to 14, that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995 does not apply to the offering made in this prospectus.

THE OFFERING

The prospectus relates to the resale by certain selling stockholders of Heartland Oil and Gas Corp. of up to 22,305,693 shares of our common stock in connection with the resale of:

- 19,927,575 shares of our common stock which were issued on September 27, 2004 in connection with private placements; and

- 2,378,118 shares of our common stock which were issued upon the conversion of Series A Convertible Preferred Stock, which Preferred Stock was issued on January 13, 2004 in a private placement.

The selling stockholders may offer to sell the shares of common stock being offered in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. We will not receive any proceeds from the resale of shares of our common stock by the selling stockholder.

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USE OF PROCEEDS

The shares of common stock offered hereby are being registered for the account of the selling stockholders named in this prospectus. As a result, all proceeds from the sales of the common stock will go to the selling stockholders and we will not receive any proceeds from the resale of the common stock by the selling stockholders. We will, however, incur all costs associated with this registration statement and prospectus.

SELLING STOCKHOLDERS

The selling stockholders may offer and sell, from time to time, any or all of the common stock issued and the common stock issuable to them upon exercise of the share purchase warrants. Because the selling stockholders may offer all or only some portion of the 22,305,693 shares of common stock to be registered, no estimate can be given as to the amount or percentage of these shares of common stock that will be held by the selling stockholders upon termination of the offering.

The following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholders as of October 31, 2004, and the number of shares of common stock covered by this prospectus. The number of shares in the table represents an estimate of the number of shares of common stock to be offered by the selling stockholder. None of the selling shareholders is a broker-dealer, or an affiliate of a broker-dealer to our knowledge.

Name of Selling Stockholder and Position, Office or Material Relationship with Heartland	Number of Shares part of this Offering owned by the Selling Stockholder acquired in Private Placements (2)	Number of Shares part of this Offering acquired Upon Exercise of Series A Convertible Preferred Shares(3)	Total Shares Registered	Number of Shares Owned by Selling Stockholder After Offering and Percent of Total Issued and Outstanding(1)
				# of Shares	% of Class
BayStar Capital II, L.P.(4)	500,000	358,400	858,400	Nil	Nil
North Sound Legacy Institutional Fund, LLC(5)		535,048	535,048	Nil	Nil
North Sound Legacy Fund LLC(5)		52,914	52,914	Nil	Nil
North Sound Legacy International Ltd.(5)		587,967	587,967	Nil	Nil
HEM Properties(6)	1,752,240	150,882	1,903,122	Nil	Nil
SDS Merchant Fund, LP(7)		692,907	692,907	Nil	Nil
Apollo Capital Management Group L.P.(8)	420,000		420,000	Nil	Nil
Apollo Microcap Partners L.P.(9)	280,000		280,000	Nil	Nil
BBT Fund, L.P.(10)	1,600,000		1,600,000	Nil	Nil
Brady Retirement Fund L.P.(11)	56,800		56,800	Nil	Nil
Bushido Capital Master Fund L.P. (12)	200,000		200,000	Nil	Nil
Castle Creek Technology Partners LLC(13)	333,333		333,333	Nil	Nil
Concentrated Alpha Partners, L.P. (14)	400,000		400,000	Nil	Nil
Cranshire Capital LP(15)	266,667		266,667	Nil	Nil
Crescent International Ltd.(16)	200,000		200,000	Nil	Nil
15
Dynamis Fund, Hot Issue Account(17)	2,000,000		2,000,000	Nil	Nil
Enable Growth Partners, LP(18)	200,000		200,000	Nil	Nil
ER Resources LP(19)	300,000		300,000	Nil	Nil
ER Value LP(19)	200,000		200,000	Nil	Nil
Frey Living Trust(20)	33,333		33,333	Nil	Nil
Gamma Opportunity Capital Partners, LP(21)	200,000		200,000	Nil	Nil
Gary Brennglass	125,000		125,000	Nil	Nil
Geary Partners(22)	252,900		252,900	Nil	Nil
Ironman Energy Capital, LP(23)	400,000		400,000	Nil	Nil
Irvin Capital International Ltd.(24)	53,333		53,333	Nil	Nil
Irvin Capital Partners III(24)	30,000		30,000	Nil	Nil
Irvin Capital Partners, LP(24)	250,001		250,001	Nil	Nil
John Tognetti	200,000		200,000	Nil	Nil
Kellogg Capital Group LLC(25)	600,000		600,000	Nil	Nil
Atif Khan	51,000		51,000	Nil	Nil
GLG Investments PLC Sub-Fund(26)	50,000		50,000	Nil	Nil
GLG North American Opportunity Fund(26)	580,000		580,000	Nil	Nil
Omicron Master Trust(27)	333,334		333,334	Nil	Nil
Pemigewasset Partners L.P.(28)	190,000		190,000	Nil	Nil
Pemigewasset Partners Offshore(28)	76,667		76,667	Nil	Nil
Presidio Partners(29)	356,300		356,300	Nil	Nil
Prism Partners I, L.P.(30)	750,000		750,000	Nil	Nil
Prism Partners II Offshore Fund(30)	750,000		750,000	Nil	Nil
Robert Johnson Campbell	100,000		100,000	Nil	Nil
Heidi Harrer	26,667		26,667	Nil	Nil
543326 BC Ltd.(31)	60,000		60,000	Nil	Nil
Veredus Partners, L.P.(32)	750,000		750,000	Nil	Nil
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Finwell & Co.(33)	137,100		137,100	Nil	Nil
Landwave & Co.(33)	858,700		858,700	Nil	Nil
Placer Creek Partners, L.P.(33)	268,100		268,100	Nil	Nil
Placer Creek Investors (Bermuda) L.P.(33)	165,400		165,400	Nil	Nil
Spindrift Partners, L.P.0.(33)	1,285,900		1,285,900	Nil	Nil
Spindrift Investors (Bermuda) L.P.(33)	1,552,100		1,552,100	Nil	Nil
Mac & Co.(33)	109,700		109,700	Nil	Nil
Global Natural Resources III(33)	623,000		623,000	Nil	Nil
TOTALS	19,927,575	2,378,118	22,305,693

(1) Assumes all of the shares of common stock offered are sold. Based on 50,070,347 common shares issued and outstanding on October 31, 2004.

(2) The number of shares of common stock listed as beneficially owned by such selling stockholder represents the number of shares of common stock part of this Offering that were issued pursuant to private placement transactions in September of 2004.

(3) Represents the number of shares that are part of this Offering that were issued in exchange for our Series A Convertible Preferred Shares.

(4) Baystar Capital Management, LLC, the general partner of Baystar Capital II, LLP, exercises dispositive and voting power with respect to the shares of common stock that Baystar Capital II, LLP. own. Mr. Steven Derby, Mr. Lawrence Goldfarb and Mr. Steven Lamar are the managing members of Baystar Capital Management, LLC.

(5) North Sound Capital LLC, Investment Advisor for North Sound Legacy Fund LLC, North Sound Legacy Institutional Fund LLC, and North Sound Legacy International Ltd., exercises dispositive and voting power with respect to the shares of common stock that North Sound Legacy Fund LLC, North Sound Legacy Institutional Fund LLC, and North Sound Legacy International Ltd. own. Mr. Thomas McAuley is the sole managing member of North Sound Capital LLC.

(6) Howard Einburg exercises dispositive and voting power with respect to the shares of common stock that HEM Properties own.

(7) SDS Capital Partners, LLC, the general partner of SDS Merchant Fund, L.P., exercises dispositive and voting power with respect to the shares of common stock that SDS Merchant Fund, L.P. own. Mr. Steven Derby is the sole member of SDS Capital Partners, LLC.

(8) Bayshore Capital Corp., the general partner of Apollo Capital Management Group L.P, exercises dispositive and voting power with respect to the shares of common stock that Apollo Capital Management Group L.P. own. Kyle Krueger is the President of Bayshore Capital Corp.

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(9) Apollo Capital Corp., the general partner of Apollo Microcap Partners L.P., exercises dispositive and voting power with respect to the shares of common stock that Apollo Microcap Partners L.P. own. Kyle Krueger is the President of Apollo Capital Corp.

(10) BBT-FW, Inc, the general partner of BBT Fund, L.P., exercises dispositive and voting power with respect to the shares of common stock that BBT Fund, L.P. own. William O. Reimann is the vice-president of BBT-FW, Inc.

(11) William Brady, the general partner of the Brady Retirement Fund L.P., exercises dispositive and voting power with respect to the shares of common stock that the Brady Retirement Fund L.P. own.

(12) Christopher Rossman, managing director, exercises dispositive and voting power with respect to the shares of common stock that Bushido Capital Master Fund L.P. own.

(13) Castle Creek Partners exercises dispositive and voting power with respect to the shares of common stock that Castle Creek Technology Partners LLC own. Daniel Asher is the managing partner of Castle Creek Partners.

(14) CAP-FW, Inc., the general partner of Concentrated Alpha Partners L.P., exercises dispositive and voting power with respect to the shares of common stock that Concentrated Alpha Partners L.P. own. William O. Reimann is the vice-president of CAP-FW, Inc.

(15) Downsview Capital, the general partner of Cranshire Capital L.P., exercises dispositive and voting power with respect to the shares of common stock that Cranshire Capital L.P. own. Mitchell P. Kopin is the President of Downsview Capital.

(16) Mel Craw and Maxi Breezi exercise dispositive and voting power with respect to the shares of common stock that Crescent International Ltd. own.

(17) Alexander H. Bocock, partner, exercises dispositive and voting power with respect to the shares of common stock that the Dynamis Fund, Hot Issue Account own.

(18) Brendan O'Neil exercises dispositive and voting power with respect to the shares of common stock that Enable Growth Partners L.P. own.

(19) ER Management, LLC, the general partner of ER Resources LP and ER Value LP, exercises dispositive and voting power with respect to the shares of common stock that ER Resources LP and ER Value LP own. Roland A. van Metzsch is the managing member of ER Management, LLC.

(20) Philip Frey exercises dispositive and voting power with respect to the shares of common stock that Frey Living Trust own.

(21) Chris Rossman and Jonathan Knight exercise dispositive and voting power with respect to the shares of common stock that Gamma Opportunity Capital Partners, LP own.

(22) William Brady, the general partner, exercises dispositive and voting power with respect to the shares of common stock that Geary Partners own.

(23) G. Bryan Dutt, the managing director, exercises dispositive and voting power with respect to the shares of common stock that Ironman Energy Capital L.P. own.

(24) David M. Bunzell, general partner, exercises dispositive and voting power with respect to the shares of common stock that Irvine Capital International Ltd., Irvine Capital Partners III and Irvine Capital Partners, LP own.

(25) Nicholas Cappelleri, controller, exercises dispositive and voting power with respect to the shares of common stock that Kellogg Capital Group LLC own.

(26) GLG Partners LP exercises dispositive and voting power with respect to the shares of common stock that GLG Investments PLC SubFund and GLG North American Opportunity Fund own. Noam Gottesman is the Managing Director of GLG Partners LP.

(27) Bruce Bernstein, managing partner, exercises dispositive and voting power with respect to the shares of common stock that Omicron Master Trust own.

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(28) James B. Vose, the managing member of the general partner, exercises dispositive and voting power with respect to the shares of common stock that Pemigawasset Partners L.P. and Pemigawasset Partners Offshore own.

(29) William Brady, the general partner of Presdio Partners, exercises dispositive and voting power with respect to the shares of common stock that Presidio Partners own.

(30) Jerald M. Weintraub, manager, exercises dispositive and voting power with respect to the shares of common stock that Prism Partners I, L.P. and Prism Partners II Offshore Fund own.

(31) Jamie Walker exercises dispositive and voting power with respect to the shares of common stock that 543326 B.C. Ltd. own.

(32) Veredus Asset Management LLC, the general partner of Veredus Partners L.P. exercises dispositive and voting power with respect to the shares of common stock that Veredus Partners L.P. own. James R. Jenkins is the Vice - President and Chief Operating Officer of Veredus Asset Management LLC.

(33) Wellington Management Company, LLP, exercises dispositive and voting power with respect to the shares of common stock owned by Finwell & Co., Landwave & Co., Placer Creek Partners L.P., Placer Creek Investors (Bermuda) L.P., Spindrift Partners L.P., Spindrift Investors (Bermuda) L.P., Mac & Co. and Global Natural Resources III. Julie A. Jenkins is the Vice-President and Counsel of Wellington Management Company, LLP.

We may require the selling security holder to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of statements in these documents in order to make statements in those documents not misleading.

PLAN OF DISTRIBUTION

The selling stockholders may, from time to time, sell all or a portion of the shares of common stock on any market upon which the common stock may be listed or quoted (currently the National Association of Securities Dealers OTC Bulletin Board in the United States, in privately negotiated transactions or otherwise. Such sales may be at fixed prices prevailing at the time of sale, at prices related to the market prices or at negotiated prices. The shares of common stock being offered for resale by this prospectus may be sold by the selling stockholders by one or more of the following methods, without limitation:

(a) block trades in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;

(b) purchases by broker or dealer as principal and resale by the broker or dealer for its account pursuant to this prospectus;

(c) an exchange distribution in accordance with the rules of the applicable exchange;

(d) ordinary brokerage transactions and transactions in which the broker solicits purchasers;

(e) privately negotiated transactions;

(f) market sales (both long and short to the extent permitted under the federal securities laws);

(g) at the market to or through market makers or into an existing market for the shares;

(h) through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); and

(i) a combination of any of the aforementioned methods of sale.

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In the event of the transfer by any of the selling stockholders of its share purchase warrants or common shares to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling stockholder who has transferred his, her or its shares.

In effecting sales, brokers and dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from a selling stockholder or, if any of the broker-dealers act as an agent for the purchaser of such shares, from a purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Broker-dealers may agree with a selling stockholder to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfil the broker-dealer commitment to the selling stockholder if such broker-dealer is unable to sell the shares on behalf of the selling stockholder. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions whi ch may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above. Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such resales, the broker-dealer may pay to or receive from the purchasers of the shares commissions as described above.

The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the sale of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

From time to time, any of the selling stockholders may pledge shares of common stock pursuant to the margin provisions of customer agreements with brokers. Upon a default by a selling stockholder, their broker may offer and sell the pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling stockholders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any of the selling stockholders defaults under any customer agreement with brokers.

To the extent required under the Securities Act, a post effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.

We and the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as a selling stockholder is a distribution participant and we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the common stock.

All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling stockholders, the purchasers participating in such transaction, or both.

Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.

20

PRIVATE PLACEMENTS

September 2004 Private Placements

Effective September 27, 2004 we entered into subscription agreements with 48 investors (Selling Stockholders herein), whereby we issued a total of 23,260,909 shares of our common stock at a purchase price of $1.50 per share for total aggregate proceeds of $34,891,363. However, one subscriber for 3,333,334 common shares, for proceeds of $5,000,000, has not yet completed their purchase and provided the purchase price. As a result this stock has been issued but remains assessable. We agreed to pay a commission of 6% of the gross proceeds realized from the sale of the securities to C.K. Cooper & Company, which was split 55% to C.K. Cooper & Company and 45% to Sterne Agee & Leach, Inc. Pursuant to the terms of the private placement, we agreed to file a registration statement for the purpose of registering for resale the shares of our common stock that were issued.

Effective September 30, 2004 we entered into subscription agreements with two investors, whereby we issued 3,529,412 Series B Convertible Preferred shares at a purchase price of $1.70 per share for total aggregate proceeds of $6,000,000. Any shares issuable upon conversion of the Series B shares are not part of this Offering.

Effective October 1, 2004, six preferred shareholders (Selling Stockholders herein) converted their Series A Convertible Preferred shares into common shares pursuant to certain participation rights of the Series A shares. We issued 2,378,118 shares of our common stock upon conversion of all outstanding Series A Convertible Preferred shares.

LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

All directors of our company hold office until the next annual general meeting of the shareholders or until their successors are elected and qualified. The officers of our company are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal.

Our directors, executive officers and other significant employees, their ages, positions held and duration each person has held that position, are as follows:

Name	Position Held with the Company	Age	Date First Elected or Appointed
Richard Coglon	President and Director	44	September 18, 2002
Robert Knight	Secretary and Director	47	September 1, 1998
Michael David	Chief Financial Officer	43	October 25, 2004
Donald Sharpe	Director	47	September 18, 2002
Randall Buchamer	Director	47	October 24, 2002
Michael Bodino	Director	35	October 16, 2003

Business Experience

The following is a brief account of the education and business experience of each director, executive officer and key employee during at least the past five years, indicating each person's principal occupation during the period, and the name and principal business of the organization by which he or she was employed.

21

Richard Coglon - President and Director

Mr. Coglon has been the President and a director of our company since September 18, 2002. He has also been the President, Secretary-Treasurer and a director of our subsidiary, Heartland Oil and Gas Inc. since August 11, 2000. Mr. Coglon graduated from the University of Alberta in 1982 with a Bachelor of Commerce. In 1983 he then attended the University of Victoria and received his Bachelor of Laws degree in 1986. Mr. Coglon was called to the Bar in British Columbia, Canada in 1987 and began his specialty in the areas of corporate finance and securities law. On January 1, 2003 Mr. Coglon ceased the active practice of law to concentrate on the business of Heartland and his other business ventures. In 1995 Mr. Coglon co-founded Velvet Exploration Ltd., as a start-up oil exploration and production company. Velvet was eventually listed on the Toronto Stock Exchange and ultimately sold in August of 2001 in a "friendly takeover transaction" with El Paso Energy for approximately $450 Million. Mr. Co glon also serves as a director of Bradner Ventures Ltd. a NASD (OTCBB) company.

Robert Knight - Secretary, Treasurer and Director

Mr. Knight has served as the Secretary-Treasurer and a director of our company since July 1998. Mr. Knight served as President of our company from 1998 until September 2002 and as our Chief Financial Officer until October, 2004. Mr. Knight has served as a director of Invisa Inc. since September 1998 and as the President and Secretary-Treasurer from September 1998 to January 2000. Mr. Knight serves as President, Secretary-Treasurer and director of Retinapharma International Inc., a position he has held since March 14, 2000. From September 1, 1998 to June 12, 1999 he served as President, Secretary-Treasurer and director of Silverwing Systems Corporation. From September 1, 1998 Mr. Knight served as President and director of Centaur BioResearch, Inc. From June 24, 1997 to February 1, 1999, he was the President and director of ANM Holdings Corporation. Additionally, Mr. Knight has served as a director of FlashPoint International, Inc. since October 2001. Mr. Knight has 20 years of experience in the public company arena and corporate finance. In all of these positions, Mr. Knight had the responsibility to manage all of the affairs of each of these companies; to ensure the operation of the business, interact with legal counsel and auditors, and the preparation of all documents to be filed with any regulatory bodies.

Mr. Knight completed a Masters in Business Administration, December 31, 1998 from Herriot-Watt University.

Michael David - Chief Financial Officer

Mr. David was appointed as our Chief Financial Officer on October 25, 2004. Mr. David graduated from the British Columbia Institute of Technology in 1983 with a Diploma in Financial Management (Accounting) and worked for a firm of Chartered Accountants in Vancouver that had a client base of public companies. Mr. David earned his Certified General Accountant designation in 1987 before receiving his Chartered Accountant designation in 1991. In 2003, Mr. David obtained the Certified Public Accountant (CPA) designation from the State of Illinois. Since 1992, Mr. David has been a partner in public practice and in 1998, formed the firm of Lancaster & David, Chartered Accountants. Mr. David's client base is mainly Canadian and US public companies for which he provides a full range of auditing and accounting services.

Donald Sharpe - Director

Mr. Sharpe has been a director of our company since September 18, 2002. Mr. Sharpe graduated from the University of British Columbia with a Bachelor of Science degree in Geophysics in 1981 and joined Suncor Inc. in August of that year. From 1981 to 1987 Mr. Sharpe trained and worked as an exploration geophysicist, gaining experience in all parts of the exploration and development cycle throughout the Western Canadian Sedimentary Basin.

In 1987, Mr. Sharpe moved into the then new field of gas marketing where he was responsible for the direct marketing of Suncor's gas to industrial, commercial and utility customers in the United States and Eastern Canada. In this position, Mr. Sharpe negotiated and completed gas contracts with some of North America's biggest industrial customers. The position required negotiating skills, an understanding of the North American pipeline infrastructure, and an appreciation for the dynamics of natural gas supply and demand. Mr. Sharpe continued his formal education and received a Certificate in Business Management from the University of Calgary in 1989.

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In 1990, Mr. Sharpe returned to exploration at Suncor in the position of group leader for British Columbia exploration. In this position, Mr. Sharpe managed a team of professionals in land, geology and geophysics and was responsible for the planning, budgeting and execution of the team's exploration program. Mr. Sharpe continued his education and graduated from the Banff School of Advanced Management in 1991.

In 1994, Mr. Sharpe left Suncor and returned to Vancouver to found and run a number of public companies. Operating under the umbrella of D. Sharpe Management Inc., Mr. Sharpe has consulted to, managed and served as a director of a number of start-up oil and gas companies including Patriot Petroleum Corp., Gemini Energy Inc., Velvet Exploration Inc., Netco Energy Inc. and Nation Energy Ltd. Mr. Sharpe is also currently the President and a director of Eden Energy Corp.

Mr. Sharpe is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta and the Canadian Society of Exploration Geophysicists.

Michael Bodino - Director

Mr. Bodino has been a director of our company since October 16, 2002. Mr. Bodino is currently a senior vice president and senior exploration and production research analyst with Sterne, Agee & Leach Inc. of New Orleans, Louisianna. In this capacity Mr. Bodino is responsible for developing and implementing corporate development strategies including mergers, acquisitions, and other financial advisory services; developing investment banking opportunities within the energy sector; and research. From 1993 to 1999 Mr. Bodino had served as a research analyst for San Jacinto Securities, Inc., of Dallas, Texas. From 1999 to 2003 Mr. Bodino was a director of Energy Investment Banking for Hibernia Southeast Capital Inc. of New Orleans, Louisiana.

Mr. Bodino holds an MBA in finance from Texas Christian University and a B.S., Bachelor of Science in Economics from Louisiana State University in Shreveport. Mr. Bodino is a member of the William Conner Foundation, a member of the National Association of Petroleum Investment Analysts (NAPIA).

Randall Buchamer - Director

Mr. Buchamer has been a director of our company since October 24, 2002. Mr. Buchamer has been the Chief Executive Officer of Voice Mobility Inc., a unified communications company, since August 21, 2001 and was the Chairman of Voice Mobility Inc. until January, 2003. Mr. Buchamer was a self-employed business consultant from April 2000 to August 2001. Mr. Buchamer has been a director of User Friendly Media from September 2000. From March 1999 to April 2000 Mr. Buchamer was the Managing Director, Operations of The Jim Pattison Group and was responsible for supporting the operations of the companies owned by The Jim Pattison Group. Prior to joining The Jim Pattison Group, Mr. Buchamer was the Vice-President and Chief Operating Officer for Mohawk Oil from March 1988 to March 1999.

Mr. Buchamer holds an Executive Management Development Degree (Condensed EMBA) from Simon Fraser University and attended the University of Illinois, Chicago taking Business Administration (Marketing and Finance).

Messrs. Coglon and Sharpe are significant employees and the loss of either of these employees would have an adverse impact on our future developments and could impair our ability to succeed.

Family Relationships

There are no family relationships among our directors or officers.

23

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of October 31, 2004, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percentage of Class(1)
Richard L. Coglon 5548 Parthenon Place West Vancouver, BC Canada V7W 2V7	1,020,000 (2)(3)	2.0%
Donald Sharpe 1281 Eldon Road North Vancouver, BC, Canada V7R 1T5	870,000(4)	1.7%
Robert Knight 114 W. Magnolia Street, Suite 446 Bellingham, WA 98225	220,000 (5)	*
Randall Buchamer Suite 1925, 200 Burrard Street Vancouver, BC V6C 3L6	138,500 (6)	*
Michael Bodino Suite 1925, 200 Burrard Street Vancouver, BC V6C 3L6	150,000 (7)	*
Michael David Suite 510, 701 West Georgia Street Vancouver, BC V7Y 1C6	Nil	*
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Directors and Executive Officers as a Group	2,398,500	4.8%

*Less than 1%.

(1)Based on 50,070,347 shares of common stock issued and outstanding as of October 31, 2004. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.

(2) Includes options to acquire an aggregate of 670,000 shares of common stock.

(3) 850,000 of the shares/options held by Mr. Coglon are the subject of a divorce action whereby Mr. Coglon's ex-wife is claiming a one-half ownership interest.

(4) Includes options to acquire an aggregate of 520,000 shares of common stock, exercisable within sixty days.

(5) 50,000 of these shares of common stock are held by Knight Financial Ltd., a company wholly-owned by Robert Knight. Also includes options to acquire an aggregate of 170,000 shares of common stock exercisable within sixty days.

(6) Includes options to acquire an aggregate of 120,000 shares of common stock exercisable within sixty days.

(7) Includes options to acquire an aggregate of 150,000 shares of common stock exercisable within sixty days.

Changes in Control

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.

DESCRIPTION OF COMMON STOCK

We are authorized to issue 100,000,000 common shares with a par value of $0.001. As at October 31, 2004 we had 50,070,347 common shares outstanding. Upon liquidation, dissolution or winding up of the corporation, the holders of common stock are entitled to share ratably in all net assets available for distribution to stockholders after payment to creditors. The common stock is not convertible or redeemable and has no preemptive, subscription or conversion rights. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders. There are no cumulative voting rights.

The holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available therefore at such times and in such amounts as our board of directors may from time to time determine. Holders of common stock will share equally on a per share basis in any dividend declared by the board of directors. We have not paid any dividends on our common stock and do not anticipate paying any cash dividends on such stock in the foreseeable future.

In the event of a merger or consolidation, all holders of common stock will be entitled to receive the same per share consideration.

We are also authorized to issue 5,000,000 shares of preferred stock, par value of $0.001. We have two series of preferred stock authorized, our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, of which 3,529,412 shares of Series B Convertible Preferred Stock are outstanding. Each share of Series B Convertible Preferred Stock is convertible into one share of common stock for no additional consideration.

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INTEREST OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

EXPERTS

The consolidated financial statements of Heartland Oil and Gas Corp. included in this registration statement have been audited by Staley Okada & Partners, independent public accountants, and Spicer Jeffries LLP, to the extent and for the period set forth in their reports appearing elsewhere in the registration statement, and are included in reliance upon such reports given upon the authority of said firms as experts in auditing and accounting.

Production Enhancement & Reservoir Management, LLC has consented to the reference included in this registration statement of its Injection Falloff Test Results reports dated August 2001.

DISCLOSURE OF SEC POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our bylaws provide that directors and officers shall be indemnified by us to the fullest extent authorized by the Nevada General Corporation Law, against all expenses and liabilities reasonably incurred in connection with services for us or on our behalf. The bylaws also authorize the board of directors to indemnify any other person who we have the power to indemnify under the Nevada General Corporation Law, and indemnification for such a person may be greater or different from that provided in the bylaws.

Insofar as indemnification for liabilities arising under the Securities Act might be permitted to directors, officers or persons controlling our company under the provisions described above, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

DESCRIPTION OF PROPERTY

Our executive and head offices are located at Suite 1925, 200 Burrard Street, Vancouver, British Columbia, V6C 3L6. The offices are approximately 2,935 square feet in size and are leased on an annual basis, expiring February 29, 2008, at an annual rent of approximately CDN$58,700. We also have offices located at 114 W. Magnolia Street, Suite 446, Bellingham, Washington USA 98225. Our Secretary/Treasurer provides this space to us at a deemed cost, for accounting purposes, of $1,666 per year. The office space aggregates approximately 1,000 square feet and is a one year lease renewable in March 2005. Our current premises are adequate for our current operations and we do not anticipate that we will require any additional premises in the foreseeable future.

Our Soldier Creek project currently encompasses approximately 1,004,000 acres of prospective frontier coal bed methane (CBM) lands located in the Forest City Basin of northeast Kansas. As at the date hereof we had a total of 1,004,000 acres of undeveloped land under lease in a number of counties northeast of Kansas.

We had no productive wells as at the date hereof and no developed acreage. As at October 15, 2004 we had 88 wells, 43 of these wells have been drilled and cased and are currently dewatering, 37 wells are drilled and are awaiting completion and 8 wells are salt water disposal wells. "Cased" means that metal casing has been cemented in place in the well to protect the well from fluids, pressures and/or wellbore stability problems in the wells, in anticipation of testing and/or production.

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DESCRIPTION OF BUSINESS

Business Development During Last Three Years

General Overview

We are an exploration stage oil and gas company engaged in the exploration for and development of Coal Bed Methane in the "Soldier Creek Prospect" located in the Forest City Basin of northeast Kansas. Our "Soldier Creek" project encompassed approximately 252,000 acres of prospective frontier CBM lands. Our subsidiary, Heartland Oil and Gas Inc., holds the interests in the leases and operates the project. Effective September 27, 2004 we acquired leases covering an additional 766,000 acres of prospective CBM lands, also in the Forest City Basin.

