**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB/A**


**Amendment
      No. 1**





x
      Quarterly Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934





**For
      the quarterly period ended June 30, 2004.**





o Transition
      Report Pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of 1934




For
      the
      transition period from _______________ to ______________





Commission
      File Number: 0-18412





**REZCONNECT
      TECHNOLOGIES, INC.**


**(now
      known as YTB International, Inc.)**


(Exact
      Name of Small Business Issuer as Specified in Its Charter)





**New
      York**


(State
      or
      Other Jurisdiction of Incorporation or Organization)





**11-2602120**


(IRS
      Employer Identification Number)





**1901 East
      Edwardville Road**


**Wood
      River, IL 62095**


(Address
      of Principal Executive Offices)





**(201)
      567-8500**


(Registrant’s
      Telephone Number, Including Area Code)




___________________________________________
 (Former
        Name, Former Address and Former Fiscal Year,


if
      Changed Since Last Report)





Indicate
      by check mark whether the issuer (1) has filed all reports required to be filed
      by Section 13 or 15 (d) of the Exchange Act of 1934 during the past 12 months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90days. Yes o No x.





Indicate
      the number of shares outstanding of each of the issuer’s classes of common stock
      as of the latest practicable date:





As
      of
      November 30, 2006 there were 27,690,454 shares, $.001 par value, of the
      Registrant’s common stock outstanding.








Transitional
      Small Business Disclosure Format (check one) Yes o No x







EXPLANATORY
      NOTE





YTB
      International, Inc. (formerly REZconnect Technologies, Inc., the “former
      REZconnect”) ( “YTB” or the “Company”) is filing this Amendment No. 1 to Form
      10-QSB for the three and six months ended June 30, 2004 to reflect the
      restatement of its audited consolidated financial statements for the years
      ended
      December 31, 2004 and December 31, 2003 and the three and six months ended
      June
      30, 2004. The restatements arose from actions taken by the Company when it
      became aware of the lack of independence with the Company’s former independent
      accounting firm. On January 6, 2006, the Company self-reported to the staff
      of
      the United States Securities and Exchange Commission ( the “SEC” or the “Staff”)
      that it became aware that the Company’s previous independent accounting firm,
      Dischino & Associates, P.C. (“Dischino”) had provided prohibited services
      and appeared to have not followed the standards of the Public Company Accounting
      Oversight Board (“PCAOB”). On January 19, 2006, the Company initiated an
      internal inquiry into those accounting-related matters which the Company
      disclosed in the Current Report on Form 8-K filed with the SEC on January 19,
      2006. Based on the findings of the inquiry, on February 6, 2006, the Company’s
      management and the Audit Committee of the Company’s Board of Directors concluded
      that the Company needed to restate certain of the Company’s financial statements
      and that the financial statements for the years ended December 31, 2004 and
      2003
      included in the Company’s Annual Report on Form 10-KSB/A No. 5 for the year
      ended December 31, 2004 and the financial statements included in the Company’s
      Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004, June
      30,
      2004, September 30, 2004, March 31, 2005, June 30, 2005 and September 30, 2005
      could not be relied upon.





During
      February 2006, the Company began the restatement of the affected years’ and
      quarters’ financial statements. During
      the course of the review of 2003 and 2004 annual and quarterly reports, certain
      other errors were discovered, resulting from a lack of proper internal controls
      and procedures. These findings and the related restatement impact are described
      fully in Item 3 of this document as well as Note 12 in the accompanying Notes
      to
      Condensed Financial Statements and Note 14 included in the Company’s Annual
      Report filed on Form 10-KSB/A No. 6 for the year ended December 31,
      2004.





The
      Company’s Chief Executive Officer and Chief Financial Officer have considered
      the errors giving rise to this restatement and have determined that the errors
      resulted, in part, from a finding of material weaknesses in the Company’s
      internal disclosure controls and procedures. This conclusion was discussed
      and
      concurred with by both the Audit Committee and UHY LLP, the Company’s current
      independent registered public accounting firm. The deficient controls and
      procedures resulted in the improper selection and application of generally
      accepted accounting principles, the improper recognition of revenue and expenses
      primarily related to the accounting treatment for the sale of the Company’s
      online travel stores, improper recording of share-based transactions and the
      improper development of accounting estimates. The Company has and is continuing
      to initiate policies and procedures designed to enhance internal controls
      related to financial reporting and disclosure.





Accordingly,
      the Company is filing this amendment to its Form 10-QSB for the three and six
      months ended June 30, 2004 for the purpose of:





·
            amending
                and restating Item 1 “Financial Statements”;





·
            amending
                and restated Item 2 “Management’s Discussion and Analysis or Plan of
                Operation”;





·
            amending
                and restating Item 3 “Controls and Procedures” and





·
            amending
                and restating Item 6 “Exhibits”.





**Additionally,
      this Form 10-QSB/A does not purport to provide a general update or discussion
      of
      any other developments at the**  **Company
      subsequent to the original filing, unless specifically stated otherwise in
      this
      report.**





As
      a
      result of this restatement, updated certifications pursuant to Section 302
      and
      Section 906 of the Sarbanes-Oxley Act of 2002 have been re-filed and included
      as
      exhibits to this amended Form 10-QSB.




1





**REZCONNECT
      TECHNOLOGIES, INC.**


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


**Three
      and Six months ended June 30, 2004**





PAGEPART
                I - FINANCIAL INFORMATIONItem
                1.Financial
                Statements (Unaudited)Condensed
                Balance SheetsJune
                30, 2004 (Unaudited) and December 31, 2003
            
            
            3Condensed
                Statements of Operations (Unaudited)Six
                months ended June 30, 2004 and 2003
            
            
            4Condensed
                Statements of Operations (Unaudited)Three
                months ended June 30, 2004 and 2003
            
            
            5Condensed
                Statement of Changes in Stockholders’ Equity (Unaudited)Six
                months ended June 30, 2004
            
            
            6Condensed
                Statements of Cash Flows (Unaudited)Six
                months ended June 30, 2004 and 2003
            
            
            7Notes
                To Condensed Financial Statements (Unaudited)
            
            
            8Item
                2.Management’s
                Discussion and Analysis or of Financial Condition and Results of
                Operations
            
            
            20Item
                3.Controls
                and Procedures
            
            
            24PART
                II - OTHER INFORMATIONItem
                6.Exhibits
            
            
            27Signatures
            
            
            28Certifications





2


**REZCONNECT
      TECHNOLOGIES, INC.**


**Condensed
      Balance Sheets**





(RESTATED)
              June
                30, 2004
              (Unaudited)
            
            (RESTATED)
              December
                31, 2003ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            68,489
            
            $
            48,120Available-for-sale
                securities
            
            
            684,927
            
            
            732,135Accounts
                receivable (less allowance for doubtful accounts of$164,857
                in 2004 and $173,909 in 2003)
            
            
            102,328
            
            
            84,500Other
                prepaid expenses and current assets
            
            
            81,001
            
            
            4,400Total
                current assets
            
            
            936,745
            
            
            869,155Property
                and equipment, net
            
            
            311,445
            
            
            519,075Other
                assets (net of accumulated amortization of $16,500 in 2004and
                $11,000 in 2003)
            
            
            238,815
            
            
            228,672TOTAL
                ASSETS
            
            $
            1,487,005
            
            $
            1,616,902LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Current
                maturities of long-term debt
            
            $
            18,618
            
            $
            18,470Accounts
                payable and accrued expenses
            
            
            409,868
            
            
            307,839Total
                current liabilities
            
            
            428,486
            
            
            326,309Other
                long-term liabilities:Long
                term debt, less current maturities
            
            
            295,132
            
            
            302,700Deferred
                revenue
            
            
            23,652
            
            
            6,538Other
                liabilities
            
            
            23,326
            
            
            26,266Total
                other long-term liabilities
            
            
            342,110
            
            
            335,504TOTAL
                LIABILITIES
            
            
            770,596
            
            
            661,813STOCKHOLDERS'
                EQUITYCommon
                stock, par value $001; 20,000,000 shares authorized11,351,845
                shares in 2004 and 10,606,314 shares in 2003 issued andoutstanding
            
            
            11,352
            
            
            10,606Additional
                paid-in capital
            
            
            6,764,856
            
            
            6,634,203Accumulated
                deficit
            
            
            (6,059,799
            )
            
            (5,689,720
            )TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            716,409
            
            
            955,089TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            1,487,005
            
            $
            1,616,902




*See
      accompanying notes to condensed financial statements.*


3


**REZCONNECT
      TECHNOLOGIES, INC.**


**Condensed
      Statements of Operations**


(Unaudited)





Six
                months ended(RESTATED)
              June
                30, 2004
            
            (RESTATED)
              June
                30, 2003NET
                REVENUESTravel
                commissions and services
            
            $
            732,025
            
            $
            515,699Online
                travel store sales and monthly fees
            
            
            232,215
            
            
            108,789Franchise
                service fees and other fees
            
            
            310,824
            
            
            432,998Other
            
            
            943
            
            
            5,864Total
                net revenues
            
            
            1,276,007
            
            
            1,063,350OPERATING
                EXPENSESTravel
                commissions
            
            
            672,678
            
            
            359,809Franchise
                services and products
            
            
            100,886
            
            
            139,502Depreciation
                and amortization
            
            
            213,130
            
            
            213,130General
                and administrative
            
            
            651,912
            
            
            552,638Total
                operating expenses
            
            
            1,638,606
            
            
            1,265,079LOSS
                FROM OPERATIONS
            
            
            (362,599
            )
            
            (201,729
            )OTHER
                INCOME (EXPENSE)Interest
                and dividend income
            
            
            15,798
            
            
            6,786Interest
                expense
            
            
            (23,278
            )
            
            (6,553
            )Total
                other income (expense)
            
            
            (7,480
            )
            
            233NET
                LOSS
            
            $
            (370,079
            )
            $
            (201,496
            )NET
                LOSS PER SHAREWeighted-average
                shares outstanding
            
            
            10,817,093
            
            
            10,226,136Net
                loss per share - basic and diluted
            
            $
            (0.03
            )
            $
            (0.02
            )




*See
      accompanying notes to condensed financial statements.*




4


**REZCONNECT
      TECHNOLOGIES, INC.**


**Condensed
      Statements of Operations**


(Unaudited)





