When YTB first started back in February of 2001 all the Founders had was a goal of being the largest seller of travel in the industry. They didn’t have their first RTA, they didn’t have a travel partner, they didn’t even have a booking engine, nor did they have their first travel sale. A bold statement from three guys who had no experience in the travel industry.

What YTB found was a company called REZConnect who came into the picture in 2002. Michael Brent, the President of REZconnect made an agreement to provide travel web site hosting for YourTravelBiz.com. By 2004 the partnership looked to be successful and the two companies merged and changed its name to YTB International, Inc.

All systems were a go and beginning in 2005 YTB started it enormous growth from 8000 RTA’s to 138,000 in 2007.

Once control was placed in the hands of YTB, a series of events happened that started the exit of both Michael and Derek Brent. On November 22, 2006, each of the members of the Brent Group resigned from their position as a member of the Board of Directors with the Company. Michael Brent also resigned from his position as President, and Derek Brent as Secretary of the Company. Along with the resignation both agreed to grant an irrevocable proxy to Lloyd Tomer (Coach) , Scott Tomer and Kim Sorensen with respect to all shares of the Company’s Common Stock or other capital stock of the Company now owned by the Brent Group.

The Founders of YTB were now in control.

Soon thereafter, Michael Brent started to sell his shares of stock. While this has been a bone that critics like to gnaw on with questions about why “executives” are selling, none of them ever considered that the direction of the company was no longer in Michael Brent’s control, and never would be. He built REZConnect and it was more than likely time to cash in on what he built. To this day, Michael Brent remains the largest single share holder in the company, yet has no voice in the day to day operations of YTB, or it’s direction.

For the last two and a half years, REZConnect has been sitting in New Jersey doing their own thing, and minding their own Vacation Central business without input or direction concerning YTB. They have however, remained the YTB payroll, and they have appeared on all press releases as a “wholly-owned subsidiary” of YTB International, Inc.

The last part of the REZConnect relationship, partnership if you will, with YTB was announced Tuesday in an 8K which stated an Employment Severance Agreement by and between REZConnect Technologies, Inc., formerly a wholly-owned subsidiary of YTB, and Michael and Derek Brent, former Chief Executive Officer and President of REZConnect.

I’ve seen a statement or two about this being another “fire sale” of sorts to generate revenue because YTB is in financial trouble. I’m not sure how returning a $275,000 certificate of deposit can be deemed a “sale”, but as we’ve seen so many times before, critics will grasp at any mud they think of that might stick.

Based on what I know about this relationship and have verified with other sources close to either YTB and the Brents, this is an end to a five year plan. REZConnect has not had an active role in the operation of the YTB booking engine for some time. Furthermore, YTB is looking to curb its expenses and there is solid speculation that the severance was initiated by our Board of Directors, 3 of which are brand new members, with an eye on YTB’s bottom line. We also can’t discount the possible role of Co-CEO Robert Van Patten who now oversees administrative, accounting and corporate governance issues for YTB.

It was time to make this break. Personally, (and this is only my opinion) this break was long overdue.

Don’t get me wrong, REZConnect served a very powerful role for YTB at a time when we didn’t have the foundation or the relationships that we do now. (That comes with proving yourself as a top travel seller.) Because YTB reinvested into itself (which showed up as losses in “income”) the company acquired assets such as land, technology, and office space to house the entire company. Today, YTB is standing very much on its own.

The issue I have are the morons who keep pointing to Michael Brent’s stock sales with questions about “What does he know that you don’t?” None of the idiots who ask that question have taken the time to read the notes found on every one of those forms. If they did, they would realize how dumb they sound to someone who takes the time to read the form in full to realize that the stock represents a monetary value only, and not a sign of anything to come. Of course we can’t discount the fact that some of these dolts do in fact know about the irrevocable proxy, but are betting that those who find their questions on forums and blogs won’t take the time to investigate on their own, which could result in more mud drying and sticking for them.

Even with their employment being terminated, the terms of the severance package are very favorable for the Brent’s, as it should be. Ownership of the stock remains with them, and their #2 Rep position with the company also remains. (Because of the Bill of Rights in place to protect all Reps.) What this does for YTB is eliminate administrative costs in regards to salary, insurance, health and medical benefits as well as participation in the Company’s profit-sharing, incentive bonus and pension plans.

There have been a number of positive changes in the last few months. A Co-CEO, new Board Members, industry awards, recognition as a top seller of travel, moving forward with our franchise model, and a settlement over some very ugly accusations. This is another positive change, if for nothing else than to put an end to those silly questions about what Michael Brent knows that we don’t.

All the best to the Brent Group, and REZConnect. And thank you for seeing what many would not or could not when YTB was young and unproven.

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Do You ZamZuu?

I started a huge task weeks ago when I promised John Frenaye that I would get his questions answered. ALL his questions. Over the next couple weeks due to the length of this list, I’m going to focus on each of these questions one at a time. My goal here is not only to answer the question, but also point out why this question is even asked in the first place.

This will also be an excellent opportunity and tool for anyone with additional comments about each of the specific questions to get better clarification. Use the comments section to discuss each of the questions in greater detail. I remind you that I learned how to accomplish such a huge task from Brian Tracy and his courses, which teach that you focus on the each task one at a time, focus on the solution, break it down into manageable chunks, and before you know it, you’ve achieved your goal.

