More Lawsuits For Tomer From FH Partners

It seems that YTB is not the only Wood River company in trouble with FH Partners. This article indicates that an affiliated company, Great River Enterprises, also had a loan with Meridien Bank that was taken over and subsequently defaulted upon.

The suit is for approximately $60,000, which is principle and interest on a $181,349 loan.

On Feb. 13, 2009, the FDIC assigned the loan and guaranty to FH Partners. Since then, however, Great River Enterprises and Tomer have failed to make payments in accordance with the terms of the loan, the suit states. A demand letter to both defendants has done nothing to encourage them to pay their debts, the complaint says.

 It seems that Tomer decided that since he no longer had the inside connection with the bank, that payments were no longer necessary. I wonder if FH Partners is aware of the YTB/Great River Enterprises/Tomer connection? If they are, I suspect that with the filing of this suit, they will be less willing to negotiate too much more.

Speculation Abounds

With a $210,000 note payable tomorrow, there is plenty of speculation running about YTB and their ability to make the payment.

I am thinking it will be a stretch. Had they had $200,000 a week ago, why would they have agreed to give up a promissory note and $10,000 to get get an extension? Granted, the 2009 10-K indicates they have approximately $600K in cash, but it is still a mystery how much has been blown in the interim, or more critically, how much revenue they have realized from ZamZuu.

This might be the time to file for bankruptcy protection. They have fired their accountants and auditors and right after that they disclose that they are in dire straits with the mortgage on the home office. Coach has moved to Florida (a homestead exemption state) and it has been rumored that Scott Tomer has as well.

A former employee of YTB has commented on this blog that they are concerned about YTB's failure as they are still unemployed and if YTB fails, their COBRA health insurance coverage will immediately terminate.

Stay tuned. It might be an interesting few days.  Or maybe not.

What Happens Tomorrow?

YTB has missed a payment on their headquarters loan as they are scrambling to find someone to either buy or lease it.  They were supposed to pay $200,000 earlier this year and neglected to do so causing a default in the loan.

On April 22, YTB was able to get an extension to April 30, 2010 to make the $200,000 payment. But only after they pledged more collateral and gave then $10,000! It seems that no one is willing to make any kind of loan to YTB unless it is secured.  Interesting. So, if YTB does not pay then $200,000 tomorrow, they will lose the promissory note and on April 30th, FH Partners can initiate all legal remedies available to secure their $1.9 million loan as well as the promissory note.

On April 22, 2010, the Company entered into an extension agreement with FH Partners pursuant to which the due date for the $200,000 payment was extended to April 29, 2010 (the “Extension”). As consideration for the extension of the due date, the Company assigned to FH Partners that certain Promissory Note made payable to the Company in the amount of $500,000 by WR Landing, LLC (the “WR Landing Note”) and all related documents securing and relating to the WR Landing Note to secure the Note and the Agreement, including that certain Mortgage dated November 24, 2008 securing the WR Landing Note (collectively, the “WR Landing Collateral Documents”).  The Extension provides that in the event the Company pays to FH Partners the amount of $200,000 on or before the close of business on April 29, 2010, FH Partners will return the WR Landing Note to the Company and assign back to the Company all of the WR Landing Collateral Documents. In the event the Company does not pay $200,000 to FH Partners on or before the close of business on April 29, 2010, on or after April 30, 2010, FH Partners shall only be obligated to return the WR Note to the Company and assign back to the Company all of the WR Landing Collateral Documents in the event the Company pays in full all of its outstanding indebtedness and obligations to FH Partners. After April 30, 2010, FH Partners will be entitled to pursue all of its rights and remedies against the Company under or related to all security agreements, mortgages and other documents or instruments executed in connection with or securing the Company’s indebtedness to FH Partners, including pursuant to the Extension. The Company agreed to pay FH Partners an extension fee of $10,000 in connection with the Extension, which Extension is contingent upon payment of the extension fee.

I Must Be Slipping

Last week, YTB issued several 8-K notices that involved an additional offering of 5 million shares of YTBLA. This was presumably to raise some cash if anyone was willing to buy the stock.

But in one of the 8-Ks, I missed this little gem.

Item 4.01.  Changes in Registrant’s Certifying Accountant.

 

On April 16, 2010, the Audit Committee (the “Audit Committee”) of the Board voted to dismiss UHY LLP, the Company’s independent registered public accounting firm, effective as of April 16, 2010.  The decision to dismiss UHY LLP was approved by the full Board.  The Company informed UHY LLP of the decision on April 16, 2010.

