On August 4, 2008, a civil action was filed against three subsidiaries of YTB International, Inc. (the "Company") and certain executive officers of the Company in the Superior Court of California, County of Los Angeles, by the California Attorney General. The complaint alleges that the defendants violated California's unfair competition and advertising laws. The Company believes it has operated in full compliance with California law and intends to vigorously defend the case.
The complaint was filed after eighteen (18) months of dialogue, initiated by the Company with the Attorney General to discuss the implementation of a new California law's potential effect on the Company's business model. Throughout these discussions, which broadened over time, the Company has consistently cooperated with the state's information requests and provided detailed evidence in face-to-face meetings explaining how and why the Company's business model is in full compliance with California law. The parties recently came to a standstill and the August 4, 2008 complaint is a result of this standstill. The Company believes it has meritorious defenses to the claims, intends to advocate its position aggressively, and believes it will ultimately prevail in the case.
Scott Tomer, CEO of the Company, stated "we are disappointed that the state has decided to take this action. We firmly believe that the facts in this matter support our position and our legal counsel has advised us that our position is strong. The Company will vigorously defend this matter and we look forward to having the courts decide the merits of our case".