Three
                months ended(RESTATED)
              June
                30, 2004
            
            (RESTATED)
              June
                30, 2003NET
                REVENUESTravel
                commissions and services
            
            $
            467,292
            
            $
            298,750Online
                travel store sales and monthly fees
            
            
            125,262
            
            
            56,807Franchise
                services fees and other fees
            
            
            168,622
            
            
            205,433Other
            
            
            -
            
            
            1,486Total
                net revenues
            
            
            761,176
            
            
            562,476OPERATING
                EXPENSESTravel
                commissions
            
            
            453,119
            
            
            237,703Franchise
                services and products
            
            
            50,307
            
            
            63,162Depreciation
                and amortization
            
            
            106,565
            
            
            106,565General
                and administrative
            
            
            370,906
            
            
            264,271Total
                operating expenses
            
            
            980,897
            
            
            671,701LOSS
                FROM OPERATIONS
            
            
            (219,721
            )
            
            (109,225
            )OTHER
                INCOME (EXPENSE)Interest
                and dividend income
            
            
            12,484
            
            
            270Interest
                expense
            
            
            (15,252
            )
            
            (3,060
            )Total
                other income (expense)
            
            
            (2,768
            )
            
            (2,790
            )NET
                LOSS
            
            $
            (222,489
            )
            $
            (112,015
            )NET
                LOSS PER SHARE:Weighted
                average shares outstanding
            
            
            10,970,189
            
            
            10,226,136Net
                loss per share - basic and diluted
            
            $
            (0.02
            )
            $
            (0.01
            )




*See
      accompanying notes to condensed financial statements.*


5





**REZCONNECT
      TECHNOLOGIES, INC.**


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


(Unaudited)




**Six
      months ended June 30, 2004 (RESTATED)**




Additional
            
            
            
            TotalCommon
                Stock
            
            Paid-In
            
            Accumulated
            
            Stockholders’Shares
            
            Amount
            
            Capital
            
            (Deficit)
            
            EquityBalance
                at January 1, 2004, as restated
            
            
            10,606,314
            
            $
            10,606
            
            $
            6,634,203
            
            $
            (5,689,720
            )
            $
            955,089Shares
                issued for services
            
            
            425,531
            
            
            426
            
            
            79,773
            
            
            -
            
            
            80,199Shares
                issued for employeecompensation
            
            
            320,000
            
            
            320
            
            
            50,880
            
            
            -
            
            
            51,200Net
                loss, as restated
            
            
            -
            
            
            -
            
            
            -
            
            
            (370,079
            )
            
            (370,079
            )Balance
                at June 30, 2004, as restated
            
            
            11,351,845
            
            $
            11,352
            
            $
            6,764,856
            
            $
            (6,059,799
            )
            $
            716,409




*See
      accompanying notes to condensed financial statements.*




6


**REZCONNECT
      TECHNOLOGIES, INC.**


**Condensed
      Statements of Cash Flows**


(Unaudited)





Six
                months ended(RESTATED)
              June
                30, 2004
            
            (RESTATED)
              June
                30, 2003CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (370,079
            )
            $
            (201,496
            )Adjustments
                to reconcile net loss to net cash provided by (used in)
              operating
                activities:Depreciation
                and amortization
            
            
            213,130
            
            
            213,130Shares
                issued for services
            
            
            80,199
            
            
            45,101Shares
                issued for employee compensation
            
            
            51,200
            
            
            15,487Shares
                issued for services subsequently surrendered
            
            
            -
            
            
            (48,527
            )Employee
                stock option expense
            
            
            -
            
            
            25,000Changes
                in operating assets and liabilities:Accounts
                receivable, net
            
            
            (17,828
            )
            
            (26,478
            )Other
                prepaid expenses and current assets
            
            
            (76,601
            )
            
            -Other
                assets
            
            
            1,471
            
            
            -Accounts
                payable and accrued expenses
            
            
            102,029
            
            
            6,615Other
                liabilities
            
            
            (2,940
            )
            
            (6,069
            )NET
                CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
            
            
            (19,419
            )
            
            22,763CASH
                FLOWS FROM INVESTING ACTIVITIES:Proceeds
                from sale of available-for-sale securities
            
            
            365,701
            
            
            119,473Purchases
                of available-for-sale securities
            
            
            (318,493
            )
            
            (3,822
            )Increase
                in notes receivable
            
            
            -
            
            
            (150,000
            )NET
                CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
            
            
            47,208
            
            
            (34,349
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Principal
                payments on debt
            
            
            (7,420
            )
            
            -NET
                CASH USED IN FINANCING ACTIVITIES
            
            
            (7,420
            )
            
            -NET
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            20,369
            
            
            (11,586
            )CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
            
            
            48,120
            
            
            63,318CASH
                AND CASH EQUIVALENTS AT END OF PERIOD
            
            $
            68,489
            
            $
            51,732SUPPLEMENTAL
                CASH FLOW INFORMATION:Interest
                paid
            
            $
            15,252
            
            $
            3,060SUPPLEMENTAL
                NON-CASH INVESTING AND FINANCING ACTIVITIES:Shares
                issued for services
            
            
            -
            
            $
            220,000Increase
                (decrease) in notes receivable and deferred revenue
            
            $
            17,114
            
            $
            (81,602
            )




*See
      accompanying notes to condensed financial statements.*




7


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




NOTE
      1
      - ORGANIZATION AND NATURE OF OPERATIONS




REZconnect
      Technologies, Inc. (the “Company”) was incorporated under the laws of the State
      of New York on December 4, 1981 under the original name of Playorena, Inc.
      The
      Company is a franchisor of traditional “brick and mortar” travel agencies, as
      well as internet-based travel-related services and technology offering
      proprietary reservation systems for the travel and entertainment industry.
      The
      Company provides internet-based travel-related services and technology, which
      offers proprietary reservation systems for the travel and entertainment
      industry, and is also a full-service provider of discount travel products and
      services to the leisure and small business traveler. The Company operates under
      various trade names, including “Global Travel Network” and “Travel Network
      Vacation Central,” as well as internet web sites “Bookmytravel.com,”
“REZconnect.com” and “RezCity.com.” The Company provides services to customers
      located primarily in the United States.




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





NOTE
      2
      - BASIS OF PRESENTATION





The
      Condensed Balance Sheet as of June 30, 2004, the related Condensed Statements
      of
      Operations for the three and six months ended June 30, 2004 and 2003, the
      Condensed Statement of Changes in Stockholders’ Equity for the six months ended
      June 30, 2004 and the Condensed Statements of Cash Flows for the six months
      ended June 30, 2004 and 2003, have been prepared without audit, pursuant to
      the
      rules and regulations of the Securities and Exchange Commission. Certain
      information and disclosures included in financial statements prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America have been condensed or omitted pursuant to such rules and
      regulations.





The
      condensed financial statements reflect all adjustments (consisting only of
      normal recurring accruals), which are, in the opinion of management, necessary
      for a fair presentation of the results for the interim periods presented. The
      condensed financial statements should be read in conjunction with the financial
      statements and notes thereto included in the Company’s 2004 Annual Report on
      Form 10-KSB/A No. 6 for the year ended December 31, 2004.





Certain
      balances have been reclassified to conform to the current year’s
      presentation.





The
      results of operations for the interim periods should not be considered
      indicative of results to be expected for the full year. The condensed balance
      sheet as of December 31, 2003 was derived from the audited financial statements
      for the year then ended included in the Company’s 2004 Annual Report on Form
      10-KSB/A No. 6 for the year ended December 31, 2004. The preparation of
      financial statements in conformity with accounting principles generally accepted
      in the United States of America requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities at the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Actual results could differ from those
      estimates.





NOTE
      3
      - PROPERTY PLANT AND EQUIPMENT





Property
      and equipment consists of the following:




(RESTATED)
            
            (RESTATED)June
                30, 2004
            
            December
                31, 2003Equipment
            
            $
            103,744
            
            $
            103,744Furniture
                and fixtures
            
            
            6,930
            
            
            6,930Capitalized
                software
            
            
            1,245,052
            
            
            1,245,0521,355,726
            
            
            1,355,726Less:
                Accumulated depreciation
            
            
            (1,044,281
            )
            
            (836,651
            )Property
                and equipment, net
            
            $
            311,445
            
            $
            519,075




8


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)





Depreciation
      and amortization expense on property and equipment was $103,815 and $103,815
      for
      the quarters ended June 30, 2004 and 2003, respectively and $207,630 and
      $207,630 for the six months ended June 30, 2004 and 2003,
      respectively.





As
      of
      June 30, 2004 and December 31, 2003, capitalized software development costs,
      net
      of accumulated amortization, totaled $311,445 and $519,075, respectively. For
      the quarters ended June 30, 2004 and 2003, the Company recorded amortization
      of
      capitalized software development costs of $103,815 and $103,815, respectively
      and $207,630 and $207,630 for the six months ended June 30, 2004 and 2003
      respectively.





NOTE
      4
      - FINANCING ARRANGEMENTS





Long-Term
      Debt





On
      January 11, 2002, as a result of the events of September 11, 2001, the Company
      borrowed $324,500 from the United States Small Business Administration (“SBA”)
      under its disaster relief program. Payments were to have initially commenced
      in
      January 2003. However, the SBA extended the commencement date until November
      2003. The loan is repayable via a monthly installment of $2,607, including
      interest at 4% per annum, through October 2017. The loan is personally
      guaranteed by the Company’s chief executive officer. The outstanding long-term
      debt balance as of June 30, 2004 and December 31, 2003 was $313,750 and
      $321,170, respectively.





NOTE
      5
      - COMMITMENTS AND CONTINGENCIES





Leases





The
      Company is obligated under an operating lease for the New Jersey office location
      which expires on April 30, 2008, to pay minimum annual rentals, currently at $44,170 per year
      plus real estate taxes and operating cost charges. In addition, the Company
      has
      entered into various operating lease agreements with Wal-Mart Stores, Inc.
      (“Wal-Mart”) for eight locations pursuant to a master lease agreement. The term
      of the individual location leases is two years with two options to extend the
      lease for one consecutive term of three years followed by one consecutive term
      of five years. The Company has also entered into sub-lease agreements with
      franchisees at these Wal-Mart locations. The subleases with the franchisees
      also
      have a two-year term with two options to extend the lease for one consecutive
      term of three years followed by one consecutive term of five years.





