Hartville Group, Inc. (OTCBB:HTVL), a provider of health insurance plans for domestic pets, today announced three important steps aimed at enhancing shareholder value. These developments included strengthening the balance sheet through conversion of all convertible debt to equity; approval of a one-for-fifteen reverse stock split; and extension of executive employment agreements for three years.
As a result, all of the Company's debt ($12.7 million) was eliminated and the total number of shares outstanding will be reduced to 10,627,968 from 159,419,521 when the reverse split becomes effective. The executives that have extended their contracts are: Mr. Dennis Rushovich (CEO), Mr. Christopher Sachs (CFO) and Mr. Christopher Edgar (Chief Marketing Officer).
The actions announced today reflect the Company's commitment to align an improved financial profile with recent significant operating improvements. The Company continues to successfully execute both the marketing plan expansion and the operating improvements launched in the third quarter of 2006. In addition to the capital structure improvements announced today, other recent, significant developments include the continued dramatic growth in pet lives covered (as of June 30, 2007, the total number of pet lives covered increased nearly 100%, from 26,055 to 51,368, from the year ago period); the securing of $2 million in funding, in addition to $4 million raised earlier this year, from existing investors, primarily for marketing initiatives; and the engagement of Cameron Associates, a New York-based investor relations agency, to assist Hartville Group with broadening its financial market presence and establishing new relationships within the investment community.
Dennis C. Rushovich, Chief Executive Office of Hartville Group stated, "The balance sheet and capital structure improvements we announced today enhance investors' opportunity to participate in the recent dramatic progress in our business. By removing high levels of convertible debt and the high share count that has depressed our stock price, we are in a stronger position to broaden our shareholder base, increase our trading volume, and deliver better value to shareholders."
Mr. Rushovich continued, "Furthermore, the $2 million in added funding from our investors and the extension of management's commitment to and ownership in the company demonstrates our shared belief in the future of the company and the industry. Together we look forward to growing our market share in the under-penetrated and highly fragmented U.S. pet life insurance market, and to increasing the visibility and of the Hartville Group within the investment community and financial media."
Conversion of Convertible Debt
On October 1, 2007, two of Hartville Group's principal shareholders converted all of their $12.7 million of Convertible Debentures in exchange for 101,265,826 shares of the Company common stock; this included the conversion of the Convertible Debentures issued in September 2007 in the last financing. With this conversion, all of the Company's debt was eliminated.
Reverse Stock Split
The Board of Directors has approved a one for fifteen reverse split of its common stock. On October 1, 2007, the reverse split was approved by written consent of the stockholders who collectively hold more than a majority of the voting power of Hartville Group's capital stock. The Company has filed a preliminary Information Statement on Schedule 14C with the Securities and Exchange Commission. When the reverse stock split is effective, every fifteen shares of common stock of Hartville Group will be combined into one share of common stock. The effect of the reverse stock split will be to reduce the total number of shares of the Company's common stock from 159,419,521 to approximately 10,627,968 presently issued and outstanding. The reverse stock split is expected to become effective in November 2007.
Executive Employment Agreements
On September 11, 2007, three senior members of Hartville Group's executive team: Mr. Dennis Rushovich, Chief Executive Officer; Mr. Christopher Sachs, Chief Financial Officer, and Mr. Christopher Edgar, Chief Marketing Officer, agreed to enter into a three-year extensions of their respective employments.
About Hartville Corporation
Hartville Group, Inc. ("Hartville Group") is a holding company whose wholly owned subsidiaries include Hartville Re Ltd. ("Hartville") and Petsmarketing Insurance.com Agency, Inc. ("the 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 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 accepts applications, underwrites and issues policies. For more information on Hartville Group and its insurance offerings, please visit http://www.hartvillegroup.com/ or http://www.petsmarketing.com/.
Forward-Looking Statement
Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in the Company's Form 10-KSB, Form 8-K and Form 10-QSB reports. The Company undertakes no obligation to update or revise any forward-looking statement.
