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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-KSB/A

Amendment No. 2



|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 (Fee Required)
|- | -------------------------------------------------------------------------------------------------



FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002



COMMISSION FILE NUMBER: 333-82786



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HARTVILLE GROUP, INC.

(Small Business Issuer in its Charter)



|NEVADA                                                         |  | 94-3360099                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|7551 NORTH MAIN STREET NORTH CANTON OHIO |  | 44720     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



Issuers
Telephone Number: (330) 305-1352



Securities registered
under Section 12(b) of the Exchange Act:



|(Title of each class) |  | (Name of each exchange on which registered)
|--------------------- |  | -------------------------------------------
|NONE                  |  | N/A                                        



Securities
registered under Section 12(g) of the Exchange Act:



COMMON STOCK, PAR VALUE $.001

(Title of each class)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  YES  x  NO ̈



Check if disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of issuers knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  x



State
issuers revenues for its most recent fiscal year: $1,796,026



State the aggregate market value of the voting stock held by non-affiliates of the issuer (based upon 1,026,870 shares held by non-affiliates and the closing price of $.73 per share for Common Stock in the over-the-counter market as of
March 27, 2003): $749,615



Number of shares of the issuers
common stock, par value $.001, outstanding as of March 31, 2003 : 3,026,870 shares.



DOCUMENTS INCORPORATED BY REFERENCE: none



Transitional Small Business Disclosure Format YES ̈NO  x



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HARTVILLE GROUP, INC.

Form 10-KSB



Table of Contents



|PART I        |  | 3                                                                                                                                
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|Item 1.       |  | DESCRIPTION OF BUSINESS                                                                                                          
|Item 2.       |  | DESCRIPTION OF PROPERTY                                                                                                          
|Item 3.       |  | LEGAL PROCEEDINGS                                                                                                                
|Item 4.       |  | SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                                                                                
|PART II       |  | 7                                                                                                                                
|Item 5.       |  | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                                         
|Item 6.       |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                            
|Item 7.       |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                      
|Item 8.       |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE                                              
|PART III      |  | 12                                                                                                                               
|Item 9.       |  | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE REGISTRANT; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
|Item 10.      |  | EXECUTIVE COMPENSATION                                                                                                           
|Item 11.      |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                                   
|Item 12.      |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                   
|Item 13.      |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                 
|Item 14.      |  | EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES                                                                                 
|SIGNATURES    |  | 16                                                                                                                               
|EXHIBIT INDEX |  |                                                                                                                                  



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PART I



Item 1.    DESCRIPTION OF BUSINESS



THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A SAFE HARBOR FOR FORWARD LOOKING STATEMENTS. CERTAIN INFORMATION CONTAINED HEREIN (AS WELL AS INFORMATION INCLUDED IN ORAL STATEMENTS OR OTHER
WRITTEN STATEMENTS MADE OR TO BE MADE BY HARTVILLE GROUP, INC.) CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING, SUCH AS STATEMENTS RELATING TO CONSUMMATION OF A TRANSACTION, ANTICIPATED FUTURE REVENUES OF THE COMPANY AND SUCCESS OF CURRENT PRODUCT
OFFERINGS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES WHICH COULD SIGNIFICANTLY AFFECT ANTICIPATED RESULTS IN THE FUTURE, AND ACCORDINGLY, SUCH RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF HARTVILLE GROUP, INC. THESE RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHER THINGS, THE CONTINUED DEMAND FOR THE COMPANYS SERVICES, COMPETITIVE AND ECONOMIC FACTORS OF THE MARKET PLACE,
AVAILABILITY OF SUPPLIES, INSURANCE REGULATIONS AND THE STATE OF THE ECONOMY.





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The Company.



Hartville Group, Inc. (the Company) is a holding company formed in the State of Nevada whose wholly-owned subsidiaries include Hartville Insurance Company,
Ltd (Hartville) and Petsmarketing Insurance.com Agency, Inc. (Agency). Hartville is a reinsurance company that is registered in the Cayman Islands, British West Indies. Hartville was formed to reinsure pet health insurance
that is currently being marketed by the Agency.



The Agency is primarily a
marketing/administration company concentrating on the sale of its proprietary health insurance plans for domestic pets. Its business plan calls for introducing its product effectively and efficiently through a variety of distribution systems. The
company presently accepts applications, underwrites and issues policies electronically. Petsmarketing, through its proprietary policy fulfillment system - PUPPS- has the capability to provide online quotes, generate specific applications, approve
applications, issue policies, and monitor claim trends on a proactive basis. This capability enables the company to effectively manage and control losses. Also, having the ability to recognize loss trends early enables the company to amend
underwriting guidelines quickly, thereby controlling and delivering appropriate underwriting margins.



Hartville takes a quota share participation on the pet health insurance originated by the Agency. The product, known as the Petshealth Care Plan works like most major medical plans for people. The plan pays eighty
(80) percent of all veterinary costs and medications received for any covered illness or injury (accident) following the annual deductible of $100 per pet. Selected plans provide coverage for routine vaccinations, heartworm testing and flea
preventive medications, dental cleanings, and all plans cover the cost to spay or neuter a pet. Pet owners are free to use any veterinarian in the United States and all plans provide a thirty-day risk free trial. In the event that a policyholder is
not completely satisfied with the plan and if they have not filed a claim, they can return the policy within thirty days for a full refund (flat cancellation).



There are three plans offered, Basic, Value, and Choice, and they have the following per incident and policy limits, respectively:



|Basic  |  | $ | 1,500/$  8,000
|------ |  | - | --------------
|Value  |  | $ | 3,500/$11,000 
|Choice |  | $ | 5,000/$13,000 



The current offering (policy) is
restricted to only dogs and cats.



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Hartville Group, Inc. has written premium on in-force policies of $5,841,703 for the twelve months ended December 31,
2002 Loss (claims) ratio for the program from 1998 to 2000 on a pure basis was 58%. The pure loss ratio for the twelve months of 2002 has been 45% The loss ratio for these periods with loss allowance expense (LAE) was 65% for 1998 to 2000 and 50%
for 2002. The improvement in losses is attributable to refinements in underwriting, claims, and rate increase, which was implemented in early 2002.



The casualty Actuarial Services Division of Aon Risk Consultants conducted an actuarial study of the overall experience of the Petshealth Care Plans from their inception
in January 1998 through April 2002. It also reviewed the overall rate adequacy of the new rates being used currently by the insurance company. The aggregate pure loss ratio was 55.7% and was relatively stable month to month with some upward trending
over time. The new rates reflect an overall 21% rate increase and are projected to achieve a 55% loss ratio in the 2002 period. This leaves 40% to cover acquisition administration and profit.



The Agency is licensed in 47 states and has filed applications with another 3 states with the
objective to receive authorization to act as insurance agency in all 50 states of the United States.



Pet health insurance coverage has been successfully marketed in Europe for many years. The Company plans to follow the proven practices of the European market. The management has carefully researched the available
market and has concluded that there is a significant demand in the U.S. for companion pet health insurance.



Studies by the American Veterinary Medical Association (AVMA), veterinary colleges, and market researchers have concluded there is a demand among pet owners and veterinarians for affordable, comprehensive pet health
insurance. Articles in veterinary journals and consumer publications reinforce this demand and the high intrinsic value pet owners place on protecting their human-to-companion pet bonding.



The U.S. has the largest population of companion animals in the world. Pets occupy an
important place in more than 60% of all U.S. households. There are more than 112 million dogs and cats in the U.S. As a market, owners of companion pets include over 58 million (6 out of 10 households), and their numbers are growing. Each year
consumers in this market spend more than $10.1 billion for the care of their pets.



Increasingly, companion animals are considered by their owners as members of the family. The American Animal Hospital Association (AAHA) reports that 81 percent of pet owners think of their pets as family members or even
children. With growing frequency, young professionals, childless couples, empty nesters, and senior citizens report that they depend on their pets for companionship and emotional bonding.



A study conducted by the University of Nevada in 1995, entitled An Analysis of Pet Health
Care Insurance concluded, over half of U.S. pet owning households were willing to purchase health insurance for their pets. The Wall StreetJournal reported in early 1996 that hundreds of thousands of pet owners willingly pay
insurance premiums to ensure that their animals get first-rate health care coverage.



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Most HMO or discount plans are normally restricted to a limited number of local veterinary practices. Pet
owners must patronize only those practices. The HMO-type plan is not portable to other veterinary practices or other parts of the U.S. when the owner is transferred or traveling, or if the owner has different veterinarian specialist needs for one of
their pets. The number of participating veterinarians is relatively small. They are located primarily in the affluent suburbs. Such limited and local geographic plans emerged because of an absence of insurance alternatives. Pet owners continue to
voice a strong demand for comprehensive veterinary health insurance coverage and the freedom to choose their own veterinarians, not unlike their own human health care needs.



History



Hartville Group, Inc. was incorporated in the State of Nevada on February 1, 2001 as a holding company of Petsmarketing Insurance.com Agency, Inc., incorporated in the
state of Ohio on March 31, 2000, which sells sickness and accident policies for domestic household pets, and for Hartville Insurance Company, LTD, which was incorporated in the Cayman Islands on October 19, 2001 and holds a restricted class B
Insurers License under the law of the Cayman Islands.