 

UHY LLP’s report on the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2009 contained no adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.  UHY LLP’s report on the Company’s consolidated financial statements as of  and for the fiscal year ended December 31, 2008 contained no adverse opinion or disclaimer of opinion, however, such opinion was modified with an explanatory paragraph regarding the substantial doubt raised as to the Company’s ability to continue as a going concern.  As a smaller reporting company for its fiscal year as of and for the year ended December 31, 2009, the Company was not required to have an audit on the effectiveness of its internal controls over financial reporting.  The audit report of UHY LLP on the effectiveness of internal control over financial reporting as of December 31, 2008 contained an adverse opinion due to the material weaknesses identified in the Company’s internal control over financial reporting.  During the fiscal years ended December 31, 2009 and 2008 and through April 16, 2010, there were no disagreements with UHY LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of UHY LLP, would have caused it to make reference to the subject matter of the disagreements in its reports for such years.  During the fiscal years ended December 31, 2009 and 2008 and through April 16, 2010, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K of the Securities and Exchange Commission (the “SEC”).

 

The Company has provided UHY LLP with a copy of the above disclosures in conjunction with the filing of this report.  The Company requested that UHY LLP provide them with a letter addressed to the SEC stating whether or not UHY LLP agrees with the above disclosures and, if not, stating the respects in which it does not agree.  A copy of UHY LLP’s letter, dated April 22, 2010, is attached as Exhibit 16.1 to this Form 8-K.

So, it seems that the going concern notice really was not "removed" but not "required" since they lost so much money and were a smaller company.

Did You Lock Your Spot?

Wow, it seems a few former YTB-ites have indeed locked their spot in the next big thing. And look who the lead recruiter in this non-travel MLM is--none other than Candy May!

It seems that she may have strayed from her biography a little:

The top producer with this company called me and said he had been with the company for only three years and was making a 6 figure income MONTHLY!! I found this hard to believe but again was intrigued. I said, “is this really something that is possible?” He said, “just do what I tell you”. He sent me some info. I went through the information he sent me and I couldn’t believe what I saw. I saw Everyday people who were making executive and CEO incomes like crazy online! It certainly changed what I thought was possible…I knew that I had to do something different, and this sure beats the incomes and the costs associated with the franchise I was looking at…I got started with him immediately. I successfully replaced my income in about 90 days and closed my travel business. I made more money in my first full year of business than I did with my travel agencies. I was working fewer hours, having less stress and a lot more satisfaction. I have been beyond pleased since day one. I made good money in the first month. And my income has grown at a dramatic pace. I closed my Travel Business and work full time  with this company. It is by far the best business decision I have ever made!

Until now. This 360 Degree company is the best thing out there. Just ask her.

Dear Mr. Sorensen

Dear Kim--

First of all, thank you for reading this blog. Hopefully, I have been able to explain some of the reasons that many in the travel industry hold your company, YTB, in such low esteem. I will be the first to admit that you do indeed sell travel and that you have made some significant changes in the past few years. Bully for you!

I notice over the past few months, a lot of your time (particularly on conference calls, webcasts, and Facebook seems to be spent defending YTB Travel Network. The main question seems to be, "why is YTB moving away from travel?"  I realize you are doing your best, but you really sound like Baghdad Bob by ignoring the obvious.  For instance:

• Your Funshine Travel Conference has been indefinitely postponed
• The number of RTAs is consistently declining at the rate of 100 per day
• The number of groups YTB claims to have on the books has been declining
• The Pleasant Holidays Sale-A-Thon was a dismal failure
• Your travel sales (according to the 10K) are down considerably while most are recovering
• Vendors are tiring of dealing with your "agents" and are asking you to handle the bookings on a corporate level
• And finally, we learn that your division--the travel division--has been counting the sale of flowers, tents, and cars in their travel numbers for several years

I can go on, but I am sure you can get the picture.

What happened to the "largest travel agency on the planet"? Now it seems that YTB is aiming to be the largest seller of girdles on the planet--by the way, mad props to Jerome and Melissa for sealing that deal, I am sure they are making a pretty penny. Very little coming out of YTB today has anything to do with the "T". It is all about ZamZuu!

And speaking of ZamZuu, you and I both know that it is really no different than any number of shopping portals on the internet. Market America anyone? The advantage YTB has is a warm audience. YTB is very good at dangling carrots and putting slick talkers in front of naive people who will take the bait and continue to send in the money. You do realize that Juliet (or Julietta as she likes to be called now) St. John has used that same tired story about being homeless and sleeping in her car in previous MLM schemes.

A few years back, to the shock of many, you were name one of the most influential people in travel. You got a lot of mileage out of that as it was included in every press release--well at least it was when YTB was concentrating on travel. How does your fall from grace feel?

I have always said that there is potential for the folks in YTB to be successful in the travel industry--just lose the MLM component. I personally know seven former RTAs who have left YTB and moved to a legitimate host and are making a lot more money now than they ever did with YTB. They are earning higher commissions, a higher split, their costs are lower, and they can sell Royal Caribbean, NCL, Celebrity, Azamara, Perillo, and others. They were not promised a spot on the Coach's Lap and a million dollars.

I know that you feel a sense of loyalty to YTB and in particular to Coach Tomer. After all, you were featured in his book. Loyalty is a great thing as long as it goes both ways. To that, I only have two words for you--RON HEAD!

