It's All In The Crowd You Hang Out With

Well, the image above is looking for criminals, and it seems we have found a doozie in Wood River!

Glenn and Starla Green were awarded the President's Award at the August 2008 YTB Convention in St. Louis. They are Level 2 Directors with YTB and Kim Sorensen, the apparent good judge of character that he is, awarded them the prestigous President's Award.

Fast forward to this week, YTB is promoting and encouraging attendance at the Millionaires Mindset Conference on February 21st in Dallas. If you want more details on this conference, you can visit their site, Millionaire Mindset Conference.

On the surface, this appears to be just another scheme organized by fellow Directors Dave and Marlis Funk to grab $10 a piece from unsuspecting RTAs. (Or maybe it is to pay for the fuel in their rolling YTBmobile.) I am not sure of the intent, but one thing is for sure with YTB. If you scratch the surface a little bit, you will always find the dirt.

Well, it seems that Glenn Green has plenty of it. Back in December of 2006, the Houston Press News did an expose on this Millionaire Mindset Conference. Glenn Green does not come into play until the bottom of page 4 when he threatens the reporter several times. One of the threats was to not investigate him. Well, as any good reporter would do, he investigated. And here's what he found:

Except the ten-year sentence for theft in 1990, according to Harris County Court records. Green was released after one year. According to an affidavit by a Texas Department of Public Safety officer, the theft worked like this: Green gave an accomplice an American Express card in Green's ex-wife's name. The accomplice charged multiple purchases of $49.99 at a Chevron station, when "in fact, no merchandise had been bought." The accomplice then gave the cash to Green. During April and May 1990, the charges exceeded $20,000.

At the time Green was popped for that crime, he was on probation for forgery for two earlier charges out of Brazos County, according to Texas Department of Criminal Justice spokeswoman Michelle Lyons. He was sentenced to ten years for those, which he served concurrently with the Harris County sentencing.

Also falling short of the Glenn Green Investigative Worthiness Standard was the ten years deferred adjudication in 1993 for fraudulent transfer of a motor vehicle. According to the investigating officer's notes, part of the case record in Harris County Court, Green bought and sold over a dozen cars, promising to pay off the leases, when he had no authorization from the lenders.

All but one of the 20 associated charges were dropped. He was also ordered to pay $31,233 in restitution

Harris County court records also show that the Houston Livestock Show and Rodeo sued Green and his wife, Starla, in 2002. The suit was for nonpayment of $107,000 Glenn and Starla bid on a champion steer and a grand champion barrow pig named Cowboy in the 1999 Rodeo auction.

"I know that the money spent here goes for a great cause," Green is quoted as saying in the Rodeo's press release.

Then Starla chimes in about the 17-year-old Brownfield Future Farmer of America who spent four hours a day after school tending to Cowboy: "[He's] very deserving. We were prepared to do what it took."

Everything, that is, except actually pay what they bid. A Harris County judge ordered the Greens to pay the full amount, plus legal fees.

Rodeo Vice President Leroy Shafer says the Greens never paid the money -- the largest debt of any one entity in the show's history. He says it was the first time in the Rodeo's history that a grand champion was involved in a bad purchase, and the first bad purchase of two champions in one year. (The highest bidder's money goes to whoever shows the animal, any charities the bidder earmarked money for, and the Rodeo's scholarship fund. Shafer says the Rodeo was able to pay the $25,000 promised to Cowboy's exhibitor, as well as the approximately $1,000 Green had earmarked for the Houston Women's Shelter.)

Green now works for a multilevel-marketing travel package company called Your Travel Biz.

Wow, Coach and Kim really take that Yale to Jail thing seriously. Penn State to State Penn. First there was Chris Paraldi, then Phil Piccolo and now this. This man has it all. I mean what more could YTB want in a Director. Someone whom they promote and encourage others to emulate. I wonder if all of the non-profit associations YTB is supposedly managing are aware that one of their directors stiffed a non-profit for over $100,000? Maybe in the interest of being transparent, they will add this to their "Facts" About YTB website!