On February 1,
2002, Petsmarketing, Inc. transferred its entire interest in Petsmarketing Insurance.Com Agency, Inc. to Hartville Group, Inc. in exchange for 1,500,000 shares of Hartville Group. Also at the same time Petsmarketing, Inc. transferred its entire
interest in Hartville Insurance Company, LTD (A Cayman Island Corporation) to Hartville Group Inc. in exchange for 500,000 shares of Hartville Group. When the transfer was complete Petsmarketing, Inc. owned 2,000,000 of the 2,001,000 shares
outstanding of Hartville Group, Inc., thereby making Hartville Group, Inc. a subsidiary of Petsmarketing, Inc. On or about April 1, 2001, Hartville Group, Inc. loaned $48,107.83 to Petsmarketing, Inc., which changed its name to PS Management
Holdings, Inc. on May 15, 2002. On September 6, 2002, by mutual agreement between Hartville Group, Inc. and PS Management Holdings, Inc., on September 6, 2002, PS Management Holdings, Inc. returned 1,750,000 shares of Hartville Group to Hartville
Group for cancellation as payment of the debt. On September 5, 2002, Whiskers, Inc. acquired 2,000,000 shares of Hartville Group, Inc. from Hartville Group, Inc. in consideration for $50,000.



On September 9, 2002, Hartville Group, Inc. changed its name to Hartville Equestrian, Inc.
The registrant, formerly Venturelist.com, Inc., changed its name to Hartville Group, Inc. on September 9, 2002. On September 12, 2002, Hartville Group, Inc., formerly Venturelist.com, Inc., acquired 100% of the issued and outstanding shares of
Hartville Equestrian, Inc., formerly Hartville Group, Inc. in exchange for 2,251,000 post forward split shares of the registrants common stock.



The reverse merger transaction with Venturelist.com, Inc. gave the company a listing on the NASD-OTC Bulletin Board. The companys common stock trades under the
stock symbol HTVL.



Government Regulation and Licenses



Most aspects of Hartville Groups operations are regulated by government
agencies. Each state of the United States of America regulates the conduct of Insurance business within its borders. This is done by the Department of Insurance, a subdivision of the State Government. The Department sets forth the policies of
insurance that may be sold in the state and licenses all person that sell policies. Hartville Groups 100% owned subsidiary Petsmarketing Insurance.Com agency is licensed by 47 State Departments of Insurance.



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Hartville Groups 100% owned subsidiary Hartville Insurance Company, Ltd is licensed as a reinsurance company by the
governmentMonetary Authorityof the Cayman Islands, British West Indies. The government regulates the kind of policies the company may reinsure, who may manage the company, the way the finances of the company are maintained, and the way
the resources of the company may be invested. The company contracts with Caledonian Insurance Services Limited, a division of Caledonian Bank, to provide insurance management services for Hartville Insurance Company, Ltd.



The Competition



Hartville Group, Inc.s major competitors are Veterinary Pet Insurance (VPI) and Pet
Care. VPI has by far the largest position with an estimated 78% of the insurance market in the United States with a premium revenue of approximately $34.4 million and 172,000 policies. In comparison, Petsmarketing has developed $3.7mm of written
premium in the last 36 months and has 15,562 active policies. VPI is 65% owned by Scottsdale Insurance Company, which in turn is a wholly owned subsidiary of Nationwide Mutual Insurance Company. Pet Care Insurance is underwritten by Lincoln National
Insurance Company. Other competitors include Companion Care and Blue Paw, both newly in business.



Employees



The company employed 20 full-time personnel as of March 28, 2003. The staff reviews all policy applications and issues policies; and reviews all claims and issues payment
of claims when appropriate. The company usually pays all proper claims in 30 days or less. The staff maintains all records and makes all required reports to the various regulating authorities and reinsurers.



Recent Events



On February 19, 2003, Hartville Group, Inc. and its wholly-owned subsidiary Petsmarketing
Insurance.com Agency, Inc. executed a promissory note to Samir Financial II, L.L.C. in the principal sum of $3,000,000 plus interest at 30% per year, with interest payments due monthly. The promissory note is due on February 19, 2004. Nine months of
interest, $675,000, was prepaid out of the funds loaned to Hartville Group, Inc. and Petsmarketing Insurance.com Agency, Inc. In addition, Samir Financial, II was paid a closing fee of $325,000 which was also paid out of the funds loaned to
Hartville Group and Petsmarketing Insurance.com Agency and Samir Financial receives a monitoring and collateral management fee of $3,000 per month. In connection with the loan, Samir Financial II, L.L.C. was granted a four year warrant to purchase
300,000 shares of Hartville common stock at an exercise price of $.83 per share. As security for the payment and performance of Hartville and Petsmarketing, Hartville and Petsmarketing executed a Loan and Security Agreement covering all now owned
and hereafter acquired personal property. In addition, W. Russell Smith III, Hartvilles president, and Whiskers, Inc., Hartvilles largest shareholder, personally guaranteed the payment of the promissory note. Whiskers, Inc. also entered
into a stock pledge agreement whereby it pledged its stock to Samir Financial to guarantee the repayment of the promissory note. Hartville and Petsmarketing may extend the term of the promissory note for an additional year in consideration for a
$250,000 renewal fee.



Significant Risk
Factors



We Must Raise Additional Capital to Repay Loan From Samir Financial
II.



The Company must raise additional capital to repay the promissory note of
$3,000,000 due to Samir Financial II, L.L.C. in February 2004, which loan may be extended by the Company until February 2005 in consideration for $250,000.



If We Default Pursuant To The Terms of the Loan and Security Agreement, We Will Lose Control of the Company.



In the event of a default as set forth in the Loan and Security Agreement, Samir Financial may exercise various rights and remedies without
notice and Samir Financial has the right to take possession of any and all collateral. This may result in a change in control of the company as Whiskers, Inc., our majority stockholder has pledged its stock to secure the repayment of the promissory
note.



We Are Dependent On W. Russell Smith III and Robert L. Cashman.



Our success depends upon our retention of W. Russell Smith III, the
companys president, and Robert L. Cashman, the companys secretary. The loss of the services of either or both of Messrs. Smith and Cashman might significantly delay or prevent the achievement of our development and strategic objectives.
We are currently in the process of obtaining a $3,000,000 key man life insurance policy on the life of Mr. Smith. We do not maintain key person life insurance on the life of Mr. Cashman. Mr. Smith and Mr. Cashthem are not under any obligation to
continue providing services to us.



The Exercise of Our Stock Options and
Warrants Could Adversely Affect the Performance of Our Stock.



We have granted
options to purchase 2,500,000 shares of our common stock at $.60 per share and warrants to purchase 300,000 shares of our common stock at $.83 per share. The exercise of these options and warrants will cause substantial dilution to the current
owners of our common stock as well as ownership of a person or group that attempts to acquire us on terms not approved by our board of directors and may have the effect of deterring hostile takeover attempts.



Our Subsidiaries Operate in the Insurance Industry Which Industry is Volatile; Risk of
Economic Woes.



The insurance industry has experienced substantial losses as a
result of war and terrorist acts. As a result many companies have withdrawn from various markets. We have encountered problems in the reinsurance markets, however personal lines and livestock programs do not appear to be as significantly impacted.



Item 2.    Description Of Property



The company currently leases 2,500 square feet of office space at 7551 N. Main St North Carton, Ohio. The space is leased for five years at a rate of $2,383 per month. The property is in good condition and sufficient to meet the needs of
the company at this time. The company does not plan to obtain additional space in the foreseeable future; however, if the company is successful in raising additional funds the resulting growth could require the company to acquire additional space.



Item 3.    Legal Proceedings



None



Item 4.    Submission Of Matters To Vote Of Security Holders



No matters were submitted to a vote of security holders during the quarter ended December 31, 2002.



Part II



Item 5.    Market for Common Equity and Related Stockholder Matters.



The companys Common Stock traded under the stock symbol VTLT until September 17, 2002 on the NASDAQS OTC Bulletin Board until it began trading under the
symbol HTVL. The high and low closing bid information for the Companys Common Stock during the year ended December 31, 2002 is based on information received from Bloomberg L.P., the NASDAQ Trading and Market Services, and a company market
maker.



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|Year ended December 31, 2002 |  | High |  | Low 
|---------------------------- |  | ---- |  | ----
|Quarter ended March 31, 2002 |  | 02   |  | .02 
|Quarter ended June 30, 2002  |  | 02   |  | .02 
|Quarter ended Sept 30, 2002  |  | 1.85 |  | 1.75
|Quarter ended Dec 31, 2002   |  | 1.05 |  | 1.01



The quotations reflect inter-dealer
price, without mark-up, mark-down or commission and may not represent actual transactions, The stock is thinly traded and transactions in the stock are sporadic and infrequent.



As of December 31, 2002, there were approximately 61 shareholders of record of the companys common stock and no holders of the
companys preferred stock.



The company has not declared or paid any cash
dividends on its common stock and does not intend to declare or pay any cash dividends in the foreseeable future. The payment of dividends, if any is within the discretion of the Board of Directors and will depend on the Companys earnings, if
any, its capital requirements, and financial condition and other such factors as the Board of Director may consider. The company affected a 100 to 1 reverse split on May 16, 2002.



The company affected a 4:1 forward stock split on September 11, 2002. As a result of the acquisition of Hartville Equestrian and the change
of focus of the Registrants business, the Registrant changed it name from Venturelist.com, Inc. to Hartville Group, Inc. and changed its trading symbol to HTVL.



In September 2002, the company issued an aggregate of 20,000 shares of common stock to two individuals in consideration for services
rendered. The company believes that the transaction was exempt from registration pursuant to Section 4(2) of the Securities Act as a transaction by an Issuer not involving a public offering as the recipient had sufficient knowledge and experience in
financial and business matters that it was able to evaluate the merits and risks of an investment in the company, it had access to the type of information normally provided in a prospectus, and since the transaction was non-recurring and privately
negotiated.



On September 12, 2002 the Registrant acquired 100% of the issued
and outstanding shares of Hartville Equestrian in exchange for 2,251,000 post forward split shares of the Registrants common stock. Following the Exchange, there were 3,011,244 shares of the Registrants common stock outstanding.



In October 2002, the company issued 15,626 shares of common stock to an
individual in consideration for services rendered. The company believes that the transaction was exempt from registration pursuant to Section 4(2) of the Securities Act as a transaction by an Issuer not involving a public offering as the recipient
had sufficient knowledge and experience in financial and business matters that he was able to evaluate the merits and risks of an investment in the company, he had access to the type of information normally provided in a prospectus, and since the
transaction was non-recurring and privately negotiated.