Following
      is a summary of net rental income (expense):





Three
                months ended
              (RESTATED)
            
            Six
                months ended
              (RESTATED)June
                30, 2004
            
            June
                30, 2003
            
            June
                30, 2004
            
            June
                30, 2003Sublease
                rental income
            
            $
            42,482
            
            $
            56,059
            
            $
            87,369
            
            $
            123,003Less
                minimum rental expense
            
            
            35,390
            
            
            52,234
            
            
            74,922
            
            
            118,074Net
                rental income
            
            $
            7,092
            
            $
            3,825
            
            $
            12,447
            
            $
            4,929





Employment
      agreements





The
      Company entered into a long-term employment agreement with Michael Y. Brent,
      the
      president, dated March 1, 2000. Under such agreement (which would have expired
      April 9, 2005 and subjects him to confidentiality, non-raid and non-compete
      provisions), Mr. Michael Y. Brent is paid, directly or indirectly, a combination
      of (i) a $200,000 salary and/or consulting fee with annual increases of 6%
      and
      (ii) options and/or warrants, determined by the Board acting as a Compensation
      Committee, based on the Company’s financial performance. Mr. Michael Y. Brent
      will continue to be subject to his confidentiality covenant and, for 3 years,
      his non-compete covenants. His estate also receives a benefit in the amount
      of
      one year's salary, upon Mr. Michael Y. Brent's death.


9


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




NOTE
      6
      - STOCK OPTIONS





As
      of
      June 30, 2004, the Company had a stock-based employee compensation plan which
      is
      described more fully in Note 8 of the Notes to Consolidated Financial Statements
      in the Company’s 2004 Annual Report on Form 10-KSB/A No. 6.  The Company
      accounts for the plan in accordance with APB No. 25, “Accounting For Stock
      Issued to Employees”, and related Interpretations.   In the first and
      second quarter of 2003, the Company recognized $12,500 in each quarter in
      compensation expense related to options granted with an exercise price less
      than
      the fair value of the underlying stock at the date of the grant. The following
      table illustrates the effect on net loss and loss per share if the Company
      had
      applied the fair value recognition provisions of SFAS No. 123, “Accounting for
      Stock-Based Compensation”.




(RESTATED)
              Three
                months ended June 30,
            
            (RESTATED)
              Six
                months ended June 30,2004
            
            2003
            
            2004
            
            2003Net
                loss - as reported
            
            $
            (222,489
            )
            $
            (112,015
            )
            $
            (370,079
            )
            $
            (201,496
            )Add:
                Stock-based compensation expenseincluded
                in reported net loss
            
            
            -
            
            
            12,500
            
            
            -
            
            
            25,000Less:
                Additional stock-based compensationexpense
                determined under fair value basedmethod
                for all awards
            
            
            (111
            )
            
            (2,750
            )
            
            (222
            )
            
            (5,500
            )Net
                loss - pro forma
            
            $
            (222,600
            )
            $
            (102,265
            )
            $
            (370,301
            )
            $
            (181,996
            )Net
                loss per share - basic and dilutedAs
                reported
            
            $
            (0.02
            )
            $
            (0.01
            )
            $
            (0.03
            )
            $
            (0.02
            )Pro
                forma
            
            $
            (0.02
            )
            $
            (0.01
            )
            $
            (0.03
            )
            $
            (0.02
            )




The
      fair
      value of each option is estimated on the date of grant using the Black-Scholes
      option pricing model with the following weighted-average assumptions used for
      grants in 2004 and 2003: risk-free interest rates of 2.9% and 3.5%,
      respectively: expected lives of 2 years; dividend yield of 0% and expected
      volatility of 75%.





NOTE
      7
      - STOCKHOLDERS’ EQUITY





In
      2002,
      the Company issued shares into escrow in satisfaction of an indemnity agreement
      reached with a former officer. During the first quarter of 2003, the number
      of
      shares needed to satisfy the indemnity agreement became known and shares
      originally issued were cancelled. The Company recorded a reduction in the escrow
      account in the amount of $48,527 and an equivalent reduction in common stock
      and
      paid in capital in the amount of $221 and $48,307, respectively.





On
      February 11, 2003, the Company entered into a Long-Term Web Servicing Agreement
      in exchange for the issuance of 1,000,000 shares of restricted stock which
      was
      approved and ratified by the Company’s Board of Directors. Specifically, the
      Company issued 800,000 restricted shares to YourTravelBiz, Inc. and 200,000
      restricted shares to YTB Travel and Cruises, Ltd. The issued shares were valued
      at $.22 per share for which the Company recorded $220,000 in deferred costs
      and
      a corresponding increase in common stock and paid in capital in the amount
      of
      $1,000 and $219,000, respectively.





During
      the first half of 2003, equity compensation in the amount of $45,101was recorded
      as a result of 205,000 shares issued as compensation for services to
      non-employees with an offsetting adjustment to common stock in the amount of
      $206 and additional paid in capital in the amount of $44,895. In addition,
      70,396 shares were issued as compensation in the amount of $15,487 to employees
      with an offsetting adjustment to common stock and additional paid in capital
      in
      the amounts of $70 and $15,417, respectively.




10


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




During
      the first half of 2004, equity compensation in the amount of $80,199 was
      recorded as a result of 425,531 shares issued as compensation for services
      to
      non-employees with an offsetting adjustment to common stock in the amount of
      $426 and additional paid in capital in the amount of $79,773. In addition,
      320,000 shares were issued as compensation in the amount of $51,200 to employees
      with an offsetting adjustment to common stock and additional paid in capital
      in
      the amounts of $320 and $50,880, respectively.





NOTE
      8
      - RELATED PARTY TRANSACTIONS





During
      the three and six months ended June 30, 2004 and 2003, the Company incurred
      consulting fee expenses for services provided by an entity owned by the
      Company’s then chief executive officer, a significant shareholder of the
      Company. These fees totaled approximately $3,000 for each of the quarters ended
      June 30, 2004 and 2003 and $15,000 and $18,000 for the six months ended June
      30,
      2004 and 2003, respectively. Under a new employment agreement reached in
      December 2004, such consulting fees have been eliminated.





NOTE
      9
      - SEGMENT INFORMATION





The
      Company operates in the following business segments: sales of travel through
      online travel stores; and developing and commercializing internet-based
      technology programs used in supporting online travel stores. The Company’s
      business segments operate primarily in the United States, but are structured
      for
      potential international growth.





Summarized
      financial information concerning the Company’s reportable segments is shown in
      the following tables.





(RESTATED)Six
                Months Ended
              June
                30, 2004
            
            Travel
            
            Technology
            
            Elimination
            
            TotalExternal
                and inter-segment
                revenue
            
            $
            1,043,792
            
            $
            232,215
            
            $
            -
            
            $
            1,276,007Segment
                profit (loss)
            
            
            (227,453
            )
            
            (142,626
            )
            
            -
            
            
            (370,079
            )Assets
            
            
            972,059
            
            
            514,946
            
            
            -
            
            
            1,487,005Depreciation
                and amortization
            
            
            -
            
            
            213,130
            
            
            -
            
            
            213,130Capital
                Expenditures
            
            
            -
            
            
            -
            
            
            -
            
            
            -





(RESTATED)Six
                Months Ended
              June
                30, 2003
            
            Travel
            
            Technology
            
            Elimination
            
            TotalExternal
                and inter-segment
                revenue
            
            $
            954,561
            
            $
            108,789
            
            $
            -
            
            $
            1,063,350Segment
                profit (loss)
            
            
            14,287
            
            
            (215,783
            )
            
            -
            
            
            (201,496
            )Assets
            
            
            1,551,518
            
            
            941,204
            
            
            -
            
            
            2,492,722Depreciation
                and amortization
            
            
            -
            
            
            213,130
            
            
            -
            
            
            213,130Capital
                Expenditures
            
            
            -
            
            
            -
            
            
            -
            
            
            -




11


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




NOTE
      10 - NEW ACCOUNTING PRONOUNCEMENTS




FASB
      Statement No. 150, *Accounting
      for Certain Financial Instruments with Characteristics of both Liabilities
      and
      Equity,* was
      issued in May 2003. This Statement establishes standards for the classification
      and measurement of certain financial instruments with characteristics of both
      liabilities and equity. The Statement also includes required disclosures for
      financial instruments within its scope. For the Company, the Statement was
      effective for instruments entered into or modified after May 31, 2003 and
      otherwise will be effective as of January 1, 2004, except for mandatorily
      redeemable financial instruments. For certain mandatorily redeemable financial
      instruments, the Statement will be effective the Company on January 1, 2005.
      The
      effective date has been deferred indefinitely for certain other types of
      mandatorily redeemable financial instruments. The company currently does not
      have any financial instruments that are within the scope of this
      Statement.




NOTE
      11 - SUBSEQUENT EVENTS





On
      December 8, 2004, the Company acquired 100% of the outstanding common shares
      from the stockholders of YourTravelBiz.com, Inc. (“YTB, Inc.”), following
      requisite approval by the Boards of Directors and stockholders, in a business
      combination structured as a statutory merger under laws of the State of New
      York
      and the reorganization provisions of the Internal Revenue Code. This
      acquisition, recorded at a total value of $4,847,928, was effected through
      an
      exchange of equity interests, with the Company exchanging 7,430,000 shares
      of
      its common stock and 4,092,376 shares of its Series B convertible preferred
      stock for all of the outstanding common stock of YTB, Inc., (see Note 3 to
      the
      Consolidated Financial Statements included in the Company’s Annual Report on
      Form 10-KSB/A No. 6 for the year ended December 31, 2004). Each share of such
      Series B convertible preferred stock was converted into one share of common
      stock on January 9, 2005 following the re-incorporation of the Company under
      the
      law of the State of Delaware and the corresponding increase in its number of
      authorized shares subsequent to December 31, 2004.





The
      Company has entered into a long-term employment agreement with each of Mr.
      J.
      Scott Tomer, (President), Mr. J. Kim Sorensen, (Treasurer), Mr. Michael Y.
      Brent, (Chief Executive Officer) and Mr. Derek Brent, (Secretary). All
      employment agreements, which were effective January 1, 2005, expire December
      31,
      2009 and subject each officer to confidentiality provisions, as well as
      non-solicitation and non-compete provisions for an additional two years
      following termination of employment.