Corporate History

Our company, Heartland Oil and Gas Corp., was incorporated in the State of Nevada on July 9, 1998, under the name Adriatic Holdings Ltd.

We are an oil and gas exploration company that, prior to our recent acquisition of certain assets from Evergreen Resources, had interests in leases covering approximately 252,000 acres in central Kansas. We have a 100% working interest in all of these leases. Our net revenue interest in these leases is 84.5%. Our "working interest" consists of our share of gross production, revenues, burdens, field operating costs and gathering and processing fees before deduction of royalties. Our "net revenue interest" means our working interest less the royalties that are payable.

We have not been involved in any bankruptcy, receivership or similar proceeding.

Our Current Business

On April 10, 2002 we entered into a letter of intent to acquire all of the shares of Heartland Oil and Gas Inc., a private Nevada corporation. On July 31, 2002 we entered into a formal Share Exchange Agreement with Heartland Oil and Gas Inc. and its shareholders. On September 17, 2002 we acquired all of the issued and outstanding stock of Heartland Oil and Gas Inc. from its stockholders in exchange for 12,212,429 shares of our common stock. As a result, the former stockholders of Heartland Oil and Gas Inc. acquired a majority of our outstanding stock. Therefore, for accounting purposes, Heartland Oil and Gas Inc. was deemed to have acquired Adriatic Holdings Ltd. Heartland Oil and Gas Inc. survives as our wholly-owned subsidiary.

We are an exploration stage oil and gas company engaged in the exploration for and development of Coal Bed Methane in the "Soldier Creek Prospect" located in the Forest City Basin of northeast Kansas. Pursuant to several Oil and Gas Leases entered into with various parties prior to our recent acquisitions of further leases from Evergreen Resources, Inc., our "Soldier Creek" project encompassed approximately 252,000 acres of prospective frontier coal bed methane lands. We have a 100% working interest in all of these leases. Our net revenue interest in these leases is 84.5%, so as a result our net acreage is approximately 213,000 acres. Our "working interest" consists of our share of gross production, revenues, burdens, field operating costs and gathering and processing fees before deduction of royalties. Our "net revenue interest" means our working interest less the royalties that are payable. Heartland Oil and Gas Inc. holds the interests in the leases for the lands and operates the project. Th e expiration dates for the leases range from dates in 2004 through 2009. Certain of the leases may be extended upon the exercise of options on the leases. For the year ending December 31, 2004 we will be required to pay approximately $258,000 on the current leases. There are no lease option payments due in 2005 and for the year ending December 31, 2006 we will be required to pay approximately $355,076 on the current leases. In addition, we are obligated to pay delay rentals on certain leases of approximately $16,000 in 2004, 2005 and 2006.

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Heartland Oil and Gas Inc. signed a letter agreement dated August 25, 2000 with Topeka-Atchinson Gas & Illuminating LLC, whereby Heartland Oil and Gas Inc. engaged Topeka-Atchinson Gas & Illuminating LLC to identify three exploration areas within the Forest City Basin and to provide a detailed budget for the anticipated cost of a one-well exploration program for each exploration area and a four-well pilot program. In consideration Heartland Oil and Gas Inc. advanced a non-refundable deposit of $20,000 to Topeka-Atchinson Gas & Illuminating LLC. Topeka-Atchinson Gas & Illuminating LLC is entitled to receive a 3% gross over-riding royalty, on an 8/8th basis, on all oil and gas leases acquired by Heartland Oil and Gas Inc. within certain areas in the Forest City Basin.

The Soldier Creek area was chosen when a privately funded, proprietary analysis of historical drilling logs from previous drilling of deeper hydrocarbon targets revealed the existence of significant coal beds to the North and West of where coal bed methane production was currently being successfully developed. This analysis also indicated that the coal bed thickness at Soldier Creek was more than four times greater than the coal beds being exploited nearby. The logs used to map the thickness of these coal beds are not capable of indicating the productivity from the coal beds. Further adding to the area's potential, was its proximity to a ready market and gas pipelines.

We commenced our exploration program consisting of three wells including our Engelke 16-18 well. The Engelke well was drilled by Heartland Oil and Gas Inc. in the fall of 2001 and encountered 57 feet of coal. Two of the three wells were logged and tested for permeability and all three were cased as potential coal bed producers. To test for permeability, we hired Production Enhancement & Reservoir Management, LLC to conduct injection falloff tests on selected coal seam intervals in the two wells. At the Engelke 16-18 well two separate injection falloff tests were conducted. The first test consisted of three seams near the bottom of the well; a 3 foot thick seam at 2,378 feet, a 2 foot seam at 2,406 feet, and a 3 foot seam at 2,429 feet. The second test targeted a single coal seam 4 feet thick at 1,832 feet. In each test the coal seam was perforated and fresh water was injected at high pressure and the pressure was then allowed to falloff. A pressure modeling program was then used to estimat e the coal seam permeability to water. This resulted in an estimated permeability of 12.68 millidarcies (md) for the lower coals and 22.5 md for the upper coal.

At the Trout 10-2 well, two falloff tests were conducted. In the first test, 3 coal seams near the bottom of the well were tested; a 3 foot seam at 1,491 feet, a 2 foot seam at 1,500 feet and a 3 foot seam at 1,510 feet. The coal seam permeability to water was estimated at 40.14 md. It was noted that the permeability in this well could be as high as 105.3 md. In the second test, a single coal seam 3 foot thick at 1,039 feet was tested and permeability was found to be 0.187 md.

No flow tests were conducted as part of the injection falloff testing. We have concluded that the coal seams in these wells will require hydraulic fracturing for commercial coalbed methane development.

During September and October 2001 Heartland Oil and Gas Inc. drilled the three test wells to test the relative coal thickness, permeability, porosity and gas content. Coal thickness and porosity are estimated from well logs and permeability is estimated through injection fall off tests. Gas content is estimated through desorption and adsorption tests on coal cores. In order to conduct a desorption test, coal core samples are saved in airtight canisters at the well site, are opened in the lab and the amount of gas that may be recovered from the coal at various pressures is measured. These tests are done using a constant temperature as close to reservoir temperature as possible. An estimate must also be made for the amount of gas lost before the coal samples were put into the canisters prior to testing.

Adsorption tests measure the ultimate amount of gas the coal can hold. These tests measure the amount of gas that the coal can hold by injecting gas into the coal at increasing pressures. These tests are also run at reservoir temperature. The adsorption test typically shows a higher gas content than that measured in the desorption test, suggesting that the coals are somewhat under saturated with gas compared to the maximum amount of gas they could hold. If so, the pressure must be lowered to that corresponding to the gas content from the desorption test, which is typically done by producing water from the coal. Most coal bed methane wells need dewatering in order to produce gas.

The coal thickness, permeability, porosity and gas content data from the various wells drilled was sent to an independent laboratory for input into a coalgas simulator program, designed to estimate the amount of coal bed methane and water that may be recoverable from the wells.

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With the results from our economic modeling, we decided to begin aggressively acquiring acreage, concentrating on the North Engelke area, which mapping shows to be the thickest part of the basin. Coal thicknesses here are up to 4 times thicker than in the Cherokee basin to the south, where there are active coal bed methane operations. Many of the coals in the Cherokee basin are present at Engelke, but Engelke also has many more coal seams. As of June 30, 2004 we had leases totalling 252,000 acres. Of the 252,000 acres under lease, approximately 227,000 are in the Engelke area. We have a 100% working interest in all of these leases. The net revenue interest of these leases is 84.5%, so our net acreage is approximately 192,000 acres in the Engelke area.

In July, 2003 we undertook the drilling of a four well pilot program surrounding the Engelke 16-18 well, the westernmost of our three initial test wells. In October, 2003 we purchased an existing wellbore in the Engelke area and converted it to a water disposal well by removing the existing tubing in the well and then perforating a deeper formation.

In November, 2003 we completed the five wells in the Engelke pilot program. We selected various coal seams in the Lower Cherokee section, in the lower part of the coal sequence, for the first completions. Eight seams, totalling approximately 16 feet of coal, were perforated, acidized and hydraulically fractured. Down-hole pumps were installed in each well and initial dewatering of the wells began in late November, 2003. As of August 11, 2004 all 5 wells were continuing to pump water with no gas production.

We commenced the drilling of the first wells in our next three 5-well pilot programs on March 19, 2004. The drilling program consists of 15 new CBM wells and three new wells to be used for salt water disposal. The new 15 pilot wells are spaced across our acreage block in the Forest City and are intended to further define the productivity of our acreage for coalbed methane production.

The wells show an excellent section of thick lower Cherokee coals, which is the main producing formation in the coalbed methane wells in other parts of the Forest City/Cherokee Basin. As of October 14, 2004 all 17 CBM wells and all three water disposal wells have been drilled, logged and cased. As of October 14, 2004 all 17 CBM wells had been completed and had begun dewatering.

In deciding to expand our Soldier Creek Prospect, we considered the following factors:

•Major gas lines exist (El Paso owned ANR Pipeline Co. runs directly through our gas leases) and many have available capacity translating to access to markets.

•The Forest City area's flat, sparsely populated marginal ranch or farmland makes transportation and access less expensive, minimizing surface access costs.

•Known gas coals that are already established from conventional drilling, thereby reducing exploration and development risk. Our mapping of the existing wells in this area shows the presence of a number of coals in the shallow part of the basin. Drilling records, when available, often show gas as these coals are penetrated.

•The abundance of depleted wells often simplifies and reduces cost of water disposal from dewatering coals, as wastewater is re-injected into depleted wells.

•As full-scale development is implemented, drilling, completing, and operating costs are anticipated to drop, further enhancing the project's economics.

•The area also contains a number of black shales, which are not included in the reserve and economic calculations but which may add to the amount of recoverable gas.

Acquisition of Assets from Evergreen Resources, Inc.

On September 27, 2004 we completed the acquisition of the "Forest City Basin" assets from Evergreen Resources, Inc. for a purchase price of $22,000,000. The Forest City Basin assets consist of all of Evergreen Resources, Inc.'s interest in certain oil and gas leases covering an aggregate of approximately 766,000 acres located in the State of Kansas, together with 60 well bores and all surface equipment, gathering and surface facilities and all geological, engineering, land and accounting data and records pertaining to these leases and assets.

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We now hold in excess of 1 million acres of prospective CBM leases at various stages of development, 88 wells, including 43 CBM wells in eight pilots that are currently dewatering and/or venting gas, 37 CBM wells awaiting stimulation, and 8 saltwater disposal wells.

The Coal Bed Methane Industry

During the past decade coal bed methane has emerged as a viable source of natural gas compared to the late 1980s when there was no significant production outside of the still dominant San Juan Basin, in northwestern New Mexico, and the Black Warrior Basin in Alabama and Mississippi. As noted in USGS Fact Sheet FS-123-00 of October 2000, coal bed methane production accounted for 7% of US natural gas production or approximately 3.6 billion cubic feet (Bcf) of gas per day or an annual 1.35 trillion cubic feet (Tcf) of gas from over 14,000 producing wells.

We believe the success of coal bed methane developments has been largely the result of improved drilling and completion techniques, better hydraulic fracture designs and significant cost reductions as a result of highly dependable gas content and coal bed methane reservoir performance analysis. Also aiding this sector's growth is the apparent shortage of quality domestic conventional exploration and development projects. In comparison, according to USGS Fact Sheet FS-123-00 of October 2000, total "unconventional" coal bed methane resource across America's 25 basins (lower US) is estimated to be roughly 700 trillion cubic feet (Tcf) of which 14% or 100 Tcf is considered technically recoverable with existing technology. Technically recoverable gas volumes do not necessarily qualify as proved reserves and we do not have any proved coal bed methane reserves at this time. We also believe that propelling the coal bed methane production growth is its relatively low finding and develop ment costs. Coal bed methane fields are often found where deeper conventional oil and gas reservoirs have already been developed, therefore, considerable exploration-cost-reducing geologic information is often readily available. This available geological information, combined with coal bed methane reservoirs' comparatively shallow locations, reduces finding and developing costs.

Coal Bed Methane

Natural gas normally consists of 80% or more methane with the balance comprising such hydrocarbons as butane, ethane and propane. In some cases it may contain minute quantities of highly poisonous hydrogen sulfide, referred to as "sour gas". Coal bed methane is, generally, a sweet gas consisting of 95% methane and thus is normally of pipeline quality. Coal bed methane is considered an unconventional natural gas resource because it does not rely on 'conventional' trapping mechanisms, such as a fault or anticline, or stratigraphic traps. Instead coal bed methane is "adsorbed" or attached to the molecular structure of the coals - an efficient storage mechanism as coal bed methane coals can contain as much as seven times the amount of gas typically stored in a conventional natural gas reservoir such as sandstone or shale. The adsorbed coal bed methane is kept in place as a result of a pressure equilibrium often from the presence of water. Thus the production of coal bed methane in many cases requi res the dewatering of the coals to be exploited. This process usually requires the drilling of adjacent wells and from 6 to 36 months to complete. Coal bed methane production typically has a low rate of production decline and an economic life typically from 10 to 20 years.

The principal sources of coal bed methane are either biogenic, producing a dry gas which is generated from bacteria in organic matter, typically at depths less than 1000 feet, or thermogenic, which is a deeper wet gas, formed when organic matter is broken down by temperature and pressure.

The three main factors that determine whether or not gas can be economically recovered from coal beds are: the gas content of the coals; the permeability or flow characteristics of the coals; and, the thickness of the coal beds. Gas content is measured in terms of standard cubic feet (Scf) per ton and varies widely from 430 Scf per ton in the deep (2,000 to 3,500 feet) San Juan, New Mexico thermogenic coals, and only 60 Scf per ton for the shallow (300 to 700 feet deep) Powder River, Wyoming biogenic coals. The San Juan coals are considered to have the industry's highest permeability. Relatively high permeability, which can affect the ability of gas to easily travel to the borehole, is an important factor for the success of a coal bed methane well, but is not absolutely required. The thickness of coal beds from which coal bed methane is economically being produced varies from as little as a few feet in some areas of the gas rich (300 Scf) Raton Basin to as much as 75 net feet of coal bed th ickness at the relatively gas poor Powder River.

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Competitors

The three largest coal bed methane producers in America's lower 48 states are BP Amoco, Burlington Resources and Phillips Petroleum, all producing most of their production from the now-in-decline San Juan basin. Though it ranks fourth in terms of natural gas production, the leading coal bed methane participant in terms of growth and technology is, in our view, Devon Energy. Devon is aggressively expanding coal bed methane production in the Powder River Basin located in Wyoming and Montana and Raton Basin located in Colorado and has coal bed methane production in the San Juan Basin located in New Mexico and Wind River Basin located in Wyoming. Devon is also developing the coal bed methane potential of southeastern Kansas where it has amassed over 400,000 acres. Its project is centered in Cherokee Basin, that is the southern end of the coal bed methane fairway.

Other companies are also active in the coal bed methane fairway, including Anadarko Petroleum Corporation, JM Huber Corporation and Whiting Petroleum.

Governmental Regulations

Our oil and gas operations are subject to various United States federal, state and local governmental regulations. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. The production, handling, storage, transportation and disposal of oil and gas, by-products thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, state, provincial and local laws and regulations relating primarily to the protection of human health and the environment. To date, expenditures related to complying with these laws, and for remediation of existing envir onmental contamination, have not been significant in relation to the results of operations of our company. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

Research and Development

Our business plan is focused on a strategy for maximizing the long-term exploration and development of our Soldier Creek Prospect, Kansas USA. To date, execution of our business plan has largely focused on acquiring prospective Coal Bed Methane leases and drilling initial test wells on this acreage from which to establish a going forward exploration and development plan.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this registration statement. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this registration statement, particularly in the section entitled "Risk Factors" beginning on page 8 of this registration statement.

Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

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Overview

We are an exploration stage oil and gas company and carry out our operations through our wholly owned subsidiary, Heartland Oil and Gas Inc. We are currently engaged in the exploration for and development of coal bed methane in the Soldier Creek Prospect located in the Forest City Basin of northeast Kansas. We do not have any revenues other than interest income, as we are in the development stage.

Plan of Operations

Cash Requirements

For the next 12 months we plan to complete 23 of the uncompleted wells we acquired from Evergreen Resources and to continue the dewatering and venting of gas in our previously completed wells. As we will be in a test period initially, gathering systems and pipeline tie-ins will be undertaken if gas production is deemed to be at commercial levels. We plan to drill 33 new CBM wells to expand some of our existing pilot programs.

Pursuant to several oil and gas leases entered into with various parties and our acquisitions from Evergreen Resources, our Soldier Creek project encompasses approximately 1,004,000 acres of prospective frontier coal bed methane lands. Heartland Oil and Gas Inc. holds the interests in the leases for the lands and operates the project. The expiration dates for the leases range from dates in 2004 through 2012. Certain of the leases may be extended upon the exercise of options on the leases. For the year ending December 31, 2004 we estimate we will spend approximately $1.243 MM on lease extensions. In 2005 we estimate we will spend approximately $1.583 MM on lease extensions. In addition, we are obligated to pay delay rentals on certain leases of approximately $43,000 in each of the years 2004, 2005 and 2006

We may require additional funds to implement our growth strategy in our gas exploration operations. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable.

In order to proceed with our plans we raised funds by way of a private placement of equity securities in our company pursuant to exemptions from registration provided by Regulation S under the Securities Act of 1933. The offering consisted of units at a price of $1.40 per unit. Each unit consisted of one common share $0.001 par value and one warrant exercisable at $1.75 expiring August 30, 2004. In May, 2003 we closed the private placement having issued 1,000,000 units for gross proceeds of $1,400,000. The net proceeds received have been used as working capital to allow us to continue our ongoing lease acquisition program and to expand on the exploration and development of our Soldier Creek Prospect.

In June, 2003, we sold an aggregate of 602,835 of our shares of our common stock and share purchase warrants to acquire an additional 301,418 shares of our common stock in a private placement for gross proceeds of approximately $1,700,000. The share purchase warrants have an exercise price of $3.38 and expire three years from the date of issuance.

On August 19, 2003, we sold an aggregate of $8,815,024 of our shares of our common stock and share purchase warrants to acquire additional shares of our common stock in a private placement. The private placement involved the issuance of 2,754,695 shares of our common stock and share purchase warrants to acquire an additional 1,377,348 shares of our common stock. The share purchase warrants have an exercise price of $3.84 and expire on August 19, 2006.

On January 13, 2004 we closed a private placement for the issuance and sale of 995,305 units at a purchase price of $3.20 per unit for total aggregate proceeds of $3,184,979. Each unit was comprised of one share of Series A Preferred Convertible Stock and one stock purchase warrant to purchase one-half of one share of common stock for the additional consideration of $3.84 per share for a period of three years. The preferred shares have been converted into common shares.

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Effective September 27, 2004 we entered into subscription agreements with 48 investors, whereby we issued a total of 23,260,909 shares of our common stock at a purchase price of $1.50 per share for total aggregate proceeds of $34,891,363. However, one subscriber for 3,333,334 common shares, for proceeds of $5,000,000, has not yet completed their purchase and provided the purchase price. As a result this stock has been issued but remains assessable. We agreed to pay a commission of 6% of the gross proceeds realized from the sale of the securities to C.K. Cooper & Company, which will be split 55% to C.K. Cooper & Company and 45% to Sterne Agee & Leach, Inc.

Effective September 30, 2004 we entered into subscription agreements with two investors, whereby we issued 3,529,412 series B convertible preferred shares at a purchase price of $1.70 per share for total aggregate proceeds of $6,000,000.

Over the next twelve months we intend to use all available funds to expand on the exploration and development of our Soldier Creek Prospect, as follows:

Estimated Funding Required During the Next Twelve Months

General and Administrative	$1,800,000
Acreage
Rentals and Option Payments	$2,861,700
New Land	$70,000
Operations
Complete 23 CBM wells	$1,172,000
Drill, and Complete 33 new wells	$4,380,000
Gathering and Pipelines	$880,300
Lease Operating Expense	$348,000
Corporate and Severance Taxes	$323,500
Total	$11,835,000

As at June 30, 2004, we had $342,821 in current liabilities. Our financial statements report a net loss of $387,302 for the three month period ended June 30, 2004 compared to a net loss of $414,209 for the three month period ended June 30, 2003. As a result, our accumulated loss increased to $2,448,113 during the period from inception to June 30, 2004. Our losses decreased primarily as a result of stock-based compensation expenses, decreased expenses associated with professional fees and increased expenses associated with administration activities. Stock-based compensation for the three month period ended June 30, 2004 was $193,538, as compared to $240,350 for the three month period ended June 30, 2003.

Our total liabilities as of June 30, 2004 were $432,821, as compared to total liabilities of $500,363 as of December 31, 2003. The decrease was due to the decrease of our accounts payable.

During the three month period ended June 30, 2004 we spent $3,363,583 on exploration and acquisition of our oil and gas properties. Of this amount, $726,171 was attributable to acquisitions costs and $2,637,412 was attributable to explorations costs. We have capitalized these amounts on our balance sheet, in addition to $90,000 related to asset retirement obligations.

We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital. In this regard we have raised additional capital through the equity offerings noted above.

The continuation of our business is dependent upon obtaining further financing, a successful program of acquisition and exploration, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

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There are no assurances that we will be able to obtain further funds required for our continued operations. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Product Research and Development

Our business plan is focused on a strategy for maximizing the long-term exploration and development of our Soldier Creek Prospects, Kansas USA. To date, execution of our business plan has largely focused on acquiring prospective Coal Bed Methane (CBM) leases and drilling three initial test wells on this acreage from which to establish a going forward exploration and development plan.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment (excluding oil and gas activities) over the twelve months ending September 30, 2005.

Employees

Currently we have six full time employees not including the officers and directors of our company. We do not expect any material changes in the number of employees over the next 12 month period. We do and will continue to outsource contract employment as needed.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS 143 addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 is effective for January 1, 2003. SFAS 143 requires that the fair value of a liability for an asset's retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized costs is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized The following table summarizes our asset retirement obligation transactions during the six month period ended June 30, 2004.

	Six Months Ended June 30, 2004
Beginning asset retirement obligations	$ -
Additions related to new properties	-
Liabilities incurred	81,000
Deletions related to property disposals	-
Accretion	9,000
Total asset retirement obligations	$ 90,000

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." Such standard requires any gain or loss on extinguishments of debt to be presented as a component of continuing operations (unless specific criteria are met) whereas SFAS No. 4 required that such gains and losses be classified as an extraordinary item in determining net income. Upon adoption of SFAS No. 145, we will reclassify any extraordinary gains and losses on the extinguishments of debt recorded in prior periods to continuing operations. The adoption of SFAS 145 did not have a material effect on our financial position or results of operations.

34

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." Such standard requires costs associated with exit or disposal activities (including restructurings) to be recognized when the costs are incurred, rather than at a date of commitment to an exit or disposal plan. SFAS No. 146 nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a liability related to an exit or disposal activity is not recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 a liability was recognized at the time of a commitment to an exit or disposal plan. The provisions of this standard are effective for exit or disposal activities initiated after December 31, 2002. The adoption of SFAS 146 did not have a material effect on our financial position or results of operations.

On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." This standard amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This standard also requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure requirements of SFAS No. 148 are required to be included in the summary of significant accounting policies.

In May, 2003, SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity", was issued. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Generally, a financial instrument, whether in the form of shares or otherwise, that is mandatorily redeemable, i.e. that embodies an unconditional obligation requiring the issuer to redeem it by transferring its shares or assets at a specified or determinable date (or dates) or upon an event that is certain to occur, must be classified as a liability (or asset in some circumstances). In some cases, a financial instrument that is conditionally redeemable may also be subject to the same treatment. This Statemen t does not apply to features that are embedded in a financial instrument that is not a derivative (as defined) in its entirety. For public entities, this Statement is effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS 150 did not effect our financial position or results of operations.

Application of Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.

Our consolidated financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements have been prepared assuming we will continue as a going concern. However, certain conditions exist which raise doubt about our ability to continue as a going concern. We have suffered recurring losses from operations and have accumulated a deficit of $2,448,113 since inception of Heartland Oil and Gas Inc. through June 30, 2004.

Since our inception, we have funded operations through the issuance of capital stock and debt. Our ability to continue as a going concern is dependent upon achieving profitable operations and the raising of additional capital. Our plans in this regard are to secure additional funds through future equity and debt financing which will enable us to develop our oil and gas properties.

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

35

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. We have chosen to account for stock-based compensation Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB25") and have adopted the disclosure only provisions of SFAS123. Accordingly, compensation for stock options is measured as the excess, if any, of the quoted market price of our stock at the date of grant over the amount an employee is required to pay for the stock.

We account for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services".

We utilize the full cost method to account for our investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. As of June 30, 2004, we have no properties with proven reserves. When we obtain proven oil and gas reserves capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. If the future development of unproved properties are determined uneconomical the amount of such properties is added to the capitalized cost to be amortiz ed. As of June 30, 2004, all of our oil and gas properties were unproved and were excluded from amortization. At June 30, 2004, none of our unproved oil and gas properties were considered impaired.

The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Revenue from sales or services will be recognized at the time the product is delivered or at the time the service is performed.

Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non-monetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary and non-monetary assets and liabilities are included in the statement of operations. Revenue and expenses are translated at the dates such items are recognized in the statement of operations.

Our financial instruments consist of cash, prepaid expenses and other liabilities. The carrying amounts of financial instruments approximate fair value due to their short maturities.

Financial instruments that potentially subject us to concentrations of credit risk consists primarily of cash in excess of the federally insured amount of $100,000. To date, we have not incurred a loss relating to this concentration of credit risk.

36

We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Earnings per share requires presentation of both basic earnings per common share and diluted earnings per common share. Common stock equivalents are not included in the weighted average calculation since their effect would be anti-dilutive.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than as listed below, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $60,000, and in which, to our knowledge, any of our directors, officers, five percent beneficial security holder, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest.

Over the year ended December 31, 2003, our company incurred consulting and management fee expenses in the amount of $57,000. The consulting and management fee expenses were charged by Richard Coglon and Robert Knight, directors of our company. Pursuant to a consulting agreement with our company dated July 1, 2003, Richard Coglon receives $5,000 per month for the services he provides to our company. Pursuant to an oral consulting agreement with our company Mr. Knight currently receives $1,000 per month for the services he provides to our company. Pursuant to a consulting agreement with our company dated July 1, 2003, D. Sharpe Management Inc., a company wholly-owned by Donald Sharpe, a director of our company, receives $5,000 per month for consulting services.

The promoters of our company are our directors and officers.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is traded on the National Association of Securities Dealers OTC Bulletin Board under the symbol "HOGC". The following quotations obtained from Bloomberg reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission an may not represent actual transactions.

The high and low bid prices of our common stock for the periods indicated below are as follows:

Quarter Ended	High	Low
September 30, 2004	$2.96	$1.33
June 30, 2004	$3.30	$1.33
March 31, 2004	$4.30	$2.29
December 31, 2003	$5.17	$3.48
September 30, 2003	$5.70	$3.90
June 30, 2003	$3.96	$1.65
March 31, 2003	$2.50	$1.96
December 31, 2002	$2.20	$1.57
September 30, 2002	$2.00	$1.40

(1) Our common stock began being quoted for trading on the OTC Bulletin Board on March 7, 2002.

(2) Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

37

Our common shares are issued in registered form. Registrar and Transfer Company of 10 Commerce Drive, Cranford, New Jersey, USA 07016-9814 (Telephone: (800) 866-1340; Facsimile: (908) 497-2310) is the registrar and transfer agent for our common shares.

On October 31, 2004, the shareholders' list of our common shares showed 172 registered shareholders and 50,070,347 shares outstanding.

Equity Compensation Plan Information

As at December 31, 2003 we have three compensation plans in place, entitled 2001 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan, 2002 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan and the Additional 2002 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan. These plans have not been approved by our security holders.

Number of Securities to be issued upon exercise of outstanding options	Weighted-Average exercise price of outstanding options	Number of securities remaining available for further issuance
1,249,000(1)	$0.69	351,000

(1) Total number of options granted pursuant to all three of our compensation plans as of December 31, 2003.

DIVIDEND POLICY

We have not declared or paid any cash dividends since inception and we do not intend to pay any cash dividends in the foreseeable future. Although there are no restrictions that limit our ability to pay dividends on our common shares other than as described below, we intend to retain future earnings for use in our operations and the expansion of our business.

EXECUTIVE COMPENSATION

No executive officer of our company received an annual salary and bonus that exceeded $60,000 during the fiscal years ended December 31, 2003, 2002 and 2001. The following table shows the compensation received by our President (chief executive officer) and Chief Financial Officer for the years ended December 31, 2003, 2002 and 2001.

