UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 FORM
        10-QSB
  x
              Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the quarterly period ended September 30,
                  2005.
 
 o
              Transition
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the transition period from _______________ to 
                  _______________
 
 Commission
        File Number: 0-18412
  YTB
        International, Inc.
 (Formerly
        REZCONNECT TECHNOLOGIES, INC)
 (Exact
        name of registrant as specified in its charter)
 
 Delaware
              
              20-181181State
                  or other jurisdiction of incorporation
                  or organization)
              
              (I.R.S.
                  Employer Identification No.)
 
 560
        Sylvan Avenue
 Englewood
        Cliffs, New Jersey 07632
 (Address
        of Principal Executive Offices)
 
 Registrant's
        telephone number, including area code:
 (201)
        567-8500
 
 N/A
 (Former
        name or former address, if changed since last report)
 
 Securities
        registered pursuant to Section 12(b) of the Act: None
 
 Securities
        registered pursuant to Section 12(g) of the Act: Common Stock,$.001
        per
        share
 (Title
        of
        Class)
 
 Indicate
        by check mark whether the Registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the Registrant was required
        to file such reports) and (2) has been subject to such filing requirements
        for
        the past 90 days. Yes x No o
 
 Indicate
        by check mark if disclosure of delinquent filers pursuant to Item 405 of
        Regulation S-K is not contained herein, and will not be contained, to the
        best
        of Registrant's knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to
        this
 form
        10-K
o.
 
 The
        aggregate market value of the voting stock held by non-affiliates of the
        Registrant as of September 30, 2005 was approximately $14,280,000. Indicate
        the
        number of shares outstanding of each of the Registrant's classes of common
        stock, as of the latest practicable date. As of September 30, 2005, there
        were
        24,530,989 shares of Common Stock, par value $.001 per share
        outstanding.
  
  FORM
        10-QSB
 NINE
        MONTHS ENDED SEPTEMBER 30, 2005
 TABLE
        OF
        CONTENTS
 
 PART
                  I - FINANCIAL INFORMATION
              
              
              PageItem
                  1. Financial Statements (unaudited)Independent
                  Registered Public Accounting Firm's Review Report
              
              
              1Condensed
                  Balance Sheets
              
              
              2Condensed
                  Statements of Operations
              
              
              4Consolidated
                  Statements of Changes in Stockholders' Equity
              
              
              6Condensed
                  Statements of Cash Flows
              
              
              7Notes
                  To Condensed Financial Statements
              
              
              8Independent
                  Registered Public Accounting Firm's Report on Supplementary
                  Information
              
              
              26Supplementary
                  Information
              
              
              27Consolidated
                  Schedules of General and Administrative Expenses
              
              
              28Item
                  2. Management's Discussion and Analysis of Financial
                  Condition and Results of Operations
              
              
              29Item
                3. Controls and Procedures
              
              
              35PART
                  II - OTHER INFORMATIONItem
                  1. Legal Proceedings
              
              
              35Item
                  2. Changes in Securities and Use of Proceeds
              
              
              35Item
                  3. Defaults Upon Senior Securities
              
              
              35Item
                  4. Submission of Matters to a Vote of Security Holders
              
              
              35Item
                  5. Other Information
              
              
              35Item
                  6. Exhibits and Reports on Form 8-K
              
              
              35Signatures
              
              
              36
 
 
  **YTB
        INTERNATIONAL, INC.**
 **AND
        SUBSIDIARIES**
 
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 **AND
        SUPPLEMENTARY INFORMATION**
 
 **NINE
        AND THREE MONTHS ENDED**
 **SEPTEMBER
        30, 2005 AND 2004**
 **(UNAUDITED)**
  
  **YTB
        INTERNATIONAL, INC. AND SUBSIDIARIES**
 
 **TABLE
        OF CONTENTS**
 
 **NINE
        AND THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**
 
 **(UNAUDITED)**
 Page(s)Independent
                    Registered Public Accounting Firm’s Review Report
                1Financial
                    StatementsConsolidated
                    Balance Sheets
                2
                    -
                    3Consolidated
                    Statements of Operations
                4
                    -
                    5Consolidated
                    Statements of Changes in Stockholders’ Equity
                6Consolidated
                    Statements of Cash Flows
                7Notes
                    to Financial Statements
                8 -
                      25Independent
                      Registered Public Accounting Firm’s Reporton
                      Supplementary Information
                26Supplementary
                    InformationConsolidated
                    Schedules of General and Administrative Expenses
                27
                    - 28
  
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 To
        the
        Board of Directors and Stockholders of
 YTB
        International, Inc. and Subsidiaries
 Englewood
        Cliffs, New Jersey
 
 We
        have
        reviewed the accompanying interim consolidated balance sheets of YTB
        International, Inc. and subsidiaries as of September 30, 2005 and 2004, and
        the
        related interim consolidated **** statements
        of operations for the nine-month and three-month periods then ended. We have
        also reviewed the related interim consolidated statements of changes in
        stockholders’ equity and cash flows for the nine-month periods ended September
        30, 2005 and 2004. These interim financial statements are the responsibility
        of
        the Company’s management.
 
 We
        conducted our reviews in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). A review of interim financial
        information consists principally of applying analytical procedures and making
        inquiries of persons responsible for financial and accounting matters. It
        is
        substantially less in scope than an audit conducted in accordance with the
        standards of the Public Company Accounting Oversight Board, the objective
        of
        which is the expression of an opinion regarding the financial statements
        taken
        as a whole. Accordingly, we do not express such an opinion.
 
 Based
        on
        our reviews, we are not aware of any material modifications that should be
        made
        to the accompanying interim consolidated financial statements for them to
        be in
        conformity with U.S. generally accepted accounting principles.
  We
        have
        previously audited, in accordance with auditing standards generally accepted
        in
        the United States of America, the consolidated balance sheet of YTB
        International, Inc. (formerly Rezconnect Technologies, Inc.) and subsidiaries
        as
        of December 31, 2004, and the related consolidated **** statements
        of operations, changes in stockholders’ equity, and cash flows for the year then
        ended (not presented herein); and in our reissued report dated May 31, 2005,
        we
        expressed an unqualified opinion on those consolidated **** financial **** statements.
  Dischino
        & Associates, P.C.
 Certified
        Public Accountants
 and
        Business Consultants
 
 November
        8, 2005
  (1)
  **YTB
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 **SEPTEMBER
          30, 2005 AND 2004**
 **(UNAUDITED)**
 **2005**
                
                **2004****ASSETS**CURRENT
                    ASSETSCash
                
                $
                2,972,166
                
                $
                21,125Available-for-sale
                    securities
                
                
                339,371
                
                
                611,636Current
                    portion of notes receivable
                
                
                —
                
                
                121,021Accounts
                    receivable (less allowance for doubtfulaccounts
                    of $65,009 in 2005 and 2004)
                
                
                401,745
                
                
                306,217Loans
                    receivable
                
                
                309,092
                
                
                50,000Current
                    portion of prepaid commissions
                
                
                4,044,930
                
                
                3,777Other
                    prepaid expenses and current assets
                
                
                532,885
                
                
                11,536TOTAL
                    CURRENT ASSETS
                
                
                8,600,189
                
                
                1,125,312PROPERTY
                    AND EQUIPMENT (NET)
                
                
                375,793
                
                
                —INTANGIBLE
                    ASSETS (NET)
                
                
                6,083,333
                
                
                —GOODWILL
                
                
                9,436,118
                
                
                —OTHER
                    ASSETSCapitalized
                    software costs (less accumulated amortization of $130,768 in
                    2005 and
                    $92,556 in 2004)
                
                
                46,370
                
                
                83,083Notes
                    receivable, less current portion
                
                
                —
                
                
                685,788Prepaid
                    commissions, less current portion
                
                
                4,195,365
                
                
                —Security
                    deposits and other assets
                
                
                11,818
                
                
                10,460Deferred
                    tax asset
                
                
                121,981
                
                
                —TOTAL
                    OTHER ASSETS
                
                
                4,375,534
                
                
                779,331TOTAL
                    ASSETS
                
                $
                28,870,967
                
                $
                1,904,643**LIABILITIES
                    AND STOCKHOLDERS' EQUITY**CURRENT
                    LIABILITIESCurrent
                    maturities of long-term debt
                
                $
                1,901,594
                
                $
                6,780Accounts
                    payable and accrued expenses
                
                
                1,351,835
                
                
                128,814Current
                    portion of deferred revenue
                
                
                3,481,307
                
                
                118,192Income
                    taxes currently payable
                
                
                108,740
                
                
                —Accrued
                    interest payable
                
                
                19,020
                
                
                —TOTAL
                    CURRENT LIABILITIES
                
                
                6,862,496
                
                
                253,786OTHER
                    LIABILITIESLong-term
                    debt, less current maturities
                
                
                678,333
                
                
                340,550Deferred
                    revenue, less current portion
                
                
                4,455,791
                
                
                620,500Security
                    deposits
                
                
                —
                
                
                20,920TOTAL
                    OTHER LIABILITIES
                
                
                5,134,124
                
                
                981,970TOTAL
                    LIABILITIES
                
                
                11,996,620
                
                
                1,235,756STOCKHOLDERS'
                    EQUITYCommon
                    stock, par value $.001; 50,000,000 and 20,000,000
                    shares  authorized; 24,530,989 and 10,879,983 shares
                    issued and
                    outstanding
                
                
                24,531
                
                
                10,880Additional
                    paid-in capital in excess of par
                
                
                23,945,253
                
                
                6,574,385Accumulated
                    deficit
                
                
                (7,093,986
                )
                
                (5,918,980
                )Accumulated
                    other comprehensive income
                
                
                (1,451
                )
                
                2,602TOTAL
                    STOCKHOLDERS' EQUITY
                
                
                16,874,347
                
                
                668,887TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                28,870,967
                
                $
                1,904,643
  See
          independent accountants' review report and notes to financial
          statements
  (2)
  **YTB
            INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
            BALANCE SHEET**
 **DECEMBER
            31, 2004**
 **(UNAUDITED)**


**ASSETS**CURRENT
                  ASSETSCash
              
              $
              25,449Available-for-sale
                  securities
              
              
              528,311Current
                  portion of notes receivable
              
              
              24,240Accounts
                  receivable (less allowance for doubtful accounts of
                  $65,009)
              
              
              383,033Current
                  portion of prepaid commissions
              
              
              1,716,958Loans
                  receivable
              
              
              122,195Other
                  current assets
              
              
              15,312TOTAL
                  CURRENT ASSETS
              
              
              2,815,498PROPERTY
                  AND EQUIPMENT (NET)
              
              
              73,121INTANGIBLE
                  ASSETS (NET)
              
              
              6,458,333GOODWILL
              
              
              9,436,118OTHER
                  ASSETSCapitalized
                  software costs (less accumulated amortization of
                  $105,222)
              
              
              79,514Notes
                  receivable, less current portion
              
              
              137,360Prepaid
                  commissions, less current portion
              
              
              1,845,936Security
                  deposits and other assets
              
              
              10,460TOTAL
                  OTHER ASSETS
              
              
              2,073,270TOTAL
                  ASSETS
              
              $
              20,856,340**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**CURRENT
                  LIABILITIESCurrent
                  maturities of long-term debt
              
              $
              19,532Short-term
                  notes payable
              
              
              202,342Accounts
                  payable and accrued expenses
              
              
              743,743Current
                  portion of deferred revenue
              
              
              1,737,984TOTAL
                  CURRENT LIABILITIES
              
              
              2,703,601OTHER
                  LIABILITIESLong-term
                  debt, less current maturities
              
              
              283,221Deferred
                  revenue, less current portion
              
              
              1,956,324Security
                  deposits
              
              
              20,920TOTAL
                  OTHER LIABILITIES
              
              
              2,260,465TOTAL
                  LIABILITIES
              
              
              4,964,066STOCKHOLDERS'
                  EQUITYPreferred
                  stock- Series B convertible, par value $.001; 5,000,000shares
                  authorized, 4,092,376 shares issued and outstanding
              
              
              4,092Common
                  stock, par value $.001; 20,000,000 shares authorized,18,976,125
                  shares issued and outstanding
              
              
              18,976Additional
                  paid-in capital in excess of par
              
              
              22,055,712Accumulated
                  deficit
              
              
              (6,186,506
              )TOTAL
                  STOCKHOLDERS' EQUITY
              
              
              15,892,274TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              20,856,340
  See
        independent accountants' review report and notes
        to financial statements
  (3)
  **YTB
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **NINE
          MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**
 **(UNAUDITED)**
 **2005**
                
