Travelzoo 2003 Annual Report Download - page 33

Intense competition may adversely aÅect our ability to achieve or maintain market share and operate
proÑtably.
We compete with large Internet portal sites, such as About.com, America Online, Lycos, MSN and
Yahoo!, that oÅer listings or other advertising opportunities for travel companies. These companies have
signiÑcantly greater Ñnancial, technical, marketing and other resources and larger client bases. We also
compete we search engines like Google or Overture that oÅer pay-per-click listings. In addition, we compete
with newspapers, magazines and other traditional media companies that provide online advertising opportuni-
ties. We expect to face additional competition as other established and emerging companies, including print
media companies, enter the online advertising market. Competition could result in reduced margins on our
services, loss of market share or less use of Travelzoo by travel companies and consumers. If we are not able to
compete eÅectively with current or future competitors as a result of these and other factors, our business could
be materially adversely aÅected.
Loss of any of our key management personnel could negatively impact our business.
Our future success depends to a signiÑcant extent on the continued service and coordination of our
management team, particularly Ralph Bartel, our Chairman, President, Chief Executive OÇcer, Chief
Financial OÇcer and Secretary. The loss or departure of any of our oÇcers or key employees could materially
adversely aÅect our ability to implement our business plan. We do not maintain key person life insurance for
any member of our management team. In addition, we expect new members to join our management team in
the future. These individuals will not previously have worked together and will be required to become
integrated into our management team. If our key management personnel are not able to work together
eÅectively or successfully, our business could be materially adversely aÅected.
We may not be able to access third party technology upon which we depend.
We use technology and software products from third parties including Microsoft. Technology from our
current or other vendors may not continue to be available to us on commercially reasonable terms, or at all.
Our business will suÅer if we are unable to access this technology, to gain access to additional products or to
integrate new technology with our existing systems. This could cause delays in our development and
introduction of new services and related products or enhancements of existing products until equivalent or
replacement technology can be accessed, if available, or developed internally, if feasible. If we experience
these delays, our business could be materially adversely aÅected.
Risks Related to the Market for our Shares
We are controlled by a principal stockholder.
Ralph Bartel, who founded Travelzoo and who is our Chairman of the Board, President, Chief Executive
OÇcer, Chief Financial OÇcer and Secretary, is our largest stockholder, holding approximately 70% of our
outstanding shares with options to increase his percentage ownership to 73% on a fully-diluted basis, assuming
all former stockholders of Travelzoo Bahamas receive shares of Travelzoo Inc. Through his share ownership,
he is in a position to control Travelzoo and to elect our entire board of directors.
Investors may face signiÑcant restrictions on the resale of our stock due to federal penny stock
regulations.
If our shares trade at less than Ñve dollars per share, since the shares are not listed on a recognized
national exchange or on the NASDAQ National Market, our common stock may be deemed to be a ""penny
stock'' under Rule 3a51-1 under the Securities Exchange Act of 1934. Compliance with the requirements
governing penny stocks may make it more diÇcult for investors in our common stock to resell their shares to
third parties or to otherwise dispose of them.
Section 15(g) of the Exchange Act, and Rule 15g-2 under the Exchange Act, require broker-dealers
dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and
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