| Delaware                                                       |   | 20-2181181                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

|   | Yes  x |   | No o |   |
|--------|------------------|--------|-----------|--------|
|   |             |   |      |   |

|   | Yes  o |   | No o |   |
|--------|------------------|--------|-----------|--------|

| Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  o | Smaller reporting company  x |
|--------------------------------------|--------------------------------|------------------------------------|----------------------------------------|

|   | Yes  o |   | No x |   |
|--------|------------------|--------|-----------|--------|

----

| PART I     |              | FINANCIAL INFORMATION                                                                  |   |   |                                                                                                  |     |
|------------|-------------------|----------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------|----------|
|       |              |                                                                                   |   |   |                                                                                                  |     |   |   |   |   |   |
| Item 1.    |              | Financial Statements.                                                                  |   |   |                                                                                                  |     |
|       |              |                                                                                   |   |   | Condensed Consolidated Balance Sheets, June 30, 2010 (Unaudited) and December 31, 2009                | 3        |
|       |              |                                                                                   |   |   | Condensed Consolidated Statements of Operations (Unaudited) Three months ended June 30, 2010 and 2009 | 4        |
|       |              |                                                                                   |   |   | Condensed Consolidated Statements of Operations (Unaudited) Six months ended June 30, 2010 and 2009   |   5 |
|       |              |                                                                                   |   |   | Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, 2010 and 2009   |   6 |
|       |              |                                                                                   |   |   | Notes To Condensed Consolidated Financial Statements (Unaudited)                                      |     |   | 8 |
| Item 2.    |              | Management's Discussion and Analysis of Financial Condition and Results of Operations. | 24     |
| Item 3.    |              | Quantitative and Qualitative Disclosures About Market Risk.                            |   |   | 42                                                                                                    |
| Item 4T.   |              | Controls and Procedures.                                                               |   |   |                                                                                                  | 42       |
|       |              |                                                                                   |   |   |                                                                                                  |     |   |   |   |   |   |
| PART II    | OTHER INFORMATION |                                                                                   |   |   |                                                                                                  |
|       |              |                                                                                   |   |   |                                                                                                  |     |   |   |   |   |   |
| Item 1.    |              | Legal Proceedings.                                                                     |   |   |                                                                                                  | 42       |
| Item 1A.   | Risk Factors.     |                                                                                   |   |   |                                                                                                  | 42       |
| Item 2.    |              | Unregistered Sales of Equity Securities and Use of Proceeds.                           |   |   | 42                                                                                                    |
| Item 3.    |              | Defaults Upon Senior Securities.                                                       |   |   |                                                                                                  | 42       |
| Item 4.    |              | [Removed and Reserved.]                                                                |   |   |                                                                                                  | 42       |
| Item 5.    |              | Other Information.                                                                     |   |   |                                                                                                  | 42       |
| Item 6.    |              | Exhibits.                                                                              |   |   |                                                                                                  |     | 43 |
| Signatures |              |                                                                                   |   |   |                                                                                                  |     |

----

| Dollars in thousands, except share and per share data                                                                                                                                                                                                                    |   | (Unaudited) June 30, 2010 |    |   | December 31, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|---------|--------|------------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                   |   |                      |    |   |                   |   |
| Current assets:                                                                                                                                                                                                                                                          |   |                      |    |   |                   |   |
|      Cash                                                                                                                                                                                                                                       |   | $                         | 1,807   |   |                   | $      | 678 |   |
|      Restricted cash                                                                                                                                                                                                                            |   |                      | 1,024   |   |                   |   | 2,637 |   |
|      Short-term investments                                                                                                                                                                                                                     |   |                      | 28      |   |                   |   | 28 |   |
|      Accounts receivable (less allowance for doubtful accounts of $0 in 2010 and $110 in 2009)                                                                                                                                                  |   |                      | 675     |   |                   |   | 674 |   |
|      Notes receivable                                                                                                                                                                                                                           |   |                      | 1,630   |   |                   |   | 1,602 |   |
|      Inventory, net                                                                                                                                                                                                                             |   |                      | 44      |   |                   |   | 125 |   |
|      Prepaid marketing commissions and advances                                                                                                                                                                                                 |   |                      | 1,279   |   |                   |   | 1,282 |   |
|      Other prepaid expenses and current assets, net                                                                                                                                                                                             |   |                      | 458     |   |                   |   | 332 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|      Total current assets                                                                                                                                                                                                                       |   |                      | 6,945   |   |                   |   | 7,358 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| Assets held for sale                                                                                                                                                                                                                                                     |   |                      | 6,686   |   |                   |   | 5,248 |   |
| Property and equipment, net                                                                                                                                                                                                                                              |   |                      | 4,085   |   |                   |   | 6,432 |   |
| Goodwill                                                                                                                                                                                                                                                                 |   |                      | 2,529   |   |                   |   | 2,529 |   |
| Other assets                                                                                                                                                                                                                                                             |   |                      | 15      |   |                   |   | 49 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|      TOTAL ASSETS                                                                                                                                                                                                                               |   | $                         | 20,260  |   |                   | $      | 21,616 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                              |   |                      |    |   |                   |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|      Accounts payable                                                                                                                                                                                                                           |   | $                         | 738     |   |                   | $      | 1,275 |   |
|      Accrued commissions                                                                                                                                                                                                                        |   |                      | 2,313   |   |                   |   | 2,740 |   |
|      Other accrued expenses                                                                                                                                                                                                                     |   |                      | 2,209   |   |                   |   | 2,424 |   |
|      Deferred revenue                                                                                                                                                                                                                           |   |                      | 3,163   |   |                   |   | 2,989 |   |
|      Short-term debt                                                                                                                                                                                                                            |   |                      | 2,210   |   |                   |   | 1,587 |   |
|      Other current liabilities                                                                                                                                                                                                                  |   |                      | 1,307   |   |                   |   | 1,274 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|     Total current liabilities                                                                                                                                                                                                                        |   |                      | 11,940  |   |                   |   | 12,289 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| Other long-term liabilities:                                                                                                                                                                                                                                             |   |                      |    |   |                   |   |   |   |
|      Other income tax liabilities                                                                                                                                                                                                               |   |                      | 181     |   |                   |   | 183 |   |
|      Accrued severance                                                                                                                                                                                                                          |   |                      | 1,429   |   |                   |   | 1,731 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|     Total other long-term liabilities                                                                                                                                                                                                                |   |                      | 1,610   |   |                   |   | 1,914 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|      TOTAL LIABILITIES                                                                                                                                                                                                                          |   |                      | 13,550  |   |                   |   | 14,203 |   |
| Commitments and Contingencies (Note 16)                                                                                                                                                                                                                                  |   |                      |    |   |                   |   |   |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| Preferred stock, $.001 par value, 5,000,000 authorized, none issued and outstanding at June 30, 2010 and December 31, 2009                                                                                                                                               |   |                      | -       |   |                   |   | - |   |
| Class A Common stock, $.001 par value, 300,000,000 shares authorized; 80,302,414 and 76,185,988 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively                                                                             |   |                      | 80      |   |                   |   | 76 |   |
| Class B Common Stock, $.001 par value, 100,000,000 shares authorized; 34,318,278 and 33,613,412 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively; convertible into Class A shares on a one-for-one basis      |   |                      | 34      |   |                   |   | 34 |   |
| Additional paid-in capital                                                                                                                                                                                                                                               |   |                      | 41,043  |   |                   |   | 40,856 |   |
| Accumulated other comprehensive loss                                                                                                                                                                                                                                     |   |                      | 19      |   |                   |   | 10 |   |
| Accumulated deficit                                                                                                                                                                                                                                                      |   |                      | (34,444 | )      |                   |   | (33,541 | ) |
| Treasury stock, at cost, 25,404 shares at June 30, 2010 and December 31, 2009                                                                                                                                                                                            |   |                      | (22     | )      |                   |   | (22 | ) |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|      TOTAL STOCKHOLDERS' EQUITY                                                                                                                                                                                                                 |   |                      | 6,710   |   |                   |   | 7,413 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
|      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                 |   | $                         | 20,260  |   |                   | $      | 21,616 |   |
|                                                                                                                                                                                                                                                                     |   |                      |    |   |                   |   |   |   |
| See accompanying notes to unaudited condensed consolidated financial statements.                                                                                                                                                                                         |   |                      |    |   |                   |   |   |   |

----

|                                                                                                                                               |   |                        |        |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|--------|--------|
|                                                                                                                                               |   | Three months ended June 30, |        |
| Dollars in thousands, except share and per share data                                                                                              |   | 2010                        |        |   | 2009   |   |
| NET REVENUES                                                                                                                                       |   |                        |        |   |   |   |
|      ITC and PDS sales and monthly fees                                                                                   |   | $                           | 5,887       |   |   | $      | 13,799 |   |
|      Travel and product commissions and services                                                                          |   |                        | 2,591       |   |   |   | 3,779 |   |
|      Training programs and marketing materials                                                                            |   |                        | 159         |   |   |   | 285 |   |
|      Other                                                                                                                |   |                        | 192         |   |   |   | 185 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
|      Total net revenues                                                                                                   |   |                        | 8,829       |   |   |   | 18,048 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| OPERATING EXPENSES                                                                                                                                 |   |                        |        |   |   |   |   |   |
|      Marketing commissions                                                                                                |   |                        | 2,446       |   |   |   | 6,646 |   |
|      Travel and product commissions                                                                                       |   |                        | 1,703       |   |   |   | 2,211 |   |
|      Depreciation and amortization                                                                                        |   |                        | 434         |   |   |   | 678 |   |
|      Training programs and marketing materials                                                                            |   |                        | 146         |   |   |   | 349 |   |
|      General and administrative                                                                                           |   |                        | 4,497       |   |   |   | 7,110 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
|      Total operating expenses                                                                                             |   |                        | 9,226       |   |   |   | 16,994 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| OPERATING (LOSS) INCOME                                                                                                                            |   |                        | (397        | )      |   |   | 1,054 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                                                                                             |   |                        |        |   |   |   |   |   |
|      Interest and dividend income                                                                                         |   |                        | 34          |   |   |   | 44 |   |
|      Interest expense                                                                                                     |   |                        | (73         | )      |   |   | (22 | ) |
|      Foreign currency translation gain                                                                                    |   |                        | (5          | )      |   |   | 13 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
|      Total other (expense) income                                                                                         |   |                        | (44         | )      |   |   | 35 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION (BENEFIT)                                                                     |   |                        | (441        | )      |   |   | 1,089 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| INCOME TAX PROVISION (BENEFIT)                                                                                                                     |   |                        | 28          |   |   |   | (192 | ) |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS                                                                                                           |   |                        | (469        | )      |   |   | 1,281 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| LOSS FROM DISCONTINUED OPERATIONS (NET OF TAX)                                                                                                     |   |                        | (11         | )      |   |   | (2,871 | ) |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| NET LOSS                                                                                                                                           |   | $                           | (480        | )      |   | $      | (1,590 | ) |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| NET INCOME (LOSS) PER SHARE:                                                                                                                       |   |                        |        |   |   |   |   |   |
|                                                                                                                           |   |                        |        |   |   |   |   |   |
|      Weighted average shares outstanding - basic and diluted for Class A and Class B shares      |   |                        | 114,133,504 |   |   |   | 105,627,059 |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
|      (Loss) income per share from continuing operations - basic and diluted*                          |   | $                           | (0.00       | )      |   | $      | 0.01 |   |
|      Loss per share from discontinued operations - basic and diluted*                                                     |   | $                           | (0.00       | )      |   | $      | (0.03 | ) |
|      Net loss per share - basic and diluted*                                                                              |   | $                           | (0.00       | )      |   | $      | (0.02 | ) |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| * Amounts for Class A and Class B shares are the same under the two-class method.                                                             |   |                        |        |   |   |
|                                                                                                                                               |   |                        |        |   |   |   |   |   |
| See accompanying notes to unaudited condensed consolidated financial statements.                                                                   |   |                        |        |   |   |