SUMMARY COMPENSATION TABLE
		Annual Compensation			Long Term Compensation (1)
					Awards		Payouts
Name and Principal Position	Year	Salary (US$)	Bonus (US$)	Other Annual Compen- sation (US$) (1)	Securities Underlying Options/ SARs Granted	Restricted Shares or Restricted Share Units	LTIP Payouts (US$)	All Other Compen- sation
Richard Coglon President(2)	2003 2002 2001	$42,000(3) $8,000(3) $12,000(4)	Nil Nil Nil	Nil Nil Nil	N/A 500,000(5) N/A	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Robert Knight Chief Financial Officer(6)	2003 2002 2001	$15,000 $15,000(7) Nil	Nil Nil Nil	Nil Nil Nil	100,000(8) 50,000(8) Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil

38

(1) The value of perquisites and other personal benefits, securities and property for the Named Executive Officers that do not exceed the lesser of $50,000 or 10% of the total of the annual salary and bonus is not reported herein.

(2) Mr. Coglon has served as our President since September 18, 2002.

(3) Upon becoming our President, Mr. Coglon received $2,000 per month for providing management services to our company until June 2003 and $5,000 per month for the period from July through December 2003.

(4) Mr. Coglon received $1,000 per month for providing management services to our subsidiary, Heartland Oil and Gas Inc.

(5) Mr. Coglon received 500,000 options at $0.35 on December 2, 2002 pursuant to the Additional 2002 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan.

(6) Mr. Knight has served as our Chief Executive Officer from July 9, 1998 to September 17, 2002 at which time he was appointed to the position of Chief Financial Officer. Mr. Knight resigned as our Chief Financial Officer on October 25, 2004.

(7) Mr. Knight received $1,250 per month for providing management services to our company.

(8) Mr. Knight received 50,000 options at $0.50 in December 2002 and 100,000 options: 50,000 options at $0.50 and 50,000 at $2.00 in June 2003 pursuant to the 2001 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan and the 2003 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan as compensation for serving as our Chief Financial Officer.

The following table sets forth for each of the Named Executive Officers certain information concerning stock options granted to them during fiscal 2003. We have never issued stock appreciation rights.

OPTION/SAR GRANTS IN THE LAST FISCAL YEAR

Name	Number of Securities Underlying Options/ SARs Granted (#)	% of Total Options/ SARs Granted to Employees in Fiscal Year(1)	Exercise Price ($/Share)	Expiration Date
Robert Knight Chief Financial Officer	100,000	100%	$0.50 and $2.00(2)	June 5, 2008

(1) The denominator (of 100,000) was arrived at by calculating the net total number of new options awarded during the year.

(2) In June 2003, Mr. Knight received 100,000 options of which 50,000 are exercisable at $0.50 and 50,000 are exercisable at $2.00 pursuant to the 2001 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan and the 2003 Officer, Director, Employee, Consultant and Advisor Stock Compensation Plan.

The following table sets forth for each Named Executive Officer certain information concerning the number of shares subject to both exercisable and unexercisable stock options as of December 31, 2003. No named Executive Officer exercised options during fiscal 2003.

39

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

Name	Shares Acquired on Exercise (#)	Aggregate Value Realized	Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable / Unexercisable		Value of Unexercised In-the - -Money Options/SARs at FY- end ($) Exercisable / Unexercisable(1)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Richard Coglon	Nil	Nil	500,000	0	$1,725,000	$0
Robert Knight	Nil	Nil	150,000	37,500	$315,000	$105,000

(1) The values for "in-the-money" options are calculated by determining the difference between the fair market value of the securities underlying the options as of December 31, 2003 ($3.80 per share on NASD OTCBB) and the exercise price of the individual's options.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

There are no employment agreements between us or any of our subsidiaries and the Named Executive Officers, other than our management agreement with Richard Coglon as discussed herein.

Our company has no plans or arrangements in respect of remuneration received or that may be received by Named Executive Officers of our company in fiscal 2003 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $100,000 per Named Executive Officer.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Our Directors do not receive salaries or fees for serving as directors, nor do they receive any compensation for attending meetings of the Board of Directors or serving on committees of the Board of Directors. We may, however, determine to compensate our directors in the future. Directors are entitled to reimbursement of expenses incurred in attending meetings. In addition, our directors are entitled to participate in our stock option plan.

During the year ended December 31, 2003 we paid $42,000 to Richard Coglon for the services he provided to our company in his capacity as President and a director of our company. We also paid $15,000 to Robert Knight for the services he provided to our company in his former capacity as the President and his capacity as Chief Financial Officer, Secretary, Treasurer and a director of our company.

Donald Sharpe, a director of our company, earns consulting fees through D. Sharpe Management Inc., a company wholly-owned and controlled by him. We paid D. Sharpe Management Inc. $2,000 per month for consulting services, which was increased to $5,000 per month commencing July 1, 2003. As well, he retains a 1% non-convertible overriding royalty on production from leases acquired by our company in Forest City Basin.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.

During the year ended December 31, 2001 we established a stock option plan pursuant to which 500,000 common shares were reserved for issuance. During the year ended December 31, 2002 we established a stock option plan pursuant to which 600,000 shares were reserved for issuance and an additional 2002 stock option plan pursuant to which 500,000 shares were reserved for issuance.

40

Stock options become exercisable at dates determined by the Board of Directors at the time of granting the option and have initial terms of five years.

The fair value of each option granted in 2003 was measured on the date of the grant at the option's intrinsic value with the following weighted-average assumptions: no dividend yield; volatility of 75%; risk-free interest rate of 2.8% and an expected life of four to five years.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

FINANCIAL STATEMENTS

Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in conformity with generally accepted accounting principles of the United States of America.

The following financial statements pertaining to Heartland Oil and Gas Corp. are filed as part of this registration statement:

(a) Audited Consolidated Financial Statements of Heartland Oil and Gas Corp.

The Independent Auditor's Report of Staley Okada & Partners, for the audited consolidated financial statements for the year ended December 31, 2003, dated March 22, 2004.

The Independent Auditor's Report of Spicer, Jeffries LLP, Independent Certified Public Accountants, for the audited consolidated financial statements for the year ended December 31, 2002 dated March 7, 2003.

Balance Sheets at December 31, 2003 and 2002.

Statements of Operations for the years ended December 31, 2003 and 2002 and for the period from inception (August 11, 2000) through December 31, 2003.

Statements of Changes in Stockholders' Equity for the period from inception (August 11, 2000) to December 31, 2003.

Statements of Cash Flows for the years ended December 31, 2003 and 2002 and for the period from inception (August 11, 2000) through December 31, 2003.

Notes to the Financial Statements.

(b) Unaudited Consolidated Interim Financial Statements of Heartland Oil and Gas Corp.

Balance Sheets as at June 30, 2004 and December 31, 2003.

Statements of Operations for the three month periods ended June 30, 2004 and June 30, 2003 for the six-month periods ended June 30, 2004 and 2003 and the period from inception (August 11, 2000) through June 30, 2004.

41

Statements of Cash Flows for the six-month period ended June 30, 2004, including the unaudited six-month period ended June 30, 2003 and the period from inception (August 11, 2000) through June 30, 2004.

Statement of Changes in Stockholders' Equity

Notes to the Financial Statements.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Heartland Oil and Gas Corp. and Subsidiary
(An Exploration Stage Company)

We have audited the consolidated balance sheet of Heartland Oil and Gas Corp. and Subsidiary (An Exploration Stage Company) as of December 31, 2003 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the year then ended and the December 31, 2003 amounts included in the cumulative amounts for the period from inception (August 11, 2000) to December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Heartland Oil and Gas Corp. and Subsidiary (An Exploration Stage Company) as of December 31, 2003, and the results of their operations and their cash flows for the year then ended and the December 31, 2003 amounts included in the cumulative amounts for the period from inception (August 11, 2000) to December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.

/s/ STALEY OKADA & PARTNERS

Vancouver, Canada
March 22, 2004

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Heartland Oil and Gas Corp. and Subsidiary
(An Exploration Stage Company)

We have audited the consolidated balance sheet of Heartland Oil and Gas Corp. and Subsidiary (An Exploration Stage Company) as of December 31, 2002 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the year then ended and the December 31, 2002 amounts included in the cumulative amounts for the period from inception (August 11, 2000) to December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Heartland Oil and Gas Corp. and Subsidiary (An Exploration Stage Company) as of December 31, 2002, and the results of their operations and their cash flows for the year then ended and the December 31, 2002 amounts included in the cumulative amounts for the period from inception (August 11, 2000) to December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.

/s/ SPICER JEFFRIES LLP

Greenwood Village, Colorado
March 7, 2003

F-3

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

BALANCE SHEETS

	December 31, 2003	December 31, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$8,279,474	$86,475
Prepaid expenses	27,011	4,341
Total current assets	8,306,485	90,816
OIL AND GAS PROPERTIES, unproven (Note 7)	4,267,171	2,150,084
EQUIPMENT, net of accumulated amortization of $3,630 and $59, respectively	16,075	3,041
TOTAL ASSETS	$12,589,731	$2,243,941
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$493,336	$64,256
Due to related parties (Note 2)	7,027	14,078
Convertible debentures (Note 5)	-	435,000
Total current liabilities	500,363	513,334
LONG-TERM DEBT
Convertible debenture - related party (Note 5)	-	235,399
TOTAL LIABILITIES	500,363	748,733
STOCKHOLDERS' EQUITY (Note 4)
Preferred stock - $0.001 par value, 5,000,000 shares authorized, none issued and outstanding	- -	- -
Common stock - $0.001 par value, 100,000,000 shares authorized,
24,301,320 and 19,582,429 shares issued and outstanding, respectively	24,301	19,582
Additional paid-in capital	13,766,605	1,957,771
Deficit accumulated during the exploration stage	(1,701,538)	(482,145)
	12,089,368	1,495,208
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$12,589,731	$2,243,941

The accompanying notes are an integral part of these statements.

F-4

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

	Year Ended December 31, 2003	Year Ended December 31, 2002	Period from Inception (August 11, 2000) Through December 31, 2003
REVENUE	$-	$-	$-
EXPENSES
Professional fees	203,423	70,211	282,345
Management fees (Note 2)	48,000	30,000	94,000
Interest expense	22,399	31,943	67,206
Stock based compensation (Note 1)	455,375	219,600	674,975
Travel and promotion	217,645	29,889	247,534
Office rent	32,168	-	32,168
Consulting	53,489	18,758	85,171
General and administrative	214,796	28,508	247,396
Total operating expenses	1,247,295	428,909	1,730,795
Loss from operations	(1,247,295)	(428,909)	(1,730,795)
OTHER INCOME
Interest income	27,902	355	29,257
NET LOSS	$(1,219,393)	$(428,554)	$(1,701,538)
BASIC AND DILUTED NET
LOSS PER COMMON SHARE	$(0.06)	$(0.03)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING	21,752,375	14,335,771

The accompanying notes are an integral part of these statements

F-5

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

PERIOD FROM INCEPTION (AUGUST 11, 2000) TO DECEMBER 31, 2003

	Common Shares	Stock Amount	Additional Paid-in Capital	Deficit Accumulated During the Exploration Stage
INCEPTION, August 11, 2000	-	$-	$-	$-
Common stock issued at $0.005 per share	10,000,000	10,000	40,000	-
Common stock issued at $0.35 per share	1,332,429	1,332	465,018	-
Net loss	-	-	-	(10,004)
BALANCES, December 31, 2000	11,332,429	11,332	505,018	(10,004)
Net loss	-	-	-	(43,587)
BALANCES, December 31, 2001	11,332,429	11,332	505,018	(53,591)
Common stock issued at $0.50 per share	880,000	880	439,120	-
Recapitalization (Note 1)	7,090,000	7,090	402,313	-
Common stock issued at $1.40 per share	280,000	280	391,720	-
Issuance of stock warrants as compensation	-	-	219,600	-
Net loss	-	-	-	(428,554)
BALANCES, December 31, 2002	19,582,429	19,582	1,957,771	(482,145)
Common stock issued at $1.40 per share	720,000	720	1,007,280	-
Exercise of options at $0.50 per share	70,000	70	34,930	-
Conversion of debentures at $2.00	121,345	121	242,569	-
Conversion of debentures at $1.00	450,016	450	449,566	-
Common stock issued at $2.82 per share	602,835	603	1,699,392	-
Common stock issued at $3.20 per share	2,754,695	2,755	8,812,269
Issuance of stock options as compensation	-	-	455,375	-
Less: share issue costs	-	-	(892,547)	-
Net loss	-	-	-	(1,219,393)
BALANCES, December 31, 2003	24,301,320	$24,301	$13,766,605	$(1,701,538)

The accompanying notes are an integral part of these statements.

F-6

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2003	Year Ended December 31, 2002	Period from Inception (August 11, 2000) Through December 31, 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$(1,219,393)	$(428,554)	$(1,701,538)
Adjustments to reconcile net loss to net cash
used in operating activities:
Accrued interest on convertible debentures	22,307	13,889	49,061
Stock options issued as compensation	455,375	219,600	674,975
Depreciation and amortization	3,571	59	3,630
Decrease in exploration advance	-	6,719	-
Increase in prepaid expenses	(22,670)	(2,698)	(26,986)
Increase (decrease) in accounts payable
and accrued expenses	429,080	(67,965)	722,782
Net cash used in
operating activities	(331,730)	(258,950)	(278,076)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment	(16,605)	(3,100)	(19,705)
Acquisition and exploration of oil and
gas properties	(2,117,087)	(917,003)	(4,267,171)
Net cash used in
investing activities	(2,133,692)	(920,103)	(4,286,876)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in due to related parties	(7,051)	30,675	228,507
Cash received on recapitalization	-	15,896	15,896
Proceeds from issuance of common stock, net of offering costs	10,665,472	832,000	12,013,821
Proceeds from long-term debt	-	376,202	586,202
Net cash provided by
financing activities	10,658,421	1,254,773	12,844,426
NET INCREASE IN CASH AND CASH EQUIVALENTS	8,192,999	75,720	8,279,474
CASH AND CASH EQUIVALENTS, beginning of period	86,475	10,755	-
CASH AND CASH EQUIVALENTS, end of period	$8,279,474	$86,475	$8,279,474

The accompanying notes are an integral part of these statements

F-7

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Continued)

	Year Ended December 31, 2003	Year Ended December 31, 2002	Period from Inception (August 11, 2000) Through December 31, 2003
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Note payable converted to convertible debenture	$-	$201,510	$201,510
Advances received on long-term debt relieved upon reverse acquisition	$-	$586,202	$586,202
Conversion of convertible debentures including interest to common stock	$692,706	$-	$692,706
The Company acquired 72 % of the capital stock of Adriatic Holdings Limited for 100% of the capital of Heartland Oil & Gas, Inc. in a reverse acquisition (See Note 1). In connection with the reverse acquisition, liabilities were assumed as follows: Fair value                  $454,401 Cash acquired                15,896 Liabilities assumed      $438,505

The accompanying notes are an integral part of these statements

F-8

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Organization

On April 10, 2002, Adriatic Holdings Limited ("Adriatic") entered into a letter of intent to acquire all of the shares of Heartland Oil and Gas Inc., a Nevada corporation ("Heartland"). Heartland was incorporated in the State of Nevada on August 11, 2000 and its principal business activity consists of exploration and development of oil and gas properties in the United States to determine whether they contain economically recoverable resources. The Company is currently in the exploration stage and has not generated revenue from its operations. Effective September 17, 2002, the acquisition of Heartland by Adriatic was completed through the issuance of one share of Adriatic common stock for each share of Heartland outstanding. At the time of the acquisition, Adriatic had 7,090,000 shares of common stock outstanding. Adriatic issued 12,212,429 shares of common stock to the shareholders of Heartland, and as a result, the Company had 19,302,429 shares of common stock outstanding immediately after the acquisition. As part of the exchange agreement, Adriatic changed its name to Heartland Oil & Gas Corp.

The acquisition of Heartland by Adriatic is considered a reverse acquisition and accounted for under the purchase method of accounting. Under reverse acquisition accounting, Heartland is considered the acquirer for accounting and financial reporting purposes, and acquired the assets and assumed the liabilities of Adriatic. Assets acquired and liabilities assumed are reported at their historical amounts.

The consolidated financial statements include the accounts of Adriatic since the date of the reverse acquisition (September 17, 2002) and the historical accounts of its wholly owned subsidiary, Heartland Oil and Gas Inc. (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company has suffered recurring losses from operations and has accumulated a deficit of $1,701,538 since its inception on August 11, 2000. The Company has raised approximately $10,665,000 during 2003 and as mentioned in Note 9 to the financial statements, the Company has raised an additional $3,184,976 in 2004. The Company has sufficient working capital to fund its current operations through 2004. Since inception, the Company has funded operations through the issuance of capital stock and debt. Management's plan is to continue raising additional funds through future equity or debt financing until it achieves profitable operations from its oil and gas drilling activities.

Stock-Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and has adopted the disclosure only provisions of SFAS 123. Accordingly, compensation cost for stock options is measured at intrinsic value, which is the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services".

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

F-9

HEARTLAND OIL & GAS CORP.

AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Oil and Gas Properties

The Company utilizes the full cost method to account for its investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, capitalized interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. As of December 31, 2003, the Company has no properties with proven reserves. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects including capitalized interest, if any, are not amortized until proved reserves associated with the projects can be determined. If the future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be amortized. As of December 31, 2003, and 2002 all of the Company's oil and gas properties were unproved and were excluded from amortization. At December 31, 2003 and 2002, none of the Company's unproved oil and gas properties were considered impaired.

The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions. No impairment existed as of December 31, 2003 and 2002.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Revenue Recognition

Revenue from sales or services will be recognized at the time the product is delivered or at the time the service is performed.

Foreign Currency Translation

Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non-monetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary and non-monetary assets and liabilities are included in the statement of operations. Revenue and expenses are translated at the dates such items are recognized in the statement of operations.

Fair Value of Financial Instruments

Substantially all of the Company's assets and liabilities are carried at fair value or contracted amounts that approximate fair value. Estimates of fair value are made at a specific point in time, based on relative market information and information about the financial instrument, specifically, the value of the underlying financial instrument. Assets that are recorded at fair value consist largely of cash and other assets, which are carried at contracted amounts that approximate fair value. Oil and gas properties are valued as discussed above. The Company's liabilities consist of short-term liabilities and notes payable recorded at contracted amounts that approximate fair value.

F-10

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash in excess of the federally insured amount of $100,000. To date, the Company has not incurred a loss relating to this concentration of credit risk.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Loss Per Share

Earnings per share requires presentation of both basic earnings per common share and diluted earnings per common share. Due to the Company recognizing losses to date, common stock equivalents have not been included in the weighted average calculation since their effect would be anti-dilutive.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

A reporting issue has arisen regarding the application of certain provisions of SFAS No. 141 and SFAS No. 142 to companies in the extractive industries, including oil and gas companies. The issue is whether SFAS No. 142 requires registrants to classify the costs of mineral rights held under lease or other contractual arrangement associated with extracting oil and gas as intangible assets in the balance sheet, apart from other capitalized oil and gas property costs, and provide specific footnote disclosures. Historically, Heartland has included the costs of such mineral rights associated with extracting oil and gas as a component of oil and gas properties. If it is ultimately determined that SFAS No. 142 requires oil and gas companies to classify costs of mineral rights held under lease or other contractual arrangement associated with extracting oil and gas as a separate intangible assets line item on the balance sheet, Heartland would be required to reclassify approxima tely $2,372,337 at December 31, 2003 and $917,003 at December 31, 2002 from oil and gas properties and into a separate intangible assets line item. Heartland's cash flows and results of operations would not be affected since such intangible assets would continue to be depleted and assessed for impairment in accordance with full-cost accounting rules.

F-11

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." Such standard requires any gain or loss on extinguishments of debt to be presented as a component of continuing operations (unless specific criteria are met) whereas SFAS No. 4 required that such gains and losses be classified as an extraordinary item in determining net income. Upon adoption of SFAS No. 145, the Company will reclassify any extraordinary gains and losses on the extinguishments of debt recorded in prior periods to continuing operations. The adoption of SFAS 145 did not have a material effect on the Company's financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." Such standard requires costs associated with exit or disposal activities (including restructurings) to be recognized when the costs are incurred, rather than at a date of commitment to an exit or disposal plan. SFAS No. 146 nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a liability related to an exit or disposal activity is not recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 a liability was recognized at the time of a commitment to an exit or disposal plan. The provisions of this standard are effective for exit or disposal activities initiated after December 31, 2002. The adoption of SFAS 146 did not have a material effect on the Company's financial position or results of operations.

On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." This standard amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This standard also requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure requirements of SFAS No. 148 are required to be included in the summary of significant accounting policies.

In May, 2003, SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity", was issued. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Generally, a financial instrument, whether in the form of shares or otherwise, that is mandatorily redeemable, i.e. that embodies an unconditional obligation requiring the issuer to redeem it by transferring its shares or assets at a specified or determinable date (or dates) or upon an event that is certain to occur, must be classified as a liability (or asset in some circumstances). In some cases, a financial instrument that is conditionally redeemable may also be subject to the same treatment. T his Statement does not apply to features that are embedded in a financial instrument that is not a derivative (as defined) in its entirety. For public entities, this Statement is effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS 150 did not effect the Company's financial position or results of operations.

F-12

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 2 - RELATED PARTY TRANSACTIONS

Amounts due to related parties at December 31, 2003 and 2002 are as follows:

	December 31, 2003	December 31, 2002
Advances payable to officers and directors, non-interest bearing,
unsecured and no due date	$ 7,027	$ 14,078

During the years ended December 31, 2003 and 2002, the Company paid certain officers and directors management and consultant fees of $101,000 and $30,000, respectively.

NOTE 3 - STOCK OPTIONS

On December 3, 2001, the Company's Board of Directors adopted the 2002 Officer, Director, Consultant and Advisor Stock Compensation Plans (the "Plan"), stock option plans. The aggregate number of shares of common stock that may be granted by the Company will not exceed a maximum of 1,600,000 shares during the period of the Plan. The Plan shall terminate upon the earlier of December 31, 2012 or the issuance of all shares granted under the Plan. The option prices per share are determined by the Board of Directors when the stock option is granted.

If for any reason a recapitalization, sale or merger of the Company occurs, all shares subject to the stock option Plan shall be immediately adjusted proportionally. The Board of Directors may amend the Plan at any time. Certain amendments require stockholders' approval.

Information with respect to all options is as follows:

	Compensation Plan	Other Options and Warrants	Exercise Price Range	Weighted Average Exercise Price	Weighted Average Remaining Life
Available
Balance at December 31, 2001	500,000	-	$0.35	$ 0.35	4.92 years
Granted	670,000	280,000	0.50 - 1.75	0.87
Balance at December 31, 2002	1,170,000	280,000	0.35 - 1.75	0.69	3.58 years
Granted	100,000	2,970,127	0.50 - 3.84	2.73
Exercised	(70,000)	-	0.50	0.50
Balance at December 31, 2003	1,200,000	3,250,127	$0.35 - 3.84	$2.10	2.05 years

F-13

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3 - STOCK OPTIONS (continued)

	Compensation Plan	Other Options and Warrants	Exercise Price Range	Weighted Average Exercise Price	Weighted Average Remaining Life
Exercisable
Number of options exercisable
at December 31, 2002	680,000	280,000	$0.35 - 0.50	$0.79	3.58 years
Number of options exercisable
at December 31, 2003	972,500	3,250,127	$0.35 - 0.50	$2.18	1.95 years

At December 31, 2003 and 2002 respectively, 400,000 and 500,000 share options were available for future grant under the Plan.

The Company measures compensation cost under APB 25 based on the intrinsic value of the options at the grant date. The options which vested in 2003 and 2002 had an exercise price range of $0.50 to $2.00 when the market value of the underlying common stock ranged from $1.72 to $2.83 which resulted in compensation cost recognized by the Company of $455,375 and $219,600 for the years ended December 31, 2003 and 2002.

Had the Company measured compensation cost based on the fair value of the options at the grant date for 2003 and 2002 consistent with the method prescribed by SFAS 123, the Company's net loss and loss per common share would have been increased to the pro forma amounts indicated below:

	Year Ended December 31, 2003	Year Ended December 31, 2002
Net loss, as reported	$ (1,219,393)	$ (428,554)
Add: Stock-based employee compensation expense included in reported
net income, net of related tax effects	455,375	219,600
Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects	(593,380)	(297,874)
Pro forma net loss	$ (1,357,398)	$ (506,828)

	Year Ended December 31, 2003	Year Ended December 31, 2002
Net loss per share:
Basic and diluted loss per common share
As reported	$ (0.06)	$ (0.03)
Pro forma	(0.06)	(0.03)

F-14

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3 - STOCK OPTIONS (continued)

The fair value of each option grant was estimated at the date of the grant using the Black-Scholes option pricing model with the following assumptions for 2003 and 2002: risk-free interest rate of 2.8% (2002 - 1.66%); no dividend yield; expected lives of 4 to 5 years; and volatility of 76% (2002 - 75%).

NOTE 4 - STOCKHOLDERS' EQUITY

On September 11, 2000, the Company completed a private placement of 10,000,000 common shares at a price of $0.005 per share for proceeds of $50,000. On October 20, 2000 and November 21, 2000 the Company completed additional private placements of 356,429 and 976,000 common shares at $0.35 per share for proceeds of $466,350.

In April 2002, prior to the reverse acquisition with Adriatic (see Note 1), the Company completed a private placement of 880,000 shares of common stock at a $0.50 per share for proceeds of $440,000. On September 17, 2002, the Company completed its reverse acquisition with Adriatic by Adriatic issuing 12,212,429 to the shareholders of Heartland.

In October 2002, the Company commenced a private placement of units (one common share and one common stock purchase warrant exercisable at a price of $1.75 per share until August 31, 2004) at a price of $1.40 per unit. As of December 31, 2002, the Company sold 280,000 units for proceeds of $392,000.

During the year ended December 31, 2003 the following transactions occurred:

• In March 2003, the Company sold 690,000 units at $1.40 for proceeds of $966,000.

• The Company sold 30,000 units at $1.40 for proceeds of $42,000 in May 2003. This sale concluded the "Regulation S" private placement of 1,000,000 units at $1.40 per unit.

• The Company issued 121,345 units at a price of $2.00 for the conversion of $242,690 (including interest of $20,242) outstanding on a convertible debenture. Each unit consists of one share of common stock and one common stock purchase warrant, exercisable at $2.00 per share expiring on December 31, 2004.

• The Company issued 602,836 units at $2.82 per unit for proceeds of approximately $1,700,000 from a private placement. Each unit consisted of one share of common stock and one-half share purchase warrant exercisable at $3.38 per warrant expiring on June 23, 2006.

• A convertible debenture for $450,016 (including interest of $15,016) was converted into 450,016 units at a price of $1.00 per unit on June 30, 2003. Each unit consists of one share of common stock and one common stock purchase warrant, exercisable at $1.00 per share expiring on December 31, 2004.

• In August 2003 the Company issued 2,754,695 units at $3.20 per unit for proceeds of $8,815,024 pursuant to a private placement. Each unit consists of one share of common stock and one-half share purchase warrant exercisable at $3.84 per warrant expiring on August 20, 2006.

• During the year ended December 31, 2003 the Company issued 70,000 shares at $0.50 per share for proceeds of $35,000 from the exercise of stock options.

As of December 31, 2003, none of the warrants had been exercised.

F-15

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 4 - STOCKHOLDERS' EQUITY (continued)

On August 20, 2003, the Company announced that it had entered into agreements in principle relating to the issuance and sale of 995,305 units at a purchase price of $3.20 per unit for total aggregate proceeds of $3,184,976. Each unit is comprised of one share of Series A Preferred convertible shares and one stock purchase warrant to purchase one-half of one share of common stock for the additional consideration of $3.84 per share. Each preferred share is convertible into one common share for no additional consideration. The closing of the preferred share offering was subject to the Company entering into definitive agreements and amending its authorized capital to create the class of preferred shares, which received shareholder approval (See Note 9).

NOTE 5 - CONVERTIBLE DEBENTURES AND LONG-TERM DEBT

On May 6, 2002, Adriatic issued a convertible debenture to an unrelated party in the amount of $435,000, bearing interest at 7%, and principal and interest due December 1, 2003. The convertible debenture was convertible at the option of the debenture holder into units (consisting of one share of common stock and one warrant to purchase one share of common stock) at $1.00 per unit. This debenture was considered to have an embedded beneficial conversion feature because the conversion price was less than the quoted market price at the time of the issuance. Accordingly, the beneficial conversion feature was valued separately and the intrinsic value, essentially interest, was recorded as a charge to operations in the amount of $108,750 with a corresponding credit to additional paid-in capital. This transaction occurred before the acquisition of Heartland by Adriatic and therefore, is not included in the accompanying statements of operations.

On June 30, 2003 the Company issued 450,016 units (one share of common stock and one common stock purchase warrant) at a price of $1.00 per unit for the conversion of $450,016 (including interest of $15,016) outstanding on the convertible debenture.

In October 2002, the Company converted a $200,000 note payable plus accrued interest into a convertible debenture in the amount of $222,448 bearing interest at 7% per annum and is due on December 31, 2004. The debenture is convertible at $2.00 per unit (one share of common stock and one common stock purchase warrant, exercisable at $2.00 per share), at the option of the holder, at any time commencing on January 1, 2003 until maturity.

On June 30, 2003 the Company issued 121,345 units (one share of common stock and one common stock purchase warrant) at $2.00 per unit for the conversion of $242,690 (including interest of $20,242) outstanding on this convertible debenture.