                **2004**REVENUETravel
                    agency commissions
                
                $
                3,369,724
                
                $
                1,442,659Franchise
                    service fees
                
                
                203,695
                
                
                284,015Incentive
                    income
                
                
                252,813
                
                
                11,826Website
                    hosting fees
                
                
                172,277
                
                
                385,528Franchise
                    rents
                
                
                122,470
                
                
                123,801Franchise
                    fees
                
                
                —
                
                
                90,753New
                    RTA sales
                
                
                2,063,200
                
                
                —Monthly
                    maintenance fees
                
                
                6,235,863
                
                
                —Printing
                    and administrative service fees
                
                
                1,780,013
                
                
                —Miscellaneous
                    fees and commissions
                
                
                232,660
                
                
                87,828GROSS
                    REVENUE
                
                
                14,432,715
                
                
                2,426,410LESS:
                    RETURNS AND ALLOWANCES
                
                
                680,811
                
                
                —NET
                    REVENUE
                
                
                13,751,904
                
                
                2,426,410OPERATING
                    EXPENSESCommissions
                
                
                6,046,884
                
                
                973,269Cost
                    of travel products and services
                
                
                1,858,904
                
                
                572,407Depreciation
                    and amortization
                
                
                444,354
                
                
                37,999Marketing
                    and selling
                
                
                525
                
                
                83,970General
                    and administrative
                
                
                5,548,894
                
                
                785,945TOTAL
                    OPERATING EXPENSES
                
                
                13,899,561
                
                
                2,453,590LOSS
                    FROM OPERATIONS
                
                
                (147,657
                )
                
                (27,180
                )OTHER
                    INCOME (EXPENSES)Loss
                    from sales of securities
                
                
                (5,671
                )
                
                (5,191
                )Interest
                    and dividend income
                
                
                72,800
                
                
                29,443Interest
                    expense
                
                
                (838,779
                )
                
                (16,186
                )TOTAL
                    OTHER INCOME (EXPENSES)
                
                
                (771,650
                )
                
                8,066INCOME
                    (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
                
                
                (919,307
                )
                
                (19,114
                )INCOME
                    TAX EXPENSE (BENEFIT)Current
                
                
                110,154
                
                
                1,670Deferred
                
                
                (121,981
                )
                
                —TOTAL
                    INCOME TAX EXPENSE (BENEFIT)
                
                
                (11,827
                )
                
                1,670NET
                    LOSS
                
                $
                (907,480
                )
                $
                (20,784
                )BASIC
                    LOSS PER SHARE:WEIGHTED-AVERAGE
                    COMMON SHARES OUTSTANDING
                
                
                21,485,566
                
                
                9,912,983BASIC
                    LOSS PER SHARE
                
                $
                (0.04
                )
                $
                (0.00
                )DILUTED
                    LOSS PER SHARE:WEIGHTED-AVERAGE
                    COMMON SHARES OUTSTANDINGAND
                    DILUTIVE POTENTIAL COMMON SHARES
                
                
                21,485,566
                
                
                9,912,983DILUTED
                    LOSS PER SHARE
                
                $
                (0.04
                )
                $
                (0.00
                )
  See
        independent accountants' review report and notes
        to financial statements
  (4)
  **YTB
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 THREE
          MONTHS ENDED SEPTEMBER 30, 2005 AND
          2004
 **(UNAUDITED)**
 **2005**
                
                **2004**REVENUETravel
                    agency commissions
                
                $
                1,216,873
                
                $
                588,913Franchise
                    service fees
                
                
                62,922
                
                
                80,271Incentive
                    income
                
                
                24,915
                
                
                7,886Website
                    hosting fees
                
                
                76,609
                
                
                150,964Franchise
                    rents
                
                
                30,624
                
                
                36,432Franchise
                    fees
                
                
                —
                
                
                36,151New
                    RTA sales
                
                
                872,485
                
                
                —Monthly
                    maintenance fees
                
                
                2,789,252
                
                
                —Printing
                    and administrative service fees
                
                
                696,294
                
                
                —Miscellaneous
                    fees and commissions
                
                
                101,585
                
                
                52,260GROSS
                    REVENUE
                
                
                5,871,559
                
                
                952,877LESS:
                    RETURNS AND ALLOWANCES
                
                
                345,800
                
                
                —NET
                    REVENUE
                
                
                5,525,759
                
                
                952,877OPERATING
                    EXPENSESCommissions
                
                
                3,183,916
                
                
                432,796Cost
                    of travel products and services
                
                
                229,591
                
                
                280,051Depreciation
                    and amortization
                
                
                150,815
                
                
                12,892Marketing
                    and selling
                
                
                125
                
                
                53,506General
                    and administrative
                
                
                2,608,779
                
                
                185,556TOTAL
                    OPERATING EXPENSES
                
                
                6,173,226
                
                
                964,801LOSS
                    FROM OPERATIONS
                
                
                (647,467
                )
                
                (11,924
                )OTHER
                    INCOME (EXPENSES)Interest
                    and dividend income
                
                
                33,266
                
                
                3,609Interest
                    expense
                
                
                (156,573
                )
                
                (5,776
                )TOTAL
                    OTHER EXPENSES
                
                
                (123,307
                )
                
                (2,167
                )LOSS
                    BEFORE INCOME TAX
                
                
                (770,774
                )
                
                (14,091
                )INCOME
                    TAX
                
                
                —
                
                
                924NET
                    LOSS
                
                $
                (770,774
                )
                $
                (15,015
                )BASIC
                    LOSS PER SHARE:WEIGHTED-AVERAGE
                    COMMON SHARES OUTSTANDING
                
                
                24,418,669
                
                
                9,912,983BASIC
                    LOSS PER SHARE
                
                $
                (0.03
                )
                $
                (0.00
                )DILUTED
                    LOSS PER SHARE:WEIGHTED-AVERAGE
                    COMMON SHARES OUTSTANDINGAND
                    DILUTIVE POTENTIAL COMMON SHARES
                
                
                24,418,669
                
                
                9,912,983DILUTED
                    LOSS PER SHARE
                
                $
                (0.03
                )
                $
                (0.00
                )
  See
        independent accountants' review report and notes
        to financial statements
  (5)




**YTB
        INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**
 NINE
        MONTHS ENDED SEPTEMBER 30, 2005 AND
        2004
 **(UNAUDITED)**





Series
                  B Convertible
              
              
              
              
              Additional
              
              
              
              
              
              TotalPreferred
                  Stock
              
              Common
                  Stock
              
              
              Paid-in
              
              
              Accumulated
              
              
              Stockholers'Shares
              
              
              Amont
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              EquityBALANCE
                  AT JANUARY 1, 2005
              
              
              4,092,376
              
              $
              4,092
              
              
              18,976,125
              
              $
              18,976
              
              $
              22,055,712
              
              $
              (6,186,506
              )
              $
              15,892,274CONVERSION
                  OF PREFERRED STOCK TO COMMON STOCK
              
              
              (4,092,376
              )
              
              (4,092
              )
              
              4,092,376
              
              
              4,092
              
              
              —
              
              
              —
              
              
              —ALLOCATION
                  OF PROCEEDS FROM ISSUANCE OF CONVERTIBLE DEBT
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              706,000
              
              
              —
              
              
              706,000COMMON
                  SHARES ISSUED FOR SERVICES
              
              
              —
              
              
              —
              
              
              95,820
              
              
              96
              
              
              91,574
              
              
              —
              
              
              91,670COMMON
                  SHARES ISSUED THROUGH PRIVATE PLACEMENT MEMORANDUM
              
              
              —
              
              
              —
              
              
              1,200,000
              
              
              1,200
              
              
              958,800
              
              
              —
              
              
              960,000CONVERSION
                  OF DEBT TO COMMON STOCK
              
              
              —
              
              
              —
              
              
              166,668
              
              
              167
              
              
              133,167
              
              
              —
              
              
              133,334UNREALIZED
                  HOLDING LOSSES ARISING DURING THE PERIOD
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,451
              )NET
                  LOSS
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (907,480
              )
              
              (907,480
              )BALANCE
                  AT SEPTEMBER 30, 2005
              
              
              —
              
              $
              —
              
              
              24,530,989
              
              $
              24,531
              
              $
              23,945,253
              
              $
              (7,093,986
              )
              $
              16,874,347BALANCE
                  AT JANUARY 1, 2004
              
              
              —
              
              $
              —
              
              
              10,879,983
              
              $
              10,880
              
              $
              6,574,385
              
              $
              (5,898,196
              )
              $
              687,069UNREALIZED
                  HOLDING GAINS
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              2,602NET
                  LOSS
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (20,784
              )
              
              (20,784
              )BALANCE
                  AT SEPTEMBER 30, 2004
              
              
              —
              
              $
              —
              
              
              10,879,983
              
              $
              10,880
              
              $
              6,574,385
              
              $
              (5,918,980
              )
              $
              668,887




See
      independent accountants' review report and notes
      to financial statements




(6)




**YTB
        INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 NINE
        MONTHS ENDED SEPTEMBER 30, 2005 AND
        2004
 **(UNAUDITED)**


**2005**
              
              **2004**CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (907,480
              )
              $
              $
                  (20,784
              )Adjustments
                  to reconcile net loss to net cashused
                  by operating activities:Depreciation
                  and amortization
              
              
              444,354
              
              
              37,999Common
                  shares issued for services
              
              
              91,670
              
              
              —Loss
                  from sales of securities
              
              
              5,671
              
              
              5,191Amortization
                  of debt discount
              
              
              706,000
              
              
              —Changes
                  in assets and liabilities:Increase
                  in accounts receivable, net
              
              
              (18,712
              )
              
              (50,973
              )Increase
                  in prepaid commissions
              
              
              (4,677,401
              )
              
              —Increase
                  in other prepaid expenses and current assets
              
              
              (517,573
              )
              
              (15,313
              )Increase
                  in security deposits, net
              
              
              (22,278
              )
              
              (2,673
              )Increase
                  in deferred tax assets
              
              
              (121,981
              )
              
              —Increase
                  in accounts payable and accrued expenses
              
              
              608,092
              
              
              23,038Increase
                  (decrease) in revenue received in advance
              
              
              4,242,790
              
              
              (6,660
              )Increase
                  in income taxes currently payable
              
              
              108,740
              
              
              —Increase
                  in accrued interest payable
              
              
              19,020
              
              
              —NET
                  CASH USED BY OPERATING ACTIVITIES
              
              
              (39,088
              )
              
              (30,175
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchases
                  of property and equipment
              
              
              (338,882
              )
              
              —Payment
                  for software license fee and costs of development
              
              
              —
              
              
              (48,613
              )Proceeds
                  from sales of securities
              
              
              172,042
              
              
              117,910Investments
                  in marketable securities
              
              
              (1,135,421
              )
              
              —Transfers
                  from brokerage accounts
              
              
              1,145,197
              
              
              —Loans
                  to franchisees and others, net
              
              
              (25,297
              )
              
              (106,875
              )NET
                  CASH USED BY INVESTING ACTIVITIES
              
              
              (182,361
              )
              
              (37,578
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESAdvance
                  from acquisition of software
              
              
              —
              
              
              38,250Net
                  increase (decrease) in principal portion of debt
              
              
              2,208,166
              
              
              (12,090
              )Proceeds
                  from issuance of common stock
              
              
              960,000
              
              
              —NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              3,168,166
              
              
              26,160NET
                  INCREASE (DECREASE) IN CASH
              
              
              2,946,717
              
              
              (41,593
              )CASH,
                  BEGINNING OF PERIOD
              
              
              25,449
              
              
              62,718CASH,
                  END OF PERIOD
              
              $
              2,972,166
              
              $
              21,125**Supplemental
                  disclosure of cash flow information:**Cash
                  paid during the period for:Interest
              
              $
              819,759
              
              $
              16,186Income
                  taxes
              
              $
              1,414
              
              $
              1,670**Supplemental
                  schedule of noncash financing activities:**Additional
                  common stock was issued upon the conversion of $133,334 of long-term
                  debt.




