Travelzoo 2003 Annual Report Download - page 58

TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The tax eÅects of temporary diÅerences that give rise to signiÑcant portions of the Company's deferred
tax assets and liabilities as of December 31, 2003, and 2002, are as follows:
2003 2002
Deferred tax assets:
Accruals and allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 55,519 $ 39,204
State income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 169,751 36,733
Capitalized start-up costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 760
Intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 57,674 $ 39,462
Gross deferred tax assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 282,944 116,159
Deferred tax liabilities:
State income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (9,409) $ Ì
Property and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (20,713) (2,792)
Gross deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (30,122) (2,792)
Net deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $252,822 $113,367
No valuation allowance has been recorded for the deferred tax assets because management believes that
the Company is more likely than not to generate suÇcient future taxable income to realize the related tax
beneÑts.
(5) Stockholders' Equity
As of December 31, 2003 the authorized capital stock of Travelzoo Inc. comprised 40,000,000 shares of
$.01 par value common stock and 5,000,000 shares of $.01 par value preferred stock. As of December 31, 2003
15,294,033 shares of common stock and no shares of preferred stock were issued and 19,425,147 shares of
common stock were reported as outstanding. If all former stockholders of Travelzoo Bahamas accept their
shares in Travelzoo Inc., an additional 4,131,114 shares of common stock will be issued. These shares are
included in the reported number of shares outstanding in our Ñnancial statements. The former stockholders of
Travelzoo Bahamas have until April 25, 2004 to receive shares in Travelzoo Inc.
As described in note 1(a), as part of the consideration exchanged for the outstanding shares of Silicon
Channels Corporation, the Company also issued to the majority stockholder in January 2001 fully vested and
exercisable options to acquire 2,158,349 shares of common stock. The options have an exercise price of $1.00
and expire in January 2011.
In October 2001, the Company granted to each director fully vested and exercisable options to purchase
30,000 shares of common stock with an exercise price of $2.00 for their services as a director in 2000 and 2001.
A total of 210,000 options were granted. The options expire in October 2011.
In March 2002, Travelzoo Inc. granted to each director options to purchase 5,000 shares of common
stock with an exercise price of $3.00 that vested in connection with their services as a director in 2002. A total
of 35,000 options were granted. In October 2002, 1,411 options were forfeited upon the resignation of a
director. All other options are vested as of December 31, 2003. The options expire in March 2012.
In October 2003, the Company completed an underwritten secondary oÅering of 402,500 shares of
common stock sold by the Company's Chief Executive OÇcer and principal stockholder. The oÅering was
intended primarily to allow the Company to satisfy the requirement for listing on the NASDAQ SmallCap
Market that the Company have 300 round lot holders. The costs of the oÅering of $328,000 were paid for by
the Company and were included in general and administrative expenses.
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