Travelzoo 2007 Annual Report Download - page 41

Jurisdictions. Due to the global nature of the Internet, it is possible that, although our transmissions over the
Internet originate primarily in California, the governments of other states and foreign countries might attempt to
regulate our business activities. In addition, because our service is available over the Internet in multiple states and
foreign countries, these jurisdictions may require us to qualify to do business as a foreign corporation in each of
these states or foreign countries, which could subject us to taxes and other regulations.
Intellectual Property
Our success depends to a significant degree upon the protection of our brand names, including Travelzoo and
Top 20. If we were unable to protect the Travelzoo and Top 20 brand names, our business could be materially
adversely affected. We rely upon a combination of copyright, trade secret and trademark laws to protect our
intellectual property rights. We have registered the Travelzoo and Top 20 trademarks, among others, with the United
States Patent and Trademark Office. We have registered the Travelzoo and Travelzoo Top 20 trademarks with the
Office for Harmonization in the Internal Market of the European Community. We have registered the Travelzoo
trademark in Australia, Canada, China, Hong Kong, Japan, South Korea, and Taiwan. The steps we have taken to
protect our proprietary rights, however, may not be adequate to deter misappropriation of proprietary information.
We may not be able to detect unauthorized use of our proprietary information or take appropriate steps to
enforce our intellectual property rights. In addition, the validity, enforceability and scope of protection of
intellectual property in Internet-related industries is uncertain and still evolving. The laws of other countries in
which we may market our services in the future are uncertain and may afford little or no effective protection of our
intellectual property.
Employees
As of December 31, 2007, we had 157 employees worldwide. None of our employees are represented under
collective bargaining agreements. We 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.
Internet Access to Other Information
We make available free of charge, on or through our Web site (www.travelzoo.com), annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements,
as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Information included on our Web site does not constitute part of this Annual Report on Form 10-K.
Item 1A. 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 affecting our operating results could have a material adverse effect on our business, our quarterly and
annual operating results or financial 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
We cannot assure you that we will sustain profitability.
Although we have been profitable in the past, there is no assurance that we will be profitable in the future. It is
likely that we will not sustain profitability in 2008. We expect our operations in Asia Pacific and Europe to incur
significant losses in the foreseeable future and we expect that this will have a material negative impact on our
operating margins and net income. Furthermore, we forecast our future expense levels based on our operating plans
and our estimates of future revenues. We may find it necessary to significantly accelerate expenditures relating to
our sales and marketing efforts or otherwise increase our financial commitment to creating and maintaining brand
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