If you’re not part of our newsletter, you need to stick close this week. I know it’s been kind of slow – but things are starting to heat up a bit up in the Home Office and you need to be aware of the upgrades, advancements, and promotions that are going on – particularly this week. Those that plug in will be able to take advantage of the opportunities that present themselves. (Take a look at Friday’s post and the new Group Cruise Page to get a taste of what I’m talking about.)

Also released late Friday was YTB’s 10Q for the 3rd Quarter. What most investors want to see is how a company responds to it’s current conditions. I’m happy to report that YTB has responded with a small but important profit for the 3rd Quarter and an increase in net income by 26%. I want to advise you that what we saw from Friday’s upgrade and the Group Cruise page, and the the announcements coming up later this week are a direct result of available cash on hand that YTB invested back into the company in previous quarters. While critics were predicting bankruptcy, the Founders and Executives of YTB have been laying the foundation of what we will be seeing in the weeks and months to come.

What most people don’t realize (or refuse to acknowledge) is that YTB operates off of working capital. With the one exception of the Home Office building, YTB is completely debt free. What I’m also seeing more and more of in the Quarterly reports is more self reliance – meaning that what the company use to sub-contract out for is now being brought in house. This self reliance in turn controls expenses.

As a result the pieces are starting to come together. The years of making hard choices and investing millions back into the company is paying off. YTB posted a 3rd Quarter profit of $362K which is coming out of a very turbulent point in it’s history and very difficult economic times.

If you recall the previous quarter, YTB reported a $1.2 Million profit before they bit off $2.6 million in contract termination costs for the disposal of REZconnect, which resulted in one time loss for “discontinued operations”. Also gone is $1 million in legal expenses for California’s attempt to shut the company down with claims of being a gigantic pyramid scheme. $250K still remain of the $1 million settlement made in May which squashed the Attorney General’s attempt to end YTB’s existence.

While some have speculated that items such as these were insurmountable, the company continues to show that it’s able to answer the speculation in the black.

I can’t knock those that have left. It appeared that everyone and their mother was telling us that YTB’s days were numbered. It’s human nature to buy into the doom and gloom – especially when you’re bombarded with bias media and overly obsessed and obnoxious critics. Even “experts” like our auditors, didn’t have confidence that YTB could pull this out.

Yet, here we are three quarters through 2009. Yes there’s been a decrease in Travel and Travel Stores out there due to the harsh external conditions over the last two years. What has also decreased general and administrative expenses of $9.5 million to answer that and keep the the company solvent. That’s called corporate responsibility and when you show profits of any kind, it provides a very resounding answer to all the negative speculation.

If there’s one thing I’ve learned after all this time it’s this. You can’t talk your way in or out of anything – you have to do it. Talk is cheap, and while walking the walk may take longer to show results, it produces a much better result.

What we saw on Friday and will continue to see throughout this week are some very solid tools and answers on what the company intends to do to keep the company solvent and viable. YTB didn’t react – it responded. (And there’s a huge difference in that.) There have been some very significant and important changes at the top of the company that puts key people in roles in which they excel. Scott and Coach are recruiters – and are now out in the field doing more with the field. Bob Van Patten has taken over the day to day operations, and manages the income and expenses. (He also appears to be in complete control of that aspect based on YTB’s bottom line.)

Like last weeks Group Cruise page – now comes the value these changes produce for those of us in the field. We’ve seen plenty of it with RPM Trainings, the Sail-a-Thons, shopYTB, and site upgrades like YTB Golf.

Like I told you at the top of this post – stick close this week – there is more to come!

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Do You ZamZuu?

YTB’s Quarterly financial report came out on Friday. During this years Convention, Scott Tomer announced a Q2 profit on earnings before income taxes. He was correct, as YTB did post a $1.2 million net income from continuing operations. What he may or may not have known until after the Convention however was a $2.6 million in contract termination costs for the disposal of REZconnect, which resulted in a “discontinued operations” line item resulting in a loss of $2.8 million total dropping the $1.2 million profit into a $1.5 million loss overall for the quarter. The current portion of the $2.6 million liability balance is $608,000 and is required to be shown in our SEC filing based on future commitments.

REZconnect has been somewhat of a sore spot in years past. Micheal Brent had been selling off shares like it was candy. Rumors surrounding the subsidiary also pointed to a net loss in revenue for the entire company for years. This was the first time the subsidiary had been broken out to show it’s contribution. REZconnect operations reported net revenues of $869,000 and a loss from operations of $463,000. The Board of Directors made a strategic decision about the REZconnect business model, which they stated was serving primarily brick and mortar travel agencies, and felt it was not compatible with YTB’s current and future plans.

