WOOD RIVER, Ill. (Legal Newsline)-YTB International Inc., the online travel company that is the target of investigation by two state attorneys general, posted meager earnings in the third quarter, corporate filings show.
YTB faces deceptive practices investigations by Attorney Generals Jerry Brown of California and Lisa Madigan of Illinois. Brown has accused the company of operating a pyramid scheme.
Some of YTB's former agents have filed a class action lawsuit claiming the company operates under a pyramid scheme that relies on a chain-referral sales technique.
The company - which operates through three subsidiaries: YourTravelBiz.com, Inc., YTB Travel Network, Inc., and REZconnect Technologies, Inc. -- said in filings Friday that it plans to raise cash by selling an office building in Edwardsville, Ill., as well as its Learjet aircraft.
The company said it made a profit of $288,000 in the three months ending Sept. 30, down sharply from the $2.2 million the company raked in the same period a year ago.
Filings with the U.S. Securities and Exchange Commission also show the company's revenue grew 7.5 percent to $42.8 million, while its expenses climbed 13 percent.
Net loss for the nine months ended Sept. 30 was $3.4 million, or $0.03 per diluted share, compared to a net income of $1.6 million, or $0.01 per diluted share, for the same period a year ago.
"While we are disappointed by the reduction in our net income, we are also aware that much of the softness we are seeing is reflective of both an industry-wide trend and a difficult comparison to last year's explosive growth," company CEO Scott Tomer said Monday.
"In the face of a looming recession, growing companies face the difficult choice of either cutting back on marketing efforts to save on expenses, or increasing these efforts in order to capture the increasingly selective customer," he added.
From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.