----

|                                                                                                                                               |   | Six months ended June 30, |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|-------------|
| Dollars in thousands, except share and per share data                                                                                              |   | 2010                      |        |   | 2009 |   |
| NET REVENUES                                                                                                                                       |   |                      |        |   |   |   |
|      ITC and PDS sales and monthly fees                                                                                   |   | $                         | 12,826      |   |   | $ | 32,407 |   |
|      Travel and product commissions and services                                                                          |   |                      | 4,479       |   |   |   | 5,939 |   |
|      Training programs and marketing materials                                                                            |   |                      | 489         |   |   |   | 769 |   |
|      Other                                                                                                                |   |                      | 320         |   |   |   | 305 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
|      Total net revenues                                                                                                   |   |                      | 18,114      |   |   |   | 39,420 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| OPERATING EXPENSES                                                                                                                                 |   |                      |        |   |   |   |   |   |
|      Marketing commissions                                                                                                |   |                      | 5,406       |   |   |   | 16,013 |   |
|      Travel and product commissions                                                                                       |   |                      | 2,842       |   |   |   | 3,625 |   |
|      Depreciation and amortization                                                                                        |   |                      | 890         |   |   |   | 1,336 |   |
|      Training programs and marketing materials                                                                            |   |                      | 289         |   |   |   | 972 |   |
|      General and administrative                                                                                           |   |                      | 9,457       |   |   |   | 18,032 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
|      Total operating expenses                                                                                             |   |                      | 18,884      |   |   |   | 39,978 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| OPERATING LOSS                                                                                                                                     |   |                      | (770        | ) |   |   | (558 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                                                                                             |   |                      |        |   |   |   |   |   |
|      Interest and dividend income                                                                                         |   |                      | 71          |   |   |   | 71 |   |
|      Interest expense                                                                                                     |   |                      | (140        | ) |   |   | (48 | ) |
|      Foreign currency translation gain (loss)                                                                             |   |                      | (5          | ) |   |   | 15 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
|      Total other (expense) income                                                                                         |   |                      | (74         | ) |   |   | 38 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION (BENEFIT)                                                                              |   |                      | (844        | ) |   |   | (520 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| INCOME TAX PROVISION (BENEFIT)                                                                                                                     |   |                      | 53          |   |   |   | (82 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| LOSS FROM CONTINUING OPERATIONS                                                                                                                    |   |                      | (897        | ) |   |   | (438 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| LOSS FROM DISCONTINUED OPERATIONS (NET OF TAX)                                                                                                     |   |                      | (6          | ) |   |   | (3,064 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| NET LOSS                                                                                                                                           |   | $                         | (903        | ) |   | $ | (3,502 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| NET LOSS PER SHARE:                                                                                                                                |   |                      |        |   |   |   |   |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
|      Weighted average shares outstanding - basic and diluted for Class A and Class B shares      |   |                      | 113,577,292 |   |   |   | 104,715,067 |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
|      Loss per share from continuing operations - basic and diluted*                                                       |   | $                         | (0.01       | ) |   | $ | (0.00 | ) |
|      Loss per share from discontinued operations - basic and diluted*                                                     |   | $                         | (0.00       | ) |   | $ | (0.03 | ) |
|      Net loss per share - basic and diluted*                                                                              |   | $                         | (0.01       | ) |   | $ | (0.03 | ) |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| * Amounts for Class A and Class B shares are the same under the two-class method.                                                             |   |                      |        |   |   |
|                                                                                                                                               |   |                      |        |   |   |   |   |   |
| See accompanying notes to unaudited condensed consolidated financial statements.                                                                   |   |                      |        |   |   |

----

|                                                                                                               |   | Six months ended June 30, |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|
| Dollars in thousands                                                                                               |   | 2010                      |   |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                              |   |                      |   |   |   |   |
| Net loss                                                                                                           |   | $                         | (903   | ) |   | $ | (3,502 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                          |   |                      |   |   |   |   |   |   |
|      Depreciation and amortization                                                        |   |                      | 890    |   |   |   | 1,336 |   |
|      Write-off of uncollectible notes and advances                                        |   |                      | -      |   |   |   | 22 |   |
|      Provision for uncollectible notes and advances                                       |   |                      | -      |   |   |   | 13 |   |
|      (Gain) loss on disposal of property and equipment                                    |   |                      | (1     | ) |   |   | 40 |   |
|      Loss from disposal of discontinued operations, net of tax                            |   |                      | 6      |   |   |   | 2,600 |   |
|      Reserve against inventory                                                            |   |                      | 33     |   |   |   | 407 |   |
|      Reserve against earnest money deposit                                                |   |                      | -      |   |   |   | 4 |   |
|      Amortization of debt issue costs                                                     |   |                      | 32     |   |   |   | - |   |
|      Interest income on notes receivable                                                  |   |                      | -      |   |   |   | (16 | ) |
|      Provision for uncollectible interest on notes receivable                             |   |                      | -      |   |   |   | 16 |   |
|      Bad debt provision reversal                                                          |   |                      | (74    | ) |   |   | - |   |
|      Amortization of restricted stock                                                     |   |                      | 47     |   |   |   | 1,087 |   |
|      Stock option expense                                                                 |   |                      | 124    |   |   |   | 181 |   |
|      Compensation credit                                                                  |   |                      | (97    | ) |   |   | (270 | ) |
| Change in operating assets and liabilities:                                                                        |   |                      |   |   |   |   |   |   |
|      Restricted cash-collateral provided by (used as) reserves for credit card processing |   |                      | 1,600  |   |   |   | (1,288 | ) |
|      Restricted cash-collateral Canadian operations                                       |   |                      | 13     |   |   |   | 96 |   |
|      Accounts receivable, net                                                             |   |                      | 73     |   |   |   | 1,364 |   |
|      Notes receivable                                                                     |   |                      | (28    | ) |   |   | 82 |   |
|      Inventory                                                                            |   |                      | 48     |   |   |   | 269 |   |
|      Prepaid marketing commissions and advances                                           |   |                      | (8     | ) |   |   | 5,418 |   |
|      Other prepaid expenses and current assets                                            |   |                      | (105   | ) |   |   | (181 | ) |
|      Other assets                                                                         |   |                      | 34     |   |   |   | 3 |   |
|      Accounts payable                                                                     |   |                      | (537   | ) |   |   | (1,244 | ) |
|      Accrued commissions                                                                  |   |                      | (372   | ) |   |   | (1,248 | ) |
|      Other accrued expenses                                                               |   |                      | (482   | ) |   |   | (138 | ) |
|      Other current liabilities                                                            |   |                      | 37     |   |   |   | (58 | ) |
|      Deferred revenue                                                                     |   |                      | 191    |   |   |   | (5,949 | ) |
|      Other income tax liabilities                                                         |   |                      | (2     | ) |   |   | 5 |   |
|      Other liabilities                                                                    |   |                      | -      |   |   |   | (2 | ) |
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                                |   |                      | 519    |   |   |   | (953 | ) |
|                                                                                                               |   |                      |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                              |   |                      |   |   |   |   |   |   |
| Purchases of property and equipment                                                                                |   |                      | (2     | ) |   |   | (59 | ) |
| Proceeds from sale of property and equipment                                                                       |   |                      | 22     |   |   |   | 14 |   |
| Proceeds from asset held for sale                                                                                  |   |                      | -      |   |   |   | 872 |   |
| Cash paid to prepare asset for sale                                                                                |   |                      | -      |   |   |   | (28 | ) |
| Proceeds from redemption of short-term investments                                                                 |   |                      | -      |   |   |   | 357 |   |
| Purchases of short-term investments                                                                                |   |                      | -      |   |   |   | (106 | ) |
| Cash relinquished in disposal of discontinued operations                                                           |   |                      | -      |   |   |   | (378 | ) |
| NET CASH PROVIDED BY INVESTING ACTIVITIES                                                                          |   |                      | 20     |   |   |   | 672 |   |
|                                                                                                               |   |                      |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                              |   |                      |   |   |   |   |   |   |
| Proceeds from issuance of debt                                                                                     |   |                      | 650    |   |   |   | - |   |
| Payment of debt issue costs                                                                                        |   |                      | (31    | ) |   |   | - |   |
| Repayment of short-term debt                                                                                       |   |                      | (27    | ) |   |   | (47 | ) |
| Proceeds received under stock purchase plan                                                                        |   |                      | -      |   |   |   | 117 |   |
| NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                          |   |                      | 592    |   |   |   | 70 |   |
|                                                                                                               |   |                      |   |   |   |   |   |   |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                                            |   |                      | (2     | ) |   |   | 11 |   |
|                                                                                                               |   |                      |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                                    |   |                      | 1,129  |   |   |   | (200 | ) |
| CASH, BEGINNING OF PERIOD                                                                                          |   |                      | 678    |   |   |   | 1,203 |   |
| CASH, END OF PERIOD                                                                                                |   | $                         | 1,807  |   |   | $ | 1,003 |   |