See
      independent accountants' review report and notes
      to financial statements




(7)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      1 - ORGANIZATION AND NATURE OF OPERATIONS**





YTB
      International, Inc. (“YTBL”, or the “Company”) and its three wholly-owned
      subsidiaries, Rezconnect Technologies, Inc., YourTravelBiz.com, Inc., and YTB
      Travel Network, Inc. ** (sometimes
      hereafter collectively referred to as the “Company”), are the entities that
      resulted from a corporate reorganization that took place on January 4, 2005.
      On
      that date YTBL ** re-incorporated
      in the State of Delaware, while simultaneously effecting a name change, by
      means
      of a “downstream merger” between itself (then incorporated in the State of New
      York under its former name of *Rezconnect
      Technologies, Inc.,* hereafter referred to as “the former Rezconnect” during periods when
      incorporated as such), and a Delaware corporation named YTB International,
      Inc.
      The former Rezconnect then changed its name to *YTB
      International, Inc.* at
      the
      time of the merger of the two entities.





On
      December 8, 2004, prior to the January 4, 2005 merger that formed the
      current *YTB
      International, Inc.,* the
      former Rezconnect acquired 100% of the outstanding common shares from the
      stockholders of *YourTravelBiz.com,
      Inc.* (“YTB”),
      following requisite approval by the Boards of Directors and stockholders, in
      a
      business combination structured as a statutory merger under New York State
      law
      and the reorganization provisions of the Internal Revenue Code. This
      acquisition, recorded at a total value of $15,257,445, was effected through
      an
      exchange of equity interests, with the former Rezconnect exchanging 7,430,000
      shares of its common stock and 4,092,376 shares of its Series B convertible
      preferred stock for all of the outstanding common stock of YTB.





On
      January 4, 2005, subsequent to the New York merger between the former Rezconnect
      and YTB, the assets of this new combined entity were assigned respectively
      to
      three newly-organized privately-held Delaware corporations,
      respectively, *Rezconnect Technologies, Inc.* (“Rezconnect”), *YourTravelBiz.com,
      Inc.* (“YTB”),
      and *YTB
      Travel Network, Inc.* (“YTB
      Travel”), with each new entity becoming a wholly-owned subsidiary of the former
      Rezconnect on that date. It was also on January 4, 2005, subsequent to the
      merger between the former Rezconnect and YTB, that YTBL was formed via the
      Delaware merger discussed above. As a consequence of this Delaware merger and
      associated re-incorporation, YTBL became the successor to the former Rezconnect
      Technologies, Inc. and its three aforementioned subsidiaries, with each
      subsidiary becoming a wholly-owned subsidiary of YTBL on January 4, 2005.





Following
      both the re-incorporation of the former Rezconnect to the now current YTB
      International, Inc. and a corresponding increase in the number of its authorized
      common shares from 20,000,000 to 50,000,000, each share of the aforementioned
      Series B convertible preferred stock was converted into one share of YTBL common
      stock on January 9, 2005.





The
      Company provides internet-based travel-related services and technology, which
      offers proprietary reservation systems for the travel and entertainment
      industry, and is also a full-service provider of discount travel products and
      services to the leisure and small business traveler. The Company operates under
      various trade names, including “Your Travel Biz”, “YTBnet.com”, “Travel
      Network”, “Global Travel Network” and “Travel Network Vacation Central”, as well
      as internet websites “Bookmytravel.com”, “REZconnect.com” and “RezCity.com”. The
      Company provides services to customers located primarily in the United States,
      and maintains its corporate headquarters in the State of New Jersey. Two of
      its
      subsidiaries maintain administrative offices in Illinois.




See
      independent accountants’ review report




(8)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      1 - ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED)**





Each
      of
      the three aforementioned operating subsidiaries was formed to divide the
      Company’s operations into three basic divisions *.* The *YourTravelBiz.com,
      Inc.* subsidiary
      markets online travel agencies on behalf of YTB Travel Network, Inc. by use
      of
      sales representatives. Such allows the representatives to build a
      linked-by-sponsorship network of representatives. The *Rezconnect
      Technologies, Inc.* subsidiary
      owns, maintains and develops online and other booking technologies for suppliers
      within the travel industry. It also franchises brick and mortar travel agencies.
      The *YTB
      Travel Network, Inc.* and *Rezconnect
      Technologies, Inc.* subsidiaries are travel agencies which book travel reservations and
      transactions, collect payments and licensing fees, and pay sales commissions.





All
      of
      the Company’s franchised operations are independently owned and operated. All
      sales of travel products by the Rezconnect subsidiary are made through its
      independent agencies and franchisees, or through its interactive websites.
      Operational expenses consist of franchise system sales and support personnel,
      executive management and minimal administrative personnel.





The
      Company is also engaged in the business of wholesale travel, providing products
      and services to its franchisees which are obtained from tour operators and
      cruise lines, and operates as a retail agency through one of its booking
      subsidiaries ( *Rezconnect),* as
      described in greater detail above.





The
      former Rezconnect had signed an exclusive 20-year management agreement with
      YTB
      in 2002 to provide travel website hosting to YTB. Upon its acquisition of YTB
      in
      December 2004, the contract was modified to eliminate the 20-year exclusivity
      clause. No other contract terms or clauses changed as a result of the merger.
      Fees remain billable pursuant to the terms of the original agreement and are
      recorded as intercompany transactions. Such fees are eliminated in
      consolidation.





In
      recent
      years, the Company began shifting its operations away from franchising in order
      to concentrate on developing its internet travel agency business. The Company’s
      investments in software and technology are directed towards the enhancement
      of
      its online travel agency.





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**Basis
      of consolidation**


The
      accompanying consolidated financial statements include the accounts of YTB
      International, Inc. and its three wholly-owned subsidiaries, *Rezconnect
      Technologies, Inc., YourTravelBiz.com, Inc.,* and *YTB
      Travel Network, Inc.* All
      significant intercompany accounts and transactions have been eliminated in
      consolidation.





**Basis
      of accounting**


The
      consolidated financial statements have been prepared in accordance with U.S.
      generally accepted accounting principles under the accrual method. Accordingly,
      revenues are recorded in the period in which they are earned and expenses are
      recorded in the period in which they are incurred.





**Cash
      and cash equivalents**


Cash
      and
      cash equivalents include all highly-liquid investments with original maturities
      of three months or less when purchased.




See
      independent accountants’ review report




(9)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**Use
      of estimates**


The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities, and disclosures of
      contingent assets and liabilities at the date of the financial statements,
      and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates. Significant estimates include
      those related to the recoverability of capitalized software costs and
      receivables generated from advertising sales.





**Revenue
      recognition**





Franchise
      fees


Payment
      of an initial franchise fee is due upon the execution of a franchise agreement
      with the franchisee. Such franchise fees are charged for the right of the
      franchisee to conduct business by the use of resources provided by the
      Rezconnect subsidiary. Payment may be in the form of cash or notes, or in a
      combination thereof. Revenue is deferred until all material conditions prior
      to
      the opening of a franchised business have been satisfied and all substantial
      doubts of collectibility have been eliminated, the culmination of which is
      generally upon the receipt of payment. Such conditions include the selection
      of
      a site location by the franchisee and the subsequent execution of a
      corresponding lease agreement. The associated rights of customers and
      Rezconnect’s obligations over the period of the relationship are described in
      detail in the master franchise agreement. Such franchise fees are non-refundable
      once a site location has been selected by the franchisee.





In
      addition, referring travel agents (“RTAs”) purchase business opportunities from
      YTB Travel. Each new RTA pays an initial up-front fee, plus a monthly
      maintenance fee thereafter for as long as the RTA remains in the system. The
      aggregate business license and opportunity fee revenues generated from RTAs,
      both initially and ongoing, far exceed the revenues generated from the
      Rezconnect brick and mortar franchises. For more detail, see the description
      of
      same in Note 1.





Travel
      products and services


Commissions
      earned by the YTB Travel Network, Inc. subsidiary from its sales of travel
      products and services are recognized when earned. Revenues earned from all
      other
      sales of travel and related products, where the Company is the agent of record,
      are recorded when earned at their aggregate retail value. Cancellations have
      not
      historically been material.





Commission
      and incentive income


Commissions
      and incentives earned from travel sales are recognized upon receipt and are
      recorded on a net basis. Commissions earned where the Company acts in the
      capacity of a wholesaler are recorded at their gross amount. The related cost
      of
      such revenue is recorded separately as an operating expense.





Website
      hosting fees


Website
      hosting fees are recognized as earned in the month after such services are
      provided. The monthly revenue generated from such services is based upon the
      number of websites hosted.





See
      independent accountants’ review report




(10)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**Revenue
      recognition (continued)**





Referring
      Travel Agent (RTA) sales and fees


*YourTravelBiz.com,
      Inc. (YTB),* the
      entity acquired by the former Rezconnect on December 8, 2004, generates revenue
      from the selling of online travel agencies, and from providing maintenance
      and
      training services to the new business owners of such online travel agencies.
      These online revenues are generated from new RTA sales and existing RTA
      maintenance fees. An initial up-front sign-up fee, comprised of four separate
      components, is required of each new RTA. However, not one of the individual
      fee
      components (namely, a fee for the preparation and delivery of training
      materials; the establishment of a website; the setup in the online system that
      permits immediate tracking of RTA revenue; and also residual RTA benefits)
      has a
      standalone value or represents the culmination of a separate earnings process.
      As such, and in accordance with both Staff Accounting Bulletin No. 104 (SAB
      104)
      of the U.S. Securities and Exchange Commission, and Issue No. 00-21 of the
      Emerging Issues Task Force (EITF), a committee established by the Financial
      Accounting Standards Board (FASB), the recognition of all up-front fees received
      from new RTA sales is deferred. Such fees are recognized as income over a period
      of thirty-six months, which is the average historical RTA turnover rate. The
      current and noncurrent deferred portions of such fees received are reflected
      as
      liabilities in the consolidated balance sheets. A 3-day right-of-return period
      is extended to each new RTA; after such time no refund is available. Monthly
      hosting and service fees are recognized in the month after the services are
      provided, site fees are recognized as revenue in the month that the service
      is
      provided, and license fees are recognized 30 days following the expiration
      of
      the license period. The associated rights of customers and obligations of YTB
      over the period of the relationship are described in detail in the master
      franchise agreement.





Service
      fees and other revenue


Franchise
      fees, administrative service fees, and printing and advertising revenues are
      recognized as earned income as they become due and payable.





**Expense
      recognition of commission costs**


YTB
      incurs commission costs that are directly related to the origination of new
      RTA
      sales; sales which result in the deferral of revenue. Such incremental direct
      commission costs are capitalized in accordance with FASB Technical Bulletin
      No.
      90-1 (FTB 90-1). In addition, the Company has elected to account for such
      commission costs in accordance with SAB 104 and FTB 90-1 by deferring and
      charging such costs to expense in proportion to the related revenue recognized,
      over the same deferral period of thirty-six months.





**Concentration
      of credit risk**


The
      Company is subject to credit risk through its cash, trade receivables,
      short-term investments and notes receivable. Credit risk with respect to cash
      is
      minimized, as deposits are maintained in accounts insured up to $100,000 by
      the
      Federal Deposit Insurance Corporation. Credit risk with respect to trade
      receivables is minimized due to the nature of its customer base and geographic
      dispersion of such customers. Short-term investments are placed in a
      highly-rated mutual bond fund to minimize credit risk. As of September 30,
      2005,
      the Company’s uninsured cash balances totaled approximately
      $2,100,000.




See
      independent accountants’ review report




(11)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**Property,
      equipment and depreciation**


Property
      and equipment is stated at cost and is depreciated over the estimated useful
      lives of the related assets. Depreciation is computed by the use of
      straight-line and accelerated methods for both reporting and income tax
      purposes. Expenditures for maintenance and repairs are expensed as incurred,
      while renewals and improvements that extend the useful life of an asset are
      capitalized.





**Investments
      in marketable securities**


The
      Company has adopted FASB Statement No. 115, “Accounting for Certain Investments
      in Debt and Equity Securities,” which requires certain investments to be
      classified into the following three categories: held-to-maturity (recorded
      at
      amortized cost), available-for-sale (recorded at fair market value), and trading
      (recorded at fair market value). The Company classifies and reflects its
      marketable equity securities as “available-for-sale” securities in the current
      asset section of its consolidated balance sheet. Realized gains and losses,
      determined by use of the first-in, first-out (FIFO) method, are included in
      earnings; unrealized holding gains and losses are reported as a component of
      stockholders’ equity, included in accumulated other comprehensive
      income.





