**FORM      10-Q**

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

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

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

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

----

**YTB      INTERNATIONAL, INC.**

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

**Three      and nine months ended September 30, 2008**

| PART                I   | FINANCIAL                INFORMATION                                                                                      |   |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|
|                    |                                                                                                                      |   |
| Item                1.  | Financial                Statements.                                                                                      |   |
|                    | Condensed                Consolidated Balance Sheets, September 30, 2008 (Unaudited) and December                31, 2007 | 2      |
|                    | Condensed                Consolidated Statements of Operations (Unaudited)                                                |   |
|                    | Three                months ended September 30, 2008 and 2007                                                             | 3      |
|                    | Condensed                Consolidated Statements of Operations (Unaudited)                                                |   |
|                    | Nine                months ended September 30, 2008 and 2007                                                              | 4      |
|                    | Condensed                Consolidated Statement of Change in Stockholders’ Equity                (Unaudited)        |   |
|                    | Nine                months ended September 30, 2008                                                                       | 5      |
|                    | Condensed                Consolidated Statements of Cash Flows (Unaudited)                                                |   |
|                    | Nine                months ended September 30, 2008 and 2007                                                              | 6-7    |
|                    | Notes                To Condensed Consolidated Financial Statements (Unaudited)                                           | 8      |
| Item                2.  | Management's                Discussion and Analysis of Financial Condition and Results of                Operations.      | 28     |
| Item                3.  | Quantitative                and Qualitative Disclosures About Market Risk (not                required).                  | 47     |
| Item                4T. | Controls                and Procedures.                                                                                   | 47     |
|                    |                                                                                                                      |   |
| PART                II  | OTHER                INFORMATION                                                                                          |   |
|                    |                                                                                                                      |   |
| Item                1.  | Legal                Proceedings.                                                                                         | 47     |
| Item                1A. | Risk                Factors (not required).                                                                               | 47     |
| Item                2.  | Unregistered                Sales of Equity Securities and Use of Proceeds.                                               | 48     |
| Item                3.  | Defaults                Upon Senior Securities.                                                                           | 48     |
| Item                4.  | Submission                of Matters to a Vote of Security Holders.                                                       | 48     |
| Item                5.  | Other                Information.                                                                                         | 48     |
| Item                6.  | Exhibits.                                                                                                                 | 48     |
| Signatures              |                                                                                                                      |

----

**PART      I – FINANCIAL INFORMATION**

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

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Balance Sheets**

|                                                                                                                                                                                                                                                                                                                                       |   | (Unaudited)September 30, 2008 |        | December 31, 2007 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                                                     |   |                                    |        |                        |   |   |   |
| Current                assets:                                                                                                                                                                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                                                                                                                   |   | $                                       | 588,886     |                        | $      | 1,730,570 |   |
| Restricted                cash                                                                                                                                                                                                                                                                                                             |   |                                    | 1,907,027   |                        |   | 2,268,344 |   |
| Available-for-sale                securities                                                                                                                                                                                                                                                                                               |   |                                    | 1,000,000   |                        |   | 26,834 |   |
| Accounts                receivable (less allowance for doubtful accounts of $7,196 in 2008                and                $5,699 in 2007)                                                                                                                                                                                               |   |                                    | 2,304,974   |                        |   | 2,662,101 |   |
| Notes                receivable (less allowance for uncollectible notes of $38,155 in                2008 and                $45,000 in 2007)                                                                                                                                                                                              |   |                                    | 787,849     |                        |   | 2,041,751 |   |
| Inventory,                net                                                                                                                                                                                                                                                                                                              |   |                                    | 3,388,836   |                        |   | 4,903,244 |   |
| Prepaid                marketing commissions and advances (less allowance for uncollectible                advances of $260,523 in 2008 and $73,125 in 2007)                                                                                                                                                                               |   |                                    | 14,830,300  |                        |   | 25,080,737 |   |
| Assets                held for sale                                                                                                                                                                                                                                                                                                        |   |                                    | 900,000     |                        |   | - |   |
| Income                taxes receivable                                                                                                                                                                                                                                                                                                     |   |                                    | 68,766      |                        |   | - |   |
| Other                prepaid expenses and current assets, net                                                                                                                                                                                                                                                                              |   |                                    | 1,063,589   |                        |   | 2,056,535 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| Total                current assets                                                                                                                                                                                                                                                                                                        |   |                                    | 26,840,227  |                        |   | 40,770,116 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| Long-term                investments                                                                                                                                                                                                                                                                                                       |   |                                    | -           |                        |   | 1,000,000 |   |
| Property                and equipment, net                                                                                                                                                                                                                                                                                                 |   |                                    | 21,352,141  |                        |   | 15,432,502 |   |
| Intangible                assets, net                                                                                                                                                                                                                                                                                                      |   |                                    | 2,340,080   |                        |   | 2,395,151 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                   |   |                                    | 3,128,441   |                        |   | 2,979,322 |   |
| Other                assets, net                                                                                                                                                                                                                                                                                                           |   |                                    | 78,377      |                        |   | 316,895 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| **TOTAL                ASSETS**                                                                                                                                                                                                                                                                                                            |   | $                                       | 53,739,266  |                        | $      | 62,893,986 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                                                        |   |                                    |        |                        |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                                                                                                        |   |                                    |        |                        |   |   |   |
| Bank                overdraft                                                                                                                                                                                                                                                                                                              |   | $                                       | 434,076     |                        | $      | - |   |
| Accounts                payable and accrued expenses                                                                                                                                                                                                                                                                                       |   |                                    | 13,261,231  |                        |   | 9,698,038 |   |
| Current                maturities of long-term debt                                                                                                                                                                                                                                                                                        |   |                                    | 22,612      |                        |   | 22,018 |   |
| Foreign                income taxes payable                                                                                                                                                                                                                                                                                                |   |                                    | 64,731      |                        |   | 126,155 |   |
| Deferred                revenue                                                                                                                                                                                                                                                                                                            |   |                                    | 20,648,825  |                        |   | 31,143,451 |   |
| Accrued                bonuses                                                                                                                                                                                                                                                                                                             |   |                                    | 544,843     |                        |   | 928,303 |   |
| Short-term                debt                                                                                                                                                                                                                                                                                                             |   |                                    | 1,995,990   |                        |   | 2,500,000 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| Total                current liabilities                                                                                                                                                                                                                                                                                                   |   |                                    | 36,972,308  |                        |   | 44,417,965 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| Other                long-term liabilities:                                                                                                                                                                                                                                                                                                |   |                                    |        |                        |   |   |   |
| Long-term                debt, less current maturities                                                                                                                                                                                                                                                                                     |   |                                    | 202,616     |                        |   | 219,641 |   |
| Deferred                tax liability                                                                                                                                                                                                                                                                                                      |   |                                    | 755,000     |                        |   | 755,000 |   |
| Other                income tax liabilities                                                                                                                                                                                                                                                                                                |   |                                    | 162,804     |                        |   | 181,821 |   |
| Other                liabilities                                                                                                                                                                                                                                                                                                           |   |                                    | 11,125      |                        |   | 11,125 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| Total                other long-term liabilities                                                                                                                                                                                                                                                                                           |   |                                    | 1,131,545   |                        |   | 1,167,587 |   |
| **TOTAL                LIABILITIES**                                                                                                                                                                                                                                                                                                       |   |                                    | 38,103,853  |                        |   | 45,585,552 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| Commitments                and Contingencies (Note 16)                                                                                                                                                                                                                                                                                     |   |                                    |        |                        |   |   |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| STOCKHOLDERS'                EQUITY                                                                                                                                                                                                                                                                                                        |   |                                    |        |                        |   |   |   |
| Preferred                stock, $.001 par value, 5,000,000 shares authorized, none issued                and                outstanding at September 30, 2008 and December 31, 2007.                                                                                                                                                       |   |                                    | -           |                        |   | - |   |
| Class                A Common stock, $.001 par value, 300,000,000 shares authorized; 68,076,992                and 51,144,275 shares issued and outstanding at September 30, 2008                and                December 31, 2007, respectively.                                                                                       |   |                                    | 68,077      |                        |   | 51,144 |   |
| Class                B Common Stock, $.001 par value, 100,000,000 shares authorized; 35,436,983                and 46,453,644 shares issued and outstanding at September 30, 2008                and                December 31, 2007, respectively; convertible into Class A shares                on a                one-for-one basis. |   |                                    | 35,437      |                        |   | 46,453 |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                  |   |                                    | 38,169,557  |                        |   | 36,419,266 |   |
| Retained                earnings (deficit)                                                                                                                                                                                                                                                                                                 |   |                                    | (22,637,658 | )                           |   | (19,208,429 | ) |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| TOTAL                STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                                                                  |   |                                    | 15,635,413  |                        |   | 17,308,434 |   |
|                                                                                                                                                                                                                                                                                                                                       |   |                                    |        |                        |   |   |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                              |   | $                                       | 53,739,266  |                        | $      | 62,893,986 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Operations**

|                                                                                                                                                                                                             |   | Three months ended |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|
|                                                                                                                                                                                                             |   | September 30, 2008 |        | September 30, 2007 |   |
| NET REVENUES                                                                                                                                                                                                |   |                         |        |   |   |   |   |
| Online                travel store sales and monthly fees                                                                                                                                                        |   | $                            | 30,473,409  |   | $ | 28,691,270 |   |
| Travel                commissions and services                                                                                                                                                                   |   |                         | 8,014,502   |   |   | 5,536,399 |   |
| Training                programs and marketing materials                                                                                                                                                         |   |                         | 2,677,641   |   |   | 4,520,974 |   |
| Other                                                                                                                                                                                                            |   |                         | 1,710,802   |   |   | 1,120,599 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| Total                net revenues                                                                                                                                                                                |   |                         | 42,876,354  |   |   | 39,869,242 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| OPERATING                EXPENSES                                                                                                                                                                                |   |                         |        |   |   |   |   |
| Marketing                commissions                                                                                                                                                                             |   |                         | 16,765,206  |   |   | 20,603,925 |   |
| Travel                commissions and other costs                                                                                                                                                                |   |                         | 5,177,571   |   |   | 3,913,021 |   |
| Depreciation                and amortization                                                                                                                                                                     |   |                         | 678,517     |   |   | 304,243 |   |
| Marketing                and selling                                                                                                                                                                             |   |                         | 1,369,170   |   |   | 543,305 |   |
| General                and administrative                                                                                                                                                                        |   |                         | 18,559,254  |   |   | 12,317,196 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| Total                operating expenses                                                                                                                                                                          |   |                         | 42,549,718  |   |   | 37,681,690 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| INCOME                FROM OPERATIONS                                                                                                                                                                            |   |                         | 326,636     |   |   | 2,187,552 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| OTHER                INCOME (EXPENSE)                                                                                                                                                                            |   |                         |        |   |   |   |   |
| Interest                and dividend income                                                                                                                                                                      |   |                         | 38,162      |   |   | 128,804 |   |
| Interest                expense                                                                                                                                                                                  |   |                         | (11,509     | ) |   | (23,115 | ) |
| Foreign                currency translation loss                                                                                                                                                                 |   |                         | (101,022    | ) |   | - |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| Total                other income (expense)                                                                                                                                                                      |   |                         | (74,369     | ) |   | 105,689 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| INCOME                BEFORE INCOME TAX PROVISION                                                                                                                                                                |   |                         | 252,267     |   |   | 2,293,241 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| INCOME                TAX PROVISION (BENEFIT)                                                                                                                                                                    |   |                         | (35,732     | ) |   | 143,750 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| NET                INCOME                                                                                                                                                                                        |   | $                            | 287,999     |   | $ | 2,149,491 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| NET                INCOME PER SHARE:                                                                                                                                                                             |   |                         |        |   |   |   |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| Weighted-average                shares outstanding - basic for Class A and Class B                                                                                                                               |   |                         | 103,438,235 |   |   | 97,209,960 |   |
| Weighted-average                shares outstanding - diluted for Class A and Class B                                                                                                                             |   |                         | 110,080,692 |   |   | 110,801,031 |   |
|                                                                                                                                                                                                             |   |                         |        |   |   |   |   |
| Net                income per share - basic for Class A and Class B (amounts for Class                A and                Class B shares are the same under the two-class method. See Note                3):   |   | $                            | 0.00        |   | $ | 0.02 |   |
| Net                income per share - diluted for Class A and Class B (amounts for Class                A                and Class B shares are the same under the two-class method. See Note                3): |   | $                            | 0.00        |   | $ | 0.02 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Operations**

