Yesterday I Was A TravelPro Now I Is A Author And A Accountant

The TravelPro seems to be having a hard time defending the dismal 10-K so, in typical MLM fashion, he has taken to attacking me.  If he is not making any money in YTB, I assume it is because of his utter lack of understanding the most basic concepts of fiances. 

I stated a bunch of facts that came from an official document and the TravelPro took issue with this excerpt:

YTB/ZamZuu makes a ton of money off of the people that attend the convention. The revenue for the 2010 convention was $322,000. (Page 16) and the expenses were $457,000 (Page 17). So if you do the math that means that the gross income from the convention was $779,000. At $199 to attend, that puts attendance in the area of 3,900. A number YTB did not disclose. But, it is clear that for every person who attended the convention, more than $80 went directly to YTB’s bottom line. That is a 41% commission YTB earned on this event! Most companies tend to make their events affordable. Yes, most make money, but most don’t gouge.

His comment was:

 Last I heard (from my 9 year old daughter no less) you add revenue and subtract expenses.

But for those who might be inclined to follow his logic, let me explain with a basic math word problem.

If you earn $100 selling a cruise and had to pay Carnival $1000 in an agency check, what is the minimum amount you sold the cruise to a client in order to earn that $100?

 You see the revenue is what YTB earned from the convention.  Call it the commission.  But in order to earn that, they needed to spend money to produce the convention. These are expenses. The only figure YTB did not report was how much they took in in ticket sales to the convention.

Maybe the TravelPro ought to suggest his 9 year old daughter listen a bit more carefully in math class!

Is A YTB Director Breaking The Rules?

Yesterday, in discussing the dismal 10-K, I mentioned that YTB/ ZamZuu tried to claim it was not one of those "pyramid" or "endless chain" schemes and listed some scheme indicators that certainly did not apply to YTB or Zam Zuu.

Here is an email blast sent out just a few hours after the 10K was released from one of YTB's Directors.

It might be hard to read but the headline is "This Is It Blitz--Time To Multiply Your Business." Nothing about selling the product.

And then the Director goes on to explain how much money she and her cohorts have made in Zam Zuu:

Ann Jones

ZamZuu Director

 $5,000 Bonus Earner

$10,000 Bonus Earner (Multiple)

 David Anderson

ZamZuu Director

 $5,000 Bonus Earner

$10,000 Bonus Earner (Multiple)

Nkechi Taifa & Dakarai Kearney

ZamZuu Directors

$10,000 Bonus Earner

They encourage you to invite everyone you know and let them do the work while you cash the check! Easy money for nothing.

Go Coast To Coast!

Tell Everyone You Know and Everyone They Know!

  

LET US PRESENT, PROVIDE TESTIMONIES, AND CLOSE

~ while you cash the check ~

Nah, this ain't no pyramid, endless chain scheme!

YTB Zam Zuu Kicks Up Recruiting

Before anyone really has a chance to think about the dismal performance and the even more dismal future, YTB / Zam Zuu have arranged a special "rah rah call" all about selling product recruiting!  Hey Lisa Madigan, are you listening?  This email was just sent this morning after they swore to the SEC that they are not an endless chain scheme.  Could this be the reincarnation of Dr. Bob Seligman?

Special Edition Conference Call
TONIGHT!
Tuesday, March 29
641-594-7578 begin_of_the_skype_highlighting            641-594-7578      end_of_the_skype_highlighting Pin 180621#
9:45 pm Eastern, 8:45 pm Central,
7:45 pm Mountain, 6:45 pm Pacific