----

|                                                                             |   |                      |   |   |   |   |
|----------------------------------------------------------------------------------|--------|---------------------------|--------|--------|--------|--------|
|                                                                             |   | Six months ended June 30, |   |
| Dollars in thousands                                                             |   | 2010                      |   |   | 2009   |   |
| SUPPLEMENTAL CASH FLOW INFORMATION:                                              |   |                      |   |   |   |   |
| Interest paid (net of capitalized interest)                                      |   | $                         | 118    |   |   | $      | 49 |   |
| Income taxes paid                                                                |   |                      | 66     |   |   |   | 145 |   |
|                                                                             |   |                      |   |   |   |   |   |   |
| SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:                        |   |                      |   |   |   |   |   |   |
| Reclass of property and equipment to assets held for sale                        |   | $                         | 1,438  |   |   | $      | - |   |
| Shares issued for severance liability                                            |   |                      | 79     |   |   |   | - |   |
| Reclass of notes receivable from other assets to notes receivable                |   |                      | -      |   |   |   | 1,200 |   |
| Stock option compensation                                                        |   |                      | 43     |   |   |   | 18 |   |
| Shares surrendered in repayment of note receivable                               |   |                      | -      |   |   |   | 22 |   |
| Shares issued for restricted stock grant                                         |   |                      | 4      |   |   |   | 4 |   |
| Transfer of Class B common stock shares to Class A common stock shares           |   |                      | 1      |   |   |   | 1 |   |
| Property and equipment included in accounts payable                              |   |                      | -      |   |   |   | 15 |   |
|                                                                             |   |                      |   |   |   |   |   |   |
| See accompanying notes to unaudited condensed consolidated financial statements. |   |                      |   |   |   |   |   |   |

----

----

| ·   | Disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using significant unobservable inputs. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A reporting entity is to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·  | Understanding that the Company’s customers today are more value oriented in their purchase decisions, the Company is expanding the “value” received in purchasing an ITC by bringing “in-house” its new ZamZuu initiative where TSOs can direct customers to shop for items they already purchase online and receive cash back on normal purchases of everyday items, as well as commissions on the purchase of featured specialty products. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company is developing new marketing programs and enhancing existing marketing programs to communicate the value of its ITCs and PDSs by offering a marketing system that enhances consistent marketing and tracking of the TSOs’ and BOs’ sales efforts via a systematic marketing program. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training has been expanded by providing TSOs and BOs with videos on how to conduct home parties to help sell the various featured products.  The recent launch of a “media center” provides easier access and a larger variety of training videos. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Dollars in thousands        |   | June 30, 2010 |   |   | December 31, 2009 |   |
|-----------------------------|--------|---------------|--------|--------|-------------------|--------|
|                        |   |          |   |   |              |   |   |   |
| Audio / video marketing     |   | $             | -      |   |              | $      | 29 |   |
| Printed marketing materials |   |          | 22     |   |              |   | 78 |   |
| Apparel                     |   |          | 22     |   |              |   | 18 |   |
|                        |   |          |   |   |              |   |   |   |
| Inventory, net              |   | $             | 44     |   |              | $      | 125 |   |

----

----

----

----

|                                                  |   | Shares |      |   | Weighted Average Exercise Price |   |   | Weighted Average Fair Value |   |   | Weighted Average Remaining  Life (Years) |   |
|-------------------------------------------------------|--------|--------|-----------|--------|---------------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------------------------|--------|
|                                                  |   |   |      |   |                            |   |   |                        |   |   |                                          |   |
| Options outstanding at beginning of 2010              |   |   | 3,561,511 |   |                            | $      | 0.49   |                        |   | $      | 0.33                                          |   |   |   |   |
| For the period from January 1, 2010 to June 30, 2010: |   |   |      |   |                            |   |   |                        |   |   |                                          |   |   |   |   |
| Granted                                               |   |   | 4,016,049 |   |                            |   | 0.07   |                        |   |   | 0.04                                          |   |   |   |   |
| Forfeited                                             |   |   | (833,627  | )      |                            |   | 0.19   |                        |   |   | 0.18                                          |   |   |   |   |
| Expired                                               |   |   | -         |   |                            |   | -      |                        |   |   | -                                             |   |   |   |   |
| Exercised                                             |   |   | -         |   |                            |   | -      |                        |   |   | -                                             |   |   |   |   |
| Options outstanding June 30, 2010                     |   |   | 6,743,933 |   |                            | $      | 0.27   |                        |   | $      | 0.18                                          |   |   |   | 4.90 |   |
|                                                  |   |   |      |   |                            |   |   |                        |   |   |                                          |   |   |   |   |   |
| Options exercisable at June 30, 2010                  |   |   | 1,877,228 |   |                            | $      | 0.60   |                        |   | $      | 0.37                                          |   |   |   | 4.09 |   |

|                                  |   | Options Outstanding |      |   | Options Exercisable |   |
|---------------------------------------|--------|---------------------|-----------|--------|---------------------|--------|
|                                  |   |                |      |   | Weighted            |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                |      |   | Average             |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                                  |   | Number              |      |   | Remaining           |   |   | Average |   |   | Number |   |   | Average |   |
| Range of Exercise Prices              |   | Outstanding         |      |   | Life (Years)        |   |   | Exercise Price |   |   | Outstanding |   |   | Exercise Price |   |
|                                  |   |                |      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     $0.07 - $1.00 |   |                | 5,843,933 |   |                |   | 4.83 |   |   | $ | 0.12 |   |   |   | 1,217,228 |   |   | $ | 0.20 |   |
|     $1.01 - $1.67 |   |                | 900,000   |   |                |   | 5.33 |   |   |   | 1.28 |   |   |   | 660,000 |   |   |   | 1.35 |   |
|                                  |   |                |      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                 |   |                | 6,743,933 |   |                |   | 4.90 |   |   | $ | 0.27 |   |   |   | 1,877,228 |   |   | $ | 0.60 |   |

----

|                                                  |   |       |       |   | Weighted   |   |
|-------------------------------------------------------|--------|------------|------------|--------|------------|--------|
|                                                  |   |       |       |   | average    |   |
|                                                  |   | Restricted |       |   | grant-date |   |
|                                                  |   | shares     |       |   | fair value |   |
|                                                  |   |       |       |   |       |   |   |   |
| Non-vested at beginning of 2010                       |   |       | 10,767,732 |   |       | $      | 0.73 |   |
| For the period from January 1, 2010 to June 30, 2010: |   |       |       |   |       |   |   |   |
| Granted                                               |   |       | 1,715,454  |   |       |   | 0.07 |   |
| Vested                                                |   |       | 3,623,261  |   |       |   | 0.18 |   |
| Forfeited                                             |   |       | 4,394,763  |   |       |   | 0.98 |   |
| Non-vested at June 30, 2010                           |   |       | 4,465,162  |   |       | $      | 0.68 |   |

----

|                      |   | Three months  |   |   | Six months    |   |
|---------------------------|--------|---------------|--------|--------|---------------|--------|
|                      |   | ended         |   |   | ended         |   |
| Dollars in thousands      |   | June 30, 2009 |   |   | June 30, 2009 |   |
|                      |   |          |   |   |          |   |
| Rental expense            |   | $             | 25,000 |   |          | $      | 50,000 |   |
| Insurance / repairs / CAM |   |          | 2,000  |   |          |   | 3,000 |   |
| Real estate taxes         |   |          | 2,000  |   |          |   | 4,000 |   |

----

| Dollars in thousands                                   |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|--------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                                   |   | 2010                        |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                                                   |   |                        |   |   |                      |   |   |   |   |   |   |   |
| Contract termination costs                             |   | $                           | -      |   |                      | $      | 2,634 |   |   | $ | - |   |   | $ | 2,634 |   |
|                                                   |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Assets sold to purchaser, net of liabilities assumed   |   |                        | -      |   |                      |   | 241 |   |   |   | - |   |   |   | 241 |   |
|                                                   |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                                               |   |                        | -      |   |                      |   | (275 | ) |   |   | - |   |   |   | (275 | ) |
|                                                   |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| True-up of contract termination costs settled in stock |   | $                           | -      |   |                      |   | - |   |   |   | (16 | ) |   |   | - |   |
|                                                   |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash accretion of contract termination liability   |   |                        | 11     |   |                      |   | - |   |   |   | 22 |   |   |   | - |   |
|                                                   |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Loss on disposal, net of tax                           |   | $                           | 11     |   |                      | $      | 2,600 |   |   | $ | 6 |   |   | $ | 2,600 |   |

| Dollars in thousands                             |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|--------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                             |   | 2010                        |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                                             |   |                        |   |   |                      |   |   |   |   |   |   |   |
| Net revenues                                     |   | $                           | -      |   |                      | $      | 452 |   |   | $ | - |   |   | $ | 869 |   |
|                                             |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations before income tax provision |   | $                           | -      |   |                      | $      | (271 | ) |   | $ | - |   |   | $ | (463 | ) |
|                                             |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income tax provision                             |   |                        | -      |   |                      |   | - |   |   |   | - |   |   |   | (1 | ) |
|                                             |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Loss on disposal, net of tax                     |   |                        | (11    | )      |                      |   | (2,600 | ) |   |   | (6 | ) |   |   | (2,600 | ) |
|                                             |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Loss on discontinued operations, net of tax      |   | $                           | (11    | )      |                      | $      | (2,871 | ) |   | $ | (6 | ) |   | $ | (3,064 | ) |

----

| Dollars in thousands       |   | Fair value at December 31, 2009 |   |   | Common stock settlements |   |   | Cash  payments |   |   | Non-cash accretion |   |   | Fair value at June 30, 2010 |   |
|----------------------------|--------|---------------------------------|--------|--------|--------------------------|--------|--------|---------------------|--------|--------|--------------------|--------|--------|-----------------------------|--------|
|                       |   |                            |   |   |                     |   |   |                |   |   |               |   |   |                        |   |
|                       |   |                            |   |   |                     |   |   |                |   |   |               |   |   |                        |   |
| Contract termination costs |   | $                               | 2,355  |   |                     | $      | (79    | )                   |   | $      | (224               | )      |   | $                           | 22     |   |   | $ | 2,074 |   |
|                       |   |                            |   |   |                     |   |   |                |   |   |               |   |   |                        |   |   |   |   |   |   |
| Total exit costs           |   | $                               | 2,355  |   |                     | $      | (79    | )                   |   | $      | (224               | )      |   | $                           | 22     |   |   | $ | 2,074 |   |

