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YTB International (YTBL.PK) (YourTravelBiz.com) has a Market Cap north of $450 million with no current financials. Any stock that rises straight up 900% in two months is always an object of interest.

Add to that a publicly traded company based on a multi-level marketing scheme [MLM]. These are always intriguing because of the potential for Ponzi-scheme type abuses.

Add to that a publicly traded company that hasn't reported its financials in over a year: one that trades on the pink sheets because of lack of adequate financial reporting.

.....One that has recently declared its historical financials for at least 3 prior years invalid and in need of restatement.

......One that, the last time it reported its numbers, had three times the revenues from selling business opportunities than it had from selling its core product.

.....One that guarantees a minimum commission for recruiting even more participants.

.....One whose operators include a minister whose primary accomplishment is building a large church congregation.

... .and finally, one whose compensation program is tied to the promise to issue large blocks of stock at a set price less than 6% of today's market price ($1 a share).

Seems impossible, but its all true.

Multi-level marketing is not illegal. A few multi-level marketing companies have been very successful. But far more collapse because of the potential abuses in the business structure that create the conditions of a Ponzi scheme.

Among the huge red flags swirling around this issue:

What are the real numbers? Is this company even profitable net of its multi-level compensation promises?

What are the legal implications and financial effects of promises of large blocks of below-market stock into an MLM organization st $1 a share?

Would regulators be concerned if MLM participants are being encouraged in any official or unofficial way to form an affinity group to buy the stock ?

And of course --- what has changed for this company in the last two months ?

Cautious Investing To All.

Disclosure: Author is short YTBL.PK.

Source: Reality Check: Raising the Red Flags on YTB International