|                                                                                                                                                                                                                                   |   | Nine months ended  |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|
|                                                                                                                                                                                                                                   |   | September 30, 2008 |        | September 30, 2007 |   |
| NET                REVENUES                                                                                                                                                                                                            |   |                         |        |   |   |   |   |
| Online                travel store sales and monthly fees                                                                                                                                                                              |   | $                            | 97,786,861  |   | $ | 69,031,218 |   |
| Travel                commissions and services                                                                                                                                                                                         |   |                         | 22,162,946  |   |   | 13,930,824 |   |
| Training                programs and marketing materials                                                                                                                                                                               |   |                         | 7,954,049   |   |   | 11,234,337 |   |
| Other                                                                                                                                                                                                                                  |   |                         | 2,474,375   |   |   | 1,722,476 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| Total                net revenues                                                                                                                                                                                                      |   |                         | 130,378,231 |   |   | 95,918,855 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| OPERATING                EXPENSES                                                                                                                                                                                                      |   |                         |        |   |   |   |   |
| Marketing                commissions                                                                                                                                                                                                   |   |                         | 66,309,983  |   |   | 55,370,759 |   |
| Travel                commissions and other costs                                                                                                                                                                                      |   |                         | 16,234,166  |   |   | 9,398,036 |   |
| Depreciation                and amortization                                                                                                                                                                                           |   |                         | 1,890,346   |   |   | 782,218 |   |
| Marketing                and selling                                                                                                                                                                                                   |   |                         | 4,293,044   |   |   | 3,134,875 |   |
| General                and administrative                                                                                                                                                                                              |   |                         | 45,002,262  |   |   | 25,727,261 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| Total                operating expenses                                                                                                                                                                                                |   |                         | 133,729,801 |   |   | 94,413,149 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| INCOME                (LOSS) FROM OPERATIONS                                                                                                                                                                                           |   |                         | (3,351,570  | ) |   | 1,505,706 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| OTHER                INCOME (EXPENSE)                                                                                                                                                                                                  |   |                         |        |   |   |   |   |
| Interest                and dividend income                                                                                                                                                                                            |   |                         | 190,360     |   |   | 309,358 |   |
| Interest                expense                                                                                                                                                                                                        |   |                         | (65,606     | ) |   | (27,041 | ) |
| Foreign                currency translation loss                                                                                                                                                                                       |   |                         | (118,625    | ) |   | - |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| Total                other income (expense)                                                                                                                                                                                            |   |                         | 6,129       |   |   | 282,317 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| INCOME                (LOSS) BEFORE INCOME TAX PROVISION                                                                                                                                                                               |   |                         | (3,345,441  | ) |   | 1,788,023 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| INCOME                TAX PROVISION                                                                                                                                                                                                    |   |                         | 83,788      |   |   | 143,750 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| NET                INCOME ( LOSS)                                                                                                                                                                                                      |   | $                            | (3,429,229  | ) | $ | 1,644,273 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| NET                INCOME (LOSS) PER SHARE:                                                                                                                                                                                            |   |                         |        |   |   |   |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| Weighted-average                shares outstanding - basic for Class A and Class B                                                                                                                                                     |   |                         | 103,283,879 |   |   | 97,143,966 |   |
| Weighted-average                shares outstanding - diluted for Class A and Class B                                                                                                                                                   |   |                         | 103,283,879 |   |   | 111,144,815 |   |
|                                                                                                                                                                                                                                   |   |                         |        |   |   |   |   |
| Net                income (loss) per share - basic for Class A and Class B (amounts                for Class                A and Class B shares are the same under the two-class method. See                Note                3):   |   | $                            | (0.03       | ) | $ | 0.02 |   |
| Net                income (loss) per share - diluted for Class A and Class B (amounts                for                Class A and Class B shares are the same under the two-class method.                See                Note 3): |   | $                            | (0.03       | ) | $ | 0.01 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statement of Changes in Stockholders’ Equity**

|                                                           |   | Preferred |   | Common Stock  |   |  Additional |   | Retained      |       | Total  |   |
|----------------------------------------------------------------|--------|-----------|--------|--------------------|--------|------------------|--------|---------------|------------|-------------|--------|
|                                                           |   | Stock     |   | Class A  |   | Class B     |   |  Paid-in |       | Earnings    |   | Stockholders' |   |
|                                                           |   | Shares    |   | Amount             |   | Shares           |   | Amount        |       | Shares      |   | Amount |   |  Capital |   | (Deficit) |   | Equity |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |    |   |   |   |   |   |
| Balance                at January 1, 2008                      |   |      | -      |               | $      | -                |   |          | 51,144,275 |        | $      | 51,144 |   |   | 46,453,644 |   | $ | 46,453 |   | $ | 36,419,266 |   | $ | (19,208,429 | ) | $ | 17,308,434 |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exchange                Class B Shares for Class A shares      |   |      | -      |               |   | -                |   |          | 14,562,236 |        |   | 14,562 |   |   | (14,562,236 | ) |   | (14,562 | ) |   | - |   |   | - |   |   | - |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                shares issued for restricted stock grant |   |      | -      |               |   | -                |   |          | 1,675,809  |        |   | 1,676 |   |   | 3,251,618 |   |   | 3,252 |   |   | (4,928 | ) |   | - |   |   | - |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of restricted stock                |   |      | -      |               |   | -                |   |          | -          |        |   | - |   |   | - |   |   | - |   |   | 400,281 |   |   | - |   |   | 400,281 |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for services                      |   |      | -      |               |   | -                |   |          | 500,000    |        |   | 500 |   |   | - |   |   | - |   |   | 509,500 |   |   | - |   |   | 510,000 |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                shares issued for option exercises       |   |      | -      |               |   | -                |   |          | 49,361     |        |   | 50 |   |   | 3,333 |   |   | 3 |   |   | 1,947 |   |   | - |   |   | 2,000 |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                of common stock warrants               |   |      | -      |               |   | -                |   |          | 145,311    |        |   | 145 |   |   | 290,624 |   |   | 291 |   |   | 253,859 |   |   | - |   |   | 254,295 |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                option compensation                       |   |      | -      |               |   | -                |   |          | -          |        |   | - |   |   | - |   |   | - |   |   | 589,632 |   |   | - |   |   | 589,632 |   |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                        |   |      | -      |               |   | -                |   |          | -          |        |   | - |   |   | - |   |   | - |   |   | - |   |   | (3,429,229 | ) |   | (3,429,229 | ) |
|                                                           |   |      |   |               |   |             |   |          |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at September 30, 2008                   |   |      | -      |               | $      | -                |   |          | 68,076,992 |        | $      | 68,077 |   |   | 35,436,983 |   | $ | 35,437 |   | $ | 38,169,557 |   | $ | (22,637,658 | ) | $ | 15,635,413 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**YTB      INTERNATIONAL, INC.**

**Condensed      Consolidated Statements of Cash Flows**

|                                                                                                                   |   | Nine months ended  |        |
|------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|
|                                                                                                                   |   | September 30, 2008 |        | September 30, 2007 |   |
| CASH FLOWS                FROM OPERATING ACTIVITIES:                                                              |   |                         |        |   |   |   |   |
| Net                income (loss)                                                                                       |   | $                            | (3,429,229  | ) | $ | 1,644,273 |   |
| Adjustments                to reconcile net income (loss) to net cash provided by operating                activities: |   |                         |        |   |   |   |   |
| Depreciation                and amortization                                                                           |   |                         | 1,890,346   |   |   | 782,218 |   |
| Write-off                of uncollectible notes                                                                        |   |                         | 205,040     |   |   | - |   |
| Loss                on disposal of property and equipment                                                              |   |                         | 11,667      |   |   | 9,991 |   |
| Impairment                loss on property and equipment                                                               |   |                         | 309,722     |   |   | - |   |
| Reserve                against inventory                                                                               |   |                         | 1,392,172   |   |   | - |   |
| Provision                for uncollectible notes and advances                                                          |   |                         | 266,553     |   |   | 182,723 |   |
| Write-off                of deposit on acquisition of business                                                         |   |                         | 311,332     |   |   | - |   |
| Interest                income on notes receivable                                                                     |   |                         | (99,963     | ) |   | - |   |
| Provision                for uncollectible interest on notes receivable                                                |   |                         | 77,235      |   |   | - |   |
| Shares                issued for restricted stock grant                                                                |   |                         | -           |   |   | 2,799,994 |   |
| Shares                issued for services                                                                              |   |                         | 510,000     |   |   | 45,500 |   |
| Amortization                of restricted stock                                                                        |   |                         | 400,281     |   |   | 3,667,231 |   |
| Stock                option expense                                                                                    |   |                         | 164,589     |   |   | 102,391 |   |
| FIN                48 tax provision                                                                                    |   |                         | (19,017     | ) |   | 87,750 |   |
| Change                in operating assets and liabilities:                                                             |   |                         |        |   |   |   |   |
| Restricted                    cash-collateral used as reserves for credit card                    processing           |   |                         | (114,352    | ) |   | (810,690 | ) |
| Restricted                cash-Canadian operations                                                                     |   |                         | (24,331     | ) |   | - |   |
| Accounts                receivable, net                                                                                |   |                         | 357,127     |   |   | (1,682,243 | ) |
| Income                tax receivable                                                                                   |   |                         | (68,766     | ) |   | - |   |
| Notes                receivable                                                                                        |   |                         | 1,071,957   |   |   | (881,739 | ) |
| Inventory                                                                                                              |   |                         | 122,236     |   |   | (3,499,799 | ) |
| Prepaid                marketing commissions and advances                                                              |   |                         | 10,000,789  |   |   | (13,110,054 | ) |
| Other                prepaid expenses and current assets                                                               |   |                         | 1,035,674   |   |   | (1,384,038 | ) |
| Other                assets                                                                                            |   |                         | (72,814     | ) |   | 8,127 |   |
| Accounts                payable and accrued expenses                                                                   |   |                         | 2,360,157   |   |   | 5,900,537 |   |
| Foreign                income tax payable                                                                              |   |                         | (61,424     | ) |   | - |   |
| Accrued                bonuses                                                                                         |   |                         | 41,583      |   |   | (365,673 | ) |
| Deferred                revenue                                                                                        |   |                         | (10,494,626 | ) |   | 16,794,005 |   |
| Other                liabilities                                                                                       |   |                         | -           |   |   | (14,269 | ) |
| NET                CASH PROVIDED BY OPERATING ACTIVITIES                                                               |   |                         | 6,143,938   |   |   | 10,276,235 |   |
|                                                                                                                   |   |                         |        |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                   |   |                         |        |   |   |   |   |
| Purchases                of property and equipment                                                                     |   |                         | (7,843,267  | ) |   | (6,263,738 | ) |
| Proceeds                from sale of property and equipment                                                            |   |                         | 10,000      |   |   | 87,539 |   |
| Acquisition                of business                                                                                 |   |                         | (149,119    | ) |   | - |   |
| Proceeds                from sale of available-for-sale securities                                                     |   |                         | 26,834      |   |   | 1,165,231 |   |
| Purchases                of available-for-sale securities                                                              |   |                         | -           |   |   | (1,150,764 | ) |
| NET                CASH USED IN INVESTING ACTIVITIES                                                                   |   |                         | (7,955,552  | ) |   | (6,161,732 | ) |
|                                                                                                                   |   |                         |        |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                                   |   |                         |        |   |   |   |   |
| Bank                overdraft (repayment)                                                                              |   |                         | 434,076     |   |   | (812,464 | ) |
| Principal                payments on debt                                                                              |   |                         | (16,431     | ) |   | (15,787 | ) |
| Repayment                of short-term debt                                                                            |   |                         | (504,010    | ) |   | - |   |
| Cash                collateral for standby letter of credit                                                            |   |                         | (1,910,000  | ) |   | - |   |
| Reduction                in cash collateral for standby letter of credit                                               |   |                         | 1,910,000   |   |   | - |   |
| Reduction                in restricted cash-collateral for outstanding note                                            |   |                         | 500,000     |   |   | - |   |
| Proceeds                from exercise of common stock options                                                          |   |                         | 2,000       |   |   | 412,000 |   |
| Proceeds                from exercise of common stock warrants                                                         |   |                         | 254,295     |   |   | 768,969 |   |
| NET                CASH PROVIDED BY FINANCING ACTIVITIES                                                               |   |                         | 669,930     |   |   | 352,718 |   |
|                                                                                                                   |   |                         |        |   |   |   |   |
| NET                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                    |   |                         | (1,141,684  | ) |   | 4,467,221 |   |
| CASH                AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                          |   |                         | 1,730,570   |   |   | - |   |
| CASH                AND CASH EQUIVALENTS, END OF PERIOD                                                                |   | $                            | 588,886     |   | $ | 4,467,221 |   |