On March 22, 2003, the
company granted options to each of five individuals to purchase 500,000 shares of the companys common stock at $.60 per share pursuant to the companys stock option plan.



The companys common stock is considered a penny stock as defined in certain rules (the Rules) under the
Securities Exchange Act of 1934. In general, a security which is not quoted on NASDAQ or has a market price of less than $5 per share where the issuer does not have in excess of $2,000,000 in net tangible assets (none of which conditions the company
meets) is considered a penny stock. The SECs rules regarding penny stocks impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally
persons with net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the Rules, the broker-dealer must make a special suitability determination for the purchaser
and receive the purchasers written agreement to the transaction prior to the sale. Thus the Rules affect the ability of broker-dealers to sell the companys shares should they wish to do so because of the adverse effect that the Rules
have upon liquidity of penny stocks. Unless the transaction is exempt under the Rules, under the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting customer transactions in penny stocks are required to
provide their customers with (i) a risk disclosure document; (ii) disclosure of current bid and ask quotations if any; (iii) disclosure of the compensation of the broker-dealer and its sales personnel in the transaction; and (iv) monthly account
statements showing the market value of each penny stock held in the customers account. As a result of the penny stock rules the market liquidity for the companys securities may be severely adversely effected by limiting the ability of
broker-dealers to sell the companys securities and the ability of purchasers of the securities to resell them.





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Item 6.    Managements Discussion and Analysis Of Financial Condition and Results of Operations.



THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED ELSEWHERE IN THIS REPORT.



THIS DISCUSSION CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, THE COMPANYS ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL
MARKET CONDITIONS.



General:



The company currently generates revenue from two sources. First Petsmarketing
Insurance.Com Agency (Agency) receives 30% of the premiums on policies written as a commission.



Second Hartville Insurance Company earns underwriting profit on the insurance risk that it assumes. The policies written by the Agency are partly reinsured by Hartville Insurance Company. The premiums received by the
company less claims paid equals underwriting profit. The business risk cededassumedby the company has historically been approximately 20% of premiums written.



Results of Operations



Premiums written for the 12-month period ending December 31, 2002 were $5,841,703. This resulted in gross revenue of $1,796,026, as compared
to the twelve months ended December 31, 2001 which had a premium written of $2,750,000 resulting in gross revenue of $1,237,248.



Operating expenses were $1,248,477 for the year ended December 31, 2001 compared to operating expenses of $1,780,089 for the twelve months ended December 31, 2002. The
increase in operating expenses is principally due to losses and expenses from an increase in volume of premium sales and increased general and administrative expenses due to an increase in volume of premium sales.



Operating loss decreased from 11,229 for the year ended December 31, 2001 to a operating
income for the twelve months ended December 31, 2002 of $15,937. Operating income is income from insurance operations.



Other income increased from $721 for the year ended December 31, 2001 to $45,062 for the year ended December 31, 2002. Other income is interest income on policy reserves.



Other expense increased from $0 for the year ended December 31, 2001 to
$24,980 for the year ended December 31, 2002. Other expense is expenses associated with the operations of the parent company.



The net income for the twelve months ended December 31, 2002 was $36,019 or $.02 per share. This compares to a net loss of $10,508 or $.01 per share for the year ended
December 31, 2001. The company had been on a calendar year reporting basis; however, following the stock exchange with Venturelist.com, Inc., the companys reporting period changed to a fiscal year ending September 30. The company has now
changed back to a calendar year basis for insurance purposes, thus filing this 10-KSB for the period ending December 31, 2002.



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The company had an accumulated deficit of $408,505 at December 31, 2002. compared to an accumulated deficit or $321,024
as of December 2001.



Liquidity And Capital
Resources



As of December 31, 2002, the company had cash of $601, 807,
total current assets of $927,596 and working capital of $335,454. The company has been experiencing losses since inception, until recently. The losses have been getting smaller each year. The 12 month period ending December 31, 2002 shows a profit
of $36,019 compared to loss of $10,508 for the prior 12 month period.



The
change to profitable operations is largely attributed to the steady increase in the volume of premiums written. Management expects this trend to continue.



The company has accounts receivable of $50,000 from Whiskers, Inc. in connection with its purchase of stock from the company.



Net cash provided by operating activities decreased from $357,377 for the year ended December
31, 2001 to $224,070 for the year ended December 31, 2002, principally due to the following: increase in other receivables of $143,817, and a decrease in unearned commissions of $60,124.



Net cash used for investing activities increased by $216,072 from $315,009 for the year ended December 31, 2001 to $531,081 for the year
ended December 31, 2002 principally due to the following: an increase in stock purchase receivable of $50,000, increase in deferred policy acquisition costs of $46,074, and an increase in other non-current assets of $116,136.



Net cash provided from financing activities decreased $833,414 from $845,679 for the year
ended December 31, 2001 to $12,265 for the year ended December 31, 2002, principally due to the decrease in notes payable by $171,823 and the decrease in contributed capital by $1,009,086.



On February 19, 2003, Hartville Group, Inc. and its wholly-owned subsidiary Petsmarketing
Insurance.com Agency, Inc. executed a promissory note to Samir Financial II, L.L.C. in the principal sum of $3,000,000 plus interest at 30% per year, with interest payments due monthly. The promissory note is due on February 19, 2004. Nine months of
interest, $675,000, was prepaid out of the funds loaned to Hartville Group, Inc. and Petsmarketing Insurance.com Agency, Inc. In addition, Samir Financial, II was paid a closing fee of $325,000 which was also paid out of the funds loaned to
Hartville Group and Petsmarketing Insurance.com Agency and Samir Financial receives a monitoring and collateral management fee of $3,000 per month. In connection with the loan, Samir Financial II, L.L.C. was granted a four year warrant to purchase
300,000 shares of Hartville common stock at an exercise price of $.83 per share. As security for the payment and performance of Hartville and Petsmarketing, Hartville and Petsmarketing executed a Loan and Security Agreement covering all now owned
and hereafter acquired personal property. In addition, W. Russell Smith III, Hartvilles president, and Whiskers, Inc., Hartvilles largest shareholder, personally guaranteed the payment of the promissory note. Whiskers, Inc. also entered
into a stock pledge agreement whereby it pledged its stock to Samir Financial to guarantee the repayment of the promissory note. Hartville and Petsmarketing may extend the term of the promissory note for an additional year in consideration for a
$250,000 renewal fee.



The company is taking steps to raise equity capital.
There can be no assurance that any new capital would be available to the company or that adequate funds for the companys operations, whether from the Companys revenues, financial markets, or other arrangements will be available when
needed or on terms satisfactory to the company. The company has no commitments from officers, directors or affiliates to provide funding. The failure of the company to obtain adequate additional financing may require the company to delay, curtail or
scale back some or all of its sales and marketing efforts. Any additional financing may involve dilution to the companys then-existing shareholders.



Without additional capital funding, the company believes it can sustain operations as it is now operating profitably.



Item 7.    Financial Statements And Supplementary Data



The financial statements and supplementary data of the company are attached hereto.



Item 8.    Changes in and Disagreements With Accountants On Accounting And Financial Disclosure.



On September 17, 2002, the client-auditor relationship between Hartville Group, Inc., formerly Venturelist.com, Inc. (the Company) and Malone & Bailey,
PLLC (Malone) ceased as Malone was dismissed as the Companys auditor.



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##### Table of Contents

To the knowledge of the Companys current Board of Directors, Malones report of the financial statements of
the Registrant for the period from April 2000 (incorporation) through June 2002 and any related interim period did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles.



During the audit of the Companys financial
statements for the period from inception (April 2000) through September 30, 2001 and any subsequent interim period through the date of dismissal, Malone did not have any disagreements with the Company on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.



The
financial statements reported on by Malone were not subject to an adverse or qualified opinion, or a disclaimer of opinion and were not modified as to uncertainty, audit scope or accounting principles during the past two fiscal years, and the
interim periods through June 30, 2002;



The decision to change accountants was
approved by the Registrants Board of Directors; and



There were no
disagreements related to accounting principles or practices auditing scope or procedure during the past two fiscal years and the interim period through June 30, 2002.



On September 17, 2002, the Registrant engaged Terrance L. Kelley, Certified Public Accountant as its independent accountant for the fiscal
year ended September 30, 2002. and the new fiscal year ending December 31,2002 During the most recent fiscal year and any subsequent interim period prior to engaging Terrance L. Kelley, the Company did not consult with Terrance L. Kelley regarding
either (i) the application of accounting principals to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Companys financial statements; or (ii) any matter that was either the
subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K). Terrance L. Kelley has reviewed the disclosure required by
Item 304(a) before it was filed with the Commission and has been provided an opportunity to furnish the Company with a letter addressed to the Commission containing any new information, clarification of the Companys expression of its views, or
the respects in which it does not agree with the statements made by the Company in response to Item 304(a). Terrance L. Kelley did not furnish a letter to the Commission.



The Company requested that Malone review the disclosure and Malone was given an opportunity to furnish the Registrant with a letter
addressed to the Commission containing any new information, clarification of the Companys expression of its views, or the respect in which it does not agree with the statements made by the Company herein. Such letter was filed as an exhibit to
that Report.



Page 11



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##### Table of Contents

PART III



Item 9.    Directors, Executive Officers, Promoters and Control Persons of the Registrant Compliance with Section 16 (A) of the Exchange.