**Goodwill
      and other intangible assets**


Goodwill,
      which is the excess of cost over the fair value of net assets (including
      identifiable intangibles) acquired in a business acquisition, is stated at
      historical cost less accumulated amortization. Goodwill had been amortized
      on a
      straight-line basis over a five-year period until the adoption of FASB Statement
      No. 142, “Goodwill and Other Intangible Assets”, on January 1, 2002. Pursuant to
      this financial accounting standard, amortization of goodwill has been
      discontinued for financial accounting reporting purposes, but is instead tested
      for impairment on an annual basis. With respect to recognized intangible assets
      other than goodwill, such assets with finite useful lives are amortized over
      their useful lives, while assets with indefinite useful lives are not amortized.
      All intangible assets are likewise tested for impairment on an annual basis.





**Advertising
      costs**


Pursuant
      to the provisions of Statement of Position (“SOP”) No. 93-7 issued by the
      American Institute of Certified Public Accountants, advertising costs are
      expensed as incurred.





**Adoption
      of other accounting pronouncements**


In
      June
      2001, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
      141, “Business Combinations”. SFAS No. 141 supersedes the accounting and
      reporting requirements under APB Opinion No. 16, “Business Combinations”, by
      requiring that only the “purchase method” be used to account for business
      combinations. More specifically, SFAS No. 141 discusses the application of
      the
      purchase method as it relates to a business combination effected through an
      exchange of equity interests. Accordingly, the provisions of SFAS No. 141 have
      been so adopted and employed in connection with the recording of the merger
      between the former *Rezconnect
      Technologies, Inc.* and *YourTravelBiz.com,
      Inc.* on
      December 8, 2004, ** as
      described in Note 1.


See
      independent accountants’ review report




(12)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**Adoption
      of other accounting pronouncements (continued)**





In
      January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable
      Interest Entities" - an Interpretation of ARB No. 51” (“FIN 46”), which
      addresses consolidation of variable interest entities. FIN 46 expands the
      criteria for consideration in determining whether a variable interest entity
      should be consolidated by a business entity, and requires existing
      unconsolidated variable interest entities (which include, but are not limited
      to, Special Purpose Entities, or “SPEs”) to be consolidated by their primary
      beneficiaries if the entities do not effectively disperse risks among parties
      involved. This interpretation applies immediately to variable interest entities
      created after January 31, 2003, and to variable interest entities in which
      an
      enterprise obtains an interest after that date, and applies in the first fiscal
      year or interim period beginning after September 15, 2003, to variable interest
      entities in which an enterprise holds a variable interest that it acquired
      before February 1, 2003. The adoption of FIN 46 is not expected to have a
      material impact on the consolidated results of operations or financial position
      of the Company.





In
      April
      2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative
      Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies
      accounting for derivative instruments, including certain derivative instruments
      embedded in other contracts, and for hedging activities under SFAS No. 133.
      SFAS
      No. 149 is effective for contracts modified or entered into after September
      30,
      2003, and for hedging relationships designed after September 30, 2003. The
      Company does not believe that the adoption of SFAS No. 149 will materially
      impact its consolidated financial statements.





In
      May
      2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial
      Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150
      establishes standards for how companies classify and measure certain financial
      instruments with characteristics of both liabilities and equity. It requires
      entities to classify a financial instrument that is within its scope as a
      liability (or an asset in some circumstances). SFAS No. 150 was effective
      beginning with the second quarter of fiscal year 2004; the Company does not
      believe that the adoption of SFAS No. 150 will have a material impact on its
      consolidated financial statements.





**Accounts
      and notes receivable**


The
      Company reflects both accounts and notes receivable at their outstanding
      principal balances as of the balance sheet date, as adjusted by any charge-offs
      or allowances established as a reserve for potentially uncollectible accounts.





**Comprehensive
      income**


The
      Company follows the provisions of SFAS No. 130, “Reporting Comprehensive
      Income”, which establishes standards for the reporting and display of
      comprehensive income and its components, when the amount of such comprehensive
      income is considered to be material.


See
      independent accountants’ review report




(13)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**Profit-sharing
      plan**


The *Rezconnect* subsidiary sponsors a profit-sharing plan (“plan”), which is a defined
      contribution pension plan, for all of its eligible employees. All employees
      who
      have completed 1,000 hours of service during the plan year may participate.
      Contributions are accrued and paid out of *Rezconnect’s* current
      profits at the discretion of the parent Company’s Board of Directors (“Board”).
      Employees may make voluntary contributions, subject to statutory limitations.
      The Board elected not to make any contributions to the plan during either the
      nine-month period ended September 30, 2005 or 2004.





**Stock-based
      compensation**


In
      accordance with SFAS No. 123, “Accounting for Stock-Based Compensation”,
      companies with stock-based compensation plans are required to recognize
      compensation expense based on the “fair value” accounting method, or must
      otherwise apply the “intrinsic value” method provisions of Accounting Principles
      Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees”, and
      disclose pro forma net income assuming the fair value method had been
      applied.





The
      Company has elected to adopt the disclosure-only provisions of SFAS No. 123
      and,
      accordingly, computes compensation expense for employees as prescribed by APB
      25. Under APB 25, compensation cost (if any) is measured as the excess of the
      quoted market price of the Company’s stock at the date of grant over the amount
      an employee must pay to acquire the stock. For stock options granted to
      non-employees, expense is measured based upon the fair value method prescribed
      by SFAS No. 123.





During
      2004, the former Rezconnect issued 900,000 shares of its common stock as
      additional compensation to its Chief Financial Officer (“CFO”) to cover the
      shortfall between actual salary paid to the CFO and the agreed-upon compensation
      amount, pursuant to an employment agreement between the CFO and the Company.
      Such stock compensation covered periods served during the years 2001 through
      2004. Of the 900,000 shares issued, 500,000 of which (valued at $50,400), were
      issued to compensate the CFO for services rendered in 2004. The remaining
      400,000 shares pertained to services rendered in years 2001 through 2003, valued
      at $67,200 in each of those years.





**Earnings
      per share**


Basic
      earnings (or loss) per share is based on the weighted-average number of common
      shares outstanding. Diluted earnings (or loss) per share assumes that
      outstanding common shares are increased by common shares issuable upon the
      exercise of stock options and warrants, and by the conversion of preferred
      stock, where such exercise or conversion would have a dilutive effect on the
      basic earnings per share. For the nine and three-month periods ended September
      30, 2005 and 2004, the effect on the basic loss per share by the incremental
      shares issued from the assumed exercise of stock options and warrants (as
      determined by use of the “treasury stock method” prescribed by SFAS No. 128)
      would be anti-dilutive in each of those periods. Accordingly, such incremental
      shares are not included in the calculation of the Company’s diluted loss per
      share in the nine and three-month periods ended September 30, 2005 and
      2004.


See
      independent accountants’ review report




(14)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**Earnings
      per share (continued)**


As
      discussed in Note 1, there were 4,092,376 shares of the former Rezconnect’s
      Series B convertible preferred stock issued on December 8, 2004 that were
      subsequently converted into YTBL common shares on January 9, 2005. These
      preferred shares, however, were considered to be common stock equivalents on
      the
      date of original issuance. Accordingly, all 4,092,376 shares of the Company’s
      Series B convertible preferred stock are or will be included in the calculation
      of the Company’s earnings (or loss) per common share for all periods presented
      on and after December 8, 2004.





**Capitalized
      software costs**


Pursuant
      to SOP 98-1, “Accounting for Costs of Computer Software Developed or Obtained
      for Internal Use”, the Company capitalizes certain costs incurred during an
      internal use software development project, including costs related to
      applications, infrastructure, and graphics development for the Company’s
      websites. Capitalized costs consist of the cost of the software license
      agreement (Note 11), and certain external direct costs of materials and
      licensor-provided services incurred in developing the software for its specific
      applications. Capitalized software costs are amortized over their expected
      useful lives of thirty-six months.





**Marketing
      compensation plan**


YTB
      offers a compensation plan to its sales representatives under an arrangement
      that pays the representatives direct sales commissions, override compensation
      (if they so qualify) and other bonus incentives based upon the amount of each
      representative’s sales, or enrolled referrals. Direct sales commissions are paid
      on a weekly basis, based upon the amount of the previous week’s sales. For
      active representatives, residual commissions are paid on a monthly basis,
      following the month earned. Bonuses are earned by maintaining a minimum number
      of personal enrollments. Commission costs are capitalized and recognized as
      expense in proportion to the related revenue recognized, over a period of
      thirty-six months.








**NOTE
      3 - LONG-TERM DEBT**





On
      January 11, 2002, as a result of the events of September 11, 2001, the former
      Rezconnect borrowed $324,500 from the United States Small Business
      Administration (“SBA”) under its disaster relief program. Payments were to have
      initially commenced in January 2003. However, the SBA extended the commencement
      date to November 2003. The loan is repayable via a monthly installment of
      $2,607, including interest at 4% per annum, through October 2017. The loan
      is
      personally guaranteed by the Company’s Chief Executive Officer, and is
      collateralized by the accounts receivable and property and equipment of the
      Company. The outstanding balance on this SBA loan as of September 30, 2005
      and
      2004 was $288,255 and $309,080, respectively.





See
      independent accountants’ review report




(15)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**




**NOTE
      3 - LONG-TERM DEBT (CONTINUED)**





As
      of
      September 30, 2005, the Company had outstanding notes payable totaling $239,721
      due to two of its officers who had advanced funds to the Company. The notes
      are
      unsecured and bear interest at the prevailing prime rate. The note provisions
      contain no set terms of repayment.





During
      2004, the former Rezconnect acquired a software license right to conduct its
      online franchise business. The total cost of this software license right was
      $45,000. An option to make installment payments of $9,000 per year for five
      years, at the prevailing rate of interest, was granted by the provider. The
      note
      is secured by various Company assets. The outstanding balance due on this note
      as of September 30, 2005 and 2004 totaled $34,000 and $38,250, respectively.





During
      January 2005, the former Rezconnect entered into an agreement with an investor
      to raise an additional $2,000,000 of capital via a convertible term note
      (“Note”), together with any accrued and unpaid interest thereon, maturing on
      January 26, 2008. The Note was superior to the subordinate SBA loan of
      approximately $300,000 on Rezconnect, and was executed and subordinated on
      February 7, 2005. The terms of the Note include the provision under the
      associated payment schedule that the Note is to pay interest only during the
      first six months, with principal and interest payments beginning in August
      2005.
      In addition, the Note is required to be paid in full within 30 months (by
      January 2008) unless the investor chooses to exercise the convertibility feature
      of the debt into common stock sooner (which the investor has the right to do
      under the terms of the agreement). On October 12, 2005, the investor did so
      choose to exercise such convertibility option (see Note 12).





Under
      the
      terms of the associated agreement, repayment was to have been made either in
      the
      form of cash or stock, or in a combination thereof, based upon the trading
      price
      of the stock at each due date level. The Note bore interest equal to the
      prevailing “prime rate”, plus three percent (3%). The interest rate contained an
      eight percent (8%) floor. The Company would have received a downward interest
      adjustment on the interest rate on the outstanding loan balance if the stock
      of
      the Company would increase as follows: for each twenty five percent (25%)
      increase in stock price value above the fixed conversion price of $0.80 for
      the
      first 1,250,000 shares, and $1.25 for the second 800,000 shares, the interest
      will be reduced for that payment period by 50 basis points (0.50%).





The
      minimum amount that could be converted into shares of common stock of the
      Company was subject to two conditions. The first is that the stock must be
      trading in an amount equal to 110% of the fixed conversion price (which, for
      the
      first 1,250,000 shares, is $0.80 per share). Therefore, the stock must trade
      above $0.88 per share and the amount of such conversion may not exceed twenty
      five percent (25%) of the aggregate dollar trading volume of the stock for
      the
      twenty two (22)-day trading period immediately preceding the applicable
      repayment date. The second condition required that any amount due on a repayment
      date that the investor was not able to convert into shares of common stock
      due
      to the failure to meet the conversion criteria, would be paid in cash by the
      Company at the rate of 102% of the monthly amount otherwise due on such
      repayment due date.





See
      independent accountants’ review report




(16)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      3 - LONG-TERM DEBT (CONTINUED)**





The
      Company had the option of prepaying this Note (“Optional Redemption”) by paying
      to the investor the sum of money equal to one hundred thirty percent (130%)
      of
      the principal amount of the Note at any time, based on the outstanding amount
      due plus any accrued interest. The investor had the right, in its sole
      discretion, to accept the cash payment or to exercise the right to take all
      stock, or stock and cash, by notifying the Company within seven (7) days of
      the
      Optional Redemption notice.