----

**YTB      INTERNATIONAL, INC.**

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

**(Unaudited)**

|                                                                                                        |   | Nine months ended  |      |
|-------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                                                        |   | September 30, 2008 |      | September 30, 2007 |   |
|                                                                                                        |   |                         |      |   |   |
| SUPPLEMENTAL                CASH FLOW INFORMATION:                                                          |   |                         |      |   |   |   |   |
| Interest                paid (net of capitalized interest)                                                  |   | $                            | 61,389    |   | $ | 28,885 |   |
| Income                taxes paid                                                                            |   | $                            | 232,995   |   | $ | - |   |
| SUPPLEMENTAL                NON-CASH INVESTING AND FINANCING ACTIVITIES:                                    |   |                         |      |   |   |   |   |
| Increase                in accounts payable/accrued expenses and property and                equipment      |   | $                            | 1,203,036 |   | $ | 174,202 |   |
| Property                and equipment settlement of the bonus liability                                     |   | $                            | -         |   | $ | 101,490 |   |
| Increase                in short-term debt and property and equipment                                       |   | $                            | -         |   | $ | 1,299,470 |   |
| 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 |   |
| Stock                option compensation                                                                    |   | $                            | 425,043   |   | $ | - |   |
| Reclass                of long-term investments to available-for-sale securities                            |   | $                            | 1,000,000 |   | $ | - |   |
| Reclass                of property and equipment to assets held for sale                                    |   | $                            | 900,000   |   | $ | - |   |
| Transfer                of Class B common stock shares to Class A common stock                shares        |   | $                            | 14,562    |   | $ | - |   |
| Shares                issued for restricted stock grant                                                     |   | $                            | 4,928     |   | $ | - |   |
| Notes                receivable issued for sale of auto                                                     |   | $                            | 60,000    |   | $ | - |   |
| Reclass                of notes receivable to other current assets / other assets                           |   | $                            | 65,000    |   | $ | - |   |
| Reclass                of notes receivable reserve to acquisition of business                reserve        |   | $                            | 45,000    |   | $ | - |   |
| Reclass                of commission advances to notes receivable                                           |   | $                            | 21,250    |   | $ | - |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

----

----

***Newly      Adopted Accounting Standards***

|   | · | Defines                fair value as the price that would be received to sell an asset or                paid to                transfer a liability in an orderly transaction between market participants                and the measurement date; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Establishes                a three-level hierarchy (“valuation hierarchy”) for fair value                measurements; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Requires                consideration of the Company’s creditworthiness when valuing liabilities;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | Expands                disclosures about instruments measured at fair                value. |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Level                1 – inputs to the valuation methodology are quoted prices (unadjusted)                for                identical assets or liabilities in active                markets. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level                2 – inputs to the valuation methodology include quoted prices for similar                assets and liabilities in active markets, inputs that are observable                for                the asset or liability, either directly or indirectly, for substantially                the full term of the financial                statement. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level                3 – inputs to the valuation methodology are unobservable and significant                to the fair value measurement. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                 |   | Three months ended |        | Nine months ended |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|-----------------------------|--------|
|                                                                                                 |   | September 30,      |        | September 30,     |   |
|                                                                                                 |   | 2008                         |        | 2007                        |   | 2008 |   | 2007 |   |
|                                                                                                 |   |                         |        |                        |   |   |   |   |   |
| Numerator:                                                                                           |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                                                                     |   | $                            | 287,999     |                        | $      | 2,149,491 |   | $ | (3,429,229 | ) | $ | 1,644,273 |   |
|                                                                                                 |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                         |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Weighted                average common shares and denominator for basic                calculation:  |   |                         | 103,438,235 |                        |   | 97,209,960 |   |   | 103,283,879 |   |   | 97,143,966 |   |
|                                                                                                 |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Weighted                average effects of dilutive equity based compensation                awards: |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Stock                options                                                                         |   |                         | 1,358,176   |                        |   | 450,718 |   |   | - |   |   | 462,601 |   |
| Stock                warrants                                                                        |   |                         | 1,868,627   |                        |   | 3,666,913 |   |   | - |   |   | 3,797,896 |   |
| Restricted                stock awards                                                               |   |                         | 3,415,654   |                        |   | 9,473,440 |   |   | - |   |   | 9,740,352 |   |
|                                                                                                 |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Denominator                for diluted calculation                                                   |   |                         | 110,080,692 |                        |   | 110,801,031 |   |   | 103,283,879 |   |   | 111,144,815 |   |
|                                                                                                 |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share - basic for Class A and Class B                           |   | $                            | 0.00        |                        | $      | 0.02 |   | $ | (0.03 | ) | $ | 0.02 |   |
|                                                                                                 |   |                         |        |                        |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share - diluted for Class A and Class B                         |   | $                            | 0.00        |                        | $      | 0.02 |   | $ | (0.03 | ) | $ | 0.01 |   |

----

|                                                       |   | September 30, 2008 |      | December 31, 2007 |   |
|------------------------------------------------------------|--------|------------------------------|-----------|-----------------------------|--------|
| "Success                From Home" and "Success" magazines |   | $                            | 1,267,647 |                        | $      | 2,772,016 |   |
| "Fun                & Travel" magazines                |   |                         | 245,611   |                        |   | 1,173,130 |   |
| Audio                / video marketing                     |   |                         | 305,696   |                        |   | 576,292 |   |
| Printed                marketing materials                 |   |                         | 1,135,580 |                        |   | 381,806 |   |
| Apparel                                                    |   |                         | 434,302   |                        |   | - |   |
|                                                       |   |                         |      |                        |   |   |   |
| Inventory,                net                              |   | $                            | 3,388,836 |                        | $      | 4,903,244 |   |

----

|                                               |   | As of September 30, 2008 |      |
|----------------------------------------------------|--------|----------------------------------------------|-----------|
|                                               |   | Amortized Cost                          |      | GrossUnrealizedGains |   | GrossUnrealizedLosses |   | Estimated FairValue |   |
| Available-for-sale                securities:      |   |                                         |      |   |   |   |   |   |   |   |   |   |   |
| Auction                rate securities             |   | $                                            | 1,000,000 |   | $ | - |   | $ | - |   | $ | 1,000,000 |   |
|                                               |   |                                         |      |   |   |   |   |   |   |   |   |   |   |
| Total                available-for-sale securities |   | $                                            | 1,000,000 |   | $ | - |   | $ | - |   | $ | 1,000,000 |   |

|                                       |   | As of December 31, 2007 |      |
|--------------------------------------------|--------|---------------------------------------------|-----------|
|                                       |   | Amortized Cost                         |      | GrossUnrealizedGains |   | GrossUnrealizedLosses |   | Estimated FairValue |   |
| Long-term                investments:      |   |                                        |      |   |   |   |   |   |   |   |   |   |   |
| Auction                rate securities     |   | $                                           | 1,000,000 |   | $ | - |   | $ | - |   | $ | 1,000,000 |   |
|                                       |   |                                        |      |   |   |   |   |   |   |   |   |   |   |
| Total                long-term investments |   | $                                           | 1,000,000 |   | $ | - |   | $ | - |   | $ | 1,000,000 |   |

----

|                                          |   | September 30, 2008 |       | December 31, 2007 |   |
|-----------------------------------------------|--------|------------------------------|------------|-----------------------------|--------|
| Equipment                                     |   | $                            | 3,317,931  |                        | $      | 2,736,467 |   |
| Furniture                and fixtures         |   |                         | 897,016    |                        |   | 847,233 |   |
| Software                                      |   |                         | 4,742,865  |                        |   | 2,016,844 |   |
| Vehicles                                      |   |                         | 64,295     |                        |   | 164,294 |   |
| Building                and improvements      |   |                         | 5,478,370  |                        |   | 5,408,154 |   |
| Land                                          |   |                         | 4,721,218  |                        |   | 4,721,218 |   |
| Construction                in progress       |   |                         | 6,506,680  |                        |   | 2,209,710 |   |
| Leasehold                improvements         |   |                         | 142,295    |                        |   | 120,445 |   |
|                                          |   |                         | 25,870,670 |                        |   | 18,224,365 |   |
| Less:                Accumulated depreciation |   |                         | (4,518,529 | )                           |   | (2,791,863 | ) |
|                                          |   |                         |       |                        |   |   |   |
| Property                and equipment, net    |   | $                            | 21,352,141 |                        | $      | 15,432,502 |   |

----

**Proposed      Business Acquisition**

**Acquisition      of Travel Agency for Canadian Operations**

***2004      Stock Option and Restricted Stock Plan.***

**Stock      Options**

----

**Additional      Awards Under the 2004 Stock Option and Restricted Stock      Plan**

*Additional      Stock Option Awards*

*Restricted      Stock Awards*

----

----

***2007      Sales Director Bonus Plan***

**Initial      Grant of Stock Options**

**Additional      Grants of Stock Options Under the 2007 Sales Director Bonus      Plan**

----

|                                                                |   | Shares |      | Weighted-AverageExercise Price |   | Weighted-Average FairValue |   |
|---------------------------------------------------------------------|--------|--------|-----------|-------------------------------------|--------|---------------------------------|--------|
|                                                                |   |   |      |                                |   |                            |   |
| Options                outstanding, beginning of period             |   |   | 785,841   |                                | $      | 0.46                            |   | $ | 0.34 |   |
| For                the period from January 1 to September 30, 2008: |   |   |      |                                |   |                            |   |   |   |   |
| Granted                                                             |   |   | 2,149,425 |                                |   | 0.94                            |   |   | 0.80 |   |
| Forfeited                                                           |   |   | 46,947    |                                |   | 0.71                            |   |   | 0.97 |   |
| Expired                                                             |   |   | -         |                                |   | -                               |   |   | - |   |
| Exercised                                                           |   |   | 68,492    |                                |   | 0.52                            |   |   | 0.54 |   |
|                                                                |   |   |      |                                |   |                            |   |   |   |   |
| Options                outstanding, end of period                   |   |   | 2,819,827 |                                | $      | 0.82                            |   | $ | 0.68 |   |
|                                                                |   |   |      |                                |   |                            |   |   |   |   |
| Options                exercisable, end of period                   |   |   | 807,986   |                                | $      | 0.80                            |   | $ | 0.58 |   |

|                                    |   | Options Outstanding |      | Options Exercisable |   |
|-----------------------------------------|--------|--------------------------|-----------|--------------------------|--------|
|                                    |   |                     |      | Weighted-                |   |   |   |   |   |   |   |
|                                    |   |                     |      | Average                  |   | Weighted- |   |   |   | Weighted- |   |
|                                    |   | Number                   |      | Remaining                |   | Average |   | Number |   | Average |   |
| Range of Exercise Prices |   | Outstanding              |      | Life (years)        |   | Exercise Price |   | Outstanding |   | Exercise Price |   |
| $0.40 -                $1.00       |   |                     | 1,819,827 |                     |   | 2.05 |   | $ | 0.54 |   |   | 554,650 |   | $ | 0.53 |   |
| $1.01                - $1.67            |   |                     | 1,000,000 |                     |   | 6.64 |   |   | 1.32 |   |   | 253,336 |   |   | 1.40 |   |
|                                    |   |                     | 2,819,827 |                     |   | 3.68 |   | $ | 0.82 |   |   | 807,986 |   | $ | 0.80 |   |

----

***One-Time      Restricted Stock Award***

----

|                                            |   |       |       | Weighted-                 |   |
|-------------------------------------------------|--------|------------|------------|---------------------------|--------|
|                                            |   |       |       | average                   |   |
|                                            |   | Restricted |       | grant-date                |   |
|                                            |   | shares     |       | fair                value |   |
| Non-vested                at beginning of 2008  |   |       | 19,611,324 |                      | $      | 1.03 |   |
| Granted                                         |   |       | 962,206    |                      |   | 1.60 |   |
| Vested                                          |   |       | 4,952,831  |                      |   | 1.03 |   |
| Forfeited                                       |   |       | 92,075     |                      |   | 1.64 |   |
| Non-vested                at September 30, 2008 |   |       | 15,528,624 |                      | $      | 1.06 |   |

----

----

----

*“*

* *

FSP      157-3      to clarify the application of SFAS No. 157, which the Company partially      adopted as of January 1, 2008, in cases where a market is not      active.  The Company has considered the guidance provided by FSP 157-3      and determined that there was no impact on estimated fair values as of      September 30, 2008. 