NOTE 6 - INCOME TAXES

As of December 31, 2003, the Company had approximately $1,295,000 in pretax U.S. federal and state net operating loss carryforwards, expiring through the 2023. A portion of such net operating loss carryforwards were incurred prior to the September 17, 2002, the reverse acquisition date of the Company, and as such, management of the Company anticipates limitations to the use of these carryforwards under Internal Revenue Code Section 382.

F-16

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 6 - INCOME TAXES (continued)

The Company provides for deferred taxes arising from temporary differences in the book and tax carrying amounts of assets and liabilities. Temporary differences arise primarily from differences in reporting stock based compensation and intangible drilling and completion costs.

The deferred tax assets that result from such operating loss carryforwards and temporary differences of approximately $760,000 and $256,000 at December 31, 2003 and 2002, respectively, have been fully reserved for in the accompanying consolidated financial statements as follows. For the years ended December 31, 2003 and 2002, the valuation allowance established against the deferred tax assets increased by 504,000 and $215,000, respectively.

	Year Ended December 31, 2003	Year Ended December 31, 2002
Deferred tax liabilities:	$ -	$ -
Deferred tax assets:
Net operating loss deduction	$ 500,000	$ 125,000
Stock based compensation	260,000	131,000
Total deferred tax assets	760,000	256,000
Valuation allowance	(760,000)	(256,000)
	$ -	$ -

Reconciliation of the differences between the statutory tax rate and the effective tax rate is as follows:

	Year Ended December 31, 2003	Year Ended December 31, 2002
Federal statutory tax (benefit) rate	(34%)	(34%)
State taxes, net of federal tax (benefit) rate	(4.57%)	(4.57%)
Effective tax rate	(38.5%)	(38.5%)
Valuation allowance	(38.5%)	(38.5%)
Effective income tax rate	-	-

F-17

HEARTLAND OIL & GAS CORP.
AND SUBSIDIARY
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 7 - OIL AND GAS PROPERTIES, UNPROVED

The expiration dates of the Company's oil and gas leases range from dates in 2004 through 2007. Certain oil and gas leases may be extended by another one or two terms by the execution of options on these leases. In addition, the Company is required to pay delay rentals on certain leases. For the years ending December 31, 2004, 2005 and 2006, approximately $16,000 per year will be required to be paid on these leases.

The total costs incurred and excluded from amortization are summarized as follows:

	Acquisition Costs	Exploration Costs	Total
Costs incurred during periods ended:
December 31, 2003	$ 839,081	$ 1,278,006	$2,117,087
December 31, 2002	917,003	-	917,003
December 31, 2001	506,253	591,875	1,098,128
December 31, 2000	110,000	24,953	134,953
Totals	$ 2,372,337	$ 1,894,834	$ 4,267,171

At December 31, 2003, all of the Company's oil and gas properties are considered unproven. Based on the status of the Company's exploration activities, including the drilling of exploratory test wells, management has determined that no impairment has occurred.

NOTE 8- COMMITMENTS

The Company leases a facility in Vancouver, British Columbia under a non-cancelable operating lease. The lease commenced on February 1, 2004 and will expire on February 29, 2008. As of December 31, 2003, future minimum lease payments are as follows:

Year	Amount
2004	$ 41,486
2005	45,258
2006	45,258
2007	45,258
2008	7,543
	$ 184,803

The Company paid $32,168 for rent expense for the year ended December 31, 2003.

NOTE 9- EVENT SUBSEQUENT TO BALANCE SHEET DATE

During January and February of 2004 the Company completed an offering of its Series A Preferred Convertible Stock. The shares were issued along with a stock purchase warrant to purchase one half of one share of common stock at an exercise price of $3.84 per share. The Series A Preferred Stock is convertible into one share of common stock at no additional consideration. The Company received proceeds of $3,184,976 pursuant to this offering.

F-18
HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)
June 30, 2004
	Index
Consolidated Balance Sheets	F-20
Consolidated Statements of Operations	F-21
Consolidated Statements of Cash Flows	F-22
Statement of Changes in Stockholders' Equity	F-23
Notes to the Financial Statements	F-24

F-19

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

BALANCE SHEETS

	June 30, 2004	December 31, 2003
	(Unaudited)	(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$7,311,074	$8,279,474
Prepaid expenses	11,306	27,011
Total current assets	7,322,380	8,306,485
OIL AND GAS PROPERTIES, unproven (Note 2)	7,720,753	4,267,171
EQUIPMENT, net of accumulated amortization of $6,630	16,903	16,075
TOTAL ASSETS	$15,060,036	$12,589,731
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$341,980	$493,336
Due to related parties (Note 4)	841	7,027
Total current liabilities	342,821	500,363
LONG-TERM LIABILITIES
Asset retirement obligations	90,000	-
TOTAL LIABILITIES	432,821	500,363
STOCKHOLDERS' EQUITY (Note 3)
Preferred stock - $0.001 per value, 5,000,000 shares authorized,
995,305 and nil shares issued and outstanding, respectively	995	-
Common stock - $0.001 per value, 100,000,000 shares authorized,
24,421,320 and 24,301,320 shares issued and outstanding, respectively	24,421	24,301
Additional paid-in capital	17,049,912	13,766,605
Deficit accumulated during the exploration stage	(2,448,113)	(1,701,538)
TOTAL STOCKHOLDERS' EQUITY	14,627,215	12,089,368
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$15,060,036	$12,589,731

The accompanying notes are an integral part of these statements.

F-20

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended June 30, 2004	Three Months Ended June 30, 2003	Six Months Ended June 30, 2004	Six Months Ended June 30, 2003	Period from Inception (August 11, 2000) Through June 30, 2004
REVENUE	$-	$-	$-	$-	$-
EXPENSES
Professional fees	8,314	65,464	88,186	107,503	370,531
Management fees (Note 4)	38,209	7,000	85,826	18,000	179,826
Interest expense	-	3,681	-	7,520	67,206
Stock - based compensation (Note 1)	193,538	240,350	301,051	240,350	977,104
Travel and promotion	66,187	18,714	110,118	43,329	357,652
Office rent	29,069	8,297	40,829	15,004	72,997
Consulting (Note 4)	-	28,674	6,000	36,927	91,171
General and administrative	75,271	42,414	159,285	76,393	405,603
Total operating expenses	410,588	414,594	791,295	545,026	2,522,090
LOSS FROM OPERATIONS	(410,588)	(414,594)	(792,295)	(545,026)	(2,522,090)
OTHER INCOME
Interest income	23,286	385	44,720	385	73,977
NET LOSS	$ (387,302)	$(414,209)	$(746,575)	$(544,641)	$(2,448,113)
BASIC AND DILUTED NET LOSS PER COMMON SHARE	$(0.02)	$(0.02)	$(0.03)	$(0.03)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	24,402,199	20,300,682	24,376,815	20,035,584

The accompanying notes are an integral part of these statements

F-21

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended June 30, 2004	Six Months Ended June 30, 2003	Period from Inception (August 11, 2000) Through June 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$(746,575)	$(544,641)	$(2,448,113)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Accrued interest on convertible debentures	-	22,308	49,061
Stock - based compensation	301,051	240,350	976,026
Depreciation, depletion and amortization	3,004	1,215	6,634
(Increase) in accounts receivable	-	(3,000)	-
Decrease (increase) in prepaid expenses	15,705	(12,911)	(11,281)
(Decrease) increase in accounts payable and accrued expenses	(151,356)	54,471	571,426
Net cash (used in) provided by operating activities	(578,171)	(242,208)	(856,247)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment	(3,832)	(8,332)	(23,537)
Acquisition and exploration of oil and gas properties	(3,363,583)	(65,836)	(7,630,754)
Net cash (used in) provided by investing activities	(3,367,415)	(74,168)	(7,654,291)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in due to related parties	(6,185)	(11,450)	222,322
Cash received on recapitalization	-	-	15,896
Proceeds from issuance of common stock, net of offering costs	55,500	2,330,723	12,069,321
Proceeds from issuance of preferred stock, net of offering costs	2,927,871	-	2,927,871
Proceeds from long-term debt	-	-	586,202
Net cash provided by financing activities	2,977,186	2,319,273	15,821,612
NET INCREASE IN CASH	(968,400)	2,002,897	7,311,074
CASH, beginning of period	8,279,474	86,475	-
CASH, end of period	$7,311,074	$2,089,372	$7,311,074

The accompanying notes are an integral part of these statements

F-22

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

PERIOD FROM INCEPTION (AUGUST 11, 2000) TO JUNE 30, 2004

	Number of Preferred Shares	Stock Amount	Number of Common Shares	Stock Amount	Additional Paid-in Capital	Deficit Accumulated During the Exploration Stage
INCEPTION, August 11, 2000	-	$ -	-	$ -	$ -	$ -
Common stock issued at $0.005 per share	-	-	10,000,000	10,000	40,000	-
Common stock issued at $0.35 per share	-	-	1,332,429	1,332	465,018	-
Net loss	-	-	-	-	-	(10,004)
BALANCES, December 31, 2000	-	-	11,332,429	11,332	505,018	(10,004)
Net loss	-	-	-	-	-	(43,587)
BALANCES, December 31, 2001	-	-	11,332,429	11,332	505,018	(53,591)
Common stock issued at $0.50 per share	-	-	880,000	880	439,120	-
Recapitalization (Note 1)	-	-	7,090,000	7,090	402,313	-
Common stock issued at $1.40 per share	-	-	280,000	280	391,720	-
Issuance of stock warrants as compensation	-	-	-	-	219,600	-
Net loss	-	-	-	-	-	(428,554)
BALANCES, December 31, 2002	-	-	19,582,429	19,582	1,957,771	(482,145)
Common stock issued at $1.40 per share	-	-	720,000	720	1,007,280	-
Exercise of options at $0.50 per share	-	-	70,000	70	34,930	-
Conversion of debentures at $2.00	-	-	121,345	121	242,569	-
Conversion of debentures at $1.00	-	-	450,016	450	449,566	-
Common stock issued at $2.82 per share	-	-	602,835	603	1,699,395	-
Common stock issued at $3.20 per share	-	-	2,754,695	2,755	8,812,268	-
Issuance of stock options as compensation	-	-	-	-	455,375	-
Less: share issue costs	-	-	-	-	(892,549)	-
Net loss	-	-	-	-	-	(1,219,393)
BALANCES, December 31, 2003	-	-	24,301,320	24,301	13,766,605	(1,701,538)
Common stock issued at $0.35 per share	-	-	30,000	30	10,470	-
Common stock issued at $0.50 per share	-	-	90,000	90	44,910	-
Issuance of stock options as compensation	-	-	-	-	301,051	-
Preferred stock issued at $3.20 per share	995,305	995	-	-	3,183,981	-
Less: share issue costs	-	-	-	-	(257,105)	-
Net loss	-	-	-	-	-	(746,575)
BALANCES, June 30, 2004 (Unaudited)	995,305	$ 995	24,421,320	$ 24,421	$ 17,049,912	$(2,448,113)

The accompanying notes are an integral part of these statements

F-23

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Organization, Business and Going Concern

On April 10, 2002, Adriatic Holdings Limited ("Adriatic") entered into a letter of intent to acquire all of the shares of Heartland Oil and Gas Inc., a Nevada corporation ("Heartland"). Heartland was incorporated in the State of Nevada on August 11, 2000 and its principal business activity consists of exploration and development of oil and gas properties in the United States to determine whether they contain economically recoverable resources. The Company is currently in the exploration stage and has not generated significant revenues from its operations. Effective September 17, 2002, the acquisition of Heartland by Adriatic was completed through the issuance of one share of Adriatic common stock for each share of Heartland outstanding. At the time of the acquisition, Adriatic had 7,090,000 shares of common stock outstanding. Adriatic issued 12,212,429 shares of common stock to the shareholders of Heartland, and as a result, the Company had 19,302,429 shares of common stock ou tstanding immediately after the acquisition. As part of the exchange agreement, Adriatic changed its name to Heartland Oil & Gas Corp. The acquisition of Heartland by Adriatic is considered a reverse acquisition and accounted for under the purchase method of accounting. Under reverse acquisition accounting, Heartland is considered the acquirer for accounting and financial reporting purposes, and acquired the assets and assumed the liabilities of Adriatic. Assets acquired and liabilities assumed are reported at their historical amounts.

The consolidated financial statements include the accounts of Adriatic since the date of the reverse acquisition (September 17, 2002) and the historical accounts of its wholly owned subsidiary, Heartland Oil and Gas Inc. (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company has suffered recurring losses from operations and has accumulated a deficit of $2,448,113 since inception on August 11, 2000. At June 30, 2004, the Company has working capital of $6,979,559. Since inception, the Company has funded operations through the issuance of capital stock and debt. Management's plan is to continue raising additional funds through future equity or debt financings until it achieves profitable operations from its oil and gas drilling activities.

Basis of Presentation

The accompanying consolidated financial statements of the Company are unaudited and include, in the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of June 30, 2004, and the related statements of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These consolidated financials statements should be read in conjunction with the Company's audited financial statements and the related notes thereto included in the Company's Form 10-KSB filed with the Securities and Exchange Commission.

Oil and Gas Properties

The Company utilizes the full cost method to account for its investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, capitalized interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. As of June 30, 2004, the Company has no properties with proven reserves. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects including capitalized interest, if any, are not amortized until proved reserves associated with the projects can be determined. If the future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be amortized. As of June 30, 2004, all of the Company's oil and gas properties were unproved and were excluded from amortization. At June 30, 2004, management believes none of the Company's unproved oil and gas properties were considered impaired.

The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

F-24

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Loss Per Share of Common Stock

Net loss per share of common stock is based on the weighted average number of shares of common stock outstanding, giving effect to the outstanding shares of Adriatic as if they were issued on the date of the reverse acquisition as discussed above. Common stock equivalents are not included in the weighted average calculation since their effect would be anti-dilutive.

Stock-Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and has adopted the disclosure only provisions of SFAS 123. Accordingly, compensation cost for stock options is measured at intrinsic value, which is the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services".

Had the Company measured compensation cost based on the fair value of the options at the grant date for the three- and six-month periods ended June 30, 2004 consistent with the method prescribed by SFAS 123, the Company's net loss and loss per common share would have been increased to the pro forma amounts indicated below:

	Three Months Ended June 30, 2004	Three Months Ended June 30, 2003	Six Months Ended June 30, 2004	Six Months Ended June 30, 2003
Net loss, as reported	$ (387,302)	$ (414,209)	$ (746,575)	$ (544,641)
Add: Stock-based employee compensation expense included in reported
net income, net of related tax effects	193,538	240,350	301,051	240,350
Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects	(680,183)	(297,874)	(785,040)	(297,874)
Pro forma net loss	$ (873,947)	$ (471,733)	$(1,230,564)	$ (602,165)

	Three Months Ended June 30, 2004	Three Months Ended June 30, 2003	Six Months Ended June 30, 2004	Six Months Ended June 30, 2003
Earnings per share:
Basic and diluted earnings (loss) per common share
As reported	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.03)
Pro forma	(0.04)	(0.02)	(0.05)	(0.03)

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

F-25

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management believes that the estimates utilized in the preparation of the consolidated financial statements are prudent and reasonable. Actual results could differ from these estimates.

Fair Value of Financial Instruments

Substantially all of the Company's assets and liabilities are carried at fair value or contracted amounts that approximate fair value. Estimates of fair value are made at a specific point in time, based on relative market information and information about the financial instrument, specifically, the value of the underlying financial instrument. Assets that are recorded at fair value consist largely of cash and other assets, which are carried at contracted amounts that approximate fair value. Oil and gas properties are valued as discussed above. The Company's liabilities consist of short term liabilities and notes payable recorded at contracted amounts that approximate fair value.

Recent Accounting Pronouncements

A reporting issue has arisen regarding the application of certain provisions of SFAS No. 141 and SFAS No. 142 to companies in the extractive industries, including oil and gas companies. The issue is whether SFAS No. 142 requires registrants to classify the costs of mineral rights held under lease or other contractual arrangement associated with extracting oil and gas as intangible assets in the balance sheet, apart from other capitalized oil and gas property costs, and provide specific footnote disclosures. Historically, Heartland has included the costs of such mineral rights associated with extracting oil and gas as a component of oil and gas properties. If it is ultimately determined that SFAS No. 142 requires oil and gas companies to classify costs of mineral rights held under lease or other contractual arrangement associated with extracting oil and gas as a separate intangible assets line item on the balance sheet, Heartland would be required to reclassify a pproximately $3,098,508 at June 30, 2004 and $2,372,337 at December 31, 2003 out of oil and gas properties and into a separate intangible assets line item. Heartland's cash flows and results of operations would not be affected since such intangible assets would continue to be depleted and assessed for impairment in accordance with full-cost accounting rules.

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS 143 addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 is effective for January 1, 2003. SFAS 143 requires that the fair value of a liability for an asset's retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized costs is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized The following table summarizes the Company's asset retirement obligation transactions during the six month period ended June 30, 2004.

	Six Months Ended June 30, 2004
Beginning asset retirement obligations	$ -
Additions related to new properties	-
Liabilities incurred	81,000
Deletions related to property disposals	-
Accretion	9,000
Total asset retirement obligations	$ 90,000

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." Such standard requires any gain or loss on extinguishments of debt to be presented as a component of continuing operations (unless specific criteria are met) whereas SFAS No. 4 required that such gains and losses be classified as an extraordinary item in determining net income. Upon adoption of SFAS No. 145, the Company will reclassify any extraordinary gains and losses on the extinguishments of debt recorded in prior periods to continuing operations. The adoption of SFAS 145 did not have a material effect on the Company's financial position or results of operations.

F-26

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." Such standard requires costs associated with exit or disposal activities (including restructurings) to be recognized when the costs are incurred, rather than at a date of commitment to an exit or disposal plan. SFAS No. 146 nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a liability related to an exit or disposal activity is not recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 a liability was recognized at the time of a commitment to an exit or disposal plan. The provisions of this standard are effective for exit or disposal activities initiated after December 31, 2002. The adoption of SFAS 146 did not have a material effect on the C ompany's financial position or results of operations.

On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." This standard amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This standard also requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure requirements of SFAS No. 148 are required to be included in the summary of significant accounting policies.

In May, 2003, SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity", was issued. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Generally, a financial instrument, whether in the form of shares or otherwise, that is mandatorily redeemable, i.e. that embodies an unconditional obligation requiring the issuer to redeem it by transferring its shares or assets at a specified or determinable date (or dates) or upon an event that is certain to occur, must be classified as a liability (or asset in some circumstances). In some cases, a financial instrument that is conditionally redeemable may also be subject to the same treatment. T his Statement does not apply to features that are embedded in a financial instrument that is not a derivative (as defined) in its entirety. For public entities, this Statement is effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS 150 did not effect the Company's financial position or results of operations.

NOTE 2- OIL AND GAS PROPERTIES, UNPROVEN

The total costs incurred and excluded from amortization are summarized as follows:

	Acquisition Costs	Exploration Costs	Total
Costs incurred during periods ended:
June 30, 2004	$ 726,171	$ 2,727,411	$ 3,453,582
December 31, 2003	839,081	1,278,006	2,117,087
December 31, 2002	917,003	-	917,003
December 31, 2001	506,253	591,875	1,098,128
December 31, 2000	110,000	24,953	134,953
Totals	$ 3,098,508	$ 4,622,245	$ 7,720,753

At June 30, 2004, all of the Company's oil and gas properties are considered unproven. Based on the status of the Company's exploration activities, including the drilling of test wells, management has determined that no impairment has occurred.

F-27

HEARTLAND OIL & GAS CORP.
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3- STOCKHOLDERS' EQUITY

During the three-month period ended March 31, 2003 the Company completed the sale of 690,000 units at $1.40 per unit for proceeds of $966,000.

During the three-month period ended March 31, 2004 the Company issued 60,000 shares of common stock at $0.50 per share for proceeds of $30,000 and 30,000 shares of common stock at $0.35 per share for proceeds of $10,500 from the exercise of stock options.

During the three-month period ended March 31, 2004 the Company completed the sale of 995,305 units at $3.20 per unit for proceeds of $3,184,976, before issue costs. Each unit is comprised of one share of Series A Preferred convertible shares and one stock purchase warrant to purchase one-half of one share of common stock for the additional consideration of $3.84 per share. Each preferred share is convertible into one common share for no additional consideration.

During the three-month period ended June 30, 2004 the Company issued 30,000 shares of common stock at $0.50 per share for proceeds of $15,000 from the exercise of stock options.

NOTE 4- RELATED PARTY TRANSACTIONS

Amounts due to related parties on the accompanying balance sheet as of June 30, 2004, are $842. This amount due from related parties represents non-interest bearing advances to directors and shareholders, with no fixed terms of repayment.

During the six-month period ended June 30, 2004, the Company paid or accrued $85,826 in management fees and $6,000 in consulting fees to directors of the Company.

42

WHERE YOU CAN FIND MORE INFORMATION

We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Our Securities and Exchange Commission filings are available to the public over the Internet at the SEC's website at http://www.sec.gov.

You may also read and copy any materials we file with the Securities and Exchange Commission at the SEC's public reference room at 450 Fifth Street N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.

We have filed with the Securities and Exchange Commission a registration statement on Form SB-2, under the Securities Act with respect to the securities offered under this prospectus. This prospectus, which forms a part of that registration statement, does not contain all information included in the registration statement. Certain information is omitted and you should refer to the registration statement and its exhibits. With respect to references made in this prospectus to any contract or other document of Heartland, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract or document. You may review a copy of the registration statement at the SEC's public reference room. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our filings and the registration statement can also be reviewed by accessing the SEC's website at http://www.sec.gov.

No finder, dealer, sales person or other person has been authorized to give any information or to make any representation in connection with this offering other than those contained in this prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by Heartland Oil and Gas Corp. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date of this prospectus.

43

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24 INDEMNIFICATION OF DIRECTORS AND OFFICERS

Nevada corporation law provides that:

- a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful;

- a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper; and

- to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.

We may make any discretionary indemnification only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

- by our stockholders;

- by our board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;

- if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion;

- if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion; or

- by court order.

44

Our Certificate of Incorporation and Articles provide that no director or officer shall be personally liable to our company, any of our stockholders or any other for damages for breach of fiduciary duty as a director or officer involving any act or omission of such director or officer unless such acts or omissions involve intentional misconduct, fraud or a knowing violation of law, or the payment of dividends in violation of the General Corporate Law of Nevada.

Our Bylaws provide that no officer or director shall be personally liable for any obligations of our company or for any duties or obligations arising out of any acts or conduct of the officer or director performed for or on behalf of our company. The Bylaws also state that we will indemnify and hold harmless each person and their heirs and administrators who shall serve at any time hereafter as a director or officer from and against any and all claims, judgments and liabilities to which such persons shall become subject by reason of their having heretofore or hereafter been a director or officer, or by reason of any action alleged to have heretofore or hereafter taken or omitted to have been taken by him or her as a director or officer. We will reimburse each such person for all legal and other expenses reasonably incurred by him in connection with any such claim or liability, including power to defend such persons from all suits or claims as provided for under the provisions of the General Corporate Law of Nevada; provided, however, that no such persons shall be indemnified against, or be reimbursed for, any expense incurred in connection with any claim or liability arising out of his (or her) own negligence or wilful misconduct. Our By-Laws also provide that we, our directors, officers, employees and agents will be fully protected in taking any action or making any payment, or in refusing so to do in reliance upon the advice of counsel.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of our company under Nevada law or otherwise, we have been advised the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than payment by us for expenses incurred or paid by a director, officer or controlling person of our company in successful defense of any action, suit, or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction, the question of whether such indemnification by it is against public policy in said Act and will be governed by the final adjudication of such issue.

Item 25 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses shall be borne by the selling stockholder. All of the amounts shown are estimates, except for the SEC Registration Fees.

SEC registration fees	$6,076,18
Printing and engraving expenses	$5,000(1)
Accounting fees and expenses	$5,000(1)
Legal fees and expenses	$25,000(1)
Transfer agent and registrar fees	$5,000(1)
Fees and expenses for qualification under state securities laws	$0
Miscellaneous	$1,000(1)
Total	$47,067.18

(1) We have estimated these amounts

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Item 26 RECENT SALES OF UNREGISTERED SECURITIES

In April 2002, prior to the reverse acquisition with Adriatic Holdings Ltd., our company completed a private placement and issued 880,000 shares of common stock at $0.50 per share for proceeds of $440,000 to nine investors. All of the investors were offshore investors and therefore we relied on the provisions of Regulation S promulgated under the Securities Act of 1933 as amended, for issuance of the shares.

On May 6, 2002 we issued a convertible debenture to one investor in the amount of $435,000 which bears interest at 7% and is due on December 1, 2003. The debenture was convertible on a dollar for dollar basis into a unit of our company, each unit consisting of one share of common stock and one common stock purchase warrant, exercisable at $1.00 per share at the option of the holder at any time commencing on July 1, 2002 until maturity. On June 30, 2003, we issued 450,016 units to the holder of the debenture pursuant to the conversion of the debenture. We relied on the provisions of Regulation S promulgated under the Securities Act of 1933 as amended, for issuance of the note and the units.

On September 17, 2002 we acquired all of the issued and outstanding stock of Heartland Oil and Gas Inc., a private Nevada Corporation, from its stockholders in exchange for 12,212,429 shares of our common stock. We relied on the provisions of Regulation S promulgated under the Securities Act of 1933 as amended, for issuance of the shares.

In October, 2002 we converted a note payable of $201,510 into a convertible debenture in the amount of $228,350 bearing interest at 7% per annum to a shareholder. The convertible debenture is due on December 31, 2004. The convertible debenture is convertible on a dollar for dollar basis into a unit, consisting of one share of common stock and on common stock purchase warrant, exercisable at $2.00 per share, at the option of the debenture holder at any time commencing January 1, 2003 until maturity. On June 30, 2003, we issued 121,345 units to the holder of the debenture pursuant to the conversion of the debenture. We relied on the provisions of Regulation S promulgated under the Securities Act of 1933, as amended, for issuance of the convertible debenture and the units.

In October 2002 we commenced a private placement of units at a price of $1.40 per unit. Each unit consisted of one share of common stock and one common stock purchase warrant, exercisable at a price of $1.75 per share until August 31, 2004. We relied on the provisions of Regulation S promulgated under the Securities Act of 1933 as amended, for issuance of the units. In May, 2003 we closed the private placement having issued 1,000,000 units.

On June 24 and June 30, 2003, we sold to eight accredited investors an aggregate of 602,836 of our shares of our common stock and share purchase warrants to acquire an additional 301,418 shares of our common stock in a private placement relying on the exemption from the registration requirements of the Securities Act provided by Rule 506 of Regulation D and/or Section 4(2) of the Securities Act.

On June 30, 2003, we issued to C.K. Cooper and Company, Inc., a broker dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, a warrant to purchase up to 25,223 shares of our common stock, exercisable at any time during the three year period ending on June 30, 2006 at an exercise price of $3.38 per share.

On June 30, 2003 we issued 571,361 shares of our common stock to holders of convertible debentures pursuant to the exercise of the conversion feature of the debentures. We relied on the provisions of Regulation S promulgated under the Securities Act of 1933, as amended, for issuance of the shares upon the conversion.

On July 10, 2003, we issued 10,000 options to Econ Investor Relations Inc. The options are exercisable at $3.50 per share and expire on July 10, 2008. The options were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On August 19, 2003, we sold to 26 accredited investors, an aggregate of $8,815,024 of our shares of our common stock and share purchase warrants to acquire additional shares of our common stock in a private placement relying on the exemption from the registration requirements of the Securities Act provided by Rule 506 of Regulation D and/or Section 4(2) of the Securities Act. The private placement involved the issuance of 2,754,695 shares of our common stock and share purchase warrants to acquire an additional 1,377,348 shares of our common stock.

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On August 19, 2003 we issued C.K. Cooper a warrant to purchase a further 134,954 shares, exercisable to August 19, 2006, at an exercise price of $3.84 per share. We issued the warrants pursuant to Rule 506 of Regulation D under the Securities Act of 1933, in partial payment of placement fees in connection with the sale of our common stock and share purchase warrants.

On August 19, 2003 we issued to Highbrook Capital Corporation a warrant to purchase 2,781 shares of our common stock, exercisable to August 19, 2006, at an exercise price of $3.84 per share. We issued these warrants pursuant to Regulation S promulgated under the Securities Act of 1933, in payment of placement fees in connection with the sale of our common stock and share purchase warrants.

On January 13, 2004, we sold to 6 accredited investors an aggregate of 995,306 shares of Series A Convertible Preferred Stock in a private placement relying on the exemption from the registration requirements of the Securities Act provided by Rule 506 of Regulation D and/or Section 4(2) of the Securities Act. The shares of Series A Convertible Preferred Stock are convertible into 995,306 shares of our common stock and share purchase warrants to acquire an additional 497,653 shares of our common stock. Effective September 27, 2004 all shares of Series A Convertible Preferred Stock were exchanged for 2,378,118 shares of common stock pursuant to certain participation rights. The common stock was also issued pursuant to Rule 506 of Regulation D.