Each
      of
      Messrs. J. Kim Sorensen and J. Scott Tomer receive a base annual salary of
      $120,000, increasing annually by 6%. They each receive an override on RTA sales
      and monthly fees generated by “representative position 2” of the
      YourTravelBiz.com sales organization equal to 50% of the monthly commissions
      and
      overrides earned by such representative position 2, paid monthly. Additionally,
      each of Messrs. J. Kim Sorensen and J. Scott Tomer receives a cash bonus based
      on the net pre-tax income of the Company equal to 2% if net pre-tax income
      is
      between $500,000 and $1,500,000, 2.25% if net pre-tax income is between
      $1,500,000 and $3,000,000 and 2.5% if net pre-tax income is at least $3,000,000.
      They each receive a car allowance and health and medical insurance provided
      by
      the Company. The Company has also taken out a term life insurance policy on
      the
      lives of Messrs. J. Kim Sorensen and J. Scott Tomer in an amount equal to three
      times their respective annual base salary, payable to beneficiaries designated
      by each.




12


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)





Mr.
      Michael Y. Brent receives a base annual salary of $240,000, increasing annually
      in 6% increments. Mr. Michael Y. Brent receives an override on the RTA sales
      and
      monthly fees generated by “representative position #1” of the YourTravelBiz.com
      sales organization equal to 16.69% of the monthly commissions and overrides
      earned by said position #1, paid monthly. Additionally, Mr. Michael Y. Brent
      receives a cash bonus based on the net pre-tax income of the Company equal
      to 2%
      if net pre-tax income is between $500,000 and $1,500,000, 2.25% if net pre-tax
      income is between $1,500,000 and $3,000,000 and 2.5% if net pre-tax income
      is at
      least $3,000,000. Mr. Michael Y. Brent receives a car allowance and health
      and
      medical insurance provided by the Company. The Company has also taken out a
      term
      life insurance policy on the life of Mr. Brent in an amount equal to three
      times
      his annual base salary, payable to beneficiaries designated by him.





Mr.
      Derek
      Brent receives a base annual salary of $120,000, increasing annually in $12,000
      increments. Additionally, Mr. Derek J. Brent receives a cash bonus based on
      the
      net pre-tax income of the Company equal to 2% if net pre-tax income is between
      $500,000 and $1,500,000, 2.25% if net pre-tax income is between $1,500,000
      and
      $3,000,000 and 2.5% if net pre-tax income is at least $3,000,000. In addition,
      Mr. Derek Brent receives an automobile allowance and health and medical
      insurance provided by the Company.





On
      January 4, 2005, subsequent to the New York merger between the Company and
      YTB,
      the assets of this combined entity were assigned respectively to three
      newly-organized Delaware corporations, respectively YourTravelBiz.com, Inc.,
      REZconnect Technologies, Inc. and YTB Travel Network, Inc., each of which
      becoming wholly-owned subsidiaries of the Company on that date.





On
      January 4, 2005 the Company re-incorporated in the State of Delaware by means
      of
      a “downstream merger” between the Company and a Delaware corporation named YTB
      International, Inc. The Company then changed its name to YTB International,
      Inc.
      and increased the number of its authorized common shares to 50,000,000, while
      maintaining the same 5,000,000 authorized preferred shares. As a consequence
      of
      this Delaware merger and associated re-incorporation, YTB International, Inc.
      became the successor to the Company and to the Company’s three subsidiaries:
      REZconnect Technologies, Inc. (“Technologies”), YourTravelBiz.com, Inc. (“YTB
      Marketing”), and YTB Travel Network, Inc. (“YTB Travel”) (the Company,
      Technologies, YTB Marketing and YTB Travel are sometimes hereafter collectively
      referred to as the “Company”), with each subsidiary becoming a wholly-owned
      subsidiary of YTB International, Inc. As part of the Reorganization, the assets
      of the Company were assigned to the three newly-organized wholly-owned
      subsidiaries, each a Delaware corporation.





On
      January 9, 2005, following both the Reorganization and a corresponding increase
      in the number of its authorized common shares from 20,000,000 to 50,000,000,
      each share of the aforementioned Series B convertible preferred stock was
      converted into one share of the Company’s common stock





On
      January 26, 2005, YTB International, Inc., formerly REZconnnect Technologies,
      Inc. (or the "Company") authorized the sale to Laurus Master Fund, Ltd.
      ("Laurus") of a Secured Convertible Term Note in the principal amount of two
      million dollars ($2,000,000), which is convertible into the Company’s common
      stock at an initial fixed conversion price of $0.80 per share (the "Term Note").
      Laurus also acquired a Common Stock Purchase Warrant for the purchase of up
      to
      800,000 shares of Common Stock, exercisable until January 26, 2012 at a price
      of
      $1.25 per share on the first 400,000 shares and $1.58 on the 400,000 share
      balance (the "Warrant"). The Term Note matures on January 26, 2008 and is
      secured by a first priority lien on all collateral of the Company and its
      wholly-owned subsidiaries, including inventory, accounts receivable, raw
      materials and all of its ownership interests in REZconnect Technologies, Inc.,
      YourTravelBiz.com, Inc. and YTB Travel Network, Inc., its wholly-owned
      subsidiaries. The Term Note is also guaranteed by each of the Company’s
      wholly-owned subsidiaries. The Term Note accrues interest at a rate per annum
      equal to the "prime rate" published in The Wall Street Journal from time to
      time, plus three percent (3%), but shall in no event be less than eight percent
      (8%) per annum. The Company also granted Laurus the right, on or prior to
      October 26, 2005 (270 days following the closing) to issue an additional note
      in
      the aggregate principal amount of $1,000,000 on the same terms and conditions
      (including the same interest rate and fixed conversion price of $1.25). Finally,
      the Company has granted Laurus registration rights with respect to all shares
      of
      Common Stock underlying the Term Note and Warrant. Closing and funding occurred
      January 2005. The second funding occurred on in October 2005.





13




REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)





On
      February 8, 2005, the Company commenced a Private Placement Memorandum for
      the
      issuance of up to 1,000,000 shares at a price of $0.80 per share, sold in units
      of $15,000.  Each unit contained warrants for a like amount of shares at an
      exercise price of $1.75, exercisable for 5 years from date of
      issuance.





On
      January 19, 2006, the Company announced that it had initiated an internal
      investigation as to certain matters related to its former accounting firm,
      Dischino & Associates, P.C., including its probable lack of independence in
      previously reported financial statements and the possible improper recognition
      of approximately $30,000 in revenue for the period ended June 30, 2005. The
      Company retained the legal firm of Greenberg Traurig, LLP to perform the
      investigation.





The
      Company executed an employment agreement on January 30, 2006 with its new Chief
      Financial Officer effective December 1, 2005. The term of the Agreement is
      through December 31, 2009, followed by a three-year renewal period.





On
      February 7, 2006, the Company reported that it was in the process of having
      its
      financial statements for the years ended December 31, 2004 and 2003 as
      previously-filed with the SEC on Form 10-KSB/A, re-audited by UHY LLP, the
      Company's new independent registered public accounting firm.





On
      June
      1, 2006, the Company announced its common stock had been removed from trading
      on
      the OTC Bulletin Board as a result of its annual report on Form 10-KSB for
      the
      year ended December 31, 2005 having not yet been filed with the
      SEC.





On
      July
      26, 2006, the Company purchased 12 acres of land which included a 100,000 square
      foot building (the “Property”) for $2.5 million to house their new corporate
      headquarters in Wood River, Illinois. The Company financed the purchase of
      the
      Property with a note in the amount of $2.5 million with an interest rate of
      Prime, less 0.50% floating daily from Meridian Bank, a local bank. Interest
      only
      is payable monthly for the first two years of the note. The Note is
      collateralized by the first mortgage on the Property and a $500,000 Certificate
      of Deposit. The Certificate of Deposit will be released after the Company makes
      $625,000 of improvements to the Property. The Company plans to begin a $6.0
      million renovation project to the Property in late 2006.





On
      November, 20, 2006, the Company entered into a Settlement Agreement with Laurus
      Master Fund, Ltd., (Laurus), whereby the Company agreed to issue an additional
      200,000 shares of YTBI stock to Laurus as settlement for liquidated damages
      for
      the Company's inability to timely file a Registration Statement as stipulated
      in
      the original documents between Laurus and YTBI. In addition, all of the original
      document provisions are terminated, excluding January Warrant and the October
      Warrant.





Effective
      November 22, 2006, an agreement has been reached between Michael Brent, Kim
      Sorensen and Scott Tomer for each of them to share a one-third interest in
      YTB
      Rep position #2. Previously, Mr. Brent had a one-sixth share in YTB Rep position
      #1. This agreement was reached to document the verbal agreement between the
      three parties whereby each would receive the same compensation. The Board of
      Directors had instructed the parties to come to a resolution of this issue
      and
      come back with a settlement. Formal approval of the change in employment
      contracts will occur at the next regular Board meeting.





Effective
      November 22, 2006, Michael Y. Brent, Derek J. Brent and Darren J. Brent resigned
      as members of the Company’s Board of Directors. Mr. Michael Y. Brent also
      resigned from his position as President of the Company, and Mr. Derek J. Brent
      resigned from his position as Secretary of the Company.





On
      December 27, 2006, J. Kim Sorenson, 56, was appointed as the President of the
      Company, effective immediately.





On
      December 27, 2006, Lou Brock and John Simmons, Esq. were elected to the
      Company’s Board of Directors, effective immediately. Mr. Brock is the chairman
      of the Compensation Committee, and Mr. Simmons is chairman of the Investment
      Committee.




14


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)


NOTE
      12 - RESTATEMENT OF FINANCIAL STATEMENTS





On
      February 6, 2006, the Company concluded that its financial results for the
      years
      ended December 31, 2003 and 2004 and the interim periods ended March 31, June
      30
      and September 30, 2003 and the interim periods ended March 31, June 30, and
      September 30, 2004 would be restated to reflect certain error identified in
      its
      previously filed financial statements.