It should be a really fun debate, and for those of you in YTB, take this information and documentation and use it. Here are the questions we have gone over thus far.

Question #1 – Why a compensation plan takes 12 pages to define?

Question #2 – How YTB arrived at $226 Million in travel sold for 2006. (Still waiting.)

Question #3 – Why so little of the “training” at the annual convention was for travel. (OK, YTB only believes in training at other meetings. We can let this one go.)

Question #4 - How nearly 150,000 RTAs can pay in the course of 9 months $79 million dollars in website sales, fees, and training; and receive $9.3 million in return. (This is huge…anyone?)

Question #5 - And for those that say I don’t get the math, I did not learn how nearly 150,000 people paid in $79 million dollars and only got $64 million in return. (Hello? Anyone? Bueller? Bueller?)

Question #6 - Why it is a good thing to have your top executives selling off stock. (There were no takers on this one, so I am gonna assume that it probably is NOT a good thing as everyone initially thought.)

This has got to be one of the biggest rumors going around the internet right now and I’m actually glad I’ve got a chance to set the record straight on this one. Before I begin, I need to help those that don’t understand how everyone knows that “executives” are selling off stock. Being a publically traded company, Officers, Directors, Majority Owners (more than 10%), are required to report both sales and purchases of stock. These reports are found on what’s known as “Form 4” and are public knowledge.

Of all the Form 4 documents filed with our company we find the following Executives who have sold stock.

Lloyd Tomer – Chairman of the Board (Two Sales)
Scott Tomer – CEO of YourTravelBiz.com (No Sales)
Kim Sorensen – President of YTB Travel Network (One Sale)
Andrew Cauthen – COO of YTB International, Inc. (Three Sales)
John Clagg – CFO of YTB International (One Sale)

An executive sold stock 7 times in the last 12 months. Exorbitant? Alarming? I don’t know, you tell me. Royal Caribbean had 6 Executives sell in the last 12 months, Carnival had 5 Executives sell in the last 12 months, Sabre had 14 Executives sell in the last 12 months, and Expedia had 9 Executives sell in the last 12 months. Seems to be pretty on par to me, how ‘bout you?

Unfortunately, our 5 Executives are not the focus of all the attention or who have been selling all the stock. The one who is getting all the attention is Michael Brent. Now I’m sure there are some even with YTB who are new and have no idea who this Michael Brent is. He’s not on the Board of Directors, and he’s not an Officer with YTB.

So just who is Michael Brent? Travel Weekly gave a brief explanation of the timeline of The Brent Group who owns Rezconnnect Technologies and gave YTB its first booking capabilities back in 2001. By 2004 YTB offered to buy Rezconnect in a reverse merger, and Michal Brent took over as President of YTB being a majority owner of the company. By late 2006 YTB was 10 times as large as Rezconnect and shareholders agreed to change the name to YTB International, Inc. and headquarters were moved from New Jersey to Illinois, and Michael Brent resigned his position as President of the company.

Here is what everyone needs to read very carefully. Pick any of these sales and you should read the “remarks” section of this form.

“The Reporting Person is a member of a Section 13(d) group and a party to a certain Stockholders’ Agreement, dated as of December 8, 2004, by and among certain stockholders of the Issuer that together own a significant percentage of the Issuer’s outstanding common stock. On November 22, 2006, the Reporting Person granted an irrevocable proxy with respect to all shares of the Issuer’s common stock now held or hereafter acquired by him to other parties to such Stockholders’ Agreement. However, because the Reporting Person continues to possess a pecuniary interest with respect to all shares that he holds, he has reported such holdings on this Form 4.”

In layman’s terms, what that means is that Michael Brent gave up his right to vote as a shareholder in the company. His stock only holds a monetary value as he has handed his voting rights over to Coach, Scott and Kim, who I know just scares the living daylights out of some of our Traditionalists.

Now that Coach, Scott and Kim are in control, I’d say we are in very good hands. We in YTB started to vote “yes” with our money by purchasing the stock, enabling the stock to start climbing in December 2006. I realize that most will point out that the stock is not doing so well a year later, which in large part is due to Michael Brent riding off into the sunset with his money. (Which is his right and choice.) YTB International, Inc. started to turn a profit by Q2 and Q3 of 2007, and we also enjoyed a 1-3 stock split for those of us smart enough to invest in Coach, Scott, and Kim.

To answer John’s question specifically, is it a “good thing” that Michael Brent is selling off his shares of stock? No.

Can Michael Brent be considered a Top Executive with the company without voting rights or control of the day to day operations of YTB International, Inc? Certainly not.

Is YTB International better off without Michael Brent at the helm considering that YTB is now showing profits less than a year after his resignation as President? I’d certainly say so. While Michael Brent is selling off all his shares, those of us in YTB are buying stock in the company while it’s on sale. YTB is profitable, the Market Cap ($101.4 Million) is starting to climb again, and YTB is growing both in numbers (140,000 Active RTA’s) and sales (an estimated $550 Million in Travel for 2007). Friday, YTB moves into Canada, our first major International market.

Now that the smoke and mirrors have been removed from the picture, I’d say YTBLA is a strong buy. />
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Doug & Ronda Bauknight
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