----

| Dollars in thousands                                              |   |      |   |    |   |   |   |   |   |
|-------------------------------------------------------------------|--------|-----------|--------|---------|--------|--------|--------|--------|--------|
|                                                              |   |      |   |    |   |   |   |   |   |
| Three months ended June 30, 2010                                  |   | Marketing |   | Product |   | Parent |   | Total  |   |
|                                                              |   |      |   |    |   |   |   |   |   |
| External and inter-segment revenue                                |   | $         | 6,051  |    | $      | 2,778  |   | $      | -      |   | $ | 8,829 |   |
| Income (loss) from continuing operations                          |   |      | 612    |    |   | (799   | )      |   | (282   |   |   | (469 | ) |
| Assets                                                            |   |      | 7,615  |    |   | 844    |   |   | 11,801 |   |   | 20,260 |   |
| Depreciation and amortization                                     |   |      | 220    |    |   | 22     |   |   | 192    |   |   | 434 |   |
| Capital expenditures                                              |   |      | -      |    |   | -      |   |   | 2      |   |   | 2 |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| Three months ended June 30, 2009                                  |   | Marketing |   | Product |   | Parent |   | Total  |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| External and inter-segment revenue                                |   | $         | 14,095 |    | $      | 3,953  |   | $      | -      |   | $ | 18,048 |   |
| Income (loss) from continuing operations                          |   |      | 2,075  |    |   | (268   | )      |   | (526   |   |   | 1,281 |   |
| Assets (1)                                                        |   |      | 8,519  |    |   | 775    |   |   | 12,322 |   |   | 21,616 |   |
| Depreciation and amortization                                     |   |      | 353    |    |   | 99     |   |   | 226    |   |   | 678 |   |
| Capital expenditures                                              |   |      | 3      |    |   | -      |   |   | 28     |   |   | 31 |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| Six months ended June 30, 2010                                    |   | Marketing |   | Product |   | Parent |   | Total  |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| External and inter-segment revenue                                |   | $         | 13,337 |    | $      | 4,777  |   | $      | -      |   | $ | 18,114 |   |
| Income (loss) from continuing operations                          |   |      | 1,259  |    |   | (1,398 | )      |   | (758   |   |   | (897 | ) |
| Assets                                                            |   |      | 7,615  |    |   | 844    |   |   | 11,801 |   |   | 20,260 |   |
| Depreciation and amortization                                     |   |      | 461    |    |   | 44     |   |   | 385    |   |   | 890 |   |
| Capital expenditures                                              |   |      | -      |    |   | -      |   |   | 2      |   |   | 2 |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| Six months ended June 30, 2009                                    |   | Marketing |   | Product |   | Parent |   | Total  |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| External and inter-segment revenue                                |   | $         | 33,187 |    | $      | 6,233  |   | $      | -      |   | $ | 39,420 |   |
| Income (loss) from continuing operations                          |   |      | 3,335  |    |   | (1,411 | )      |   | (2,362 |   |   | (438 | ) |
| Assets (1)                                                        |   |      | 8,519  |    |   | 775    |   |   | 12,322 |   |   | 21,616 |   |
| Depreciation and amortization                                     |   |      | 697    |    |   | 210    |   |   | 429    |   |   | 1,336 |   |
| Capital expenditures                                              |   |      | 35     |    |   | -      |   |   | 39     |   |   | 74 |   |
|                                                              |   |      |   |    |   |   |   |   |   |   |   |   |   |
| (1) Segment totals represent assets as of December 31, 2009. |   |      |   |    |   |   |   |   |   |   |

----

|                 |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|----------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| Dollars in thousands |   | 2010                        |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                 |   |                        |   |   |                      |   |   |   |   |   |   |   |
| United States        |   | $                           | 8,653  |   |                      | $      | 17,106 |   |   | $ | 17,624 |   |   | $ | 37,999 |   |
| Canada               |   |                        | 176    |   |                      |   | 942 |   |   |   | 490 |   |   |   | 1,421 |   |
| Total net revenues   |   | $                           | 8,829  |   |                      | $      | 18,048 |   |   | $ | 18,114 |   |   | $ | 39,420 |   |

----

----

----

----

----

| Dollars in thousands                                                           |   | Three months ended June 30, |   |
|--------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                           |   | 2010                        |   |   | % of Net Revenues |   |   | 2009 |   |   | % of Net Revenues |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET REVENUES                                                                   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      ITC and PDS sales and monthly fees               |   | $                           | 5,887  |   |   |   | 66.7 | % |   | $ | 13,799 |   |   |   | 76.4 | % |   | $ | (7,912 | ) |   |   | (57.3 | )% |
|      Travel and product commissions and services      |   |                        | 2,591  |   |   |   | 29.3 | % |   |   | 3,779 |   |   |   | 20.9 | % |   |   | (1,188 | ) |   |   | (31.4 | )% |
|      Training programs and marketing materials        |   |                        | 159    |   |   |   | 1.8 | % |   |   | 285 |   |   |   | 1.6 | % |   |   | (126 | ) |   |   | (44.2 | )% |
|      Other                                            |   |                        | 192    |   |   |   | 2.2 | % |   |   | 185 |   |   |   | 1.1 | % |   |   | 7 |   |   |   | 3.8 | % |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues                               |   |                        | 8,829  |   |   |   | 100.0 | % |   |   | 18,048 |   |   |   | 100.0 | % |   |   | (9,219 | ) |   |   | (51.1 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                             |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Marketing commissions                            |   |                        | 2,446  |   |   |   | 27.7 | % |   |   | 6,646 |   |   |   | 36.8 | % |   |   | (4,200 | ) |   |   | (63.2 | )% |
|      Travel and product commissions                   |   |                        | 1,703  |   |   |   | 19.3 | % |   |   | 2,211 |   |   |   | 12.3 | % |   |   | (508 | ) |   |   | (23.0 | )% |
|      Depreciation and amortization                    |   |                        | 434    |   |   |   | 4.9 | % |   |   | 678 |   |   |   | 3.8 | % |   |   | (244 | ) |   |   | (36.0 | )% |
|      Training programs and marketing materials        |   |                        | 146    |   |   |   | 1.7 | % |   |   | 349 |   |   |   | 1.9 | % |   |   | (203 | ) |   |   | (58.2 | )% |
|      General and administrative                       |   |                        | 4,497  |   |   |   | 50.9 | % |   |   | 7,110 |   |   |   | 39.4 | % |   |   | (2,613 | ) |   |   | (36.8 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                         |   |                        | 9,226  |   |   |   | 104.5 | % |   |   | 16,994 |   |   |   | 94.2 | % |   |   | (7,768 | ) |   |   | (45.7 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING (LOSS) INCOME                                                        |   |                        | (397   | ) |   |   | (4.5 | )% |   |   | 1,054 |   |   |   | 5.8 | % |   |   | (1,451 | ) |   |   | (137.7 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Interest and dividend income                     |   |                        | 34     |   |   |   | 0.4 | % |   |   | 44 |   |   |   | 0.2 | % |   |   | (10 | ) |   |   | -22.7 | % |
|      Interest expense                                 |   |                        | (73    | ) |   |   | (0.8 | )% |   |   | (22 | ) |   |   | (0.1 | )% |   |   | (51 | ) |   |   | 231.8 | % |
|      Foreign currency translation gain                |   |                        | (5     | ) |   |   | (0.1 | )% |   |   | 13 |   |   |   | 0.1 | % |   |   | (18 | ) |   |   | (138.5 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total other (expense) income                     |   |                        | (44    | ) |   |   | (0.5 | )% |   |   | 35 |   |   |   | 0.2 | % |   |   | (79 | ) |   |   | (225.7 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION (BENEFIT) |   |                        | (441   | ) |   |   | (5.0 | )% |   |   | 1,089 |   |   |   | 6.0 | % |   |   | (1,530 | ) |   |   | (140.5 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX PROVISION (BENEFIT)                                                 |   |                        | 28     |   |   |   | 0.3 | % |   |   | (192 | ) |   |   | (1.1 | )% |   |   | 220 |   |   |   | (114.6 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS                                       |   |                        | (469   | ) |   |   | (5.3 | )% |   |   | 1,281 |   |   |   | 7.1 | % |   |   | (1,750 | ) |   |   | (136.6 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM DISCONTINUED OPERATIONS (NET OF TAX)                                 |   |                        | (11    | ) |   |   | (0.1 | )% |   |   | (2,871 | ) |   |   | (15.9 | )% |   |   | 2,860 |   |   |   | (99.6 | )% |
|                                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                       |   | $                           | (480   | ) |   |   | (5.4 | )% |   | $ | (1,590 | ) |   |   | (8.8 | )% |   | $ | 1,110 |   |   |   | (69.8 | )% |

