**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB**

**For      the quarterly period ended June 30, 2007**

**YTB      INTERNATIONAL, INC.**

**Delaware**

**20-2181181**

**1901      East Edwardsville Road**

**Wood      River, Illinois 62095**

** **

**(618)      655-9477**

----

**YTB      INTERNATIONAL, INC.**

**Index      to Quarterly Report on Form 10-QSB**

**Three      and six months ended June 30, 2007**

| PART                    I  | FINANCIAL                    INFORMATION                                                                                                                                              |                        |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                       |                                                                                                                                                                                  |                        |
| Item                    1. | Financial                    Statements.                                                                                                                                              |                        |
|                       | Condensed                    Consolidated Balance Sheets, June 30, 2007 (Unaudited) and December                    31,                    2006                                       | 2                           |
|                       | Condensed                    Consolidated Statements of Operations (Unaudited)Three                    months ended June 30, 2007 and 2006                                            |                    3   |
|                       | Condensed                    Consolidated Statements of Operations (Unaudited)Six                    months ended June 30, 2007 and 2006                                              |                    4   |
|                       | Condensed                    Consolidated Statement of Change in Stockholders’ Equity (Deficit)                    (Unaudited)Six                    months ended June 30, 2007 |                    5   |
|                       | Condensed                    Consolidated Statements of Cash Flows (Unaudited)Six                    months ended June 30, 2007 and 2006                                              |                    6-7 |
|                       | Notes                    To Condensed Consolidated Financial Statements (Unaudited)                                                                                                   | 8                           |
| Item                    2. | Management's                    Discussion and Analysis or Plan of Operation.                                                                                                         | 20                          |
| Item                    3. | Controls                    and Procedures.                                                                                                                                           | 29                          |
|                       |                                                                                                                                                                                  |                        |
| PART                    II | OTHER                    INFORMATION                                                                                                                                                  |                        |
|                       |                                                                                                                                                                                  |                        |
| Item                    1. | Legal                    Proceedings.                                                                                                                                                 | 30                          |
| Item                    2. | Unregistered                    Sales of Equity Securities and Use of Proceeds.                                                                                                       | 30                          |
| Item                    3. | Defaults                    Upon Senior Securities.                                                                                                                                   | 30                          |
| Item                    4. | Submission                    of Matters to a Vote of Security Holders.                                                                                                               | 30                          |
| Item                    5. | Other                    Information.                                                                                                                                                 | 31                          |
| Item                    6. | Exhibits.                                                                                                                                                                             | 32                          |
| Signatures                 |                                                                                                                                                                                  |                        |

----

*On      July 31, 2007 (the “Reclassification Date”), we filed an Amended and Restated      Certificate of Incorporation which authorized the issuance of two classes of      common stock - Class A Common Stock and Class B Common Stock - and to increase      the Company’s total authorized capital. Stockholders of record on the      Reclassification Date received two shares of Class B common stock and one share      of Class A common Stock in exchange for each share of existing common stock      held      as of the Reclassification Date. All share and per share amounts in this      Quarterly Report on Form 10-QSB reflect this reclassification. The par value      of      the additional shares of common stock issued in connection with the stock split      will be credited to “Common stock” and a like amount charged to “Additional      paid-in-capital” in third quarter of 2007.*

**Item      1.**
**Financial      Statements.**

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Balance Sheets**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  June                  30, 2007 (Unaudited) |        |  December                  31, 2006  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-------------|------------------------------------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                        |        |                                      |   |
| Current                  assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                        |        |                                      |   |
| Cash                  and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                                | 1,032,054   |                                           | $      | - |   |
| Restricted                  cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                             | 4,506,190   |                                           |   | 1,250,000 |   |
| Available-for-sale                  securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                             | 1,025,888   |                                           |   | 1,014,591 |   |
| Accounts                  receivable (less allowance for doubtful accounts of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                             |        |                                           |   |   |   |
| $5,699                  in 2007 and $6,919 in 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                             | 2,134,746   |                                           |   | 103,539 |   |
| Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                             | 1,097,152   |                                           |   | 1,016,690 |   |
| Notes                  receivable (less allowance for uncollectible notes of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                             |        |                                           |   |   |   |
| $52,000                  in 2007 and $0 in 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                             | 1,967,358   |                                           |   | 1,233,624 |   |
| Prepaid                  marketing commissions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                             | 22,889,808  |                                           |   | 12,978,516 |   |
| Other                  prepaid expenses and current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                             | 1,397,665   |                                           |   | 394,125 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| Total                  current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                             | 36,050,861  |                                           |   | 17,991,085 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| Property                  and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                             | 8,770,841   |                                           |   | 6,191,408 |   |
| Intangible                  assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             | 2,431,860   |                                           |   | 2,468,580 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                             | 2,979,322   |                                           |   | 2,224,322 |   |
| Other                  assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                             | 6,867       |                                           |   | 14,994 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| **TOTAL                  ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                                | 50,239,751  |                                           | $      | 28,890,389 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| LIABILITIES                  AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                             |        |                                           |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                             |        |                                           |   |   |   |
| Bank                  overdraft                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                                | -           |                                           | $      | 812,464 |   |
| Accounts                  payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                             | 7,399,550   |                                           |   | 5,099,248 |   |
| Current                  maturities of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                             | 21,583      |                                           |   | 21,156 |   |
| Deferred                  revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                             | 28,491,993  |                                           |   | 14,769,085 |   |
| Accrued                  bonuses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                             | 187,415     |                                           |   | 7,435,132 |   |
| Short-term                  debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                             | 2,500,000   |                                           |   | 2,500,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| Total                  current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                             | 38,600,541  |                                           |   | 30,637,085 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| Other                  long-term liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                             |        |                                           |   |   |   |
| Long-term                  debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                             | 230,760     |                                           |   | 241,659 |   |
| Deferred                  revenue, less current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             | -           |                                           |   | 4,366 |   |
| Deferred                  tax liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             | 755,000     |                                           |   | - |   |
| Other                  income tax liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                             | 105,091     |                                           |   | - |   |
| Other                  liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                             | 13,733      |                                           |   | 23,636 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| Total                  other long-term liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                             | 1,104,584   |                                           |   | 269,661 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| **TOTAL                  LIABILITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                             | 39,705,125  |                                           |   | 30,906,746 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| STOCKHOLDERS'                  EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                             |        |                                           |   |   |   |
| Preferred                    stock, $.001 par value, 5,000,000 shares authorized, none issued                    and                    outstanding at June 30, 2007 and December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                             | -           |                                           |   | - |   |
| Class                          A Common stock, $.001 par value, 300,000,000 shares authorized;                          32,347,359                          and                          27,870,454 shares issued and outstanding at June 30, 2007                          and December 31,                          2006, respectively, and Class B Common Stock, $.001 par                          value, 100,000,000                          shares authorized; 64,694,718 and 55,740,908 shares issued                          and outstanding                          at June 30, 2007 and December 31, 2006,                          respectively. |   |                                             | 32,347      |                                           |   | 27,870 |   |
| Additional                  paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                             | 33,424,821  |                                           |   | 20,268,006 |   |
| Retained                  earnings (deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                             | (22,922,542 | )                                              |   | (22,312,233 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| TOTAL                  STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                             | 10,534,626  |                                           |   | (2,016,357 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             |        |                                           |   |   |   |
| **TOTAL                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                                | 50,239,751  |                                           | $      | 28,890,389 |   |

| *See                  accompanying notes to condensed consolidated financial                  statements.* |
|------------------------------------------------------------------------------------------------------------|

