YTB gets “going concern” notice, swings to loss in ‘08
The auditors of YTB International Inc. have raised concerns about the company’s future and its financial controls, the Wood River-based online travel seller disclosed this week. And the exodus of agents, whose fees to operate travel websites provide most of YTB’s revenue, continued.
YTB’s annual report, released this week, is the latest sign of trouble at the company. Its star has fallen fast since August, when California Attorney General Jerry Brown accused the company of deceptive marketing in a lawsuit filed days before its huge annual convention at the Edward Jones Dome.
In the filing, YTB reported a $4.5 million loss in 2008, after a $3.2 million gain the year before, and the company had just $1.2 million in cash at year’s end.
That, coupled with the weak economy and "substantial uncertainties" around YTB, led auditors from UHY LLP in St. Louis to question the company’s future. Auditors also criticized YTB’s internal financial controls, saying the company’s board had too little control over management’s spending and that executives had signed contracts without proper board approval.
In August, a Post-Dispatch investigation detailed millions of dollars worth of business deals in recent years between YTB and companies owned by its executives and board members, including a small Illinois bank that has since been taken over by the state no teletrack payday loans.
YTB said it will right its financial ship through cost-cutting and better use of technology. The company said it has begun requiring board review of any spending worth more than $100,000 a year, or more than $50,000 with a company insider.
It’s also seen a sharp drop in the ranks of its "referring travel agents," from about 130,000 in August to 92,000 at year’s end. Those agents pay $500 up front and $50 a month for a website through which they sell travel, and they provide about three-quarters of YTB’s $162 million in revenue. Those numbers fell quickly after the California lawsuit, which is still in court, as well as a class-action suit from former agents in federal court in East St. Louis.
YTB said it has spent about $1 million fighting the suit in California.
tlogan@post-dispatch.com | 314-340-8291
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