STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

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

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

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

Overview

YTB International, Inc. and its subsidiaries may be referred to as the "Company" or in the first person notation of "we," "us," and "ours" in the following discussion.

We are a leading provider of Internet-based travel related services and operate through our three subsidiaries: YourTravelBiz.com, Inc. ("YTB Marketing"), YTB Travel Network, Inc. ("YTB Travel") and REZconnect Technologies, Inc. ("REZconnect"). YTB Marketing establishes and sells online travel stores and compensates its Independent Marketing Representatives ("Reps") (independent contractors) who sell such online travel stores through a direct sales model and are compensated via a multilevel marketing commission structure. YTB Travel contracts with the customers of online travel stores, supports online booking transactions, supplies personal fulfillment services, collects travel commissions and pays travel commissions. REZconnect operates a franchise chain of travel agencies and also acts as a host agency for traditional brick and mortar travel companies. REZconnect is reported as part of the YTB Travel segment for segment reporting purposes.

YTB Marketing conducts business through marketing, training and support of its Rep sales force who are responsible for marketing and selling online travel stores to Referring Travel Agents (Referring Travel Affiliates in Canada, "RTAs"), most of whom work from their homes.

YTB Travel is the travel management subsidiary that processes travel sales from online business models and processes and handles bookings (reservations) from RTA online travel stores, negotiates deals with preferred vendors, and receives incentives based on the volume of business that it produces. The fulfillment is offered through interactive, real time booking engines and access to preferred deals with leading travel industry suppliers.

The emerging market shift to the Internet for travel services presents the opportunity for advancement of products and services by referral relationships. Typical online travel merchants sell a commodity (travel), which does not engender strong customer loyalty. By contrast, each RTA develops personal relationships with his or her customers, who book travel through the RTA's online travel store, thereby creating a significant advantage for our sales force over the major online travel companies. Typically, the cost to book a trip through an RTA is nearly identical to booking a trip through a major online travel company. The RTAs' online stores provide access to more than 60 booking engines, including World Choice Travel (a subsidiary of Travelocity), Hotels.com, Apple Vacations, Collette Vacations, and others.

Future travel revenue growth should accelerate as we add RTAs and as our existing RTAs become more productive. RTA sites are available for use 24 hours, 7 days a week. On June 30, 2008, we issued a press release announcing that we have been named one of the country's leading travel agencies in Travel Weekly's 2008 Power List. In this year's Travel Weekly Power List, we are ranked 26th among all travel agencies, advancing nine places over our ranking in the previous year with an 84% increase in travel sales.

Our revenues are comprised primarily of online travel store sales and monthly RTA web hosting fees, commissions paid by travel providers and direct sales of travel. In addition, certain travel suppliers pay performance-based compensation known as "override commissions" or "overrides." Commission revenues and gross retail sales, net of allowances for cancellations, are recognized generally based on the expected date of travel. Overrides are recognized on an accrual basis, based on prior years experience adjusted for current year volumes. Management believes these estimates to be reasonable. Revenue from online travel store sales is deferred and recognized ratably as revenue over a twelve-month period.

The commission rates paid by travel suppliers, in addition to overrides, are determined by individual travel suppliers and are subject to change. Historically, typical standard base commission rates paid by travel suppliers have been approximately 10% for hotel reservations, 5% to 10% for car rentals, 10% to 16% for cruises and vacation packages and a nominal service fee for airline tickets. During the past several years, leisure vendors (including tour operators, cruise lines and hotel and car packagers) have not reduced their commission levels but in fact have offered YTB Travel incentive commissions above the standard compensation for its volume business. YTB Travel expects that its weighted average commission of online transaction revenues will increase due to the fact that its leisure bookings are much greater as a percentage of total sales than airline ticketing, the latter offering lower commissions. Each online travel storeowner (RTA) pays a monthly fee of $49.95 to us, and can earn transactional compensation from travel purchased from his or her online travel store. There can be no assurance that travel suppliers will not reduce commission rates paid to YTB Travel or eliminate such commissions entirely, which could, individually or in the aggregate, have a material adverse effect on our business, operating results and financial condition.

Because we are not the merchant of record for the travel sales since the travel is booked directly with the travel vendor (except for the two cruises which set sail in the second quarter of 2008), our revenues do not reflect the retail value of travel sold through our online travel stores, which is significant. In 2007, our online travel stores were responsible for over $414 million in retail travel sales.

About Our Industry

Booking via the Internet has resulted in many opportunities for individuals and provides greater access to the consumer. We have become a target of criticism from some traditional "Brick and Mortar" agencies as their market share diminishes.

We believe that the shift to the Internet for booking travel and our unique programs for our RTAs place us in a valuable and unique position to provide an income stream for our RTAs and allows the ultimate consumer a choice of booking his or her travel through the ever-growing Internet travel industry.