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Operations**

|                                                                                                       |   | Three                  months ended |        |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|
|                                                                                                       |   | June                  30, 2007      |        | June                  30, 2006 |   |
| NET                  REVENUES                                                                              |   |                                |        |   |   |
| Online                  travel store sales and monthly license fees                                        |   | $                                   | 23,309,601  |   | $ | 7,405,332 |   |
| Travel                  commissions and services                                                           |   |                                | 5,856,731   |   |   | 1,904,131 |   |
| Franchise                  service fees and other fees                                                     |   |                                | 62,075      |   |   | 90,823 |   |
| Training                  programs and marketing materials                                                 |   |                                | 3,352,211   |   |   | 460,835 |   |
| Other                                                                                                      |   |                                | 225,528     |   |   | 18,040 |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| Net                  revenues                                                                              |   |                                | 32,806,146  |   |   | 9,879,161 |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| OPERATING                  EXPENSES                                                                        |   |                                |        |   |   |   |   |
| Marketing                  commissions                                                                     |   |                                | 18,946,646  |   |   | 5,883,341 |   |
| Travel                  commissions                                                                        |   |                                | 3,876,327   |   |   | 1,327,317 |   |
| Depreciation                  and amortization                                                             |   |                                | 263,943     |   |   | 68,068 |   |
| Marketing                  and selling                                                                     |   |                                | 1,349,190   |   |   | 273,086 |   |
| General                  and administrative                                                                |   |                                | 6,836,504   |   |   | 3,608,946 |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| Total                  operating expenses                                                                  |   |                                | 31,272,610  |   |   | 11,160,758 |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| INCOME                  (LOSS) FROM OPERATIONS                                                             |   |                                | 1,533,536   |   |   | (1,281,597 | ) |
|                                                                                                       |   |                                |        |   |   |   |   |
| OTHER                  INCOME (EXPENSE)                                                                    |   |                                |        |   |   |   |   |
| Interest                  and dividend income                                                              |   |                                | 131,018     |   |   | 42,575 |   |
| Interest                  expense                                                                          |   |                                | (1,315      | ) |   | (151,493 | ) |
| Gain                  on sale of assets                                                                    |   |                                | 8,565       |   |   | 1,000 |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| Total                  other income (expense)                                                              |   |                                | 138,268     |   |   | (107,918 | ) |
|                                                                                                       |   |                                |        |   |   |   |   |
| INCOME                  (LOSS) BEFORE INCOME TAX PROVISION                                                 |   |                                | 1,671,804   |   |   | (1,389,515 | ) |
|                                                                                                       |   |                                |        |   |   |   |   |
| INCOME                  TAX PROVISION                                                                      |   |                                | -           |   |   | - |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| NET                  INCOME (LOSS)                                                                         |   | $                                   | 1,671,804   |   | $ | (1,389,515 | ) |
|                                                                                                       |   |                                |        |   |   |   |   |
| NET                  INCOME (LOSS) PER SHARE:                                                              |   |                                |        |   |   |   |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| Weighted-average                  shares outstanding - basic                                               |   |                                | 96,529,578  |   |   | 82,008,780 |   |
| Weighted-average                  shares outstanding - diluted                                             |   |                                | 105,887,781 |   |   | 82,008,780 |   |
|                                                                                                       |   |                                |        |   |   |   |   |
| Net                  income (loss) per share - basic                                                       |   | $                                   | 0.02        |   | $ | (0.02 | ) |
| Net                  income (loss) per share - diluted                                                     |   | $                                   | 0.02        |   | $ | (0.02 | ) |
|                                                                                                       |   |                                |        |   |   |   |   |
| *See                  accompanying notes to condensed consolidated financial                  statements.* |   |                                |        |   |   |   |   |

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Operations**

|                                                                                                       |   | Six                  months ended |       |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                       |   | June                  30, 2007    |       | June                  30, 2006 |   |
| NET                  REVENUES                                                                              |   |                              |       |   |   |
| Online                  travel store sales and monthly license fees                                        |   | $                                 | 41,274,962 |   | $ | 13,466,639 |   |
| Travel                  commissions and services                                                           |   |                              | 8,394,425  |   |   | 3,152,642 |   |
| Franchise                  service fees and other fees                                                     |   |                              | 152,298    |   |   | 175,375 |   |
| Training                  programs and marketing materials                                                 |   |                              | 6,713,363  |   |   | 1,195,545 |   |
| Other                                                                                                      |   |                              | 449,579    |   |   | 52,286 |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| Net                  revenues                                                                              |   |                              | 56,984,627 |   |   | 18,042,487 |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| OPERATING                  EXPENSES                                                                        |   |                              |       |   |   |   |   |
| Marketing                  commissions                                                                     |   |                              | 35,701,848 |   |   | 10,272,577 |   |
| Travel                  commissions                                                                        |   |                              | 5,485,015  |   |   | 1,970,505 |   |
| Depreciation                  and amortization                                                             |   |                              | 477,975    |   |   | 133,470 |   |
| Marketing                  and selling                                                                     |   |                              | 2,728,590  |   |   | 345,963 |   |
| General                  and administrative                                                                |   |                              | 13,281,610 |   |   | 6,741,471 |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| Total                  operating expenses                                                                  |   |                              | 57,675,038 |   |   | 19,463,986 |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| LOSS                  FROM OPERATIONS                                                                      |   |                              | (690,411   | ) |   | (1,421,499 | ) |
|                                                                                                       |   |                              |       |   |   |   |   |
| OTHER                  INCOME (EXPENSE)                                                                    |   |                              |       |   |   |   |   |
| Interest                  and dividend income                                                              |   |                              | 180,554    |   |   | 75,376 |   |
| Interest                  expense                                                                          |   |                              | (3,926     | ) |   | (300,654 | ) |
| Gain                  on sale of assets                                                                    |   |                              | 8,565      |   |   | 1,000 |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| Total                  other income (expense)                                                              |   |                              | 185,193    |   |   | (224,278 | ) |
|                                                                                                       |   |                              |       |   |   |   |   |
| LOSS                  BEFORE INCOME TAX PROVISION                                                          |   |                              | (505,218   | ) |   | (1,645,777 | ) |
|                                                                                                       |   |                              |       |   |   |   |   |
| INCOME                  TAX PROVISION                                                                      |   |                              | -          |   |   | - |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| NET                  LOSS                                                                                  |   | $                                 | (505,218   | ) | $ | (1,645,777 | ) |
|                                                                                                       |   |                              |       |   |   |   |   |
| NET                  LOSS PER SHARE:                                                                       |   |                              |       |   |   |   |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| Weighted-average                  shares outstanding                                                       |   |                              | 95,801,451 |   |   | 82,008,780 |   |
|                                                                                                       |   |                              |       |   |   |   |   |
| Net                  loss per share - basic and diluted                                                    |   | $                                 | (0.01      | ) | $ | (0.02 | ) |
|                                                                                                       |   |                              |       |   |   |   |   |
| *See                  accompanying notes to condensed consolidated financial                  statements.* |   |                              |       |   |   |   |   |

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statement of Changes in Stockholders’ Equity      (Deficit)**