On January 13, 2004 we issued C.K. Cooper a warrant to purchase a further 41,471 shares, exercisable to January 13, 2007, at an exercise price of $3.84 per share. We issued the warrants pursuant to Rule 506 of Regulation D under the Securities Act of 1933, in partial payment of placement fees in connection with the sale of our shares of Series A Convertible Preferred Stock.

On May 28, 2004, we issued to an employee an aggregate of 30,000 shares of common stock pursuant to the exercise of stock options previously granted under the terms of a stock option plan. We issued these shares pursuant to a Registration Statement on Form S-8.

Effective September 27, 2004 we entered into subscription agreements with 48 accredited investors, whereby we issued a total of 23,260,909 shares of our common stock at a purchase price of $1.50 per share for total aggregate proceeds of $34,891,363. However, one subscriber for 3,333,334 common shares, for proceeds of $5,000,000, has not yet completed their purchase and provided the purchase price. As a result this stock has been issued but remains assessable. We relied on the provisions of Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended, for issuance of the shares.

Effective September 30, 2004 we entered into subscription agreements with 2 accredited investors, whereby we issued 3,529,412 series B convertible preferred shares at a purchase price of $1.70 per share for total aggregate proceeds of $6,000,000. We relied on the provisions of Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended, for the issuance of the shares.

Effective October 1, 2004, six accredited investors converted their series A convertible preferred shares into common shares pursuant to certain participation rights of the Series A shares. We issued 2,378,118 shares of our common stock upon conversion of all outstanding series A convertible preferred shares. We relied on the provisions of Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended, for the issuance of the shares.

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Item 27 EXHIBITS

The following Exhibits are filed with this Prospectus:

Exhibit Number	Description
3.1*	Articles of Incorporation (1)
3.2*	Bylaws of Adriatic Holdings Ltd. (1)
3.3*	Certificate of Amendment to Articles of Incorporation effective November 4, 2002 (2)
3.4**	Certificate of Amendment to Articles of Incorporation effective December 10, 2003
3.5*	Certificate of Designation for shares of Series A Convertible Preferred Stock, effective December 18, 2003(9)
3.6**	Certificate of Designation for shares of Series B Convertible Preferred Stock, effective October 1, 2004
5.1**	Opinion of Clark, Wilson regarding the legality of the securities being registered
10.1*	Share Exchange Agreement between Adriatic Holdings Ltd., Heartland Oil and Gas Inc. and the shareholders of Heartland Oil and Gas Inc., dated July 31, 2002 (3)
10.2*	Form of Oil and Gas Lease (4)
10.3*	Managing Dealers Agreement, dated June 19, 2003, between Heartland Oil and Gas Corp. and C.K. Cooper and Company, Inc.(5)
10.4*	Managing Dealers Agreement, dated July 29, 2003 between Heartland Oil and Gas Corp. and C.K. Cooper and Company, Inc. (8)
10.5*	Form of Subscription Agreement in connection with private placements on June 24 and June 30, 2003 (5)
10.6*	Form of Subscription Agreement in connection with private placement on August 19, 2003 (6)
10.7*	Consulting Agreement dated July 1, 2003, between Heartland Oil and Gas Corp. and Donald Sharpe (8)
10.8*	Consulting Agreement dated July 1, 2003, between Heartland Oil and Gas Corp. and Richard Coglon (8)
10.9*	Letter Agreement between Topeka-Atchison Gas & Illuminating LLC with Heartland Oil and Gas Inc., dated August 25, 2000 (8)
10.10*	Form of Oil and Gas Lease with Option (7)
10.11*	Form of Subscription Agreement in connection with private placement of Series A Preferred shares, dated September 24, 2003 (10)
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10.12**	Purchase and Sale Agreement between Heartland Oil and Gas Corp. and Evergreen Resources, Inc, dated effective September 27, 2004
10.13*	Form of Securities Purchase Agreement in connection with private placement of Series B Preferred shares, dated October 1, 2004 (11)
10.14**	Form of Subscription Agreement in connection with the private placement on September 27, 2004
14.1*	Code of Business Conduct and Ethics (10)
21.1	Heartland Oil and Gas Inc., a company incorporated pursuant to the laws of the State of Nevada
23.1**	Consent of Staley Okada & Partners on Heartland Oil and Gas Corp.
23.2**	Consent of Spicer Jeffries LLP on Heartland Oil and Gas Corp.
23.3**	Consent of Production Enhancement & Reservoir Management, LLC on Heartland Oil and Gas Corp.

* Previously filed

** Filed herewith

(1) Incorporated by reference to the company's Form SB-2 Registration Statement filed with the Securities and Exchange Commission on October 23, 2001.

(2) Incorporated by reference to the company's Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2002.

(3) Incorporated by reference to the company's Form 8-K filed with the Securities and Exchange Commission on October 2, 2002.

(4) Incorporated by reference to the company's Form 10-KSB filed with the Securities and Exchange Commission on April 1, 2003.

(5) Incorporated by reference to the company's Form 10-QSB filed with the Securities and Exchange Commission on July 28, 2003.

(6) Incorporated by reference to the company's Form 8-K filed with the Securities and Exchange Commission on August 21, 2003.

(7) Incorporated by reference to the company's Form 10-KSB/A filed with the Securities and Exchange Commission on October 22, 2003.

(8) Incorporated by reference to the company's Form SB-2 Registration Statement filed with the Securities and Exchange Commission on August 29, 2003, as amended.

(9) Incorporated by reference to the company's Form SB-2 Registration Statement filed with the Securities and Exchange Commission on February 17, 2004.

(10) Incorporated by reference to the company's Form 10-KSB filed with the Securities and Exchange Commission on March 29, 2004, as amended on May 27, 2004.

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(11) Incorporated by reference to the company's Form 8-K filed with the Securities and Exchange Commission on October 6, 2004.

Item 28 UNDERTAKINGS

The undersigned company hereby undertakes that it will:

(1) file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include:

(a) any prospectus required by Section 10(a)(3) of the Securities Act;

(b) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(c) any additional or changed material information with respect to the plan of distribution not previously disclosed in the registration statement;

(2) for the purpose of determining any liability under the Securities Act, each of the post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof; and

(3) remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Heartland pursuant to the foregoing provisions, or otherwise, Heartland has been advised that in the opinion of the Commission that type of indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against said liabilities (other than the payment by Heartland of expenses incurred or paid by a director, officer or controlling person of Heartland in the successful defense of any action, suit or proceeding) is asserted by the director, officer or controlling person in connection with the securities being registered, Heartland will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securitie s Act and will be governed by the final adjudication of the issue.

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

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SIGNATURES

In accordance with the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Vancouver, British Columbia, Canada, on November 12, 2004.

HEARTLAND OIL AND GAS CORP.

/s/Richard Coglon
By: Richard Coglon, President and Director
(Principal Executive Officer)
Dated: November 12, 2004

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person who signature appears below constitutes and appoints Richard Coglon as his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of them, or of their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates stated.

Signatures

/s/ Richard Coglon
By: Richard Coglon, President and Director
(Principal Executive Officer)
Dated: November 12, 2004

/s/ Michael David
By: Michael David, Chief Financial Officer
(Principal Financial Officer)
Dated: November 12, 2004

/s/ Robert Knight
By: Robert Knight, Secretary and Director
Dated: November 12, 2004

/s/ Donald Sharpe
By: Donald Sharpe, Director
Dated: November 12, 2004

EX-3

EX-3

Exhibit 3.6

Dean Heller Filed # C16136-98

Secretary of State September 30, 2004

204 North Carson Street, Suite 1 In the Office of

Carson City, Nevada 89701-4299 Dean Heller, Secretary of State

(778) 684 5708

Website: secretaryofstate.biz

Certificate of Designation
(Pursuant to NRS78.1955)

Certificate of Designation

For Nevada Profit Corporations

(Pursuant to NRS 78.1955)

1. Name of corporation: Heartland Oil and Gas Corp.

2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock:

Articles of Incorporation and Bylaws, each as amended and restated through the date hereof, has and hereby authorizes a series of the Corporation's previously authorized Preferred Stock, par value $0.001 per share (the "Preferred Stock"), and hereby states the designation and number of shares and fixes the relative rights, preferences, privileges, powers and restrictions thereof, as follow:

1. DESIGNATION AND AMOUNT

The designation of this series, which consists of 3,529,412 shares of Preferred Stock, is the Series B Convertible Preferred Stock (the "Series B Preferred Stock") and the purchase price shall be One Dollar and Seventy Cents ($1.70) per share (the "Purchase Price")

SEE ATTACHED.

3. Effective date of filing (optional): September 30, 2004

4. Officer Signature /s/ signed

Filing fee: $175.00

IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected.

SUBMIT IN DUPLICATE

SCHEDULE

CERTIFICATE OF DESIGNATION,

PREFERENCES AND RIGHTS

of

SERIES B CONVERTIBLE PREFERRED STOCK

of

HEARTLAND OIL AND GAS CORP.

(Pursuant to NRS 78.195 and 78.1955 of the

Nevada Revised Statutes)

Heartland Oil and Gas Corp., a corporation organized and existing under the laws of the State of Nevada (the "Corporation"), hereby certifies that the Board of Directors of the Corporation (the "Board of Directors" or the "Board"), pursuant to authority of the Board of Directors under NRS 78.195 and 78.1955 of the Nevada Revised Statutes, and in accordance with the provisions of its Articles of Incorporation and Bylaws, each as amended and restated through the date hereof, has and hereby authorizes a series of the Corporation's previously authorized Preferred Stock, par value $0.001 per share (the "Preferred Stock"), and hereby states the designation and number of shares, and fixes the relative rights, preferences, privileges, powers and restrictions thereof, as follows:

I. DESIGNATION AND AMOUNT

The designation of this series, which consists of 3,529,412 shares of Preferred Stock, is the Series B Convertible Preferred Stock (the "Series B Preferred Stock") and the purchase price shall be One Dollar and Seventy Cents ($1.70) per share (the "Purchase Price").

II. CERTAIN DEFINITIONS

For purposes of this Certificate of Designation, in addition to the other terms defined herein, the following terms shall have the following meanings:

A. "Business day" means any day, other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law, regulation or executive order to close.

B. "Closing Sales Price" means, for any security as of any date, the last sales price of such security on the principal trading market where such security is listed or traded as reported by Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by the Corporation and reasonably acceptable to the Majority Holders if Bloomberg Financial Markets is not then reporting closing sales prices of such security) (collectively, "Bloomberg"), or if the foregoing does not apply, the last reported sales price of such security on a national exchange or in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no such price is reported for such security by Bloomberg, the average of the bid prices of all market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc., in each case for such date or, if such date was not a trading day for such security, on the next preceding date which was a trading day. If the Closing Sales Price cannot be calculated for such security as of either of such dates on any of the foregoing bases, the Closing Sales Price of such security on such date shall be the fair market value as reasonably determined by an investment banking firm selected by the Corporation and reasonably acceptable to the Majority Holders, with the costs of such appraisal to be borne by the Corporation.

C. "Conversion Date" means, (i) for any Optional Conversion (as defined in Article IV.A below), the date specified in the notice of conversion in the form attached hereto (the "Notice of Conversion"), so long as a copy of the Notice of Conversion is faxed (or delivered by other means resulting in notice) to the Corporation before 11:59 p.m., New York City time, on the Conversion Date indicated in the Notice of Conversion; provided, however, that if the Notice of Conversion is not so faxed or otherwise delivered before such time, then the Conversion Date shall be the date the holder faxes or otherwise delivers the Notice of Conversion to the Corporation, and (ii) for a Mandatory Conversion (as defined in Article IV.A below), that date specified on the notice delivered to the holders of Series B Preferred Stock being converted pursuant to Article IV.C in the event that such Mandatory Conversion occurs.

D. "Conversion Price" means $1.70 and shall be subject to adjustment as provided herein.

E. "Default Cure Date" means, as applicable, (i) with respect to a Conversion Default described in clause (i) of Article VI.A, the date the Corporation effects the conversion of the full number of shares of Series B Preferred Stock, (ii) with respect to a Conversion Default described in clause (ii) of Article VI.A, the date the Corporation issues freely tradable shares of Common Stock in satisfaction of all conversions of Series B Preferred Stock in accordance with Article IV, or (iii) with respect to either type of a Conversion Default, the date on which the Corporation redeems shares of Series B Preferred Stock held by such holder pursuant to Article VI.A.

F. "Issuance Date" means the date of the closing under the Securities Purchase Agreement by and among the Corporation and the purchasers named therein (the "Securities Purchase Agreement"), pursuant to which the Corporation issues, and such purchasers purchase, shares of Series B Preferred Stock upon the terms and conditions stated therein.

G. "Majority Holders" means the holders of a majority of the then outstanding shares of Series B Preferred Stock.

H. "Mandatory Redemption Date" means, for any Mandatory Redemption (as defined in Article VII.D below), that date specified on the notice delivered to the holders of the Series B Preferred Stock being redeemed pursuant to Article VII.D.

I. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Issuance Date, by and among the Corporation and the initial holders of Series B Preferred Stock.

J. "trading day" means any day on which the principal United States securities exchange or trading market where the Common Stock is then listed or traded, is open for trading.

III. DIVIDENDS

The Series B Preferred Stock will bear no dividends, and the holders of the Series B Preferred Stock shall not be entitled to receive dividends on the Series B Preferred Stock.

IV. CONVERSION

A. Conversion at the Option of the Holder. Each holder of shares of Series B Preferred Stock may, at any time and from time to time, convert (an "Optional Conversion") any share of Series B Preferred Stock into one fully paid and nonassessable share of Common Stock by paying the Conversion Price for each share of Preferred Stock so converted.

B. Mechanics of Conversion. In order to effect an Optional Conversion, a holder shall: (x) fax (or otherwise deliver) a copy of the fully executed Notice of Conversion to the Corporation (Attention: Secretary) and (y) surrender or cause to be surrendered the original certificates representing the Series B Preferred Stock being converted (the "Preferred Stock Certificates"), duly endorsed, along with a copy of the Notice of Conversion as soon as practicable thereafter to the Corporation. Upon receipt by the Corporation of a facsimile copy of a Notice of Conversion from a holder, the Corporation shall promptly send, via facsimile, a confirmation to such holder stating that the Notice of Conversion has been received, the date upon which the Corporation expects to deliver the Common Stock issuable upon such conversion and the name and telephone number of a contact person at the Corporation regarding the conversion. The Corporation shall not be obligated to issue shares of Common Stock upon a conversion unless either the Preferred Stock Certificates are delivered to the Corporation as provided above, or the holder notifies the Corporation that such Preferred Stock Certificates have been lost, stolen or destroyed and delivers the documentation to the Corporation required by Article XIV.B hereof.

(i) Delivery of Common Stock Upon Conversion. Upon the surrender of Preferred Stock Certificates accompanied by a Notice of Conversion, the Corporation (itself, or through its transfer agent) shall, no later than the later of (a) the second business day following the Conversion Date and (b) the business day following the date of such surrender (or, in the case of lost, stolen or destroyed certificates, after provision of indemnity pursuant to Article XIV.B) (the "Delivery Period"), issue and deliver (i.e., deposit with a nationally recognized overnight courier service postage prepaid) to the holder or its nominee (x) that number of shares of Common Stock issuable upon conversion of such shares of Series B Preferred Stock being converted and (y) a certificate representing the number of shares of Series B Preferred Stock not being converted, if any. Notwithstanding the foregoing, if the Corporation's transfer agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as the certificates therefor do not bear a legend (pursuant to the terms of the Securities Purchase Agreement) and the holder thereof is not then required to return such certificate for the placement of a legend thereon (pursuant to the terms of the Securities Purchase Agreement), the Corporation shall cause its transfer agent to promptly electronically transmit the Common Stock issuable upon conversion to the holder by crediting the account of the holder or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the aforementioned conditions to a DTC Transfer are not satisfied, the Corporation shall deliver as provided above to the holder physical certificates representing the Common Stock issuable upon conversion. Further, a holder may instruct the Corporation to deliver to the holder physical certificates representing the Common Stock issuable upon conversion in lieu of delivering such shares by way of DTC Transfer.

(ii) Taxes. The Corporation shall pay any and all taxes that may be imposed upon it with respect to the issuance and delivery of the shares of Common Stock upon the conversion of the Series B Preferred Stock.

(iii) No Fractional Shares. If any conversion of Series B Preferred Stock would result in the issuance of a fractional share of Common Stock (aggregating all shares of Series B Preferred Stock being converted pursuant to a given Notice of Conversion), such fractional share shall be payable in cash based upon the ten day average Closing Sales Price of the Common Stock at such time, and the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock shall be the next lower whole number of shares. If the Corporation elects not to, or is unable to, make such a cash payment, the holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.

(iv) Conversion Disputes. In the case of any dispute with respect to a conversion, the Corporation shall promptly issue such number of shares of Common Stock as are not disputed in accordance with subparagraph (I) above. If such dispute involves the calculation of the Conversion Price, and such dispute is not promptly resolved by discussion between the relevant holder and the Corporation, the Corporation shall submit the disputed calculations to an independent outside accountant via facsimile within three business days of receipt of the Notice of Conversion. The accountant, at the Corporation's sole expense, shall promptly audit the calculations and notify the Corporation and the holder of the results no later than three business days from the date it receives the disputed calculations. The accountant's calculation shall be deemed conclusive, absent manifest error. The Corporation shall then issue the appropriate number of shares of Common Stock in accordance with subparagraph (I) a bove.

(v) Payment of Accrued Amounts. Upon conversion of any shares of Series B Preferred Stock, all amounts then accrued or payable on such shares under this Certificate of Designation or the Registration Rights Agreement through and including the Conversion Date shall be paid in cash by the Corporation.

C. Conversion at the Option of the Corporation. Subject to the Required Conditions contained in Paragraph D of this Article VI, the Corporation may require each holder of shares of Series B Preferred Stock, at any time following (a) at least eighteen (18) months from the Issuance Date, and (b) the date that shares of the Corporation's common stock have been trading at or above 200% of the Conversion Price (as the Conversion Price may be adjusted from time to time pursuant to Article X) for a period of ten consecutive trading days, to convert (a "Mandatory Conversion") each of its shares of Series B Preferred Stock into a number of fully paid and nonassessable shares of Common Stock determined in accordance with the Conversion Price. In order to effect a Mandatory Conversion, the Corporation shall deliver written notice to the holders of the Series B Preferred Stock no more than thirty (30) days prior to and no less than ten (15) days prior to the Conversion Date stated in suc h notice. Thereafter, the Corporation and the holders of the Series B Preferred Stock shall follow the applicable conversion procedures set forth in Article IV.B (including the requirement that the holders deliver the Preferred Stock Certificates representing the Series B Preferred Stock being converted to the Corporation); provided, however, the holders of the Series B Preferred Stock shall not be required to deliver a Notice of Conversion to the Corporation. In the event the Corporation elects to convert only a portion of the outstanding shares of Series B Preferred Stock pursuant to this Article IV.C, the outstanding shares of Series B Preferred Stock shall be converted pro rata among the holders of the Series B Preferred Stock based upon their aggregate relative ownership of outstanding shares of Series B Preferred Stock as of the Conversion Date.

D. The "Required Conditions" shall consist of the following:

1. Each Registration Statement required to be filed by the Corporation pursuant to Section 2(a) of the Registration Rights Agreement shall have been declared effective by the Securities and Exchange Commission (it being understood that the Corporation shall comply with its obligations under Section 2(a) of the Registration Rights Agreement relating to the effectiveness of the Registration Statements) and shall have been kept effective pursuant to the Registration Rights Agreement;
2. No Redemption Event (as defined in Article VII below) shall have occurred without having been cured;
3. All amounts, if any, then accrued and payable under this Certificate of Designation or the Registration Rights Agreements shall have been paid.

V. RESERVATION OF SHARES OF COMMON STOCK

A. Reserved Amount. On or prior to the Issuance Date, the Corporation shall reserve 3,529,412 shares of its authorized but unissued shares of Common Stock for issuance upon conversion of the Series B Preferred Stock, and, thereafter, the number of authorized but unissued shares of Common Stock so reserved (the "Reserved Amount") shall at all times be sufficient to provide for the full conversion of all of the Series B Preferred Stock outstanding at the then current Conversion Price thereof. The Reserved Amount shall be allocated among the holders of Series B Preferred Stock as provided in Article XIV.C.

B. Increases to Reserved Amount. If the Reserved Amount for any three consecutive trading days (the last of such three trading days being the "Authorization Trigger Date") shall be less than one hundred percent (100%) of the number of shares of Common Stock issuable upon full conversion of the then outstanding shares of Series B Preferred Stock, the Corporation shall immediately notify the holders of Series B Preferred Stock of such occurrence and shall take immediate action (including, if necessary, seeking stockholder approval to authorize the issuance of additional shares of Common Stock) to increase the Reserved Amount to one hundred percent (100%) of the number of shares of Common Stock then issuable upon full conversion of all of the outstanding Series B Preferred Stock at the then current Conversion Price.

VI. FAILURE TO SATISFY CONVERSIONS

A. Conversion Defaults. If, at any time, (i) a holder of shares of Series B Preferred Stock submits a Notice of Conversion and the Corporation fails for any reason to deliver, on or prior to the fifth business day following the expiration of the Delivery Period for such conversion, such number of shares of Common Stock to which such holder is entitled upon such conversion, or (ii) the Corporation provides written notice to any holder of Series B Preferred Stock (or makes a public announcement via press release) at any time of its intention not to issue shares of Common Stock upon exercise by any holder of its conversion rights in accordance with the terms of this Certificate of Designation (each of (i) and (ii) being a "Conversion Default"), then the holder may elect, at any time and from time to time prior to the Default Cure Date for such Conversion Default, by delivery of a Redemption Notice to the Corporation, to have all or any portion of such holder's outstanding sh ares of Series B Preferred Stock redeemed by the Corporation for cash, at an amount per share equal to the Redemption Amount (as defined in Article VII.B). If the Corporation fails to redeem any of such shares within five business days after its receipt of such Redemption Notice, then such holder shall be entitled to the remedies provided in Article VII.C.

B. Buy-In Cure. Unless the Corporation has notified the applicable holder in writing prior to the delivery by such holder of a Notice of Conversion that the Corporation is unable to honor conversions, if (i) (a) the Corporation fails to promptly deliver during the Delivery Period shares of Common Stock to a holder upon a conversion of shares of Series B Preferred Stock or (b) there shall occur a Legend Removal Failure (as defined in Article VII.A(iii) below) and (ii) thereafter, such holder purchases (in an open market transaction or otherwise) shares of Common Stock to make delivery in satisfaction of a sale by such holder of the unlegended shares of Common Stock (the "Sold Shares") which such holder anticipated receiving upon such conversion (a "Buy-In"), the Corporation shall pay such holder, in addition to any other remedies available to the holder, the amount by which (x) such holder's total purchase price (including brokerage commissions, if any) for the unlegend ed shares of Common Stock so purchased exceeds (y) the net proceeds received by such holder from the sale of the Sold Shares. For example, if a holder purchases unlegended shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to shares of Common Stock it sold for $10,000, the Corporation will be required to pay the holder $1,000. A holder shall provide the Corporation written notification and supporting documentation indicating any amounts payable to such holder pursuant to this Article VI.B.

VII. REDEMPTION DUE TO CERTAIN EVENTS

A. Redemption by Holder. In the event (each of the events described in clauses (i)-(viii) below after expiration of the applicable cure period (if any) being a "Redemption Event"):

1. the Common Stock (including any of the shares of Common Stock issuable upon conversion of the Series B Preferred Stock) is suspended from trading on any of, or is not listed (and authorized) for trading on at least one of, the New York Stock Exchange, the American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market for an aggregate of ten or more trading days in any twelve month period;
2. the registration statement required to be filed by the Corporation pursuant to Section 2(a) of the Registration Rights Agreement has not been declared effective by the one hundred and twentieth (120^th) day following the Issuance Date or such registration statement, after being declared effective, cannot be utilized by the holders of Series B Preferred Stock for the resale of all of their Registrable Securities (as defined in the Registration Rights Agreement) for an aggregate of more than 20 days (other than as permitted under the Registration Rights Agreement);
3. the Corporation fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the holders of Series B Preferred Stock upon conversion of the Series B Preferred Stock as and when required by this Certificate of Designation, the Securities Purchase Agreement or the Registration Rights Agreement (a "Legend Removal Failure"), and any such failure continues uncured for five business days after the Corporation has been notified thereof in writing by the holder;
4. the Corporation provides written notice (or otherwise indicates) to any holder of Series B Preferred Stock, or states by way of public announcement distributed via a press release, at any time, of its intention not to issue, or otherwise refuses to issue, shares of Common Stock to any holder of Series B Preferred Stock upon conversion in accordance with the terms of this Certificate of Designation;
5. the Corporation or any subsidiary of the Corporation shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed;
6. bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Corporation or any subsidiary of the Corporation and if instituted against the Corporation or any subsidiary of the Corporation by a third party, shall not be dismissed within 60 days of their initiation;
7. the Corporation shall:
1. sell, convey or dispose of all or substantially all of its assets (the presentation of any such transaction for stockholder approval being conclusive evidence that such transaction involves the sale of all or substantially all of the assets of the Corporation);
2. merge or consolidate with or into, or engage in any other business combination with, any other person or entity, in any case , which results in either (i) the holders of the voting securities of the Corporation immediately prior to such transaction holding or having the right to direct the voting of fifty percent (50%) or less of the total outstanding voting securities of the Corporation or such other surviving or acquiring person or entity immediately following such transaction or (ii) the members of the board of directors or other governing body of the Corporation comprising fifty percent (50%) or less of the members of the board of directors or other governing body of the Corporation or such other surviving or acquiring person or entity immediately following such transaction;
3. either (i) fail to pay, when due, or within any applicable grace period, any payment with respect to any indebtedness of the Corporation in excess of $250,000 due to any third party, other than payments contested by the Corporation in good faith, or otherwise be in breach or violation of any agreement for monies owed or owing in an amount in excess of $250,000 which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other default or event of default under any agreement binding the Corporation which default or event of default would or is likely to have a material adverse effect on the business, operations, properties, prospects or financial condition of the Corporation;
4. have thirty-five percent (35%) or more of the voting power of its capital stock owned beneficially by one person, entity or "group" (as such term is used under Section 13(d) of the Securities Exchange Act of 1934, as amended); or
8. except with respect to matters covered by subparagraphs (i) - (vii) above, as to which such applicable subparagraphs shall apply, the Corporation otherwise shall breach any material term hereunder or under the Securities Purchase Agreement, the Registration Rights Agreement, including, without limitation, the representations and warranties contained therein (i.e., in the event of a material breach as of the date such representation and warranty was made) and if such breach is curable, shall fail to cure such breach within ten business days after the Corporation has been notified thereof in writing by the holder;

then, upon the occurrence of any such Redemption Event, each holder of shares of Series B Preferred Stock shall thereafter have the option, exercisable in whole or in part at any time and from time to time by delivery of a written notice to such effect (a "Redemption Notice") to the Corporation while such Redemption Event continues, to require the Corporation to purchase for cash any or all of the then outstanding shares of Series B Preferred Stock held by such holder for an amount per share equal to the Redemption Amount (as defined in Paragraph B below) in effect at the time of the redemption hereunder. For the avoidance of doubt, the occurrence of any event described in clauses (i), (ii), (iv), (v), (vi) and (vii) above shall immediately constitute a Redemption Event and there shall be no cure period. Upon the Corporation's receipt of any Redemption Notice hereunder (other than during the three trading day period following the Corporation's delivery of a Redemption Announcem ent (as defined below) to all of the holders in response to the Corporation's initial receipt of a Redemption Notice from a holder of Series B Preferred Stock), the Corporation shall immediately (and in any event within one business day following such receipt) deliver a written notice (a "Redemption Announcement") to all holders of Series B Preferred Stock stating the date upon which the Corporation received such Redemption Notice and the amount of Series B Preferred Stock covered thereby. The Corporation shall not redeem any shares of Series B Preferred Stock during the three trading day period following the delivery of a required Redemption Announcement hereunder. At any time and from time to time during such three trading day period, each holder of Series B Preferred Stock may request (either orally or in writing) information from the Corporation with respect to the instant redemption (including, but not limited to, the aggregate number of shares of Series B Preferred Stock covered by Redemption No tices received by the Corporation) and the Corporation shall furnish (either orally or in writing) as soon as practicable such requested information to such requesting holder.