“As a result, the Company expects to realize cash savings of $2.4 million over the next 5.5 years based upon the cash payments to be made under the employment severance agreement versus the cash payments that would have been required under the original employment contracts.  Thus, while the Company has recognized significant expenses in the current period, the cash savings in the coming 5.5 years will serve to contribute a significant savings in terms of liquidity, helping to strengthen the Company’s position.”

In this current economic climate companies need to cut dead wood. While I have not seen, nor do I really care to see what others will be saying about YTB’s financial condition, I’m willing to bet you that they’ll be pointing to the huge loss in revenue over the last year do to the pyramid crumbling. While they will most certainly be pointing YTB’s “business model” as the cause of the loss in revenue, you should take a look at other company revenues to compare what they’re doing in this current economic climate. Royal Caribbean’s revenue (and profit margins) have declined significantly, resulting from large profits plummeting to significant losses over the last four quarters.

People are not spending in this current economic climate. Period.

It should be noted that the hemorrhaging of our RTA’s has slowed significantly in part due to the California settlement. While there was an enormous amount of speculation over California winning it’s argument of a gigantic pyramid scheme and successfully shutting the company down, the truth (as always) finally came to light. In addition, the “ungainly monster of 39 pages and 133 paragraphs” that was submitted as a class action law suit was also thrown out by the courts. Current RTA’s are just now starting to realize what I’ve known all along.

If you’d like to read my analysis of what our critics actually know about MLM and YTB in general, I invite you to read my e-book entitled “What the Critics Know About YTB“.

To further illustrate my point, I did take note of a couple of things in the notes section that critics were speculating (as they always do) about YTB’s financial condition and what the company would and would not be able to do.

Once Scott mentioned “profits from continued operations” our second payment for the California settlement was brought up. Some wondered if we happened to skip that payment in order to show profits. It should be pointed out that it was in fact paid and half of the settlement money is behind the company. Payment of $250,000 was paid as scheduled before the June 30 quarter ending.

In March, YTB’s credit card processor increased it’s reserve requirements, resulting in a $2.7 million balance to be held in reserve. While it was speculated that YTB would not be able to acquire the funds necessary to obtain the balance, that request was also achieved during this quarter. This too is now behind the company.

One of the funniest twists found in the financial statement that I doubt you will find anywhere but here is the saga of the proposed Conference Center that was envisioned by YTB to be built on land the company currently owns. Back in November, YTB sold a 9.9 acre out parcel of the 59 acres it owns to an undisclosed buyer. In late July, we found out through the media and the blogs that the buyer plans to build a Holiday Inn Express and a Country Kitchen gas station on the land that has been purchased. When news came out that the Wood River City Council voted to approve a funding agreement with Aventurs Development LLC. nobody bothered to check if the land in question had in fact been paid for.

“In addition to other consideration, the Company received a $500,000 promissory note dated November 24, 2008 as proceeds for the sale of land situated in Madison County, Illinois, which was non-interest bearing so long as there was no event of default thereunder.  Principal and other amounts under the note, collateralized by the related land sold, was due and payable on March 24, 2009.  On April 22, 2009, the Company sent a notice of default under the promissory note and mortgage to the purchaser because the purchaser failed to satisfy all obligations under the note within 120 days.  The notice required the purchaser to cure such non-payment within five business days of receipt of the notice, as required by the mortgage.  On May 6, 2009, the Company filed a complaint for foreclosure in Madison County, Illinois Circuit Court under the terms of the promissory note and mortgage because the purchaser failed to cure the non-payment within the required five business days.  On June 2, 2009, a notice of foreclosure was recorded against the land.”

Of course, like everything else that backfires on our critics for drawing conclusions based on what he reads and hears on the internet without checking actual facts, mums going to be the word on this. Instead, they’ll continue to focus on yours truly and the gross error I made when I didn’t check my source. As I’ve learned over the weekend, thanks to many comments, e-mails, and phone calls, it’s much better to surrender defeat in cases such as this in order to move on and get back on track.