Under
      the
      agreement, the Company was required to make monthly principal payments to the
      holder on each repayment date, each in the amount of $66,667 together with
      any
      accrued and unpaid interest to date. If the stock was trading at or above 110%
      of the fixed conversion price stated above, and the average dollar trading
      volume did not exceed 25% of the last twenty two (22) trading days, the Company
      would then have been permitted to make payment in stock at a value of $66,667
      divided by $0.80, or 83,333 shares of common stock, plus accrued
      interest.





The
      warrants issued with the Note were based on providing shares convertible into
      common stock at $1.58 for the first 400,000 shares and $1.72 for the remaining
      400,000 shares. The investor was permitted to convert these shares anytime
      between the date of registration of the shares on associated Form SB-2, and
      January 26, 2012. Such exercise price is determined by averaging the closing
      bid
      and asked prices reported for the last business day immediately preceding the
      exercise date.





The
      Company was liable under the terms of this agreement for the approximate maximum
      amount of $340,005 of principal and accrued interest in 2005, should the quoted
      market price of its stock have fallen below $0.88 per share. Such maximum
      liability would have approximated $816,013, plus accrued interest, per year
      in
      years 2006 and beyond if the quoted market price of its stock were to fall
      below
      $0.88 on the first 1,250,000 shares converted and $1.375 on the second 800,000
      shares converted.





This
      convertible Note contained a beneficial conversion feature, as the debt was
      convertible into common stock at fixed-dollar conversion prices as of the
      commitment date (February 1, 2005) that were lower than the market price of
      the
      common stock on that same date. The date of earliest conversion was August
      1,
      2005. In applying the provisions of EITF Issue No. 98-5 and No. 00-27, the
      intrinsic value of the beneficial conversion feature, or debt discount, has
      been
      calculated to be $706,000. This debt discount, fully amortized as of September
      30, 2005, was recognized as interest expense over the six-month period February
      1, 2005 through July 31, 2005, at a monthly amortization of $117,667. The debt
      discount recognized as interest expense during the nine and three-month periods
      ended September 30, 2005 was $706,000 and $117,667, respectively. The original
      principal amount of this debt ($2,000,000) was reduced to $1,866,666 as of
      September 30, 2005 by means of a conversion to 166,668 shares of common stock,
      valued at $133,334, on September 1, 2005. As previously discussed, this debt
      was
      fully satisfied on October 12, 2005 via the investor’s exercise of the Note’s
      conversion feature (see Note 12).





In
      addition, as of September 30, 2005, the Company is financing four vehicles,
      payable in monthly installments ranging from approximately $1,000 to $1,200,
      at
      the rate of approximately 6.25%. The loans are payable through April 2008.
      The
      balances due on these vehicle loans as of September 30, 2005 totaled $151,285.




See
      independent accountants’ review report




(17)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      3 - LONG-TERM DEBT (CONTINUED)**





Minimum
      principal payments of long-term debt as of September 30, 2005 are as
      follows:




Twelve
                  months
                ending
                  September 30,
              
              Amount2006
              
              $
              1,901,5742007
              
              
              50,7282008
              
              
              40,5562009
              
              
              36,4182010
              
              
              37,315Thereafter
              
              
              513,316Total
              
              $
              2,579,927




**NOTE
      4 - CONSULTING AGREEMENT WITH EXECUTIVE**




A
      consulting agreement was entered into with a Company executive during April
      2005
      for the Company to pay such executive, from May 1, 2005 through April 30, 2006,
      a monthly fee of $10,000 (plus an additional $1 per month for each new sign-up
      site sold in each month) for consulting services. A one-year renewal option
      is
      available upon the expiration of the original one-year agreement.





**NOTE
      5 - COMMITMENTS AND CONTINGENCIES**





Leases


The
      Company is obligated under operating office lease agreements through June 30,
      2010, to pay minimum annual rentals, currently at $164,000 per year plus real
      estate taxes and operating cost charges, at its New Jersey and Illinois
      locations.





In
      addition, the Company (the former Rezconnect) has entered into various operating
      lease agreements with Wal-Mart Stores, Inc. (Wal-Mart) for eight locations
      pursuant to a master lease agreement. The Company has also entered into
      sub-lease agreements with franchisees at many of these Wal-Mart locations.
      The
      Company has an option to renew both the leases with Wal-Mart and the subleases
      with the franchisees for a two-year period and, additionally, for three one-year
      periods.





Following
      is a summary of net rental income for the nine months ended September 30, 2005
      and 2004:


**2005**
              
              **2004**Sublease
                  rental income
              
              $
              122,470
              
              $
              123,081Less:
                  minimum rental expense
              
              
              89,418
              
              
              106,438Net
                  rental income
              
              $
              33,052
              
              $
              16,643


See
      independent accountants’ review report




(18)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)**





Minimum
      future rental payments under non-cancelable operating leases (including the
      Wal-Mart location leases), having remaining terms in excess of one year as
      of
      September 30, 2005 are as follows:




Twelve
                  months
              
              New
                  Jersey andending
                  September 30,
              
              Illinois
                  Offices
              
              Wal-Mart
                  Locations2006
              
              $
              166,815
              
              $
              147,8762007
              
              
              178,375
              
              
              147,8762008
              
              
              214,140
              
              
              147,8762009
              
              
              172,250
              
              
              -0-2010
              
              
              132,000
              
              
              -0-Total
              
              $
              863,580
              
              $
              443,628




Other
      Lease


The
      former Rezconnect assumed leases of its acquiree for copy machines under
      non-cancelable operating leases expiring in calendar year 2007. Future minimum
      payments in excess of one year are approximated as follows:





Twelve
                months
              ending
                September 30,
            
            Amount2006
            
            $
            7,9142007
            
            
            5,936Total
            
            $
            13,850




Legal
      Proceedings


During
      June 2005, the Company and its Chief Executive Officer (the “defendants”) were
      served a citation for a claim asserted against the defendants on May 20, 2005.
      In the opinion of legal counsel, it was *remote* (as
      defined in SFAS No. 5) that either the Company or its CEO would receive a
      judgment against either or both. It was subsequently decreed by the U.S.
      District Court during August 2005 that all claims against the defendants be
      dismissed.




See
      independent accountants’ review report




(19)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)**





Employment
      Agreements with Senior Management


Following
      the merger with YTB on December 8, 2004, the former Rezconnect entered into
      long-term employment agreements with Michael Y. Brent (its CEO), J. Scott Tomer
      (its President), Derek Brent (its Secretary) and Kim Sorensen (its Treasurer),
      collectively the “Senior Executives”. Such agreements commenced on January 1,
      2005 and expire December 31, 2009. Each Senior Executive is subject to
      confidentiality, non-raid and non-compete provisions. (Michael Y. Brent's
      previous 2004 employment agreement was cancelled and superseded in the context
      of putting in place these nearly identical employment agreements with senior
      management). Each Senior Executive, so long as they continue to be employed
      by
      the Company, will be paid, directly or indirectly, a combination of (i) a base
      salary, and (ii) stock options and/or warrants, as so determined by the Board
      of
      Directors, acting as a Compensation Committee, based on the Company’s financial
      performance.  Each Senior Executive will continue to be subject to their
      respective confidentiality covenants and, for 3 years, their non-compete
      covenants.  Additionally, the estate of each Senior Executive will receive
      a death benefit in an amount equal to one year’s salary.





As
      discussed in Note 4, a one-year consulting agreement was entered into with
      a
      Company executive (J. Lloyd Tomer, its Chairman), with a one-year renewal option
      upon expiration.




**NOTE
      6 - STOCK OPTIONS**





The
      number of stock options outstanding as of September 30, 2005 and 2004 was
      475,000, with a weighted-average exercise price of $1.08. No options were
      granted, exercised, forfeited or canceled during either of the nine-month
      periods ended September 30, 2005 or 2004.





A
      summary
      of stock options outstanding and exercisable as September 30, 2005 are as
      follows:


Options
              Outstanding
              Options
              ExercisableExercise
                Price
              Number
                Outstanding
              Weighted-
                Average
                Remaining
                  Life
              Weighted-
                Average
                Exercise
                  Price
              Number
                Exercisable
              Weighted-
                Average
                Exercise
                  Price$1.00
              410,000
              5
                  Years
              $1.00
              351,000
              $1.00$2.00
              65,000
              5
                  Years
              $2.00
              45,000
              $2.00


The
      fair
      value of the options granted for the six months ended September 30, 2005 and
      2004 was estimated using the Black-Scholes option pricing model based on the
      following weighted-average assumptions:





Risk
                  free interest rate
              
              
              5.00
              %Expected
                  volatility
              
              
              100.00
              %Expected
                  remaining lives
              
              
              2Expected
                  dividend yield
              
              
              -0
              -




See
      independent accountants’ review report




(20)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      7 - INCOME TAXES**





As
      a
      result of Federal tax loss carryforwards available to YTB International, Inc.
      (the “parent” company) in 2005, either by consolidated operations or by such tax
      attributes that succeeded to the parent resulting from the acquisition of
      YourTravelBiz.com, Inc. in December 2004, a deferred tax asset has been
      recognized in the amount of $121,981 as of September 30, 2005 for the estimated
      future benefit of Federal income taxes. Such asset value has been reduced to
      this estimated net realizable amount as of September 30, 2005 by a valuation
      allowance of approximately $700,000, as estimated in accordance with the
      provisions of SFAS No. 109, *Accounting
      for Income* Taxes.
      At
      September 30, 2004, the Company was uncertain if it would realize any future
      tax
      benefit of its deferred tax assets. Accordingly, a full valuation allowance
      had
      been established as a reserve against the Company’s deferred tax assets as of
      September 30, 2004 and, therefore, no deferred income tax credits were
      recognized in the nine-month period ended September 30, 2004.




**NOTE
      8 - SEGMENT INFORMATION**





The
      Company operates in the following three business segments: providing and selling
      management services within the travel industry, including franchising
      activities; developing and commercializing internet-based technology programs;
      and online travel store services. Although the Company operates franchises
      in
      eight foreign countries, revenue is generated from just three of the countries.
      Such revenue generated from these three foreign countries amounts to an
      insignificant and immaterial portion of the overall total revenues of the
      Company. Accordingly, Company management considers it impracticable to report
      such geographic information.





Summarized
      financial information concerning the Company’s reportable segments is shown in
      the following tables. The “other” column includes corporate items not
      specifically allocated to the segments. (Note: the amounts for the nine months
      ended September 30, 2004 reflect pre-merger activity).





Nine-Month
              Period
                Ended
              September
                30, 2005
            
            Franchise
                and Travel-Related Management
                Services
            
            Internet-Based
                Technology Programs
            
            Online
                Travel
              Store
                Services
            
            Other
            
            TotalExternal
                and inter-segment
                revenue, net
            
            $
            4,275,387
            
            $
            9,262,993
            
            $
            1,313,550
            
            $
            —
            
            $
            14,851,930Segment
                profit (loss)
            
            $
            442,235
            
            $
            (314,001
            )
            $
            278,773
            
            $
            (1,314,487
            )
            $
            (907,480
            )Total
                assets
            
            $
            1,314,827
            
            $
            8,842,289
            
            $
            166,526
            
            $
            18,547,325
            
            $
            28,870,967Capital
                expenditures
            
            
            —
            
            $
            338,882
            
            
            —
            
            
            —
            
            $
            338,882Depreciation
                and amortization
            
            
            —
            
            $
            20,347
            
            
            —
            
            $
            375,000
            
            $
            444,354Investment
                income, net
            
            
            —
            
            
            —
            
            
            —
            
            $
            67,129
            
            $
            67,129







See
      independent accountants’ review report




(21)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      8 - SEGMENT INFORMATION (CONTINUED)**





Nine-Month
              Period
                Ended
              September
                30, 2004
            
            Franchise
                and
              Travel-Related
                Management
                Services
            
            Internet-Based
                Technology Programs
            
            Online
                Travel
              Store
                Services
            
            Other
            
            TotalExternal
                and inter-segment
                revenue, net
            
            $
            2,043,231
            
            $
            —
            
            $
            383,179
            
            $
            —
            
            $
            2,426,410Segment
                profit (loss)
            
            $
            (316,449
            )
            
            —
            
            $
            295,665
            
            
            —
            
            $
            (20,784
            )Total
                assets
            
            $
            381,990
            
            $
            83,083
            
            $
            806,809
            
            $
            632,761
            
            $
            1,904,643Capital
                expenditures
            
            
            —
            
            
            3,613
            
            $
            45,000
            
            
            —
            
            $
            48,613Depreciation
                and amortization
            
            
            —
            
            
            —
            
            $
            37,999
            
            
            —
            
            $
            37,999Investment
                income, net
            
            
            —
            
            
            —
            
            
            —
            
            $
            24,252
            
            $
            24,252





**NOTE
      9 - BUSINESS COMBINATION**




As
      described more fully in Note 1, a business combination structured as a statutory
      merger took place between the former Rezconnect Technologies, Inc. (referred
      to
      as the “Company” in this Note) and *YourTravelBiz.com,
      Inc.* (“YTB”)
      on December 8, 2004. This merger was accounted for by use of the “purchase
      method”, as prescribed by Statement of Financial Accounting Standards (“SFAS”)
      No. 141, *Business
      Combinations.* In
      exchange for all of the outstanding common stock of YTB, the Company issued
      common stock (valued at $9,838,493) and Series B convertible preferred stock
      (valued at $5,418,952), or a total value of $15,257,445, to the stockholders
      of
      YTB. The total cost of this acquisition was allocated based upon the estimated
      fair values of the identifiable assets acquired and the fair values of the
      liabilities assumed at the date of acquisition. The recorded cost of the
      acquisition was based mainly on the number of sales representatives on hand
      at
      the time of contract negotiations during August 2004; financial projections
      of
      YTB, prepared and provided by YTB management; and on the estimated value of
      the
      Company’s software development regarding two franchise systems, in addition to
      other intangible assets.