The company currently has the following directors and officers:



|Name                 |  | Age |  | Position with the Company |  | 
|-------------------- |  | --- |  | ------------------------- |  | 
|                     |  |     | 
|W. Russell Smith III |  | 39  |  | Director and President    |  | 
|                     |  |     | 
|Robert L. Cashman    |  | 70  |  | Director and Secretary    |  | 
|                     |  |     | 
|Dr. Tom Neuzil       |  | 57  |  | Director                  |  | 



W.
Russell Smith IIIPresident, Director



W. Russell Smith, has served
as the companys President and Director since its incorporation. Since April 2000, Mr. Smith has served as the President of Pets Marketing Insurance.com Agency. From June 1995 through April 2000, Mr. Smith served as the President of Pets Health
Insurance Agency, Inc. Mr. Smith is a licensed insurance broker is an experienced bank executive with over thirteen years in the consumer financial services industry. Mr. Smith developed the concept of insuring household pets (dogs and cats) and has
been active in the pet insurance business for the last eight years. Mr. Smith will be active in all aspects of the operation of the business. He is experienced in directing the policy enrollment, insurance administration, insurance claims management
and database information systems. Additionally, Mr. Smith maintains the necessary insurance licenses as Managing Agent, TPA for the company. Mr. Smith is an experienced financial executive with over 13-years in the financial services industry and is
a Summa Cum Laude graduate from Florida Metropolitan University with an MBA in business/accountancy. He also holds a BA in Business/Finance from Eckerd College.



Robert L. CashmanSecretary, Director



Mr. Cashman has served as our Secretary and Director since our inception. Since June 1990, Mr. Cashman has served as Chairman and senior
partner of The Charleston Group, a private investment banking and consulting firm. Mr. Cashman has been involved in merger, acquisition, reorganization, liquidation, and public offering transactions throughout his entire business career. He has
personally directed more than 100 transactions including I.P.O.s, secondary offerings, shell reverse mergers and private placements. In the first 12 years out of college, Mr. Cashman developed a fast growing insurance company that qualified him for
the prestigious Young Presidents Organization. After successfully selling the company in 1972, he worked in the merger and acquisition business until 1977 when he acquired Pacific Envelope Co. Under his management, Pacific Envelope grew very
rapidly. The company was able to qualify for the Inc. Magazine 500 fastest growing companies for five years in succession. Mr. Cashman has remained active in business consulting throughout his entire career. Mr. Cashman is currently a member of the
Orange County Airport Commission, operators of John Wayne Airport and also an active general aviation pilot and aircraft owner. Mr. Cashman serves on the board of directors of PS Management Holdings, Inc., Berkshire Asset Management, Inc., Wayne
Aircraft Company, and City of Anaheim Workforce Investment Board. Mr. Cashman has been active in many civic organizations, including serving on the governing board of the National YMCA, has been active in the Boy Scouts, in the Young Presidents
Organization, and numerous blue ribbon committees. He earned a B.S. degree in Business Administration from U.C.L.A.



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##### Table of Contents

Dr. Tomas Neuzil, Director



Dr. Neuzil has served as our director since our incorporation. Dr. Neuzil is a licensed veterinarian with 12-years practice experience in an
accredited American Animal Hospital Association (AAHA) hospital. From June 1999 through April 2000, Dr. Neuzil was the veterinarian for Pets Health Insurance Agency. Dr. Neuzil has 15 years of experience as director of a state and national
veterinary medical association. In addition, Dr. Neuzil was formerly the president of the American Society of Veterinary Medical Association Executives. Dr. Neuzil directs the marketing programs within the veterinary medical profession. Furthermore,
he oversees all aspects of the claims department. Dr. Neuzil received a Doctorate Degree in Veterinary Medicine from Iowa State University.



Item 10.    Executive Compensation



The following table sets forth certain information concerning the compensation of the companys principal executive officer.



|                                         |  |             |  | AnnualCompensation
|---------------------------------------- |  | ----------- |  | ------------------
|Name and Position                        |  | Fiscal Year |  | Salary            
|W. Russell Smith III Director, President |  | 2002        |  | $                 
|                                         |  |             | 
|Kris Lafour, Chief Executive Officer     |  | 2002        |  |                   
|                                         |  |             | 
|Steve Bauman, Chief Executive Officer    |  | 2001        |  | $                 



|(1) | Mr. Smith was paid by Petsmarketing, Inc., a wholly-owned subsidiary.
|--- | ---------------------------------------------------------------------

|(2) | Mr. Lafour, Former Chief Executive Officer of Venturelist.Com, Inc., was paid by M&A West, Inc., our former parent company.
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Bauman received 250,000 shares of Digital Bridge, Inc. from the company and M&A West, Inc. in connection with a settlement agreement and mutual release which was valued at
$12,250.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The company has no employment contracts. The company
does not have a bonus or stock option plan at this time. Officers and directors are elected annually.



Item 11.    Security Ownership of Certain Beneficial Owners and Management



The following is a listing of security ownership of management and certain beneficial owners of the Issuers securities as of March 28, 2003. On that date there were
3,026,870 shares of the Issuers stock issued and outstanding.



|Name                                                                      |  | Title              |  | Number of Shares Beneficially owned |     |  | Percentage owned |  
|------------------------------------------------------------------------- |  | ------------------ |  | ----------------------------------- | --- |  | ---------------- | -
|W. Russell Smith III 7551 North Main Street North Canton, OH 44720        |  | Director/President |  | -0-                                 |     |  | 0                | %
|                                                                          |  |                    | 
|Robert L. Cashman 18482 Park Villa Place Villa Park, CA 92861             |  | Director/Secretary |  | 251,000                             | (1) |  | 8                | %
|                                                                          |  |                    | 
|Tomas Neuzil 7551 North Main Street North Canton, OH 44720                |  | Director           |  | -0-                                 |     |  | 0                | %
|                                                                          |  |                    | 
|Whiskers, Inc 7373 North Scottsdale Blvd Suite D215 Scottsdale, AZ 85253  |  |                    |  | 2,000,000                           |     |  | 66               | %
|                                                                          |  |                    | 
|PS Management Holdings, Inc 18482 Park Villa Place Villa Park, CA 92861   |  |                    |  | 250,000                             |     |  | 8                | %
|                                                                          |  |                    | 
|Allan Staggs 7373 North Scottsdale Blvd Suite D215 Scottsdale, AZ 85253   |  |                    |  | 2,000,000                           | (2) |  | 66               | %
|                                                                          |  |                    | 
|Samir Financial II, L.L.C 20682 N. Plumwood Drive Kildeer, Illinois 60047 |  |                    |  | 2,300,000                           | (3) |  | 69               | %
|                                                                          |  |                    | 
|Richard Johnson 18482 Park Villa Place Villa Park, CA 92861               |  |                    |  | 500,000                             | (4) |  | 14               | %
|                                                                          |  |                    | 
|Karen Fowler 18482 Park Villa Place Villa Park, CA 92861                  |  |                    |  | 500,000                             | (4) |  | 14               | %
|                                                                          |  |                    | 
|John Vilagi 18482 Park Villa Place Villa Park, CA 92861                   |  |                    |  | 500,000                             | (4) |  | 14               | %
|                                                                          |  |                    | 
|Glenn Glasshagel 18482 Park Villa Place Villa Park, CA 92861              |  |                    |  | 500,000                             | (4) |  | 14               | %
|                                                                          |  |                    | 
|Roland Thomas 18482 Park Villa Place Villa Park, CA 92861                 |  |                    |  | 500,000                             | (4) |  | 14               | %
|Total Officers and Directors as a group (2 people)                        |  |                    |  | 251,000                             |     |  | 8                | %
|                                                                          |  |                    |  |                                     |     |  |                  |  
|Total Shareholders                                                        |  |                    |  | 3,026,870                           |     |  | 100              | %
|                                                                          |  |                    |  |                                     |     |  |                  |  



|(1) | Includes 250,000 shares owned of record by PS Management Holdings, Inc., of which Robert L. Cashman serves as the President.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | Includes 2,000,000 shares owned of record by Whiskers, Inc., of which Allan Staggs is the executive officer.
|--- | ------------------------------------------------------------------------------------------------------------

|(3) | Includes warrants to purchase 300,000 shares of stock at $.83 per share as well as 2,000,000 shares which have been pledged by Whiskers, Inc. pursuant to a Debtors Security
and Pledge Agreement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes options to purchase 500,000 shares of common stock at an exercise price of $.60 per share.
|--- | ---------------------------------------------------------------------------------------------------



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##### Table of Contents

Item 12.    Certain Relationships and Related Transactions



On or about April 1, 2001, Hartville Group, Inc. loaned $48,107.83 to PetsMarketing, Inc., which changed its name to PS Management Holdings, Inc. on May 15, 2002. On
September 6, 2002, by mutual agreement between Hartville Group, Inc. and PS Management Holdings, Inc., on September 6, 2002, PS Management Holdings, Inc. returned 1,750,000 shares of Hartville Group to Hartville Group for cancellation as payment of
the debt. Robert L. Cashman is the President of PS Management Holdings, Inc.



In September 2002, Whiskers, Inc., our controlling shareholder, acquired 2,000,000 shares of our common stock in consideration for a $50,000 note and Whiskers, Inc. agreeing to obtain funding for us in the form of a stock investment or a
loan in the amount of US$2,000,000. Whiskers, Inc. agreed to pay the costs, finders fees, commissions and interest applicable in the event it is successful in obtaining financing or a loan for us. In the event Whiskers, Inc. was not successful
in obtaining financing or a loan in the amount of $2,000,000 for the company by July 1, 2003, Whiskers, Inc. was to return the 2,000,000 shares of company common stock to the company for cancellation and the $50,000 payment would have been retained
by the company.



In September 2002, we issued a former director 10,000 shares
of our common stock in consideration for services rendered.