Lastly, it should be noted that the company has made significant advances in curbing it’s spending and keeping an eye on the bottom line. Those of us who were at this years Convention saw evidence of that. With the current details listed in the notes section of the quarterly report just filed, we see more documentation of YTB doing what it needs to do in order to survive. Many of the hard choices made in prior months have proven to be significant, and while time will tell if the elimination of REZconnect will help YTB’s bottom line, the future looks to be significantly better than a single number found at the bottom our financial report.

A major key in YTB’s survival and prominence in the industry is educating those who may be looking for opportunities as the country starts to come out of the current economic condition. With YTB’s new tools and upgrades just announced at Convention, it may prove to be significant in showing the company’s strength instead of weakness.

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Do You ZamZuu?

We’ve been getting a bunch of financial data over the last few weeks. When you look at the first quarter results you find alarming losses from many companies. Just in the travel industry alone, you find a loss of $9 million in Q1 for Dollar Thrifty, Wynn Resorts reports a Q1 loss of $33.8 million, Marriott loses $23 million in Q1, Royal Caribbean loses $36 million in Q1, Delta loses $794 million in Q1 along with United losing $382 million, and Orbitz realizes a $336 million loss.

Revenue has also dropped significantly in the industry. Hawaii’s Q1 hotel occupancy sinks to 69%, Starwood’s Q1 profit plummets 81%, and Disney’s Q1 operating income down 24% for parks and resorts. Let’s not forget about Mexico and what it’s gone through the last few weeks. Anyone want to take a stab at what the swine flu has done to the economy there thus far?

And what do you imagine critics will be talking about? YTB of course!

YTB’s Q1 Financials (YTBLA.OB) were posted last evening with a sharp decline in revenue, along with a $1.9 million loss. Not great by any means. When you look at the majority of companies in our market posting huge losses, it doesn’t come as a big surprise. Couple that with Q1 losses each of the last 3 years and you’re looking at a quarter that is certainly difficult for YTB in regards to it’s bottom line.

With revenue down considerably due to a number of factors, the filing focuses on the economy for this reason. It doesn’t accurately credit the less than favorable suits that have been levied against the company. While the California AG nor any of YTB’s critics will look at the legal letter of the law concerning pyramid schemes, the tentative settlement being finalized at this time will shed plenty of light on that subject. (More on that a little later in this article, and considerably more when the settlement is made public.) Combine that with very heavy recruiting and pillaging of our sales force from other companies feeding on the fears of the litigation the company is defending, and former members of our company who have changed companies. As a result, YTB’s active members have been cut just short of half of what it was a year ago.

Yeah…yeah…”What do they know that I don’t”.

If you want to look at the numbers and let that be the be all and end all for you, you are welcome to it. It makes little difference to me these days what a few obsessed zealots want to pitch to the public right now. While they choose to ignore how far out of bounds they are, the truth will surface in due time. The rumors, lies, and myths about this pyramid idea will be brought to light for everyone else to see. Talk is cheap, and I like to look at how the company is walking in response the the challenges it’s facing.

What many of you are here for are the facts and findings that you won’t find anywhere else. The statements in the filing that everyone wants to hide because if found, could change the momentum of the mud slide the company is currently experiencing. These are very difficult times for any company in business right now. Only those who respond correctly to the current financial climate are going to make it through these difficult economic times. We’ve already seen a number of agencies such as Joystar and Cruise Value Center bite the dust. Suppliers like Happy Vacations have closed their doors as well.

Clearly, the problem here is a flawed business model right?

I think not.

YTB is a vastly different company than it was a year ago. If it refused to respond to the challenges brought up against them (as some would have you believe) we might be looking at a deficit twice as large instead cutting our quarterly loss in half over what it was a year ago. ($3.5 million Q1 2008) Combine the deficit with considerably less revenue and the company has cut it’s spending considerably in a number of areas. The company clearly gets the fact that it can’t spend the way it has in the past. A huge expense that has been a part of Q1 for years was Coach’s Birthday Bash. Typically this Leadership Event is announced during the National Convention each year, costing the company millions for these trips. For the 18,000 plus who made it to Convention in 2008, the absence of any January trip hosted by the company was certainly missed. Red Carpet Days at the companies expense have slowed to once per month. We have also not seen any news about a grand presentation like we did last year at this time for Convention.

Because YTB is watching it’s spending, cash reserves have tripled over the last 3 quarters from $600K ending Q3 to $1.8 million Q1. Part of this was pinned to the sale of the Corporate Jet and some land that was sold. We’ve come to find that the the 9.9 acres that was sold is now being foreclosed on due to payment not being received by the buyer. Since the land (an out parcel of the 56 total acres YTB currently owns) never produced any revenue for the company, the additional funds realized between December 31 and March 31 came from controlling expenses not selling of assets.