The
      Company recently filed its amended Annual Report on Form 10-KSB/A No. 6 for
      its
      fiscal year ended December 31, 2004 to reflect the restatement of its audited
      financial statements for the fiscal years ended December 31, 2004 and 2003.
      The
      restatements arose from actions taken by the Company when it became aware of
      the
      lack of independence with the Company’s former independent accounting firm.
      Subsequently, the Company began a review of the financial statements for the
      years ended December 31, 2004 and 2003, which gave rise to additional
      adjustments. An in-depth discussion of the items that have been restated in
      the
      Company’s financial statements for the years ended December 31, 2003 and 2004
      and the cause for those restatements is provided in Note 14 included in the
      Company’s Annual Report on Form 10-KSB/A No. 6 for the year ended December 31,
      2004, which is being incorporated herein by reference.





The
      following tables summarize in a condensed format the financial statements
      previously reported and as restated for the items described in Form 10-KSB/A
      No.
      6 for the year ended December 31, 2004 as they related to the year ended
      December 31, 2003 and for the three and six months ended June 30, 2003 and
      2004.




15


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




**2003
      RESTATEMENT SUMMARY**





As
                of December 31, 2003As
              Previously
              Reported
            
            Adjustment
            
            As
                RestatedASSETSCURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            62,718
            
            $
            (14,598
            )
            $
            48,120Available-for-sale
                securities
            
            
            732,135
            
            
            -
            
            
            732,135Accounts
                receivable (less allowance for doubtful accounts
              restated
                $173,909 and $74,061 originally reported)
            
            
            255,244
            
            
            (170,744
            )
            
            84,500Other
                prepaid expenses and current assets
            
            
            -
            
            
            4,400
            
            
            4,400Current
                portion of notes receivable
            
            
            112,490
            
            
            (112,490
            )
            
            -TOTAL
                CURRENT ASSETS
            
            
            1,162,587
            
            
            (293,432
            )
            
            869,155PROPERTY
                AND EQUIPMENT (net)
            
            
            -
            
            
            519,075
            
            
            519,075OTHER
                ASSETS
            
            
            723,046
            
            
            (494,374
            )
            
            228,672TOTAL
                ASSETS
            
            $
            1,885,633
            
            $
            (268,731
            )
            $
            1,616,902LIABILITIES
                AND STOCKHOLDERS’ EQUITYCURRENT
                LIABILITIES:Current
                maturities of long-term debt
            
            $
            20,368
            
            $
            (1,898
            )
            $
            18,470Accounts
                payable and accrued expenses
            
            
            105,776
            
            
            202,063
            
            
            307,839Deferred
                revenue
            
            
            112,490
            
            
            (112,490
            )
            
            -TOTAL
                CURRENT LIABILITIES
            
            
            238,634
            
            
            87,675
            
            
            326,309OTHER
                LONG-TERM LIABILITIES:Long-term
                debt, less current maturities
            
            
            300,802
            
            
            1,898
            
            
            302,700Deferred
                revenue, less current portion
            
            
            632,862
            
            
            (626,324
            )
            
            6,538Other
                liabilities
            
            
            26,266
            
            
            -
            
            
            26,266TOTAL
                OTHER LONG-TERM LIABILITIES
            
            
            959,930
            
            
            (624,426
            )
            
            335,504TOTAL
                LIABILITIES
            
            
            1,198,564
            
            
            (536,751
            )
            
            661,813STOCKHOLDERS’
                EQUITYCommon
                stock, issued and outstanding 10,606,314 restated and10,779,361
                as originally reported
            
            
            10,462
            
            
            144
            
            
            10,606Additional
                paid-in capital
            
            
            6,439,863
            
            
            194,340
            
            
            6,634,203Accumulated
                deficit
            
            
            (5,763,256
            )
            
            73,536
            
            
            (5,689,720
            )TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            687,069
            
            
            268,020
            
            
            955,089TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            1,885,633
            
            $
            (268,731
            )
            $
            1,616,902




16


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




Three
                months ended June 30, 2003
            
            Six
                months ended June 30, 2003AsPreviously
                Reported
            
            Adjustment
            
            AsRestated
            
            AsPreviouslyReported
            
            Adjustment
            
            AsRestatedNET
                REVENUESTravel
                commissions and services
            
            $
            -
            
            $
            298,750
            
            $
            298,750
            
            $
            
            
            $
            515,699
            
            $
            515,699Travel
                products and services
            
            
            359,328
            
            
            (359,328
            )
            
            -
            
            
            709,445
            
            
            (709,445
            )
            
            -Online
                travel store sales and monthly fees
            
            
            -
            
            
            56,807
            
            
            56,807
            
            
            -
            
            
            108,789
            
            
            108,789Online
                travel income
            
            
            56,807
            
            
            (56,807
            )
            
            -
            
            
            108,789
            
            
            (108,789
            )
            
            -Franchise
                service fees and other fees
            
            
            115,180
            
            
            90,253
            
            
            205,433
            
            
            238,732
            
            
            194,266
            
            
            432,998Franchise
                fees
            
            
            43,732
            
            
            (43,732
            )
            
            -
            
            
            54,866
            
            
            (54,866
            )
            
            -Other
            
            
            -
            
            
            1,486
            
            
            1,486
            
            
            -
            
            
            5,864
            
            
            5,864Total
                net revenues
            
            
            575,047
            
            
            (12,571
            )
            
            562,476
            
            
            1,111,832
            
            
            (48,482
            )
            
            1,063,350OPERATING
                EXPENSESTravel
                commissions
            
            
            -
            
            
            237,703
            
            
            237,703
            
            
            -
            
            
            359,809
            
            
            359,809Cost
                of travel services and products
            
            
            316,064
            
            
            (316,064
            )
            
            -
            
            
            570,646
            
            
            (570,646
            )
            
            -Franchise
                services and products
            
            
            -
            
            
            63,162
            
            
            63,162
            
            
            -
            
            
            139,502
            
            
            139,502Depreciation
                and amortization
            
            
            122,148
            
            
            (15,583
            )
            
            106,565
            
            
            244,296
            
            
            (31,166
            )
            
            213,130Marketing
                and selling
            
            
            14,519
            
            
            (14,519
            )
            
            -
            
            
            30,014
            
            
            (30,014
            )
            
            -General
                and administrative
            
            
            214,405
            
            
            49,866
            
            
            264,271
            
            
            440,093
            
            
            112,545
            
            
            552,638Total
                operating expenses
            
            
            667,136
            
            
            4,565
            
            
            671,701
            
            
            1,285,049
            
            
            (19,970
            )
            
            1,265,079LOSS
                FROM OPERATIONS
            
            
            (92,089
            )
            
            (17,136
            )
            
            (109,225
            )
            
            (173,217
            )
            
            (28,512
            )
            
            (201,729
            )OTHER
                INCOME (EXPENSES)Interest
                and dividend income
            
            
            1,164
            
            
            (894
            )
            
            270
            
            
            6,786
            
            
            -
            
            
            6,786Interest
                expense
            
            
            -
            
            
            (3,060
            )
            
            (3,060
            )
            
            -
            
            
            (6,553
            )
            
            (6,553
            )Total
                other income (expenses)
            
            
            1,164
            
            
            (3,954
            )
            
            (2,790
            )
            
            6,786
            
            
            (6,553
            )
            
            233NET
                LOSS
            
            $
            (90,925
            )
            $
            (21,090
            )
            $
            (112,015
            )
            $
            (166,431
            )
            $
            (35,065
            )
            $
            (201,496
            )NET
                LOSS PER SHARE:Weighted
                average shares outstanding
            
            
            10,156,077
            
            
            70,059
            
            
            10,226,136
            
            
            10,156,077
            
            
            70,059
            
            
            10,226,136Net
                loss per share - basic and diluted
            
            $
            (0.02
            )
            $
            (0.00
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.00
            )
            $
            (0.02
            )




17


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




**2004
      RESTATEMENT SUMMARY**





As
                of June 30, 2004As
              Previously
              Reported
            
            Adjustment
            
            As
                RestatedASSETSCURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            91,300
            
            $
            (22,811
            )
            $
            68,489Available-for-sale
                securities
            
            
            684,926
            
            
            -
            
            
            684,926Accounts
                receivable (less allowance for doubtful accounts
              restated
                $169,644 and $65,009 originally reported)
            
            
            267,673
            
            
            (165,345
            )
            
            102,328Notes
                receivable
            
            
            119,120
            
            
            (119,120
            )
            
            -Interest
                receivable
            
            
            10,036
            
            
            (10,036
            )
            
            -Other
                prepaid expenses and current assets
            
            
            -
            
            
            81,002
            
            
            81,002TOTAL
                CURRENT ASSETS
            
            
            1,173,055
            
            
            (236,310
            )
            
            936,745PROPERTY
                AND EQUIPMENT (net)
            
            
            92,362
            
            
            219,083
            
            
            311,445OTHER
                ASSETS
            
            
            686,677
            
            
            (447,862
            )
            
            238,815TOTAL
                ASSETS
            
            $
            1,952,094
            
            $
            (465,089
            )
            $
            1,487,005LIABILITIES
                AND STOCKHOLDERS’ EQUITYCURRENT
                LIABILITIES:Current
                maturities of long-term debt
            
            $
            19,273
            
            $
            (655
            )
            $
            18,618Accounts
                payable and accrued expenses
            
            
            146,923
            
            
            262,945
            
            
            409,868Deferred
                revenue
            
            
            118,062
            
            
            (118,062
            )
            
            -TOTAL
                CURRENT LIABILITIES
            
            
            284,258
            
            
            144,227
            
            
            428,486OTHER
                LONG-TERM LIABILITIES:Long-term
                debt, less current maturities
            
            
            334,977
            
            
            (39,845
            )
            
            295,132Deferred
                revenue, less current portion
            
            
            628,232
            
            
            (604,580
            )
            
            23,652Other
                liabilities
            
            
            23,326
            
            
            -
            
            
            23,326TOTAL
                OTHER LONG-TERM LIABILITIES
            
            
            986,535
            
            
            (644,425
            )
            
            342,110TOTAL
                LIABILITIES
            
            
            1,270,793
            
            
            (500,197
            )
            
            770,596STOCKHOLDERS’
                EQUITYCommon
                stock, 11,351,845 restated and
              10,462,983
                as originally reported
            
            
            10,462
            
            
            890
            
            
            11,352Additional
                paid-in capital
            
            
            6,439,863
            
            
            324,993
            
            
            6,764,856Accumulated
                deficit
            
            
            (5,769,024
            )
            
            (290,775
            )
            
            (6,059,799
            )TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            681,301
            
            
            35,108
            
            
            716,409TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            1,952,094
            
            $
            (465,089
            )
            $
            1,487,005




18


REZCONNECT
      TECHNOLOGIES, INC.