Item 13.    Exhibits List and Reports On Form 8-k



Index to Exhibits



|Exhibit No. |  | Identification of Exhibit                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|            | 
|2.1(2)      |  | Exchange Agreement between Hartville Group, Inc. Formerly Venturelist .com, Inc., and Hartville Equestrian, Inc., Formerly Hartville Group, Inc.
|            | 
|3.1(1)      |  | Amended and restated Articles of Incorporation                                                                                                  
|            | 
|3.2(1)      |  | By-Laws of Venturelist.com                                                                                                                      
|            | 
|3.3(2)      |  | Certificate of Amendment to Articles of Incorporation.                                                                                          
|            | 
|4.1(1)      |  | Form of Specimen of common stock                                                                                                                
|            | 
|10.1(*)     |  | Stock Purchase Agreement with Whiskers, Inc.                                                                                                    
|            | 
|10.2(*)     |  | Promissory Note with Samir Financial II, L.L.C.                                                                                                 
|            | 
|10.3(*)     |  | Loan and Security Agreement with Samir Financial II, L.L.C.                                                                                     
|            | 
|10.4(*)     |  | Hartville Group, Inc. Common Stock Warrant                                                                                                      
|            | 
|23.1(*)     |  | Consent of Independent Auditors                                                                                                                 
|            | 
|99.1(*)     |  | CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350                                                                 



|* | Filed herein.
|- | -------------

|(1) | Filed as an Exhibit to the Companys registration statement on Form SB-2 (File No. 333-48544 ) and herein Incorporated by reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(2) | Filed as an Exhibit to the Companys Form 8-K filed on September 16, 2002.
|--- | --------------------------------------------------------------------------



Page 14



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##### Table of Contents

Reports on Form 8-K



| | 1. | On September 16, 2002 the company filed a Form 8-K to report
| | -- | ------------------------------------------------------------



| | A. | Change of name to Hartville Group, Inc.
| | -- | ---------------------------------------



| | B. | Acquisition of Hartville Equestrian, Inc.
| | -- | -----------------------------------------



| | C. | Change in control of the Company
| | -- | --------------------------------



| | D. | A four (4) for one (1) forward split of the Companys Common Stock effective September 11,2002
| | -- | ----------------------------------------------------------------------------------------------



| | 2. | On October 1, 2002, the company filed an amended 8-K to provide financial statements of the company and modify the beneficial owner of Whiskers, Inc.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | On November 27, 2002, the company filed an amended 8-K modifying the financial disclosure and providing additional information about the company.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | On January 8, 2003, the company filed a Form 8-K reporting a change in auditors.
| | -- | --------------------------------------------------------------------------------



| | 5. | On February 18, 2003, the company filed an amended Form 8-K updating its financial statement disclosure.
| | -- | --------------------------------------------------------------------------------------------------------



| | 6. | On February 25, 2003, the company filed a Form 8-K relating to a change in the companys fiscal year from September 30th to December 31st.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------



Item 14.    Evaluation of Disclosure Controls and Procedures



(a) Evaluation of disclosure controls and procedures. Our principal executive officer, after evaluating the effectiveness of the Companys
disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the Evaluation Date) within 90 days before the filing date of this quarterly report, has
concluded that as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that material information relating to us and our consolidated subsidiaries would be made known to them by others within those
entities.



(b) Changes in internal controls. There were no
significant changes in our internal controls or to our knowledge, in other factors that could significantly affect our disclosure controls and procedures subsequent to the Evaluation Date.



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##### Table of Contents

SIGNATURES



In accordance with
Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned. Thereunto duly



Dated: January 8, 2004



Hartville Group, Inc. RegistrantBy:

/s/    W. Russell Smith IIIW. Russell Smith III President




In accordance with the Exchange
Act. This report has be signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|Signature and Capacity                      |  |  |  |       |  |                
|------------------------------------------- |  |  |  | ----- |  | ---------------
|                                            |  |  | 
|/s/    W. Russell Smith III                 |  |  |  | Dated |  | January 8, 2004
|                                            |  |  |  |       | 
|W. Russell Smith III President and
Director |  |  |  |       |  |                
|                                            |  |  | 
|/s/    Dr. Tom Neuzil                       |  |  |  | Dated |  | January 8, 2004
|                                            |  |  |  |       | 
|Dr. Tomas Neuzil Director                   |  |  |  |       |  |                



CERTIFICATIONS



I, W. Russell Smith III, Principal Executive Officer,
certify that:



|1. | I have reviewed this annual report on Form 10-KSB of Hartville Group, Inc.;
|-- | ---------------------------------------------------------------------------



|2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 14 and 15d-14) for the registrant and have:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this annual report is being prepared;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the
Evaluation Date); and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. | I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the
equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. | I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: January 8, 2004



|/s/    W. Russell Smith    
|---------------------------
|                           
|W. Russell Smith, President



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##### Table of Contents

Financial Statements



|Pollard-Kelley Auditing Services, Inc.              |  |                                   
|--------------------------------------------------- |  | ----------------------------------
|Certified Public Accountants                        |  | 3250 West Market Street Suite 307,
|                                                    |  | Fairlawn, OH 44333 (330) 864-2265 
|                                                    |  |                                   
|Hartville Group, Inc. and Subsidiaries Canton, Ohio |  |                                   



I have audited the consolidated
Balance Sheet of Hartville Group, Inc. and Subsidiaries (A Development Stage Company), as of December 31, 2002 and December 31, 2001 and the related Consolidated Statements of Income, Consolidated Changes in Stockholders Equity, and
Consolidated Statement of Cash Flows for the years then ended. These financial statements are the responsibility of the Companys management. My responsibility is to express an opinion on those financial statements based on my audits.



I conducted my audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. Audits include examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Audits also include assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I
believe that my audits provide a reasonable basis for my opinion.



In my
opinion, based on my audits, the financial statements referenced above present fairly, in all material respects, the financial position of Hartville Group, Inc. and Subsidiaries as of December 31, 2002 and December 31, 2001, and the results of their
operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles accepted in the United States of America.



Pollard-Kelley Auditing Services, Inc.



|/s/    Terance L. Kelley                                                  
|--------------------------------------------------------------------------
|                                                                          
|For Pollard-Kelley Auditing Services,
Inc. Fairlawn, Ohio February 6, 2003



EXCEPT FOR FOOTNOTE 10, FOR WHICH
THE DATE IS FEBRUARY 19, 2003



Page 17



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheets

December 31, 2002 and December 31, 2001



|                                                                     |  | December 31, 2002 |           | December 31, 2001
|-------------------------------------------------------------------- |  | ----------------- | --------- | -----------------
|ASSETS                                                               |  |                   |           |                  
|Current Assets                                                       |  |                   |           |                  
|Cash                                                                 |  | $                 | 601,807   |                  
|Commissions receivable                                               |  |                   | 105,658   |                  
|Other receivables                                                    |  |                   | 168,773   |                  
|Prepaid expenses                                                     |  |                   | 51,358    |                  
|                                                                     |  |                   |           |                  
|Total Current Assets                                                 |  |                   | 927,596   |                  
|Fixed Assets                                                         |  |                   |           |                  
|Property and equipmentnet                                           |  |                   | 100,345   |                  
|Deferred policy acquisition costsnet                                |  |                   | 452,563   |                  
|                                                                     |  |                   |           |                  
|                                                                     |  |                   | 552,908   |                  
|Other Assets                                                         |  |                   |           |                  
|Licensing fees. Less accumulated amortization of $21,324 and $14,706 |  |                   | 26,470    |                  
|Other non-current assets                                             |  |                   | 285,801   |                  
|Investments                                                          |  |                   | 156       |                  
|                                                                     |  |                   |           |                  
|                                                                     |  |                   | 312,427   |                  
|                                                                     |  |                   |           |                  
|Total Assets                                                         |  | $                 | 1,792,931 |                  
|                                                                     |  |                   |           |                  



See accompanying notes
to financial statements.



Page 18



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##### Table of Contents

|                                                                                                                     |  | December 31,2002 |           |   | December 31,2001 |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | - | ---------------- | -
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                 |  |                  |           |   |                  |  
|Current Liabilities                                                                                                  |  |                  |           |   |                  |  
|Accounts payable                                                                                                     |  | $                | 78,422    |   |                  | $
|Accrued expenses                                                                                                     |  |                  | 61,529    |   |                  |  
|Premium deposits                                                                                                     |  |                  | 390,516   |   |                  |  
|Unearned commissions                                                                                                 |  |                  |          |   |                  |  
|Due to fronting carrier                                                                                              |  |                  | 46,630    |   |                  |  
|Current portion of long-term debt                                                                                    |  |                  | 15,045    |   |                  |  
|                                                                                                                     |  |                  |           |   |                  |  
|Total Current Liabilities                                                                                            |  |                  | 592,142   |   |                  |  
|Long-Term Debt                                                                                                       |  |                  | 3,974     |   |                  |  
|                                                                                                                     |  |                  |           |   |                  |  
|Total Liabilities                                                                                                    |  |                  | 596,116   |   |                  |  
|Stockholders Equity                                                                                                 |  |                  |           |   |                  |  
|Common stock, 50,000,000 shares authorized: $.001 par value; 3,026,870 shares issued and outstanding at December
31, |  |                  | 3,027     |   |                  |  
|Additional paid in capital                                                                                           |  |                  | 1,652,293 |   |                  |  
|Deficit accumulated during development stage                                                                         |  |                  | (408,505  | ) |                  |  
|Stock purchase receivable                                                                                            |  |                  | (50,000   | ) |                  |  
|                                                                                                                     |  |                  |           |   |                  |  
|                                                                                                                     |  |                  | 1,196,815 |   |                  |  
|                                                                                                                     |  |                  |           |   |                  |  
|Total Liabilities and Stockholders Equity                                                                           |  | $                | 1,792,931 |   |                  | $
|                                                                                                                     |  |                  |           |   |                  |  