Top Secret Recruiting Breakthrough will be revealed on tonight's call! This simple recruiting system has allowed Mike Demetro to personally sponsor 247 people in less than 80 days and on this "Special Edition" call he is going tell you EXACTLY how he did it!
~~~

We are proud to introduce a new Rep to the ZamZuu family: Mike Demetro. Mike has been involved in the network marketing industry for over 18 years, and has been a highly sought-after consultant and trainer who has literally trained thousands of networkers from all over the world.

The reason Mike has gotten so much attention in the network marketing industry is simple. He has developed a unique recruiting system that has allowed him to personally sponsor over 200 people in 80 days - not once or twice, but three times in his career! Network marketing CEOs and industry leaders have paid him as much as $500 for a 60-minute training call.

Mike has agreed to share this incredible recruiting system with you! You will have the opportunity to find out how Mike:

• Gets hundreds of people a week to visit his website without saying a
   single word.
• Uses a simple business card to expose 4,000 people every 30 days
   without having to say one word!

These are just two of 19 incredible recruiting steps that make up the "Insider Tells All" Ultimate Recruiting System! We highly recommend that you take at least 60 minutes to call the members of your downline and make sure they do not miss tonight's call. It will be a true game changer!

Take a sneak preview of this simple and powerful recruiting system. It doesn't matter if you have been involved in network marketing for one week or 10 years this website will simply leave you speechless, I guarantee it! www.InsiderRevealsAll.com 

YTB Zam Zuu Losses Continue To Mount In 2010 And Beyond

The 10-K (annual filing) for YTB was released early this morning and aside from a change in auditors, and changing the definitions of terms to make it difficult to ascertain growth or decline of travel sales, travel "agents" and recruiters--it is the same old story. More losses, more excuses, more red flags!

Here are some key points:

• There are only 120 employees of the company. Not the 300 that many like to claim. (Page 7)
• The Class Action Suit is not dead and there were oral hearings on February 25, 2011 and it was also refiled in federal court. (Page 10)
• Illinois may be settled. YTB claims that they want to settle without litigating and are exchanging information with Lisa Madigan's Office (Page 10) and they have already accrued $150,000 towards a potential settlement (Notes)
• There are ONLY 559 shareholders. Pretty dismal for a company that claims there are 35,154 subscribers. (Page 11)
• Recruiting still represents the vast majority of their income (68%) and product sales including potions, lotions, purses, and travel only accounts for 31%. (Page 14)
• Commissions on all products sold only amounted to $7.1 million (Page 14)
• Income from recruiting is down 52% from last year and income from products sold is down 22% from last year (Page 14)
• TOTAL YEARLY LOSS WAS $4,030,000 (Page 14)
• The average subscriber paid $702.72 in fees to YTB/ZamZuu and received $543.44 back in commissions. (Page 15)
• YTB/ZamZuu makes a ton of money off of the people that attend the convention. The revenue for the 2010 convention was $322,000. (Page 16) and the expenses were $457,000 (Page 17). So if you do the math, that means that the gross income from the convention was $779,000.  At $199 to attend, that puts attendance in the area of 3,900. A number YTB did not disclose. But, it is clear that for every person who attended the convention, more than $80 went directly to YTB's bottom line. That is a 41% commission YTB earned on this event!  Most companies tend to make their events affordable. Yes, most make money, but most don't gouge.
• Travel commissions are down 2.6 million from 2009. (Page 17) While YTB does not disclose the amount of travel they sold, we can take a good guess. YTB told Travel Weekly that they sold $252.1 million in 2009. The 10-K from last year shows that they earned $12,201,000 in commissions selling travel.  This equates to an across the board commission percentage of 4.8%. (Most legitimate agencies are a lot closer to 10%). So, if they lost $2.6 million from the $12.2 million, that leaves travel commissions at $9.6 million. Putting that 4.8% back in, that puts travel sales at $200 million for the year or a solid 20% drop--in a year when most agencies were seeing a recovery. What is also interesting is that if these numbers are to be believed, travel represented 84% of their "product" revenue. Extrapolating a bit more and not knowing how many of their subscribers are actually selling travel and at what commission level, if we assume all 35,154 of them are equal, each one would have earned $163.85 for the year! At $49.95 a month for the site--well you do the math.