I know the the line you are throwing out claims that YTB is getting stronger. You bring Ann Sedgwick in to say that YTB is having a good year. But I am not sure you really believe that.

Kim, I have seen your compensation and to be honest, you can certainly make that in the travel industry as a legitimate host. You have many people that are passionate and capable of being outstanding travel professionals. Why not ditch the MLM model and spin off from YTB and go legitimate? If Coach and Scott are so sure of ZamZuu's success, I am sure you could "buy" YTB Travel Network with the shares of YTBLA which you currently own.

Change the name to get the monkey off of your back. Meet with the vendors who have thrown you to the curb and ask if they will consider re-evaluating their decisions based on the newest changes. Talk with your serious travel professionals (your TAs and RTAs) and let them know that you are indeed 100% behind them in SELLING TRAVEL and then show all the recruiters and affiliates to the door.

With 30,000 RTAs, you are likely to have 3000 ones that are indeed serious about travel. I know of a few--Maizie Middleton comes to mind as well as several in recently departed Director's downline. With 3,000 serious travel professionals under one host, this group can become the nation's largest host agency virtually overnight.

Just some food for thought--for a few shares of that nickel stock, you might have a shot at actually doing what you have been claiming (and failing) to do all along. If you want to talk about it, give me a call.

Sincerely yours,

And Where Are They Going?

Well, we know that the TravelPro is not sending anyone anywhere, but considering that Princess Cruises recently had a sale-a-thon with YTB, one might think that an army of 40,000 could muster up more than 2 groups for Alaska!

Yes, that is right, of the 378 groups, 368 of them are on Carnival. For Princess Cruises, they have 1 each on the following; Caribbean Princess (New England), Coral Princess (Alaska, with a nice photo of a Carnival ship on the promotional material), Diamond Princess (Alaska), Island Princess (Panama Canal), and the Star Princess (Mediterranean also with a nice Carnival ship pictured).

One on the Costa Serena, one on the MSC Poesia (with Carnival ship pictured), and three on Holland America Line ships. One on the Oosterdam to the Mexican Riviera, one on the Rotterdam to Alaska, and one on the Statendam to Alaska!

I wonder if some of these brands are about to put YTB on an affiliate type program.

Any Surprises?

The 41,000 RTAs of YTB only have 378 groups on the books. Strangely none of them are booked by the TravelPro. But here is how they play out by duration. More than 50% of them are UNDER 7 nights.
.

Stay tuned for these same groups by destination.

And The Number Is

381

What Changed?

Back in 2009, YTB's auditors issued a "going concern" notice. It read as follows:

As reflected in the accompanying consolidated financial statements, the Company has incurred losses from operations for the year ended December 31, 2008 of $4.1 million. In addition, negative current economic conditions and other factors have led to a reduction in the number of active RTAs in the Company. The number of active IBC sites has declined during the year ended December 31, 2008 by a net of 39,419 sites to 92,383 active RTA IBCs from the 131,802 reported as of December 31, 2007. The Company is also defending against two cases challenging the legality of its network marketing program. The litigation claims can be expensive and time consuming to bring and defend against and could result in settlements or damages that could significantly affect financial results. The Company’s loss from operations, the declining active IBC count, working capital deficiency, uncertainties surrounding the Company’s pending litigation and the general downturn in the economy raise substantial doubt about the Company’s ability to continue as a going concern.

• 2008 losses $4.1 Million
• 2009 losses $9.8 Million
• 2008 RTAs lost 29.91%
• 2009 RTAs lost 55.43%
• 2008 Company defending against two legal challenges (California and Class Action)
• 2009 Company defending against two legal challenges (Illinois and Class Action)

So, let me understand, when YTB loses $4.1 million and 30% of it's paying RTAs people are concerned. Yet when they lose $9.1 million and over 50% of their paying RTAs it is looking much better?  Maybe someone can explain that to me.

Seems to me like the auditor may have had his arm twisted a little bit and bought into the rhetoric that ZamZuu is something new and unique.  After all, the perks of ZamZuu can be had in any number of online shopping portals--just not the girdles--they are exclusive to YTB since Ghiada is owned by Jerome and Melissa!

And The Spin Starts Here

The Press Release can be found here.

And while the auditors did not have a "going concern statement" they did say this (76/165):

The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Nice try Coach!

10K Comments

While YTB will likely find one thing to positively spin about this report, it is clear that the company is in dire straits. Below are the excerpts from the YTB 10K for 2009. The number in parenthesis is the page where it can be found (it is the PDF page number and not the report page number). My observations are in bold.

YTB Franchise Services, Inc. (― YTB Franchise ‖) was formed in March 2009, to serve as the corporate entity to offer a new franchise offering designed to increase the training and qualifications of those IBC owners who want to focus exclusively on travel. There has been no activity by YTB Franchise other than an initial capital contribution by YTB International, Inc. All intercompany transactions have been eliminated in consolidation. Franchise applications have been filed in 7 states and are pending approval. (9/165) Does not seem like franchising travel is a priority for YTB. RTA/TSOs were told it was happening in early 2008.

