Latest YTB Financials

The 3rd quarter 10-Q has been posted. Let's look at some of the numbers.

First up, the number of RTAs. The second quarter showed a loss of 7,242 RTAs, or 5.2% of the RTA sales force. The third quarter continued this downtrend and even accelerated it. In the third quarter, the net loss of RTAs was 16,958 or 12.9% of the already reduced number of RTAs. The number of deactivations was fairly constant from quarter to quarter, 30,638 in the second quarter to 32,815 in the third quarter. However, the number of new sign-ups dropped dramatically from 23,396 to 15,857.

Next, lets look at sales revenue. Online travel store sales and monthly fees for the 3rd quarter were $30,473,409, vs. $33,354,064 in the 2nd quarter. Actual travel commissions in the 3rd quarter were $8,014,502 vs. $8,819,817 in the 2nd. Both of these continue the downward trend.

There is a bit of good news. For the 3rd quarter, YTB had a net income of $287,999 vs. a net loss of $(199,577) in the 2nd quarter.

Other notes are not so good. Remember the plane that was purchased in February for a price of $1.3 million. Apparently that wasn't such a good idea after all, as the company decided in August to sell it for $900K, a loss of $400K.

Also noted were the lawsuits that have already been discussed at length.

Finally, it was noted that YTB is selling property that was purchased a little over a year ago, also at a loss. This was the subject of a prior blog post.

So, what to make of all this. Honestly, it is not a bad as I expected it would be, but it isn't good. While YTB barely managed to eek out a profit for the quarter, the decline in RTAs cannot be considered a good thing. If this rate of decline continues, the number of RTAs will likely drop below 100,000 by the end of the year. This could actually be a good thing for the company as a whole, but a bad thing for the individuals. Why is that? In order to remain a Director and collect Director bonuses, you have to maintain a certain number of RTAs in your organization. As the number of RTAs shrinks, the less bonuses that will need to be paid out. On the other hand, as people start to lose their Director status, that will make recruiting new RTAs and REPs even more difficult, which eventually leads to the sinking ship.

Apparently the Officers and Board members understand this. They note in the latest 10-Q,

"Management has taken several actions to ensure that the Company will continue as a going concern. Management has instituted a cost reduction program that included a reduction in labor and fringe costs, as well as reductions of discretionary expenditures in the operating structure of the organization. In addition, the Company has instituted more efficient management techniques through better utilization of technology. The Company is also evaluating the sale of certain non-core assets and raising new capital for future operations. Management believes these factors will contribute toward achieving profitability. However, there can be no assurance that the Company will be successful in achieving its objectives."

There was no mention of any worry about continuing as a"going concern" in previous 10-Q reports. In case you aren't familiar with accounting and stock reporting documents, a "going concern" clause is very significant, especially when issued by the company's auditors in an annual report. We've got 3 more months to wait for that.

Coming up near the end of the month, the company's responses to the two class-action lawsuits are due to the judge. That should prove interesting.

Also, if the company continues to need additional cash, they won't have their sweetheart bank to fall back on anymore, as on October 10th, Meridian Bank was taken over by the FDIC. That annual report should be an interesting read.

I only wish that Traverus, World Ventures, and the others were publicly traded companies so I could give them equal time.