----

| Three Months Ended                      |   |      |       |   |   |      |   |        |       |
|---------------------------------------------------|--------|-----------|------------|--------|--------|-----------|--------|-------------|------------|
| September 30, 2008                      |   | Marketing |       | Travel |   | Parent    |   | Total  |       |
|                                              |   |      |       |   |   |      |   |        |       |
| External                and inter-segment revenue |   | $         | 34,759,960 |   | $      | 8,045,957 |   | $           | 70,437     |   | $ | 42,876,354 |   |
| Net                income (loss)                  |   |      | 1,291,222  |   |   | 1,742,690 |   |        | (2,745,913 | ) |   | 287,999 |   |
| Assets                                            |   |      | 25,091,865 |   |   | 4,204,180 |   |        | 24,443,221 |   |   | 53,739,266 |   |
| Depreciation                and amortization      |   |      | 376,095    |   |   | 60,371    |   |        | 242,051    |   |   | 678,517 |   |
| Capital                expenditures               |   |      | 159,788    |   |   | 480,000   |   |        | 1,854,543  |   |   | 2,494,331 |   |

| Three Months Ended                      |   |      |       |   |   |      |   |   |       |
|---------------------------------------------------|--------|-----------|------------|--------|--------|-----------|--------|--------|------------|
| September 30, 2007                      |   | Marketing |       | Travel |   | Parent    |   | Total  |       |
|                                              |   |      |       |   |   |      |   |   |       |
| External                and inter-segment revenue |   | $         | 34,162,402 |   | $      | 5,706,840 |   | $      | -          |   | $ | 39,869,242 |   |
| Net                income (loss)                  |   |      | 3,660,838  |   |   | 1,507,896 |   |   | (3,019,243 | ) |   | 2,149,491 |   |
| Assets                                            |   |      | 46,712,901 |   |   | 6,494,484 |   |   | 8,824,643  |   |   | 62,032,028 |   |
| Depreciation                and amortization      |   |      | 230,115    |   |   | 3,188     |   |   | 70,940     |   |   | 304,243 |   |
| Capital                expenditures               |   |      | 1,123,615  |   |   | 63,500    |   |   | 3,401,668  |   |   | 4,588,783 |   |

| Nine Months Ended                       |   |      |        |   |   |       |   |   |       |
|---------------------------------------------------|--------|-----------|-------------|--------|--------|------------|--------|--------|------------|
| September 30, 2008                      |   | Marketing |        | Travel |   | Parent     |   | Total  |       |
|                                              |   |      |        |   |   |       |   |   |       |
| External                and inter-segment revenue |   | $         | 107,624,352 |   | $      | 22,683,442 |   | $      | 70,437     |   | $ | 130,378,231 |   |
| Net                income (loss)                  |   |      | 2,248,716   |   |   | 4,104,424  |   |   | (9,782,369 | ) |   | (3,429,229 | ) |
| Assets                                            |   |      | 25,091,865  |   |   | 4,204,180  |   |   | 24,443,221 |   |   | 53,739,266 |   |
| Depreciation                and amortization      |   |      | 1,036,155   |   |   | 169,632    |   |   | 684,559    |   |   | 1,890,346 |   |
| Capital                expenditures               |   |      | 1,181,647   |   |   | 938,424    |   |   | 6,926,232  |   |   | 9,046,303 |   |

| Nine Months Ended                       |   |      |       |   |   |       |   |   |       |
|---------------------------------------------------|--------|-----------|------------|--------|--------|------------|--------|--------|------------|
| September 30, 2007                      |   | Marketing |       | Travel |   | Parent     |   | Total  |       |
|                                              |   |      |       |   |   |       |   |   |       |
| External                and inter-segment revenue |   | $         | 81,203,985 |   | $      | 14,714,470 |   | $      | 400        |   | $ | 95,918,855 |   |
| Net                income (loss)                  |   |      | 3,281,463  |   |   | 4,221,996  |   |   | (5,859,186 | ) |   | 1,644,273 |   |
| Assets                                            |   |      | 46,712,901 |   |   | 6,494,484  |   |   | 8,824,643  |   |   | 62,032,028 |   |
| Depreciation                and amortization      |   |      | 577,605    |   |   | 4,250      |   |   | 200,363    |   |   | 782,218 |   |
| Capital                expenditures               |   |      | 2,726,976  |   |   | 165,250    |   |   | 4,845,184  |   |   | 7,737,410 |   |

----

|                         |   | Three months ended |       | Nine months ended  |   |
|------------------------------|--------|------------------------------|------------|------------------------------|--------|
|                         |   | September 30, 2008 |       | September 30, 2007 |   | September 30, 2008 |   | September 30, 2007 |   |
|                         |   |                         |       |                         |   |   |   |   |   |
| United                States |   | $                            | 41,957,053 |                         |   | 39,869,242 |   | $ | 126,901,534 |   | $ | 95,918,855 |   |
| Canada                       |   |                         | 919,301    |                         |   | - |   |   | 3,476,697 |   |   | - |   |
|                         |   | $                            | 42,876,354 |                         | $      | 39,869,242 |   | $ | 130,378,231 |   | $ | 95,918,855 |   |

----

----

**Item      2. **
**Management’s      Discussion and Analysis**
**      of Financial Condition and Results of Operations**

*The      Private Securities Litigation Reform Act of 1995 and Section 21E of the      Securities Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe      harbor for forward-looking statements made by or on behalf of the Company.      The      Company and its representatives may from time to time make written or oral      statements that are “forward-looking”, including statements contained in this      report and other filings with the Securities and Exchange Commission (“SEC”) and      in our reports to stockholders. In some cases forward-looking statements can      be      identified by words such as “believe,” “expect,” “anticipate,” “plan,”“potential,” “continue” or similar expressions. Such forward-looking statements      include risks and uncertainties and there are important factors that could      cause      actual results to differ materially from those expressed or implied by such      forward-looking statements. These factors, risks and uncertainties can be found      in the, “Risk Factors” section of the Company’s Registration Statement on Form      SB-2 filed with the SEC on May 21, 2007.*

*Although      we believe the expectations reflected in our forward-looking statements are      based upon reasonable assumptions, it is not possible to foresee or identify      all      facts that could have a material effect on the future financial performance      of      the Company. The forward-looking statements in this report are made on the      basis      of management’s assumptions and analyses, as of the time the statements are      made, in light of their experience and perception of historical conditions,      expected future developments and other factors believed to be appropriate under      the circumstances.*

*In      addition, certain market data and other statistical information used throughout      this report are based on independent industry publications. Although we believe      these sources to be reliable, we have not independently verified the information      and cannot guarantee the accuracy and completeness of such      sources.*

*Except      as otherwise required by the federal securities laws, we disclaim any obligation      or undertaking to publicly release any updates or revisions to any      forward-looking statement contained in this quarterly report on Form 10-Q and      the information incorporated by reference in this report to reflect any change      in our expectations with regard thereto or any change in events, conditions      or      circumstances on which any statement is based.*

**Overview**

----

**About      Our Industry**

----

**Results      of Operations**

|                                                                |   | Three months ended |       | Three months ended     |   | Variance                     |          |
|---------------------------------------------------------------------|--------|------------------------------|------------|----------------------------------|--------|------------------------------|---------------|
|                                                                |   | September 30, 2008 |       | % of NetRevenues  |   | September 30, 2007 |          | % of NetRevenues |   | Increase(Decrease) |   | Inc.(Decr.)% |   |
|                                                                |   |                         |       |                             |   |                         |          |   |   |   |   |   |   |
| NET                REVENUES                                         |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| ** **Online                travel store sales and monthly fees |   | $                            | 30,473,409 |                   |   | 71.1                         | %   | $ | 28,691,270 |     |   | 72.1 | %   | $ | 1,782,139 |   |   | 6.2 | % |
| Travel                commissions and services                      |   |                         | 8,014,502  |                             |   | 18.7                         | %             |   | 5,536,399 |   |   | 13.9 | % |   | 2,478,103 |   |   | 44.8 | % |
| Training                programs and marketing materials            |   |                         | 2,677,641  |                             |   | 6.2                          | %             |   | 4,520,974 |   |   | 11.3 | % |   | (1,843,333 | )   |   | (40.8 | )% |
| Other                                                               |   |                         | 1,710,802  |                             |   | 4.0                          | %             |   | 1,120,599 |   |   | 2.7 | % |   | 590,203 |   |   | 52.7 | % |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                net revenues                                   |   |                         | 42,876,354 |                             |   | 100.0                        | %             |   | 39,869,242 |   |   | 100.0 | % |   | 3,007,112 |   |   | 7.5 | % |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| OPERATING                EXPENSES                                   |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Marketing                commissions                                |   |                         | 16,765,206 |                             |   | 39.1                         | %             |   | 20,603,925 |   |   | 51.7 | % |   | (3,838,719 | ) |   | (18.6 | )% |
| Travel                commissions and other costs                   |   |                         | 5,177,571  |                             |   | 12.1                         | %             |   | 3,913,021 |   |   | 9.8 | % |   | 1,264,550 |   |   | 32.3 | % |
| Depreciation                and amortization                        |   |                         | 678,517    |                             |   | 1.6                          | %             |   | 304,243 |   |   | 0.8 | % |   | 374,274 |   |   | 123.0 | % |
| Marketing                and selling                                |   |                         | 1,369,170  |                             |   | 3.2                          | %             |   | 543,305 |   |   | 1.4 | % |   | 825,865 |   |   | 152.0 | % |
| General                and administrative                           |   |                         | 18,559,254 |                             |   | 43.2                         | %             |   | 12,317,196 |   |   | 30.8 | % |   | 6,242,058 |   |   | 50.7 | % |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                operating expenses                             |   |                         | 42,549,718 |                             |   | 99.2                         | %             |   | 37,681,690 |   |   | 94.5 | % |   | 4,868,028 |   |   | 12.9 | % |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| INCOME                FROM OPERATIONS                               |   |                         | 326,636    |                             |   | 0.8                          | %             |   | 2,187,552 |   |   | 5.5 | % |   | (1,860,916 | ) |   | (85.1 | )% |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| OTHER                INCOME (EXPENSE)                               |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Interest                and dividend income                         |   |                         | 38,162     |                             |   | 0.0                          | %             |   | 128,804 |   |   | 0.3 | % |   | (90,642 | ) |   | (70.4 | )% |
| Interest                expense                                     |   |                         | (11,509    | )                                |   | 0.0                          | %             |   | (23,115 | ) |   | (0.1 | )% |   | 11,606 |   |   | (50.2 | )% |
| Foreign                currency translation loss                    |   |                         | (101,022   | )                                |   | (0.2                         | )%            |   | - |   |   | 0.0 | % |   | (101,022 | ) |   | n/a |   |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                other income (expense)                         |   |                         | (74,369    | )                                |   | (0.2                         | )%            |   | 105,689 |   |   | 0.2 | % |   | (180,058 | ) |   | (170.4 | )% |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| INCOME                BEFORE INCOME TAX PROVISION                   |   |                         | 252,267    |                             |   | 0.6                          | %             |   | 2,293,241 |   |   | 5.7 | % |   | (2,040,974 | ) |   | (89.0 | )% |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| INCOME                TAX PROVISION (BENEFIT)                       |   |                         | (35,732    | )                                |   | (0.1                         | )%            |   | 143,750 |   |   | 0.4 | % |   | (179,482 | ) |   | (124.9 | )% |
|                                                                |   |                         |            |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| NET                INCOME                                           |   | $                            | 287,999    |                             |   | 0.7                          | %             | $ | 2,149,491 |   |   | 5.3 | % | $ | (1,861,492 | ) |   | (86.6 | )% |