----

| Dollars in thousands                                                      |   | Six months ended June 30, |   |
|---------------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                      |   | 2010                      |   |   | % of Net Revenues |   |   | 2009 |   |   | % of Net Revenues |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET REVENUES                                                              |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      ITC and PDS sales and monthly fees          |   | $                         | 12,826 |   |   |   | 70.8 | % |   | $ | 32,407 |   |   |   | 82.2 | % |   | $ | (19,581 | ) |   |   | (60.4 | )% |
|      Travel and product commissions and services |   |                      | 4,479  |   |   |   | 24.7 | % |   |   | 5,939 |   |   |   | 15.1 | % |   |   | (1,460 | ) |   |   | (24.6 | )% |
|      Training programs and marketing materials   |   |                      | 489    |   |   |   | 2.7 | % |   |   | 769 |   |   |   | 2.0 | % |   |   | (280 | ) |   |   | (36.4 | )% |
|      Other                                       |   |                      | 320    |   |   |   | 1.8 | % |   |   | 305 |   |   |   | 0.7 | % |   |   | 15 |   |   |   | 4.9 | % |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues                          |   |                      | 18,114 |   |   |   | 100.0 | % |   |   | 39,420 |   |   |   | 100.0 | % |   |   | (21,306 | ) |   |   | (54.0 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Marketing commissions                       |   |                      | 5,406  |   |   |   | 29.8 | % |   |   | 16,013 |   |   |   | 40.6 | % |   |   | (10,607 | ) |   |   | (66.2 | )% |
|      Travel and product commissions              |   |                      | 2,842  |   |   |   | 15.7 | % |   |   | 3,625 |   |   |   | 9.2 | % |   |   | (783 | ) |   |   | (21.6 | )% |
|      Depreciation and amortization               |   |                      | 890    |   |   |   | 4.9 | % |   |   | 1,336 |   |   |   | 3.4 | % |   |   | (446 | ) |   |   | (33.4 | )% |
|      Training programs and marketing materials   |   |                      | 289    |   |   |   | 1.6 | % |   |   | 972 |   |   |   | 2.5 | % |   |   | (683 | ) |   |   | (70.3 | )% |
|      General and administrative                  |   |                      | 9,457  |   |   |   | 52.3 | % |   |   | 18,032 |   |   |   | 45.7 | % |   |   | (8,575 | ) |   |   | (47.6 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                    |   |                      | 18,884 |   |   |   | 104.3 | % |   |   | 39,978 |   |   |   | 101.4 | % |   |   | (21,094 | ) |   |   | (52.8 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                                            |   |                      | (770   | ) |   |   | (4.3 | )% |   |   | (558 | ) |   |   | (1.4 | )% |   |   | (212 | ) |   |   | 38.0 | % |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Interest and dividend income                |   |                      | 71     |   |   |   | 0.4 | % |   |   | 71 |   |   |   | 0.2 | % |   |   | - |   |   |   | 0.0 | % |
|      Interest expense                            |   |                      | (140   | ) |   |   | (0.8 | )% |   |   | (48 | ) |   |   | (0.1 | )% |   |   | (92 | ) |   |   | 191.7 | % |
|      Foreign currency translation gain (loss)    |   |                      | (5     | ) |   |   | 0.0 | % |   |   | 15 |   |   |   | 0.0 | % |   |   | (20 | ) |   |   | (133.3 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total other (expense) income                |   |                      | (74    | ) |   |   | (0.4 | )% |   |   | 38 |   |   |   | 0.1 | % |   |   | (112 | ) |   |   | (294.7 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION (BENEFIT)     |   |                      | (844   | ) |   |   | (4.7 | )% |   |   | (520 | ) |   |   | (1.3 | )% |   |   | (324 | ) |   |   | 62.3 | % |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX PROVISION (BENEFIT)                                            |   |                      | 53     |   |   |   | 0.3 | % |   |   | (82 | ) |   |   | (0.2 | )% |   |   | 135 |   |   |   | (164.6 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM CONTINUING OPERATIONS                                           |   |                      | (897   | ) |   |   | (5.0 | )% |   |   | (438 | ) |   |   | (1.1 | )% |   |   | (459 | ) |   |   | 104.8 | % |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM DISCONTINUED OPERATIONS (NET OF TAX)                            |   |                      | (6     | ) |   |   | 0.0 | % |   |   | (3,064 | ) |   |   | (7.8 | )% |   |   | 3,058 |   |   |   | (99.8 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                  |   | $                         | (903   | ) |   |   | (5.0 | )% |   | $ | (3,502 | ) |   |   | (8.9 | )% |   | $ | 2,599 |   |   |   | (74.2 | )% |

----

| 2010                             |   | Beginning Balance Active TSOs and BOs |   | New TSOs |   | New BOs |   | Deactivations |   | Ending Balance Active TSOs and BOs |   | Weighted Average Active TSOs and BOs |
|----------------------------------|--------|---------------------------------------|--------|----------|--------|---------|--------|---------------|--------|------------------------------------|--------|--------------------------------------|
|                             |   |                                  |   |     |   |    |   |          |   |                               |   |                                 |
| Three months ended June 30, 2010 |   | 36,487                                |   | 254      |   | 2,977   |   | 6,644         |   | 33,074                             |   | 34,674                               |
|                             |   |                                  |   |     |   |    |   |          |   |                               |   |                                 |
| Six months ended June 30, 2010   |   | 41,174                                |   | 911      |   | 5,739   |   | 14,750        |   | 33,074                             |   | 36,259                               |
|                             |   |                                  |   |     |   |    |   |          |   |                               |   |                                 |
| 2009                             |   | Beginning Balance Active TSOs and BOs |   | New TSOs |   | New BOs |   | Deactivations |   | Ending Balance Active TSOs and BOs |   | Weighted Average Active TSOs and BOs |
|                             |   |                                  |   |     |   |    |   |          |   |                               |   |                                 |
| Three months ended June 30, 2009 |   | 73,801                                |   | 4,019    |   |  - |   | 17,406        |   | 60,414                             |   | 64,334                               |
|                             |   |                                  |   |     |   |    |   |          |   |                               |   |                                 |
| Six months ended June 30, 2009   |   | 92,383                                |   | 11,446   |   |  - |   | 43,415        |   | 60,414                             |   | 71,678                               |

----

| ·   | Through our ongoing marketing, we are balancing initiatives to attract new TSOs and BOs and retain existing TSOs and BOs.  Understanding that today, our customers are more value oriented in their purchase decisions, we are expanding the “value” received in purchasing an ITC or PDS by bringing “in-house” our new ZamZuu business solution where TSOs and BOs can direct customers to shop for items they already purchase and receive cash back on normal purchases of everyday items, as well as commissions on the purchase of featured specialty products. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We are developing new marketing programs and enhancing existing marketing programs to communicate the value of our ITCs and PDSs by offering a marketing system that enhances consistent marketing and tracking of the TSOs’ and BOs’ sales efforts via a systematic marketing program. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training has been expanded by providing TSOs and BOs with videos on how to conduct home parties to help sell the various featured products.  The recent launch of a “media center” provides easier access and a larger variety of training videos. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company plans on further diversifying and enhancing its revenue stream by introducing new product lines that the Company will announce at its National Convention held in St. Louis, Missouri in August 2010.  We believe that these announcements will have a positive impact to our overall business structure and vision for the future. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ITC and PDS sales along with monthly fees decreased $7.9 million to $5.9 million in the second quarter of 2010 compared to $13.8 million in the comparable prior year quarter.  This decrease is attributable to the following: |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | ITC and PDS sales revenue decreased $3.2 million in the second quarter of 2010 to $818,000 from the $4.0 million reported in the comparable prior year quarter.  We have experienced a decrease in the actual number of ITCs and PDSs sold for the three months ended June 30, 2010 to 3,231 from 4,019 in the prior year period.  As a result, the average number of sales for which we were able to recognize revenue decreased to 920 in the second quarter of 2010 from 3,208 for the same period in 2009.  In addition, the average amount of recognized revenue from each new sale decreased to $298.64 in the second quarter of 2010 from $434.16 in the comparable quarter in 2009 due to the introduction of the PDSs in the first quarter of 2010, which are sold for $249.95.  We believe the decline in the number of new ITC and PDS sales is mostly attributable to the current economic downturn present in the United States and Canada.  However, due to new marketing initiatives that the Company will announce at its National Convention, we believe that we will see a stabilization of sales coupled with slower declines in attrition over the next year. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Monthly renewal fees revenue decreased $4.7 million in the second quarter of 2010 to $5.1 million from the $9.8 million reported in the comparable prior year quarter.  The decrease is in direct relation to the number of active paying TSOs and BOs.  The weighted average of paying TSOs and BOs per month decreased from 64,334 for the three months ended June 30, 2009 to 34,674 for the same period in 2010.  We anticipate a continued decline in the number of active paying TSOs and BOs in the coming months due to the general economic conditions in the United States and Canada.  However, due to new marketing initiatives that the Company will announce at its National Convention in August 2010, we believe that we will see a stabilization of sales coupled with slower declines in attrition over the next year. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Travel and product commissions and services revenue for the second quarter of 2010 decreased $1.2 million to $2.6 million from the $3.8 million reported in the comparable prior year quarter.  The decrease in travel and product commissions and services revenue is attributable to the decrease in the number of active ITCs affecting the gross travel retail bookings which are driven by the number of customers utilizing us as their travel sale provider in 2010.  In addition, general economic conditions have lowered the overall demand for travel. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training programs and marketing materials revenue decreased $126,000 in the second quarter of 2010 to $159,000 from $285,000 in the comparable prior year quarter.   The decrease was primarily due to a reduction in the number of training events that the Company held.  The reduction in the number of training events held were related to the decline in the number of new ITC and PDS sales and the number of active paying TSOs and BOs compared to what we have experienced in the past.  We expect this trend to stabilize in the coming months with the new marketing initiatives to be announced at our National Convention in August 2010. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Marketing commissions decreased $4.2 million in the second quarter of 2010 to $2.4 million from $6.6 million in the comparable prior year quarter.  Commission expense related to new sales declined $2.4 million directly related to the decline in the number of new ITC and PDS sales.  The average number of new sales for which we recognized a commission expense decreased to 920 in the second quarter of 2010 compared to 3,208 in the comparable prior year quarter.   At the same time, the average amount of recognized expense for each new sale decreased to $223.14 in 2010 compared to $367.59 in 2009, partially due to the introduction of the PDSs in the first quarter of 2010, which are sold at $249.95   As our new sales decline, the amount of leadership and dream bonuses paid also decreases which are included in the calculation to determine the average commission expense recognized on each new sale.  We also experienced a decrease of $1.7 million in commission expense relating to TSO and BO monthly renewal fees.  This is a direct result of the decline in the number of average active TSOs and BOs for the second quarter of 2010 compared to the same period in 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Travel and product commissions for the second quarter of 2010 decreased $508,000 to $1.7 million from $2.2 million reported in the comparable quarter of 2009.  The decrease in travel and product commissions is primarily attributable to the decrease in the number of active ITCs and the decrease in commissions paid for gross travel retail bookings which are driven by the number of customers utilizing us as their travel sale provider in 2010, in addition to an overall decline in the volume of travel due to current economic conditions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation for the second quarter of 2010 decreased $244,000 to $434,000 from $678,000 reported in the comparable prior year quarter.  The decrease is primarily attributable to the sale of Company vehicles, excess computers, and the retirement of software that was not being utilized. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training programs and marketing materials expense decreased $203,000 to $146,000 in the second quarter of 2010 from $349,000 reported in the comparable prior year quarter.  The Company experienced a decrease in training material sales of $73,000 as a result of the elimination of the sales of magazines and a reduction in the number of new ITC and PDS sales compared to what we have experienced in the past.  The inventory reserve decreased $97,000 in the second quarter of 2010 compared to the same period in 2009, net of additions and disposals.   Fulfillment labor and freight decreased $37,000 in the second quarter of 2010 compared to the same period in 2009, directly related to the reduction of sales of magazines and sales aids and the creation of more online sales materials. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses decreased $2.6 million to $4.5 million in the second quarter of 2010 from $7.1 million in the same quarter of 2009.  As a percentage of total net revenues, these expenses were 50.9% in the second quarter of 2010 and 39.4% in the second quarter of 2009.  The decrease in general and administrative expense in 2010 is primarily attributable to the costs associated with the reduction of new ITC and PDS sales and active TSOs and BOs.  The decreases year over year relate primarily to: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| §   | Merchant processing fees decreased $183,000 directly related to the number of transactions processed by the Company, linked to the downturn in revenue. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Restricted stock amortization decreased $299,000 due to a decline in the Company’s stock price and a reduction in the number of restricted stock awards granted in 2010 compared to 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $1.2 million due to the reduction in the home office staff. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| §   | Travel and entertainment expenses decreased $176,000 due to a decrease in the number of executives and employees traveling along with management cost cutting measures. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Contract labor decreased $208,000 primarily due to the elimination of numerous consultants and the conversion of consultants to full time employees. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dollars in thousands                                                    |   | Three months ended June 30, |   |
|-------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                    |   | 2010                        |   |   | 2009 |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
| NET REVENUES                                                            |   |                        |   |   |   |   |   |   |   |   |   |   |
|      ITC and PDS sales and monthly fees        |   | $                           | 5,887  |   |   | $ | 13,799 |   |   | $ | (7,912 | ) |   |   | (57.3 | )% |
|      Training programs and marketing materials |   |                        | 156    |   |   |   | 265 |   |   |   | (109 | ) |   |   | (41.1 | )% |
|      Other                                     |   |                        | 8      |   |   |   | 31 |   |   |   | (23 | ) |   |   | (74.2 | )% |
|                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues                        |   |                        | 6,051  |   |   |   | 14,095 |   |   |   | (8,044 | ) |   |   | (57.1 | )% |
|                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Marketing commissions                     |   |                        | 2,446  |   |   |   | 6,646 |   |   |   | (4,200 | ) |   |   | (63.2 | )% |
|      Depreciation and amortization             |   |                        | 220    |   |   |   | 353 |   |   |   | (133 | ) |   |   | (37.7 | )% |
|      Training programs and marketing materials |   |                        | 142    |   |   |   | 335 |   |   |   | (193 | ) |   |   | (57.6 | )% |
|      General and administrative                |   |                        | 2,616  |   |   |   | 4,832 |   |   |   | (2,216 | ) |   |   | (45.9 | )% |
|                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                  |   |                        | 5,424  |   |   |   | 12,166 |   |   |   | (6,742 | ) |   |   | (55.4 | )% |
|                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                        |   | $                           | 627    |   |   | $ | 1,929 |   |   | $ | (1,302 | ) |   |   | (67.5 | )% |