Just to recap, here is the rap sheet on Glenn Green:

• Theft
• Forgery
• Fraudulent Transfer of Motor Vehicles
• Breach of Contract with a Non-Profit where he failed to pay then $107,000

NOTE: To all the Directors and Coach's Corner Members (and esteemed guests) currently in Wood River for the "Best Director's Meeting Ever"--watch your wallets!

Hey Carnival!

Well, it has been just over a year since Lisa Bauer, Dondra Ritzenthaler, and Royal Caribbean took the gutsy move to terminate relationships with companies they deemed to be card mills. It has also been almost a year and Carnival Cruise Lines has been mum on the topic.

The question I have for Micky Arison and Gerry Cahill centers around if that was a good move or not? At what cost did you receive any incremental revenue? Did you receive any?

According to the 3rd Quarter SEC filings, it seems that Royal Caribbean's income is up 4.2% for the quarter and 7.4% for the year; while Carnival is down 3.2% for the quarter and 4.4% for the year. I know it is hard to compare apples to apples when Carnival has so many brands that are really diverse, but the bottom line is telling.

I wish I could find a breakout by brand because I content that continuing to do business with MLM or Card Mill agencies is indeed bad business.Looking at the bottom line, it appears that the expected incremental revenue from Royal Caribbean never materialized for Carnival.

If we look at one of the known agencies that was terminated by Royal Caribbean (YTB) is it obvious from their own SEC numbers that they bulk of their people do not sell much product. The Referring Travel Agents were responsible for a reported (yet unverified) $211 million in sales for 2007. There are claims that 2008 sales are higher, but that remains to be seen since their enrollment has dropped significantly.

So the question to Carnival remains was the $33 million paid in commission really worth the additional sales? The YTB numbers indicate that the vast majority of sales made are for personal travel and not to that of legitimate clients. The California Attorney General has also alleged this in his $25 million lawsuit against YTB. So why is Carnival happy with essentially discounting cruises by 16% that they likely would have captured in any event? Sure, there are a lot of people in YTB that took cruises ONLY because of the discount, but come on--$33 million? And that does not even cover the override agreement in place. So is this really good business?

What about the bad press? Remember the YTB Travel Agent in Tennessee that sold a Carnival Cruise to "Grand Caymen" to hundreds of high school seniors and then vamoosed with the money? What was the cost to the reputation of Carnival and YTB?

What about your additional cost? There are marketing costs to attend their events, costs to facilitate the product update calls, and let's not forget that Carnival flew res center agents to Wood River to handle consumer calls for the recent "Sail-A-Thon". Why doesn't Carnival send res agents to all travel agencies to handle consumer inquiries? I think I know the answer--and I bet Carnival does as well.

Have you noticed a decline in bookings from legitimate agencies that used to support Carnival in years past? Has Royal Caribbean seen an increase?

I contend that accepting Card Mill business is likely bad business. Your bottom line sure seems to support this as well.

2009 looks to be one of the more challenging years facing the travel industry. Who is better positioned to help out Carnival Cruise Lines? Is it the travel professional who knows your product and sells to the public? Or is it the "I just bought my credential" agent that is looking for a 16% discount on his own cruise.

Assets For Cash? You Betcha!

Ever since YTB started selling off some of their assets, people have been wondering if they have been doing it because they are in need of “quick” cash. They have sold some real estate at a loss of $350,000 and are selling their much touted jet that has been owned for less than a year for a loss of $400,000. Sounds to me like they’re trying to pump up their cash on hand before the end of year report comes out.

Now, this past weekend, the 3Q report was released, and as expected, it wasn’t that great. Granted, there was a profit made, but not that much of one. $287,999 for 3 months. With a sales force of just over 114,000 people. That averages out to $2.51 per person. Now, I know all the arguments…..not everyone sells (well, get rid of the deadwood and stop propping up the sales force figures), the economy is bad (but doesn’t YTB advertise itself as recession proof?), etc. For YTD, the company is in the RED $3,429,229. If this past quarter is indicative, one has to wonder if 4th quarter earnings will be enough to turn that red number to black.

This brings us to the question of selling off more assets to raise more capital. The company itself has said that they are evaluating the possibility of this, along with other measures to try to stop the bleeding. Of course, those on the pro YTB side don’t want to believe that this could possibly be, and have questioned whether this information is factual, or just a figment of our collective imaginations. Well, my friends, I hate to tell you, but it is factual. It says so, right in the report, despite all those saying that it has yet to be found.