The
      total
      cost of this acquisition exceeded the net of the amounts assigned to assets
      acquired and liabilities assumed by $9,436,118, which was recorded as
“goodwill”. In accordance with SFAS No. 142, goodwill resulting from this
      acquisition has been recognized, but will not be amortized. This value
      representing goodwill will instead be tested for impairment on an annual basis.




Following
      is a summary of the allocated cost of the Company’s acquisition of
      YTB:


Asset(Liability)Property
                  and equipment
              
              $
              73,121Computer
                  software
              
              
              9,097Intangible
                  assets (other than goodwill)
              
              
              6,500,000Goodwill
              
              
              9,436,118Short-term
                  debt
              
              
              (102,342
              )Accounts
                  payable and accrued expenses
              
              
              (658,549
              )Net
                  assets acquired
              
              $
              15,257,445


See
      independent accountants’ review report




(22)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**








**NOTE
      9 - BUSINESS COMBINATION (CONTINUED)**





Management’s
      primary reasons for acquiring YTB include the long-lasting business relationship
      between the two companies, with YTB being the primary customer of the Company.
      Other factors include management’s belief that there is a larger growth
      potential as a combined company than as separate entities, among other reasons
      because of the referral marketing component that marketing contributes. More
      specifically, the merger is expected to increase travel market share in the
      retail sale of travel and travel-related services, a development that is
      unlikely using the prior brick and mortar agency business model. By acquiring
      marketing and combining the respective existing travel agency businesses of
      YTB
      and the Company, the merged entity provides both a new source of travel booking
      agencies plus an additional revenue source in the initial and ongoing monthly
      fees paid by the RTAs..





The
      estimated fair value of all identifiable assets acquired totaled $6,582,218.
      Goodwill was recognized in the amount of $9,436,118. Of the $6,500,000 of
      identifiable intangible assets acquired, $3,500,000 was assigned to trade names;
      $1,500,000 to internet domain names; and $1,500,000 to RTA sales agreements.
      Of
      these, only the RTA sales agreements (each of which having an estimated useful
      life of thirty-six months) are subject to amortization. With respect to the
      acquired intangible assets not subject to amortization, tests for impairment
      will be made on an annual basis.





As
      of
      September 30, 2005, the gross carrying amount and accumulated amortization
      of
      the RTA sales agreements (“agreements”) was $1,500,000 and $416,667,
      respectively; amortization expense for the nine months then ended totaled
      $375,000. Amortization expense of the agreements for the fiscal years ending
      December 31, 2005 and 2006 is estimated to be $500,000 in each of those years.
      The cost of the agreements will be fully amortized by November 30,
      2007.





With
      respect to the acquired intangible assets recognized as assets apart from
      goodwill that are not subject to amortization, the respective gross carrying
      amounts as of September 30, 2005 are as follows: trade names - $3,500,000;
      internet domain names - $1,500,000. These intangibles have indefinite legal
      lives. As such, they are expected to contribute indefinitely to the Company’s
      cash flows. No impairment losses have been recognized on these unamortized
      intangible assets.





The
      $9,436,118 of goodwill was assigned to the Company’s business segments as
      follows: $7,022,105 to *Franchise
      and Travel-Related Management Services;* $1,172,679
      to *Internet-Based
      Technology Programs;* and
      $1,241,334 to *Online
      Travel Store Services* .





The
      basis
      and method for determining the total acquisition cost of $15,257,445 included
      the following factors:




·
            YTB’s
                customer-base and related revenue
                stream.


·
            YTB’s
                operating system.


·
            The
                number of representatives on YTB’s sales force and related sales
                agreements.


·
            The
                estimated value of YTB, based primarily on the above-listed factors,
                in
                comparison to the market value of the Company.




See
      independent accountants’ review report




(23)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      9 - BUSINESS COMBINATION (CONTINUED)**





The
      cost
      of goodwill and all identifiable intangible assets acquired to be amortized
      and
      deducted for tax purposes for the years ending December 31, 2005 through 2018
      is
      expected to be $1,062,408 in each of those years, which is based on current
      tax
      law that mandates use of the straight-line method over a period of 15 years
      for
      such assets. The cost goodwill will be fully amortized by November 30,
      2007.





SFAS
      No.
      141 requires the identification of the *acquiring* entity
      in a business combination. In this transaction effected through the exchange
      of
      equity interests, the Company (i.e., the former *Rezconnect
      Technologies, Inc.* )
      has
      been identified as the acquiring entity. Following are among the most pertinent
      facts and circumstances considered in the identification of the Company as
      the
“acquiring entity” which, moreover, provides the rationale for the position
      taken that this transaction does *not* constitute
      a “reverse acquisition” as addressed in SFAS No. 141:





·
            Day-to-day
                control continues to reside in the Company with its Chief Executive
                Officer (“CEO”) at the parent company level (acknowledging that each
                operating subsidiary has its own Board of Directors and, accordingly,
                a
                degree of operational autonomy).


·
            The
                Company’s asset value constitutes more than 50% of the resulting total
                assets of the combined entity.


·
            The
                CEO of the Company has convened and conducted each meeting of The
                Board of
                Directors that has occurred both before and after the
                merger.


·
            The
                CEO of the Company continues to often be the sole signatory on filings
                with the Securities and Exchange Commission (SEC) and other
                documents.


·
            The
                CEO of the Company initiated and structured the merger with
                YTB.


·
            Most
                funding and structuring initiatives continue to reside with the Company’s
                CEO.


·
            The
                Company has provided funding to YTB prior to the
                merger.


·
            The
                SEC reporting address and day-to-day operations emanate from the
                Company’s
                New Jersey headquarters.








**NOTE
      10 - RELATED PARTY TRANSACTIONS**





The *Rezconnect Technologies, Inc.* subsidiary
      provides website hosting services to the *YourTravelBiz.com,
      Inc.* subsidiary.
      For the nine-month and three-month periods ended September 30, 2005, *Rezconnect* generated
      total intercompany website hosting fee revenue of $607,991 and $272,198,
      respectively.





The *YTB
      Travel Network, Inc.* subsidiary
      receives commissions from *Rezconnect* for
      providing travel-related services *.* For
      the
      nine-month and three-month periods ended September 30, 2005, *YTB
      Travel* generated
      total ** intercompany
      commission revenue of $492,035 and $185,299, respectively.





All
      intercompany revenues, and corresponding intercompany expenses, have been
      eliminated in the accompanying consolidated statements of
      operations.





See
      independent accountants’ review report




(24)




**YTB
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 AND 2004**


**(UNAUDITED)**





**NOTE
      10 - RELATED PARTY TRANSACTIONS (CONTINUED)**





During
      the nine-month period ended September 30, 2004, the Company incurred consulting
      fee expenses of approximately $18,000 for services provided by an entity owned
      by the Company’s Chief Executive Officer, a significant shareholder of the
      Company. Under a new employment agreement reached in December 2004, such
      consulting fees have been discontinued.





**NOTE
      11 - SOFTWARE LICENSE AGREEMENT AND DEVELOPMENT COSTS**





During
      2004, the former Rezconnect Technologies, Inc. (“Rezconnect”) acquired a
      software license right to conduct its online franchise business. The total
      cost
      of this software license right was $45,000. Rezconnect has been given the option
      to make installment payments of $9,000 per year for five years. The cost of
      this
      software license is being amortized over its five-year life. During August
      2004,
      Rezconnect acquired a new software right in the amount of $3,612. The cost
      of
      this software right is being amortized over its expected useful life of
      thirty-six months.





**NOTE
      12 - SUBSEQUENT EVENTS**





As
      described in Note 3, the former Rezconnect entered into an agreement with an
      investor to raise an additional $2,000,000 of capital via a convertible term
      note (“Note”) during January 2005. The terms of the Note provided for payment to
      be made in full by January 2008, unless the investor would choose to exercise
      the convertibility feature of the Note into common stock sooner. On October
      12,
      2005, the investor did choose to exercise such convertibility option, and thus
      converted the debt outstanding on that date ($1,866,666) into 1,800,000 shares
      of common stock.





See
      independent accountants’ review report




(25)










**SUPPLEMENTARY
      INFORMATION**


**(See
      independent registered public accounting firm’s review
      report)**




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**


**ON
      SUPPLEMENTARY INFORMATION**


Our
      report on our reviews of the basic interim consolidated financial statements
      of
      YTB International, Inc. and subsidiaries as of September 30, 2005 and 2004,
      and
      for the nine-month and three-month periods then ended, appears on page 1. Our
      reviews were made for the purpose of expressing limited assurance that there
      are
      no material modifications that should be made to the interim consolidated
      financial statements in order for them to be in conformity with U.S. generally
      accepted accounting principles. The information included in the accompanying
      interim consolidated supplementary schedules is presented only for supplementary
      analysis purposes. Such information has been subjected to the inquiry and
      analytical procedures applied in the reviews of the basic interim consolidated
      financial statements, and we are not aware of any material modifications that
      should be made thereto.





Dischino
      & Associates, P.C.


Certified
      Public Accountants


and
      Business Consultants





November
      8, 2005







(26)




**YTB
        INTERNATIONAL, INC. AND SUBSIDIARIES**
 SUPPLEMENTARY
        INFORMATION
 CONSOLIDATED
        SCHEDULES OF GENERAL AND
        ADMINSITRATIVE EXPENSES
 NINE
        MONTHS ENDED SEPTEMBER 30, 2005 AND
        2004
 **(UNAUDITED)**


**2005**
                  ****
                  ****
                  **2004**Administrative
                      salaried and leased employees
                  
                  $
                  1,792,001
                  
                  $
                  407,673Payroll
                      taxes
                  
                  
                  76,922
                  
                  
                  31,989Advertising
                  
                  
                  103,323
                  
                  
                  —Auto
                      expense
                  
                  
                  —
                  
                  
                  13,517Bad
                      debt expense
                  
                  
                  166,542
                  
                  
                  —Bank
                      fees and service charges
                  
                  
                  34,137
                  
                  
                  2,376Consultant
                      fees
                  
                  
                  143,316
                  
                  
                  —Contract
                      labor
                  
                  
                  357,271
                  
                  
                  —Computer
                      expense
                  
                  
                  30,965
                  
                  
                  120Charitable
                      contributions
                  
                  
                  8,960
                  
                  
                  —Credit
                      card fees
                  
                  
                  340,719
                  
                  
                  —Dues
                      and subscriptions
                  
                  
                  35,842
                  
                  
                  39,300Employee
                      benefits
                  
                  
                  39,558
                  
                  
                  —Equipment
                      leases
                  
                  
                  28,385
                  
                  
                  5,312Minor
                      equipment
                  
                  
                  5,468
                  
                  
                  6,024Licenses
                      and permits
                  
                  
                  2,782
                  
                  
                  150Management
                      fees
                  
                  
                  41,250
                  
                  
                  —Meetings
                      and conventions
                  
                  
                  492,531
                  
                  
                  —Miscellaneous
                  
                  
                  5,957
                  
                  
                  —Office
                      rent
                  
                  
                  223,818
                  
                  
                  140,206Travel
                      and entertainment
                  
                  
                  284,476
                  
                  
                  —Office
                      supplies and expenses
                  
                  
                  86,956
                  
                  
                  11,130Printing
                      and reproduction
                  
                  
                  437,557
                  
                  
                  5,736Postage
                      and delivery
                  
                  
                  192,171
                  
                  
                  16,828Insurance
                  
                  
                  62,357
                  
                  
                  44,354Professional
                      fees
                  
                  
                  216,274
                  
                  
                  46,809Training
                      and recruitment
                  
                  
                  147,953
                  
                  
                  375Telephone
                  
                  
                  44,121
                  
                  
                  14,046Website
                      user, processing and programming fees
                  
                  
                  147,282
                  
                  
                  —TOTAL
                    GENERAL AND ADMINISTRATIVE EXPENSES
                  
                  $
                  5,548,894
                  
                  $
                  785,945
  See
            independent accountants' report on supplementary
            information