B. Definition of Redemption Amount. The "Redemption Amount" with respect to a share of Series B Preferred Stock means an amount equal to the greater of:

(i) V _{x M}

C P

and (ii) V x R

where:

"V" means the Purchase Price thereof ;

"CP" means the Conversion Price in effect on the date on which the Corporation receives the Redemption Notice;

"M" means (I) with respect to all redemptions other than redemptions pursuant to subparagraph (a) or (b) of Article VII.A(vii) hereof, the highest Closing Sales Price of the Corporation's Common Stock during the period beginning on the date on which the Corporation receives the Redemption Notice and ending on the date immediately preceding the date of payment of the Redemption Amount and (ii) with respect to redemptions pursuant to subparagraph (a) or (b) of Article VII.A(vii) hereof, the greater of (a) the amount determined pursuant to clause (I) of this definition or (b) the fair market value, as of the date on which the Corporation receives the Redemption Notice, of the consideration payable to the holder of a share of Common Stock pursuant to the transaction which triggers the redemption. For purposes of this definition, "fair market value" shall be determined by the mutual agreement of the Corporation and the Majority Holders, or if such agreement cannot be reached within five business days prior to the date of redemption, by an investment banking firm selected by the Corporation and reasonably acceptable to the Majority Holders, with the costs of such appraisal to be borne by the Corporation; and

"R" means 112%.

C. Redemption Defaults. If the Corporation fails to pay any holder the Redemption Amount with respect to any share of Series B Preferred Stock within five business days after its receipt of a Redemption Notice, then the holder of Series B Preferred Stock entitled to redemption shall be entitled to interest on the Redemption Amount in accordance with Article XV.E from the date on which the Corporation receives the Redemption Notice until the date of payment of the Redemption Amount hereunder. In the event the Corporation is not able to redeem all of the shares of Series B Preferred Stock subject to Redemption Notices delivered prior to the date upon which such redemption is to be effected, the Corporation shall redeem shares of Series B Preferred Stock from each holder pro rata, based on the total number of shares of Series B Preferred Stock outstanding at the time of redemption included by such holder in all Redemption Notices delivered prior to the date upon which such redemption i s to be effected relative to the total number of shares of Series B Preferred Stock outstanding at the time of redemption included in all of the Redemption Notices delivered prior to the date upon which such redemption is to be effected.

D. Mandatory Redemption.

(i) Subject to the Required Conditions contained in Paragraph D of Article VI above, at any point following the Issuance Date, the Company may redeem each share of Series B Preferred Stock issued and outstanding at such date (a "Mandatory Redemption") at the Mandatory Redemption Price (as defined in Paragraph E below) per share so redeemed. In order to effect a Mandatory Redemption, the Corporation shall deliver written notice to the holders of the Series B Preferred Stock no more than forty-five (45) days prior to and no less than twenty (20) days prior to the Mandatory Redemption Date stated in such notice. In the event the Corporation elects to redeem only a portion of the outstanding shares of Series B Preferred Stock pursuant to this Article VII.D, the outstanding shares of Series B Preferred Stock shall be redeemed pro rata among the holders of the Series B Preferred Stock based upon their aggregate relative ownership of outstanding shares of Series B Preferred Stock as of the Conversion Date.

(ii) Notwithstanding the delivery of written notice of a Mandatory Redemption, a holder of Series B Preferred Stock may convert such shares of Series B Preferred Stock subject to such notice by the delivery prior to the date set forth in such notice on which the Corporation intends to redeem such shares of a Notice of Conversion to the Company or its transfer agent pursuant to the procedures set forth in Article IV.B.

(iii) The Corporation may not deliver to a holder of Series B Preferred Stock a written notice of a Mandatory Redemption unless on or prior to the date of delivery of such notice, the Corporation shall have segregated on the books and records of the Corporation an amount of cash sufficient to pay all amounts to which the holders of Series B Preferred Stock are entitled upon such redemption pursuant to this Article D. Any notice of a Mandatory Redemption delivered shall be irrevocable and shall be accompanied by a statement executed by a duly authorized officer of the Corporation.

(iv) The redemption amount payable under this Paragraph D shall be paid to the holders of the Series B Preferred Stock being redeemed within five (5) business days of the redemption date specified in the written notice of Mandatory Redemption; provided, however, that the Corporation shall not be obligated to deliver any portion of such redemption amount until either the certificates evidencing the Series B Preferred Stock being redeemed are delivered to the office of the Corporation or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed and delivers the documentation in accordance with Article XIV.B hereof. Notwithstanding anything herein to the contrary, in the event that the certificates evidencing the Series B Preferred Stock being redeemed are not delivered to the Corporation prior to the third business day following the redemption date specified in the notice of Mandatory Redemption, the redemption of the Series B Preferred Stock pursuant to this Article VII.D shall still be deemed effective as of the redemption date specified in the written notice of Mandatory Redemption and the applicable redemption amount shall be paid to the holder of Series B Preferred Stock being redeemed within five (5) business days of the date the certificates evidencing the Series B Preferred Stock being redeemed are actually delivered to the Corporation or the holder otherwise complies with Article XIV.B hereof.

E. Mandatory Redemption Price. The Mandatory Redemption Price shall be as follows:

1. For any Mandatory Redemption that occurs after the Issuance Date and up to but not including 12 months thereafter, 112% of the Conversion Price.
2. For any Mandatory Redemption that occurs 12 months after the Issuance Date and up to but not including 24 months thereafter, 124% of the Conversion Price.
3. For any Mandatory Redemption that occurs on or after 24 months following the Issuance Date, 136% of the Conversion Price.

VIII. RANK

All shares of the Series B Preferred Stock shall rank (i) prior to the Corporation's Common Stock and any class or series of capital stock of the Corporation hereafter created (unless, with the consent of the Majority Holders obtained in accordance with Article XII hereof, such class or series of capital stock specifically, by its terms, ranks senior to or pari passu with the Series B Preferred Stock) (collectively with the Common Stock, "Junior Securities"); (ii) pari passu with any class or series of capital stock of the Corporation hereafter created (with the written consent of the Majority Holders obtained in accordance with Article XII hereof) specifically ranking, by its terms, on parity with the Series B Preferred Stock (the "Pari Passu Securities"); and (iii) junior to any class or series of capital stock of the Corporation hereafter created (with the written consent of the Majority Holders obtained in accordance with Arti cle XII hereof) specifically ranking, by its terms, senior to the Series B Preferred Stock (collectively, the "Senior Securities"), in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.

IX. LIQUIDATION PREFERENCE

A. Priority in Liquidation. In the event that the Corporation shall liquidate, dissolve or wind up its affairs (but not including any event described in Article VII.A(vii)(a) and (b)) (a "Liquidation Event"), no distribution shall be made to the holders of any shares of capital stock of the Corporation (other than Senior Securities pursuant to the rights, preferences and privileges thereof) upon liquidation, dissolution or winding up unless prior thereto the holders of shares of Series B Preferred Stock shall have received the Liquidation Preference with respect to each share. If, upon the occurrence of a Liquidation Event, the assets and funds available for distribution among the holders of the Series B Preferred Stock and holders of Pari Passu Securities, if any, shall be insufficient to permit the payment to such holders of the preferential amounts payable thereon, then the entire assets and funds of the Corporation legally available for distribution to the Seri es B Preferred Stock and the Pari Passu Securities, if any, shall be distributed ratably among such shares in proportion to the ratio that the Liquidation Preference payable on each such share bears to the aggregate Liquidation Preference payable on all such shares. [If, upon the occurrence of a Liquidation Event, the assets and funds available for distribution among the holders of Senior Securities, if any, the holders of the Series B Preferred Stock and the holders of Pari Passu Securities, if any, shall be sufficient to permit the payment to such holders of the preferential amounts payable thereon, then after such payment shall be made in full to the holders of Senior Securities, if any, the holders of the Series B Preferred Stock and the holders of Pari Passu Securities, if any, the remaining assets and funds available for distribution shall be distributed to the holders of any Junior Securities entitled to a liquidation preference in payment of the aggregate liquidation preference o f all such holders. After such payment shall be made in full to the holders of any Junior Securities entitled to a liquidation preference, the remaining assets and funds available for distribution shall be distributed ratably among the holders of shares of Series B Preferred Stock, the holders of any other class or series of Preferred Stock entitled to participate with the Common Stock in a liquidating distribution and the holders of the Common Stock, with the holders of shares of Preferred Stock deemed to hold the number of shares of Common Stock into which such shares of Preferred Stock are then convertible.]

B. Definition of Liquidation Preference. The "Liquidation Preference" with respect to a share of Series B Preferred Stock means the greater of (i) an amount equal to the Purchase Price thereof, and (ii) the amount that would be distributed in such Liquidation Event on the number of shares of Common Stock into which a share of Series B Preferred Stock could be converted immediately prior to such Liquidation Event, assuming all shares of Series B Preferred Stock were so converted. The Liquidation Preference with respect to any Pari Passu Securities, if any, shall be as set forth in the Certificate of Designation filed in respect thereof.

X. ADJUSTMENTS TO THE CONVERSION PRICE

The Conversion Price shall be subject to adjustment from time to time as follows:

A. Stock Splits, Stock Dividends, Etc. If, at any time on or after the Issuance Date, the number of outstanding shares of Common Stock is increased by a stock split, stock dividend, combination, reclassification or other similar event, the Conversion Price shall be proportionately reduced, or if the number of outstanding shares of Common Stock is decreased by a reverse stock split, combination, reclassification or other similar event, the Conversion Price shall be proportionately increased. In such event, the Corporation shall notify the Corporation's transfer agent of such change on or before the effective date thereof.

B. Merger, Consolidation, Etc. If, at any time after the Issuance Date, there shall be (i) any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation or merger of the Corporation with any other entity (other than a merger in which the Corporation is the surviving or continuing entity and its capital stock is unchanged), (iii) any sale or transfer of all or substantially all of the assets of the Corporation or (iv) any share exchange or other transaction pursuant to which all of the outstanding shares of Common Stock are converted into other securities or property (each of (i) - (iv) above being a "Corporate Change"), then the holders of Series B Preferred Stock shall thereafter have the right to receive upon conversion, in lieu of the shares of Common Stock otherwise issuable, such shares of stock, securities and/or other property as would have been issued or payable in such Corporate Change with respect to or in exchange for the number of shares of Common Stock which would have been issuable upon conversion had such Corporate Change not taken place, and in any such case, appropriate provisions (in form and substance reasonably satisfactory to the Majority Holders) shall be made with respect to the rights and interests of the holders of the Series B Preferred Stock to the end that the economic value of the shares of Series B Preferred Stock are in no way diminished by such Corporate Change and that the provisions hereof (including, without limitation, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is not the Corporation, an immediate adjustment of the Conversion Price so that the Conversion Price immediately after the Corporate Change reflects the same relative value as compared to the value of the surviving entity's common stock that existed between the Conversion Price and the value of the Corporation's Common Stock immediately prior to such Corporate Change) shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter deliverable upon the conversion thereof. The Corporation shall not effect any Corporate Change unless (i) each holder of Series B Preferred Stock has received written notice of such transaction at least 45 days prior thereto, but in no event later than 15 days prior to the record date for the determination of stockholders entitled to vote with respect thereto, and (ii) the resulting successor or acquiring entity (if not the Corporation) assumes by written instrument (in form and substance reasonable satisfactory to the Majority Holders) the obligations of this Certificate of Designation. The above provisions shall apply regardless of whether or not there would have been a sufficient number of shares of Common Stock authorized and available for issuance upon c onversion of the shares of Series B Preferred Stock outstanding as of the date of such transaction, and shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers or share exchanges.

C. Distributions. If, at any time after the Issuance Date, the Corporation shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a partial liquidating dividend, by way of return of capital or otherwise (including any dividend or distribution to the Corporation's stockholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then the holders of Series B Preferred Stock shall be entitled, upon any conversion of shares of Series B Preferred Stock after the date of record for determining stockholders entitled to such Distribution (or if no such record is taken, the date on which such Distribution is declared or made), to receive the amount of such assets which would have been payable to the holder with respect to the shares of Common Stock issuable upon such conversion had such holder been the holder of such shares of Common Stock on the rec ord date for the determination of stockholders entitled to such Distribution (or if no such record is taken, the date on which such Distribution is declared or made).

D. Convertible Securities and Purchase Rights. If, at any time after the Issuance Date, the Corporation issues any securities or other instruments which are convertible into or exercisable or exchangeable for Common Stock ("Convertible Securities") or options, warrants or other rights to purchase or subscribe for Common Stock or Convertible Securities ("Purchase Rights") pro rata to the record holders of the Common Stock, whether or not such Convertible Securities or Purchase Rights are immediately convertible, exercisable or exchangeable, then the holders of Series B Preferred Stock shall be entitled, upon any conversion of shares of Series B Preferred Stock after the date of record for determining stockholders entitled to receive such Convertible Securities or Purchase Rights (or if no such record is taken, the date on which such Convertible Securities or Purchase Rights are issued), to receive the aggregate number of Convertible Securities or Purchase Rights which s uch holder would have received with respect to the shares of Common Stock issuable upon such conversion had such holder been the holder of such shares of Common Stock on the record date for the determination of stockholders entitled to receive such Convertible Securities or Purchase Rights (or if no such record is taken, the date on which such Convertible Securities or Purchase Rights were issued). If the right to exercise or convert any such Convertible Securities or Purchase Rights would expire in accordance with their terms prior to the conversion of the Series B Preferred Stock, then the terms of such Convertible Securities or Purchase Rights shall provide that such exercise or convertibility right shall remain in effect until 30 days after the date the holder of Series B Preferred Stock receives such Convertible Securities or Purchase Rights pursuant to the conversion hereof.

E. Other Action Affecting Conversion Price. If, at any time after the Issuance Date, the Corporation takes any action affecting the Common Stock that would be covered by Article X.A through D, but for the manner in which such action is taken or structured, which would in any way diminish the value of the Series B Preferred Stock, then the Conversion Price shall be adjusted in such manner as the Board of Directors of the Corporation shall in good faith determine to be equitable under the circumstances.

F. Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Article X amounting to a more than one percent (1%) change in such Conversion Price, or any change in the number or type of stock, securities and/or other property issuable upon conversion of the Series B Preferred Stock, the Corporation, at its expense, shall promptly compute such adjustment or readjustment or change and prepare and furnish to each holder of Series B Preferred Stock a certificate setting forth such adjustment or readjustment or change and showing in detail the facts upon which such adjustment or readjustment or change is based. The Corporation shall, upon the written request at any time of any holder of Series B Preferred Stock, furnish to such holder a like certificate setting forth (i) such adjustment or readjustment or change, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any , of other securities or property which at the time would be received upon conversion of a share of Series B Preferred Stock.

XI. VOTING RIGHTS

The holders of the Series B Preferred Stock shall have no voting power whatsoever, except as otherwise provided by the Nevada General Corporation Law (the "NGCL"), in this Article XI and in Article XII below.

Notwithstanding the above, the Corporation shall provide each holder of Series B Preferred Stock with prior notification of any meeting of the stockholders (and copies of proxy materials and other information sent to stockholders). If the Corporation takes a record of its stockholders for the purpose of determining stockholders entitled to (i) receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation or recapitalization) any share of any class or any other securities or property, or to receive any other right, or (ii) to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Corporation, or any proposed merger, consolidation, liquidation, dissolution or winding up of the Corporation, the Corporation shall mail a notice to each holder of Series B Preferred Stock, at least 15 days prior to the record date specified therein (or 45 days prio r to the consummation of the transaction or event, whichever is earlier, but in no event earlier than public announcement of such proposed transaction), of the date on which any such record is to be taken for the purpose of such vote, dividend, distribution, right or other event, and a brief statement regarding the amount and character of such vote, dividend, distribution, right or other event to the extent known at such time.

To the extent that under the NGCL the vote of the holders of the Series B Preferred Stock, voting separately as a class or series, as applicable, is required to authorize a given action of the Corporation, the affirmative vote or consent of the holders of at least a majority of the then outstanding shares of the Series B Preferred Stock represented at a duly held meeting at which a quorum is present or by written consent of the Majority Holders (except as otherwise may be required under the NGCL) shall constitute the approval of such action by the class. To the extent that under the NGCL holders of the Series B Preferred Stock are entitled to vote on a matter with holders of Common Stock, voting together as one class, each share of Series B Preferred Stock shall be entitled to a number of votes equal to the number of shares of Common Stock into which it is then convertible using the record date for the taking of such vote of stockholders as the date as of which the Conversion Price is calc ulated.

XII. PROTECTION PROVISIONS

So long as any shares of Series B Preferred Stock are outstanding, the Corporation shall not take any of the following corporate actions (whether by merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by the NGCL) of the Majority Holders:

1. alter or change the rights, preferences or privileges of the Series B Preferred Stock, or increase the authorized number of shares of Series B Preferred Stock;
2. alter or change the rights, preferences or privileges of any capital stock of the Corporation so as to affect adversely the Series B Preferred Stock;
3. create or issue any Senior Securities or Pari Passu Securities;
4. issue any shares of Series B Preferred Stock other than pursuant to the Securities Purchase Agreement;
5. redeem, repurchase or otherwise acquire, or declare or pay any cash dividend or distribution on, any Junior Securities;
6. increase the par value of the Common Stock;
7. issue any debt securities or incur any indebtedness that would have any preferences over the Series B Preferred Stock upon liquidation of the Corporation, or redeem, repurchase, prepay or otherwise acquire any outstanding debt securities or indebtedness of the Corporation, except as expressly required by the terms of such securities or indebtedness; provided, however, this Paragraph (vii) shall not apply to any financing with any lender where (x) the interest rate, per annum, applicable to such financing is no greater than the highest rate of interest published as the "Prime Rate" in the "Money Rates" section of the Wall Street Journal from time to time (or, in the event such rate of interest is no longer reported in the Wall Street Journal, any other commercially reasonable method of determining such rate of interest as is satisfactory to the Majority Holders), plus 5%, and (y) the facility fees, up-front fees, commitment fees, set up fees or other similar fees applicable to such financing are no more than, in the aggregate, 1.5% of the total principal amount available to be borrowed pursuant to such financing, so long as neither type of financing in (A) or (B) above involves any equity component;
8. enter into any agreement, commitment, understanding or other arrangement to take any of the foregoing actions; or
9. cause or authorize any subsidiary of the Corporation to engage in any of the foregoing actions.

Notwithstanding the foregoing, no change pursuant to this Article XII shall be effective to the extent that, by its terms, it applies to less than all of the holders of shares of Series B Preferred Stock then outstanding.

XIII. PARTICIPATION RIGHT

A. Participation Right. Subject to the terms and conditions specified in this Article XIII, [until the second anniversary of the Issuance Date,] the holders of shares of Series B Preferred Stock shall have a right to participate with respect to the issuance or possible issuance of any equity or equity-linked securities or debt which is convertible into equity or in which there is an equity component (as the case may be, "Additional Securities") on the same terms and conditions as offered by the Corporation to the other purchasers of such Additional Securities. Each time the Corporation proposes to offer any Additional Securities, the Corporation shall make an offering of such Additional Securities to each holder of shares of Series B Preferred Stock in accordance with the following provisions:

1. The Corporation shall deliver a notice (the "Issuance Notice") to the holders of shares of Series B Preferred Stock stating (a) its bona fide intention to offer such Additional Securities, (b) the number of such Additional Securities to be offered, (c) the price and terms, if any, upon which it proposes to offer such Additional Securities, and (d) the anticipated closing date of the sale of such Additional Securities.
2. By written notification received by the Corporation, within 10 business days after giving of the Issuance Notice, any holder of shares of Series B Preferred Stock may elect to purchase or obtain, at the price and on the terms specified in the Issuance Notice up to that number of such Additional Securities which equals such holder's Pro Rata Amount (as defined below). The "Pro Rata Amount" for any given holder of shares of Series B Preferred Stock shall equal that portion of the Additional Securities that the Corporation proposes to offer which equals the proportion that the number of shares of Common Stock that such holder owns or has the right to acquire bears to the total number of shares of Common Stock then outstanding (assuming in each case the full conversion, exercise or exchange of all Convertible Securities and Purchase Rights then outstanding); provided, however, that in the event that any such holder exercises its right to pay the consideration for the A dditional Securities purchasable hereunder with shares of Series B Preferred Stock (as provided in Paragraph B below), then such holder's Pro Rata Amount shall be increased (but not decreased) to the extent necessary to equal (x) such number of shares of Common Stock (if the Additional Securities being issued are Common Stock) or (y) that number of Additional Securities as are convertible into or exercisable or exchangeable for such number of shares of Common Stock (if the Additional Securities being issued are Convertible Securities or Purchase Rights), as is obtained by dividing (a) the Redemption Amount attributable to such holder's shares of Series B Preferred Stock being redeemed by (b) (i) the price per share at which such Common Stock is being issued (if the Additional Securities being issued are Common Stock) or (ii) the conversion, exercise or exchange price at which such Additional Securities are convertible into or exercisable or exchangeable for shares of Common Stock (if the Additional Securitie s being issued are Convertible Securities or Purchase Rights), and in such event the Corporation shall be obligated to sell such number of Additional Securities to each such holder, even if the aggregate Pro Rata Amount for all such holders exceeds the aggregate amount of Additional Securities that the Corporation had initially proposed to offer. The Corporation shall promptly, in writing, inform each holder of shares of Series B Preferred Stock which elects to purchase all of the Additional Shares available to it ("Fully-Exercising Holder") of any other holder's failure to do likewise. During the five-day period commencing after such information is given, each Fully-Exercising Holder shall be entitled to obtain that portion of the Additional Securities for which the holders of shares of Series B Preferred Stock were entitled to subscribe but which were not subscribed for by such holders which is equal to the proportion that the number of shares of Series B Preferred Stock held by such Fully-Exercisin g Holder bears to the total number of shares of Series B Preferred Stock held by all Fully-Exercising Holders who wish to purchase any of the unsubscribed shares.
3. If all Additional Securities which the holders of shares of Series B Preferred Stock are entitled to obtain pursuant to subparagraph (ii) of this Article XIII.A are not elected to be obtained as provided in such subparagraph, the Corporation may offer the remaining unsubscribed portion of such Additional Securities to any person or persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Issuance Notice.
4. The participation right set forth in this Article XIII may not be assigned or transferred, except that such right is assignable by each holder of shares of Series B Preferred Stock to any wholly-owned subsidiary or parent of, or to any corporation or entity that is, within the meaning of the Securities Act of 1933, as amended, controlling, controlled by or under common control with, any such holder.

B. Consideration for Additional Securities. In the event that any holder of shares of Series B Preferred Stock exercises its participation right under this Article XIII, such holder shall be entitled to use the shares of Series B Preferred Stock then held by such holder as the consideration for the purchase of its allocated portion of Additional Securities pursuant to this Article XIII, with the shares of Series B Preferred Stock being valued at the Redemption Amount for such purpose; provided, however, that for the purposes of this Paragraph B, the Redemption Amount shall be calculated as of the day of such purchase and no Redemption Notice shall be required.

XIV. LIMITATIONS ON CERTAIN CONVERSIONS

The conversion of shares of Series B Preferred Stock and transfers of shares of Series B Preferred Stock shall be subject to the following limitation: In no event shall a holder of shares of Series B Preferred Stock of the Corporation have the right to convert shares of Series B Preferred Stock into shares of Common Stock or to dispose of any shares of Series B Preferred Stock to the extent that right to effect such conversion or disposition would result in the holder and its affiliates together beneficially owning more than 4.99% of the outstanding shares of Common Stock. For purposes of this Article XIV, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder. The restriction contained in this Article XIV may not be altered, amended, deleted or changed in any manner whatsoever unless the holders of a majority of the outstanding shares of Common Stock and the Majority Holders shall ap prove, in writing, such alteration, amendment, deletion or change.

XV. MISCELLANEOUS

A. Cancellation of Series B Preferred Stock. If any shares of Series B Preferred Stock are converted pursuant to Article IV or redeemed or repurchased by the Corporation, the shares so converted or redeemed shall be canceled, shall return to the status of authorized, but unissued Preferred Stock of no designated series, and shall not be issuable by the Corporation as Series B Preferred Stock.

B. Lost or Stolen Certificates. Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (ii) (y) in the case of loss, theft or destruction, indemnity (without any bond or other security) reasonably satisfactory to the Corporation, or (z) in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificate(s) of like tenor and date. However, the Corporation shall not be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificate(s) if the holder contemporaneously requests the Corporation to convert such Series B Preferred Stock.

C. Reserved Amount. The initial Reserved Amount shall be allocated pro rata among the holders of Series B Preferred Stock based on the number of shares of Series B Preferred Stock issued to each such holder. Each increase to the Reserved Amount shall be allocated pro rata among the holders of Series B Preferred Stock based on the number of shares of Series B Preferred Stock held by each holder at the time of the increase in the Reserved Amount. In the event a holder shall sell or otherwise transfer any of such holder's shares of Series B Preferred Stock, each transferee shall be allocated a pro rata portion of such transferor's Reserved Amount. Any portion of the Reserved Amount which remains allocated to any person or entity which does not hold any Series B Preferred Stock shall be allocated to the remaining holders of shares of Series B Preferred Stock, pro rata based on the number of shares of Series B Preferred Stock then held by such holders.

D. Quarterly Statements of Available Shares. For each calendar quarter beginning in the quarter in which the initial registration statement required to be filed pursuant to Section 2(a) of the Registration Rights Agreement is declared effective and thereafter for so long as any shares of Series B Preferred Stock are outstanding, the Corporation shall deliver (or cause its transfer agent to deliver) to each holder a written report notifying the holders of any occurrence that prohibits the Corporation from issuing Common Stock upon any conversion. The report shall also specify (i) the total number of shares of Series B Preferred Stock outstanding as of the end of such quarter, (ii) the total number of shares of Common Stock issued upon all conversions of Series B Preferred Stock prior to the end of such quarter, (iii) the total number of shares of Common Stock which are reserved for issuance upon conversion of the Series B Preferred Stock as of the end of such quarter and (iv) the tot al number of shares of Common Stock which may thereafter be issued by the Corporation upon conversion of the Series B Preferred Stock before the Corporation would exceed the Cap Amount and the Reserved Amount. The Corporation (or its transfer agent) shall use its best efforts to deliver the report for each quarter to each holder prior to the tenth day of the calendar month following the quarter to which such report relates. In addition, the Corporation (or its transfer agent) shall provide, as promptly as practicable following delivery to the Corporation of a written request by any holder, any of the information enumerated in clauses (i) - (iv) of this Paragraph D as of the date of such request.

E. Payment of Cash; Defaults. Whenever the Corporation is required to make any cash payment to a holder under this Certificate of Designation (upon redemption or otherwise), such cash payment shall be made to the holder within five business days after delivery by such holder of a notice specifying that the holder elects to receive such payment in cash and the method (e.g., by check, wire transfer) in which such payment should be made and any supporting documentation reasonably requested by the Corporation to substantiate the holder's claim to such cash payment or the amount thereof. If such payment is not delivered within such five business day period, such holder shall thereafter be entitled to interest on the unpaid amount at a per annum rate equal to the lower of eighteen percent (18%) and the highest interest rate permitted by applicable law until such amount is paid in full to the holder.

F. Status as Stockholder. Upon submission of a Notice of Conversion by a holder of Series B Preferred Stock, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such holder's allocated portion of the Reserved Amount or Cap Amount) shall be deemed converted into shares of Common Stock and (ii) the holder's rights as a holder of such converted shares of Series B Preferred Stock shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. Notwithstanding the foregoing, if a holder has not received certificates for all shares of Common Stock prior to the sixth business day after the expiration of the Delivery Period with respect to a conversion of Series B Preferred Stock for any reason, then (unless the holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Corporation within five business days after the expiration of such six business day period after expiration of the Delivery Period) the holder shall regain the rights of a holder of Series B Preferred Stock with respect to such unconverted shares of Series B Preferred Stock and the Corporation shall, as soon as practicable, return such unconverted shares to the holder. In all cases, the holder shall retain all of its rights and remedies for the Corporation's failure to convert Series B Preferred Stock.

G. Remedies Cumulative. The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit a holder's right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate of Designation. The Corporation acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of Series B Preferred Stock and that the remedy at law for any such breach may be inadequate. The Corporation therefore agrees, in the event of any such breach or threatened breach, that the holders of Series B Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security bein g required.

H. Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series B Preferred Stock granted hereunder may be waived as to all shares of Series B Preferred Stock (and the holders thereof) upon the written consent of the Majority Holders, unless a higher percentage is required by applicable law, in which case the written consent of the holders of not less than such higher percentage of shares of Series B Preferred Stock shall be required.

I. Notices. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by responsible overnight carrier or by confirmed facsimile, and shall be effective five days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by responsible overnight carrier or confirmed facsimile, in each case addressed to a party. The addresses for such communications are (i) if to the Corporation to Heartland Oil and Gas Corp., 1360 - 885 West Georgia Street, Vancouver, British Columbia V6C 3E8, Telephone: (604) 693-0177, Facsimile: (604) 638-3525, Attention: Richard Coglon, and (ii) if to any holder to the address set forth under such holder's name on the execution page to the Securities Purchase Agreement, or such other address as may be designated in writing hereafter, in the same manner, by such person.

IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Corporation this 28 day of September, 2004.

HEARTLAND OIL AND GAS CORP.