We are not attempting to conform to the pre-Internet travel industry of the 1970s and '80s. Rather, we are building a new company with new ideas and building an army of entrepreneurs. We will continue to attract RTAs to sell our products. We will provide our sales force with a powerful e-commerce consumer website that sells travel as well as other highly consumed products. Our customers will shop and purchase on the Internet from someone they know and with whom they have a relationship.

We offer opportunities for entrepreneurs who desire to capitalize on the growing trend of online travel bookings. In our eighth year of business and with well over a billion dollars in travel sales in our history, we will continue to teach and practice the highest standards of business principles and practices in this exciting and growing travel industry.

Results of Operations

The following tables set forth, for the three and nine months ended September
30, 2008 and 2007, as indicated, the percentage relationship of certain items
from the Company's consolidated statement of operations to total net revenues. A
summary of consolidated results follows.

                                             Three months ended                      Three months ended                        Variance
                                                              % of Net                                % of Net        Increase       Inc.(Decr.)
                                     September 30, 2008      Revenues        September 30, 2007       Revenues       (Decrease)           %

NET REVENUES
 Online travel store sales and
monthly fees                        $         30,473,409            71.1 %  $         28,691,270            72.1 %  $  1,782,139               6.2 %
Travel commissions and services                8,014,502            18.7 %             5,536,399            13.9 %     2,478,103              44.8 %
Training programs and marketing
materials                                      2,677,641             6.2 %             4,520,974            11.3 %    (1,843,333 )           (40.8 )%
Other                                          1,710,802             4.0 %             1,120,599             2.7 %       590,203              52.7 %

Total net revenues                            42,876,354           100.0 %            39,869,242           100.0 %     3,007,112               7.5 %

OPERATING EXPENSES
Marketing commissions                         16,765,206            39.1 %            20,603,925            51.7 %    (3,838,719 )           (18.6 )%
Travel commissions and other
costs                                          5,177,571            12.1 %             3,913,021             9.8 %     1,264,550              32.3 %
Depreciation and amortization                    678,517             1.6 %               304,243             0.8 %       374,274             123.0 %
Marketing and selling                          1,369,170             3.2 %               543,305             1.4 %       825,865             152.0 %
General and administrative                    18,559,254            43.2 %            12,317,196            30.8 %     6,242,058              50.7 %

Total operating expenses                      42,549,718            99.2 %            37,681,690            94.5 %     4,868,028              12.9 %

INCOME FROM OPERATIONS                           326,636             0.8 %             2,187,552             5.5 %    (1,860,916 )           (85.1 )%

OTHER INCOME (EXPENSE)
Interest and dividend income                      38,162             0.0 %               128,804             0.3 %       (90,642 )           (70.4 )%
Interest expense                                 (11,509 )           0.0 %               (23,115 )          (0.1 )%       11,606             (50.2 )%
Foreign currency translation
loss                                            (101,022 )          (0.2 )%                    -             0.0 %      (101,022 )             n/a

Total other income (expense)                     (74,369 )          (0.2 )%              105,689             0.2 %      (180,058 )          (170.4 )%

INCOME BEFORE INCOME TAX
PROVISION                                        252,267             0.6 %             2,293,241             5.7 %    (2,040,974 )           (89.0 )%

INCOME TAX PROVISION (BENEFIT)                   (35,732 )          (0.1 )%              143,750             0.4 %      (179,482 )          (124.9 )%

NET INCOME                          $            287,999             0.7 %  $          2,149,491             5.3 %  $ (1,861,492 )           (86.6 )%

                                               Nine months ended                       Nine months ended                        Variance
                                                                % of Net                                % of Net        Increase       Inc.(Decr.)
                                       September 30, 2008      Revenues        September 30, 2007      Revenues        (Decrease)           %

NET REVENUES
Online travel store sales and
monthly fees                          $         97,786,861            75.0 %  $         69,031,218            72.0 %  $ 28,755,643             41.7 %
Travel commissions and services                 22,162,946            17.0 %            13,930,824            14.5 %     8,232,122             59.1 %
Training programs and marketing
materials                                        7,954,049             6.1 %            11,234,337            11.7 %    (3,280,288 )          (29.2 )%
Other                                            2,474,375             1.9 %             1,722,476             1.8 %       751,899             43.7 %

Total net revenues                             130,378,231           100.0 %            95,918,855           100.0 %    34,459,376             35.9 %

OPERATING EXPENSES
Marketing commissions                           66,309,983            50.9 %            55,370,759            57.7 %    10,939,224             19.8 %
Travel commissions and other costs              16,234,166            12.5 %             9,398,036             9.8 %     6,836,130             72.7 %
Depreciation and amortization                    1,890,346             1.4 %               782,218             0.8 %     1,108,128            141.7 %
Marketing and selling                            4,293,044             3.3 %             3,134,875             3.3 %     1,158,169             36.9 %
General and administrative                      45,002,262            34.5 %            25,727,261            26.8 %    19,275,001             74.9 %