|                                                 |   |    |   |                            |   |                            |   |                            |       |          |   |     |   |      |   |                              |   |
|------------------------------------------------------|--------|--------------|--------|---------------------------------|--------|---------------------------------|--------|---------------------------------|------------|---------------|--------|---------------|--------|-----------|--------|-----------------------------------|--------|
|                                                 |   | Preferred    |   |                            |   |  Additional                |   | Retained                        |       | Total         |   |
|                                                 |   | Stock        |   | Common                    Stock |   |  Paid-in                   |   | Earnings                        |       | Stockholders' |   |
|                                                 |   |  Shares |   | Amount                          |   | Class                  A Shares |   | Class                  B Shares |       | Amount        |   |  Capital |   | (Deficit) |   | Equity                  (Deficit) |   |
|                                                 |   |    |   |                            |   |                            |   |                            |       |          |   |     |   |      |   |                              |   |
| Balance                  at January 1, 2007          |   |         | -      |                            | $      | -                               |   |                            | 27,870,454 |          |   | 55,740,908    |   | $         | 27,870 |                              | $      | 20,268,006 |   | $ | (22,312,233 | ) | $ | (2,016,357 | ) |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Common                  shares issued for restricted |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| stock                  grant                         |   |         | -      |                            |   | -                               |   |                            | 3,112,901  |          |   | 6,225,802     |   |      | 3,113  |                              |   | 9,646,880 |   |   | - |   |   | 9,649,993 |   |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Amortization                  of restricted stock    |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| (unvested)                                           |   |         | -      |                            |   | -                               |   |                            | -          |          |   | -             |   |      | -      |                              |   | 2,444,821 |   |   | - |   |   | 2,444,821 |   |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Common                  shares issued for            |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| options                  exercised                   |   |         | -      |                            |   | -                               |   |                            | 400,000    |          |   | 800,000       |   |      | 400    |                              |   | 399,600 |   |   | - |   |   | 400,000 |   |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Exercise                  of common stock warrants   |   |         | -      |                            |   | -                               |   |                            | 964,004    |          |   | 1,928,008     |   |      | 964    |                              |   | 641,911 |   |   | - |   |   | 642,875 |   |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Stock                  option compensation           |   |         | -      |                            |   | -                               |   |                            | -          |          |   | -             |   |      | -      |                              |   | 23,603 |   |   | - |   |   | 23,603 |   |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Adoption                  of FIN 48 cummulative      |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| effect                  adjustment                   |   |         | -      |                            |   | -                               |   |                            | -          |          |   | -             |   |      | -      |                              |   | - |   |   | (105,091 | ) |   | (105,091 | ) |
|                                                 |   |         |   |                            |   |                            |   |                            |       |          |   |          |   |      |   |                              |   |   |   |   |   |   |   |   |   |
| Net                  loss                            |   |         | -      |                            |   | -                               |   |                            | -          |          |   | -             |   |      | -      |                              |   | - |   |   | (505,218 | ) |   | (505,218 | ) |
| Balance                  at June 30, 2007            |   |         | -      |                            | $      | -                               |   |                            | 32,347,359 |          |   | 64,694,718    |   | $         | 32,347 |                              | $      | 33,424,821 |   | $ | (22,922,542 | ) | $ | 10,534,626 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Cash Flows**

|                                                                                                                        |   | Six                  months ended |       |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                                        |   | June                  30, 2007    |       | June                  30, 2006 |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                                      |   |                              |       |   |   |
| Net                  Loss                                                                                                   |   | $                                 | (505,218   | ) | $ | (1,645,777 | ) |
| Adjustments                  to reconcile net loss to net cash provided by (used in) operating                  activities: |   |                              |       |   |   |   |   |
| Depreciation                  and amortization                                                                              |   |                              | 477,975    |   |   | 133,470 |   |
| Loss                  on disposal of property and equipment                                                                 |   |                              | 127,939    |   |   |   |   |
| Shares                  issued for restricted stock grant                                                                   |   |                              | 2,799,994  |   |   | - |   |
| Amortization                  of restricted stock (unvested)                                                                |   |                              | 2,444,821  |   |   | - |   |
| Stock                  option expense                                                                                       |   |                              | 23,603     |   |   | 106,581 |   |
| Change                  in operating assets and liabilities:                                                                |   |                              |       |   |   |   |   |
| Accounts                  receivable, net                                                                                   |   |                              | (2,031,207 | ) |   | (125,687 | ) |
| Notes                  receivable                                                                                           |   |                              | (733,734   | ) |   | (409,720 | ) |
| Inventory                                                                                                                   |   |                              | (80,462    | ) |   | - |   |
| Prepaid                  marketing commissions                                                                              |   |                              | (9,911,292 | ) |   | (3,165,901 | ) |
| Other                  prepaid expenses and current assets                                                                  |   |                              | (1,003,540 | ) |   | (337,716 | ) |
| Other                  assets                                                                                               |   |                              | 8,127      |   |   | 1,190 |   |
| Accounts                  payable and accrued expenses                                                                      |   |                              | 2,230,674  |   |   | (248,000 | ) |
| Accrued                  bonuses                                                                                            |   |                              | (397,718   | ) |   | 940,334 |   |
| Deferred                  revenue                                                                                           |   |                              | 13,722,908 |   |   | 3,487,530 |   |
| Convertible                  debt derivative                                                                                |   |                              | -          |   |   | 333,390 |   |
| Other                  liabilities                                                                                          |   |                              | (14,269    | ) |   | - |   |
| NET                  CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                        |   |                              | 7,158,601  |   |   | (930,306 | ) |
|                                                                                                                        |   |                              |       |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                                      |   |                              |       |   |   |   |   |
| Purchases                  of property and equipment                                                                        |   |                              | (3,078,999 | ) |   | (258,926 | ) |
| Proceeds                  from sale of available-for-sale securities                                                        |   |                              | (11,297    | ) |   | 2,862,253 |   |
| Purchases                  of available-for-sale securities                                                                 |   |                              | -          |   |   | (1,702,560 | ) |
| NET                  CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                                                        |   |                              | (3,090,296 | ) |   | 900,767 |   |
|                                                                                                                        |   |                              |       |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                                                                      |   |                              |       |   |   |   |   |
| Repayment                  of bank overdraft                                                                                |   |                              | (812,464   | ) |   | - |   |
| Principal                  payments on debt                                                                                 |   |                              | (10,472    | ) |   | (10,530 | ) |
| Repayment                  of notes payable                                                                                 |   |                              | -          |   |   | (92,898 | ) |
| Restricted                  cash-collateral used as reserves for                                                            |   |                              |       |   |   |   |   |
| credit                  card processing                                                                                     |   |                              | (3,256,190 | ) |   | - |   |
| Proceeds                  from exercise of common stock options                                                             |   |                              | 400,000    |   |   | - |   |
| Proceeds                  from exercise of common stock warrants                                                            |   |                              | 642,875    |   |   | - |   |
| NET                  CASH USED IN FINANCING ACTIVITIES                                                                      |   |                              | (3,036,251 | ) |   | (103,428 | ) |
|                                                                                                                        |   |                              |       |   |   |   |   |
| NET                  INCREASE IN CASH AND CASH EQUIVALENTS                                                                  |   |                              | 1,032,054  |   |   | (132,967 | ) |
| CASH                  AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                             |   |                              | -          |   |   | 230,358 |   |
| CASH                  AND CASH EQUIVALENTS, END OF PERIOD                                                                   |   | $                                 | 1,032,054  |   | $ | 97,391 |   |
|                                                                                                                        |   |                              |       |   |   |   |   |
| SUPPLEMENTAL                  CASH FLOW INFORMATION:                                                                        |   |                              |       |   |   |   |   |
| Interest                  paid                                                                                              |   | $                                 | 101,780    |   | $ | 7,875 |   |

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Cash Flows (continued)**

**(Unaudited)**

|                                                                                    |   | Six                      months ended |      |
|-----------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                                                    |   | June                      30, 2007    |      | June                      30, 2006 |   |
| SUPPLEMENTAL                      NON-CASH INVESTING AND FINANCING ACTIVITIES:          |   |                                  |      |   |   |
| Increase                      in accounts payable and property and equipment            |   | $                                     | 69,628    |   | $ | - |   |
| Shares                      issued under a restricted stock grant in settlement of      |   |                                  |      |   |   |   |   |
| bonus                      liability                                                    |   | $                                     | 6,849,999 |   | $ | - |   |
| Shares                      issued in cashless warrant exercise                         |   | $                                     | 602       |   | $ | - |   |
| Increase                      in goodwill related to increase in deferred tax liability |   | $                                     | 755,000   |   | $ | - |   |
| FIN                      48 cumulative effect adjustment                                |   | $                                     | 105,091   |   | $ | - |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