In another myth gone south, how does a company spend $8 million on a foam statue when the financial data provided documents less than half that paid to Beryl Martin for all of 2008? Remember they did most of the printing for YTB as well. I guess we need to put the word ‘estimated’ back into the news report that made the quote over a year ago.

Critics like to call the company “Coach and Scotties personal piggy bank”. Based on what “Coach and Scottie” have done in recent months, I wonder why that myth persists. A number of measures have been put in place to look at cost structure to improve the overall profitability of the Company. Bob Van Patten was brought in early April to do just that. Bob’s job is to cut spending, while Coach and Scott’s job is to produce revenue. YTB also put in place an Audit Committee as a measure of checks and balances for any expense in excess of $50K to require Board approval. Critics will probably point out that the Board is considerably smaller with the departure of both Clay Winfield and Tim Kaiser, but will likely ignore Bob Van Pattens role in leveling the playing field when it comes to any piggy bank that Coach and Scott may be dipping into.

We’ve also gained little better picture of the pending litigation that has been brought against the company.

On August 4, 2008, a day before YTB’s National Convention, a civil action was filed against against YTB and it’s Executives by the California Attorney General. Among the 17 complaints it claims that YTB is a gigantic pyramid scheme. The complaint was filed after 18 months of dialogue, initiated by the Company with the Attorney General to discuss the implementation of a new California travel laws that went into effect in January of 2007. (Anybody remember why YTB now has minimum booking requirements to apply for CLIA?) The penalties consist of at least $15.0 million, and restitution of at least $10.0 million totaling $25 million dollars. The largest claim filed in California history. On April 6, 2009, the Company reached a tentative settlement agreement with the State of California and papers stating this were filed by James Toma with the courts on April 8th in Los Angeles. The tentative settlement agreement is currently awaiting execution by both parties in addition to final court approval.

There have been rumors that a deal is final, but we will await final word from either YTB, the California AG, or both before any further word is mentioned here.

I’m simply glad that someone was finally able to educate the California AG that no one pays a single dime to YTB for the opportunity to recruit others into the business. Nor does anyone earn a single dime without a product being attached to it. (AKA: a booking engine.) I know all about the myths and the perceptions surrounding YTB and pyramid schemes. Here, we deal in facts. I’ve been with YTB for 4 years, and it’s never cost me a red cent for the opportunity to recruit others. Hard for anyone to lose money when no money is required. Thus we have a tentative settlement instead of dragging this into the courts in September to find out what I already know to be true.

In addition, on February 9, 2009, the Company filed motions to dismiss the consolidated complaint (formerly two that were filed) and these motions are now pending before the Court. The motions to dismiss were fully briefed and the Court has set a hearing for June 1, 2009.  YTB believes the Company has meritorious defenses and intends to vigorously defend these cases. With the settlement pending in California, and from what I know to be true about pyramid laws and the proper structure of YTB, I like the odds of this being dismissed.

That’s not to say that it will be dismissed…I just like the odds.

I realize it’s difficult to read the crap out there on the internet with all the doom and gloom. The predictions of YTB filing for bankruptcy, or even better, Coach, Scott and Kim preparing to fly off with all your hard earned money. I’ve been reading it for years, and still holding my breath for that shoe to drop. Because none of it has ever come to fruition I take it with a grain of salt and chalk it up to wishful thinking.

Once the California situation is behind us, and YTB pays the fine due the state, the legal costs due them for filing the complaint, and what ever restitution they come up with for the “victims” they claim their trying to protect, we can get back to building our business. At this point it’s clear that the California Attorney Generals plan of shutting YTB down completely isn’t going to happen. If you never figured it out on your own, or if nobody told you, California never had that type of authority to begin with. (Small detail or fact that critics never considered.) While Illinois is still a little more uncertain in which way that will go, we will have some finalization to that ordeal in less than a month.

For those that have hung around to see what will actually come of this fiasco, we are about to find out.

Challenges like we’ve seen can either make or break a company. YTB’s been skating along for a number of years without facing much adversity. If you actually look at what it’s been able to do, instead of ignoring it, it looks to me like YTB is planning on sticking around for some time to come.

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Do You ZamZuu?

This has been one of the wackiest weeks I’ve seen in some time. I have been rather quiet about spending time with family this week during Spring Break, and have no idea why all this news needs to hit during my vacation.