As of April 7, 2010, we had a total of 157 full-time employees, 3 part-time employees (13/165) It seems like there were considerably more than the 50 employees. YTB has touted "over 300" for years and the recruiters still do.

We plan to offer ZamZuu as the exclusive IBC option for new Site Owners on a go-forward basis, while continuing to maintain and operate our existing travel IBCs. (14/165) This is a serious statement. Going forward, a YTB Travel Network rented website is no longer an option. And Kim says the focus is still on travel. Well, OK Baghdad Bob.

We conduct marketing activities, book travel and sell a variety of products exclusively through 7,245 independent contractors known as Reps (such numbers are provided as of March 29, 2010) and 41,174 Site Owners (such numbers are provided as of December 31, 2009) (14/165) WOW, this is quite a decline in the number of reps. One might think that a "free" opportunity might be able to attract more than 7000.
We experienced a 13.1% decrease in active Reps and a 55.4% decrease in Site Owners during 2009. (15/165)

Fees from hosting and sales of IBCs that we offer to home-based representatives make-up over 76% of our revenues as of December 31, 2009. While our business model is based primarily on IBC hosting of various products and services, we do intend to pursue other sources of revenue to lower this percentage. (15/165) YTB appears to be concerned that this percentage will bring additional scrutiny--as it should.

We work with AT&T for Internet access. If our arrangement with this provider is terminated or if they were to cease operations, we might not be able to find an alternate provider on a timely basis or on reasonable terms, which could hurt our business.  (18/165) It is very strange to see a statement like this. It makes one wonder if they are not in default with AT&T. We have heard that many of the technology vendors are not happy about arrearages.

We increasingly utilize internet search engines to generate traffic to our IBCs. Search engines frequently update and change the logic that determines the placement and display of results of a user’s search, such that the purchased or algorithmic placement of links to our IBCs can be negatively affected. In addition, a significant amount of our business is directed to our own IBCs through our participation in pay-per-click and display advertising campaigns on internet media properties and search engines whose pricing and operating dynamics can experience rapid change, both technically and competitively. If a major search engine changes its algorithms in a manner that negatively affects the search engine ranking, paid or unpaid, of our IBCs or that of our third-party distribution partners, or if competitive dynamics further impact market pricing in a negative manner, our business and financial performance would be adversely affected. (21/165) If true, why are Internet searchers being directed to YTB sites? When you search for anything associated with YTB, you typically get results from competitors or evidence of it being a farce/scam/pyramid scheme, etc. Why aren't the RTA/TSOs screaming at YTB for their failure to direct Internet searches to the sites for which they pay a $50/month rental fee?

Our Chairman of the Board, J. Scott Tomer, together with his family (including his father, our former Chairman, J. Lloyd Tomer) and affiliates, has the ability to influence the election and removal of the members of our board of directors and, as a result, to influence the future direction and operations of our Company. As of December 31, 2009, J. Scott Tomer, his family and affiliates beneficially owned common stock with voting power constituting approximately 44.1% of the combined voting power of our common stock (after factoring in the relative voting power of our Class A Common Stock and Class B Common Stock). Accordingly, they may significantly influence decisions concerning business opportunities, declaring dividends, issuing additional shares of common stock or other securities and the approval of any merger, consolidation or sale of all or substantially all of our assets. They may make decisions that are adverse to your interests. (28/165) This is frightening and should be a wake up call to everyone. Coach has already moved to Florida and Scott is preparing to move.

The Agreement renews the note executed by the Company in connection with the Loan and the Note Renewal in the new amount of $1.9 million (the ― Note ‖) and extends the maturity of the Note Renewal and Loan to April 30, 2010. The amount due under the Note bears interest at a rate of 8.0% annually. A principal installment in the amount of $300,000 was due and payable on September 30, 2009, which the Company paid timely, and a second additional principal installment in the amount of $200,000, originally due and payable on December 31, 2009, was extended to January 31, 2010. To date, the Company has not made the $200,000 payment. FH Partners has not given the Company notice of its intention to accelerate the debt as a result of the Company’s failure to make the $200,000 payment that was due January 31, 2010. In the event of default, as defined in the Note, FH Partners has the right to declare the entire unpaid balance of principal and interest on the Note due and payable.  (31/165) YTB has $600K in cash and liquidity. Yet they have not paid a $200K note that is risking putting them in default. Certainly FH Partners can see the financial condition of YTB. Will they call the note and demand the $1.9M?

On May 14, 2009, a civil action was filed against the Company, three of its subsidiaries and certain executive officers of the Company in the Superior Court of Illinois, Champaign County, by the Illinois Attorney General. The complaint alleges that the defendants violated Illinois’ unfair competition and advertising laws. The Company believes it has meritorious defenses to the claims and intends to vigorously defend the case. The Company is in the process of exchanging information with the Office of the Illinois Attorney General and exploring possible resolution alternatives .  (37/165) Nothing to report here. Illinois is being tight lipped as well. Very strange indeed.