(27)




**YTB
        INTERNATIONAL, INC. AND SUBSIDIARIES**
 SUPPLEMENTARY
        INFORMATION
 CONSOLIDATED
        SCHEDULES OF GENERAL AND
        ADMINSITRATIVE EXPENSES
 NINE
        MONTHS ENDED SEPTEMBER 30, 2005 AND
        2004
 **(UNAUDITED)**
 **2005**
                
                **2004**Administrative
                    salaried and leased employees
                
                $
                738,553
                
                $
                146,214Payroll
                    taxes
                
                
                43,394
                
                
                9,736Advertising
                
                
                92,677
                
                
                —Auto
                    expense
                
                
                —
                
                
                4,564Bad
                    debt expense
                
                
                166,542
                
                
                —Bank
                    fees and service charges
                
                
                20,402
                
                
                814Consultant
                    fees
                
                
                22,301
                
                
                (52,080
                )Contract
                    labor
                
                
                73,874
                
                
                —Computer
                    expense
                
                
                10,982
                
                
                (12,916
                )Charitable
                    contributions
                
                
                5,000
                
                
                —Credit
                    card fees
                
                
                159,305
                
                
                —Dues
                    and subscriptions
                
                
                15,423
                
                
                10,954Employee
                    benefits
                
                
                38,218
                
                
                —Equipment
                    leases
                
                
                12,457
                
                
                525Minor
                    equipment
                
                
                (2,362
                )
                
                1,502Licenses
                    and permits
                
                
                1,072
                
                
                150Management
                    fees
                
                
                16,667
                
                
                —Meetings
                    and conventions
                
                
                245,223
                
                
                —Miscellaneous
                
                
                (1,471
                )
                
                —Office
                    rent
                
                
                94,837
                
                
                43,070Travel
                    and entertainment
                
                
                124,382
                
                
                —Office
                    supplies and expenses
                
                
                40,856
                
                
                1,278Printing
                    and reproduction
                
                
                190,528
                
                
                1,199Postage
                    and delivery
                
                
                127,158
                
                
                6,077Insurance
                
                
                17,901
                
                
                13,459Professional
                    fees
                
                
                74,061
                
                
                3,639Training
                    and recruitment
                
                
                142,953
                
                
                375Telephone
                
                
                25,686
                
                
                6,996Website
                    user, processing and programming fees
                
                
                112,160
                
                
                —TOTAL
                    GENERAL AND ADMINISTRATIVE EXPENSES
                
                $
                2,608,779
                
                $
                185,556




See
      independent accountants' report on supplementary
      information




(28)




Item
        2.
        Management's Discussion and Analysis or Plan of Operation YTB International,
        Inc.(YTBL) In December 2004, REZconnect Technologies, a publicly traded Bulletin
        Board company, merged with its largest customer: the privately owned
        YourTravelbiz.com. REZconnect Technologies had provided YTB with the technology
        that enabled the latter to operate its online travel stores, track orders,
        and
        book travel online. REZconnect also provides its technology to 5,000 registered
        agents using the Vacation Central site. YTB had developed a successful
        multilevel online travel marketing program through its network of Independent
        Marketing Representatives (“IMRs”). YTB received 11.5 million common shares
        valued at $15.9 million. Because the combined Company is primarily a multilevel
        marketing organization (71% of revenues), in January 2005, it changed its
        name
        to YTB International, Inc. from REZconnect.
 
 The
        merger gives YTBL a competitive advantage because few travel related companies
        have expertise in travel, marketing and technology. In addition, the combined
        company has gained more favorable pricing terms with its vendors. The combined
        company is also beginning to realize economies of scale
 
 YTBL
        is a
        leading provider of Internet based travel related services. YTBL operates
        three
        subsidiaries: Your Travelbiz.com, establishes online travel agencies and
        compensates its Sales Rep’s via multilevel marketing commission structure; YTB
        Travel Network supports online travel agencies, provides RTAs with the online
        booking systems, fulfills travel orders & pay travel commissions. REZconnect
        Technologies is a travel technology provider, including online travel booking
        engine technologies and supports full service travel agencies including its
        franchised chain of travel agencies.
 
 The
        Company operates the businesses under various trade names "YourTravelBiz.com,"
        "YourTravelBiz," "YTBnet.com ,"
“YTB
        Travel and Cruises,” " Travel
        Network," "Global Travel Network," "Travel Network Vacation Central," as
        well as
        web sites "Bookmytravel.com," and "REZconnect.com." We offer our customers
        a
        reliable source of travel products and services through our agreements with
        selected travel providers, including major airlines, cruise lines, hotels
        and
        car rental agencies, as well as wholesale travel providers. In addition,
        we
        offer our customers the ability to make reservations on over 400 airlines,
        at
        more than 57,000 hotels and with most major car rental companies, cruise
        lines
        and tour package operators.
 
 Your
        Travel Biz.com markets and establishes online travel agencies which it charges
        a
        monthly fee. The sales of the online travel agency sites should account for
        63%
        of the 2005 gross revenue. Your Travel Biz.com has a unique business model.
        Its
        strategy is to create a network of commissioned sales representatives who
        exclusively market the online travel agencies which are serviced by YTB Travel
        Network. Those who the purchasers of online travel agencies are known as
        Referral Travel Agents (RTAs). Each RTA pays an initial fee of $349.95, plus
        the
        first month’s membership dues of $49.95. Each subsequent month, Your ** Travel
        Biz automatically charges the RTA’s monthly membership dues of $49.95 to their
        credit cards or bank account. YTB Travel Network retains a percentage of
        the
        travel commissions generated by the RTAs. In contrast Travelocity,
        Priceline.com, Expedia and Orbitz focus their promotion efforts on the customer.
        Whereas Your Travel Biz spends nothing on advertising, the major companies
        spend
        at least 50% of their revenue on advertising. YourTravelBiz is not subject
        to
        the seasonality of the travel business, nor should a decline in travel
        significantly impact it, since the $49.95 monthly fee which is its primary
        source of revenue. Also, typical online travel merchants sell a commodity
        (travel), which does not engender strong customer loyalty. RTAs have a
        significant advantage over the major online travel companies which as they
        have
        personal relationships with their customers, who book travel through the
        RTAs’
        own online travel stores. Usually, the cost to book a trip through an RTA
        is
        comparable to booking a trip through a major online travel company. By virtue
        of
        REZconnect’s technology, the RTAs’ stores provide access to more than 60 booking
        engines, including World Choice (a subsidiary of Travelocity), Priceline.com,
        Hotels.com, Apple Vacations, Funjet Vacations, Ourvacationstore.com and
        more.
 
 (29)
  YTB
        Travel Network’s RTAs and REZconnect.com’s independent and franchised travel
        agents realize these pricing benefits because they are considered, as a single
        entity.
  YTB
        International’s subsidiary REZconnect offers its customers consumer driven
        websites which provide strong content and book-ability with over 60 booking
        engines incorporated into one site, covering all aspects of the travel industry.
        Sites are available for use 24 hours, 7 days a week, allowing travel agents
        the
        ability to personally follow-up with the online consumer and provide customer
        service.
 
 YourTravelNetwork
        services a Referring Travel Agent (RTA) network, while REZconnect services
        the
        travel agent community. They both typically charges $49.95 per month on a
        non-contract basis to own and operate an online travel site. The agencies
        pay
        month to month via credit card.
 
 Currently,
        there are over 20,000 RTA consumer websites in operation. REZconnect has
        over
        5,000 registered travel agents, using the Vacation Central travel portal
        site.
        Site owners may qualify to solicit organizations and associations offering
        online travel sites helping site owners to earn revenue.
 
 YTB
        Travel Network should represent 26% of YTBL’s 2005 gross revenue. This division
        processes all of the travel transactions, negotiates deals with over 60
        preferred vendors, and receives incentives based on the volume of business
        that
        it produces. YTB Travel Network revenue should increase 112% in 2005 to $5.1
        million. We project that it will increase 60% next year to $8.0 million.
        Future
        revenue growth should accelerate as more RTA’s are added to the system, and they
        go through the various training programs that the Company provides.
 
 REZconnect
        Technologies should generate 12% of YTBL’s 2005 gross revenue. Through 5,000
        registered travel agents and over 50 active franchised travel agencies,
        REZconnect operates under the following brands: Travel Network, Global Travel
        Network and Travel Network / Vacation Central. The franchisees book their
        customers’ travel through REZconnect.com because they generally receive more
        favorable pricing.
  We
        expect
        REZconnect Technologies’ revenue to grow 98.3% in 2005 to $2.6 million. In 2006,
        revenue should advance 31.9% to $3.4 million.
 
 OVERVIEW
 
 For
        2005,
        net revenue is projected to rise to $19.7 million, and basic loss per share
        is
        forecast at $.04. Monthly new RTA sales should advance to $8.3 million,
        reflecting an increase in the number of RTAs from 8,438 at the end of 2004
        to an
        estimated 21,000 by December 31, 2005. Initial new RTA fees should advance
        to
        $2.7 million. Printing and administrative fees, which include revenue received
        from the sale of training materials, marketing brochures and RTA certification
        conferences, should climb to $2.3 million. This is also attributable to an
        increase in the number of RTAs.
  Commissions
        are projected to increase as a percentage of net sales from June 30, 2005
        to
        December 31, 2005 from 31% to 35%. General and administrative expense is
        projected to increase from 37% for the period June 30, 2005 to December 31,
        2005
        to 46% as staffing, overhead, utilities, insurance should increase at the
        same
        rate as net revenue.
 
 Our
        revenues are comprised of initial and monthly RTA sales and monthly maintenance
        fees, franchise fees and franchise service fees and commissions paid by travel
        providers. Additional revenue is derived from other travel products and
        services. Certain travel suppliers pay performance based compensation known
        as
        "override commissions" or "overrides." Commission revenues and gross retail
        sales, net of allowances for cancellations, are recognized generally based
        on
        the expected date of travel. Overrides are recognized on an accrual basis
        once
        the amount has been confirmed with the travel supplier. Franchise fees are
        recognized when all material services and conditions required have been
        performed and the collectability of the franchise fee is relatively assured.
        We
        generally defer recognition of franchise fees until such amounts have been
        collected from the franchisee. Franchise service fees are recognized on the
        accrual basis as earned. Online travel income is recorded when earned and
        is
        recognized based on the websites hosted.
  (30)
  With
        respect to travel services, revenues are generated by transactions with
        customers who purchase tickets supplied by participating vendors. Because
        the
        Company is the merchant of record in some of these transactions, revenue
        for
        these services includes the total amount billed to the customer.
 
 The
        commission rates paid by travel suppliers, in addition to overrides, are
        determined by individual travel suppliers and are subject to change.
        Historically, typical standard base commission rates paid by travel suppliers
        have been approximately 10% for hotel reservations, 5% to 10% for car rentals
        and 10% to 17% for cruises and vacation packages. Based on the past several
        years leisure vendors (including tour operators, cruise lines, hotel and
        car
        packagers) have not reduced their commission levels but, in fact, have offered
        the YTB Travel Network incentive commissions above the standard compensation
        for
        its volume business. The YTB Travel Network expects that its weighted average
        commission of online transaction revenues will increase due to the fact that
        its
        leisure bookings are much greater as a percentage of total sales than airline
        ticketing, the later offering the Company lower commissions. There can be
        no
        assurance that travel suppliers will not reduce commission rates paid to
        YTB
        Travel Network or for REZconnect or eliminate such commissions entirely,
        which
        could, individually or in the aggregate, have a material adverse effect on
        the
        Company's business, operating results and financial condition. Each website
        travel storeowner pays a monthly fee of 49.95 plus YTB Travel Network and
        REZconnect can earn transactional compensation from travel purchased on each
        website.
 