Late Monday afternoon, I along with hundreds of Directors and Coach’s Corner Members received word that a “tentative settlement” had been reached concerning the California Litigation. News spread very quickly over the internet and the boards that a settlement was pending and the litigation would soon be over.

Critics of this news have been extremely busy trying to distract everyone with rumors of Directors leaving, (2 confirmed) and just this morning I found out that the SEC will most likely get a number of complaints that someone named “Travel Pro” was busy buying up shares of YTBLA.OB based on insider information. (I knew there was something I should have been doing instead of writing!)

The big stink currently is that the Attorney Generals office laid claim there is was no settlement, and would never allow YTB to continue in what it claims is a “gigantic pyramid scheme”.

While critics are holding out hope that YTB will now be punished by leaking news about the “tentative settlement” they had no idea that papers were filed in Superior Court on April 8th at 8:30AM, that California and YTB International have reached a tentative agreement to settle pending litigation by none other than James M. Toma, Deputy Attorney General. The Attorney General’s office asked the court to postpone the trial date to allow more time for the parties to work out final details of an agreement. The state has scheduled a number of depositions for April which would be costly to the state and would prove unnecessary if a final agreement is made.

My hat’s off to Nadine Goodwin of Travel Weekly who decided to go to the source to get credible information via the courts, the AG’s office and YTB Attorney’s instead of just regurgitating what she has read by those who do nothing more that write in order to get attention and spew slanted and unconfirmed stories.

As much as I’d love to slam Jerry Brown right now, I’ll bite my tongue. (As much as possible anyway.) How anyone could say one thing and his office do another really burns me. To now find out that a tentative settlement statement has actually been filed with the courts, by the AG’s office no less, is a point of concern that I’ll save for a later date.

Regardless, the papers have been filed with the courts via Mr. James Toma, and the tentative settlement is still in the works. (Although a little longer than originally anticipated.)

A very important lesson for our everyone involved right now. (Including me by the way.)

Don’t count your chickens until they’ve been hatched.

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Do You ZamZuu?

A few weeks ago Brittany had her annual doctor check-up. During the exam, I was reading an analysis of what to expect from your typical 7 year old. I remember a specific quote in this document that stated that Brittany would show an increased desire for acceptance from both her peers and her parents. The only reason why that stood out for me was because I had already noticed this behavior and felt comforted that this was deemed to be “normal”.

I’ve come to the realization that some people don’t grow out of this need of acceptance or desire to qualify themselves as “normal”. Last Saturday I posted about our Quarterly Report that arrived with a $288K profit, much to the chagrin of our critics.

In that post I commented how the excuses would start to emerge and our critics would look at this Quarterly Report in a much darker light. I’ve spent the last week debating back and forth with a few of the better known critics, and one mystery woman, who desperately needed for me to see things their way.

I’m an optimist, and I typically find ways to look for the positive in anything I look at. I’ll give everyone and everything I come across a chance to show their good side of things. (Even our critics if you recall.) Some are not as not as open minded and frankly unwilling to see other points of view. So yesterday, the head critic decides to post a blurb about how others outside the industry agree with his position. As if to say, “See, all these experts agree with me.”

I’m not going to belabor the fact that people are certainly entitled to view our financials however they choose. I’ve left it up to individuals to look at our company and collect a simple ‘yes’ or ‘no’ for years. But I do have to wonder why it’s so important for some individuals to proven right all the time like this.

I also have to wonder why this use of headlines from non financial analysts means a bloomin’ thing.

It’s not that some of these articles weren’t written by some very intelligent people, one might have actually been a lawyer. But this supposed lawyer didn’t even know that there needs to be brackets at that bottom of a financial statement to show (losses). No joke, the headline read “Online travel company targeted by AGs posts 3Q loss”.

I also noticed that the first article out in the press provided the following statement:

“The filings said Friday that it plans to raise cash by selling an office building in Edwardsville, Ill., as well as its Learjet aircraft.”

The Q3 didn’t mention the sale of the One Country Club Drive location. To be fair they were possibly referring to the 8-K filed earlier in the week, and the filing did state that a decision was made to sell the LearJet, and that they were “evaluating” the sale of certain non-core assets and raising new capital for future operations. I would assume that everyone knows in this day and age that when an asset is sold, cash in hand is a nice benefit of the transaction. Somehow, the transaction for cash for an asset like a building or jet is determined to be abnormal for the likes of YTB. I found it very odd concerning what the “filing said” being regurgitated word for word in every single news article out there. It leads me to believe that very few authors who posted their findings actually read the financial report, but instead read what others said and assumed what someone else found to be correct. (Another example of that below.)