| ·   | Depreciation and amortization decreased $133,000 to $220,000 in the second quarter of 2010 from $353,000 in the second quarter of 2009.   The decrease is primarily attributable to the sale of Company vehicles and excess computers. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | General and administrative expenses decreased $2.2 million to $2.6 million in the second quarter of 2010 from $4.8 million in the comparable prior year quarter.  As a percentage of total marketing net revenues, these expenses were 43.2% in the second quarter of 2010 and 34.3% in the same quarter of 2009. The decrease in general and administrative expense in 2010 is primarily attributable to the costs associated with the reduction of ITC and PDS sales and active TSOs and BOs.  The decreases year over year relate primarily to: |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Merchant processing fees decreased $182,000 directly related to the number of transactions processed by the Company, linked to the downturn in revenue. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Corporate allocation from the parent decreased $1.2 million due to the variances in the following allocable expenses as explained in the parent discussion below:  legal fees, contract labor, accounting fees, consulting fees and restricted stock amortization. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $396,000 due to the reduction in the home office staff. |
|--------------------|-------------------------------------------------------------------------------------------------|

| Dollars in thousands                                                      |   | Three months ended June 30, |   |
|---------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                      |   | 2010                        |   |   | 2009 |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
| NET REVENUES                                                              |   |                        |   |   |   |   |   |   |   |   |   |   |
|      Travel and product commissions and services |   | $                           | 2,591  |   |   | $ | 3,779 |   |   | $ | (1,188 | ) |   |   | (31.4 | )% |
|      Training programs and marketing materials   |   |                        | 3      |   |   |   | 20 |   |   |   | (17 | ) |   |   | (85.0 | )% |
|      Other                                       |   |                        | 184    |   |   |   | 154 |   |   |   | 30 |   |   |   | 19.5 | % |
|                                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues                          |   |                        | 2,778  |   |   |   | 3,953 |   |   |   | (1,175 | ) |   |   | (29.7 | )% |
|                                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Travel and product commissions              |   |                        | 1,703  |   |   |   | 2,211 |   |   |   | (508 | ) |   |   | (23.0 | )% |
|      Depreciation and amortization               |   |                        | 22     |   |   |   | 99 |   |   |   | (77 | ) |   |   | (77.8 | )% |
|      Training programs and marketing materials   |   |                        | 4      |   |   |   | 14 |   |   |   | (10 | ) |   |   | (71.4 | )% |
|      General and administrative                  |   |                        | 1,848  |   |   |   | 1,988 |   |   |   | (140 | ) |   |   | (7.0 | )% |
|                                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                    |   |                        | 3,577  |   |   |   | 4,312 |   |   |   | (735 | ) |   |   | (17.0 | )% |
|                                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                                            |   | $                           | (799   | ) |   | $ | (359 | ) |   | $ | (440 | ) |   |   | 122.6 | % |

| ·   | Depreciation and amortization was $22,000 in the second quarter of 2010 compared to $99,000 in the corresponding quarter of 2009.  The decrease of $77,000 in depreciation and amortization is primarily attributable to the retirement of software that was not being utilized. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses decreased $140,000 to $1.8 million in the second quarter of 2010 from $2.0 million in the comparable prior year quarter.  As a percentage of total travel net revenues, these expenses were 66.5% in 2010 and 50.3% in 2009.  The decrease year over year relates primarily to: |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Corporate allocation from the parent decreased $185,000 due to the variances in the following allocable expenses as explained in the parent discussion below:  legal fees, contract labor, accounting fees, consulting fees and restricted stock amortization. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Dollars in thousands                                        |   | Three months ended June 30, |   |
|-------------------------------------------------------------|--------|-----------------------------|--------|
|                                                        |   | 2010                        |   |   | 2009 |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
| NET REVENUES                                                |   |                        |   |   |   |   |   |   |   |   |   |   |
|      Other                         |   | $                           | -      |   |   | $ | - |   |   | $ | - |   |   |   | - |   |
|                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues            |   |                        | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Depreciation and amortization |   |                        | 192    |   |   |   | 226 |   |   |   | (34 | ) |   |   | (15.0 | )% |
|      General and administrative    |   |                        | 33     |   |   |   | 290 |   |   |   | (257 | ) |   |   | (88.6 | )% |
|                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses      |   |                        | 225    |   |   |   | 516 |   |   |   | (291 | ) |   |   | (56.4 | )% |
|                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                              |   | $                           | (225   | ) |   | $ | (516 | ) |   | $ | 291 |   |   |   | (56.4 | )% |

| ·   | Depreciation and amortization was $192,000 in the second quarter of 2010 compared to $226,000 in the corresponding quarter of 2009.  The decrease in depreciation and amortization of $34,000 is primarily attributable to the fully amortized software in 2009 and the impairment and transfer of intangible assets to the Marketing and Product segments. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses, net of corporate allocation, decreased $257,000 to $33,000 in the second quarter of 2010 from $290,000 in the same quarter of 2009.  The decreases year over year relate primarily to: |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $837,000 due to the reduction in the home office staff. |
|--------------------|-------------------------------------------------------------------------------------------------|