As of April 7, 2010, we had 513 shareholders of record of our Class A Common Stock and Class B Common Stock. (37/165) Only 513 people interested in this stock? With 41K site owners and 7K reps, one might think that they could find more than 500 people to cough up a few pennies.
The value of such travel services increased approximately $9 million in 2008 to over $424 million from approximately $414 million in 2007. Comparable data for 2009 sales (retail value) has been reported to us by our travel vendors in the amount of $252 million.  (39/165) Spin, spin, spin. While most other legitimate travel companies saw an increase in travel sales in 2009 (compared to 2008) YTB saw a loss of $172M.  But hey, three years ago they were up.  Nice try Kim.

Comparing 2009 with 2008, total revenue was down 57.8% . Travel commissions received was down 51.5%. Income from site rentals was down 57.7%. Travel commissions paid out to the RTAs was down 58.3%. Overall, 2009’s loss was $9.8M versus $4.4M for 2008.  Specifically addressing travel commissions, YTB received $12.2M in commissions and paid out $7.3M to the field. This equated to an approximate 60% split.  However, in 2008, they received $25.1M and paid out $17.6M which equates to an approximate 70% split. This is strange as the “travel agent” program enabling people to earn more was rolled out in 2009. It appears that there are an insignificant number of people taking part in the program if the commission split actually decreased. This is further evidenced since their income from training was down 77.2%.  (41/165)

Over 5,000 Site Owners attended the Funshine event held in Orlando, Florida in September 2008 and approximately 2,200 attended in September 2009. (43/165) Oops.

We believe the decline in the number of new IBCs is attributed to the current economic downturn present in the United States. We anticipate slower growth in the coming months compared to what we have experienced in the past. (44/165) Another very interesting comment. They continually say that their sustainability is tied to the revenue from the IBCs or RTA/TSOs. Here they say that they anticipate it to get worse. YTB is actually admitting that they feel it will get worse.

In addition, during 2009, we recorded impairment charges of $724,000 related to obsolete inventory and $564,000 for purchased software no longer used in operations.  (46/165) Honestly, very few companies purchase software any more. As a travel company with literally no inventory, how does one amass a $724K stock?

National Convention expense decreased $4.4 million due to costs associated with lower attendance at the convention and cost cutting measures by management. (50/165) Lower attendance? Sure, but I am guessing that in 2009 they did not have that multi million dollar statue whose cost was funneled through Kim and Coach's little company--Beryl Martin.

 The increase of $168,000 in 2009 compared to 2008 is attributable to an increase in shopYTB revenue, partially offset by a decline in revenues earned through flower sales and payment processing fees earned by the Company. (51/165) Aha. Finally, they are mentioning flowers. It appears that YTB has indeed been including flowers, cars (if any were sold), hunting gear, beef jerky and girdles in their "travel" number. Travel Weekly...how do you feel about that?

During the fourth quarter of 2009, we performed our annual impairment test of goodwill and intangible assets pursuant to accounting standards governing goodwill and other intangible assets. As a result of our tests, we recorded an impairment charge of $450,000 related to the fair value of goodwill associated with our Travel segment. Our annual impairment test of goodwill during the fourth quarter of 2008 concluded that the goodwill of our Sunrise Travel subsidiary (purchased in 2008) with a carrying amount of $149,000 had no fair market value, resulting in an impairment charge of $149,000. See Note 9 – ―Goodwill and Intangible Assets, Net.‖ (53/165) LOL, gee, I wonder why the "goodwill" of YTB might be impacted. My only argument is that $400K seems a little light!

The increase of $688,000 in 2009 compared to 2008 was the result of writing off $564,000 in capitalized costs for a travel booking search engine that did not perform as expected and had to be removed from production. (53/165) I suppose this is the Convergentware. They are still booking through Travelocity as stated elsewhere in the report. But this would explain why customers do not receive the deals from their gateway or that they cannot compare trips side by side.

As of December 31, 2009, we had $678,000 in cash and cash equivalents. We believe that our cash generating capability will be adequate to meet the needs of our future operations. (57/165) For how long? There is certainly breathing room now that PJ, Camaron, and Ron Head are out of the picture. And the additional $144K given to VanPatten is certainly less than the $600K+ given to Cauthen, Clagg, and now Tomer.

YTB has sold more than 50% of its assets in 2009 (77/165)

Deferred revenue in 2008 was $13.5M and in 2009 it was $2.9M. This is a liability and was likely reduced as a result of the terminations of Head, Jensen, Corr, Hoffmann, and other senior level Directors. (77/165)

YTB loaned Directors a lot of money and in 2009 they wrote off $371K (99/165)

The real estate transactions are VERY convoluted and interwoven. It seems if the forces go against YTB they can lose essentially all of their real estate which is their primary assets.
Travel commission revenues generated by Sunrise totaled $110,000 and $105,000 for the years ended December 31, 2009 and 2008, respectively. (109/165) Since all transactions in Canada are being run through this agency, it seems as if they are not doing to well in Canada. There was no mention of the other Canadian offices they have in terms of generating revenue.