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statement of Income

For the Year ended December 31, 2002, for the Year Ended December 31, 2001, and for the
Period from March 1, 2000 (Date of Inception) Through December 31, 2002 (Since Inception)



|                                           |  | December 31,2002 |           |   | December 31,2001 |   |           | SinceInception | 
|------------------------------------------ |  | ---------------- | --------- | - | ---------------- | - | --------- | -------------- | 
|Commissions                                |  | $                | 865,723   |   |                  | $ | 599,499   |                | 
|Premiums                                   |  |                  | 930,303   |   |                  |   | 637,749   |                | 
|                                           |  |                  |           |   |                  |   |           |                | 
|                                           |  |                  | 1,796,026 |   |                  |   | 1,237,248 |                | 
|Losses and expenses                        |  |                  | 662,904   |   |                  |   | 382,649   |                | 
|Ceded costs                                |  |                  | 283,562   |   |                  |   | 216,092   |                | 
|General and administrative                 |  |                  | 833,623   |   |                  |   | 649,736   |                | 
|                                           |  |                  |           |   |                  |   |           |                | 
|                                           |  |                  | 1,780,089 |   |                  |   | 1,248,477 |                | 
|                                           |  |                  |           |   |                  |   |           |                | 
|Operating Income (loss)                    |  |                  | 15,937    |   |                  |   | (11,229   | )              | 
|Other income                               |  |                  | 45,062    |   |                  |   | 721       |                | 
|Other expense                              |  |                  | (24,980   | ) |                  |   |          |                | 
|                                           |  |                  |           |   |                  |   |           |                | 
|Income (Loss) before taxes                 |  |                  | 36,019    |   |                  |   | (10,508   | )              | 
|Provision for taxes                        |  |                  |          |   |                  |   |          |                | 
|                                           |  |                  |           |   |                  |   |           |                | 
|NET INCOME (LOSS)                          |  | $                | 36,019    |   |                  | $ | (10,508   | )              | 
|                                           |  |                  |           |   |                  |   |           |                | 
|Net income (loss) per common share         |  | $                | 0.02      |   |                  | $ | (0.01     | )              | 
|Weighted average common shares outstanding |  |                  | 2,295,980 |   |                  |   | 2,001,000 |                | 



See accompanying notes
to financial statements



Page 20



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statement of Stockholders Equity

For the Period From March 1, 2000 (Date of Inception) through December
31, 2002



|                                     |  | Additional CommonShares |  | Total StockAmount |       | Paid inCapital |   | AccumulatedDeficit |  |   | StockholdersEquity |  
|------------------------------------ |  | ----------------------- |  | ----------------- | ----- | -------------- | - | ------------------ |  | - | ------------------- | -
|Balance at March 1, 2000             |  |                        |  |                   |      |                |   |                   |  |   |                    |  
|Retroactive stock issued             |  | 2,001,000               |  | $                 | 2,001 |                | $ | 508,327            |  | $ |                    |  
|Net Loss                             |  |                        |  |                   |      |                |   |                   |  |   | (310,516            | )
|                                     |  |                         |  |                   |       |                |   |                    |  |   |                     |  
|Balance at December 31, 2000         |  | 2,001,000               |  |                   | 2,001 |                |   | 508,327            |  |   | (310,516            | )
|Capital contributed 2001             |  |                        |  |                   |      |                |   | 1,015,086          |  |   |                    |  
|Net Loss                             |  |                        |  |                   |      |                |   |                   |  |   | (10,508             | )
|                                     |  |                         |  |                   |       |                |   |                    |  |   |                     |  
|Balance December 31, 2001            |  | 2,001,000               |  |                   | 2,001 |                |   | 1,523,413          |  |   | (321,024            | )
|Acquisition of Venturelist.com, Inc. |  | 760,244                 |  |                   | 760   |                |   | 122,740            |  |   | (123,500            | )
|Sale of shares                       |  | 250,000                 |  |                   | 250   |                |   | 6,000              |  |   |                    |  
|Stock issued for investment          |  | 15,626                  |  |                   | 16    |                |   | 140                |  |   |                    |  
|Net income                           |  |                        |  |                   |      |                |   |                   |  |   | 36,019              |  
|Balance December 31, 2002            |  | 3,026,870               |  | $                 | 3,027 |                | $ | 1,652,293          |  | $ | (408,505            | )
|                                     |  |                         |  |                   |       |                |   |                    |  |   |                     |  



See accompanying notes
to financial statements



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statement of Cash Flows

For the Nine Months Ended December 31, 2002, for the Year Ended December 31, 2001, and
for the Period from March 1, 2000 (Date of Inception) Through December 31, 2002 (Since Inception)



|                                                                                    |  | December 31,2002 |          |   | December 31,2001 |   |           | SinceInception | 
|----------------------------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------- | - | --------- | -------------- | 
|Cash flows from operating activities                                                |  |                  |          |   |                  |   |           |                | 
|Net loss                                                                            |  | $                | 36,019   |   |                  | $ | (10,508   | )              | 
|Adjustments to reconciliation net loss to net cash provided by operating activities |  |                  |          |   |                  |   |           |                | 
|Depreciation                                                                        |  |                  | 40,986   |   |                  |   | 31,027    |                | 
|Amortization                                                                        |  |                  | 86,492   |   |                  |   | 52,014    |                | 
|Decrease/(increase) commissions receivable                                          |  |                  | (54,747  | ) |                  |   | 86,489    |                | 
|(Increase) Other receivables                                                        |  |                  | (156,295 | ) |                  |   | (12,478   | )              | 
|Decrease/(increase) Prepaid expenses                                                |  |                  | (18,496  | ) |                  |   | (29,976   | )              | 
|(Increase) Licensing fees                                                           |  |                  |         |   |                  |   |          |                | 
|Increase Accounts payable                                                           |  |                  | 40,970   |   |                  |   | (8,675    | )              | 
|Increase Accrued expenses                                                           |  |                  | 31,732   |   |                  |   | 29,747    |                | 
|Increase Premium deposits                                                           |  |                  | 200,841  |   |                  |   | 189,675   |                | 
|(Decrease)/increase Unearned commissions                                            |  |                  | (30,062  | ) |                  |   | 30,062    |                | 
|Increase/(decrease) Due to fronting carrier                                         |  |                  | 46,630   |   |                  |   |          |                | 
|                                                                                    |  |                  |          |   |                  |   |           |                | 
|Net Cash Provided by /(Used for ) Operating Activities                              |  |                  | 224,070  |   |                  |   | 357,377   |                | 
|Cash Flows from Investing Activities                                                |  |                  |          |   |                  |   |           |                | 
|Increase in Stock purchase receivable                                               |  |                  | (50,000  | ) |                  |   |          |                | 
|Increase Deferred policy acquisition costs                                          |  |                  | (309,747 | ) |                  |   | (263,673  | )              | 
|Increase Property and equipment                                                     |  |                  | (49,307  | ) |                  |   | (45,445   | )              | 
|Increase Other non-current assets                                                   |  |                  | (122,027 | ) |                  |   | (5,891    | )              | 
|                                                                                    |  |                  |          |   |                  |   |           |                | 
|Net Cash Used for Investing Activities                                              |  |                  | (531,081 | ) |                  |   | (315,009  | )              | 
|Cash Flows from Financing Activities                                                |  |                  |          |   |                  |   |           |                | 
|Proceeds from notes payable                                                         |  |                  | 21,406   |   |                  |   | 17,807    |                | 
|Payment on notes payable                                                            |  |                  | (15,391  | ) |                  |   | (187,214  | )              | 
|Issuance of Common stock                                                            |  |                  | 250      |   |                  |   |          |                | 
|Contributed capital                                                                 |  |                  | 6,000    |   |                  |   | 1,015,086 |                | 
|                                                                                    |  |                  |          |   |                  |   |           |                | 
|Net Cash Provided from Financing Activities                                         |  |                  | 12,265   |   |                  |   | 845,679   |                | 
|                                                                                    |  |                  |          |   |                  |   |           |                | 
|Net Increase in Cash and Cash Equivalents                                           |  |                  | (294,746 | ) |                  |   | 888,047   |                | 
|Cash and Cash EquivalentsBeginning                                                 |  |                  | 896,553  |   |                  |   | 8,506     |                | 
|Cash and Cash EquivalentsEnding                                                    |  | $                | 601,807  |   |                  | $ | 896,553   |                | 
|                                                                                    |  |                  |          |   |                  |   |           |                | 



See accompanying notes
to financial statements



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



December 31, 2002



NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



DEVELOPMENT STAGE COMPANY



Hartville
Group, Inc. and Subsidiaries (the Company) are development stage companies as defined under Statements of Financial Accounting Standards No. 7. Hartville Group, Inc. was incorporated in the state of Nevada on February 1, 2001 as a holding company of
Petsmarketing Insurance.com Agency, Inc., incorporated in the state of Ohio, which sells sickness and accident policies for domestic household pets, for Hartville Group, Inc. and for Hartville Insurance Company, LTD, which was incorporated in the
Cayman Islands on October 19, 2001 and holds a restricted class B Insurers License under the laws of the Cayman Islands.



On February 1, 2002 Petsmarketing, Inc. transferred its entire interest in Petsmarketing Insurance.Com Agency, Inc. to Hartville Group, Inc. (A Nevada Corporation) in
exchange for 1,500,000 shares of Hartville Group. Also at the same time Petsmarketing, Inc. transferred its entire interest in Hartville Insurance Company, LTD (A Cayman Island Corporation) to Hartville Group Inc. in exchange for 500,000 shares of
Hartville Group. When the transfer was complete Petsmarketing, Inc. owned 2,000,000 of the 2,001,000 shares outstanding of Hartville Group, Inc., thereby making Hartville Group, Inc. a subsidiary of Petsmarketing, Inc. Since there was no significant
change in ownership, the transaction was accounted for as similar to a pooling of interests with all assets and liabilities recorded at historical values.