• YTB is still burning cash and at the end of 2009 had $678K and at the end of 2010 was down to $493K. (Page 19) This explains the strange deal on the sale of headquarters to raise cash fast.
• Speaking of the deal, the 8K filed did not disclose that YTB actually paid $84,000 to Wood River Capital LLC to sell their own building and offered them 13,575,000 stock options to sweeten the deal. The options can be exercised at any time until March 25, 2016 at $0.032 cents per share. I wonder if we will see some strange stock fluctuations (wink wink) in the coming months?

Pretty much no surprises. Still hanging on and crafting strange deals to come up with cash to keep it going. They are still reliant on recruiting to make the endless chain continue.

Perhaps the most amusing part of the whole filing was when YTB/ZamZuu explained that sometimes they might be classified as a "pyramid scheme" and went on to explain what a pyramid scheme was and how it differed from YTB (Page 6):

Often these schemes are characterized by large up-front entry or sign-up fees, over-priced products of  low value, little or no emphasis on the sale or use of products, high-pressure recruiting tactics, and claims of huge and quick financial rewards requiring little or no effort.

1. Large up-front entry or sign up fee. (Nope)
2. Over-priced products of low value. (Check!  Has anyone seen the Z-Kit for $399, the Gina Alexander purses, the Crystal Memories picture frames, or the Ghiada girdles?)
3. Little emphasis on the sale or use of the product. (Check. It is all about building the downline. Coach's weekly calls are all about finding more people to expose the opportunity to. There is nothing said about selling the products.)
4. High-pressure recruiting tactics. (Check. Here's the free opportunity, but why do you want free when you can pay for it and make money?)
5. Claims of huge and quick financial rewards requiring little or no effort. (Check. Become a power team leader and earn bonuses. Become one of Coach's mentors and become one of 10,000 millionaires that he is creating)

Come on YTB and ZamZuu, who are you kidding?

But on a brighter note, YTB made sure that Coach Tomer, Scott Tomer, and Kim Sorensen earned over a million dollars for being "reps".

Some YTB And ZamZuu Comparisons

Since YTB and ZamZuu are online shopping sites, I was curious as to how much traffic they were drawing. It was quite a surprise.

While traffic certainly does not equate to sales, I suspect it is a good performance indicator and a metric that might be of interest to many.

Here is the TOTAL traffic for ALL of the YTB travel sites:




According to the 2010 Travel Weekly Power List, Onetravel.com was ranked #44 to YTB's #29, yet they have1.2 million site visitors per month to YTB's 42,000. 



While YTB's graph seems to be scattered and perhaps even trending down, it looks like Onetravel.com is trending up significantly.

But what about the girdle, lotions and potions side of YTB?  Shop YTB Aisle 19 ZamZuu is poised to be (according to the master distributor) the "largest distribution channel of product in the world by 2020." ZamZuu, it was said, was on target to dwarf Amazon, Walmart and all the rest combined.  So how are they doing?

Here is the TOTAL traffic for ALL of the ZamZuu shopping sites:




It seems that after a slight bump after the last convention, it has flattened or declined a little bit with only 44,600 people visiting the site to shop each month. I wonder how much they are buying?

But what about one of the direct competitors to the ZamZuu opportunity?  Market America seems like they are also in a downspin; yet they still have twice the volume!

MarketAmerica.com traffic:





But why worry about the bit players like Market America when the likes of Amazon and Walmart are within reach?  To win this battle, the reps are going to have to kick up the recruiting a notch--and I suspect start finding people that will actually buy on the site.

Here is the monthly traffic for Amazon.com:





And Walmart.com