During 2009, the Company expended $6,000 in book royalty fees to J. Lloyd ―Coach‖ Tomer, former director and Chairman of the Board of the Company. Book royalty fees of $1,000 were included in accounts payable in the consolidated balance sheet as of December 31, 2009. (124/165) Come on!! It was a self- published, poorly written and edited, self-serving tome to assuage the ego. The book was replete with spelling and grammatical errors. YTB ought to seek and get their $6000 back. And yes, I do have the book and yes I did read it.

As of December 31, 2009, the Company had outstanding purchase commitments for future goods and services of $1.0 million. Of these commitments, $821,000 is unconditional purchase obligations which include $722,000 related to the Company’s annual convention and $99,000 related to various travel services and technologies. (134/165) OK, so there is $600K in cash and equivalents and they feel that is adequate. They are past due $200K from December, have two multi million dollar suits, are bleeding recruits and RTA/TSOs, have committed $722K to the America's Center and all is well? Mmmm OK.

Also on April 6, 2010, the Board of Directors adopted a resolution to modify paragraph 3.3 of the existing employment agreement effective January 1, 2008 between the Company and J. Scott Tomer, Chairman of the Board (the ― Modification ‖). Under the Modification, J. Scott Tomer will earn commissions and overrides generated by the Director 4 position occupied by a former sales director in lieu of earning commissions and overrides generated by Representative position #2. All other terms and conditions of his existing employment agreement remain unchanged. (140/165) So, since YTB is doing so well, they bumped Scotty up closer to the top of the pyramid? I guess that is the reward he got for missing all the other growth targets.

Something To Chew On

While I am reading over the 10K here are some interesting facts "gleaned" from the 10K.

• During 1Q they lost 20% of their RTA/TSOs
• During 2Q they lost 18% of their RTA/TSOs
• During 3Q they lost 17% of their RTA/TSOs
• During 4Q they lost 18% of their RTA/TSOs

It does not seem that the bleeding is stopping. I have heard that right now they are under 30,000 RTA/TSOs and that is consistent with these numbers. If they had 41,174 on December 31, 2009 and were losing 116 per day, that is 12,180 RTA/TSOs lost between January 1 and April 15.

And speaking of April 15th, someone remind Coach that it is time to file the taxes and be sure to deduct all those expenses because it is the YTB way.

Reading Material

Amusing Juxtaposition

One time in a land far far away, a zealot said these words:

Anyone who “Double Dog Dares” us needs to go back grade school instead of trying to waste our time and energy.

Hey Von Nickleberry---are you listening? The TravelPro wants you to go back to grade school.

# 1 Source For Raising Money

Now that YTB has become the #1 travel agency in the world Wood River by 2010, and now that Zam Zuu is on the way to being the largest distributor of products worldwide by 2020, Coach has a new announcement.

He now believes that Passport To Giving Beyond Giving will be the #1 source for raising funds for non-profits and churches.  Look out United Way, Coach is calling a play!

A Change In Pay

YTB announced this afternoon that they have terminated Coach's employment agreement and replaced it with a Master Distributor Agreement retroactive to February 1, 2010. The terms of this agreement were not disclosed and they said they would disclose them with the 10Q to be filed for the first quarter of 2010 (Expected May 15, 2010).

They also advised that they would be compensating Scott Tomer as a Level 4 Director and modifying his employment agreement as well--the terms of which are also not disclosed at this point.

Did You See The New Disclaimers?

Be careful what you say. It could come back to bite you in the arse!

Funshine Go Away Today!

So, for the 25th largest seller of travel in the world, they are going to go 18 to 20 months between having their travel conference? Just does not seem to be a priority any longer.

Although, I did hear there was a Zam Zuu conference scheduled for August.

Attention K-Mart Shoppers

Attention K-Mart shoppers, soon to be available at the front of the store brand new KIA cars from Zeiser KIA!

We are hearing rumors that YTB has struck a deal to rent out all or part of their World Headquarters K-Mart to a local car dealership. We reported that YTB was furiously trying to sell the building back on March 4th, and YTB finally disclosed this on March 31st.

While this is certainly not the infusion of cash YTB had hoped (and the deal, we hear, is not finalized and anyone that knows business knows there are a lot of hurdles to clear when renting a facility) it might give them a little more breathing room. The real question remains if they have enough assets to cover the notes that are coming due, pay commissions to the Zam Zuukeepers & RTAs, and all of the past due accounts to their technology vendors. It will be quite a task for the CEO, CFO, COO, Secretary, President, and Treasurer (and we suspect lead janitor, support desk manager, and receptionist as well)--Bob VanPatten if he can pull it off.

Why Is This?

Why does Princess limit YTB to only allowing one group per sailing?  I have never heard of such a thing?