By:/s/ Richard Coglon

Name: Richard Coglon

Title: President

NOTICE OF CONVERSION

(To be Executed by the Registered Holder

in order to Convert the Series B Preferred Stock)

The undersigned hereby irrevocably elects to convert ____________ shares of Series B Preferred Stock (the "Conversion"), represented by Stock Certificate No(s). ___________ (the "Preferred Stock Certificates"), into shares of common stock ("Common Stock") of HEARTLAND OIL AND GAS CORP. (the "Corporation") according to the conditions of the Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock (the "Certificate of Designation"), as of the date written below. If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. No fee will be charged to the holder for any conversion, except for transfer taxes, if any. Each Preferred Stock Certificate is attached hereto (or evidence of loss, theft or destruction thereof).

Except as may be provided below, the Corporation shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee (which is _________________) with DTC through its Deposit Withdrawal Agent Commission System ("DTC Transfer").

In the event of partial exercise, please reissue a new stock certificate for the number of shares of Series B Preferred Stock which shall not have been converted.

The undersigned acknowledges and agrees that all offers and sales by the undersigned of the securities issuable to the undersigned upon conversion of the Series B Preferred Stock have been or will be made only pursuant to an effective registration of the transfer of the Common Stock under the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from registration under the Act.

In lieu of receiving the shares of Common Stock issuable pursuant to this Notice of Conversion by way of DTC Transfer, the undersigned hereby requests that the Corporation issue and deliver to the undersigned physical certificates representing such shares of Common Stock.

Date of Conversion: 

Applicable Conversion Price: 

Signature: 

Name: 

Address:

EX-10

Exhibit 10.12

PURCHASE AND SALE AGREEMENT

THIS AGREEMENT is dated the 27th day of September, 2004, by and between Evergreen Resources, Inc. ("Seller") and Heartland Oil and Gas Corp. ("Buyer").

RECITALS:

A. Seller desires to sell, assign and convey to Buyer, and to cause its Affiliate, Evergreen Operating Corporation, to sell, assign and convey to Buyer, and Buyer desires to purchase and assume certain oil and gas leases, wells and related properties and assets.

B. The parties have reached agreement regarding such sale and purchase.

ARTICLE 1- DEFINITIONS

Definitions: In this Agreement, capitalized terms have the meanings provided in this Article, unless expressly provided otherwise in other Articles. (All defined terms include both the singular and the plural. All references to Articles refer to Articles in this Agreement, and all Exhibits refer to Exhibits attached to and made a part of this Agreement.)

"Affiliate" means and includes any entity that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the entity specified.

"Agreement" means this agreement.

"Arbitrable Dispute" shall have the meaning attributed in Section 4.7, below.

"Assignment and Bill of Sale" means a document in the form of Exhibit F attached hereto.

"Business Day" means a Day (as hereinafter defined) excluding Saturdays, Sundays and U.S. legal holidays.

"Buyer" means Heartland Oil and Gas Corp., a Nevada corporation.

"Casualty Loss" means any loss, damage or reduction in value resulting from catastrophic occurrences, acts of God and any other losses which are not the result of (i) normal wear and tear, (ii) natural reservoir changes or (iii) changes in commodity pricing, operating expenses or the financial condition of a party.

"Claim" or "Claims" means any and all claims, demands, suits, causes of action, losses, damages, liabilities, fines, penalties and costs (including attorneys' fees and costs of litigation) which are brought by or owed to a Third Party (as hereinafter defined).

"Claimant" shall have the meaning attributed in Section 4.7, below.

"Claim Notice" has the meaning attributed to it in Section 7.6, below.

"Close" or "Closing" means the consummation of the transfer of title to the Properties (as hereinafter defined) to Buyer, including execution and delivery of all documents provided herein.

"Closing Date" means September 27, 2004, or such other date as may be mutually agreed upon by the parties.

"Confidentiality Agreements" shall have the meaning attributed in Section 13.4, below.

"Day" means a calendar day consisting of twenty-four (24) hours from midnight to midnight.

"Defect Notice" shall have the meaning attributed in Section 4.5, below.

"Defect Notification Date" shall have the meaning attributed in Section 4.4, below.

"Defects" shall have the meaning attributed in Section 4.4(a), below.

"Defect Value" shall have the meaning attributed in Section 4.5, below.

"Deposit" shall have the meaning attributed in Section 3.1(a), below.

"Easements" means all easements and rights-of-way owned by Seller appurtenant to or used in connection with the Leases, Wells and Gathering System, including, without limitation, those described on Exhibit D hereto.

"Effective Time" means September 27, 2004, at 7:00 a.m., local time where the Properties are located.

"Encumbrance" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, or restriction on transfer, other than a Permitted Encumbrance.

"Environmental Claims" means all Claims for pollution or environmental damages of any kind, including without limitation, those relating to: (a) remediation and/or clean-up thereof, (b) damage to and/or loss of any property or resource, and/or (c) injury or death of any person(s) whomsoever; including without limitation, Claims relating to breach and/or violation of Environmental Laws, common law causes of action such as negligence, gross negligence, strict liability, nuisance or trespass, or fault imposed by statute, rule, regulation or otherwise, Claims relating to asbestos or other potentially hazardous substances, all costs associated with remediation and clean up, and fines and penalties associated with any of the foregoing.

"Environmental Defect" shall have the meaning attributed in Section 4.4(b), below.

"Environmental Laws" means all laws, statutes, ordinances, permits, orders, judgments, rules or regulations which are promulgated, issued or enacted by a governmental entity or tribal authority having appropriate jurisdiction that relate to (a) the prevention of pollution or environmental damage, (b) the remediation of pollution or environmental damage, or (c) the protection of the environment generally; including without limitation, the Clean Air Act, as amended, the Clean Water Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Federal Water Pollution Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substance and Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as amended, and the Oil Pollution Act of 1990, as amend ed.

"Final Settlement Date" shall have the meaning attributed in Section 5.5, below.

"Final Accounting Settlement" shall have the meaning attributed in Section 5.5, below.

"Gathering System" means all gathering systems and related facilities owned and used by Seller in connection with the Wells and Leases, as further described on Exhibit C hereto.

"JAG" shall have the meaning attributed in Section 4.7, below.

"Laws" means laws, statutes, ordinances, permits, decrees, orders, judgments, rules or regulations (including without limitation Environmental Laws) which are promulgated, issued or enacted by a governmental entity or tribal authority having appropriate jurisdiction and which are effective as of the date of Closing.

"Leases" means all of the oil and gas leases, leaseholds, subleases, licenses, concessions and other agreements (written or oral), listed or described on Exhibit A hereto, including all amendments, extensions, renewals, guaranties and other documents with respect thereto and the right to all security deposits and other amounts and instruments deposited by or on behalf of Seller thereunder.

"Marketable Title" means, as to the Properties, complete and exclusive ownership by Seller or Evergreen Operating Corporation that, subject to and except for the Permitted Encumbrances:

a. In the case of Leases:

i. entitles Seller (or Evergreen Operating Corporation) to receive throughout the duration of the productive life of any Lease (after satisfaction of all royalties, overriding royalties, nonparticipating royalties, net profits interests or other similar burdens on or measured by production of oil and gas created by, through or under Seller or Evergreen Operating Corporation prior to the Effective Time), not less than the "net revenue interest" share shown in the applicable assignments under which Seller or Evergreen Operating Corporation acquired title to such Lease; and

ii. entitles Seller (or Evergreen Operating Corporation) to a 100% working interest in each of the Leases, unless otherwise shown on Exhibit A.

b. In the case of Wells, entitles Seller (or Evergreen Operating Corporation) to receive throughout the duration of the productive life of the Well, not less than the net revenue interest shown for such Well on Exhibit B hereto, and obligates Seller (or Evergreen Operating Corporatoin) to pay a working interest share of expenses for such Well not more than the working interest shown for such Well on Exhibit B; and

c. is deducible of record and free and clear of Encumbrances other than such Encumbrances that would be acceptable to a reasonable and prudent person in the oil and gas industry in the State of Kansas.

"Material Adverse Effect" shall have the meaning attributed in Section 8.3, below.

"NORM" means naturally occurring radioactive materials.

"Permitted Encumbrances" means:

(a) rights reserved to or vested in any governmental entity or tribal authority having appropriate jurisdiction to control or regulate the use or occupancy of the Properties and the activities conducted thereon in any manner whatsoever, and all Laws of any such governmental entity or tribal authority which are not violated by the current use or occupancy of the Properties or the operation of Seller's business as currently conducted thereon;

(b) all rights to consent by, required notices to, filings with, or other actions by governmental entities or tribal authorities in connection with the sale or conveyance of the Properties, if the same are ministerial in nature and customarily obtained subsequent to the transfer of title;

(c) mechanics liens and similar liens for labor, materials or supplies provided with respect to the Properties incurred in the ordinary course of business for amounts which are not due and payable as of the Closing Date and which would not, individually or in the aggregate, have a material adverse effect on Seller's business as currently conducted thereon;

(d) easements, rights-of-way, servitudes, surface leases, grazing rights, logging rights, canals, ditches, reservoirs, pipelines, utility lines, telephone lines, power lines, railways, streets, roads, alleys, highways and structures on, over and through the Properties, to the extent such rights, interests or structures do not or would not, individually or in the aggregate, impair the use of the Properties or the operation of Seller's business as currently conducted thereon;

(e) the terms and conditions of the leases, agreements and instruments identified in Exhibit F; excluding, however, any restriction on assignment, or preferential purchase rights contained therein;

(f) liens for real estate taxes or assessments and other governmental levies, fees or charges imposed with respect to the Properties which are not due and payable as of the Closing Date;

(g) overriding royalties of record as of the Effective Time burdening any of the Leases, but only to the extent such overriding royalties do not reduce the net revenue interest of Seller in the Wells below that set forth on Exhibit B; and,

(h) any other defects which do not, individually or in the aggregate, materially detract from the ownership and operation of the Properties in the manner owned and operated by Seller on the date hereof.

"Purchase Price" has the meaning attributed to it in Article 3, below.

"Properties" means, and only means, all of Seller's (and Evergreen Operating Corporation's) title in the following properties (real, personal or mixed) and rights (contractual or otherwise) unless expressly reserved or excluded herein:

(a) the Leases,

(b) the Wells,

(c) the Gathering System,

(d) the Easements,

(e) all other equipment, facilities and personal property located on the property that is subject to the Leases, or used in connection with or appurtenant to the Leases, Wells, Gathering System or Easements, including without limitation assignment of the vehicle leases, the inventory of tubular goods, packers and similar equipment set forth on Exhibit E hereto, excluding, however, computers, computer software and communication equipment, and including the two water trucks owned by Evergreen Well Services, Inc., as listed on Exhibit L,

(f) the contracts and agreements pertaining to or affecting the Leases, Wells, Gathering System or Easements set forth on Exhibit G hereto,

(h) the Records, and

(i) all other rights, titles, properties, assets, and interests of Seller or Evergreen Operating Corporation which are located in the eastern half of the State of Kansas, in Richardson County, Nebraska, and in Cass County, Missouri.

The Properties expressly excludes all assets and properties of Evergreen Well Service, Inc., other than the water trucks listed on Exhibit L. With respect to those water trucks, Seller shall cause Evergreen Well Services, Inc., to convey those water trucks to Buyer at Closing.

"Records" means all records, lease files, title information, title opinions, title certificates or memos, title curative information, well files, division orders, technical data, analyses and evaluations, and other information in Seller's possession pertaining to the Properties or any of them, excluding, however, any seismic data that may not be divulged to third parties due to licensing arrangements or proprietary restrictions.

"Respondent" shall have the meaning attributed in Section 4.7, below.

"SEC" shall have the meaning attributed in Section 11.1(h), below.

"Seller" means Evergreen Resources, Inc., a Colorado corporation.

"Seller's Knowledge" means the actual knowledge of Seller's officers or of the supervisory personnel directly responsible for the Leases, Wells, Gathering System, Records or any other component of the Properties, without any duty of independent inquiry.

"Seller's Response" shall have the meaning attributed in Section 4.5, below.

"Tax" or "Taxes" means any state or local severance, conservation, ad valorem, property or other similar tax, including any interest, penalty, or addition thereto, whether disputed or not. which has been or which could be assessed against, or give rise to an Encumbrance upon, the Properties or any of them and pertaining, in whole or in part, to the period of time prior to the Effective Time.

"Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to any Tax, including any schedule or attachment thereto, and including any amendment thereof.

"Third Party" means any person or entity, governmental or otherwise, other than Seller and Buyer, and their respective Affiliates.

"Title Defects" shall have the meaning attributed in Section 4.4(c), below.

"Title Defect Threshold Amount" shall have the meaning attributed in Section 4.5, below.

"Transaction Documents" means the Assignments and Bills of Sale.

"Wells" means all drilled and/or producing wells, injection wells, and strat wells located on the property that is subject to the Leases that were drilled by Seller, including those described on Exhibit B, but excluding any wells located on the property that is subject to the Leases that were not drilled by, and are not owned by, Seller.

ARTICLE 2 - TRANSFER OF THE PROPERTIES

EX-5

Our File No. 28362-1 / D/WLM/651747.1

Exhibit 5.1

November 12, 2004

Heartland Oil and Gas Corp.
Suite 1925, 200 Burrard Street
Vancouver, British Columbia
Canada V6C 3L6

Dear Sirs:

Re: Common Stock of Heartland Oil and Gas Corp. - Registration Statement on Form SB-2 filed November 12, 2004

We have acted as special counsel to Heartland Oil and Gas Corp. (the "Company"), a Nevada corporation, in connection with the filing of a registration statement on Form SB-2 (the "Registration Statement") in connection with the registration under the Securities Act of 1933, as amended, of up to 22,305,693 shares of the Company's common stock (the "Registered Shares"), as further described in the Registration Statement filed on November 12, 2004.

In connection with this opinion, we have examined the following documents:

(a) Corporate Charter and Articles of the Company;

(b) By-Laws of the Company;

(c) Resolutions adopted by the Board of Directors of the Company pertaining to the Registered Shares;

(d) The Registration Statement; and

(e) The Prospectus/Information Statement (the "Prospectus") constituting a part of the Registration Statement.

In addition, we have examined such other documents as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed.

We have assumed that the signatures on all documents examined by us are genuine, that all documents submitted to us as originals are authentic and that all documents submitted to us as copies or as facsimiles of copies or originals, conform with the originals, which assumptions we have not independently verified.

Based upon the foregoing and the examination of such legal authorities as we have deemed relevant, and subject to the qualifications and further assumptions set forth below, we are of the opinion that the Registered Shares to which the Registration Statement and Prospectus relate, have been duly and validly authorized and issued, and are fully paid and non-assessable.

We have attorneys admitted to practice in California, Florida, New York, Washington, Virginia and the District of Columbia. We are familiar with the General Corporation Law of the State of Nevada, the applicable provisions of the Nevada Constitution and reported judicial decisions interpreting these laws, and we have made such inquiries with respect thereto as we consider necessary to render this opinion with respect to a Nevada corporation. This opinion letter is opining upon and is limited to the current federal laws of the United States and, as set forth above, Nevada law, including the statutory provisions, all applicable provisions of the Nevada Constitution and reported judicial decisions interpreting those laws, as such laws presently exist and to the facts as they presently exist. We express no opinion with respect to the effect or applicability of the laws of any other jurisdiction. We assume no obligation to revise or supplement this opinion letter should the laws of such jurisdiction be changed after the date hereof by legislative action, judicial decision or otherwise.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the General Rules and Regulations of the Securities and Exchange Commission.

Yours truly,

CLARK, WILSON

"Clark, Wilson"

WLM

EX-10

Exhibit 10.14

SECURITIES PURCHASE AGREEMENT

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS 1

1.1 Definitions 1

ARTICLE 2 PURCHASE AND SALE 3

2.1 Purchase and Sale of the Shares 3

2.2 Closing. 3

2.3 Conditions to Closing 4

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4

3.1 Organization, Good Standing and Qualification 4

3.2 Authorization 4

3.3 Capitalization 5

3.4 No Conflicts 6

3.5 Filings, Consents and Approvals 6

3.6 Issuance of the Securities 6

3.7 Use of Proceeds 6

3.8 SEC Reports; Financial Statements 6

3.9 Material Changes 7

3.10 Litigation 7

3.11 Compliance 8

3.12 Labor Relations 8

3.13 Regulatory Permits 8

3.14 Title to Assets 8

3.15 Insurance 8

3.16 Transactions with Affiliates and Employees 9

3.17 Private Placement 9

3.18 Listing Requirements 9

3.19 Disclosure 9

3.20 Taxes 9

3.21 Brokers and Finders 10

3.22 No General Solicitation 10

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS 10

4.1 Organization; Authority 10

4.2 Investment Intent 10

4.3 Investor Status 10

4.4 Investment Experience 11

4.5 General Solicitation 11

4.6 Short Sales 11

4.7 Disclosure of Information 11

4.8 Irrevocability of Subscription 11

4.9 Brokers and Finders 11

4.10 Restricted Securities 11

4.11 British Columbia Resale Restrictions. 12

ARTICLE 5 COVENANTS AND AGREEMENTS 12

5.1 Transfer Restrictions. 12

5.2 Integration 13

5.3 Listing of Shares 13

5.4 Press Release and 8-K 14

5.5 No Material Non-Public Information 14

ARTICLE 6 INDEMNIFICATION 14

6.1 Indemnification 14

6.2 Conduct of Indemnification Proceedings 14

ARTICLE 7 REGISTRATION RIGHTS 15

7.1 Registration Statement 15

7.2 Failure of Registration Process 15

7.3 Participation by Investors 16

7.4 Amendments and Supplements 17

7.5 Documents to Holders 17

7.6 Registration Expenses 17

7.7 Indemnification by Company 17

7.8 Indemnification by Investors 18

7.9 Indemnification Procedures 18

ARTICLE 8 MISCELLANEOUS 18

8.1 Fees And Expenses 18

8.2 Entire Agreement 18

8.3 Notices 18

8.4 Amendments; Waivers 19

8.5 Construction 19

8.6 Successors and Assigns 19

8.7 No Third-Party Beneficiaries 19

8.8 Governing Law; Attorneys' Fees 19

8.9 Execution 20

8.10 Severability 20

8.11 Replacement of Securities 20

8.12 Independent Nature of Investors' Obligations 20

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this "Agreement") is dated as of _______________, 2004, by and between Heartland Oil and Gas Corp., a Nevada corporation (the "Company"), and the Investors identified on the signature pages attached hereto (each an "Investor" and collectively the "Investors").

WHEREAS, the Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"), subject to the terms and conditions set forth in this Agreement; and

WHEREAS, the Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement, in the amounts set forth beneath such Investor's name on the Investor's signature page, an aggregate of ______________ shares of the Company's Common Stock, par value $0.01 per share (the "Common Stock").

NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Investor hereby agrees as follows:

ARTICLE 1
DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated in this Section 1.1:

1. "Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.
2. "B.C. Act" means the Securities Act (British Columbia).
3. "BCSC" means the British Columbia Securities Commission.
4. "Closing" means the closing of the purchase and sale of the Securities pursuant to Section 2.2 hereof.
5. "Closing Date" shall have the meaning ascribed to such term in Section 2.3 hereof.
6. "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
7. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
8. "GAAP" shall have the meaning ascribed to such term in Section 3.8 hereof.
9. "Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities.
10. "Material Adverse Effect" means a material adverse effect on:
1. the assets, liabilities, results of operations, condition (financial or otherwise), business or prospects of the Company and its Subsidiaries taken as a whole; or
2. or the ability of the Company to issue and sell the Securities contemplated hereby and to perform its obligations under this Agreement.
11. "OTCBB" means The National Association of Securities Dealers Inc.'s over-the-counter bulletin board.
12. "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
13. "Registrable Securities" means all of the Shares and any securities issued or issuable upon any stock split, dividend or other distribution recapitalization or similar event with respect to the foregoing.
14. "Registration Statement" means the registration statement to be filed by the Company pursuant to Section 7.1 hereof.
15. "Required Approvals" shall have the meaning ascribed to such term in Section 3.5 hereof.
16. "SEC Reports" shall have the meaning ascribed to such term in Section 3.8 hereof.
17. "Securities" means the Shares.
18. "Shares" shall mean shares of Common Stock of the Company sold hereunder.
19. "Subscription Amount" means, as to each Investor, the amount to be paid for the Shares hereunder, as set forth beneath such Investor's name on the Investor's signature page, in United States Dollars and in immediately available funds.
20. "Subsidiary" means any subsidiary of the Company as set forth in the Company's SEC Reports.

ARTICLE 2
PURCHASE AND SALE

2.1 Purchase and Sale of the Shares. Subject to the terms and conditions of this Agreement, on the Closing Date, each of the Investors shall severally, and not jointly, purchase, and the Company shall sell and issue to the Investors, the Shares in the amount set forth beneath such Investor's name on the Investor's signature page in exchange for the Subscription Amount (reflecting a per Share purchase price of $1.50) as specified in Section 2.2 below.

2.2 Closing.

1. Upon the terms and subject to the conditions set forth herein, concurrently with the execution and delivery of this Agreement by the parties hereto, each Investor shall deliver to the Company via wire transfer or a certified check immediately available funds equal to such Investor's Subscription Amount and shall simultaneously deliver or cause to be delivered this Agreement to the offices of the Company, duly executed by such Investor. The following are the wiring instructions for the Company:

Bank: HSBC

Account: Heartland Oil and Gas Corp.

SWIFT CODE # MRMDUS 33

Routing 125007098

Account 446-00907-5

Account Manager: Lisa Dydasco

Telephone: 206-233-8758

600 University Street

1 Union Square

Suite 2323

Seattle, King, Washington

98101-4112

2. The Company, within three business days after the Closing Date, and after confirming receipt of this Agreement executed by the Investor and confirming the receipt of the Subscription Amount for the Closing, shall deliver to each Investor the following via overnight delivery service:
1. a stock certificate for the number of Shares subscribed, registered in the name of such Investor; and
2. this Agreement, duly executed by the Company.

2.3 Conditions to Closing. Upon satisfaction or waiver by the party sought to be benefited thereby of the conditions set forth in this Section 2.3, the Closing shall occur on or before September 24, 2004, at the offices of the Company. The conditions to Closing are as follows:

1. All representations and warranties of the other party contained herein shall remain true and correct as of the Closing Date and all covenants of the other party shall have been performed if due prior to such date.
2. There shall have been no Material Adverse Effect with respect to the Company since the date hereof.
3. No stop order or suspension of trading shall have been imposed by the OTCBB, the SEC or any other governmental regulatory body with respect to the public trading in the Common Stock.
4. An opinion of counsel to the Company in substantially the form attached as Schedule 2.3(d) hereto shall have been delivered to C. K. Cooper & Company, Inc. and Investors for transmission to each Investor.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby makes the representations and warranties set forth below to each Investor.

3.1 Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not and could not reasonably be expected to have a Material Adverse Effect.

3.2 Authorization. The Company has the requisite power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for:

1. the authorization, execution and delivery of this Agreement;
2. authorization of the performance of all obligations of the Company hereunder or thereunder; and
3. the authorization, issuance (or reservation for issuance) and delivery of the Securities. This Agreement constitutes legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors' rights generally.

3.3 Capitalization. Schedule 3.3 sets forth:

1. the authorized capital stock of the Company on the date hereof;
2. the number of shares of capital stock issued and outstanding;
3. the number of shares of capital stock issuable pursuant to the Company's stock plans; and
4. the number of shares of capital stock issuable and reserved for issuance pursuant to securities (other than the Shares) exercisable for, or convertible into or exchangeable for any shares of capital stock of the Company.

All of the issued and outstanding shares of the Company's capital stock have been duly authorized and validly issued and are fully paid, nonassessable and were issued in full compliance with applicable law and any rights of third parties. Except as disclosed on Schedule 3.3, no Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except as disclosed on Schedule 3.3, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any equity securities of any kind, and except as contemplated by this Agreement, neither the Company nor any Subsidiary is currently in negotiations for the issuance of any equity securities of any kind. Except as disclosed on Schedule 3.3, there are no voting agreements, buy-sell agreements, options or rights of first purchase agreements or other agreements of any kind among the Company and a ny of the security holders of the Company relating to the securities of the Company held by them. Except as disclosed in Schedule 3.3, the Company has not granted any Person the right to require the Company to register any securities of the Company under the Securities Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

3.4 No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not:

1. conflict with or violate any provision of the Company's certificate or articles of incorporation, bylaws or other organizational or charter documents; or
2. subject to obtaining the Required Approvals, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected; or
3. result, in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of the foregoing clauses, such as could not, individually or in the aggregate, have or result in a Material Adverse Effect.

3.5 Filings, Consents and Approvals. To the Company's knowledge, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement other than:

1. the filing with the SEC of the Registration Statement;
2. the filing of Form D with the SEC and applicable state law filings; and
3. obtaining of any necessary lender's consent in connection with the Company's primary credit facility

(collectively, the "Required Approvals").

3.6 Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with this Agreement will be duly and validly issued, fully paid and non-assessable, free and clear of all liens. The Company has not, and to the knowledge of the Company, no Affiliate of the Company has sold, offered for sale or solicited offers to buy or otherwise negotiated in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors.

3.7 Use of Proceeds. The proceeds of the sale of the Securities hereunder shall be used by the Company for the acquisition of assets in the Forest City Basin, for drilling and development and general corporate purposes.

3.8 SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials being collectively referred to herein as the "SEC Reports") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. The Company has identified and made available to the Investors a copy of all SEC Reports filed within the 10 days preceding the date hereof. As of their respective dates, to the knowledge of the Company, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. To the Company's knowledge, the financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year - -end audit adjustments.

3.9 Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports:

1. there has been no event, occurrence or development that has had or that could result in a Material Adverse Effect;
2. the Company has not incurred any liabilities (contingent or otherwise) other than:
1. trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice; and
2. liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the SEC;
3. the Company has not altered its method of accounting or the identity of its auditors;
4. the Company has not declared or made any dividend or distribution of cash or other property to its common stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; and
5. the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to the Company's existing stock option or similar plans.

3.10 Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the actual knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which:

1. adversely affects or challenges the legality, validity or enforceability of this Agreement or the Securities; or
2. could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

There has not been, and to the actual knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

3.11 Compliance. The Company:

1. is not in default under or in violation of (and, to the Company's actual knowledge, no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived);
2. is not in violation of any order of any court, arbitrator or governmental body; or
3. to the Company's knowledge, is not in violation of any statute, rule or regulation of any governmental authority, except in each case as could not, individually or in the aggregate, have or result in a Material Adverse Effect.

3.12 Labor Relations. No material labor dispute exists or, to the actual knowledge of the Company, is imminent with respect to any of the employees of the Company.

3.13 Regulatory Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its businesses as described in the SEC Reports, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect ("Material Permits"), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

3.14 Title to Assets. The Company has good and marketable title in and to all property owned by the Company and that is material to its business, free and clear of all liens, except for liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company. Any property and facilities held under lease by the Company and the Subsidiaries are held under valid, subsisting and enforceable leases concerning which the Company is in compliance.

3.15 Insurance. The Company maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company, and the Company reasonably believes such insurance coverage provides reasonable, prudent and customary coverage against all liabilities, claims and risks against which it is customary for comparably situated companies to insure.

3.16 Transactions with Affiliates and Employees. Except as disclosed in the SEC Reports, none of the officers or directors of the Company and, to the actual knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the actual knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

3.17 Private Placement. Assuming the accuracy of the representations and warranties of the Investors set forth in Article IV hereof, the offer, issuance and sale of the Securities to the Investors as contemplated hereby are exempt from the registration requirements of the Securities Act.

3.18 Listing Requirements. Certain market makers make a market in the Company's Common Stock for quotation on the OTCBB. There are no proceedings pending or, to the Company's actual knowledge, threatened against the Company relating to the continued quotation of the Company's Common Stock on the OTCBB, and the Company has not received any notice of, nor to the Company's actual knowledge is there any basis for, the Common Stock to cease to be quoted on the OTCBB.

3.19 Disclosure. To the actual knowledge of the Company, neither the Company nor any Person acting on its behalf has provided the Investors or their agents or counsel with any information that constitutes or might constitute material, non-public information. The written information relating to the Company, its business, the Subsidiaries and the transactions contemplated hereby delivered to the Investors in connection with the transactions contemplated by this Agreement does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

3.20 Taxes. The Company has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company have no actual knowledge of any basis for an y such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statue or local tax. None of the Company's tax returns is presently being audited by any taxing authority.

3.21 Brokers and Finders. No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company, other than as described in Schedule 3.21.

3.22 No General Solicitation. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

Each Investor hereby, for itself and for no other Investor, represents and warrants to the Company as follows:

4.1 Organization; Authority. Investor, if not an individual, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by Investor of the Securities hereunder has been duly authorized by all necessary action on the part of Investor. This Agreement has been duly executed by Investor, and when delivered by Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of Investor, enforceable against it in accordance with its terms.

4.2 Investment Intent. Investor is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof, without prejudice, however, to Investor's right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Securities pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by Investor to hold Securities for any period of time. Investor is acquiring the Securities hereunder in the ordinary course of its business. Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.< /A>

4.3 Investor Status. At the time Investor was offered the Securities, it was, and at the date hereof it is, an "accredited investor" as defined in Rule 501(a) under the Securities Act, and has completed an Accredited Investor Questionnaire in the form attached herein immediately after the Investor's signature page. Investor has not been formed solely for the purpose of acquiring the Securities. Investor is not a registered broker-dealer under Section 15 of the Exchange Act.

