Travelzoo 2002 Annual Report Download - page 29

introduction of new services and related products or enhancements of existing products until equivalent or
replacement technology can be accessed, if available, or developed internally, if feasible. If we experience
these delays, our business could be materially adversely aÅected.
Risks Related to the Market for our Shares
We cannot be sure that an active market for our shares will develop or be maintained in the future.
On August 28, 2002, our shares commenced trading on the OTC Bulletin Board. However, there has
been only limited trading in the shares since that time, at widely varying prices, and the trading to date has not
resulted in an active market for our shares. We cannot assure you that an active market for our shares will be
established or maintained in the future. If such market is not established or maintained, stockholders will not
be able to readily sell their shares.
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 72% of our
outstanding shares with options to increase his percentage ownership to 75% on a fully-diluted basis, assuming
all former stockholders of Travelzoo Bahamas receive shares of Travelzoo Inc. Through his share ownership,
he is in a position to control Travelzoo and to elect our entire board of directors.
Investors may face signiÑcant restrictions on the resale of our stock due to federal penny stock
regulations.
If our shares trade at less than Ñve dollars per share, since the shares are not listed on a recognized
national exchange or on NASDAQ, our common stock may be deemed to be a ""penny stock'' under
Rule 3a51-1 under the Securities Exchange Act of 1934. Compliance with the requirements governing penny
stocks may make it more diÇcult for investors in our common stock to resell their shares to third parties or to
otherwise dispose of them.
Section 15(g) of the Exchange Act, and Rule 15g-2 under the Exchange Act, require broker-dealers
dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and
to obtain a manually signed and dated written receipt of the document before eÅecting any transaction in a
penny stock for the investor's account. Moreover, Rule 15g-9 promulgated under the Securities Exchange Act
of 1934 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such
stocks before selling any penny stock to that investor. These requirements signiÑcantly increase the time
necessary for a broker-dealer to sell a stock and limit the available purchasers for a stock.
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;
‚ consumer protection;
‚ copyright, trademark and patent infringement;
‚ pricing controls;
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