With Walmart at 26.4 million visitors per month and Amazon at 74.4 million visitors, I might suggest that YTB/ZamZuu has a lot of work to do. Maybe the Coach can rally those 10,000 millionaires that he made to see if they can step up to the plate?

ZamZuu Versus Amazon!



Yes, that line at the bottom--the flat one...that is the YTB/ZamZuu traffic compared to Amazon. Does YTB/ZamZuu include this type of information in the weekly rah rah calls? Just wondering?

YTB's Crazy Deal For Selling The Home Office

We have certainly come a long way from building a business campus with  conference centers, hotels, and the YTB World Headquarters. It seems that the dreams were dashed with a dose of reality and they were relegated to selling off nearly all of their assets to make ends meet including the K-Mart Worldwide Headquarters in Wood River.  Yesterday they filed an 8-K with the SEC about the sale of the building.

While YTB claims that the transaction is a non-related third party, history indicates that there likely is a relationship somewhere. It may not be evident just yet. It just seems strange that a sweetheart deal like this would be given to complete strangers as this has a lot of risk for YTB, yet does give them some much needed cash flow.

Consider the following:

• The buyer has purchased the building and "all tangible, intangible, and mixed assets"
• The sales price is $7.1 million
• The downpayment is $2,790,000 in cash
• The balance of $4.3 million is being "financed" by YTB as a non-recourse, interest free, unsecured promissory note for a period of three years.*
• If YTB or Zeiser misses three consecutive rent payments or they fail to pay timely, the note goes away as if completely satisfied and the buyer owns the building free and clear.**
• The  $4.3 million dollar note can be reduced significantly. Within 18 months, if the buyer can some up with $2.7 million (a 37.2% discount) the note will be deemed satisfied. If they can come up with $3.2 million in more than 18 months and less than 36 months, the note will also be satisfied.
• YTB had the right to buy back the assets once paid off for $6.6 million  or if they are able to come up with the cash before the note is paid off, they can buy it back for $3.9 million.
• YTB will pay $1,385 rent per month for three years at which time it will escalate to $20,000 per month for 7 years and adjusted for the CPI.

* Who makes a loan (other than family) that is non interest bearing, unsecured and non-recourse (which means that YTB cannot take back the building since the note is not secured)? What are the tax ramifications?
** Judging from the ups and downs of YTB/ZamZuu over the years, missing a payment seems to be the norm rather than the exception. They are currently in default on the headquarters loan with FH Partners. But why on earth would you agree to be bound to an agreement based on Zeiser Motors paying their lease on time?

If you do the math on a few scenarios, the buyers stand to make some good coin if all plays out well.  This deal will give YTB some more breathing room at least for a few more years.

If the buyer pays off in 18 months, they will have expended $5.5 million on this transaction and will own the building free and clear. If YTB decides to exercise their buyback option, they pay the buyer $6.6 million (if they have it) and the buyer makes a cool $1.1 million in 18 months. (Still not sure why he just didn't sign up to be a Free Agent--aren't they all making millions??)

If the buyer pays off in 36 months, they will have expended $6 million on this transaction and will own the building free and clear. If YTB decides to exercise their buyback option, they pay the buyer $6.6 million (if they have it) and the buyer makes a cool $600K in 36 months.

If the stars align and YTB is able to a) avoid a settlement or trial with Illinois, b) have the class action suits dismissed, c) not have any other large settlements or judgments against them, and d) manage to make money and attract new astute business people fools to the program,  they may come out ahead and the buyer may lose.  If after 12 months, YTB decides to exercise their buyback option, they pay the buyer $3.9 million and the buyer will end up having lost $333K on the deal.

But, considering that YTB and ZamZuu has been cash strapped for several years and their stock has consistently closed at 3 cents for the past month and they only have a market cap of $4.1 million, the chances of YTB coming up with this cash in less than 18 months is essentially nil.

Where the $7.1 million comes from is a mystery since it seems there is no intent on either party to take this note to term. Perhaps it is a method to over inflate an asset on a financial statement?