----

|                                                      |   | **Three                  Months Ended** |        |   |   | **Six                  Months Ended** |   |   |   |
|-----------------------------------------------------------|--------|-----------------------------------------|-------------|--------|--------|---------------------------------------|--------|--------|--------|
|                                                      |   | **June                  30,**           |        |   |   | **June                  30,**         |   |   |   |
|                                                      |   | 2007                                    |        | 2006   |   |                                  |   | 2007   |   |   |   | 2006 |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Numerator:                                                |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                        |   | $                                       | 1,671,804   |   | $      | (1,389,515                            | )      |   |   |   | $ | (505,218 | ) |   |   |   | $ | (1,645,777 | ) |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                              |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average common shares and       |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| denominator                  for basic calculation:  |   |                                    | 96,529,578  |   |   | 82,008,780                            |   |   |   |   |   | 95,801,451 |   |   |   |   |   | 82,008,780 |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average effects of dilutive     |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equity                  based compensation awards:   |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Stock                  options                      |   |                                    | 270,807     |   |   | -                                     |   |   |        |   |   | - |   |   |   |   |   | - |   |   |   |   |
|  Stock                  warrants                     |   |                                    | 4,626,219   |   |   | -                                     |   |   |   |   |   | - |   |   |   |   |   | - |   |   |   |   |
|  Restricted                  stock awards            |   |                                    | 4,461,177   |   |   | -                                     |   |   |   |   |   | - |   |   |   |   |   | - |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Denominator                  for diluted calculation      |   |                                    | 105,887,781 |   |   | 82,008,780                            |   |   |   |   |   | 95,801,451 |   |   |   |   |   | 82,008,780 |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                    |        |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) per share - basic      |   | $                                       | 0.02        |   | $      | (0.02                                 | )      |   |   |   | $ | (0.01 | ) |   |   |   | $ | (0.02 | ) |   |   |   |
| Net                  income (loss) per share - diluted    |   | $                                       | 0.02        |   | $      | (0.02                                 | )      |   |   |   | $ | (0.01 | ) |   |   |   | $ | (0.02 | ) |   |   |   |

----

|                                           |   | June                  30, 2007 |      | December                  31, 2006 |   |
|------------------------------------------------|--------|--------------------------------|-----------|------------------------------------|--------|
| "Success                  From Home" magazines |   | $                              | 628,117   |                               | $      | 906,600 |   |
| Printed                  marketing materials   |   |                           | 469,035   |                               |   | 110,090 |   |
|                                           |   |                           |      |                               |   |   |   |
| Inventory                                      |   | $                              | 1,097,152 |                               | $      | 1,016,690 |   |

|                                            |   | June                  30, 2007 |       | December                  31, 2006 |   |
|-------------------------------------------------|--------|--------------------------------|------------|------------------------------------|--------|
| Equipment                                       |   | $                              | 1,635,488  |                               | $      | 1,105,005 |   |
| Furniture                  and fixtures         |   |                           | 757,536    |                               |   | 436,369 |   |
| Capitalized                  software           |   |                           | 1,717,893  |                               |   | 1,555,003 |   |
| Vehicles                                        |   |                           | 226,532    |                               |   | 168,908 |   |
| Building                  and improvements      |   |                           | 4,081,268  |                               |   | 3,085,519 |   |
| Land                                            |   |                           | 1,538,694  |                               |   | 1,538,693 |   |
| Construction                  in progress       |   |                           | 869,324    |                               |   | - |   |
| Leasehold                  improvements         |   |                           | 115,272    |                               |   | 116,522 |   |
|                                            |   |                           | 10,942,007 |                               |   | 8,006,019 |   |
| Less:                  Accumulated depreciation |   |                           | (2,171,166 | )                                  |   | (1,814,611 | ) |
|                                            |   |                           |       |                               |   |   |   |
| Property                  and equipment, net    |   | $                              | 8,770,841  |                               | $      | 6,191,408 |   |

----

**Stock      Options**

|                                                             |   | Shares |       | Weighted-Average                  Exercise Price |   | Weighted-Average                  Fair Value |   |
|------------------------------------------------------------------|--------|--------|------------|--------------------------------------------------|--------|----------------------------------------------|--------|
|                                                             |   |   |       |                                             |   |                                         |   |
| Options                  outstanding, beginning of period        |   |   | 1,875,000  |                                             | $      | 0.36                                         |   | $ | 0.210 |   |
| For                  the period from January 1 to June 30, 2007: |   |   |       |                                             |   |                                         |   |   |   |   |
|  Granted                                                    |   |   | -          |                                             |   | -                                            |   |   | - |   |
|  Forfeited                                                  |   |   | -          |                                             |   | -                                            |   |   | - |   |
|  Expired                                                    |   |   | -          |                                             |   | -                                            |   |   | - |   |
|  Exercised                                                  |   |   | (1,200,000 | )                                                |   | 0.33                                         |   |   | 0.220 |   |
|                                                             |   |   |       |                                             |   |                                         |   |   |   |   |
| Options                  outstanding, end of period              |   |   | 675,000    |                                             | $      | 0.40                                         |   | $ | 0.200 |   |
|                                                             |   |   |       |                                             |   |                                         |   |   |   |   |
| Options                  exercisable, end of period              |   |   | 135,000    |                                             | $      | 0.40                                         |   | $ | 0.120 |   |

|                                                     |   | Options                    Outstanding |    | Options                    Exercisable |   |
|----------------------------------------------------------|--------|----------------------------------------|---------|----------------------------------------|--------|
|                                                     |   |                                   |    | Weighted-                              |   |   |   |   |   |   |   |
|                                                     |   |                                   |    | Average                                |   | Weighted- |   |   |   | Weighted- |   |
|                                                     |   | Number                                 |    | Remaining                              |   | Average |   | Number |   | Average |   |
| Range                    of Exercise Prices              |   | Outstanding                            |    | Life                    (years)        |   | Exercise                    Price |   | Outstanding |   | Exercise                    Price |   |
|                    $1.01                    - $1.20 |   |                                   | 675,000 |                                   |   | 4.82 |   | $ | 0.40 |   |   | 135,000 |   | $ | 0.40 |   |
|                                                     |   |                                   |    |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                    |   |                                   | 675,000 |                                   |   | 4.82 |   | $ | 0.40 |   |   | 135,000 |   | $ | 0.40 |   |

----

**Restricted      Stock**

----

|                                               |   |       |       | Weighted-                     |   |
|----------------------------------------------------|--------|------------|------------|-------------------------------|--------|
|                                               |   |       |       | average                       |   |
|                                               |   | Restricted |       | grant-date                    |   |
|                                               |   | shares     |       | fair                    value |   |
| Non-vested                    at beginning of 2007 |   |       | -          |                          |   | - |   |
| Granted                                            |   |       | 28,950,027 |                          | $      | 1.03 |   |
| Vested                                             |   |       | 9,338,703  |                          | $      | 1.03 |   |
| Forfeited                                          |   |       | -          |                          |   |   |   |
| Non-vested                    at June 30, 2007     |   |       | 19,611,324 |                          | $      | 1.03 |   |

----

*The      Fair Value Option for Financial Assets and Financial Liabilities Including      an      amendment of FASB Statement No. 115 *
*,*

