Travelzoo 2002 Annual Report Download - page 53

TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The tax eÅects of temporary diÅerences that give rise to signiÑcant portions of the Company's deferred
tax assets and liabilities as of December 31, 2002, and 2001, are as follows:
2002 2001
Deferred tax assets:
Accruals and allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 39,204 $28,104
State income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,733 36,948
Capitalized start-up costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 760 1,531
Property and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 3,968
Intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 39,462 $13,073
Gross deferred tax assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 116,159 83,624
Deferred tax liabilities:
State income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $(3,275)
Property and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,792) Ì
Gross deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,792) (3,275)
Net deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $113,367 $80,349
No valuation allowance has been recorded for the deferred tax assets because management believes that
the Company is more likely than not to generate suÇcient future taxable income to realize the related tax
beneÑts.
(5) Stockholders' Equity
As of December 31, 2002 the authorized capital stock of Travelzoo Inc. comprised 40,000,000 shares of
$.01 par value common stock and 5,000,000 shares of $.01 par value preferred stock. As of December 31, 2002
19,425,147 shares of common stock and no shares of preferred stock were issued and outstanding. During
2000, the Company granted to an employee options to purchase 334,676 shares of common stock with an
exercise price of $0.05 and a two-year vesting period. In September 2000, upon the termination of the
employee, 70,000 options were fully vested under the original terms of the grant and the remaining unvested
options were forfeited. The Company recorded stock-based compensation in 2000 of $9,221 based on the
intrinsic value of the options that vested. The 70,000 vested options were exercised in September 2000.
As described in note 1(a), as part of the consideration exchanged for the outstanding shares of Silicon
Channels Corporation, the Company also issued to the majority stockholder in January 2001 fully vested and
exercisable options to acquire 2,158,349 shares of common stock. The options have an exercise price of $1.00
and expire in January 2011.
In October 2001, the Company granted to each director fully vested and exercisable options to purchase
30,000 shares of common stock with an exercise price of $2.00 for their services as a director in 2000 and 2001.
A total of 210,000 options were granted. The options expire in October 2011.
In March 2002, Travelzoo Inc. granted to each director fully vested and exercisable options to purchase
5,000 shares of common stock with an exercise price of $3.00 for their services as a director in 2002. A total of
35,000 options were granted. In October 2002, 1,411 options were forfeited upon the resignation of a director.
All other options are vested as of December 31, 2002. The options expire in March 2012.
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