| §   | Due to the overall decrease in allocable expenses as individually discussed below, the corporate allocation to the segments decreased $1.4 million.  Allocable expenses include contract labor, legal fees, accounting fees, consulting fees, restricted stock amortization and stock option expense. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Contract labor decreased $200,000 primarily due to the elimination of numerous consultants and the conversion of consultants to full time employees. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Restricted stock amortization decreased $299,000 due to a decline in the Company’s stock price and a reduction in the number of restricted stock awards granted in 2010 compared to 2009. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ITC and PDS sales along with monthly fees decreased $19.6 million to $12.8 million in the first six months of 2010 compared to $32.4 million in the comparable prior year period.  This decrease is attributable to the following: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| §   | ITC and PDS sales revenue decreased $8.6 million in the first six months of 2010 to $1.9 million from the $10.5 million reported in the comparable prior year period.  We have experienced a decrease in the actual number of ITCs and PDSs sold for the six months ended June 30, 2010 to 6,650 from 11,446 in the prior year period.   As a result, the average number of sales for which we were able to recognize revenue decreased to 1,004 in the first six months of 2010 from 4,086 for the same period in 2009.  In addition, the average amount of recognized revenue from each new sale decreased to $328.88 in the first six months of 2010 from $439.91 in the comparable period in 2009 due to the introduction of the PDSs in the first quarter of 2010, which are sold for $249.95.  We believe the decline in the number of new ITC and PDS sales is mostly attributable to the current economic downturn present in the United States and Canada.  However, due to new marketing initiatives that the Company will announce at its National Convention, we believe that we will see a stabilization of sales coupled with slower declines in attrition over the next year. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Monthly renewal fees revenue decreased $11.0 million in the first six months of 2010 to $10.9 million from the $21.9 million reported in the comparable prior year period.  The decrease is in direct relation to the number of active paying TSOs and BOs.  The weighted average of paying TSOs and BOs per month decreased from 71,678 for the six months ended June 30, 2009 to 36,259 for the same period in 2010.  We anticipate a continued decline in the number of active paying TSOs and BOs in the coming months due to the general economic conditions in the United States and Canada.  However, due to new marketing initiatives that the Company will announce at its National Convention in August 2010, we believe that we will see a stabilization of sales coupled with slower declines in attrition over the next year. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Travel and product commissions and services revenue for the first six months of 2010 decreased $1.5 million to $4.5 million from the $5.9 million reported in the comparable prior year period.  The decrease in travel and product commissions and services revenue is attributable to the decrease in the number of active ITCs affecting the gross travel retail bookings which are driven by the number of customers utilizing us as their travel sale provider in 2010.  In addition, general economic conditions have lowered the overall demand for travel. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training programs and marketing materials revenue decreased $280,000 in the first six months of 2010 to $489,000 from $769,000 in the comparable prior year period.  The decrease was primarily due to a reduction in the number of training events that the Company held.  The reduction in the number of training events held were related to the decline in the number of new ITC and PDS sales and the number of active paying TSOs and BOs compared to what we have experienced in the past.  We expect this trend to stabilize in the coming months with the new marketing initiatives to be announced at our National Convention in August 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Marketing commissions decreased $10.6 million in the first six months of 2010 to $5.4 million from $16.0 million in the comparable prior year period.  Commission expense related to new sales declined $6.6 million directly related to the decline in the number of new ITC and PDS sales.  The average number of new sales for which we recognized a commission expense decreased to 1,004 in the first six months of 2010 compared to 4,086 in the same prior year comparable period.  At the same time, the average amount of recognized expense for each new sale decreased to $246.34 in 2010 compared to $364.20 in 2009, partially due to the introduction of the PDSs in the first quarter of 2010, which are sold at $249.95.  As our new sales decline, the amount of leadership and dream bonuses paid also decreases which are included in the calculation to determine the average commission expense recognized on each new sale.  We also experienced a decrease of $3.9 million in commission expense relating to TSO and BO monthly renewal fees.  This is a direct result of the decline in the number of average active TSOs and BOs for the first six months of 2010 compared to the same period in 2009. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Travel and product commissions for the first six months of 2010 decreased $783,000 to $2.8 million from $3.6 million reported in the comparable period of 2009.  The decrease in travel and product commissions is primarily attributable to the decrease in the number of active ITCs and the decrease in commissions paid for gross travel retail bookings which are driven by the number of customers utilizing us as their travel sale provider in 2010, in addition to an overall decline in the volume of travel due to current economic conditions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation for the first six months of 2010 decreased $446,000 to $890,000 from $1.3 million reported in the same period of 2009.  The decrease is primarily attributable to the sale of Company vehicles, excess computers, and the retirement of software that was not being utilized. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Training programs and marketing materials expense decreased $683,000 to $289,000 in the first six months of 2010 from $972,000 reported in the same period of 2009.  The Company experienced a decrease in training material sales of $170,000 as a result of the elimination of the sales of magazines and a reduction in the number of new ITC and PDS sales compared to what we have experienced in the past.  The inventory reserve decreased $374,000 in the first six months of 2010 compared to the same period in 2009, net of additions and disposals.   Fulfillment labor and freight decreased $168,000 in the first six months of 2010 compared to the same period in 2009, directly related to the reduction of sales of magazines and sales aids and the creation of more online sales materials. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses decreased $8.6 million to $9.5 million in the first six months of 2010 from $18.0 million in the same period of 2009.  As a percentage of total net revenues, these expenses were 52.3% in the first six months of 2010 and 45.7% in the same period of 2009.  The decrease in general and administrative expense in 2010 is primarily attributable to a reduction in legal expenses, the one-time legal settlement recorded in the first half of 2009 and the costs associated with the reduction of new ITC and PDS sales and active TSOs and BOs.  The decreases year over year relate primarily to: |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Merchant processing fees decreased $435,000 directly related to the number of transactions processed by the Company, linked to the downturn in revenue. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Accounting fees decreased $225,000 due to lower annual audit costs. |
|--------------------|---------------------------------------------------------------------|

| §   | Travel and entertainment expenses decreased $329,000 due to a decrease in the number of executives and employees traveling along with management’s cost cutting measures. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Restricted stock amortization decreased $1.0 million due to a decline in the Company’s stock price, a reduction in the number of restricted stock awards granted in 2010 compared to 2009 and first quarter 2010 forfeitures associated with restricted stock awards granted during the first quarter of 2009. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Legal settlement expense decreased $1.0 million due to a settlement reached in the first quarter of 2009 on a suit filed by the California Attorney General’s Office that did not repeat during the first six months of 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $2.5 million due to the reduction in the home office staff. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| §   | Legal expenses decreased $1.7 million.  This decrease is primarily due to $907,000 in legal expenses in the first half of 2009 related to the California Attorney General matter that was settled in May 2009 and a reduction of $793,000 year over year related to the decrease in general corporate legal fees principally due to the consolidation of legal advice. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Contract labor decreased $429,000 primarily due to the elimination of numerous consultants and the conversion of consultants to full time employees. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dollars in thousands                                                    |   | Six months ended June 30, |   |
|-------------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                    |   | 2010                      |   |   | 2009 |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
| NET REVENUES                                                            |   |                      |   |   |   |   |   |   |   |   |   |   |
|      ITC and PDS sales and monthly fees        |   | $                         | 12,826 |   |   | $ | 32,407 |   |   | $ | (19,581 | ) |   |   | (60.4 | )% |
|      Training programs and marketing materials |   |                      | 479    |   |   |   | 710 |   |   |   | (231 | ) |   |   | (32.5 | )% |
|      Other                                     |   |                      | 32     |   |   |   | 70 |   |   |   | (38 | ) |   |   | (54.3 | )% |
|                                                                    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues                        |   |                      | 13,337 |   |   |   | 33,187 |   |   |   | (19,850 | ) |   |   | (59.8 | )% |
|                                                                    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Marketing commissions                     |   |                      | 5,406  |   |   |   | 16,013 |   |   |   | (10,607 | ) |   |   | (66.2 | )% |
|      Depreciation and amortization             |   |                      | 461    |   |   |   | 697 |   |   |   | (236 | ) |   |   | (33.9 | )% |
|      Training programs and marketing materials |   |                      | 275    |   |   |   | 936 |   |   |   | (661 | ) |   |   | (70.6 | )% |
|      General and administrative                |   |                      | 5,912  |   |   |   | 12,262 |   |   |   | (6,350 | ) |   |   | (51.8 | )% |
|                                                                    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                  |   |                      | 12,054 |   |   |   | 29,908 |   |   |   | (17,854 | ) |   |   | (59.7 | )% |
|                                                                    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                        |   | $                         | 1,283  |   |   | $ | 3,279 |   |   | $ | (1,996 | ) |   |   | (60.9 | )% |

----

| ·   | Depreciation and amortization decreased $236,000 to $461,000 in the first six months of 2010 from $697,000 in the first six months of 2009.   The decrease is primarily attributable to the sale of Company vehicles and excess computers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses decreased $6.4 million to $5.9 million in the first six months of 2010 from $12.3 million in the first six months of 2009.  As a percentage of total marketing net revenues, these expenses were 44.3% in the first six months of 2010 and 37.0% in the first six months of 2009. The decrease in general and administrative expense in 2010 is primarily attributable to the costs associated with the reduction of ITC and PDS sales and active TSOs and BOs.  The decreases year over year relate primarily to: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Travel and entertainment expenses decreased $261,000 due to cost cutting efforts by management to eliminate unnecessary travel and related expenses. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Merchant processing fees decreased $434,000 directly related to the number of transactions processed by the Company, linked to the downturn in revenue. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $456,000 due to the reduction in the home office staff. |
|--------------------|-------------------------------------------------------------------------------------------------|

| §   | Corporate allocation from the parent decreased $4.6 million due to the variances in the following allocable expenses as explained in the parent discussion below:  legal fees, contract labor, accounting fees, consulting fees and restricted stock amortization. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dollars in thousands                                                      |   | Six months ended June 30, |   |
|---------------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                      |   | 2010                      |   |   | 2009 |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
| NET REVENUES                                                              |   |                      |   |   |   |   |   |   |   |   |   |   |
|      Travel and product commissions and services |   | $                         | 4,479  |   |   | $ | 5,939 |   |   | $ | (1,460 | ) |   |   | (24.6 | )% |
|      Training programs and marketing materials   |   |                      | 10     |   |   |   | 59 |   |   |   | (49 | ) |   |   | (83.1 | )% |
|      Other                                       |   |                      | 288    |   |   |   | 235 |   |   |   | 53 |   |   |   | 22.6 | % |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues                          |   |                      | 4,777  |   |   |   | 6,233 |   |   |   | (1,456 | ) |   |   | (23.4 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Travel and product commissions              |   |                      | 2,842  |   |   |   | 3,625 |   |   |   | (783 | ) |   |   | (21.6 | )% |
|      Depreciation and amortization               |   |                      | 44     |   |   |   | 210 |   |   |   | (166 | ) |   |   | (79.0 | )% |
|      Training programs and marketing materials   |   |                      | 14     |   |   |   | 36 |   |   |   | (22 | ) |   |   | (61.1 | )% |
|      General and administrative                  |   |                      | 3,273  |   |   |   | 3,863 |   |   |   | (590 | ) |   |   | (15.3 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                    |   |                      | 6,173  |   |   |   | 7,734 |   |   |   | (1,561 | ) |   |   | (20.2 | )% |
|                                                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                                            |   | $                         | (1,396 | ) |   | $ | (1,501 | ) |   | $ | 105 |   |   |   | (7.0 | )% |

----

| ·   | Depreciation and amortization was $44,000 in the first six months of 2010 compared to $210,000 in the corresponding quarter of 2009.  The decrease of $166,000 in depreciation and amortization is primarily attributable to the retirement of software that was not being utilized. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training programs and marketing material expense decreased $22,000 to $14,000 from $36,000 reported in the first six months of 2009 due to the elimination of promotional items that were purchased in the first six months of 2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses decreased $590,000 to $3.3 million in the first six months of 2010 from $3.9 million in the first six months of 2009.  As a percentage of total travel net revenues, these expenses were 68.5% in 2010 and 62.0% in 2009. The decrease year over year relates primarily to: |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $232,000 due to the reduction in the home office staff. |
|--------------------|-------------------------------------------------------------------------------------------------|

| §   | Corporate allocation from the parent decreased $311,000 due to the variances in the following allocable expenses as explained in the parent discussion below:  legal fees, contract labor, accounting fees, consulting fees and restricted stock amortization. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dollars in thousands                                        |   | Six months ended June 30, |   |
|-------------------------------------------------------------|--------|---------------------------|--------|
|                                                        |   | 2010                      |   |   | 2009 |   |   | Increase (Decrease) |   |   | % Increase (Decrease) |   |
| NET REVENUES                                                |   |                      |   |   |   |   |   |   |   |   |   |   |
|      Other                         |   | $                         | -      |   |   | $ | - |   |   | $ | - |   |   |   | - |   |
|                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total net revenues            |   |                      | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                          |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Depreciation and amortization |   | $                         | 385    |   |   | $ | 429 |   |   |   | (44 | ) |   |   | (10.3 | )% |
|      General and administrative    |   |                      | 272    |   |   |   | 1,907 |   |   |   | (1,635 | ) |   |   | (85.7 | )% |
|                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses      |   |                      | 657    |   |   |   | 2,336 |   |   |   | (1,679 | ) |   |   | (71.9 | )% |
|                                                        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                              |   | $                         | (657   | ) |   | $ | (2,336 | ) |   | $ | 1,679 |   |   |   | (71.9 | )% |