----

| Three                  Months Ended                 |   |      |       |   |   |      |   |        |       |   |   |
|-----------------------------------------------------|--------|-----------|------------|--------|--------|-----------|--------|-------------|------------|--------|--------|
| June                  30, 2007                      |   | Marketing |       | Travel |   | Parent    |   | Elimination |       | Total  |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |
| External                  and inter-segment revenue |   | $         | 26,683,569 |   | $      | 5,840,820 |   | $           | -          |   | $      | 281,757 |   | $ | 32,806,146 |   |
| Segment                  profit (loss)              |   |      | 967,111    |   |   | 1,712,544 |   |        | (1,007,851 | )      |   | - |   |   | 1,671,804 |   |
| Assets                                              |   |      | 38,926,714 |   |   | 8,599,360 |   |        | 9,720,937  |   |   | (7,007,260 | ) |   | 50,239,751 |   |
| Depreciation                  and amortization      |   |      | 193,741    |   |   | 1,063     |   |        | 69,139     |   |   | - |   |   | 263,943 |   |
| Capital                  expenditures               |   |      | 679,803    |   |   | 101,750   |   |        | 373,372    |   |   | - |   |   | 1,154,925 |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| Three                  Months Ended                 |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| June                  30, 2006                      |   |      | Marketing  |   |   | Travel    |   |        | Parent     |   |   | Elimination |   |   | Total |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| External                  and inter-segment revenue |   | $         | 7,860,647  |   | $      | 2,139,661 |   | $           | -          |   | $      | (121,147 | ) | $ | 9,879,161 |   |
| Segment                  profit (loss)              |   |      | (508,427   | )      |   | 364,443   |   |        | (1,245,531 | )      |   | - |   |   | (1,389,515 | ) |
| Assets                                              |   |      | 10,301,005 |   |   | 3,346,868 |   |        | 7,435,850  |   |   | (4,375,226 | ) |   | 16,708,497 |   |
| Depreciation                  and amortization      |   |      | 44,708     |   |   | -         |   |        | 23,360     |   |   | - |   |   | 68,068 |   |
| Capital                  expenditures               |   |      | 139,001    |   |   | -         |   |        | -          |   |   | - |   |   | 139,001 |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| Six                  Months Ended                   |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| June                  30, 2007                      |   |      | Marketing  |   |   | Travel    |   |        | Parent     |   |   | Elimination |   |   | Total |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| External                  and inter-segment revenue |   | $         | 47,976,997 |   | $      | 9,007,630 |   | $           | -          |   | $      | - |   | $ | 56,984,627 |   |
| Segment                  profit (loss)              |   |      | (1,254,028 | )      |   | 2,676,333 |   |        | (1,927,523 | )      |   | - |   |   | (505,218 | ) |
| Assets                                              |   |      | 38,926,714 |   |   | 8,599,360 |   |        | 9,720,937  |   |   | (7,007,260 | ) |   | 50,239,751 |   |
| Depreciation                  and amortization      |   |      | 347,489    |   |   | 1,063     |   |        | 129,423    |   |   | - |   |   | 477,975 |   |
| Capital                  expenditures               |   |      | 1,603,361  |   |   | 101,750   |   |        | 1,443,516  |   |   | - |   |   | 3,148,627 |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| Six                  Months Ended                   |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| June                  30, 2006                      |   |      | Marketing  |   |   | Travel    |   |        | Parent     |   |   | Elimination |   |   | Total |   |
|                                                |   |      |       |   |   |      |   |        |       |   |   |   |   |   |   |   |
| External                  and inter-segment revenue |   | $         | 14,679,548 |   | $      | 3,587,947 |   | $           | -          |   | $      | (225,008 | ) | $ | 18,042,487 |   |
| Segment                  profit (loss)              |   |      | (174,071   | )      |   | 888,547   |   |        | (2,360,253 | )      |   | - |   |   | (1,645,777 | ) |
| Assets                                              |   |      | 10,301,005 |   |   | 3,346,868 |   |        | 7,435,850  |   |   | (4,375,226 | ) |   | 16,708,497 |   |
| Depreciation                  and amortization      |   |      | 86,750     |   |   | -         |   |        | 46,720     |   |   | - |   |   | 133,470 |   |
| Capital                  expenditures               |   |      | 258,925    |   |   | -         |   |        | -          |   |   | - |   |   | 258,925 |   |

----

*Income      Taxes -*
*”,*

----

----

----

----

**Item      2.**
**Management’s      Discussion and Analysis or Plan of Operation**

**Overview**

----

**Results      of Operations**

|                                                             |   | Three                  months ended |       | Three                  months ended |   | Variance                       |   |
|------------------------------------------------------------------|--------|-------------------------------------|------------|-------------------------------------|--------|--------------------------------|--------|
|                                                             |   | June                  30, 2007      |       | %                  of Net Revenues  |   | June                  30, 2006 |   | %                  of Net Revenues |   | Increase                  (Decrease) |   | Inc.(Decr.)                  % |   |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |
| NET                  REVENUES                                    |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |
| ** **Online                  travel stores and monthly fees |   | $                                   | 23,309,601 |                                |   | 71.1                           | %      | $ | 7,405,332 |   |   | 75.0 | % | $ | 15,904,269 |   |   | 214.8 | % |
| Travel                  commissions and services                 |   |                                | 5,856,731  |                                |   | 17.8                           | %      |   | 1,904,131 |   |   | 19.3 | % |   | 3,952,600 |   |   | 207.6 | % |
| Franchise                  services fees and other fees          |   |                                | 62,075     |                                |   | 0.2                            | %      |   | 90,823 |   |   | 0.9 | % |   | (28,748 | ) |   | (31.7 | %) |
| Training                  programs and marketing materials       |   |                                | 3,352,211  |                                |   | 10.2                           | %      |   | 460,835 |   |   | 4.6 | % |   | 2,891,376 |   |   | 627.4 | % |
| Other                                                            |   |                                | 225,528    |                                |   | 0.7                            | %      |   | 18,040 |   |   | 0.2 | % |   | 207,488 |   |   | 1150.2 | % |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  net revenues                              |   |                                | 32,806,146 |                                |   | 100.0                          | %      |   | 9,879,161 |   |   | 100.0 | % |   | 22,926,985 |   |   | 232.1 | % |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING                  EXPENSES                              |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing                  commissions                           |   |                                | 18,946,646 |                                |   | 57.8                           | %      |   | 5,883,341 |   |   | 59.6 | % |   | 13,063,305 |   |   | 222.0 | % |
| Travel                  commissions                              |   |                                | 3,876,327  |                                |   | 11.8                           | %      |   | 1,327,317 |   |   | 13.4 | % |   | 2,549,010 |   |   | 192.0 | % |
| Depreciation                  and amortization                   |   |                                | 263,943    |                                |   | 0.8                            | %      |   | 68,068 |   |   | 0.7 | % |   | 195,875 |   |   | 287.8 | % |
| Marketing                  and selling                           |   |                                | 1,349,190  |                                |   | 4.1                            | %      |   | 273,086 |   |   | 2.8 | % |   | 1,076,104 |   |   | 394.1 | % |
| General                  and administrative                      |   |                                | 6,836,504  |                                |   | 20.8                           | %      |   | 3,608,946 |   |   | 36.5 | % |   | 3,227,558 |   |   | 89.4 | % |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  operating expenses                        |   |                                | 31,272,610 |                                |   | 95.3                           | %      |   | 11,160,758 |   |   | 113.0 | % |   | 20,111,852 |   |   | 180.2 | % |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                  (LOSS) FROM OPERATIONS                   |   |                                | 1,533,536  |                                |   | 4.7                            | %      |   | (1,281,597 | ) |   | (13.0 | %) |   | 2,815,133 |   |   | (219.7 | %) |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                  INCOME/(EXPENSE)                          |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  and dividend income                    |   |                                | 131,018    |                                |   | 0.4                            | %      |   | 42,575 |   |   | 0.4 | % |   | 88,443 |   |   | 207.7 | % |
| Interest                  expense                                |   |                                | (1,315     | )                                   |   | 0.0                            | %      |   | (151,493 | ) |   | (1.5 | %) |   | 150,178 |   |   | (99.1 | %) |
| Gain                  on sale of assets                          |   |                                | 8,565      |                                |   | 0.0                            | %      |   | 1,000 |   |   | 0.0 | % |   | 7,565 |   |   | 756.5 | % |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  income/(expense)                          |   |                                | 138,268    |                                |   | 0.4                            | %      |   | (107,918 | ) |   | (1.1 | %) |   | 246,186 |   |   | (228.1 | %) |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS)                  BEFORE INCOME TAX PROVISION  |   |                                | 1,671,804  |                                |   | 5.1                            | %      |   | (1,389,515 | ) |   | (14.1 | %) |   | 3,061,319  |   |   | (220.3 | %) |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                  TAX PROVISION                            |   |                                | -          |                                |   | -                              |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                             |   |                                |       |                                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  INCOME (LOSS)                               |   | $                                   | 1,671,804  |                                |   | 5.1                            | %      | $ | (1,389,515 | ) |   | (14.1 | %) | $ | 3,061,319 |   |   | (220.3 | %) |

