Travelzoo 2004 Annual Report Download - page 33

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 78% of our
outstanding shares with options to increase his percentage ownership to 81% on a fully-diluted basis. Through
his share ownership, he is in a position to control Travelzoo and to elect our entire board of directors.
Risks Related to Legal Uncertainty
We may become subject to burdensome government regulations and legal uncertainties aÅecting the
Internet which could adversely aÅect our business.
To date, governmental regulations have not materially restricted use of the Internet in our markets.
However, the legal and regulatory environment that pertains to the Internet is uncertain and may change.
Uncertainty and new regulations could increase our costs of doing business, prevent us from delivering our
products and services over the Internet or slow the growth of the Internet. In addition to new laws and
regulations being adopted, existing laws may be applied to the Internet. New and existing laws may cover
issues which include:
‚ user privacy;
‚ anti-spam legislation;
‚ consumer protection;
‚ copyright, trademark and patent infringement;
‚ pricing controls;
‚ characteristics and quality of products and services;
‚ sales and other taxes; and
‚ other claims based on the nature and content of Internet materials.
We may be liable as a result of information retrieved from or transmitted over the Internet.
We may be sued for defamation, negligence, copyright or trademark infringement or other legal claims
relating to information that is published or made available in our products. These types of claims have been
brought, sometimes successfully, against online services in the past. The fact that we distribute information via
e-mail may subject us to potential risks, such as liabilities or claims resulting from unsolicited e-mail or
spamming, lost or misdirected messages, security breaches, illegal or fraudulent use of e-mail or interruptions
or delays in e-mail service. In addition, we could incur signiÑcant costs in investigating and defending such
claims, even if we ultimately are not liable. If any of these events occur, our business could be materially
adversely aÅected.
Claims may be asserted against us relating to shares not issued in our recent merger.
The merger of Travelzoo.com Corporation into the Company became eÅective on April 25, 2002.
Stockholders of Travelzoo.com Corporation were allowed a period of two years following the eÅective date to
receive our shares. After April 25, 2004, two years following the eÅective date, we ceased issuing shares to the
former stockholders of Travelzoo.com Corporation. Many of the ""Netsurfer stockholders,'' who had applied to
receive shares of Travelzoo.com Corporation in 1998 for no cash consideration, did not elect to receive their
shares which were issuable in the merger prior to the end of the two-year period. A total of 4,115,532 of our
shares which had been reserved for issuance in the merger were not claimed.
It is possible that claims may be asserted against us in the future by former stockholders of
Travelzoo.com Corporation seeking to receive our shares, whether based on a claim that the two-year deadline
for exchanging their shares was unenforceable or otherwise. In addition, one or more jurisdictions, including
the Bahamas or the State of Delaware, may assert rights to unclaimed shares under escheat statutes. If such
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