| ·   | Depreciation and amortization was $385,000 in the first six months of 2010 compared to $429,000 in the corresponding period of 2009.  The decrease in depreciation and amortization of $44,000 is primarily attributable to the fully amortized software in 2009 and the impairment and transfer of intangible assets to the Marketing and Product segments. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative expenses, net of corporate allocation, decreased $1.6 million to $272,000 in the first six months of 2010 from $1.9 million in the first six months of 2009.  The decreases year over year relate primarily to: |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries and related benefits decreased $1.8 million due to the reduction in the home office staff. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| §   | Legal settlement expense decreased $1.0 million due to a settlement reached in the first quarter of 2009 on a suit filed by the California Attorney General’s Office that did not repeat during the first six months of 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Due to the overall decrease in allocable expenses as individually discussed below, the corporate allocation to the segments decreased $4.9 million.  Allocable expenses include contract labor, legal fees, accounting fees, consulting fees, restricted stock amortization and stock option expense. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Contract labor decreased $439,000 primarily due to the elimination of numerous consultants and the conversion of consultants to full time employees. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| o   | Accounting and audit fees decreased $225,000 due to decreased annual audit costs. |
|---------------|-----------------------------------------------------------------------------------|

| o   | Restricted stock amortization decreased $1.0 million due to a decline in the Company’s stock price, a reduction in the number of restricted stock awards granted in 2010 compared to 2009 and first quarter 2010 forfeitures associated with restricted stock awards granted during the first quarter of 2009. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Legal expenses decreased $1.6 million.  This decrease is primarily due to $907,000 in legal expenses in the first half of 2009 related to the California Attorney General matter that was settled in May 2009 and a reduction of $693,000 year over year related to the decrease in general corporate legal fees principally due to the consolidation of legal advice. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dollars in thousands                                                    |   | Three months ended June 30, |   |   | Six months ended June 30, |                |
|-------------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|---------------------|
|                                                                    |   | 2010                        |   | 2009   |                      | Increase (Decrease) |   | % Increase (Decrease) |   |   | 2010 |   | 2009 |   | Increase (Decrease) |   | % Increase (Decrease) |   |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |
| NET REVENUES                                                            |   | $                           | -      |   | $                         | 452                 |   | $ | (452 | ) |   | (100.0 | )% |   | $ | - |   | $ | 869 |   | $ | (869 | ) |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                      |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Travel and product commissions            |   |                        | -      |   |                      | 415                 |   |   | (415 | ) |   | (100.0 | )% |   |   | - |   |   | 709 |   |   | (709 | ) |   | (100.0 | )% |
|      Training programs and marketing materials |   |                        | -      |   |                      | 3                   |   |   | (3 | ) |   | (100.0 | )% |   |   | - |   |   | 6 |   |   | (6 | ) |   | (100.0 | )% |
|      General and administrative                |   |                        | -      |   |                      | 307                 |   |   | (307 | ) |   | (100.0 | )% |   |   | - |   |   | 621 |   |   | (621 | ) |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total operating expenses                  |   |                        | -      |   |                      | 725                 |   |   | (725 | ) |   | (100.0 | )% |   |   | - |   |   | 1,336 |   |   | (1,336 | ) |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                                          |   |                        | -      |   |                      | (273                | ) |   | 273 |   |   | (100.0 | )% |   |   | - |   |   | (467 | ) |   | 467 |   |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME                                                            |   |                        | -      |   |                      | 2                   |   |   | (2 | ) |   | (100.0 | )% |   |   | - |   |   | 4 |   |   | (4 | ) |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM OPERATIONS BEFORE INCOME TAX PROVISION                        |   |                        | -      |   |                      | (271                | ) |   | 271 |   |   | (100.0 | )% |   |   | - |   |   | (463 | ) |   | 463 |   |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX PROVISION                                                    |   |                        | -      |   |                      | -                   |   |   | - |   |   | - |   |   |   | - |   |   | (1 | ) |   | 1 |   |   | (100.0 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS ON DISPOSAL, NET OF TAX                                            |   |                        | (11    | )      |                      | (2,600              | ) |   | 2,589 |   |   | (99.6 | )% |   |   | (6 | ) |   | (2,600 | ) |   | 2,594 |   |   | (99.8 | )% |
|                                                                    |   |                        |   |   |                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS ON DISCONTINUED OPERATIONS, NET OF TAX                             |   | $                           | (11    | )      | $                         | (2,871              | ) | $ | 2,860 |   |   | (99.6 | )% |   | $ | (6 | ) | $ | (3,064 | ) | $ | 3,058 |   |   | (99.8 | )% |

----

| ·   | Understanding that our customers today are more value oriented in their purchase decisions, we are expanding the “value” received in purchasing an ITC by bringing “in-house” our new ZamZuu initiative where TSOs can direct customers to shop for items they already purchase online and receive cash back on normal purchases of everyday items, as well as commissions on the purchase of featured specialty products. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We are developing new marketing programs and enhancing existing marketing programs to communicate the value of our ITCs and PDSs by offering a marketing system that enhances consistent marketing and tracking of the TSOs and BOs sales efforts via a systematic marketing program. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training has been expanded by providing TSOs and BOs with videos on how to conduct home parties to help sell the various featured products.  The recent launch of a “media center” provides easier access and a larger variety of training videos. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company plans on further diversifying and enhancing its revenue stream by introducing new product lines that the Company will announce at its National Convention held in St. Louis, Missouri in August 2010.  We believe that these announcements will have a positive impact to our overall business structure and vision for the future. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                    |   | Six months ended June 30, |   |
|-----------------------------------------|--------|---------------------------|--------|
| Dollars in thousands                    |   | 2010                      |   |   | 2009 |   |
|                                    |   |                      |   |   |   |   |
| Net cash provided by (used in):         |   |                      |   |   |   |   |
| Operating activities                    |   |                      |   |   |   |   |
| Continuing                              |   | $                         | 519    |   |   | $ | (608 | ) |
| Discontinued                            |   |                      | -      |   |   |   | (345 | ) |
| Total operating activities              |   |                      | 519    |   |   |   | (953 | ) |
| Investing activities                    |   |                      |   |   |   |   |   |   |
| Continuing                              |   |                      | 20     |   |   |   | 421 |   |
| Discontinued                            |   |                      | -      |   |   |   | 251 |   |
| Total investing activities              |   |                      | 20     |   |   |   | 672 |   |
| Financing activities                    |   |                      |   |   |   |   |   |   |
| Continuing                              |   |                      | 592    |   |   |   | 70 |   |
| Discontinued                            |   |                      | -      |   |   |   | - |   |
| Total financing activities              |   |                      | 592    |   |   |   | 70 |   |
| Effect of exchange rate changes on cash |   |                      | (2     | ) |   |   | 11 |   |
|                                    |   |                      |   |   |   |   |   |   |
| Net increase (decrease) in cash         |   | $                         | 1,129  |   |   | $ | (200 | ) |

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| Dollars in thousands                                                                                 |   | Six months ended June 30, |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                                                 |   | 2010                      |   |   | 2009 |   |
| Net loss                                                                                             |   | $                         | (903   | ) |   | $ | (3,502 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                          |   |                      |   |   |   |   |   |   |
|      Depreciation and amortization                                          |   |                      | 890    |   |   |   | 1,336 |   |
|      Loss from disposal of discontinued operations, net of tax              |   |                      | 6      |   |   |   | 3,064 |   |
|      Reserve against inventory                                              |   |                      | 33     |   |   |   | 407 |   |
|      Amortization of restricted stock and stock option/compensation expense |   |                      | 74     |   |   |   | 998 |   |
|      Other, net                                                             |   |                      | (43    | ) |   |   | 79 |   |
| Change in operating assets and liabilities, net:                                                     |   |                      |   |   |   |   |   |   |
|      Restricted cash-collateral used as reserves for credit card processing |   |                      | 1,613  |   |   |   | (1,192 | ) |
|      Accounts receivable, net                                               |   |                      | 73     |   |   |   | 1,335 |   |
|      Inventory                                                              |   |                      | 48     |   |   |   | 269 |   |
|      Prepaid marketing commissions and advances                             |   |                      | (8     | ) |   |   | 5,591 |   |
|      Accounts payable and accrued expenses                                  |   |                      | (1,391 | ) |   |   | (2,655 | ) |
|      Deferred revenue                                                       |   |                      | 191    |   |   |   | (6,181 | ) |
|      Other                                                                  |   |                      | (64    | ) |   |   | (157 | ) |
| Net cash provided by (used in) continuing operating activities                                       |   |                      | 519    |   |   |   | (608 | ) |
| Net cash used in discontinued operating activities                                                   |   |                      | -      |   |   |   | (345 | ) |
| Net cash provided by (used in) operating activities                                                  |   | $                         | 519    |   |   | $ | (953 | ) |

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| (a) | None. |
|-----|-------|

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| (b) | There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors implemented in the period covered by this report. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1* | Second Amended and Restated 2004 Stock Option and Restricted Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 22, 2010).                                                                           |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.2  | Extension Letter between YTB International, Inc. and FH Partners, LLC executed April 22, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 28, 2010).                                                     |
| 10.3  | First Amendment to Loan Modification, Renewal and Extension Agreement between YTB International, Inc. and FH Partners, LLC executed June 17, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 23, 2010).  |
| 10.4* | Master Distributor Letter of Understanding adopted April 6, 2010 by and between J. Lloyd Tomer and YTB International, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 17, 2010).                       |
| 10.5* | Compensation Modification adopted April 6, 2010 by and between J. Scott Tomer and YTB International, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 17, 2010).                                        |
| 16.1  | Letter of UHY LLP date April 22, 2010 (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 22, 2010).                                                                                                             |
| 31.1  | Chief Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                           |
| 31.2  | Chief Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                           |
| 32.1# | Chief Executive Officer Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                             |
| 32.2# | Chief Financial Officer Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                             |

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| YTB International, Inc.                                                          |
|----------------------------------------------------------------------------------|
|                                                                             |
| /s/ Robert M. Van Patten                                               |
| Robert M. Van Patten                                                             |
| Chief Executive Officer, Interim Chief Financial Officer, President and Director |
| Dated:   August 12, 2010                                          |

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