 The
        Company believes it is at the forefront of several growing trends: The increase
        in consumer spending in the travel industry, the boom in home-based businesses,
        and the growing acceptance of conducting retail business on the Internet.
        Tourism accounts for nearly 11% of all consumer spending worldwide. The travel
        industry, currently a $7 trillion business, is growing 23% faster than the
        global economy and spending on travel is expected to double in the next five
        years. Industry research shows that one "baby boomer," a segment comprised
        of
        nearly a billion people worldwide, will retire every eight seconds for the
        next
        20 years. Luxury cruise ship companies and resort builders are gearing up
        for
        this wave of retirees. Secondly, with job security, as well as an ability
        to
        spend time with the family, an ever-increasing concern, we believe the ability
        to own a home-based business is becoming an even more attractive option.
        Finally, we believe online travel purchasing will continue to make tremendous
        inroads in the marketplace as more people use the Internet to become better
        informed and to save time and money.
 
 Results
        of Operations
 
 NOTE:
        The
        consolidated results for the nine-months ended September 30, 2005 include
        the
        accounts of YTB International, Inc. and its three wholly-owned subsidiaries,
        REZconnect Technologies, Inc.; YTB Travel Network, Inc.; and YourTravelBiz.com.,
        Inc. The results for the nine-months ended September 30, 2004 represent the
        accounts of the former REZconnect Technologies, Inc. only, because at September
        30, 2004 the merger and subsequent consolidation had not yet occurred. As
        such,
        comparisons between September 30, 2005 and September 30, 2004 will reflect
        variances causing incompatibility between those two periods.
 
 REVENUES
  Commissions.
          The increase in commission revenue in 2005 is attributable to an increase
          in
          sales volume in the YTB Travel Network subsidiary. (See note
          above).
 (31)
  Franchise
        Service Fees and online service fees and other fees decreased similarly as
        compared to 2004 by approximately $80,320 or 28% in the 2005 nine-month period
        as compared to the 2004 nine-month period. This is attributable to a decrease
        in
        service fees of storefront travel agency franchisees in the
        franchise system.
 
 Incentive
        Income. Incentive income increased to $252,813 in the 2005 nine-month period
        as
        compared to the 2004 nine-month period and is attributable to an increase
        in
        sales volume.
 
 Website
        Hosting Fees. Website hosting fees amount to approximately $172,000
        net.
 
 Franchise
        Rents. The revenue in 2005 decreased as compared to 2004 by approximately
        $1,331
        in the 2005 nine-month period as compared to the 2004 nine-month period.
        This is
        attributable to a decrease of travel agency franchisees in the franchise
        system.
 
 New
        RTA
        Sales. New RTA sales revenue of $2,063,200 is attributable to the
        YourTravelBiz.com, Inc. subsidiary (see note above).
 
 Monthly
        Maintenance Fees. The revenue in 2005 of $6,235,863 is attributable to the
        merger of the two companies. (See note above).
 
 Printing
        and Administrative Service Fees. The revenue in 2005 of $1,780,013 is
        attributable to the merger of the two companies. (See note above).
 
 Miscellaneous
        fees and commissions. The revenue increase of $144,832 in 2005 is attributable
        to the increase in total sales volume.
 
 OPERATING
        EXPENSES
 
 Commissions.
        Commissions increased by $5,465,650. The increase is mainly attributable
        to
        YourTravelBiz.com, Inc. and Your Travel Network (See note above).
 
 Cost
        of
        Travel Products and Services. Cost of travel products and services are a
        function of revenue. Therefore the increase in such costs is a result of
        higher
        travel related revenue.
 
 Depreciation
        and Amortization. Depreciation and amortization expenses increased by
        approximately $406,355 which is attributable mainly to the amortization of
        the
        RTA agreements acquired in the merger.
  General
        and Administrative. Combined Companies the General and administrative expenses
        increased by approximately $4,855,530. As a percentage of net revenue, total
        general and administrative expenses for the nine month period for 2005 was
        39%
        as compared to 32% for the nine month period of 2004.
 
 Variability
        of Results
 
 The
        Company's travel products and services gross bookings have increased from
        2004
        to 2005 due to increase in the number of hosted websites including additional
        franchises derived from REZcity.com and an increase in products and services
        sold to travel agencies utilizing our unique private label agent only web-based
        booking site. Cost of travel revenues have similarly increased from 2004
        to
        2005.
  (32)
  As
        a
        result of the Company's operating history in online commerce and the variability
        that can be experienced by our franchising operations, the Company is unable
        to
        accurately forecast its revenues. The Company's current and future expense
        levels are based predominantly on its operating plans. The Company may be
        unable
        to adjust spending in a timely manner to compensate for any unexpected revenue
        shortfall. Accordingly, any significant shortfall in revenues would likely
        have
        an adverse effect on the Company's business, operating results and financial
        condition. Further, the Company currently intends to substantially increase
        its
        operating expenses to develop and offer new and expanded travel services,
        to
        fund increased sales and marketing and customer service operations to develop
        its technology and transaction processing systems. To the extent such expenses
        precede or are not subsequently followed by increased revenues, the Company's
        operating results will fluctuate and anticipated net losses in a given period
        may be greater than expected.
 
 The
        Company expects to experience fluctuations in its future quarterly operating
        results due to a variety of other factors, many of which are outside the
        Company's control. Factors that may adversely affect the Company's quarterly
        operating results include, but are not limited to (i) the Company's ability
        to
        retain existing customers, attract new customers at a steady rate and maintain
        customer satisfaction, (ii) changes in inventory availability from third
        party
        suppliers or commission rates paid by travel suppliers, (iii) the announcement
        or introduction of new or enhanced sites, services and products by the Company
        or its competitors, (iv) general economic conditions specific to the Internet,
        online commerce or the travel industry, (v) the level of use of online services
        and consumer acceptance of the Internet and commercial online services for
        the
        purchase of consumer products and services such as those offered by the
        Company,(vi) the Company's ability to upgrade and develop its systems and
        infrastructure and to attract new personnel in a timely and effective manner,
        (vii) the level of traffic on the Company's online sites, (viii) technical
        difficulties, system downtime or Internet brownouts, (ix) the amount and
        timing
        of operating costs and capital expenditures relating to expansion of the
        Company's business, operations and infrastructure, (x) governmental regulation
        and (xi) unforeseen events affecting the travel industry, including terrorist
        activities similar to September 11 and the conflict with Iraq.
 
 In
        addition, the Company expects that it will experience seasonal business,
        reflecting seasonal fluctuations in the travel industry, Internet and commercial
        online service usage and advertising expenditures. The Company anticipates
        that
        travel bookings will typically increase during the first and second quarter
        in
        anticipation of summer travel and will typically decline during the third
        quarter. Internet and commercial online service usage and the rate of growth
        of
        such usage may be expected typically to decline during the summer. Depending
        on
        the extent to which the Internet and commercial online services are accepted
        as
        an advertising medium, seasonality in the level of advertising expenditures
        could become more pronounced for Internet-based advertising.
 
 Due
        to
        the foregoing factors, quarterly revenues and operating results are difficult
        to
        forecast, and the Company believes that period-to-period comparisons of its
        operating results will not necessarily be meaningful and should not be relied
        upon as an indication of future performance. It is likely that the Company's
        future quarterly operating results from time to time will not meet the
        expectations of security analysts or investors. In such event, the price
        of the
        Company's Common Stock would likely be materially and adversely
        affected.
 
 The
        material effects on our operations that we anticipate as a result of the
        merger
        with YTB will be a significant increase in RTA's revenue, as well as a
        commensurate increase in related commission expense.
 
 LIQUIDITY
        AND CAPITAL RESOURCES
 
 Net
        cash
        used by operating activities in nine months of 2005 was approximately $39,088
        as
        compared to cash used by operating activities of $30,175 in 2004.
  (33)
  Net
        cash
        used by investing activities was approximately $182,000 in 2005 as compared
        to
        cash used by investing activities of approximately $37,578 in 2004.
 
 Cash
        provided by financing activities was approximately $3,168,166 in 2005 and
        provided by financing activities was approximately $26,160 in 2004. As of
        September 30, 2005, we had approximately $2,972,166 in cash and approximately
        $339,371 in marketable securities, as a result of raising of capital from
        the
        sale of a convertible note which occurred in January 2005 for 2 million dollars,
        and from the proceeds from the issuance of stock in a private placement
        memorandum.
 
 The
        Company believes that cash and short term investments on hand at September
        30,
        2005 and its cash flow from operations will be sufficient to meet its
        obligations on a timely basis for the next 12 months.
 
 FORWARD-LOOKING
        STATEMENTS
 
 All
        statements other than statements of historical fact included in this quarter
        report, including without limitation statements regarding the company's
        financial position, business strategy and the plans and objectives of the
        company's management for future operations are forward-looking statements.
        When
        used in this annual report, words such as "anticipate", "believe," "estimate,"
        "expect," "intend", and similar expressions, as they relate to the company
        or
        its management, identify forward-looking statements. Such forward-looking
        statements are based on the beliefs of the company's management, as well
        as
        assumptions made by and information currently available to the company's
        management. Actual results could differ materially from those contemplated
        by
        the forward-looking statements as a result of certain factors, including
        but not
        limited to, business and economic conditions. Competitive factors and pricing
        pressures, capacity and supply constraints. Such statements reflect the views
        of
        the company with respect to future events and are subject to these and other
        risks, uncertainties and assumptions relating to the operations, results
        of
        operations, growth strategy And liquidity of the company. Readers are cautioned
        not to place undue reliance on these forward-looking statements. The company
        does not undertake any obligation to release publicly any revisions to these
        forward-looking statements to reflect future events or circumstances or to
        reflect the occurrence of unanticipated events.
  (34)




ITEM
        3 -
        CONTROLS AND PROCEDURES
  Evaluation
        of disclosure controls and procedures
  Our
        chief
        executive officer and chief financial officer have reviewed and evaluated
        the
        effectiveness of our disclosure controls and procedures (as defined in Rules
        13a-14 and 15d-14 under the Securities Exchange Act of 1934 (the “Exchange
        Act”), as of a date within ninety days before the filing of this quarterly
        report. Based on that evaluation, the chief executive officer and chief
        financial officer
        have concluded that our current disclosure controls and procedures are effective
        to ensure that information required to be disclosed by us in reports that
        we
        file or submit under the Exchange Act is recorded, processed, summarized,
        and
        reported wi thin
        the
        time periods specified in the Commission’s rules and forms.
  Changes
        in internal controls
  There
        have not been any significant changes in our internal controls or in other
        factors that could significantly affect the se
        controls subsequent to the date of their evaluation. There were no significant
        deficiencies or material weakness in the internal controls, and therefore
        no
        corrective actions were taken.
   PART
        II -
        OTHER INFORMATION
  ITEM 1
          - 
          LEGAL PROCEEDINGS
 None
  ITEM
        2 -
        CHANGES IN SECURITIES
  None
  ITEM
        3 -
        DEFAULTS UPON SENIOR SECURITIES
  None
  ITEM
        4 -
        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Not applicable
  ITEM
        5 -
        OTHER INFORMATION
  N one
 ITEM 6
          - EXHIBITS.
 (a)
            Reports on Form 8K
  None
 (b)
          Exhibits:
  Rule
          13a-14(a) / 15d-14(a) Certifications:
 Exhibit
          31.1 - Certification of Chief Executive Officer.
 Exhibit
          31.2 - Certification of Chief Financial Officer.
  Section
          1350 Certifications:
 Exhibit
          32.1 - Certification of Chief Executive Officer.
 Exhibit
          32.2 - Certification of Chief Financial Officer.
 (35)
 SIGNATURES
 
 Pursuant
          to the requirements of Section 13 or 15(d) of the Securities Exchange Act
          of
          1934, YTB International, Inc. (successor to REZconnect(R) Technologies,
          Inc.)
          has duly caused this Report to be signed on its behalf by the undersigned
          thereunto duly authorized on the 11th day of November,2005.
 
 YTB
                  International, Inc.
                  successor to REZconnect(R) Technologies, Inc.)By:
                /s/ Michael
                  Y. BrentMichael
                    Y. Brent, Director and
                  Chief
                    Executive Officer
  November
          14, 2005
  (36)