Multi-level travel marketing firm, YTB International, has filed its annual 10K report with the Securities and Exchange Commission, reporting that it has incurred losses from continuing operations for 2010 and 2009 of $4 million and $6.8 million, respectively in an 86-page detailed report of its operations.
YTB also said that negative current economic conditions and other factors have led to a fall off in the number of its active subscribers in 2010 by a net loss of 7,467 to a total of 33,707 active subscribers in 2010, down considerably from the 41,174 subscribers reported as of Dec. 31, 2009.
Revenue from marketing site sales and monthly fees decreased by $27.6 million to $24.8 million for 2010, compared to $52.4 million in 2009, YTB said. The decrease, according to YTB, was in direct relation to the number of active paying subscribers.
Convention revenue decreased by $283,000 to $322,000 for 2010, down from the $605,000 generated in 2009. The decrease was attributed to a reduction in the number of attendees at the YTB’s National Convention in 2010 compared to 2009.
Product sales and commissions revenue, which is comprised of revenue from products sold through the YTB ZamZuu network of online retail stores and travel booking commission revenue from travel providers, also declined. Product sales revenue decreased by $3.3 million to $11.4 million for 2010; in 2009, those numbers came in at $14.7 million. YTB attributed the loss to the lower average number of subscribers in 2010 versus 2009.
“The product sales and commissions revenue decrease is primarily due to a $2.6 million reduction in travel commissions resulting from a decline in the number of customers utilizing us as their travel sale provider in 2010 compared to 2009,” YTB said.
This includes a $952,000 reduction in sales aids resulting from the decline in the number of active subscribers, and a $411,000 reduction in training revenue due to the suspension of training at various locations throughout the country. YTB said the company now offers online training resources, which it believes to be more efficient.
YTB also said it is in the process of exchanging information with the Office of the Illinois Attorney General and exploring possible resolution alternatives to a May 14, 2009, civil action suit filed against YTB. The case, filed in the Superior Court of Illinois, Champaign County, by the Illinois Attorney General, alleges that YTB violated Illinois’ unfair competition and advertising laws. YTB said it believes it has meritorious defenses to the claims and that the Illinois Attorney General has proposed resolving the suit short of litigation. YTB is based in Illinois.
YTB also noted the effects of the August 2008 civil action filed against YTB in the Superior Court of California, County of Los Angeles, by the California Attorney General. The complaint alleged that YTB violated California’s unfair competition, anti-pyramid and advertising laws. The California Attorney General won a permanent injunction preventing YTB from making any untrue or misleading statements or committing any acts of unfair competition and penalties of at least $15 million, and restitution of at least $10 million.