Notes
      to
      Condensed Financial Statements


(Unaudited)




Three
                months ended June 30, 2004
            
            Six
                months ended June 30, 2004As
              Previously
                Reported
            
            Adjustment
            
            As
              Restated
            
            As
              PreviouslyReported
            
            Adjustment
            
            As
              RestatedNET
                REVENUESTravel
                commissions and services
            
            $
            -
            
            $
            467,292
            
            $
            467,292
            
            $
            -
            
            $
            732,025
            
            $
            732,025Travel
                products and services
            
            
            567,460
            
            
            (567,460
            )
            
            -
            
            
            893,254
            
            
            (893,254
            )
            
            -Online
                travel store sales and monthly fees
            
            
            -
            
            
            125,262
            
            
            125,262
            
            
            -
            
            
            232,215
            
            
            232,215Online
                travel income
            
            
            125,262
            
            
            (125,262
            )
            
            -
            
            
            232,215
            
            
            (232,215
            )
            
            -Franchise
                service fees and other fees
            
            
            151,571
            
            
            17,051
            
            
            168,622
            
            
            291,113
            
            
            19,711
            
            
            310,824Franchise
                fees
            
            
            50,857
            
            
            (50,857
            )
            
            -
            
            
            54,602
            
            
            (54,602
            )
            
            -Other
            
            
            -
            
            
            -
            
            
            -
            
            
            2,349
            
            
            (1,406
            )
            
            943Total
                net revenues
            
            
            895,150
            
            
            (133,974
            )
            
            761,176
            
            
            1,473,533
            
            
            (197,526
            )
            
            1,276,007OPERATING
                EXPENSESTravel
                commissions
            
            
            -
            
            
            453,119
            
            
            453,119
            
            
            -
            
            
            672,678
            
            
            672,678Cost
                of travel services
            
            
            552,914
            
            
            (552,914
            )
            
            -
            
            
            832,829
            
            
            (832,829
            )
            
            -Franchise
                services and products
            
            
            -
            
            
            50,307
            
            
            50,307
            
            
            -
            
            
            100,886
            
            
            100,886Depreciation
                and amortization
            
            
            13,995
            
            
            92,570
            
            
            106,565
            
            
            25,107
            
            
            188,023
            
            
            213,130Marketing
                and selling
            
            
            15,590
            
            
            (15,590
            )
            
            -
            
            
            30,464
            
            
            (30,464
            )
            
            -General
                and administrative
            
            
            298,325
            
            
            72,581
            
            
            370,906
            
            
            600,389
            
            
            51,523
            
            
            651,912Total
                operating expenses
            
            
            880,824
            
            
            100,073
            
            
            980,897
            
            
            1,488,789
            
            
            149,817
            
            
            1,638,606LOSS
                FROM OPERATIONS
            
            
            14,326
            
            
            (234,047
            )
            
            (219,721
            )
            
            (15,256
            )
            
            (347,343
            )
            
            (362,599
            )OTHER
                INCOME (EXPENSES)Interest
                and dividend income
            
            
            22,520
            
            
            (10,036
            )
            
            12,484
            
            
            25,834
            
            
            (10,036
            )
            
            15,798Interest
                expense
            
            
            (5,112
            )
            
            (10,140
            )
            
            (15,252
            )
            
            (10,409
            )
            
            (12,869
            )
            
            (23,278
            )Loss
                on sale of short term investments
            
            
            (5,727
            )
            
            5,727
            
            
            -
            
            
            (5,191
            )
            
            5,191
            
            
            -Total
                other income (expenses)
            
            
            11,681
            
            
            (14,449
            )
            
            (2,768
            )
            
            10,234
            
            
            (17,714
            )
            
            (7,480
            )Income
                (loss) before income taxes
            
            
            26,007
            
            
            (248,496
            )
            
            (222,489
            )
            
            (5,022
            )
            
            (365,057
            )
            
            (370,079
            )Income
                tax expense (benefit)
            
            
            (210
            )
            
            210
            
            
            -
            
            
            746
            
            
            (746
            )
            
            -NET
                LOSS
            
            $
            26,217
            
            $
            (248,706
            )
            $
            (222,489
            )
            $
            (5,768
            )
            $
            (364,311
            )
            $
            (370,079
            )NET
                LOSS PER SHARE:Weighted
                average shares outstanding
            
            
            9,912,983
            
            
            1,057,206
            
            
            10,970,189
            
            
            9,912,983
            
            
            904,110
            
            
            10,817,093Net
                loss per share - basic and diluted
            
            $
            0.00
            
            $
            (.02
            )
            $
            (0.02
            )
            $
            0.00
            
            $
            (0.03
            )
            $
            (0.03
            )




19


**ITEM
      2.** **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





REZconnect
      (R) Technologies, Inc. (the “Company”) is a franchisor of traditional “brick and
      mortar” travel agencies, as well as Internet-based, travel-related services and
      technology developing unique reservation systems for the travel and
      entertainment industry. We are also a full service provider of discount travel
      products and services to the leisure and small business traveler. We operate
      the
      business under our trade names “Travel Network,” “Global Travel Network” and
“Travel Network Vacation Central,” as well as web sites “Bookmytravel.com” and
“REZconnect.com.” We offer our customers a reliable source of travel products
      and services through our agreements with selected travel providers, including
      major airlines, cruise lines, hotels and car rental agencies, as well as
      wholesale travel providers. In addition, we offer our customers the ability
      to
      make reservations on over 400 airlines, at more than 35,000 hotels and with
      most
      major car rental companies, cruise lines and tour package
      operators.





The
      Company’s operations are comprised of 3 divisions. The first division is an
      extension of its travel franchise system. The extension is marketed as
      REZcity.com, an online local city guide and online travel store. The second
      division of the Company is its technology section, which builds reservation
      systems using proprietary applications for suppliers within the travel industry.
      The third division builds online travel stores for consumers of travel agents,
      as well as “Super Sites” for Travel Agents to book their clients travel. The
      Company has signed contracts with numerous Consortium groups to build online
      “Super sites” for their agent base. Contracts that have been signed include:
      Hickory Leisure, InteleTravel, OSSN, ARTA, GTM and the IT Group.





The
      Company’s consumer driven websites provide strong content and bookability with
      over 55 booking engines incorporated into one site, covering virtually all
      aspects of the travel industry. Sites are available for use 24 hours, 7 days
      a
      week, allowing travel agents the ability to personally follow-up with the online
      consumer and provide customer service.





The
      Company typically charges $49 per month, on a non-contract basis, to own and
      operate on an online travel site. If an agent signs a one year contract, the
      cost is reduced and the agent only pays for 11 months of service. The Company
      also offers CLIA members a discounted rate of $39 per month with the same
      pre-payment plan described above. In addition, we offer CLIA agencies a free
      one-month trial before committing to a yearly contract. The agencies that pay
      month-to-month must pay by credit card while yearly contracts can be paid either
      by check or credit card.





Currently,
      there are over 5,300 consumer websites in operation. Site owners are permitted
      to solicit other organizations and associations to clone travel sites allowing
      for site owners to earn more revenue. The fee associated with a travel site
      clone is $25 per site, monthly.





REZcity
      is an online city guide and online travel store for over 53,000 towns throughout
      the United States providing a unique model for entrepreneurs and travel agencies
      to participate by licensing the local community content with rights to sell
      advertising and e-commerce solutions. The pricing for a local town of up to
      25,000 in population is $1,500 for a one-time fee and an annual hosting fee
      of
      $150.





REZcity
      offers every postal zip code in the U.S. with strong content provided by over
      100 sources, including weather, entertainment, sports, news, various information
      guides with yellow page listings of over 15,000,000 businesses. This site is
      currently in operation and was first available in 1998. The Company took over
      the site in 2002 and is currently offering this product to companies within
      the
      travel community.





A
      single
      unit franchise consists of a single town or zip code with a population of 25,000
      or less. Franchisees are required to sell e-commerce and advertising solutions,
      to earn revenue, within their purchased territory and market their website
      to
      local residents residing in the community. An Area Representative Unit
      franchisee owns a minimum of 20 Franchise units in which he/she is responsible
      for the same tasks as a single unit franchise owner. A Master Unit franchisee
      owns a minimum of 600 Franchise units. A Master’s primary role is to sell
      individual franchise units and Area Representative Units. A Master earns revenue
      by Franchise sales as well as by sales created by franchisees within their
      master territory selling e-commerce and advertising solutions.





Revenues
      from the sale of Area Representative Unit franchisees and Master Unit
      franchisees are not usually recorded in our financial statement based on our
      accounting policy regarding the recognition of franchise revenues. Revenue
      is
      recognized until all services have been rendered and substantial doubt of
      collectability has been eliminated, usually upon receipt of
      payment.




20


Our
      brick
      and mortar franchisee fees range from $3,000 to $29,900 for domestic franchises
      and from $50,000 to $350,000 for individual international territories. Yearly
      service fees range from $2,000 to $9,000 per location. Commission rates paid
      by
      travel suppliers have been approximately 10% for hotel reservations, 5-10%
      for
      car rentals, and 10-15% for cruises and vacation packages. Airline tickets
      are a
      non-commissionable item and revenues are earned from service fees, which range
      from $10 to $35 per ticket.





In-house
      sales personnel have generally handled marketing of franchisees. All of the
      Company’s franchised operations are independently owned and operated. All sales
      of travel products by the Company are made through its franchisees or through
      its interactive web site. Operational expenses are related to franchise system
      sales and support personnel, executive management and administrative
      personnel.





In
      2003,
      The Company signed an exclusive, 20-year management agreement to provide travel
      web site hosting the Company’s clients, “Your Travel Biz, Inc.” and “YTB Travel
      And Cruise LTD” (collectively, YTB) a network marketing company offering its
      representatives an interactive consumer website from the Company. All travel
      arrangements from the online website are serviced by a division of the Company.
      We currently host over 3,500 sites for YTB. Based on current projections
      supplied by YTB, the growth of new sites should increase significantly over
      the
      next several years. In conjunction with the signing of this agreement The
      Company issued YTB Travel and Cruise Ltd. and Your Travel Biz, Inc., 200,000
      and
      800,000 shares of stock respectively, as well as a loan in the aggregate of
      $150,000 to be repaid through a combination of credits and installment payments
      beginning in December 2002. YTB elected to repay the $150,000 loan in full
      in
      November 2003.