I found it. Quite easily, I might add, if one were to read the entire 10Q, and not just what is found on Yahoo Finance. It is on Page 9, in the Notes To Condensed Consolidated Financial Statements, Note 2. Paragraph 8, which deals with the incurred losses, and how the company plans on counteracting the losses. They talk about how the company has instituted a cost reduction program and more efficient management techniques. The 3rd to last sentence says: 

"The company is also evaluating the sale of certain non-core assets and raising new capital for future operations." 

Paragraph 8 goes on to say:

"However, there can be no assurance that the Company will be successful in achieving its objectives."

Paragraph 9 is interesting as well. It states (emphasis is mine):

"The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is substantially dependant on the successful execution of many of the actions referred to above, on the timeline contemplated by our plan. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern."

Of the "actions referred to above", they state that they have already instituted them (the reduction in labor and fringe costs, reduction of discretionary expenditures, more efficient management techniques), so the only thing left for them to do is to sell assets.

So, there you have it, ladies and gentlemen. Straight from the horses mouth. The question now truly is, to sell or not to sell.

Reality Bites!

Well, the long awaited 10-Q was released on Friday and there was a very good analysis of the document posted here. However, on other blogs and forums, the word is that the TTAs are spinning this information and the news is good.

Well, let's take the TTAs out of the equation for a bit and take a look at the analysis provided by non-travel related entities. These folks don't have a horse in this race and are merely analyzing the data given to them. So is it really JUST a bunch of disgruntled TTAs? Or is there a lot of truth behind what has been posted in this blog over the past year?


From the St. Louis Post Dispatch:
YTB growth stalls in Q3, sells assets


From the St. Louis Business Journal:
YTB sees Q3 profit fall 87% 


From the Madison County Record:
YTB posts meager third quarter earnings 


From the Legal Newsline:
Online travel company targeted by AGs post 3Q loss 

From Travel Weekly:
YTB's Q3 net profit falls 87%


And yes, these are all negative sounding headlines and yes, I did select them to make a point. The remainder are pretty neutral, but if anyone can show me a positive headline from the recent filing, by all means bring it on!

But in more positive news, the Emmons County Record is reporting that Grits Travel* has just opened at the Ampride Convenience Store on U.S. Highway 83 in Emmons County North Dakota.

* Yes, that is right, "grits" named after the owner's favorite corn-based food in the south, hominy grits.

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.

YTB sells administrative offices

We need to wait a few more days for the YTB 10-Q filing, but it appears that they need to raise some cash. According to this 8-K filing, YTB is selling its property at 1 Country Club View in Edwardsville, IL. The property is being sold to Prestige Management Services, LLC for $1.5 million. This is the same property that YTB acquired a little more than a year ago, and according to this 8-K filing paid $1.85 million for.

The current sale is not only for the building and land, but also "All office equipment to remain with building to include: Cubicles, Chairs, Desk, Tables, Break Room Equipment. Sellers may leave or take Phone system." Computers and Computer Systems are excluded. Further, the buyer has taken an option to purchase 600 Country Club View at any time within 12 months of the closing of this sale.

This means that YTB is losing $350,000 on the sale, plus the cost of the equipment and furniture, plus the costs of acquisition and sale.

Why would they be doing this? The obvious speculation is that the company is bleeding financially, and needs to raise cash.

A quick search found a Prestige Management Services, LLC in Alton, IL, but their website, such as it is, doesn't really give us any information about them. The "whois" check shows the site to be registered to the website hosting company. What appears to be a related company, Prestige Management, Inc. is located in the same town, and could have formed an LLC to purchase the property, rather than buy it directly for the corporation. I guess it doesn't really matter who the buyer is.

This property that has been sold was used by YTB for administrative offices. What property will they be using now for this purpose? Have they laid-off so many people that they no longer need the space? Perhaps they will be leasing back the offices. If so, since they were leasing them prior to the 2007 purchase, why did they buy in the first place?

Hopefully the answers to these questions, and others, will be made public when the 10-Q is filed on 11/14.