----

|                                                             |   | Six                  months ended |       | Six                  months ended  |   | Variance                       |   |
|------------------------------------------------------------------|--------|-----------------------------------|------------|------------------------------------|--------|--------------------------------|--------|
|                                                             |   | June                  30, 2007    |       | %                  of Net Revenues |   | June                  30, 2006 |   | %                  of Net Revenues |   | Increase                  (Decrease) |   | Inc.(Decr.)                  % |   |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |
| NET                  REVENUES                                    |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |
| ** **Online                  travel stores and monthly fees |   | $                                 | 41,274,962 |                               |   | 72.4                           | %      | $ | 13,466,639 |   |   | 74.6 | % | $ | 27,808,323 |   |   | 206.5 | % |
| Travel                  commissions and services                 |   |                              | 8,394,425  |                               |   | 14.7                           | %      |   | 3,152,642 |   |   | 17.5 | % |   | 5,241,783 |   |   | 166.3 | % |
| Franchise                  services fees and other fees          |   |                              | 152,298    |                               |   | 0.3                            | %      |   | 175,375 |   |   | 1.0 | % |   | (23,077 | ) |   | (13.2 | %) |
| Training                  programs and marketing materials       |   |                              | 6,713,363  |                               |   | 11.8                           | %      |   | 1,195,545 |   |   | 6.6 | % |   | 5,517,818 |   |   | 461.5 | % |
| Other                                                            |   |                              | 449,579    |                               |   | 0.8                            | %      |   | 52,286 |   |   | 0.3 | % |   | 397,293 |   |   | 759.8 | % |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  net revenues                              |   |                              | 56,984,627 |                               |   | 100.0                          | %      |   | 18,042,487 |   |   | 100.0 | % |   | 38,942,140 |   |   | 215.8 | % |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING                  EXPENSES                              |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing                  commissions                           |   |                              | 35,701,848 |                               |   | 62.7                           | %      |   | 10,272,577 |   |   | 56.9 | % |   | 25,429,271 |   |   | 247.5 | % |
| Travel                  commissions                              |   |                              | 5,485,015  |                               |   | 9.6                            | %      |   | 1,970,505 |   |   | 10.9 | % |   | 3,514,510 |   |   | 178.4 | % |
| Depreciation                  and amortization                   |   |                              | 477,975    |                               |   | 0.8                            | %      |   | 133,470 |   |   | 0.8 | % |   | 344,505 |   |   | 258.1 | % |
| Marketing                  and selling                           |   |                              | 2,728,590  |                               |   | 4.8                            | %      |   | 345,963 |   |   | 1.9 | % |   | 2,382,627 |   |   | 688.7 | % |
| General                  and administrative                      |   |                              | 13,281,610 |                               |   | 23.3                           | %      |   | 6,741,471 |   |   | 37.4 | % |   | 6,540,139 |   |   | 97.0 | % |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  operating expenses                        |   |                              | 57,675,038 |                               |   | 101.2                          | %      |   | 19,463,986 |   |   | 107.9 | % |   | 38,211,052 |   |   | 196.3 | % |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS                  FROM OPERATIONS                            |   |                              | (690,411   | )                                  |   | (1.2                           | %)     |   | (1,421,499 | ) |   | (7.9 | %) |   | 731,088 |   |   | (51.4 | %) |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                  INCOME/(EXPENSE)                          |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  and dividend income                    |   |                              | 180,554    |                               |   | 0.3                            | %      |   | 75,376 |   |   | 0.4 | % |   | 105,178 |   |   | 139.5 | % |
| Interest                  expense                                |   |                              | (3,926     | )                                  |   | 0.0                            | %      |   | (300,654 | ) |   | (1.6 | %) |   | 296,728 |   |   | (98.7 | %) |
| Gain                  on sale of assets                          |   |                              | 8,565      |                               |   | 0.0                            | %      |   | 1,000 |   |   | 0.0 | % |   | 7,565 |   |   | 756.5 | % |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  income/(expense)                          |   |                              | 185,193    |                               |   | 0.3                            | %      |   | (224,278 | ) |   | (1.2 | %) |   | 409,471 |   |   | (182.6 | %) |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS                  BEFORE INCOME TAX PROVISION                |   |                              | (505,218   | )                                  |   | (0.9                           | %)     |   | (1,645,777 | ) |   | (9.1 | %) |   | 1,140,559 |   |   | (69.3 | %) |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                  TAX PROVISION                            |   |                              | -          |                               |   | -                              |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                             |   |                              |       |                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  LOSS                                        |   | $                                 | (505,218   | )                                  |   | (0.9                           | %)     | $ | (1,645,777 | ) |   | (9.1 | %) | $ | 1,140,559 |   |   | (69.3 | %) |

|  RTAs                as of    |   |   RTAs                as of |
|------------------------------------|--------|---------------------------------------|
|  June                30, 2007 |   |  June                30, 2006    |
|  100,344                      |   |   34,241                    |

|   **Three                months ended June                30, 2007 and 2006** |
|-----------------------------------------------------------------------------------------|
|  Site                sales for the                                                 |   |  Site                sales for the |
|  3                months ended                                                     |   |  3                months ended |
|  June                30, 2007                                                 |   |   June                30, 2006 |
|  34,309                                                                            |   |  11,867 |

| **Six                  months ended June 30, 2007 and                  2006** |
|-------------------------------------------------------------------------------|
|  Site                  sales for the                                     |   |  Site                  sales for the |
| 6                  months ended                                               |   | 6                  months ended |
|  June                  30, 2007                                     |   |   June                  30, 2006 |
|  67,724                                                                  |   |  21,802 |

----

**Three      months ended June 30, 2007 compared to three months ended June 30,      2006**

**Net      Revenues**

| ·   | Online                travel store sales and monthly fees increased $15,904,269 or 214.8%                in the                second quarter of 2007 to $23,309,601 from the $7,405,332 reported                in the                comparable prior year quarter. The increase is due to the significant                growth of YTB Marketing attributable to the increase in active RTAs.                The                Company believes its significant growth in RTAs is attributable to                the                emerging market shift to the Internet for travel services which presents                the opportunity for advancement of products and services by referral                relationships and the boom in home-based                businesses. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Travel                agency commissions for the second quarter of 2007 increased $3,952,600                or                207.6%                to                $5,856,731                from the $1,904,131 reported in the comparable prior year quarter.                The                increase is attributable to the increase in the number of customers                utilizing the Company as their travel provider in 2007 due to the                significant growth in the number of RTAs. Also contributing to the                growth                in travel agency commissions is the fact that the Company is holding                more                travel training events/tradeshows in the second quarter of 2007 compared                to 2006 that increase product awareness, making the Company’s RTAs more                effective in selling travel. The Company anticipates the number of                training events and tradeshows held will continue to increase as                the                number of RTAs continues to grow. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Franchise                service fees and other fees decreased $28,748 or 31.7% in the second                quarter of 2007 to $62,075 from $90,823 reported in the second quarter                of                2006 as a result of the decline in active brick-and-mortar travel                agencies                as the market shifts to online travel                bookings. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training                programs and marketing materials revenue increased $2,891,376 or                627.4% in                the second quarter of 2007 to $3,352,211 from $460,835 in the comparable                prior year quarter. This increase is due to the significant growth                of                sales revenues primarily from training programs, sales aides and                miscellaneous promotional and marketing materials purchased by an                increasing number of Reps. Revenue from the sale of the “Success from                Home” magazine, new in 2006, accounts for $1.3 million of the increase                in                the second quarter of 2007. Additional increases in the second quarter                of                2007 related to training programs revenue and sales aides and                miscellaneous marketing materials revenue in the amount of $1.2 million                and $349,142 respectively, compared to the second quarter of 2006.                Training program revenue has increased significantly as the company                is                holding more meetings and the average attendance at the meetings                is                growing as well. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other                income increased in the second quarter of 2007 as compared to 2006                by                $207,488 or 1,150.2% to $225,528 from $18,040. This increase is primarily                related to new cruise-line incentive program revenue generated from                new                incentive programs that did not exist in the second quarter of                2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses **

| ·   | Marketing                commissions increased by $13,063,305 or 222.0% in the second quarter                of                2007 to $18,946,646 from $5,883,341 in the second quarter of 2006.                This                increase is due to the significant increase in active RTAs recruited                by                our Reps. The increase is also due to an increase in the number of                sales                directors in the Company along with an increase in the amount paid                out to                the entire Director’s Pool. The Director’s Pool consists of Reps who have                achieved certain performance levels within the Company which entitles                them                to additional commissions on the number of new sales, monthly renewals                and                the number of training events held. The second quarter ended June                30, 2007                also includes $187,415 in bonus expense for the Company’s Reps earned in                conjunction with a new 2007 Sales Director Bonus Program approved                by the                shareholders at the Company’s annual meeting on June 11, 2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Travel                commissions for the second quarter of 2007 increased by $2,549,010                or                192.0% to $3,876,327 from $1,327,317 reported in the second quarter                of                2006. The increase is attributable to the increase in the number                of                customers utilizing the Company as their travel provider in 2007                due to                the significant growth in the number of                RTAs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation                and amortization was $263,943 in the second quarter of 2007, compared                to                $68,068 in the corresponding quarter of 2006. The increase in depreciation                and amortization is primarily attributable to the new additions related                to                the Company’s new headquarters building and assets related to the growth                of the Company’s infrastructure. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Marketing                and selling expenses increased by $1,076,104 or 394.1% to $1,349,190                from                $273,086 reported in the second quarter of 2006. The increase is                primarily                due to the increase in the promotional magazine program expense,                which                program was not in place during the second quarter of 2006; this                expense                is offset by the revenue collected on the sale of magazines to                RTAs. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General                and administrative expenses increased $3,227,558 to $6,836,504 in                the                second quarter of 2007 from $3,608,946 in the second quarter of 2006.                As a                percentage of total net revenues, these expenses were 20.8% in 2007                and                36.5% in 2006. The increase in general and administrative expense                in 2007                is attributable to the significant growth in the number of active                RTAs                resulting in increased costs associated with the growth in the Company’s                infrastructure to support the increased volume as well as the costs                associated with the ongoing implementation of new business strategies                company-wide. The increases year over year relate primarily to                : |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries                and benefits increased by $1.2 million primarily as a result of additional                staffing requirements at the home office directly related to the                increased                sales of on line travel stores and continuing renewals of RTAs.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Printing                of marketing materials and sales aides increased by $628,000 due                to the                increased volume of on line store sales and renewals and the related                sales                of marketing materials for the growing base of RTAs.  |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Postage                and shipping increased by $399,000 as a result of the continued strong                sales and renewal base of RTAs and the related costs to ship marketing                materials to our RTAs.    |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Credit                card fees and bank charges increased by $256,000 in direct proportion                to                the number of sales and                renewals.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Six      months ended June 30, 2007 compared to six months ended June 30,      2006**

**Net      Revenues**

| ·   | Online                travel store sales and monthly fees increased $27,808,323 or 206.5%                in the                first half of 2007 to $41,274,962 from the $13,466,639 reported in                the                comparable prior year period. The increase is due to the significant                growth of YTB Marketing attributable to the increase in active RTAs.                The                Company believes its significant growth in RTAs is attributable to                the                emerging market shift to the Internet for travel services which presents                the opportunity for advancement of products and services by referral                relationships and the boom in home-based                businesses. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Travel                agency commissions for the first half of 2007 increased $5,241,783                or                166.3%                to                $8,394,425                from the $3,152,642 reported in the comparable prior year period.                The                increase is attributable to an increase in the number of customers                utilizing the Company as their travel provider in 2007 due to the                significant growth in the number of RTAs. Also contributing to the                growth                in travel agency commissions is the fact that the Company is holding                more                travel training events/tradeshows in the second half of 2007 compared                to                2006 that increase product awareness, making the Company’s RTAs more                effective in selling travel. The Company anticipates the number of                training events and tradeshows held will continue to increase as                the                number of RTAs continues to grow. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Franchise                service fees and other fees decreased $23,077 or 13.2% in the first                half                of 2007 to $152,298 from $175,375 reported in the first half of 2006                as a                result of the decline in active brick-and-mortar travel agencies                as the                market shifts to online travel                bookings. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Training                programs and marketing materials revenue increased $5,517,818 or                461.5% in                the first half of 2007 to $6,713,363 from $1,195,545 in the comparable                prior year period. This increase is due to the significant growth                of sales                revenues primarily from training programs, sales aides and miscellaneous                promotional and marketing materials purchased by an increasing number                of                Reps. Revenue from the sale of the “Success from Home” magazine, new in                2006, accounts for approximately $2.5 million of the increase in                the first                half of 2007. Additional increases in the first half of 2007 related                to                training programs revenue and sales aides and miscellaneous marketing                materials revenue in the amount of approximately $2.3 million and                $767,953, respectively, compared to the first half of 2006. Training                program revenue has increased significantly as the company is holding                more                meetings and the average attendance at the meetings is growing as                well. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other                income increased in the first half of 2007 as compared to 2006 by                $397,293                or 759.8% to $449,579 from $52,286. This increase is primarily related                to                new cruise-line incentive program revenue generated from new incentive                programs that did not exist in the first half of                2006. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses **

| ·   | Marketing                commissions increased by $25,429,271 or 247.5% in the first half                of 2007                to $35,701,848 from $10,272,577 in the first half of 2006. This increase                is primarily due to the significant increase in active RTAs recruited                by                our Reps. The first half ended June 30, 2007 also includes $4,253,974                in                bonus expense for the Company’s Reps earned in conjunction with the                Company’s sales director bonus programs while the first half of 2006                includes $1,213,834 of bonus expense. The increase is also due to                an                increase in the number of sales directors in the Company with guaranteed                earnings, along with an increase in the amount paid out to the entire                Directors’ Pool. The Directors’ Pool consists of Reps who have achieved                certain performance levels within the Company which entitles them                to                additional commissions on the number of new sales, monthly renewals                and                the number of training events held. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Travel                commissions for the first half of 2007 increased by $3,514,510 or                178.4%                to $5,485,015 from $1,970,505 reported in the first half of 2006.                The                increase is attributable to an increase in the number of customers                utilizing the Company as their travel provider in 2007 due to the                significant growth in the number of                RTAs. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation                and amortization was $477,975 in the first half of 2007, compared                to                $133,470 in the corresponding period of 2006. The increase in depreciation                and amortization is primarily attributable to the new additions related                to                the Company’s new headquarters building and assets related to the growth                of the Company’s infrastructure. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Marketing                and selling expenses increased by $2,382,627 or 688.7% from $345,963                in                the first half of 2006 to $2,728,590 in the first half of 2007. The                increase is attributable to an increase in promotional efforts in                connection with our Super Bowl insert and our leadership bulletins                which                led to an increase in RTAs. The increase is also due to the increase                in                magazine expense, which was not in place in the second quarter of                2006;                this expense is offset by the revenue collected on the sale of magazines                to RTAs. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General                and administrative expenses increased $6,540,139 to $13,281,610 in                the                first half of 2007 from $6,741,471 in the first half of 2006. As                a                percentage of total net revenues, these expenses were 23.3% in 2007                and                37.4% in 2006. The increase in general and administrative expense                in 2007                is attributable to the significant growth in the number of active                RTAs                resulting in increased costs associated with the growth in the Company’s                infrastructure to support the increased volume as well as costs associated                with the ongoing implementation of new business strategies company-wide.                The increases year over year relate primarily to                : |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Salaries                and benefits increased by $2.4 million primarily as a result of additional                staffing requirements at the home office directly related to the                increased                sales of on line travel stores and continuing renewals of RTAs.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Printing                of marketing materials and sales aides increased by $0.9 million                due to                the increased volume of on line store sales and renewals and the                related                sales of marketing materials for the growing base of RTAs.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Postage                and shipping increased by $869,000 as a result of the continued strong                sales and renewal base of RTAs and the related costs to ship marketing                materials to our RTAs.    |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Credit                card fees and bank charges increased by $840,000 in direct proportion                to                the number of sales and                renewals.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Variability      of Results**