And The Answer Is.....

Sorry, this was supposed to publish earlier. Just checked--it is down to 409 as of 1230pm

The below graph represents the number of groups that YTB has booked.  You will notice that the soon to be largest travel company on the planet is in a downward trend. Back in the beginning of March, Kim Sorensen did a conference call to assure all of the YTB RTAs that travel was still the focus of the company and not ZamZuu. Since that time, Carnival has decided to not allow RTAs to talk directly to their res agents, Carnival may have put them on a stop-sell (unconfirmed), Kim does not answer too many questions and the new YTB Carnival Desk seems to not answer the phones. They had a Pleasant sale-a-thon that resulted in less than a handful of sales.

Does this look like a booking trend for a company that is focused on travel?  When this graph was made (4/3/10) they had 424 groups on the books. By this morning it was 414; and as I am writing this it has dropped yet again to 410 (630pm 4/6/10).

So for those that like percentages, the number of booked groups has declined almost 13% in less than a month. The strange thing is that this is Wave Season and most everyone else's bookings are trending up!

Can Anyone Guess?

UPDATE: 04/06/10 827AM.  The latest number (not shown on graph) is 414. This represents a drop of 10 (or 2.36%) since the chart was made on April 3, 2010. 

Can anyone guess what this chart represents? Nothing has been altered. The numbers are what they are. There are no tricks. Leave your guess in the comments and I will reveal the answer tomorrow!

Funny Business With The SEC?

Not sure what to make of this, but this screen shot was sent to me a few days ago. It is from the secure "whistleblower" site linking off of the main YTB site. This link appears to go to a separate company, but the message definitely is filtered right back into YTB.

What is curious is that initially they were very fast to reply, and when pressed a little more, silence. Whomever sent this into their audit committee alluded that based on a run up of the stock on March 16, 2010, there would be some news released from YTB.  And sure enough, on March 17, 2010, they released the press release about the non restructuring restructuring. But beyond that, silence from the audit committee of YTB.

I wonder if Tom Baker really did so anything with the report? I wonder if the SEC has a copy of it like he suggests? I wonder what they think when their actions are so predictable? And I wonder if they were talking about this blog when they referenced "making statements ahead of official announcements"?

More Info From The April Fool

This is the response when told that he probably ought to do some more investigating.

Sent: Friday, April 2, 2010 3:27:15 PM GMT -05:00 US/Canada Eastern
Subject: RE: Card Mills

I am sorry, I am a professional travel agent, I book travel I have all the appropriate credentials to boot. I however, do not limit myself to just that. I have several streams of income, not just as an agent, I am a custom home builder, I also am an instructor for our school, and I also have a Christian Rock Band that does charities and special services. (We are very good, all original) So yes, I like the Network Market Model, Home based Travel Agent, whatever you want to call it. I like the Network marketing side because in this industry there is no inventory, nothing to buy, or stock at discount prices to sell up. No automatic shipping, nothing to track except pay. YTB has never stiffed me yet.

This is a straightforward business. I cannot defend how someone else may have represented YTB  in California, I was not there. I know what I do and maintain a high standard of integrity and honesty. I never promise "get rich quick." It just doesn't happen that way.  What we do here, is promise to give someone all the tools to become travel agents, just as much of an agent as any agent (including you) in the business, and by the end of the school, they will be equipped to the nine's in information and credentials. You have experience, which could be useful and valuable, if you would quit thinking that if someone does not do it the way you learned they are wrong. That is how it appears, very snobby.

We are sincere, and dedicated to doing the very best we can to equip people, and  to add extra income to their streams, doing something they like, and doing something that helps others. We learned all we learned through the school of hard knocks. Not YTB. YTB is too concerned with YTB and has missed the point, hopefully what we are doing will correct that error.


Robert Perry
Higher Destination Travel
www.higherdestinationtravel.com
www.higherdestinationinfo.com
www.ytbrepsnetwork.com

The 4th Quarter (Not The Book)

I just did some math. If YTB is projecting a $9.9 million dollar loss for the year, that means they managed to lose $6.7 million in the fourth quarter alone.

• 1st Quarter   $1.9 million loss
• 2nd Quarter  $1.6 million loss
• 3rd Quarter  $362K income
• 4th Quarter
• Year End      $9.9 million loss

Now mind you, the fourth quarter was the time that most other travel companies began to see the recession measurably recover. The fourth quarter is typically a robust quarter for income for most agencies as all of the summer travel commissions are being paid. For YTB the fourth quarter was a full two quarters after they "won" in California. In the fourth quarter, YTB only had one more payment of $250K to make to California.

How the heck could they lose THAT much in three months?

Records Schmecords

Apparently YTB keeps their travel training records as well as they keep their accounting records.

Several days ago, someone named Daniel Hoffman said he listened to the Mancini trainings and attended First Class Training all in a five week period. Kim Sorensen went gaga over this and was absolutely amazed that someone could complete it that fast (Retention is a whole other issue). So by late Tuesday, March 30th, Kim posted a congratulations message to his Facebook page. But by early morning on the 31st, another RTA explained how he had completed the training in one evening.