I realize that critics want to make this out to be a “fire sale” to raise much needed cash. I suspect that our new Independent Directors have suggested that it’s time to tighten belts as other companies have. (Well, responsible companies have anyway.) With YTB moving everyone under one roof at the 1901 Wood River location, a 130,000 sq foot, state of the art, facility that has 59 acres to expand on, why keep the One Country Club location to boot?

Because the commercial market is currently as soft as it is, it was thought that the Edwardsville property would be on the market up to two years. In just a few months a contract had been received on the Edwardsville building One, with a closing set for December. With plans to relocate the staff to Wood River under one roof in January 2009 YTB accepted the offer. I honestly don’t know how anyone would turn down any offer on commercial real estate, especially right now, but apparently along with all the other hats and feathers of expertise, we can now add “Real Estate Agents” to the many, MANY, credentials of our critics who obviously know better than anyone else.

I’m also wondering why some are upset about decision to sell the LearJet? It was an overly flamboyant decision to begin with according to critics, and now that the company is leaning towards fiscal responsibility, a non core asset, the decision is again ridiculed. A couple of possibilities come to mind over just why some critics would be this bent out of shape.

One, this LearJet was Coach, Scott, and Kim’s ticket to paradise when they made off with all the millions they made off RTA’s backs, leaving all of us high and dry. Unfortunately for critics, it now looks like the YTB founders will either be flying commercial for a quick exit, or there is the slight possibly that a choice was made to stick around.

Two, I find such poetic irony, especially this week, that there was such animosity over the big three Auto Execs beat our Founders to the punch as they flew into town in luxury Jets looking for a multibillion-dollar bailout. Possibly the speculation was that it would have been YTB who would be first to pull a stunt like this, but now that the Auto Execs have taken away their thunder, there is no way to pin this type of blunder for the likes of YTB.

I’m happy for John and the others that they have found these well respected financial analysts that agree with them so they can feel normal. It’s obviously important to them, and their desire to ride with the status quo has been not only noted but accepted by this YTB’er.

Me, I’ll call it what I choose, and that’s financial responsibility to ensure the viability of the company I’ve grown to know and love. No more, no less.

I’d like to close with this comical find. I was back for a short visit yesterday morning to comment on John’s blog. I was reminded when I returned last evening how far the threads there can be derailed and while amused at not only the direction of the comments, I honestly stopped to ask why people actually spend time posting there.

It’s not unusual for threads there to wonder off in totally different directions and tangents. There was yet another “outing” of an RTA to show how stupid YTB’ers are, which escalated to a couple of RTA’s who are planning a group trip to the Inauguration of Barak Obama in Washington, DC on January 20th.

Honestly, travel happens to be this small groups first love and obvious level of expertise. This group of Professionals began to discuss how much better they would have been able to organize and schedule a trip like this.

Both questions and details of the trip were discussed among the group and many pointed to the scheduling, location, and supplier. Obviously finding all sorts of problems with how the group was formed, and the potential pitfalls of a group like this at that time of year. Links of the promotion were provided to both a WHAM forum and from there Regina Osei’s post highlighting the details of the trip they were attempting to discredit and derail.

Not all that odd or uncommon for our Traditionalists to offer their knowledge or expertise on how much better they can plan trips for clients. Just take a closer look and compare the comments with the actual promotion found in Regina Osei’s post. John in his usual excitement over finding a possible trip for his vultures to rip apart he incorrectly told the group that the trip to the Inauguration departed from Frostburg, Maryland.

Typical of the group, and much like authors of all those articles John eluded to earlier, the group blindly followed John’s statement of departure from Frostburg. They spent an exorbitant amount of time discussing this and began pull up MapQuest directions of the 150 mile, 3 hour trip, and also discussed just who the trip was scheduled with. One did in fact ask if American Destinations was involved, but nobody bothered to check, and nary a soul figured out that the trip left from Fredrick, Maryland (not Frostburg) through American Destinations who schedules HUNDREDS of tours throughout the Washington DC area on a yearly basis.

I was laughing so hard, I couldn’t bring myself to ruining their fun. So I just let it be and we’ll just let it be our little secret.