On September 12, 2002 Hartville Group, Inc. the holding company was acquired by Venturelist.com, Inc. a Nevada public, reporting corporation. Venturelist.com was a shell
at the time of the acquisition and therefore the acquisition was treated as a reverse merger whereby the acquired company is treated as the acquiring company for accounting purposes. Venturelist.com, Inc. changed its name to Hartville Group,
Inc. at the time of the acquisition and at the same time Hartville Group, Inc. changed its name to Hartville Equestrian, Inc.



The Company, when originally organized was to include both an insurance agency and a reinsurance company, which would take an 80 to 90% quota share participation in the
pet health insurance thereby increasing the portion of risk and profits retained by the Company. At September 30, 2002 this goal had not been accomplished and therefore the Company is still considered to be in the development stage at this time.





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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Hartville Insurance Company LTD has taken a 20% quota share (compared to a 35% per quota share in 2001) participation in the pet health insurance originated by Petsmarketing Insurance.com Agency, Inc. and insured by Clarendon National
Insurance Company. The remaining 80% of risk (65% in 2001) is ceded to re-insurers. The policies have been issued on a claims made basis with policy limits of $5,000 per occurrence with an annum aggregate of $13,000 for
veterinarians fees and $5,000 per animal for mortality.



The consolidated
financial statements include the accounts of the Petsmarketing Insurance.com Agency, Inc., Hartville Equestrian, Inc. and Hartville Insurance Company, LTD, all wholly owned subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.



REVENUE
RECOGNITION POLICIES



Policies are issued for a term of one year, thus the
Company recognizes commissions on a 1/12annual basis as premiums are received. In the event premiums are paid
in advance; For example a policy on which the annual premium is paid in advance, the liability, unearned commissions is recognized until the premium is earned on a 1/12annual basis. Commissions receivable represent commissions due the company from Clarendon National Insurance Company for premiums received during the previous month. Premium
deposits are recorded as cash at year end with the recording of a corresponding liability to the reinsurance carriers. Ceded costs represent the proportional losses paid on policies under the reinsurance agreements. Due to fronting carrier,
represents any amounts collected by the Company due to Clarendon National Insurance Company as the fronting carrier.



Hartville Insurance Company, LTD is a reinsurance company. It receives its income on a net basis. That is, the Companys revenue is net of claims paid and expenses.
However, for accounting purposes this amount is grossed up to show gross premium revenues and expenses of claims paid and loss allowances.



CASH AND CASH EQUIVALENTS



For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash
equivalents.



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 1SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



INCOME TAXES



The Company accounts for income taxes under the provisions of Statements of
Financial Accounting Standards No. 109 Accounting for Income Taxes, which requires a company to recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in a
companys financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted
tax rates. The Company has no differences between book and tax accounting.



OTHER RECEIVABLES



These amounts represent monies advanced to
an unrelated entity. The funds are to be paid by July 1, 2003. The amount outstanding bears interest at 8% per annum.



DEFERRED POLICY ACQUISITION COST



Costs incurred in connection with policy acquisition have been capitalized and are amortized over the estimated life of the policies acquired. Management was amortizing
these costs over 36 months. However, on January 1, 2002 management elected to extend the estimated life of these assets to 60 months. Management felt this change brought its amortization life closer to industry standards. Total costs deferred at
December 31,2002 were $573,420 with accumulated amortization through that date of $120,857. The impact of this change on the Companys earnings through December 31, 2002 would have been an additional $24,000 of expense.



PROPERTY AND EQUIPMENT



Property and equipment are carried at cost. Maintenance, repairs and renewals are expensed as incurred. Depreciation of property and
equipment is provided for over their estimated useful lives, which range from three to seven years, using the straight-lined method.



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 1SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



SOFTWARE DEVELOPMENT
COSTS



The Company has expended $274,828 in software development costs
through December 31, 2002 for internal use software. The software being developed is called PUPPS(C) a proprietary software, which will provide a common data base for applications, policy underwriting, billing, policy issuance, claims processing,
reporting and interface with financial reporting. The software is entirely proprietary. The Company will amortize these costs over its estimated useful life, which has not been determined at this time, once the development stage is complete.



LIABILITY FOR UNPAID CLAIMS



The Company pays claims on a claims made basis whereby claims are only paid while the policy
is in force. Any liability for unpaid claims at period end is included in accounts payable.



USE OF ESTIMATES



The preparation of the
consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.



NOTE 2OTHER NONCURRENT ASSETS



Other noncurrent assets represent software costs associated with the development of the
Companys computer system in the amount of $274,828. The software being developed is called PUPPS(C) a proprietary software which, will provide a common data base for applications, policy underwriting, billing, policy issuance, claims
processing, reporting and interface with financial reporting. The software is entirely proprietary. As of December 31, 2002, the software is still under development and has not been placed in service. Also included are insurance license costs of
$7,428 and organization costs of $665.



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 3FIXED
ASSETS



Property and equipment are summarized by major classifications as
follows:



|                               |  | December 31,2002 |         |   | December 31,2001 |  
|------------------------------ |  | ---------------- | ------- | - | ---------------- | -
|Furniture and fixtures         |  | $                | 5,979   |   |                  | $
|Equipment                      |  |                  | 117,685 |   |                  |  
|Software                       |  |                  | 55,563  |   |                  |  
|Leasehold Improvements         |  |                  | 10,899  |   |                  |  
|                               |  |                  |         |   |                  |  
|                               |  |                  | 190,126 |   |                  |  
|Less: accumulated depreciation |  |                  | (89,781 | ) |                  |  
|                               |  |                  |         |   |                  |  
|                               |  | $                | 100,345 |   |                  | $
|                               |  |                  |         |   |                  |  



Deferred policy acquisition costs are
summarized as follows:



|                                  |  | December 31,2002 |          |   | December 31,2001 |  
|--------------------------------- |  | ---------------- | -------- | - | ---------------- | -
|Deferred policy acquisition costs |  | $                | 573,420  |   |                  | $
|Less: accumulated amortization    |  |                  | (120,857 | ) |                  |  
|                                  |  |                  |          |   |                  |  
|                                  |  | $                | 452,563  |   |                  | $
|                                  |  |                  |          |   |                  |  



NOTE 4NOTES PAYABLE



On June 14, 2001 the Company entered into a lease purchase arrangement with a
finance company for a phone system. The total borrowed was $17,807. The note calls for 24 monthly payments of $858 including interest at 15.7%. The last three payments were prepaid when the note was signed. The balance outstanding at December 31,
2002 was $4,126. The equipment financed secures the note.



On May 9, 2002 the
Company entered into a lease purchase arrangement with a finance company for a computer system. The total borrowed was $21,406. The note calls for 24 monthly payments of $1,021 including interest at 13.4%. The last three payments were prepaid when
the note was signed. The balance outstanding at December 31, 2002 was $14,893. The equipment financed secures the note.



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 4NOTES PAYABLE
(CONTINUED)



Maturities on long-term debt are as follows:



|Year ending December 31, |  |  
|------------------------ |  | -
|2002                     |  | $
|2003                     |  | $



NOTE 5INCOME TAXES



The Company has a net operating loss carryforward of approximately $310,000
available for up to twenty (20) years for federal purposes. Pursuant to Internal Revenue Code Section 382 and the regulations thereunder, the amounts of utilizable carryover may be limited as a result of ownership changes or even eliminated if
business continuity requirements are not met. Net operating losses may be carried forward for fifteen consecutive tax years for the state of Ohio. There were no temporary differences allowing no deferred tax liabilities to arise.



Components of Income Tax Expenses are as follows:



|CURRENT                                  |  | December 31, 2002
|---------------------------------------- |  | -----------------
|Federal                                  |  | $                
|States                                   |  |                  
|                                         |  |                  
|NET PROVISION/(BENEFIT FOR INCOME TAXES) |  | $                
|                                         |  |                  



NOTE 6COMMITMENTS



The Companys leasing operations consist principally of the leasing of
office space under operating leases that expire in five years.



The following
is a schedule, by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2001.



|Year ending December 31 |  | Amount
|----------------------- |  | ------
|2003                    |  | 26,000
|2004                    |  | 26,000



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 6COMMITMENTS
(CONTINUED)



|Year ending December 31 |  | Amount
|----------------------- |  | ------
|2005                    |  |       
|                        |  |       
|Total                   |  | $     
|                        |  |       



Rental expense was approximately
$29,368 for the year ended December 31, 2002.



NOTE 7UNDERWRITING



January 1, 2001 the Company started to market, administrator and reinsure a
portion of its underwriting risk. Each years business is ceded to reinsurers under an annual quota share reinsurance agreement. At present there are two such treaties in effect. Below shows the breakdown of revenue and direct expenses under
each of these treaties to date:



|                           |  | Inception to date |         |        |  
|-------------------------- |  | ----------------- | ------- | ------ | -
|                           |  | 2002              |         | 2001   |  
|                           |  | Treaty            |         | Treaty |  
|Premiums                   |  | $                 | 514,676 |        | $
|Losses and expenses        |  |                   | 142,661 |        |  
|Ceded costs                |  |                   | 148,484 |        |  
|                           |  |                   |         |        |  
|Underwriting Profit/(Loss) |  | $                 | 223,531 |        | $
|                           |  |                   |         |        |  



NOTE 8RELATED PARTY
TRANSACTIONS



At December 31, 2002 the Company has an Accounts Receivable
on its books for $50,000 from its majority shareholder for the purchase of stock.



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##### Table of Contents

HARTVILLE GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



December 31, 2002



NOTE 9OPERATING
SEGMENTS



The Company organizes its business into three reportable
segments: the holding company (Hartville Group, Inc.), and the old holding company (Hartville Equestrian, Inc.), the insurance agency (Petsmarketing Insurance.com Agency, Inc.), and the reinsurance company (Hartville Insurance Company, LTD). The
supplemental schedules provide the breakdown of assets, liabilities and operations for each of these segments.