But, this gives YTB some more cash for now and with a dismal 10-K due out at the end of next week, having a "positive" note on the financial statement will give them the ability to make silk out of a sow's ear for 2010 and the first quarter of 2011.

YTB Sells Corporate Office

The last real asset of YTB has been sold. The Corporate Headquarters has been sold for $7.1 million dollars.

The buyer is a non related party (Wood River Capital, LLC) and is to pay YTB $2,790,000 within 5 days after completing their due diligence. The balance of $4.3 million is to be paid to YTB over a term of 3 years. The Kia Dealership lease will convey.

YTB will lease back 40,000 square feet of the property from the new owner.

From the proceeds, YTB will pay FH Partners the $1.6 million owed which is currently in default!

What is unusual is that while YTB claims a sales price of $7.1 million, the buyer is able to accelerate his purchase and if done withing 18 months of closing, the $4.3 million note will reduce to $2.7 million and if between 19 and 36 months it reduces to $3.2 million.

More on this as it becomes available. There likely are some twists and turns. But this sale represents the last major asset of YTB to be sold.  It will however, infuse $1.1 million into the company upon closing.

Update: Wood River Capital, LLC appears to have been established yesterday for this specific transaction (not unusual) and is based in Kissimmee, FL.

505 W VINE ST STE 301 KISSIMMEE, FL 34741

The principles of the company are listed as:

Entity Name

WOOD RIVER CAPITAL LLC

File Number

03520676

Name	Address
RAJYAGURU, VRAJ	505 W VINE ST STE 301, KISSEMMEE, FL - 34741
4HATHI, KANAIYALAL J	2350 W 1ST ST STE 701, FT MYERS, FL - 33901

YTB's Free Program Pays Off

According to a March 9, 2011 memo, YTB sold $413,063 in February which resulted in $23,200 in commissions paid out.  WOW!  The Travel StockPro disclosed yesterday that there were 100K+ people in the program.  Do the math....hmmmm $413,063 divided by 100,000 = $4.13 for average monthly sales per associate! It seems that people are simply flocking to buy travel and goods from YTB!

But, don't stop there. Let's do the math on the riches you can earn. $23,200 divided by 100,000 = $0.23 for an average monthly commission income!   Just think, in a year, you might be able to save enough for a cup of coffee at Starbucks--but a small one. And you will likely have to come up with the tax on top of it!  But in all honesty, if these are all "free agents" I guess it is money for nothing.  But they certainly are not all free agents.

Of the 100,000, it seems that YTB was able to convince 395 suckers people to buy a Zam Zuu "Z-Kit" with free samples for $499.95 each!  But alas, is the $158K enough to truly bail YTB/ZamZuu out of the mess they are in?

Wednesday, March 9, 2011

February was another great month for ZamZuu! Congratulations ZamZuu!

We have more people shopping than ever thanks to all our members spreading the word! In fact, affiliate store sales were a whopping $413,063! That generated $23,200 in commissions at a rate of 5.6%! Way to go ZamZuu. That's a lot of money being earned, and those people are saving money, too, with cash back!

February also boasted $36,881 in Featured Store sales, which is a 58% increase over last year's sales for the same timeframe. Our Brokers and Free Agents were getting the word out in a big way last month, but they weren't the only ones working hard.

Congratulations to all our Reps out there as well! You sold a combined $157,980 worth of our brand new Z Kit! The more Z Kits that get into the hands of Brokers, the more we'll see those Featured Store sales rise.

Just A Correction

A reader brought something to my attention this morning and I want to make sure there are no smoke and mirrors utilized.

A few days ago, the CEO and the CFO of YTB were awarded stock options in accordance with their compensation plan. It really is a non-event and did not even consider positing about it.  However, as a reader pointed out this morning the Travel StockPro has some very incorrect information on his blog this morning.

He states:

