Travelzoo 2004 Annual Report Download - page 29

‚ the introduction, development, timing, competitive pricing and market acceptance of our products and
services and those of our competitors;
‚ our ability to attract and retain key personnel;
‚ our ability to manage our anticipated growth and expansion;
‚ our ability to attract traÇc to our Web site;
‚ technical diÇculties or system downtime aÅecting the Internet generally or the operation of our
products and services speciÑcally; and
‚ payments which we make to previous stockholders of Travelzoo.com Corporation who failed to submit
requests for shares in Travelzoo Inc. within the required time period.
In addition, we plan to signiÑcantly increase our operating expenses related to advertising campaigns for
Travelzoo and the expansion of our sales and production departments. If revenues fall below our expectations
in any quarter and we are unable to quickly reduce our spending in response, our operating results would be
lower than expected and our stock price may fall.
In addition, we are required under U.S. Generally Accepted Accounting Principles to review our
intangible assets for impairment when events or changes in circumstances indicate the carrying value may not
be recoverable. We may be required to record a signiÑcant expense or charge to earnings in our Ñnancial
statements in the period any impairment of intangible assets is determined.
We depend on one client for a substantial part of our revenues.
In the Ñscal year ended December 31, 2004, one client, Click Here, Inc., an advertising agency
representing Travelocity.com, accounted for 12% of our revenues. The loss of this client may result in a
signiÑcant decrease in our revenues and results of operations, which could have a material adverse eÅect on
our business. We have written agreements with Click Here, Inc. Copies of the agreements are Ñled as exhibits
to this Report. The agreements provide that Travelzoo will be paid for the publication of ads on a cost-per-
click basis. The agreements for 2004 were not cancelable by Click Here, Inc. The agreements for 2005 are
cancelable by Click Here, Inc. upon 90 days' written notice. The payment terms are net 60 days with no
discount for early payment.
Our business model is unproven and may not be adaptable to a changing market.
Our current revenue model depends on advertising fees paid by travel companies. If current clients decide
not to continue advertising their oÅers with us and we are unable to replace them with new clients, our
business may be adversely aÅected. To be successful, we must provide online marketing solutions that achieve
broad market acceptance by travel companies. In addition, we must attract suÇcient Internet users with
attractive demographic characteristics to our products. It is possible that we will be required to further adapt
our business model in response to changes in the online advertising market or if our current business model is
not successful. If we are not able to anticipate changes in the online advertising market or if our business
model is not successful, our business could be materially adversely aÅected.
We may not be able to obtain suÇcient funds to grow our business and any additional Ñnancing may be
on terms adverse to your interests.
We intend to continue to grow our business, and intend to fund our current operations and anticipated
growth from the cash Öow generated from our operations and our retained earnings. However, these sources
may not be suÇcient to meet our needs. We may not be able to obtain additional Ñnancing on commercially
reasonable terms, or at all.
If additional Ñnancing is not available when required or is not available on acceptable terms, we may be
unable to fund our expansion, successfully promote our brand name, develop or enhance our products and
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