NOTE 10SUBSEQUENT EVENTS



On
February 19, 2003 Hartville Group, Inc. and Petsmarketing Insurance.com Agency, Inc. entered into a loan and security agreement with a finance company. The amount borrowed was $3,000,000 at 30% interest due February 19, 2004 with an option to extend
for an additional year as long as there are no defaults under the agreement. The business assets of the Companies secure the loan. The President of the Company and the Companys majority shareholder also guarantee the loan. Under a separate
agreement with the Companys majority shareholder; the shareholder will assume all costs in connection with this loan including the periodic interest charges.



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##### Table of Contents

|Pollard-Kelley Auditing Services, Inc. |  |  |  |                                   
|-------------------------------------- |  |  |  | ----------------------------------
|Certified Public Accountants           |  |  |  | 3250 West Market Street Suite 307,
|                                       |  |  |  | Fairlawn, OH 44333 (330) 864-2265 



Report of
Independent Certified Public Accountant

on Supplementary Information



Board of Directors

Hartville Group, Inc. and Subsidiaries

Canton, Ohio



My audit was made for the purpose
of forming an opinion on the basic financial statements taken as a whole of Hartville Group, Inc. and subsidiaries as of December 31, 2002, which are presented in the preceding section of this report. The supplementary information as of and for the
year ended December 31, 2002 presented hereafter is for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole.



|Pollard-Kelley Auditing Services, Inc.                                     
|---------------------------------------------------------------------------
|                                                                           
|/s/    Terance L. Kelley                                                   
|                                                                           
|Terance L. Kelley for Pollard-Kelley Auditing Services, Inc. Fairlawn, Ohio
|February 6, 2003                                                           



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheet

Details of Consolidation

December 31, 2002



|                                       |  | Total |           | Eliminations |   |          | HartvilleGroup, Inc. |  | HartvilleEquestrian, Inc. |       | PetsmarketingInsurance.comAgency, Inc. |   | HartvilleInsuranceCompany, LTD
|-------------------------------------- |  | ----- | --------- | ------------ | - | -------- | -------------------- |  | ------------------------- | ----- | -------------------------------------- | - | ------------------------------
|ASSETS                                 |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|Current Assets                         |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|Cash                                   |  | $     | 601,807   |              | $ |         |                      |  | $                         | 78    |                                        | $ |                              
|Commissions receivable                 |  |       | 105,658   |              |   |         |                      |  |                           |      |                                        |   | 105,658                       
|Other receivable                       |  |       | 168,773   |              |   | (155,000 | )                    |  |                           | 6,250 |                                        |   | 103,000                       
|Prepaid expense                        |  |       | 51,358    |              |   |         |                      |  |                           |      |                                        |   |                              
|                                       |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|                                       |  |       | 927,596   |              |   | (155,000 | )                    |  |                           | 6,328 |                                        |   | 103,000                       
|Fixed Assets                           |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|Property and equipmentnet             |  |       | 100,345   |              |   |         |                      |  |                           |      |                                        |   |                              
|Deferred policy acquisition costsnet |  |       | 452,563   |              |   |         |                      |  |                           |      |                                        |   |                              
|                                       |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|                                       |  |       | 552,908   |              |   |         |                      |  |                           |      |                                        |   |                              
|Other Assets                           |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|Licensing feesnet                     |  |       | 26,470    |              |   |         |                      |  |                           |      |                                        |   |                              
|Other non-current assets               |  |       | 285,801   |              |   |         |                      |  |                           |      |                                        |   | 665                           
|Investments                            |  |       | 156       |              |   |         |                      |  |                           | 156   |                                        |   |                              
|                                       |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|                                       |  |       | 312,427   |              |   |         |                      |  |                           | 156   |                                        |   | 665                           
|                                       |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               
|                                       |  | $     | 1,792,931 |              | $ | (155,000 | )                    |  | $                         | 6,484 |                                        | $ | 103,665                       
|                                       |  |       |           |              |   |          |                      |  |                           |       |                                        |   |                               



See accompanying notes
to financial statements



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheet

Details of Consolidation

September 30, 2002



|                                     |  | Total |           |   | Eliminations |   |          | HartvilleGroup, Inc. |  |   | HartvilleEquestrian, Inc. |   |  | PetsmarketingInsurance.comAgency, Inc. |         |   | HartvilleInsuranceCompany, LTD |  
|------------------------------------ |  | ----- | --------- | - | ------------ | - | -------- | -------------------- |  | - | ------------------------- | - |  | -------------------------------------- | ------- | - | ------------------------------ | -
|LIABILITIES AND STOCKHOLDERS EQUITY |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|Current Liabilities                  |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|Accounts payable                     |  |       | 78,422    |   |              | $ | (155,000 | )                    |  | $ | 25,058                    |   |  | $                                      | 155,565 |   |                                | $
|Accrued expenses                     |  |       | 61,529    |   |              |   |         |                      |  |   |                          |   |  |                                        |        |   |                                |  
|Premium deposits                     |  |       | 390,516   |   |              |   |         |                      |  |   |                          |   |  |                                        |        |   |                                |  
|Unearned commissions                 |  |       |          |   |              |   |         |                      |  |   |                          |   |  |                                        |        |   |                                |  
|Due to fronting carrier              |  |       | 46,630    |   |              |   |         |                      |  |   |                          |   |  |                                        |        |   |                                |  
|Current portion long-term debt       |  |       | 15,045    |   |              |   |         |                      |  |   |                          |   |  |                                        |        |   |                                |  
|                                     |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|                                     |  |       | 592,142   |   |              |   | (155,000 | )                    |  |   | 25,058                    |   |  |                                        | 155,565 |   |                                |  
|Long-Term Debt                       |  |       | 3,974     |   |              |   |         |                      |  |   |                          |   |  |                                        |        |   |                                |  
|                                     |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|Total Liabilities                    |  |       | 596,116   |   |              |   | (155,000 | )                    |  |   | 25,058                    |   |  |                                        | 155,565 |   |                                |  
|Stockholders Equity                 |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|Common stock                         |  |       | 3,027     |   |              |   | (1,100   | )                    |  |   | 3,027                     |   |  |                                        | 100     |   |                                |  
|Additional paid capital              |  |       | 1,652,293 |   |              |   | 1,100    |                      |  |   | 126,879                   |   |  |                                        |        |   |                                |  
|Deficit accumulated                  |  |       | (408,505  | ) |              |   |         |                      |  |   | (148,480                  | ) |  |                                        | (2,000  | ) |                                |  
|Stock purchase receivable            |  |       | (50,000   | ) |              |   |         |                      |  |   |                          |   |  |                                        | (50,000 | ) |                                |  
|                                     |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|                                     |  |       | 1,196,815 |   |              |   |         |                      |  |   | (18,574                   | ) |  |                                        | (51,900 | ) |                                |  
|                                     |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  
|                                     |  | $     | 1,792,931 |   |              | $ | (155,000 | )                    |  | $ | 6,484                     |   |  | $                                      | 103,665 |   |                                | $
|                                     |  |       |           |   |              |   |          |                      |  |   |                           |   |  |                                        |         |   |                                |  



See accompanying notes
to financial statements



Page 33



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##### Table of Contents

Hartville Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statement of Income

Details of Consolidation

For the Nine Months Ended September 30, 2002



|                            |  | Total |           |   | Eliminations |   | HartvilleGroup, Inc. |  |   | HartvilleEquestrian, Inc. |   |  | PetsmarketingInsurance.comAgency, Inc. |        | HartvilleInsuranceCompany, LTD | 
|--------------------------- |  | ----- | --------- | - | ------------ | - | -------------------- |  | - | ------------------------- | - |  | -------------------------------------- | ------ | ------------------------------ | 
|Commissions and fees income |  | $     | 865,723   |   |              | $ |                     |  | $ |                          |   |  | $                                      |       |                                | 
|Premiums                    |  |       | 930,303   |   |              |   |                     |  |   |                          |   |  |                                        |       |                                | 
|                            |  |       |           |   |              |   |                      |  |   |                           |   |  |                                        |        |                                | 
|                            |  |       | 1,796,026 |   |              |   |                     |  |   |                          |   |  |                                        |       |                                | 
|Losses and expenses         |  |       | 662,904   |   |              |   |                     |  |   |                          |   |  |                                        |       |                                | 
|Ceded costs                 |  |       | 283,562   |   |              |   |                     |  |   |                          |   |  |                                        |       |                                | 
|General and administrative  |  |       | 833,623   |   |              |   |                     |  |   |                          |   |  |                                        | 5,000  |                                | 
|                            |  |       |           |   |              |   |                      |  |   |                           |   |  |                                        |        |                                | 
|                            |  |       | 1,780,089 |   |              |   |                     |  |   |                          |   |  |                                        | 5,000  |                                | 
|Operating loss              |  |       | 15,937    |   |              |   |                     |  |   |                          |   |  |                                        | (5,000 | )                              | 
|Other income                |  |       | 45,062    |   |              |   |                     |  |   |                          |   |  |                                        | 3,000  |                                | 
|Other expenses              |  |       | (24,980   | ) |              |   |                     |  |   | (24,980                   | ) |  |                                        |       |                                | 
|                            |  |       |           |   |              |   |                      |  |   |                           |   |  |                                        |        |                                | 
|Loss before taxes           |  |       | 36,019    |   |              |   |                     |  |   | (24,980                   | ) |  |                                        | (2,000 | )                              | 
|Tax provisions              |  |       |          |   |              |   |                     |  |   |                          |   |  |                                        |       |                                | 
|                            |  |       |           |   |              |   |                      |  |   |                           |   |  |                                        |        |                                | 
|NET LOSS                    |  | $     | 36,019    |   |              | $ |                     |  | $ | (24,980                   | ) |  | $                                      | (2,000 | )                              | 
|                            |  |       |           |   |              |   |                      |  |   |                           |   |  |                                        |        |                                | 



See accompanying notes
to financial statements



Page 34