While researching a question poised in my last article, and found two new Form 4′s filed in the Company’s SEC filings. If you don’t know what a Form 4 is, (and I suppose there are some who don’t.) it’s a required filing for any insider transactions. Insiders are defined as Executives, Founders, Board of Directors, or anyone else who’s privy to insider information not available to the public. It’s a transparency thing – and it’s not uncommon for CEO’s and Executives to acquire company stock. (I found 9 stocks with CEO buys of over $100,000 in the past week.) The reports were possible after finding the required Form 4 that was filed with each company financial filings.

So what does it say about YTB International when CEO and President Robert Van Patten acquires 500,000 shares of stock, and CFO Jeremy Hemann acquires another 100,000 shares of stock?

 Now to correct the record. They did not acquire ANY stock. They acquired options to buy stock. The option price was $0.035 per share--yes, three and a half cents per share.  But they cannot be exercised until March 1, of 2012, 2013, and 2014 in equal installments.

Now, certainly they are not going to exercise an option for a 3.5 cent stock if the stock is trading at 3 cents as it has since the beginning of March.  I guess it is possible for the stock to rise in the next three years, but this stock has not been solidly over a nickel since December 2009. Is it possible? Sure, anything is possible. Is it probable? Not likely when you consider YTB's stock has declined 98.79% since August 2007, and has been delisted from the OTC exchange and placed on the risky Pink Sheets exchange.

The Travel StockPro also discusses a non-litigated settlement with the State of Illinois. Again, that is entirely possible--there has been no information from Illinois released other than to say "they are still working on the case and still pursuing litigation."  It is a standard answer that really means, "we ain't telling you squat." But YTB did settle with California for a million dollars. I am sure that they are interested in settling with Illinois as well. But all of these "settlements" should be raising some red flags for the people involved with (or considering becoming involved with) the company. The one question you need to ask is, "why settle if they did nothing improper?" Do you pay a parking fine when there is still time on the meter?  Well, you might if the car is stolen or not registered--no need for a court to figure that out. In that case, it might be worth the $25 fine.  Just some food for thought!

Ain't No Funshine

YTB issued a statement (below) that it is being postponed until the fall of 2011 so they can add more enhancements to the YTB program. In the meantime, if you paid $10 to attend, YTB thanks you for the interest free loan you have contributed to help them out of the cash crunch they are currently facing.

Remember folks, you read it here first on December 1 of 2010. Ain't gonna be no funshine!

YTB Spins Loss Of American

In a video this morning, Kim Sorensen told the masses at YTB that American Airlines has dropped YTB as an agency. He explained that it was nothing that YTB did and it was a decision by American Airlines to terminate their "contract."

He said that this was a concern when they lost their contract with Travelocity decided to join with Orbitz, and it has come to fruition.

But to really clarify this, Kim probably should explain that YTB has not had ANY contract with ANY airline since IATAN rescinded their accreditation for violating their terms--YTB was using IATAN to re-sell credentials. This was challenged and ultimately upheld.  So, in order to sell airline tickets, YTB signed up as an affiliate of Travelocity. And just recently, in a questionable and poorly planned move, decided to become an affiliate of Orbitz.

Orbitz IS a legitimate online travel agency and they are indeed accredited by IATAN and YTB is merely piggy-backing off of their IATAN accreditation. The affiliate program (both through Orbitz and Travelocity) is available to anyone and can be implemented on any website and both are FREE.

And a point of clarification,  Sorensen mentions Southwest airlines as being a vendor who always made agencies book direct. Apparently Sorensen is unaware of a small  company called Sabre who has had direct GDS access to Southwest inventory from day one.

Just one more step in the calculated move away from travel.

YTB Gains Support Of Many Suppliers For Virtual Funshine

According to the YTB Travel Network Funshine 2011 facebook page, YTB has received the unwaivering support of the following travel suppliers who will be supporting YTB in this virtual event.

• CARNIVAL CRUISE LINES
• GLOBUS FAMILY OF BRANDS
• CAREY INTERNATIONAL
• TRAVEL GUARD
• SCEPTRE TOURS
• PLEASANT HOLIDAYS
• MSC CRUISES
• TRAVEL IMPRESSIONS
• SUPERCLUBS