Kim must have been so impressed with Daniel that he never acknowledged the RTA who actually completed more quickly. And Kim made a video.

But still the other RTAs who completed the training in less time are letting him know, but their achievements are going unanswered.

Perhaps The Biggest April Fool

This email was forwarded to me. Someone dared to criticize YTB and this was the response. Care to point out any inaccuracies for TravelBob?

Sent: Thursday, April 1, 2010 1:20:13 PM GMT -05:00 US/Canada Eastern
Subject: Card Mills

I am a member of a so called "Card Mill", and I think you should re-check your information on YTB, it is not current or up to date. Royal Caribbean is one of our suppliers. I am from Indiana, and we have started a travel school here to teach agents how to take advantage of every opportunity in the travel business. The old school is done, brick and stick travel agency's are a thing of the past. Our office is close to one of the biggest brick and stick offices, and they have shrunk to almost "0".

While YTB is far from perfect, and we do Network Market with it, it is our purpose here in Indiana to change the face of this model. You do not have all the facts, and while you view this as a card mill, I view it as opportunity that has been suppressed by the stick and brick agencies who look out only for their own benefit, instead of getting into the 21st Century and realize that there are those of us out here who have learned to not only Master and become credentialed in Cruising,  (Disney is a YTB supplier too by the way, your info is incorrect) in Hotels, Resorts, locations, and be come CTA's, with all the cruise lines, with all of the offices of tourisms like Alaska and Israel. And we also provide ways for those who want to travel better, cheaper and write it off at the end of the day as well. What is wrong with that?

Your prejudice against some companies may be justified, I have not researched them all, but I do know about me, our local group and how we are instructing. Are you a CTA? Have you taken the tests? Are you certified with Disney? With Costa? With Carnival? Princess? We are. Hang onto that old face of travel if you want, but, sticks and bricks....they are a thing of the past. You can continue to knock us, or be aware, we are bringing in a whole new generation of agents, and we are going to change the face of travel. We would rather share with you, than bury you. But then, we would not have to bury you at all, you are already diggin' your own graves.

The world is changing. This is not meant as a threatening thing, it is meant as a, why are you fighting so hard to hang onto a dead bone? There's no meat on it. Be positive. The travel industry is 8 trillion dollars, what portion of it are you protecting? Pride?Your turf?

We are training, mentoring, credentialing and developing a new group of agents  Ones not only knowledgeable, but close knit. We are transparent. We want everyone to enjoy the fruits of travel. And we are teaching anyone who wants, how to be a travel professional, as well as a professional traveler with all the perks and benefits of travel agents. Stuff that the stick and brick agencies kept for themselves for years. Perks of the business for sure, but it should have been shared.

The times have changed. Money is tight. People are looking for ways to save, and enjoy travel, and we are making that a reality. You can look at us with different eyes, and see us in a new light, or hang onto that 1960's mentality, and go the way of the dinosaurs. Why do you continue to write negative stuff about YTB, when they are doing what you all (if applicable) in the travel industry don't, share the wealth, share the information, and change the way travel is taught, done and enjoyed?

YTB is imperfect, but we here in Indiana are working on a new model, and it is great!!! You can ride the wave with us when the time comes, or you can lay floating in our wake. But make no mistake, we are coming, we love to travel, we love to teach, we love to make money, and most of all, we love to help others who need additional ncomes learn how to do it. Why should a billionaire who is a billionaire make all the money online, He saw the future and embraced it, now we are challenging his model, and I guarantee you, he will adapt, the question is will you and the rest of your narrow thinking travel businesses change with it.

Robert Perry
Higher Destination Travel

Another Video

Not sure who created this, but since it is April Fool's Day and in light of the new revelations of the financial dire straits of YTB, why not? Caution, it does contain some PG-13 language.

No More Funshine

When asked about Funshine this year, this was Kim Sorensen's response:

Kim Sorensen

Hey CarolLee! We're looking at some different destinations and a different time of year for Funshine. We don't have anything definite. We'll let everyone know as soon as something is solid! Great question!

Well, with an almost $10 million dollar loss CarolLee--we were thinking about having it in the back seat of your car.  My guess--no Funshine. YTB may be history by then.

Thursday Morning Flashback

This is very apropos that this is posting on April Fool's Day!

Who said the following on July 6, 2006:

• I’ve always wanted to do my own thing, and have financial security, but never had any success.
• So far it seems to be working, booking over $500 million in travel services in 2005 and thus far 2006 is showing indications that the company could exceed 5 times that amount, with expectations of $2.5 Billion in travel bookings for the current fiscal year.
• If you keep those pictures in the forefront, and actually feel the emotions they create on a daily basis, anyone can achieve the independence I’ve received.

The answer is after the jump!  (OK apparently the MORE tag does not work with this theme).  Find out the answer by clicking here.