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PART I
The information in this Report contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements are based upon current expectations, assumptions, estimates and projections about
Travelzoo Inc. and our industry. These forward-looking statements are subject to the many risks and
uncertainties that exist in our operations and business environment that may cause actual results, performance
or achievements of Travelzoo to be diÅerent from those expected or anticipated in the forward-looking
statements. Any statements contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. For example, words such as ""may'', ""will'', ""should'', ""estimates'', ""predicts'',
""potential'', ""continue'', ""strategy'', ""believes'', ""anticipates'', ""plans'', ""expects'', ""intends'', and similar
expressions are intended to identify forward-looking statements. Travelzoo's actual results and the timing of
certain events could diÅer signiÑcantly from those anticipated in such forward-looking statements. Factors
that might cause or contribute to such a discrepancy include, but are not limited to, those discussed elsewhere
in this Report in the section entitled ""Risk Factors'' and the risks discussed in our other Securities and
Exchange Commission (""SEC'') Ñlings. The forward-looking statements included in this report reÖect the
beliefs of our management on the date of this report. We undertake no obligation to update publicly any
forward-looking statements for any reason, even if new information becomes available or other events or
circumstances occur in the future.
Item 1. Business
Overview
Travelzoo Inc. (the ""Company'' or ""Travelzoo'') is an Internet media company that publishes travel
oÅers from hundreds of travel companies. As the Internet is becoming consumers' preferred medium to search
for travel oÅers, we provide airlines, hotels, cruise lines, vacation packagers, and other travel companies with a
fast, Öexible, and cost-eÅective way to reach millions of users. While our products provide advertising
opportunities for travel companies, they also provide Internet users with a free source of information on
current sales and specials from hundreds of travel companies.
Our publications include the Travelzoo Web site (www.travelzoo.com), the Travelzoo Top 20 e-mail
newsletter, and the NewsÖash e-mail product. The Company also operates SuperSearch, a pay-per-click travel
search engine.
More than 300 companies purchase our advertising services, including American Airlines, ATA, Avis
Rent-A-Car, British Airways, Carnival Cruise Lines, Liberty Travel, Delta Air Lines, Expedia, Fairmont
Hotels & Resorts, JetBlue Airways, Kimpton Hotels, Marriott Hotels, Caesars Entertainment, Spirit Airlines,
Starwood Hotels & Resorts Worldwide, Royal Caribbean, United Airlines, US Airways, and Vanguard Rent-
A-Car.
Our revenues are generated from advertising sales. Our revenues have grown rapidly since we began
operations in 1998, primarily driven by an increasing number of travel companies listing their sales and
specials on the Travelzoo Web site and in the Travelzoo Top 20 newsletter. Our revenues increased from
approximately $84,000 for the period from May 21, 1998 (inception) to December 31, 1998, to approximately
$33.7 million for the year ended December 31, 2004.
Our principal business oÇce is located at 590 Madison Avenue, 21st Floor, New York, New York 10022.
Travelzoo is controlled by Ralph Bartel, who holds approximately 78% of the outstanding shares.
The Company was formed as a result of a combination and merger of entities founded by the Company's
majority stockholder, Mr. Ralph Bartel. In 1998, Mr. Bartel founded Travelzoo.com Corporation, a Bahamas
corporation, which issued 5,155,874 shares via the Internet to approximately 700,000 stockholders for no cash
consideration (""Netsurfer shares''). In 1998, Mr. Bartel also founded Silicon Channels Corporation, a
California corporation, to operate the Travelzoo Web site. During 2001, Travelzoo Inc. was formed as a
subsidiary of Travelzoo.com Corporation, and Mr. Bartel contributed all of the outstanding shares of Silicon
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