21


RESULTS
      OF OPERATIONS




SIX
      MONTHS ENDED JUNE 30, 2004


AS
      COMPARED TO SIX MONTHS ENDED JUNE 30, 2003





Revenues





Online
      travel store sales and monthly fees increased $123,426 while travel commissions
      and services increased by $216,326 for the six-month period ended June 30,
      2004,
      as compared to the six-month period ended June 30, 2003. As the number of brick
      and mortar franchisees declines, the number of online stores has
      increased.





Franchise
      service fees and other fees decreased $122,174 for the six-month period
      ended June 30, 2004, as compared to the six-month period ended June 30,
      2003. Other income decreased $4,921 for the six-month period ended June 30,
      2004, as compared to the six-month period ended June 30, 2003.





Expenses





Travel commissions increased
      by $312,869 in the 2004 six-month period as compared to the 2003 six-month
      period as a result of higher related revenues. Such costs amounted to
      approximately 53% of revenues in the 2004 six-month period as compared to 34%
      of
      related revenues in the 2003 six-month period.





Franchise
      services and product expense decreased by $38,616 in the 2004 six-month period
      as compared to the 2003 six-month period.





General
      and administrative expenses increased by $99,274 in the 2004 six-month period
      as
      compared to the 2003 six-month period.





Depreciation
      and amortization expense stayed the same at $213,130 for the six month period
      ended June 30, 2004 and 2003.





Variability
      of Results





The
      Company expects to experience significant fluctuations in its future quarterly
      operating results due to a variety of factors, many of which are outside the
      Company's control. Factors that may adversely affect the Company's quarterly
      operating results include, but are not limited to, (i) the Company's ability
      to
      retain existing customers, attract new customers at a steady rate and maintain
      customer satisfaction, (ii) changes in inventory availability from third party
      suppliers or commission rates paid by travel suppliers, (iii) the announcement
      or introduction of new or enhanced sites, services and products by the Company
      or its competitors, (iv) general economic conditions specific to the Internet,
      online commerce or the travel industry, (v) the level of use of online services
      and consumer acceptance of the Internet and commercial online services for
      the
      purchase of consumer products and services such as those offered by the Company,
      (vi) the Company's ability to upgrade and develop its systems and infrastructure
      and to attract new personnel in a timely and effective manner, (vii) the level
      of traffic on the Company's online sites, (viii) technical difficulties, system
      downtime or Internet brownouts, (ix) the amount and timing of operating costs
      and capital expenditures relating to expansion of the Company's business,
      operations and infrastructure, (x) governmental regulation and (xi) unforeseen
      events affecting the travel industry.





In
      addition, the Company expects that it will experience seasonal fluctuations
      in
      the travel industry, Internet and commercial online service usage and
      advertising expenditures. The Company anticipates that travel bookings will
      typically increase during the first and second quarter in anticipation of summer
      travel and will typically decline during the third quarter. Internet and
      commercial online service usage and the rate of growth of such usage may be
      expected typically to decline during the summer. Depending on the extent to
      which the Internet and commercial online services are accepted as an advertising
      medium, seasonality in the level of advertising expenditures could become more
      pronounced for Internet-based advertising. Seasonality in the travel industry,
      Internet and commercial online service usage and advertising expenditures are
      likely to cause fluctuations in the Company's operating results and could have
      a
      material adverse effect on the Company's business, operating results and
      financial condition would likely be materially and adversely
      affected.




22


Due
      to
      the foregoing factors, quarterly revenues and operating results are difficult
      to
      forecast, and the Company believes that period-to-period comparisons of its
      operating results will not necessarily be meaningful and should not be relied
      upon as an indication of future performance. It is likely that the Company's
      future quarterly operating results from time to time will not meet the
      expectations of security analysts or investors. In such event, the price of
      the
      Company's Common Stock would likely be materially and adversely
      affected.





Liquidity
      and capital resources





Cash
      used
      in operating activities for the first half of 2004 was $19,419 as compared
      to
      cash provided by operating activities of $22,763 in the comparable prior year
      period.


Cash
        provided by investing activities was $47,208 in the first half of 2004 as
        compared to cash used by investing activities of $34,349 in the 2004 six
        month
        period.
 
 Cash
        used
        in financing activities was $7,420 in the first half of 2004. There was no
        cash
        financing activity in the first half of 2003.




We
      believe that our cash and short term investments on June 30, 2004 and our
      anticipated cash flow from operations will be sufficient to meet our obligations
      on a timely basis for the next 12 months.




New
      Accounting Pronouncements




FASB
      Statement No. 150, *Accounting
      for Certain Financial Instruments with Characteristics of both Liabilities
      and
      Equity,* was
      issued in May 2003. This Statement establishes standards for the classification
      and measurement of certain financial instruments with characteristics of both
      liabilities and equity. The Statement also includes required disclosures for
      financial instruments within its scope. For the Company, the Statement was
      effective for instruments entered into or modified after May 31, 2003 and
      otherwise will be effective as of January 1, 2004, except for mandatorily
      redeemable financial instruments. For certain mandatorily redeemable financial
      instruments, the Statement will be effective the Company on January 1, 2005.
      The
      effective date has been deferred indefinitely for certain other types of
      mandatorily redeemable financial instruments. The company currently does not
      have any financial instruments that are within the scope of this
      Statement.




Application
      of Critical Accounting Policies




The
      Company’s significant accounting policies are discussed in the Notes to the
      Consolidated Financial Statements that are included in the Company’s 2004 Annual
      Report on Form 10-KSB/A No. 6 that is filed with the Securities and Exchange
      Commission.  In most cases, the accounting policies utilized by the Company
      are the only ones permissible under U.S. Generally Accepted Accounting
      Principles for businesses in our industry.  However, the application of
      certain of these policies requires significant judgments or a complex estimation
      process that can affect the results of operations and financial position of
      the
      Company, as well as the related footnote disclosures.  The Company bases
      its estimates on historical experience and other assumptions that it believes
      are reasonable. If actual amounts are ultimately different from previous
      estimates, the revisions are included in the Company’s results of operations for
      the period in which the actual amounts become known.  The accounting
      policies and estimates that can have a significant impact on the operating
      results, financial position and footnote disclosures of the Company are
      described in the Management Discussion and Analysis of Financial Condition
      and
      Results of Operations in the Company’s 2004 Annual Report on Form 10-KSB/A No.
      6.




Forward-Looking
      Statements





All
      statements other than statements of historical fact included in this quarterly
      report, including without limitation statements regarding the Company's
      financial position, business strategy and the plans and objectives of the
      Company's management for future operations is forward-looking statements. When
      used in this quarterly report, words such as "anticipate," "believe,"
      "estimate," "expect," "intend," and similar expressions, as they relate to
      the
      company or its management, identify forward-looking statements. Such
      forward-looking statements are based on the beliefs of the Company's management,
      as well as assumptions made by and information currently available to the
      Company's management. Actual results could differ materially from those
      contemplated by the forward-looking statements as a result of certain factors,
      including but not limited to, business and economic conditions, competitive
      factors and pricing pressures, capacity and supply constraints. Such statements
      reflect the views of the Company with respect to future events and are subject
      to these and other risks, uncertainties and assumptions relating to the
      operations, results of operations, growth strategy and liquidity of the Company.
      Readers are cautioned not to place undue reliance on these forward-looking
      statements. The company does not undertake any obligation to release publicly
      any revisions to these forward-looking statements to reflect future events
      or
      circumstances or to reflect the occurrence of unanticipated events.




23


**ITEM
      3.** **CONTROLS
      AND PROCEDURES**





a.  Evaluation
      of disclosure controls and procedures.





The
      Company maintains disclosure controls and procedures designed to ensure that
      information required to be disclosed in the reports that the Company files
      or
      submits under the Securities Exchange Act of 1934, is recorded, processed,
      summarized and reported within the time period specified in the rules and forms
      of the SEC. In connection with the Form 10-QSB for the three and six months
      ended June 30, 2004 and 2003 previously filed by the Company, as required under
      Rule 13a-15(e) of the Exchange Act, the Company's management, including its
      Chief Executive Officer and Chief Financial Officer, conducted an evaluation
      of
      the effectiveness of the Company's disclosure controls and procedures. Based
      on
      that evaluation, the Company's Chief Executive Officer and Chief Financial
      Officer concluded that the Company's disclosure controls and procedures were
      effective as of June 30, 2004 and 2003.





On
      January 6, 2006, the Company self-reported to the Staff that it became aware
      that the Company’s previous independent accounting firm, Dischino and
      Associates, P.C., had provided prohibited services and appeared to have not
      followed the standards of the Public Company Accounting Oversight Board. On
      January 19, 2006, the Company initiated an internal inquiry into those
      accounting-related matters which the Company disclosed in the Current Report
      on
      Form 8-K filed with the SEC on January 19, 2006. Based on the findings of the
      inquiry, on February 6, 2006, the Company’s management and the Audit Committee
      of the Company’s Board of Directors concluded that the Company needed to restate
      certain of the Company’s financial statements and that the financial statements
      included in the Company’s Annual Report on Form 10-KSB/A No. 5 for the year
      ended December 31, 2004 and the financial statements included in the Company’s
      Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004, June
      30,
      2004, September 30, 2004, March 31, 2005, June 30, 2005 and September 30, 2005
      could not be relied upon.





As
      a
      result of the notification of non-reliance filed, the Company began its
      restatement of the affected years’ and quarters’ financial statements. The
      Company believes that the restatements resulted from the record retention
      deficiencies and lack of internal controls over financial reporting. However,
      the Company is taking numerous steps to tighten controls and strengthen internal
      control policies and procedures.