Total operating expenses                       133,729,801           102.6 %            94,413,149            98.4 %    39,316,652             41.6 %

INCOME (LOSS) FROM OPERATIONS                   (3,351,570 )          (2.6 )%            1,505,706             1.6 %    (4,857,276 )         (322.6 )%

OTHER INCOME (EXPENSE)
Interest and dividend income                       190,360             0.1 %               309,358             0.3 %      (118,998 )          (38.5 )%
Interest expense                                   (65,606 )           0.0 %               (27,041 )           0.0 %       (38,565 )          142.6 %
Foreign currency translation loss                 (118,625 )          (0.1 )%                    -             0.0 %      (118,625 )            n/a

Total other income (expense)                         6,129             0.0 %               282,317             0.3 %      (276,188 )          (97.8 )%

INCOME (LOSS) BEFORE INCOME TAX
PROVISION                                       (3,345,441 )          (2.6 )%            1,788,023             1.9 %    (5,133,464 )         (287.1 )%

INCOME TAX PROVISION                                83,788             0.0 %               143,750             0.1 %       (59,962 )          (41.7 )%

NET INCOME (LOSS)                     $         (3,429,229 )          (2.6 )% $          1,644,273             1.8 %  $ (5,073,502 )         (308.6 )%

The RTA numbers represent the number of active RTAs paying $49.95 per month to us as monthly web hosting fees. The New RTAs represent the number of online travel store sites sold during the respective periods. The number of sales, and the number of recurring monthly fees paid, each directly impacts our revenues and expenses. As each new site is sold for $449.95, marketing commissions are paid on that sale. Likewise, each recurring monthly fee paid results in marketing commissions paid to the Reps. As the number of active RTAs grows, the amount of our travel commission revenue grows as well. Correspondingly, our travel commission expense follows suit.

The growth on a year-to-year basis of our organization that is evidenced by the above numbers directly impacts our financial results, both on the revenue side, as well as the expense side. As more sites are sold and maintained, the amount of marketing and travel commissions correspondingly increase, as do other volume related expenses, such as wage and benefit costs. As more sales are made, our entire infrastructure needs to keep pace with the sales volume.

The following table sets forth information concerning (i) the number of RTAs that were added to, and those that were deactivated from (by non-payment or cancellation), our organization during each of the three months and nine months ended September 30, 2008 and 2007, and (ii) the weighted average number of active RTAs during each such period:

                            Beginning Balance                                       Ending Balance    Average Renewals
       Year 2008               Active RTAs         New RTAs       Deactivations      Active RTAs       for the Period
3 months ended September
        30, 2008                       131,572          15,857            32,815            114,614             121,101

9 months ended September
        30, 2008                       131,802          69,170            86,358            114,614             130,690



                            Beginning Balance                                      Ending Balance    Average Renewals
       Year 2007               Active RTAs         New RTAs      Deactivations      Active RTAs       for the Period
3 months ended September
        30, 2007                       100,344         38,032            17,428            120,948             112,837

9 months ended September
        30, 2007                        59,333        105,756            44,141            120,948              94,108

An RTA's online travel store can be deactivated for a number of reasons. For example, the payment method used to pay for monthly web hosting fees may no longer be valid or may have been changed and an RTA may fail to update this information. If the RTA fails to provide payment for future months' web hosting fees in advance of the service being provided, the online travel store will be deactivated automatically after an applicable grace period. We also have a cancellation policy that allows an RTA to voluntarily discontinue his or her online travel store; such an online travel store is deactivated at the time the request is made. RTA sites may be reactivated by simply resuming payment of web hosting fees from that point forward. We reserve the right to deactivate any online travel store which we believe may have fraudulent activity associated with it or with its owner.

Deactivations of our RTAs' online travel store in relation to the number of new online travel store sales (websites) during a specified period is a key component in the calculation performed to determine the average lifespan that an RTA remains with our Company. If the proportion of RTA deactivations were to grow as a percentage of active paying RTAs, the average lifespan of an RTA would decrease and vise versa. In the event of such a decrease, we would accelerate the time frame over which we recognize the income and offsetting expense, relating to the RTA initial sign up fees. This acceleration would have a positive impact on our bottom line, as the amount of revenue deferred from an RTA's sign-up fees outweighs the offsetting deferred expense for commissions related to such sign-up. With no change in the commission structure, we expect the trend of revenues exceeding the related expenses to continue.

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

We reported net income for the third quarter ended September 30, 2008 of $287,999 or $0.00 per diluted share compared to net income of $2,149,491 or $0.02 per diluted share for the comparable quarter of 2007.

Net Revenues

Net revenues totaled $42,876,354 and $39,869,242 in the third quarter of 2008 and 2007, respectively.

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

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

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

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

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

Operating Expenses

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

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

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

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

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