How odd that these are the same people who are telling everyone that WE don’t know a thing about travel and that WE are the embarrassment to the travel industry.

Go figure.

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Do You ZamZuu?

I’ve enjoyed the last couple of days watching the critics swarm around the virtual water coolers on the internet just licking their chops for the third quarter numbers to come out. I checked one of my favorite places and laughed at how anxious they were. It reminded me of a bunch of addicts waiting for some dealer to show up so they could get their fix. It’s been more than 19 years since my last drink or drug, but I still remember waiting with anxious anticipation for THAT car being the guy with my next score.

Imagine their surprise when the dealer ends up being an undercover Cop to bust them.

On what charge you say? Being F.O.S. (Think about it.)

The speculation of course was that YTB has been bleeding money, and Management doesn’t know how to manage the money they have. When news broke earlier in the week over the pending sale of the old Home Office building it was because YTB was in a cash crunch. It had nothing to do with the fact we have a gorgeous new 130,000 square-foot complex to move into. No, we needed the money because our critics were absolutely sure that there would be yet another huge loss for YTB.

Why? Because recruiting is down, and the focus of course (actually “phobia” is a much better choice of words) has always been about the recruiting. Their theory is that if you can cut the recruiting off at the knees you cut the life blood of the pariah that consumes and controls your life.

How I would have loved to see the looks on the faces when critics opened the YTB 10-Q and saw a profit for Q3 of $287,999.

Surprise!

So what went wrong? How could the critics have been so far off base? (Again)

Simple. They don’t have the first clue how a Network Marketing business actually operates and stays solvent. (I’ll even go as far as stating ANY business for that matter.) This quarterly provides proof that it’s not about “recruiting” and the Kool-aid they’ve been drinking is spiked with nothing but rumors, lies and myths.

None of these characters have any actually experience in Network Marketing, and the knowledge they acquire to form their beliefs and opinions isn’t even “book learning” for the most part. Many of the beliefs are formed from the very massage boards and blogs they participate in. The blind leading the blind so to speak, so it’s not at all surprising that everyone ended up looking like dolts.

I don’t know, nor do I care if they’ll ever grasp that the money made in selling travel agencies goes directly out to the field. Every penny of the $449.95 from the sale of a travel agency is tied to the representatives who sold it. If you like that idea, you can join the ranks of YourTravelBiz.com for free by the way. And “free” negates the California complaint according to the letter of the law. But that’s yet another surprise we have for our critics.

The number critics were looking for certainly showed up with a mere 114,614 active RTA’s at the end of the quarter, a decrease of 13% from the previous quarter. Sales of travel agencies were cut more than half, down from 38k in Q3 of 2007 to 15k the current quarter.

So how in the world could YTB show anything other than massive bleeding and negative numbers?

Here’s a quick breakdown of the numbers.

• Online travel store sales increased $1,205,560 or 10.8%
• Monthly renewal fees increased $576,579 or 3.3%
• Travel commissions and services increased $2,478,103 or 44.8%
• Training programs and marketing materials revenue decreased ($1,843,333) or 40.8%
• Other income increased in the third quarter by $590,203 or 52.7%

Net revenues totaled $42,876,354 and $39,869,242 in the third quarter of 2008 and 2007, respectively, a slight increase of 7.5%.

Expenses also increased considerably year over year with the following breakdown.

• Depreciation and amortization increased of 123.0% or $374,274.
• Marketing and selling expenses increased by $825,865 or 152.0%
• General and administrative expenses increased 50.7% or $6,242,058.

So let’s me see if we have this right? We had a decrease in RTA’s, increased expenditures, but increased revenue for a quarterly profit of $288K?

Yep. The numbers don’t lie, that’s exactly what happened and our critics are busy scratching their heads wondering what happened.

What’s so much fun to watch is that after Q2 reports came out, and predictions of up to $6 million in losses bit them in the gluteus maximus, we were told to wait until Q3. Excuses started to emerge just like they are now. The spin and claims now are that none of the additional slander and junk they’ve been spinning has had time to take full effect. The California suit had just been announced, and ambulance chasers decided to get into the action as well to spread fear about the end of YTB mid quarter. Now that those allegations have come up lame these very same people who simply ignored the egg on their face last quarter are looking once again into the unknown. Believe it or not, we’re all supposed to wait until the Annual Report for them to show us they’re right and we’re wrong. How fun it is watching them weasel their way out of yet another speculative blunder.

