Travelzoo 2004 Annual Report Download - page 28

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consider our relations with our employees to be good. Because of our anticipated further growth, we expect
that the number of our employees will continue to increase for the foreseeable future.
RISK FACTORS
Investing in our common stock involves a high degree of risk. Any or all of the risks listed below as well
as other variables aÅecting our operating results could have a material adverse eÅect on our business, our
quarterly and annual operating results or Ñnancial condition, which could cause the market price of our stock
to decline or cause substantial volatility in our stock price, in which event the value of your common stock
could decline. You should also keep these risk factors in mind when you read forward-looking statements.
Risks Related to Our Financial Condition and Business Model
Our limited operating history makes our business diÇcult to evaluate.
We have only a limited operating history for you to consider in evaluating our business. As a young
company, we face risks and uncertainties relating to our ability to successfully implement our business plan.
You must consider the risks, expenses and uncertainties which can materially aÅect the business of a young
company like ours. These risks include uncertainty whether we will be able to:
‚ increase awareness of the Travelzoo brand;
‚ attract and retain additional travel companies to list their special oÅers with us;
‚ attract additional Internet users to the Travelzoo Web site;
‚ increase the functionality of our products and services;
‚ maintain our current, and develop new, business relationships;
‚ respond eÅectively to competitive pressures; and
‚ continue to develop and upgrade our technology.
We cannot assure you that we will sustain proÑtability.
Although we have been proÑtable in the past, there is no assurance that we will continue to be proÑtable.
We forecast our future expense levels based on our operating plans and our estimates of future revenues. We
may Ñnd it necessary to accelerate expenditures relating to our sales and marketing eÅorts or otherwise
increase our Ñnancial commitment to creating and maintaining brand awareness among travel companies and
Internet users. If our revenues grow at a slower rate than we anticipate, or if our spending levels exceed our
expectations or cannot be adjusted to reÖect slower revenue growth, we may not generate suÇcient revenues to
sustain proÑtability. In this case, the value of the shares of Travelzoo could be reduced.
Fluctuations in our operating results may negatively impact our stock price.
Our quarterly operating results may Öuctuate signiÑcantly in the future due to a variety of factors that
could aÅect our revenues or our expenses in any particular quarter. You should not rely on quarter-to-quarter
comparisons of our results of operations as an indication of future performance. Factors that may aÅect our
quarterly results include:
‚ mismatches between resource allocation and client demand due to diÇculties in predicting client
demand in a new market;
‚ changes in general economic conditions that could aÅect marketing eÅorts generally and online
marketing eÅorts in particular;
‚ the magnitude and timing of marketing initiatives;
‚ the maintenance and development of our strategic relationships;
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