4.4 Investment Experience. Investor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Investor recognizes that investment in the Securities involves substantial risks, including loss of the entire amount of such investment, and Investor is able to bear the economic risk of investment in the Securities and to afford a complete loss of such investment.

4.5 General Solicitation. Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

4.6 Short Sales. From the date of this Agreement until the filing of the Form 8-K or Press Release, Investor represents and warrants that it shall not engage in short sales of the Company's Common Stock, as that term is defined in applicable SEC rules.

4.7 Disclosure of Information. Investor has received, read, carefully considered, and fully understands this Agreement, the SEC Reports and all documents related to the Company and its operations required by and furnished to such Investor. In making its decision to invest in the Securities, Investor has relied upon the independent investigations made by Investor and by Investor's own professional advisors. Investor and its advisors, if any, have been given the opportunity to obtain information and to examine this Agreement and certain other information regarding the Company and to ask questions of, and to receive answers from the Company or any Person acting on the Company's behalf concerning the Securities, the Company, and terms and conditions of this investment, and to obtain any additional information to verify the accuracy of any information previously furnished. All such questions have been answered to Invest or's full satisfaction.

4.8 Irrevocability of Subscription. Investor agrees that the Investor's subscription shall be irrevocable by Investor, except as required by applicable law, and that Investor shall not be entitled to cancel, terminate or revoke this Agreement or any of Investor's obligations hereunder.

4.9 Brokers and Finders. No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of an Investor.

4.10 Restricted Securities. Investor understands that:

1. the Securities have not been registered under the Securities Act because of their issuance in a transaction exempt from the registration requirements of the Securities Act;
2. the Securities must be held by Investor indefinitely (without limiting the Company's obligation hereunder to file the Registration Statement) unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration; and
3. the Securities will bear the legends to such effect set forth in Section 5.1(b) hereof.

4.11 British Columbia Resale Restrictions.

1. The Investor acknowledges that the Shares are subject to resale restrictions in British Columbia and may not be traded in British Columbia except as permitted by the B.C. Act and the rules made thereunder.
2. Pursuant to Multilateral Instrument 45-102, as adopted by the BCSC, a subsequent trade in the Shares will be a distribution subject to the prospectus and registration requirements of applicable Canadian securities legislation (including the B.C. Act) unless certain conditions are met, which conditions include a hold period (the "Canadian Hold Period") that shall have elapsed from the date on which the Securities were issued to the Subscriber and, during the currency of the Canadian Hold Period, any certificate representing the Shares is to be imprinted with a restrictive legend (the "Canadian Legend").
3. By executing and delivering this Agreement, the Investor will have directed the Company not to include the Canadian Legend on any certificates representing the Shares to be issued to the Investor.
4. As a consequence, the Investor will not be able to rely on the resale provisions of Multilateral Instrument 45-102, and any subsequent trade in the Shares during or after the Canadian Hold Period will be a distribution subject to the prospectus and registration requirements of Canadian securities legislation, to the extent that the trade is at that time subject to any such Canadian securities legislation.

ARTICLE 5
COVENANTS AND AGREEMENTS

5.1 Transfer Restrictions.

1. The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities, other than pursuant to an effective registration statement or a transfer to the Company or to an Affiliate of an Investor, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion to be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of any transfer, Investor shall have notified the Company of concerning the proposed disposition, and any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of an Investor under this Agreement.
2. Investor agrees to the imprinting of the following legend on any certificate evidencing the Securities:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THE SECURITIES TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS."

3. An Investor may from time to time pledge pursuant to a bona fide margin account or grant a security interest in some or all of the Securities, provided the pledge or secured party is an accredited investor and, if required under the terms of such transaction, such Investor may transfer possession of the pledged or secured Securities to the pledgees or secured parties. Notice of such pledge or transfer shall be given to the Company, but such pledge or transfer will not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but the legend set forth in Section 5.1(b) hereof shall remain on the pledged Securities, and such legal opinion may be required in connection with a foreclosure by the pledgee or secured party or a subsequent transfer following default by the Investor.

5.2 Integration. The Company shall not, and shall use commercially reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that will be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors.

5.3 Listing of Shares. If the Company applies to have its Common Stock or other securities traded on any other principal stock exchange or market, it shall include in such application the Shares and will take such other action as is necessary to cause such Common Stock to be so listed. The Company will use commercially reasonable efforts to comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of such market or exchange, as applicable.

5.4 Press Release and 8-K. On or promptly following the Closing Date, the Company shall issue a press release reasonably acceptable to the Investors disclosing the material terms of the transactions contemplated hereby and the proposed use of proceeds and file a Current Report on Form 8-K disclosing the transactions contemplated hereby and the proposed use of proceeds and including this Agreement and any material agreements involving the use of proceeds as exhibits to such Form 8-K. In addition, the Company will make such other filings and notices in the manner and time required by the SEC.

5.5 No Material Non-Public Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Investor or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Investor shall be relying on the foregoing representations in effecting transactions in the Securities of the Company.

ARTICLE 6
INDEMNIFICATION

6.1 Indemnification. Each party (the "Indemnifying Party") will indemnify, defend and hold the other parties and their directors, officers, shareholders, partners, employees and agents (each, an "Indemnified Party") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such Indemnified Party may suffer or incur as a result of or relating to any breach of any of the representations, warranties, covenants or agreements made by the Indemnifying Party in this Agreement.

6.2 Conduct of Indemnification Proceedings. If any action shall be brought against any Indemnified Party in respect of which indemnity may be sought pursuant to this Agreement, such Indemnified Party shall promptly notify the Indemnifying Party in writing, and the Indemnifying Party shall have the right to assume the defense thereof with counsel of its own choosing. Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that:

1. the employment thereof has been specifically authorized by the Indemnifying Party in writing;
2. the Indemnifying Party has failed after a reasonable period of time to assume such defense and to employ counsel; or
3. in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Indemnifying Party and the position of such Indemnified Party.

The Indemnifying Party will not be liable to any Indemnified Party under this Agreement:

4. for any settlement by an Indemnified Party effected without the Indemnifying Party's prior written consent, which shall not be unreasonably withheld or delayed; or
5. to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Indemnified Party's breach of any of its representations, warranties, covenants or agreements in this Agreement.

ARTICLE 7
REGISTRATION RIGHTS

7.1 Registration Statement. On or before 60 days after the Closing Date (the "Filing Date"), the Company shall prepare and file with the SEC a "Shelf" Registration Statement (the "Registration Statement") covering the resale of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act. The Registration Statement shall be on Form S-3 (unless the Company reasonably determines that it is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith). Subject to the terms of this Agreement, the Company shall use its best efforts to cause the Registration Statement to be declared effective under the Securities Act within 120 days after the Filing Date (the "Effectiveness Date"), and to keep the Registration Statement continuously effective unti l the earliest of:

1. the date all Registrable Securities covered by such Registration Statement have been sold;
2. the date the Registrable Securities are eligible for resale under Rule 144(k) under the Securities Act (as reasonably determined by the Company); or
3. two years following the Closing Date;

provided, however, that the Company may voluntarily suspend the effectiveness of the Registration Statement for a limited time, which in no event shall be longer than 90 days, if the Company has been advised by counsel or underwriters to the Company that the offering of the Registrable Securities pursuant to the Registration Statement would have a Material Adverse Effect, or would be improper in view of (or improper without disclosure in a prospectus) a proposed financing, reorganization, recapitalization, merger, consolidation, or similar transaction involving the Company, in which case the Company shall be required to keep Registration Statement effective for an additional period of time beyond two years following the date of the Closing Date equal to the number of days the effectiveness thereof is suspended pursuant to this provision.

7.2 Failure of Registration Process. If (i) a Registration Statement is not filed on or prior to its Filing Date (if the Company files a Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 7.3, the Company shall not be deemed to have satisfied this clause (i), or (ii) the Company fails to file with the SEC a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within ten trading days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that a Registration Statement will not be "reviewed," or not subject to further review, or (iii) prior to its Effectiveness Date, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the SEC in respect of such Registration Statement with 20 calendar days after the receipt of comm ents by or notice from the SEC that such amendment is required in order for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or required to be filed hereunder is not declared effective by the SEC by its Effectiveness Date, or (v) after the Effectiveness Date, a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holders are not permitted to utilize the prospectus therein to resell such Registrable Securities for more than 30 consecutive trading days but no more than an aggregate of 60 trading days during any 12-month period (which need not be consecutive trading days; provided that such number of days shall not include the 15 calendar days following the filing of any Form 8-K, Form 10-Q or Form 10-K, or other comparable form, for purposes of filing a post-effective amendment to the Registration Statement) (any such failure or breach being referred to as an "Even t," and for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such ten trading day period is exceeded, or for purposes of clause (iii) the date which such 15 calendar day period is exceeded, or for purposes of clause (v) the date on which such 30 or 60 trading day period, as applicable, is exceeded being referred to as an "Event Date"), then in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as full liquidated damages and not as a penalty, equal to one percent (but not to exceed six percent, in the aggregate hereunder) of the aggregate purchase price paid by such Holder pursuant to this Agreement for any Registrable Securities then held by such Holder. If the Company fails to pay any liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

7.3 Participation by Investors. The Investors or Holders shall furnish to the Company such information regarding the Investors' offerings of Registrable Securities and the proposed manner of distribution thereof as the Company may reasonably request and as shall be required in connection with the Registration Statement and any related prospectus, or any amendment thereof or supplement thereto. The Company will give each Investor, Holder and any underwriter, and their respective counsel and accountants (at the Investor's, Holder's or underwriter's sole expense), a reasonable opportunity to review, comment upon and participate in the preparation of the Registration Statement, each prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto. The Company will also allow each Investor or Holder reasonable access to the Company's books and records and such opportunities to discuss the business of the Company with its officers, counsel and accountant s, as shall be reasonably necessary in order to conduct a reasonable and diligent investigation in within the meaning of the Securities Act.

7.4 Amendments and Supplements. The Company shall prepare and file with the SEC such amendments and supplements, including post-effective amendments, to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the period of time set forth in Section 7.1 hereof. The Company shall respond as promptly as reasonably practicable to any comments received from the SEC with respect to the Registration Statement, the prospectus or any amendment thereof or supplement thereto, and as promptly as reasonably practicable provide the Holders true and complete copies of all correspondence from and to the SEC relating to the Registration Statement. To the extent within the control of the Company, the Company shall comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders set forth in the Registration Statement or the prospectus, as amended or supplemented.

7.5 Documents to Holders. The Company will, at the expense of the Company, furnish to the Purchaser such number of copies of the Registration Statement, prospectuses, amendments, supplements and other documents incident to any registration or qualification of the Registrable Securities as a Holder may from time to time reasonably request.

7.6 Registration Expenses. The Company will bear all costs and expenses related to the Registration Statement, other than the expenses incurred by the Holders for brokers' or underwriters' commissions and discounts or legal fees incurred by the Holders.

7.7 Indemnification by Company. The Company agrees to indemnify, defend and hold harmless, to the extent permitted by law, each Investor and its officers, directors, stockholders, employees, agents and representatives, and any other person deemed to control the Investor within the meaning of the Securities Act against all losses, claims, damages, liabilities and expenses caused by:

1. any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any other federal or state securities law, rule or regulation applicable to the Company; or
2. any untrue statement of material fact contained in the Registration Statement, the prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Investor expressly for use therein or by such Investor's failure to deliver information reasonably requested by the Company for preparation of the Registration Statement, the prospectus or any amendments or supplements thereto.

7.8 Indemnification by Investors. If any Investor is participating in the Registration Statement, such Investor will furnish to the Company in writing such information as the Company reasonably requests for use in connection with the Registration Statement, prospectus or any amendments or supplements thereto, to the extent permitted by law, such Investor will indemnify, defend and hold harmless the Company, its directors, officers, stockholders, employees, agents and representatives, and any other person deemed to control the Company against any losses, claims, damages, liabilities and expenses resulting from any untrue statement or material fact contained in the Registration Statement, prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent the same are caused by or contained in any information furnished in writing to the Company by such Investor expressly for use therein or by such Investor's failure to deliver information reasonably requested by the Company for preparation of the Registration Statement, the prospectus or any amendments or supplements thereto.

7.9 Indemnification Procedures. The application of the indemnities set forth in Sections 7.7 and 7.8 hereof shall be in accordance with the procedures set forth in Section 6.2 hereof.

ARTICLE 8
MISCELLANEOUS

8.1 Fees And Expenses. Except as expressly set forth in this Agreement to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the issuance of any Securities.

8.2 Entire Agreement. This Agreement and the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents.

8.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of:

1. the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified herein;
2. three business days following the date of mailing, if sent by U.S. mail prepaid or a nationally recognized overnight courier service; or
3. upon actual receipt by the party to whom such notice is required to be given.

The addresses for such notices and communications are those set forth on the signature pages hereof, or such other address as may be designated in writing hereafter.

8.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each of the Investors or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

8.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

8.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. Any Investor may assign its rights under this Agreement to any Person to whom such Investor assigns or transfers any Securities in accordance with the provisions of this Agreement.

8.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in the indemnities under Sections 6.1, 7.7 and 7.8 hereof.

8.8 Governing Law; Attorneys' Fees. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its court costs and reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

8.9 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

8.10 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

8.11 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for any new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.

8.12 Independent Nature of Investors' Obligations. The obligations of each Investor under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any transaction document. Nothing contained herein, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to duly executed by their respective authorized signatories as of the date first indicated above.

HEARTLAND OIL AND GAS CORP.

By

Name: Richard Coglon

Title: President

ADDRESS FOR NOTICE:

Suite 1925, 200 Burrard Street

Vancouver, British Columbia V6C 3L6

Attention: Richard Coglon, President

Tel: (604) 693-0177

Fax: (604) 638-3525

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR INVESTOR FOLLOWS]

INVESTOR'S SIGNATURE PAGE

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Investor Name:

Signature:

Name of Signatory:

Title of Signatory:

Subscription Amount: $_______________ for _______________ Shares

Address for Notice:

Fax Number:

Telephone Number:

E-Mail Address:

Tax Identification Number:

With a copy to:

(which shall not constitute notice)

ACCREDITED INVESTOR QUESTIONNAIRE

The undersigned Investor, in connection with the acquisition of securities of HEARTLAND OIL AND GAS CORP. (the "Company"), hereby makes the following representations and warranties:

The Investor understands that the offer and sale of the Company's are not being registered under the Securities Act of 1933, as amended (the "Act") or qualified under state securities laws, in reliance upon exemptions from such registration and qualification requirements for transactions not involving any public offering. Information supplied through this Questionnaire will be used to ensure compliance with the requirements of such exemptions.

The undersigned Investor represents and warrants to the Company that:

(a) The information contained herein is complete and accurate and may be relied upon by the Company; and

(b) Investor will notify the Company immediately of any material change in any of such information occurring prior to the acceptance or rejection of the Investor's subscription for securities of the Company.

ALL INFORMATION WILL BE TREATED CONFIDENTIALLY

The Investor represents and warrants that the Investor falls within the category (or categories) marked. PLEASE INDICATE EACH CATEGORY OF ACCREDITED INVESTOR THAT YOU SATISFY, BY PLACING AN "X" ON THE APPROPRIATE LINE BELOW.

___ Category 1. A bank, as defined in Section 3(a)(2) of the Act, whether acting in its individual or fiduciary capacity; or

___ Category 2. A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; or

___ Category 3. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

___ Category 4. An insurance company as defined in Section 2(13) of the Act; or

___ Category 5. An investment company registered under the Investment Company Act of 1940; or

___ Category 6. A business development company as defined in Section 2(a) (48) of the Investment Company Act of 1940; or

___ Category 7. A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

___ Category 8. A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of US$5,000,000; or

___ Category 9. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of US$5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or

___ Category 10. A private business development company as defined in Section 202(a)(22) or the Investment Advisors Act of 1940; or

___ Category 11. An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of US$5,000,000; or

___ Category 12. A director, executive officer or general partner of the Company; or

___ Category 13. A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of this purchase exceeds US$1,000,000; or

___ Category 14. A natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person's spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

___ Category 15. A trust, with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in SEC Rule 506(b) (2)(ii); or

___ Category 16. An entity in which all of the equity owners are accredited investors.

Date: _______________

(Signature)

(Print Name)

SCHEDULE 2.3(d)

[Law Firm Letterhead]

_______________, 2004

C. K. Cooper & Company, Inc.
18300 Von Karman Avenue
Suite 440
Irvine, California 92612

and

To the Investors listed in Schedule A attached hereto

Re: Private Placement of Securities of Heartland Oil and Gas Corp.

Ladies and Gentlemen:

This opinion is furnished to the Investors listed in Schedule A attached hereto (the "Investors") and to C. K. Cooper & Company, Inc. as managing dealer to Heartland Oil and Gas Corp., a Nevada corporation (the "Company"), pursuant to Section 2.3(d) of that certain Securities Purchase Agreement dated _______________, 2004 (the " Agreement"), by and between the Company and the Investors.

We have acted as counsel to the Company in connection with the proposed issuance and sale of up to $45,000,000 of its Common Stock (the "Stock" or the "Securities") offered and sold pursuant to the Agreement. Capitalized terms used in this opinion, unless specifically defined in this opinion, have the meanings given them in the Agreement.

Documents Reviewed

In connection with rendering the opinions set forth herein, we examined the Company's Articles of Incorporation and its By-Laws, each as amended to date, and the proceedings of the Company's Board of Directors taken in connection with issuing the Securities, and the following additional documents:

1. The Agreement;

3. Good Standing Certificate, dated _______________, 2004, issued by the Nevada Secretary of State; and

4. Good Standing Certificates from applicable agencies of other states wherein the Company is qualified to do business.

5. An officer's certificate dated _______________.

6. A letter from the transfer agent of the Company dated _______________.

Assumptions

In conducting our examination, we have assumed the following: (i) that any agreement relating to the issuance of the Securities, including, without limitation, the Agreement, has been executed by each of the parties thereto in the same form as the forms which we have examined, (ii) the genuineness of all signatures, the legal capacity of natural persons, the authenticity and accuracy of all documents submitted to us as originals, and the conformity to originals of all documents submitted to us as copies, and (iii) that the Agreement has been duly and validly authorized, executed, and delivered by the party or parties thereto other than the Company.

Opinions

Based upon and subject to the assumptions, qualifications and limitations set forth in this letter, we are of the opinion that:

1. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Nevada. The Company does not, directly or indirectly, own or control or have any interest in, any corporation, partnership, limited liability company, association or other entity except the following: .

2. The Company has the corporate power and authority to own, lease and operate its properties and to conduct its business.

3. The Company is duly qualified to do business as a foreign corporation and is in good standing in Kansas, to our knowledge the only jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification except to the extent that failure to so qualify would not have a material adverse effect on the Company.

4. The authorized, issued and outstanding capital stock of the Company consists of _______________ shares of Common Stock of which _______________ are issued and outstanding and _______________ shares of Preferred Stock of which _______________ are issued and outstanding; the issued and outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and non-assessable, and, to our knowledge, will not have been issued in violation of or subject to any preemptive right, co-sale right, registration right, right of first refusal or other similar right, except for registration rights that have been fulfilled by the Company.

5. When delivered to the Investors against payment of the agreed consideration therefor in accordance with the provisions of the Agreement, the Securities, as described in the Agreement, will be duly authorized and validly issued, fully paid and non-assessable, and to our knowledge will not have been issued in violation of or subject to any preemptive right, co-sale right, registration right, right of first refusal or other similar right.

6. The Company has the requisite corporate power and authority to execute, deliver and perform the Agreement and to issue, sell and deliver to the Investors the Securities.

7. The Agreement has been duly authorized by all necessary corporate action on the part of the Company, and has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery by the other parties thereto, is a valid and binding agreement of the Company, enforceable in accordance with its terms, except as rights to indemnification thereunder may be limited by applicable law and except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors' rights generally or by equitable principles. As well, we do not opine on whether a court will specifically enforce any right or remedy set out in the Agreement.

8. The performance of the Agreement and the consummation of the transactions therein contemplated, including, without limitation, the issuance of the Securities do not (a) violate any provision of the Company's Articles of Incorporation or By-Laws or (b) to our knowledge, result in a breach or violation of any of the terms and provisions of, or constitute a default under, any bond, debenture, note or other evidence of indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument known to us to which the Company is a party or by which its properties are bound the effect of which would have a material adverse effect on the business of the Company or the consummation of the transaction contemplated by the Agreement, or any applicable statute, rule or regulation known to us, or any order, writ or decree of any court, government or governmental agency or body having jurisdiction over the Company or over any of their p roperties or operations.

9. No consent, approval, authorization or order of or qualification with any court, government or governmental agency or body having jurisdiction over the Company, or over any of their properties or operations is necessary in connection with the consummation by the Company of the transactions contemplated in the Agreement, including, without limitation, the issuance of the Securities, except such as may be required under state or other securities or Blue Sky laws in connection with the purchase and the distribution of the Securities by the Company.

10. Assuming the representations and warranties of the Investors in the Agreement are true, the offer and sale of the Securities by the Company in accordance with the terms of the Agreement is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the "Securities Act").

11. To our knowledge, there are no legal or governmental proceedings pending or threatened against the Company.

12. To our knowledge, the Company is not presently (a) in violation of its Articles of Incorporation or By-Laws, or (b) in breach of any applicable statute, rule or regulation known to such counsel or, to our knowledge, any order, writ or decree of any court or governmental agency or body having jurisdiction over the Company, or over any of its properties or operations.

Whenever a statement herein is qualified by "known to us," "to our knowledge," or similar phrase, it is intended to indicate that, during the course of our representation of the Company, no information that would give us current actual knowledge of the inaccuracy of such statement has come to the attention of the attorneys in this firm who have rendered legal services in connection with the transaction described in the first two paragraphs of this letter. However, we have not undertaken any independent inquiry to determine the accuracy of such statement, and any limited inquiry undertaken by us should not be regarded as such an investigation. No inference as to our knowledge of any matters bearing on the accuracy of such statement should be drawn from the fact of our representation of the Company.

Limitations

This opinion is based solely upon the laws of the United States and the State of Nevada, as currently in effect, and does not include an interpretation or statement concerning the laws of any other state or jurisdiction.

This opinion is rendered as of the date set forth above solely for your benefit and the benefit of your counsel and may not be reviewed, relied upon, used, circulated, referred to or quoted to any party without our prior written consent.

We make no undertaking to supplement this opinion if, after the date hereof, facts or circumstances come to our attention or changes in the law occur which could affect such opinion.

Very truly yours

SCHEDULE 3.21

The Company entered into an Engagement Agreement (the "Agreement") with C. K. Cooper & Company ("CKCC") on September 8, 2004. Under the terms of the Agreement the Company agrees to pay CKCC for its services under this Agreement a fee (a "Transaction Fee") equal to six percent (6.0%) of aggregated gross proceeds received or to be received by the Company from the sale of Securities in any Transaction during the Term. The Transaction Fee shall be due and payable on the closing of any Transaction. The Transaction Fee shall be split 55% to CKCC, 45% to Sterne Agee & Leach, Inc.

SCHEDULE 3.3

The following is Schedule 3.3 to the Securities Purchase Agreement (the "Agreement") dated as of _________, 2004 between Heartland Oil and Gas Corp. ("Heartland") and certain Investors. The disclosures set out in this Schedule shall qualify sections of the Agreement where it is reasonably apparent that such information qualifies the representations and warranties of Heartland under the Agreement

1. Authorized Capital Stock

Heartland's Certificate of Incorporation authorizes the issuance of 100,000,000 shares of common stock and 5,000,000 shares of preferred stock.

2. Capital Stock Issued and Outstanding

As of September 8, 2004 the issued and outstanding is:

24,431,321 shares of common stock

995,305 shares of convertible preferred stock, convertible to shares of common stock on a one for one basis

3. Convertible Securities and Shares Reserved for Issuance

(a) Stock Options

The following shares of common stock of Heartland are reserved for issuance pursuant to Heartland's stock option plans:

- 500,000 shares of common stock pursuant to the 2001 Stock Option Plan;

- 600,000 shares of common stock pursuant to the 2002 Stock Option Plan;

- 500,000 shares of common stock pursuant to the 2002 Additional Stock Option Plan; and

- 2,000,000 shares of common stock pursuant to the 2004 Stock Option Plan.

The following shares of common stock of Heartland are issuable upon the exercise of outstanding stock options:

- 105,000 shares of common stock which may be issued upon the exercise of stock options pursuant to the 2001 Stock Option Plan;

- 490,000 shares of common stock which may be issued upon the exercise of stock options pursuant to the 2002 Stock Option Plan;

- 470,000 shares of common stock which may be issued upon the exercise of stock options pursuant to the 2002 Additional Stock Option Plan; and

- 780,000 shares of common stock which may be issued upon the exercise of stock options pursuant to the 2004 Stock Option Plan.

(b) Share Purchase Warrants

The following shares of common stock of Heartland are reserved for issuance and issuable upon the exercise of outstanding share purchase warrants:

- 1,678,766 shares of common stock which may be issued upon the exercise of certain share purchase warrants issued in connection with private placements in June and August of 2003;

- 162,958 shares of common stock which may be issued upon the exercise of certain share purchase warrants issued in partial payment of placement fees;

- 1,000,000 shares of common stock which may be issued upon the exercise of certain share purchase warrants issued in connection with a private placement that closed on April 16, 2003; and

- 571,361 shares of common stock which may be issued upon the exercise of certain share purchase warrants, which were issued upon conversion of outstanding convertible debentures.

- 497,653 shares of common stock which may be issued upon the exercise of share purchase warrants, issued in connection with a private placement of convertible preferred shares that closed on January 13, 2004.

EX-23

Suite 400 - 889 West Pender Street
Vancouver, BC Canada V6C 3B2
Tel 604 694-6070
Fax 604 585-3800
info@staleyokada.com
www.staleyokada.com

Exhibit 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

        We hereby consent to the use in Form SB-2 of Heartland Oil and Gas Corp. of our report dated March 22, 2004 accompanying the financial statements of Heartland Oil and Gas Corp. for the year ended December 31, 2003 and the December 31, 2003 amounts included in the cumulative amounts for the period from inception (August 11, 2000) through December 31, 2003 and to the reference to our firm under the caption “Experts” in the Form SB-2.

/s/ Staley, Okada & Partners

Vancouver, Canada
November 12, 2004 Staley, Okada & Partners

EX-23

Exhibit 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form SB-2 of Heartland Oil and Gas Corp. of our report dated March 7, 2003 accompanying the financial statements of Heartland Oil and Gas Corp. for the year ended December 31, 2002 and the period from inception (August 11, 2000) through December 31, 2002 which is part of the Annual Report on Form 10-KSB, and to the reference to our firm under the caption "Experts" in the prospectus.

/s/ SPICER JEFFRIES LLP

Greenwood Village, Colorado
November 12, 2004

EX-23

Production Enhancement & Reservoir Management, LLC

9947 S. Blackbird Circle
Littleton, CO 80130-3869

Exhibit 23.3

November 12, 2004

Re: Consent to Use of Report

We consent to the reference in this Registration Statement on Form SB-2 of Heartland Oil and Gas Corp. of our Injection Falloff Test Results reports dated August 2001, and to the reference of us under the heading "Experts" in such Prospectus.

Production Enhancement and Reservoir Management, LLC

Per: /s/ Trent W. Green
Trent Green

Phone: 720/344-3464 Fax: 413/832-7993 Cell: 303/882-8861 Email: tgreen@permllc.com

CORRESP

Reply Attention of William L. Macdonald
Direct Tel. 604.643.3118
EMail Address wlm@cwilson.com
Our File No. 23417 / D/ljm/651876.1

November 12, 2004

via edgar

Securities and Exchange Commission
450 Fifth Street NW
Mail Stop 20549-0407
Washington, DC 20549
USA

Attention: Office of Small Business

Dear Sirs:

Re: Heartland Oil and Gas Corp.
Registration Statement on Form SB-2

On behalf of Heartland Oil and Gas Corp. (the "Company"), we transmit for filing under the Securities Act of 1933, as amended (the "Act"), the Company's Registration Statement on Form SB-2 for the offering of shares of the Company's common stock. Manually executed signature pages have been signed prior to the time of the electronic filing and will be retained by the Company for five years.

We have been informed by the Company that that they have transmitted via wire transfer $6100.00 to the account of the Securities and Exchange Commission at Mellon Bank to be applied to the filing fee. This amount exceeds the actual filing fee of $23.82.

Please note that the Company requests that the Securities and Exchange Commission permit the Company's request for acceleration of the effective date of the Registration Statement be made orally or by facsimile in accordance with Rule 461(a) of Regulation C (the "Rule"). Pursuant to the Rule, please also be advised that the Company is aware of its obligations under the Act.

2

If you have any questions regarding the Registration Statement, please contact the undersigned at 604.643.3118.

Yours truly,

CLARK, WILSON

Per: /s/ William L. Macdonald

William L. Macdonald

WLM/

Encl.