----

|                                                 |   | Nine months ended  |        | Nine months ended      |   | Variance                     |          |
|-----------------------------------------------------------|--------|------------------------------|-------------|----------------------------------|--------|------------------------------|---------------|
| * *                                                  |   | September 30, 2008 |        | % of NetRevenues  |   | September 30, 2007 |          | % of NetRevenues  |   | Increase(Decrease) |   | Inc.(Decr.)% |   |
|                                                      |   |                         |        |                             |   |                         |          |   |   |   |   |   |   |
| NET                REVENUES                               |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Online                travel store sales and monthly fees |   | $                            | 97,786,861  |                   |   | 75.0                         | %   | $ | 69,031,218 |     |   | 72.0 | %   | $ | 28,755,643 |   |   | 41.7 | % |
| Travel                commissions and services            |   |                         | 22,162,946  |                             |   | 17.0                         | %             |   | 13,930,824 |   |   | 14.5 | % |   | 8,232,122 |   |   | 59.1 | % |
| Training                programs and marketing materials  |   |                         | 7,954,049   |                             |   | 6.1                          | %             |   | 11,234,337 |   |   | 11.7 | % |   | (3,280,288 | )   |   | (29.2 | )% |
| Other                                                     |   |                         | 2,474,375   |                             |   | 1.9                          | %             |   | 1,722,476 |   |   | 1.8 | % |   | 751,899 |   |   | 43.7 | % |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                net revenues                         |   |                         | 130,378,231 |                             |   | 100.0                        | %             |   | 95,918,855 |   |   | 100.0 | % |   | 34,459,376 |   |   | 35.9 | % |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| OPERATING                EXPENSES                         |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Marketing                commissions                      |   |                         | 66,309,983  |                             |   | 50.9                         | %             |   | 55,370,759 |   |   | 57.7 | % |   | 10,939,224 |   |   | 19.8 | % |
| Travel                commissions and other costs         |   |                         | 16,234,166  |                             |   | 12.5                         | %             |   | 9,398,036 |   |   | 9.8 | % |   | 6,836,130 |   |   | 72.7 | % |
| Depreciation                and amortization              |   |                         | 1,890,346   |                             |   | 1.4                          | %             |   | 782,218 |   |   | 0.8 | % |   | 1,108,128 |   |   | 141.7 | % |
| Marketing                and selling                      |   |                         | 4,293,044   |                             |   | 3.3                          | %             |   | 3,134,875 |   |   | 3.3 | % |   | 1,158,169 |   |   | 36.9 | % |
| General                and administrative                 |   |                         | 45,002,262  |                             |   | 34.5                         | %             |   | 25,727,261 |   |   | 26.8 | % |   | 19,275,001 |   |   | 74.9 | % |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                operating expenses                   |   |                         | 133,729,801 |                             |   | 102.6                        | %             |   | 94,413,149 |   |   | 98.4 | % |   | 39,316,652 |   |   | 41.6 | % |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| INCOME                (LOSS) FROM OPERATIONS              |   |                         | (3,351,570  | )                                |   | (2.6                         | )%            |   | 1,505,706 |   |   | 1.6 | % |   | (4,857,276 | ) |   | (322.6 | )% |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| OTHER                INCOME (EXPENSE)                     |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Interest                and dividend income               |   |                         | 190,360     |                             |   | 0.1                          | %             |   | 309,358 |   |   | 0.3 | % |   | (118,998 | ) |   | (38.5 | )% |
| Interest                expense                           |   |                         | (65,606     | )                                |   | 0.0                          | %             |   | (27,041 | ) |   | 0.0 | % |   | (38,565 | ) |   | 142.6 | % |
| Foreign                currency translation loss          |   |                         | (118,625    | )                                |   | (0.1                         | )%            |   | - |   |   | 0.0 | % |   | (118,625 | ) |   | n/a |   |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                other income (expense)               |   |                         | 6,129       |                             |   | 0.0                          | %             |   | 282,317 |   |   | 0.3 | % |   | (276,188 | ) |   | (97.8 | )% |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| INCOME                (LOSS) BEFORE INCOME TAX PROVISION  |   |                         | (3,345,441  | )                                |   | (2.6                         | )%            |   | 1,788,023 |   |   | 1.9 | % |   | (5,133,464 | ) |   | (287.1 | )% |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| INCOME                TAX PROVISION                       |   |                         | 83,788      |                             |   | 0.0                          | %             |   | 143,750 |   |   | 0.1 | % |   | (59,962 | ) |   | (41.7 | )% |
|                                                      |   |                         |             |                             |   |                              |          |   |  |   |   |  |   |   |  |   |   |  |   |
| NET                INCOME (LOSS)                          |   | $                            | (3,429,229  | )                                |   | (2.6                         | )%            | $ | 1,644,273 |   |   | 1.8 | % | $ | (5,073,502 | ) |   | (308.6 | )% |

----

| **Year 2008**                               |   | **Beginning Balance****Active RTAs** |    | **New RTAs** |   | **Deactivations** |   | **Ending Balance****Active RTAs** |   | **Average Renewals****for the Period** |   |
|--------------------------------------------------|--------|------------------------------------------------|---------|-------------------|--------|-------------------|--------|---------------------------------------------|--------|-------------------------------------------------------|--------|
| 3                months ended September 30, 2008 |   |                                           | 131,572 |              |   | 15,857            |   |                                        | 32,815 |                                                  |   | 114,614 |   |   | 121,101 |   |
|                                             |   |                                           |    |              |   |              |   |                                        |   |                                                  |   |   |   |   |   |   |
| 9                months ended September 30, 2008 |   |                                           | 131,802 |              |   | 69,170            |   |                                        | 86,358 |                                                  |   | 114,614 |   |   | 130,690 |   |

| **Year 2007**                               |   | **Beginning Balance****Active RTAs** |    | **New RTAs** |   | **Deactivations** |   | **Ending Balance****Active RTAs** |   | **Average Renewals****for the Period** |   |
|--------------------------------------------------|--------|------------------------------------------------|---------|-------------------|--------|-------------------|--------|---------------------------------------------|--------|-------------------------------------------------------|--------|
| 3                months ended September 30, 2007 |   |                                           | 100,344 |              |   | 38,032            |   |                                        | 17,428 |                                                  |   | 120,948 |   |   | 112,837 |   |
|                                             |   |                                           |    |              |   |              |   |                                        |   |                                                  |   |   |   |   |   |   |
| 9                months ended September 30, 2007 |   |                                           | 59,333  |              |   | 105,756           |   |                                        | 44,141 |                                                  |   | 120,948 |   |   | 94,108 |   |

----

**Three      months ended September 30, 2008 compared to three months ended September 30,      2007**

**Net      Revenues **

|  | · | Online                  travel store sales increased $1,205,560 or 10.8% in the third quarter                  of                  2008 to $12,405,988 from the $11,200,428 reported in the comparable                  prior                  year quarter. While we have experienced a decrease in the actual                  number of                  stores sold for the three months ended September 30, 2008 to 15,857                  from                  38,032 in the prior year period, the revenue recognized actually                  increased                  due to the recognition of previously deferred new store sales from                  periods                  with higher volumes of new store sales. In addition, the average                  amount of                  recognized revenue from each store sale increased to $449.95 in                  the third quarter of 2008 from $446.69 in the comparable quarter in                  2007. We believe the decline in the number of new online travel                  store                  sales is attributable to the current economic downturn present                  in the                  United States. We anticipate slower growth in the coming months                  compared                  to what we have experienced in the past. However, with new marketing                  initiatives and enhanced/expanded services being added, we believe                  that we                  will see a stabilization of our sales and                  retention. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Monthly                renewal fees increased $576,579 or 3.3% in the third quarter of 2008                to                $18,067,421 from the $17,490,842 reported in the comparable prior                year                quarter. The increase is in direct relation to the number of active                paying                RTAs. The weighted average of paying RTAs per month increased from                112,837                for the three months ended September 30, 2007 to 121,101 for the                same                period in 2008. We anticipate slower growth in the coming months                compared                to what we have experienced in the past. However, with new marketing                initiatives and enhanced/expanded services being added, we believe                that we                will see a stabilization of our sales and                retention. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Travel                commissions and services for the third quarter of 2008 increased                $2,478,103 or 44.8%                to                $8,014,502                from the $5,536,399 reported in the comparable prior year quarter.                The                increase in travel commissions is attributable to the growth in gross                travel retail bookings driven by the number of customers utilizing                us as                their travel provider in 2008. Also contributing to the growth in                travel                commissions is the fact that we held more travel educational events/trade                shows in the third quarter of 2008 compared to 2007, which in turn                increases product awareness, making our RTAs more effective in selling                travel. As the increase in travel bookings occur, a preferred travel                bonus, or override, is given by certain vendors in addition to commission.                A portion of the anticipated bonus for the third quarter of 2008                has been                recorded as travel commission revenue with an offsetting receivable. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Training                programs and marketing materials revenue decreased $1,843,333 or                40.8% in                the third quarter of 2008 to $2,677,641 from $4,520,974 in the comparable                prior year quarter. The decrease was primarily due to a reduction                in sales                of magazine and sales aids, partially due to a reduction in the number                of                participants in the magazine Autoship Program, linked to the $6,000                Guarantee Program. We expect this trend to continue into the early                part of                2009. Also contributing to the decrease was a reduction in the number                of                paying attendees at training events, partially due to a revamping                of the                CRTA program. We expect this trend to change as we roll out a new                training                program, which we believe will increase the number of paid participants                in                these training programs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other                income increased in the third quarter of 2008 as compared to 2007                by                $590,203 or 52.7% to $1,710,802 from $1,120,599 in the comparable                prior                year quarter. The increase is primarily due to an increase in the                number                of paid attendees at the National Convention in 2008 as compared                to the                2007 National Convention. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses **

|   | · | Marketing                commissions decreased by $3,838,719 or 18.6% in the third quarter                of 2008                to $16,765,206 from $20,603,925 in the third quarter of 2007. This                decrease is primarily due to a forfeiture estimate of approximately                $3.6                million related to the second anniversary tranche of the one-time                Sales                Director restricted stock award vesting in January 2009. Due to the                decline in new sales and the increase in deactivations, management                believes it is probable that the vesting criteria required for the                second                anniversary tranche of the one-time restricted stock award will not                be met                as of the next vesting date - January 2, 2009. This decrease is also                a                result of a decline in new store sales resulting in a decrease in                the                average commission paid out on each new on-line store sale. As our                new                sales decline, the amount of leadership and dream bonuses paid also                decreases, which are included in the calculation to determine the                average                commission paid on each new sale. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Travel                commissions and other costs for the third quarter of 2008 increased                by                $1,264,550 or 32.3% to $5,177,571 from $3,913,021 reported in the                third                quarter of 2007. The increase is attributable to the increase in                the                number of customers utilizing us as their travel provider in 2008                due to                the growth in the number of active online travel stores compared                to the                prior year period. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Depreciation                and amortization was $678,517 in the third quarter of 2008 compared                to                $304,243 in the corresponding quarter of 2007, reflecting an increase                of                123.0% or $374,274. The increase in depreciation and amortization                is                primarily attributable to the new additions related to our current                headquarters building and assets related to the growth of our                infrastructure as well as the new additions of computer software                related                to our expansion into Canada. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing                and selling expenses increased by $825,865 or 152.0% to $1,369,170                from                $543,305 reported in the third quarter of 2007. The increase is primarily                due to an increase in expenditures related to travel trade shows,                Red                Carpet Days, and other marketing events that we                held. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $6,242,058 to $18,559,254 in                the                third quarter of 2008 from $12,317,196 in the third quarter of 2007,                reflecting an increase of 50.7%. As a percentage of total net revenues,                these expenses were 43.3% in 2008 and 30.9% in 2007. The increase                in                general and administrative expense in 2008 is primarily attributable                to                the costs associated with the ongoing implementation of new business                strategies company-wide and to a lesser extent the growth of our                infrastructure. The increases year over year relate primarily                to: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Salaries                and benefits increased by $1.9 million primarily as a result of additional                staffing requirements at the home office directly related to the                increased                sales of online travel stores and continuing renewals of RTAs as                well as                salary increases of existing staff.  |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Reserve                on slow moving or obsolete inventory of approximately                $735,000. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | § | Bad                debt expense related to advances and notes receivable to the Company’s                directors increased by approximately $240,000 compared to the same                period                in 2007. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Legal                fees of  $556,880 resulting from the Company’s defense against                the suit filed by the California Attorney General’s office. We expect a                portion of these fees to be reimbursed by our insurance                carriers. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Net                expenses incurred as a result of our National Convention increased                $3.6                million compared to the same period in                2007. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**BUSINESS      SEGMENTS**

**Marketing**

| Three                months ended September 30, |   | 2008   |       | 2007   |   | Change     |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                            |   |   |       |   |   |       |   |
| Net                revenues                     |   | $      | 34,759,960 |   | $      | 34,162,402 |   |   | 1.7 | % |
|                                            |   |   |       |   |   |       |   |   |   |   |
| Operating                expenses               |   | $      | 33,291,722 |   | $      | 30,620,064 |   |   | 8.7 | % |
|                                            |   |   |       |   |   |       |   |   |   |   |
| Income                from operations           |   | $      | 1,468,238  |   | $      | 3,542,338  |   |   | (58.6 | )% |

**Net      Revenues**

|  | · | Online                  travel store sales increased $1,205,560 or 10.8% in the third quarter                  of                  2008 to $12,405,988 from the $11,200,428 reported in the comparable                  prior                  year quarter. While we have experienced a decrease in the actual                  number of                  stores sold for the three months ended September 30, 2008 to 15,857                  from                  38,032 in the prior year period, the revenue recognized actually                  increased                  due to the recognition of previously deferred new store sales from                  periods                  with higher volumes of new store sales. In addition, the average                  amount of                  recognized revenue from each store sale increased to $449.95 in                  the third quarter of 2008 from $446.69 in the comparable quarter in                  2007. We believe the decline in the number of new online travel                  store                  sales is attributable to the current economic downturn present                  in the                  United States. We anticipate slower growth in the coming months                  compared                  to what we have experienced in the past. However, with new marketing                  initiatives and enhanced/expanded services being added, we believe                  that we                  will see a stabilization of our sales and                  retention. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Monthly                renewal fees increased $576,579 or 3.3% in the third quarter of 2008                to                $18,067,421 from the $17,490,842 reported in the comparable prior                year                quarter. The increase is in direct relation to the number of active                paying                RTAs. The weighted average of paying RTAs per month increased from                112,837                for the three months ended September 30, 2007 to 121,101 for the                same                period in 2008. We anticipate slower growth in the coming months                compared                to what we have experienced in the past. However, with new marketing                initiatives and enhanced/expanded services being added, we believe                that we                will see a stabilization of our sales and retention. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Training                programs and marketing materials revenue decreased $1,843,333 or                40.8% in                the third quarter of 2008 to $2,677,641 from $4,520,974 in the comparable                prior year quarter. The decrease was primarily due to a reduction                in sales                of magazine and sales aids, partially due to a reduction in the number                of                participants in the magazine Autoship Program, linked to the $6,000                Guarantee Program. We expect this trend to continue into the early                part of                2009. Also contributing to the decrease was a reduction in the number                of                paying attendees at training events, partially due to a revamping                of the                CRTA program. We expect this trend to change as we roll out a new                training                program, which we believe will increase the number of paid participants                in                these training programs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other                income increased in the third quarter of 2008 as compared to 2007                by                $658,752 or 69.3% to $1,608,910 from $950,158 in the comparable prior                year                quarter. The increase is primarily due to an increase in the number                of                paid attendees at the National Convention in 2008 as compared to                the 2007                National Convention |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses**

|   | · | Marketing                commissions decreased by $3,838,719 or 18.6% in the third quarter                of 2008                to $16,765,206 from $20,603,925 in the third quarter of 2007. This                decrease is primarily due to a forfeiture estimate of approximately                $3.6                million related to the second anniversary tranche of the one-time                Sales                Director restricted stock award vesting in January 2009. Due to the                decline in new sales and the increase in deactivations, management                believes it is probable that the vesting criteria required for the                second                anniversary tranche of the one-time restricted stock award will not                be met                as of the next vesting date - January 2, 2009. This decrease is also                a                result of a decline in new store sales resulting in a decrease in                the                average commission paid out on each new on-line store sale. As our                new                sales decline, the amount of leadership and dream bonuses paid also                decreases, which are included in the calculation to determine the                average                commission paid on each new sale. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Depreciation                and amortization was $376,095 in the third quarter of 2008, compared                to                $230,115 in the corresponding quarter of 2007. The increase in                depreciation and amortization is primarily attributable to the new                additions related to our current headquarters building and assets                related                to the growth of our                infrastructure. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing                and selling expenses increased by $433,147 or 80.9% to $968,411 from                $535,264 reported in the third quarter of 2007. The increase is primarily                due to an increase in expenditures related to Red Carpet Days and                other                marketing events held by the                Company. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $5,931,250 or 64.1% to $15,182,010                in the third quarter of 2008 from $9,250,760 in the third quarter                of 2007.                As a percentage of total marketing net revenues, these expenses were                43.7%                in 2008 and 27.1% in 2007. The increase in general and administrative                expense in 2008 is primarily attributable to the costs associated                with the                ongoing implementation of new business strategies and to a lesser                extent                the growth of our infrastructure. The increases year over year relate                primarily to: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Salaries                and benefits increased by $1.6 million primarily as a result of additional                staffing requirements at the home office directly related to the                increased                sales of online travel stores and continuing renewals of RTAs as                well as                salary increases of existing                staff.  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Reserve                on slow moving or obsolete inventory of approximately                $735,000. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | § | Bad                debt expense related to advances and notes receivable to the Company’s                Sales Directors increased by approximately $240,000, as compared                to the                same period in 2007. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Net                expenses incurred as a result of our National Convention increased                $3.6                million compared to the same period of                2007. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Travel**

| Three                months ended September 30, |   | 2008   |      | 2007   |   | Change    |   |
|-------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
|                                            |   |   |      |   |   |      |   |
| Net                revenues                     |   | $      | 8,045,957 |   | $      | 5,706,840 |   |   | 41.0 | % |
|                                            |   |   |      |   |   |      |   |   |   |   |
| Operating                expenses               |   | $      | 6,343,567 |   | $      | 4,200,094 |   |   | 51.0 | % |
|                                            |   |   |      |   |   |      |   |   |   |   |
| Income                from operations           |   | $      | 1,702,390 |   | $      | 1,506,746 |   |   | 13.0 | % |

**Net      Revenues**

|   | · | Travel                commissions and services for the third quarter of 2008 increased                $2,478,103 or 44.8%                to                $8,014,502                from the $5,536,399 reported in the comparable prior year quarter.                The                increase in travel commissions is attributable to the growth in gross                travel retail bookings driven by the number of customers utilizing                us as                their travel provider in 2008. Also contributing to the growth in                travel                commissions is the fact that we held more travel educational events/trade                shows in the third quarter of 2008 compared to 2007, which in turn                increases product awareness, making our RTAs more effective in selling                travel. As the increase in travel bookings occur, a preferred travel                bonus, or override, is given by certain vendors in addition to commission.                A portion of the anticipated bonus for the third quarter of 2008                has been                recorded as travel commission revenue with an offsetting receivable. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other                income decreased in the third quarter of 2008 compared to the prior                year                quarter by $138,986 or 81.5% to $31,455 from $170,441. The decrease                is                attributable to a decrease in car commission revenue along with a                decrease                in funds collected related to shipping and                handling. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses **

|   | · | Travel                commissions and other costs for the third quarter of 2008 increased                by                $1,264,550 or 32.3% to $5,177,571 from $3,913,021 reported in the                third                quarter of 2007. The increase is attributable to the increase in                the                number of customers utilizing us as their travel provider in 2008 due to                the growth in the number of active online travel stores compared                to the                prior period. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Depreciation                and amortization was $60,371 in the third quarter of 2008, compared                to                $3,188 in the corresponding quarter of 2007. The increase in depreciation                and amortization is primarily attributable to the new addition of                computer                software related to our expansion into Canada, and the addition of                infrastructure to support our growth in                travel. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing                and selling expenses increased by $392,718 to $400,759 from $8,041                reported in the third quarter of 2007. The increase is primarily                due to an                increase in costs incurred related to travel trade shows that the                Company                hosted along with an increase in costs incurred related to individual                reimbursements for unauthorized activities committed by the                Company’s RTA’s. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $429,022 to $704,866 in the                third                quarter of 2008 from $275,844 in the third quarter of 2007. The increase                is primarily due to an increase in overhead, partially due to our                expansion to Canada, along with an increase in expenditures related                to                travel training. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Parent**

| Three                months ended September 30, |   | 2008   |       | 2007   |   | Change     |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                            |   |   |       |   |   |       |   |
| Net                revenues                     |   | $      | 70,437     |   | $      | -          |   |   | n/a |   |
|                                            |   |   |       |   |   |       |   |   |   |   |
| Operating                expenses               |   | $      | 2,914,429  |   | $      | 2,861,532  |   |   | 1.8 | % |
|                                            |   |   |       |   |   |       |   |   |   |   |
| Loss                from operations             |   | $      | (2,843,992 | )      | $      | (2,861,532 | )      |   | (0.6 | )% |

**Net        Revenues**

| · | Other                  income represents third party use of the company                  jet. |
|--------|-----------------------------------------------------------------------------------------------|

**Operating      Expenses**

| · | Depreciation                and amortization was $242,051 in the third quarter of 2008, compared                to                $70,940 in the corresponding quarter of 2007. The increase in depreciation                and amortization is primarily attributable to the new additions related                to                our current headquarters building and assets related to the growth                of our                infrastructure. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | General                and administrative expenses decreased $118,214 to $2,672,378 in the                third                quarter of 2008 from $2,790,592 in the third quarter of 2007. The                decrease                is attributable to a reduction in non-capitalized consulting and                contract                labor fees of approximately $800,000 relating to the development                of our                new facility and various IT development projects offset                by: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Legal                fees of $556,880 resulting from the Company’s defense against the suit                filed by the California Attorney General’s office. We expect a portion of                these fees to be reimbursed by our insurance                carriers. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | An                impairment relating to the company jet, for which a sale agreement                had                been reached in principle for a value below the net book value of                approximately $310,000. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | An                increase in accounting fees of approximately $200,00 related primarily                to                Sarbanes-Oxley compliance consultant                fees. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Nine      months ended September 30, 2008 compared to nine months ended September 30,      2007**