For the record, I don’t know why they do it. It’s almost as if they like looking like clowns. I think a more accurate description would be that their entire existence revolves around proving their superior knowledge and understanding about any subject of conversation. It could be taxes, travel, ethics, stocks, laws, compliance, you name it. If it’s being discussed around the virtual water coolers on the internet, they always appear to be the guy or gal who’s “in the know”.

And a simple word of caution when it comes to correcting any of them. Don’t. You’ll be called every name in the book, as they attempt to shame you into submission among the other participants. Looking at this intelligently or rationally will have you scorned until you either give up or conform to their way of thinking. My best advice is to just smile and nod in a positive manor and when you turn your back you can then roll your eyes, or smirk and chuckle to yourself how insecure and desperate they are.

So we’ll just have to wait, AGAIN, for the promise of our critics showing us that this model just doesn’t work. It’s flawed because all the money is made recruiting people. When the recruiting dries up like it has, we’re promised that the house of cards we’ve built will come crashing down.

Do you really want to worry about such nonsense and spin? Or would you rather look at the fact that YTB turned a profit under the combined adversity of mud slinging and economic conditions?

The choice is yours.

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Do You ZamZuu?

While I was reading this week, I caught a couple of threads with the infamous “predictions” of what our Quarterly Reports would look like. One fruit cake actually speculated a $6 million loss…for the quarter. It’s one of the reasons I don’t like to put things like this out there, you look like a real ass when reports like ours come out.

Of course we’ve learned that “critics” like this spend all their time promoting negative information and spin, and while the “spin machine” hasn’t gotten into full swing concerning the numbers, I’m quite confident that it will be more doom and gloom. Truth of the matter is; it appears that YTB has curbed some of the spending it could in order to reduce losses from the proposed $6 million, to less the $200 thousand.

There are of course expenses that YTB could not control based on the foundation it put into place back in 2007, such as 135,000 square foot home office renovation that should be complete in 2009. It’s odd how critics who know so much about us Network Marketers like to talk about the Corporate Jet purchased that Coach, Scott, and Kim will escape in when the imaginary house of card begins to crumble. Somehow they ignore the $5.7 million in property and equipment spent this quarter alone which should be a big clue that they Founders intend on staying right were they are. Salaries and benefits increased by $2.1 million, while building overhead increased approximately $900,000 due to the increase in employees and number of locations in which YTB operates.

It’s interesting that Travel commissions and services for the first six months of 2008 increased $5,754,019 or 68.5% to $14,148,444 from the $8,394,425 reported in the comparable prior year period. While travel commission increased, the number of RTA’s has decreased.

This is a very important development, not because “the house of cards” is crumbling as some will probably predict, but because directly correlates to what I’ve been telling everyone for years. Please take note of a line on page 9 of the quarterly report that I’m very happy to see. I have to wonder if this line was specifically intended for a new critic we have?

“Revenues generated from the direct sales of travel are recorded as deferred revenue until recognized in the period the travel departure takes place.”

Meaning, travel commissions are not reported on our SEC filings until AFTER we actually have the money in hand to report as revenue. While the percentage of Marketing Commission (74.5%) and Travel Commissions (19.7%) have narrowed slightly the SEC report now states that recorded revenue from actual sales are not reported at the same time.

Who knew?

Proper knowledge of how our industry works could prove to be a very important element in California. Actually, some in California already know how this works based on the Legislation that went into effect back in January of 2007 when YTB was able to continue to offer credentials after minimum “booking” requirements were met.

Some however, must not have gotten the memo.

Overall, not a great quarter, but certainly not the horrible showing that was predicted. The key is going to be retention as it is with all companies. I do admit, it’s going to be somewhat difficult due to those who don’t verify what they’ll read from the critics. Proper education in just how we operate and what our model reports to the SEC will be key, and I’ll steal a line that our critics like to use all the time.

“The numbers don’t lie.”

Truth be told, they’ve been lying for years, and it’s my hope that when the suit is either thrown out, or YTB is found to be a ligitimate business model based on proper understanding of how revenue is reported, we’ll find out just who has been lying to who.

PS - If you're involved with YTB, sign up for our FREE Newsletter. As a Website Owner or Website Seller, we'll keep you up to date with all the latest news, acquisitions, and developments with YTB.

PPS - Subscribe to the Just Picture It Now RSS feed, (including e-mail) for all the latest posts and updates found right here!

Learn How To Become A Travel Agent

Book Your Travel & Vacations With

Do You ZamZuu?