----

**Liquidity      and Capital Resources**

|                                                   |   |  Six                  months ended |       |
|--------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                   |   |  June                  30, 2007    |       | June                  30, 2006 |   |
|                                                   |   |                               |       |   |   |
| Net                  cash provided by (used in):       |   |                               |       |   |   |
| Operating                  activities                  |   | $                                       | 7,158,601  |   | $ | (930,306 | ) |
| Investing                  activities                  |   |                                    | (3,090,296 | ) |   | 900,767 |   |
| Financing                  activities                  |   |                                    | (3,036,251 | ) |   | (103,428 | ) |
|                                                   |   |                                    |       |   |   |   |   |
| Net                  increase (decrease)  in cash |   | $                                       | 1,032,054  |   | $ | (132,967 | ) |

----

**Off-Balance      Sheet Arrangements**

**New      Accounting Pronouncements**

*The      Fair Value Option for Financial Assets and Financial Liabilities Including      an      amendment of FASB Statement No. 115 *
*,*

----

**Application      of Critical Accounting Policies**

**Forward-Looking      Statements**

**Item      3.**
**Controls      and Procedures**

**Evaluation      of Disclosure Controls and Procedures **

----

**Changes      in Internal Control Over Financial Reporting**

**PART      II - OTHER INFORMATION**

**Item      1.**
**Legal      Proceedings.**

**Item      2.**
**Unregistered      Sales of Equity Securities and Use of Proceeds.**

**Item      3.**
**Defaults      Upon Senior Securities.**

**Item      4.**
**Submission      of Matters to a Vote of Security Holders.**

| (a)   | With                respect to the approval of Proposal 1 (election of nominees for the                Company’s Board of Directors), the following individuals were elected to                our Board of Directors to hold office until the annual meeting at                which                the term of their class of directorship expires or until their successors                are elected and qualified, with the following votes in favor of the                election: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | For    |       | Withhold                  authority |   |
|---------------------------------------|--------|--------|------------|-------------------------------------|--------|
|                                  |   |   |       |                                |   |
| J.                  Lloyd Tomer       |   |   | 85,031,001 |                                |   | 230,148 |   |
| J.                  Scott Tomer       |   |   | 85,049,589 |                                |   | 211,560 |   |
| J.                  Kim Sorensen      |   |   | 85,051,827 |                                |   | 209,322 |   |
| Harold                  L. Kestenbaum |   |   | 85,051,413 |                                |   | 209,736 |   |
| Clay                  Winfield        |   |   | 85,049,076 |                                |   | 212,073 |   |
| Andrew                  Wilder        |   |   | 85,050,684 |                                |   | 210,465 |   |
| Timothy                  Kaiser       |   |   | 85,044,738 |                                |   | 216,411 |   |
| John                  Simmons         |   |   | 85,058,244 |                                |   | 202,905 |   |
| Lou                  Brock            |   |   | 85,043,355 |                                |   | 217,794 |   |

----

| (b) | With                  respect to the approval of Proposal 2 (ratification of UHY LLP                  as                  Independent Auditors of the                  Company): |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | For    |       | Against |   | Abstain |   |
|--------|--------|--------|------------|---------|--------|---------|--------|
|   |   |   |       |    |   |    |   |
|   |   |   | 85,010,142 |    |   | 232,818 |   |   | 18,183 |   |

| (c) | With                  respect to the approval of Proposal 3 (classification of the company’s                  Board of Directos into three classes of directors with staggered                  three                  year terms): |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   | For        |   |   | Against |   |   | Abstain |   |
|--------|--------|--------|------------|--------|--------|---------|--------|--------|---------|--------|
|   |   |   |       |   |   |    |   |   |    |   |
|   |   |   | 62,348,196 |   |   | 553,029 |   |   | 138,579 |   |

| (d) | With                  respect to the approval of Proposal 4 (reclassification of the                  Company’s                  common Stock into two classes and increase in the Company’s total                  authorized capital): |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   | For        |   |   | Against |   |   | Abstain |   |
|--------|--------|--------|------------|--------|--------|---------|--------|--------|---------|--------|
|   |   |   |       |   |   |    |   |   |    |   |
|   |   |   | 85,261,149 |   |   | 735,684 |   |   | 58,263  |   |

| (e) | With                  respect to the approval of Proposal 5 (supermajority voting provisions                  for                  approval of certain fundamental transactions not approved by the                  Company’s                  Board of Directors): |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   | For        |   |   | Against   |   |   | Abstain |   |
|--------|--------|--------|------------|--------|--------|-----------|--------|--------|---------|--------|
|   |   |   |       |   |   |      |   |   |    |   |
|   |   |   | 58,822,608 |   |   | 4,135,221 |   |   | 81,969  |   |

| (f) | With                  respect to the approval of Proposal 6 (ratification of the Company’s 2007                  Sales Director Bonus Plan): |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   | For        |   |   | Against   |   |   | Abstain |   |
|--------|--------|--------|------------|--------|--------|-----------|--------|--------|---------|--------|
|   |   |   |       |   |   |      |   |   |    |   |
|   |   |   | 60,705,810 |   |   | 1,948,986 |   |   | 385,005 |   |

**Item      5.**
**Other      Information.**

----

**Item      6.**
**Exhibits**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1    | Amended                and Restated Merger and Stock Exchange agreement dated November 19,                2004                by and between REZconnect Technologies, Inc. and YourTravelBiz.com,                Inc.,                incorporated by reference to YTB International, Inc.'s Current Report                on                Form 8-K as amended, Exhibit 2.1, filed June 20, 2005.                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.1    | Form                of Amended and Restated Certificate of Incorporation of the Company,                to be                effective as of the effectiveness of the Reclassification (July 31                2007),                incorporated by reference to YTB International, Inc.'s Appendix A                to its                Definitive Proxy Statement, on Schedule 14A, filed April 24,                2007.                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.2    | Amended                By-Laws of the Company, incorporated by reference to YTB International,                Inc.'s Current Report on Form 8-K, Exhibit 3.2, filed January 10,                2005.                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.1    | Stockholders’                Agreement dated December 8, 2004 by and among Great River Enterprises,                LP#1, J. Scott Tomer, J. Kim Sorensen, Michael Y. Brent, Derek J.                Brent                and REZconnect Technologies Inc., incorporated by reference to YTB                International, Inc.’s Current Report on Form 8-K, as amended, Exhibit 4.1,                filed June 20, 2005.                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.2    | Agreement                and Irrevocable Proxy, dated November 22, 2006, by and among J. Lloyd                Tomer, J. Scott Tomer, J. Kim Sorensen, jointly and severally, and                Michael                Y. Brent, Derek Brent and Darren Brent, jointly and severally, with                respect to certain matters specified therein, incorporated by reference                to                Exhibit 99.1 to the Schedule 13D/A filed by Great River Enterprises,                LP                #1, J. Lloyd Tomer, J. Scott Tomer and J. Kim Sorensen on November                24,                2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.1   | Contract                to Purchase Real Estate (Building One), dated July 27, 2007, by and                between Meridian Land Company, Inc. and YTB International,                Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.2   | Amendment                to Commercial Lease (Building Two), dated as of August 3, 2007, by                and                between Meridian Land Company, Inc. and YTB International, Inc.,                incorporated by reference to YTB International, Inc.’s Current Report on                Form 8-K, Exhibit 10.1 filed August 7, 2007.                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.3   | Contract                to Purchase Real Estate (Building Two), dated August 3, 2007, by                and                between Meridian Land Company, Inc. and YTB International,                Inc.                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.1   | Chief                Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a)                of                the Securities Exchange Act of 1934, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.2   | Chief                Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a)                of                the Securities Exchange Act of 1934, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.1*  | Chief                Executive Officer Certification pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.2*  | Chief                Financial Officer Certification pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

**SIGNATURES**

| **YTB                  International, Inc**           |
|-------------------------------------------------------|
|                                                  |
| /s/                  J. Scott Tomer                   |
| J.                  Scott Tomer                       |
| Chief                  Executive Officer and Director |
| Dated:                  August 14, 2007               |
|                                                  |
|                                                  |
| /s/                  John D. Clagg                    |
| John                  D. Clagg                        |
| Chief                  Financial Officer              |
| Dated:                  August 14, 2007               |

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