**Net      Revenues **

|   | · | Online                travel store sales increased $6,563,785 or 19.6% in the first nine                months                2008 to $40,052,693 from the $33,488,908 reported in the comparable                prior                year period. The increase is due to increases in both the average                number                of store sales for which we are able to recognize revenue, along                with an                increase in the average amount of revenue recognizable for each store                sale. The average number of store sales for which we were able to                recognize revenue increased to 10,390 for the nine months ended September                30, 2008 from 7,887 in comparable period of 2007. In addition, the                average                amount of recognized revenue from each store sale increased to $449.95                in                2008 from $438.81 in 2007. We believe the decline in the number of                new                store sales is attributable to the current economic downturn present                in                the United States. We anticipate slower growth in the coming months                compared to what we have experienced in the past. However, with new                marketing initiatives and enhanced/expanded services being added,                we                believe that we will see a stabilization of our sales and retention. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Monthly                renewal fees increased $22,191,858 or 62.4% in the first nine months                of                2008 to $57,734,168 from the $35,542,310 reported in the comparable                prior                year period. The increase is in direct relation to the number of                active                paying RTAs. The weighted average of paying RTAs per month increased                from                94,108 in the first nine months of 2007 to 130,690 for the same period                in                2008. We anticipate slower growth in the coming months compared to                what we                have experienced in the past. However, with new marketing initiatives                and                enhanced/expanded services being added, we believe that we will see                a                stabilization of our sales and                retention. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Travel                commissions and services for the first nine months of 2008 increased                $8,232,122 or 59.1%                to                $22,162,946                from the $13,930,824 reported in the comparable prior year period.                The                increase in travel commissions is attributable to the growth in gross                travel bookings driven by the increase in the number of customers                utilizing us as their travel provider in 2008. Also contributing                to the                growth in travel agency commissions is the fact that we held more                travel                training events/trade shows during the first nine months of 2008                compared                to 2007, which in turn increases product awareness, making our RTAs                more                effective in selling travel. As the increase in travel bookings occur,                a                preferred travel bonus, or override, is given by certain vendors                in                addition to commission. A portion of the anticipated bonus for the                third                quarter of 2008 has been recorded as travel commission revenue with                an                offsetting receivable. Contributing to the increase in travel services                for                the nine months ended September 30, 2008, is the fact that we chartered                two cruise ships with revenues totaling                $1,048,192. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Training                programs and marketing materials revenue decreased $3,280,288 or                29.2% in                the first nine months of 2008 to $7,954,049 from $11,234,337 in the                comparable prior year period. The decrease was primarily due to a                reduction in sales of magazine and sales aids, partially due to a                reduction in the number of participants in the magazine Autoship                Program,                linked to the $6,000 Guarantee Program. We expect this trend to continue                into the early part of 2009. Also contributing to the decrease was                a                reduction in the number of paying attendees at training events, partially                due to a revamping of both the Association and CRTA programs during                the                first nine months of 2009. We expect this trend to change as we roll                out a                new training program, which we believe will increase the number of                paid                participants in these training                programs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other                income increased in the first nine months of 2008 as compared to                the first                nine months of 2007 by $751,899 or 43.7% to $2,474,375 from $1,722,476                in                the comparable prior year period. The increase is primarily due to                an                increase in the number of paid attendees at the National Convention                in                2008 as compared to the 2007 National Convention partially offset                by a                decrease in sales of products at travel training                events. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses **

|   | · | Marketing                commissions increased by $10,939,224 or 19.8% in the first nine months                of                2008 to $66,309,983 from $55,370,759 in the first nine months of                2007.                This increase is due to the increase year over year in active online                travel stores. The increase is also due to an increase in the number                of                Sales Directors in our 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 our Company which                entitles them to additional commissions on the number of new sales,                monthly renewals and the number of training events held. Also, the                introduction of Levels 6 and 7 Director’s Pool in first quarter 2008,                which consists of a small group of our top Sales Directors, increased                the                amount of the overall pool to be paid out monthly. This                Program was revamped during the month of October, along with dissolution                of the level 7 position in the program, which the company believes                will                lead in a reduction in costs incurred.  Partially offsetting                the increase is a forfeiture estimate of approximately $3.6 million                related to the second anniversary tranche of the one-time Sales Director                restricted stock award vesting in January 2009. Due to the decline                in new                sales and the increase in deactivations, management believes it is                probable that the vesting criteria required for the second anniversary                tranche of the one-time restricted stock award will not be met as                of the                next vesting date - January 2,                2009. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Travel                commissions and other costs for the first nine months of 2008 increased                by                $6,836,130 or 72.7% to $16,234,166 from $9,398,036 reported in the                first                nine months of 2007. The increase is primarily due to the expense                we                incurred in relation to the two charters that sailed during the second                quarter of 2008 which totaled $2,397,121. Additionally, the increase                is                attributable to the increase in the number of customers utilizing                us as                their travel provider in 2008 due to the growth in the number of                active                online travel stores. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Depreciation                and amortization was $1,890,346 in the first nine months of 2008,                compared                to $782,218 in the corresponding period of 2007. The increase in                depreciation and amortization is primarily attributable to the new                additions related to our current headquarters building and assets                related                to the growth of our infrastructure as well as the additions of computer                software related to our expansion into                Canada. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing                and selling expenses increased by $1,158,169 or 36.9% to $4,293,044                from                $3,134,875 reported in the first nine months of 2007. The increase                is                primarily due to an increase in expenditures related to travel trade                shows, Red Carpet Days, and other marketing events that we held. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $19,275,001 to $45,002,262                in the                first nine months of 2008 from $25,727,261 in the first nine months                of                2007, reflecting an increase of 74.9%. As a percentage of total net                revenues, these expenses were 34.5% in the first nine months of 2008                and                26.8% in the comparable prior year period. The increase in general                and                administrative expense in 2008 is primarily attributable to the costs                associated with the ongoing implementation of new business strategies                company-wide and to a lesser extent the growth of our infrastructure.                The                increases year over year relate primarily                to: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Salaries                and benefits increased by $6.6 million primarily as a result of additional                staffing requirements at the home office directly related to the                increased                sales of online travel stores and continuing renewals of RTAs as                well as                salary increases of existing staff.   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Legal                fees increased $1.5 million as a result of work done relating to                the                Canadian expansion, and an increase in expenses surrounding general                compliance, both domestic and international as well as $556,880 resulting                from the Company’s defense against the suit filed by the California                Attorney General’s office. We expect a portion of these fees to be                reimbursed by our insurance                carriers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Sarbanes-Oxley                compliance consultant fees of approximately $470,000. Approximately                $190,000 of this expense related to fiscal year 2007 testing performed                in                2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Building                overhead increased approximately $1.6 million due to the increase                in                employees, and number of locations at which we have                employees. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Sales                and use tax expense of $828,115. |
|--------|--------|-------------------------------------------------------|
|   | § | Management              service fees of $1.3 million. |
|--------|--------|-------------------------------------------------------|

|   | § | Contract                labor increased approximately $300,000, partially due to support                costs                related to the implementation of SAP along with other IT                projects. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Bad                debt expense increased by $675,413 to $861,887 in the first nine                months of                2008 from $186,473 reported for the first nine months of 2007 due                to the                write-off of $311,332 in deposits related to a terminated acquisition                along with reserves against advances and notes receivable that had                been                made to our Sales Directors. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Marketing                event costs for top Sales Directors in our Company of                $831,979. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | § | Equity                compensation of $510,000 for certain marketing                services. |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | § | Net                expenses incurred as a result of our National Convention increased                $3.6                million compared to the same period in                2007. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Increase                in shipping and postage costs of approximately $430,000 due to an                increase                in both quantity of checks and packages shipped along with an increase                in                shipping and postage rates. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Accounting                fees increased approximately $400,000 due to an increase in expenses                surrounding general compliance both international and                domestic. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Reserve                on slow moving or obsolete inventory of approximately                $1,260,000. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | § | Impairment                of the company jet of approximately                $310,000. |
|--------|--------|----------------------------------------------------------------------------------------|

----

**BUSINESS      SEGMENTS **

**Marketing**

| Nine                months ended September 30, |   | 2008   |        | 2007   |   | Change     |   |
|------------------------------------------------|--------|--------|-------------|--------|--------|------------|--------|
|                                           |   |   |        |   |   |       |   |
| Net                revenues                    |   | $      | 107,624,352 |   | $      | 81,203,985 |   |   | 32.5 | % |
|                                           |   |   |        |   |   |       |   |   |   |   |
| Operating                expenses              |   | $      | 105,237,545 |   | $      | 78,169,249 |   |   | 34.6 | % |
|                                           |   |   |        |   |   |       |   |   |   |   |
| Income                from operations          |   | $      | 2,386,807   |   | $      | 3,034,736  |   |   | (21.4 | )% |

**Net      Revenues**

|   | · | Online                travel store sales increased $6,563,785 or 19.6% in the first nine                months                2008 to $40,052,693 from the $33,488,908 reported in the comparable                prior                year period. The increase is due to increases in both the average                number                of store sales for which we are able to recognize revenue, along                with an                increase in the average amount of revenue recognizable for each store                sale. The average number of store sales for which we were able to                recognize revenue increased to 10,390 for the nine months ended September                30, 2008 from 7,887 in comparable period of 2007. In addition, the                average                amount of recognized revenue from each store sale increased to $449.95                in                2008 from $438.81 in 2007. We believe the decline in the number of                new                store sales is attributable to the current economic downturn present                in                the United States. We anticipate slower growth in the coming months                compared to what we have experienced in the past. However, with new                marketing initiatives and enhanced/expanded services being added,                we                believe that we will see a stabilization of our sales and retention. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Monthly                renewal fees increased $22,191,858 or 62.4% in the first nine months                of                2008 to $57,734,168 from the $35,542,310 reported in the comparable                prior                year period. The increase is in direct relation to the number of                active                paying RTAs. The weighted average of paying RTAs per month increased                from                94,108 in the first nine months of 2007 to 130,690 for the same period                in                2008. We anticipate slower growth in the coming months compared to                what we                have experienced in the past. However, with new marketing initiatives                and                enhanced/expanded services being added, we believe that we will see                a                stabilization of our sales and retention. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Training                programs and marketing materials revenue decreased $3,280,288 or                29.2% in                the first nine months of 2008 to $7,954,049 from $11,234,337 in the                comparable prior year period. The decrease was primarily due to a                reduction in sales of magazine and sales aids, partially due to a                reduction in the number of participants in the magazine Autoship                Program,                linked to the $6,000 Guarantee Program. We expect this trend to continue                into the early part of 2009. Also contributing to the decrease was                a                reduction in the number of paying attendees at training events, partially                due to a revamping of both the Association and CRTA programs during                the                first nine months of 2009. We expect this trend to change as we roll                out a                new training program, which we believe will increase the number of                paid                participants in these training                programs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other                income increased in the first nine months of 2008 compared to 2007                by                $945,012 from $938,430 in 2007 to $1,883,442 in 2007. The increase                is                primarily due to an increase in the number of paid attendees at the                National Convention in 2008 as compared to the 2007 National                Convention. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses**