In
      addition, during the restatement process, the Company also discovered other
      matters giving rise to adjustments. These matters are with regard to
      insufficient personnel resources and technical accounting expertise within
      the
      accounting function to affect a timely and accurate financial close process.
      In
      conjunction with this effort, the Company conducted an in-depth review of the
      application of accounting principles and system of internal controls. As a
      result of this investigation, the Company identified numerous material
      weaknesses in its internal controls and improper application of accounting
      principles. A material weakness is a significant deficiency, or combination
      of
      significant deficiencies, that results in more than a remote likelihood that
      a
      material misstatement of the annual or interim financial statements will not
      be
      prevented or detected. The Company has quantified the errors caused by these
      deficiencies and has prepared restated financial statements and disclosures
      to
      correct the identified errors.





The
      restatements are described in more detail in Note 14 in the Notes to
      Consolidated Financial Statements included in the Company’s Annual Report on
      Form 10-KSB/A No. 6 for the year ended December 31, 2004. Internal controls
      over
      financial reporting, including the application of accounting policies and
      principles, are within the scope of disclosure controls. Therefore, management
      has concluded that there were material weaknesses in the Company’s disclosure
      controls as of December 31, 2004 and 2003. Remediation of those internal control
      issues is currently in process. The following is a summary of those weaknesses
      identified by management:





·
            The
                Company did not maintain sufficient competent personnel to maintain
                an
                appropriate accounting and financial reporting organizational structure.
                Specifically, the Company did not maintain personnel with an appropriate
                level of accounting knowledge, experience and training in the selection,
                application and implementation of generally accepted accounting principles
                commensurate with the Company’s financial reporting requirements. As a
                result, the Company’s controls over selection and application of
                accounting principles were ineffective. This deficiency resulted
                in the
                improper presentations in the Company’s financial statements.





·
            The
                Company’s design and operation of controls over the accounting closing and
                reporting process are not effective due to lack of timely and complete
                preparation of account analyses and reconciliations, a lack of appropriate
                review of account reconciliations and supporting analyses and errors
                in
                account balance classification. This lack of proper evaluations resulted
                in cut-off, completeness and presentation errors in the Company’s
                financial statements.




24




·
            The
                Company did not maintain effective controls over the development
                of
                accounting estimates. Specifically, the Company did not have controls
                in
                place to conduct a review over the propriety or collectibility of
                account
                and notes receivable in order to determine the proper recorded value
                of
                those assets and the proper valuation of the allowance for doubtful
                accounts. In addition, the deficient controls did not allow for the
                proper
                evaluation of the estimated lives of RTAs so that a proper matching
                of
                revenue and expense could be accomplished. Additionally, the Company
                did
                not analyze average marketing commissions paid in relation to original
                enrollment transactions in order to determine proper expense
                recognition.





·
            The
                Company did not maintain proper internal controls over expenditures
                and
                accounting for certain liabilities which resulted in unrecorded
                liabilities and expenses.





·
            The
                Company did not conduct an in-depth study of the carrying value of
                its
                recorded assets or testing over the impairment of those assets.
                Specifically, the deficient controls did not allow for the proper
                identification of the composition of the items included in the Company’s
                capitalized software accounts nor did it allow for an impairment
                valuation
                to determine the proper carrying value of the
                asset.





·
            The
                Board of Directors failed to maintain documentation of approved acts
                of
                the Company. Formal Board of Director minutes were not maintained
                during
                this reporting period. As result, certain share-based transactions
                were
                not recorded or were recorded incorrectly in the Company’s financial
                statements.





In
      connection with the filing of this Form 10-QSB/A, the Company’s management
      including the Chief Executive Officer and Chief Financial Officer have
      re-evaluated the effectiveness of the Company’s disclosure controls and
      procedures as of June 30, 2004 and 2003. Because of the material weaknesses
      discussed above, the Company’s Chief Executive Officer and Chief Financial
      Officer have now concluded that the Company’s disclosure controls and procedures
      were not effective as of June 30, 2004 and 2003.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      provide reasonable assurance that information required to be disclosed in
      Company reports filed or submitted under the Securities and Exchange Act of
      1934
      (“Exchange Act”) is recorded, processed, summarized and reported, within the
      time periods specified in the Securities and Exchange Commission’s rules and
      forms. Disclosure controls and procedures include, without limitation, controls
      and procedures designed to provide reasonable assurance that information
      required to be disclosed in Company reports filed under the Exchange Act is
      accumulated and communicated to management, including the Company’s Chief
      Executive Officer and Chief Financial Officer as appropriate, to allow timely
      decisions regarding required disclosure.





It
      should
      be noted that a control system, no matter how well designed and operated, can
      provide only reasonable, not absolute, assurance that the objectives of the
      control system are met. As a result, there can be no assurance that a control
      system will succeed in preventing all possible instances of error and fraud.
      The
      Company’s disclosure controls and procedures are designed to provide reasonable
      assurance of achieving their objectives, and the conclusions of our Chief
      Executive Officer and Chief Financial Officer are made at the “reasonable
      assurance” level.


25


**b.** **Changes
        in internal control over financial reporting.**





There
      were no changes in the Company’s internal controls over financial reporting that
      materially affected, or are reasonably likely to materially affect the Company’s
      internal control over financial reporting during the three and six months ended
      June 30, 2004 and 2003.





**c.** **Management
        Remediation Plan.**





The
      Company’s management and Audit Committee are committed to addressing and
      resolving these material weaknesses fully and promptly, by putting in place
      the
      personnel, processes, technology and other resources appropriate to support
      our
      financial reporting processes.





To
      remediate the internal control material weaknesses described above, management
      has commenced implementation of the following measures:





·  For
      material transactions that are unique or outside the Company’s core operations,
      the Company will continue to document its process for accounting for such
      transactions and the Company will improve its process for researching the
      applicable accounting literature and documenting its conclusions, by consulting
      with outside experts to ensure its interpretations are correct.





·  The
      Company will prepare a standardized memorandum that is required to be completed
      for each transaction that is unique or outside the Company’s normal core
      operations that is material to its financial statements. This memo will be
      reviewed and approved by the Chief Financial Officer.





·  The
      Company will enhance formal communication with, and approval by, its Chief
      Financial Officer and Audit Committee of its application of Generally Accepted
      Accounting Principles in the United States (“US GAAP”) and account policy
      decisions for transactions that are outside the Company’s core operations and
      the advice received from outside experts.





·  All
      Board
      of Directors’ meetings as well as Committee meetings minutes will be reviewed by
      an appropriate member of the internal accounting staff to determine if there
      are
      any transactions that need to be accounted for properly or events that rise
      to
      the level of disclosure.




·  Management
      will evaluate and augment when necessary, the qualifications of accounting
      personnel and staffing levels at both the Illinois and New Jersey
      locations.





·  Management
      will establish new policies and procedures as part of an enhanced quarterly
      and
      annual financial review close process to include additional analysis and support
      for the financial accounts as well as to ensure that all appropriate disclosures
      are made in accordance with US GAAP and the rules and regulations of the
      SEC.





We
      have
      undertaken remedial action to address and correct the weakness in our internal
      controls and disclosure controls identified subsequent to the end of 2004.
      These
      actions include adopting an adequate review of the annual and quarterly
      financial statements, engaging qualified personnel to prepare the statements
      and
      ensuring that the personnel receive continuing professional educational related
      specifically to US GAAP. These actions were put in place during the quarter
      beginning January, 2006.





We
      have
      begun the extensive process of documenting and evaluating our internal control
      procedures in order to satisfy the requirements of Section 404 of the
      Sarbanes-Oxley Act which will apply to us beginning with our fiscal year 2007.
      Section 404 will require an annual report by our management on the effectiveness
      of our internal controls over financial reporting and for our independent
      registered public accounting firm to attest to management’s evaluation
      report.





**Internal
      Inquiry**





The
      Company initiated an internal inquiry into (i) possible improper recognition
      of
      approximately $30,000 in revenue for the period ended June 30, 2005 as reported
      in the Company’s Form 10-QSB for the period ended June 30, 2005, which possible
      improper recognition the Company believes was rectified in its Form 10-QSB
      for
      the period ended September 30, 2005, and (ii) the probability that Dischino
      & Associates, P.C., the Company’s former independent auditor, was not
      independent during a portion of the period in which it performed services on
      behalf of the Company. Management of the Company concluded that in light of
      the
      fact that it appears the Company’s former audit firm provided certain prohibited
      services and appeared not to have followed appropriate auditing standards,
      the
      financial statements included in the Company’s Annual Reports for the years
      ended December 31, 2003 and 2004, and the Company’s Quarterly reports on Form
      10-QSB for years 2004 and 2005 cannot be relied upon. Accordingly, all of the
      affected statements and filings have been restated and re-audited.




26




The
      legal
      firm of Greenberg Traurig, LLP was retained by the Audit Committee of the Board
      of Directors of the Company to handle the inquiry and to make recommendations
      to
      the Audit Committee. In April 2006, the findings of Greenberg Traurig, LLP
      were
      presented to the Company’s Audit Committee of the Board of Directors. As a
      result, the Audit Committee presented certain resolutions to the Board of
      Directors which were adopted on April 24, 2006. The resolutions included, but
      were not limited to, enhanced controls over an executive’s ability to enter into
      contracts on behalf of the Company, additional controls over safeguarding
      Company assets and changes to enhance the Company’s record retention
      procedures.





In
      September 2006, the Company’s Chief Financial Officer and the Company’s legal
      counsel met with the SEC Staff to explain the financial statement restatements,
      the internal control weaknesses that gave rise to those restatements as well
      as
      the corrective actions that have been undertaken.





**PART
      II -- OTHER INFORMATION**





Item
      6. Exhibits.





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 and Chief Financial Officer Certification pursuant
                to 18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.




*
            This
                certification is attached as Exhibit 32.1 accompanying this Quarterly
                Report on Form 10-QSB pursuant to Section 906 of the Sarbanes-Oxley
                Act of
                2002 and shall not be deemed “filed” by YTB International, Inc. for the
                purposes of Section 18 of the Exchange Act. A signed original of
                this
                written statement required by Section 906 has been provided to YTB
                International, Inc. and will be retained by YTB International, Inc.
                and
                furnished to the Securities and Exchange Commission or its staff
                upon
                request.




27


SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      caused this report to be signed on its behalf by the undersigned thereunto
      duly
      authorized.




REZCONNECT
                TECHNOLOGIES, INC./s/
                J. Scott TomerJ.
                Scott Tomer, CEODated:
                January 12, 2007




/s/
                John D. ClaggJohn
                D. Clagg, CFODated:
                January 12, 2007