|   | · | Marketing                commissions increased by $10,939,224 or 19.8% in the first nine months                of                2008 to $66,309,983 from $55,370,759 in the first nine months of                2007.                This increase is due to the increase year over year in active online                travel stores. The increase is also due to an increase in the number                of                Sales Directors in our 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 our Company which                entitles them to additional commissions on the number of new sales,                monthly renewals and the number of training events held. Also, the                introduction of Levels 6 and 7 Director’s Pool in first quarter 2008,                which consists of a small group of our top Sales Directors, increased                the                amount of the overall pool to be paid out monthly. This                program was revamped during the month of October, along with dissolution                of the level 7 position in the program, which the company believes                will                lead in a reduction in costs incurred.  Partially offsetting                the increase is a forfeiture estimate of approximately $3.6 million                related to the second anniversary tranche of the one-time Sales Director                restricted stock award vesting in January 2009. Due to the decline                in new                sales and the increase in deactivations, management believes it is                probable that the vesting criteria required for the second anniversary                tranche of the one-time restricted stock award will not be met as                of the                next vesting date - January 2, 2009. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Depreciation                and amortization was $1,036,155 in the first nine months of 2008,                compared                to $577,605 in the corresponding quarter of 2007, reflecting an increase                of 79.4%. The increase in depreciation and amortization is primarily                attributable to the new additions related to our current headquarters                building and assets related to the growth of our                infrastructure. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing                and selling expenses increased by $761,760 or 25.5% to $3,743,539                from                $2,981,779 reported in the first nine months of 2007. The increase                was                primarily associated with an increase in costs incurred to host various                marketing events including, Red Carpet Days, along with an increase                in the                amount spent on various marketing                services. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $14,908,762 to $34,147,868                in the                first nine months of 2008 from $19,239,106 in the first nine months                of                2007, reflecting an increase of 77.5%. As a percentage of total marketing                net revenues, these expenses were 31.7% in 2008 and 23.7% in 2007.                The                increase in general and administrative expense in 2008 is primarily                attributable to the growth in the costs associated with the ongoing                implementation of new business strategies and to a lesser extent                the                growth of our infrastructure. The increases year over year relate                primarily to: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Salaries                and benefits increased by $6.5 million primarily as a result of additional                staffing requirements at the home office directly related to the                increased                sales of online travel stores and continuing renewals of RTAs as                well as                salary increases of existing                staff.   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Management                service fees of $1.3 million. |
|--------|--------|---------------------------------------------------------|

|   | § | Reserve                on slow-moving or obsolete inventory of approximately                $1,260,000. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | § | Building                overhead increased approximately $1.0 million due to the increase                in                employees, and number of locations at which we have                employees. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Sales                and use tax expense of $828,115. |
|--------|--------|-------------------------------------------------------|

|   | § | Bad                debt expense increased by $319,082 to $505,555 in the first nine                months of                2008 from $186,473 reported for the first nine months of 2007 due                to our                recording of reserves related to advances and notes receivable that                had                been made our Sales Directors. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Marketing                event costs for top Sales Directors in our Company of                $831,979. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | § | Net                expenses incurred as a result of our National Convention increased                $3.6                million compared to the same period in                2007. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | § | Legal                fees increased by approximately $250,000 as a result of work done                relating                to the Canadian expansion and an increase in expenses surrounding                general                compliance, both domestic and                international. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | § | Increase                in shipping and postage costs of approximately $380,000 due to an                increase                in both quantity of checks and packages shipped along with an increase                in                shipping and postage rates. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Travel**

| Nine                months ended September 30, |   | 2008   |       | 2007   |   | Change     |   |
|------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                           |   |   |       |   |   |       |   |
| Net                revenues                    |   | $      | 22,683,442 |   | $      | 14,714,470 |   |   | 54.2 | % |
|                                           |   |   |       |   |   |       |   |   |   |   |
| Operating                expenses              |   | $      | 18,633,608 |   | $      | 10,517,666 |   |   | 77.2 | % |
|                                           |   |   |       |   |   |       |   |   |   |   |
| Income                from operations          |   | $      | 4,049,834  |   | $      | 4,196,804  |   |   | (3.5 | )% |

**Net      Revenues**

|   | · | Travel                commissions and services for the first nine months of 2008 increased                $8,232,122 or 59.1%                to                $22,162,946                from the $13,930,824 reported in the comparable prior year period.                The                increase in travel commissions is attributable to the growth in gross                travel bookings driven by the increase in the number of customers                utilizing us as their travel provider in 2008. Also contributing                to the                growth in travel agency commissions is the fact that we held more                travel                training events/trade shows during the first nine months of 2008                compared                to 2007, which in turn increases product awareness, making our RTAs                more                effective in selling travel. As the increase in travel bookings occur,                a                preferred travel bonus, or override, is given by certain vendors                in                addition to commission. A portion of the anticipated bonus for the                third                quarter of 2008 has been recorded as travel commission revenue with                an                offsetting receivable. Contributing to the increase in travel services                for                the nine months ended September 30, 2008, is the fact that we chartered                two cruise ships with revenues totaling                $1,048,192. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other                income decreased in the first nine months of 2008 as compared to                2007 by                $263,150 or 33.6% to $520,496 from $783,646 reported in the first                nine                months of 2007. The decrease is attributable to a decrease in sales                of                products at travel training                events. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Operating      Expenses **

|   | · | Travel                commissions and other costs for the first nine months of 2008 increased                by                $6,836,130 or 72.7% to $16,234,166 from $9,398,036 reported in the                first                nine months of 2007. The increase is primarily due to the expense                we                incurred in relation to the two charters that sailed during the second                quarter of 2008 which totaled $2,397,121. Additionally, the increase                is                attributable to the increase in the number of customers utilizing                us as                their travel provider in 2008 due to the growth in the number of                active                online travel stores. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Depreciation                and amortization was $169,632 in the first nine months of 2008, compared                to $4,250 in the corresponding period of 2007. The increase in                depreciation and amortization is primarily attributable to the new                addition of computer software related to our expansion into Canada,                and                the overall growth in our infrastructure to support our                growth. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing                and selling expenses increased by $358,830 to $511,926 from $153,096                reported in the first nine months of 2007. The increase is primarily                due                to an increase in costs incurred related to travel trade shows that                the                Company hosted along with an increase in costs incurred related to                individual reimbursements for fraud committed by the Company’s RTA’s. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $755,600 to $1,717,884 in the                first                nine months of 2008 from $962,284 in the first nine months of 2007.                As a                percentage of total travel net revenues, these expenses were 7.6%                in 2008                and 6.5% in 2007. The increase in general and administrative expense                in                2008 is primarily attributable to costs related to the expansion                into                Canada, including related software and training costs, along with                an                increase in expenditures related to travel training in the                U.S. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Parent**

| Nine                months ended September 30, |   | 2008   |       | 2007   |   | Change     |   |
|------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                           |   |   |       |   |   |       |   |
| Net                revenues                    |   | $      | 70,437     |   | $      | 400        |   |   | n/m |   |
|                                           |   |   |       |   |   |       |   |   |   |   |
| Operating                expenses              |   | $      | 9,858,648  |   | $      | 5,726,234  |   |   | 72.2 | % |
|                                           |   |   |       |   |   |       |   |   |   |   |
| Loss                from operations            |   | $      | (9,788,211 | )      | $      | (5,725,834 | )      |   | 70.9 | % |

**Net      Revenues**

|  | · | Other                    income increased approximately $70,000 as a result of third party                    use of                    the company jet. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

**Operating      Expenses**

|   | · | Depreciation                and amortization was $684,559 in the first nine months of 2008, compared                to $200,363 in the corresponding first nine months of 2007. The increase                in depreciation and amortization is primarily attributable to the                renovations to our current headquarters, which have increased their                depreciable value. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General                and administrative expenses increased $3,610,639 to $9,136,510 in                the                first nine months of 2008 from $5,525,871 in the first nine months                of                2007. As a percentage of total net revenues, the expenses were 7.0%                in                2008 and 5.8% in 2007. The increase in general and administrative                expense                in 2008 is attributable to: |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Sarbanes-Oxley                compliance consultant fees of approximately $470,000. Approximately                $190,000 of this expense related to fiscal year 2007 testing performed                in                2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Equity                compensation of $510,000 for certain marketing                services. |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | § | Legal                fees increased by approximately $1.2                million as a result of work done relating to the Canadian expansion,                and                an increase in expenses surrounding general compliance, both domestic                and                international as well as $556,880 resulting from the Company’s defense                against the suit filed by the California Attorney General’s office. We                expect a portion of these fees to be reimbursed by our insurance                carriers. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | § | Building                overhead increased approximately                $300,000. |
|--------|--------|-----------------------------------------------------------------------------------|

|   | § | Insurance                costs increased approximately $200,000 as a result of an increase                in                corporate coverage. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Variability      of Results**

**Liquidity      and Capital Resources**

| Nine                months ended September 30, |   |  2008   |       | 2007    |   |
|------------------------------------------------|--------|--------------|------------|---------|--------|
|                                           |   |    |       |    |   |
| Net                cash provided by (used in): |   |         |       |    |   |   |   |
| Operating                activities            |   | $            | 6,143,938  |    | $      | 10,276,235 |   |
| Investing                activities            |   |         | (7,955,552 | )  |   | (6,161,732 | ) |
| Financing                activities            |   |         | 669,930    |    |   | 352,718 |   |
|                                           |   |         |       |    |   |   |   |
| Net                increase (decrease) in cash |   | $            | (1,141,684 | )       | $      | 4,467,221 |   |

----

**Off-Balance      Sheet Arrangements**

**New      Accounting Pronouncements**

----

*“*

* *

**Application      of Critical Accounting Policies**

----

**Forward-Looking      Statements**

|   | · | Our                ability to attract and maintain a sufficient number of Affiliates,                Reps                and RTAs; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                dependence upon a direct sales model to distribute our                products; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | Activities                of our independent Affiliates, Reps and                RTAs; |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | Our                planned expansion into international markets, including delays in                commencement of sales in any new market, delays in compliance with                local                marketing or other regulatory requirements, or changes in target                markets; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Rigorous                government scrutiny of multilevel marketing                practices; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | Potential                political events, economic events, natural disasters or other events                that                may negatively affect economic                conditions; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Potential                effects of adverse publicity regarding the Company, its Affiliates,                Reps                and RTAs or the direct selling marketing                industry; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Reliance                on key management personnel; |
|--------|--------|------------------------------------------------------|

|   | · | Extensive                government regulation of the Company’s products, services and direct                selling system; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Potential                inability to sustain or manage growth, including the failure to continue                to develop new products; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An                increase in the amount of Affiliate, Rep and RTA                incentives; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | Our                reliance on the use of information                technology; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | The                adverse effect of the loss of a high-level sponsoring Rep, together                with a                group of leading Reps in that person’s                downline; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                loss of market share or Affiliates, Reps or RTAs to competitors;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | The                outcome of regulatory and litigation                matters. |
|--------|--------|---------------------------------------------------------------------------------|

----

**Item      3.**

**Quantitative      and Qualitative Disclosures About Market Risk**

**Item      4T.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      1A. Risk Factors.**

----

**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.**

**Item      5.**

**Other      Information.**

** **

**Item      6.**

**Exhibits**

| 10.1   | Sales                Contract, effective as of November 6, 2008, by and between Prestige                Management Services, LLC and the Company with respect to that real                property and certain office equipment located at One Country Club                View,                Edwardsville, Illinois 62025, incorporated by reference to the Company’s                Current Report on Form 8-K, Exhibit 10.1, filed with the SEC on November                12, 2008. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.2   | Offer                to Purchase, effective as of November 12, 2008, by and between Espectra                Aviation Inc. to sell a 1980 Learjet 35A aircraft.                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.1   | Chief                Executive Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a)                of                the Securities Exchange Act of 1934, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.2   | Chief                Financial Officer Certification pursuant to Rule 13a-14(a) or 15d-14(a)                of                the Securities Exchange Act of 1934, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.1*  | Chief                Executive Officer Certification pursuant to Rule 13a-14(b) of the                Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.2*  | Chief                Financial Officer Certification pursuant to Rule 13a-14(b) of the                Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                           |

----

**SIGNATURES**

| **YTB                International, Inc**              |
|--------------------------------------------------------|
|                                                   |
| /s/                J. Scott Tomer       |
| J.                Scott Tomer                          |
| Director                and Chief Executive Officer    |
| Dated:                November 14, 2008                |
|                                                   |
|                                                   |
| /s/                John D. Clagg        |
| John                D. Clagg                           |
| Chief                Financial Officer                 |
| Dated:                November 14, 2008                |

----