Travelzoo 2005 Annual Report Download - page 32

‚ our ability to manage our anticipated growth and expansion;
‚ our ability to attract traÇc to our Web sites;
‚ technical diÇculties or system downtime aÅecting the Internet generally or the operation of our
products and services speciÑcally; and
‚ payments which we may 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 may signiÑcantly increase our operating expenses related to advertising campaigns for
Travelzoo for a certain period if we see a unique opportunity for a brand marketing campaign or if we Ñnd it
necessary to respond to increased brand marketing by a competitor.
If revenues fall below our expectations in any quarter and we are unable to quickly reduce our operating
expenses in response, our operating results would be lower than expected and our stock price may fall.
We depend on one client for a substantial part of our revenues.
In the Ñscal year ended December 31, 2005, one client accounted for 15% of our revenues. The loss of
this client may result in a signiÑcant decrease in our revenues, which could have a material adverse eÅect on
our business. Copies of the agreements with our largest client in 2005 were previously Ñled as exhibits to our
Annual Report on Form 10-K for the year ended December 31, 2004. The agreements provided that Travelzoo
will be paid for the publication of ads on a cost-per-click basis. The agreements were cancelable upon 90 days'
written notice, and the payment terms were net 60 days with no discount for early payment. The agreements
for 2005 expired on December 31, 2005.
Our business model 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 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
services, take advantage of business opportunities, or respond to competitive pressures, any of which could
have a material adverse eÅect on our business.
If we choose to raise additional funds through the issuance of equity securities, you may experience
signiÑcant dilution of your ownership interest, and holders of the additional equity securities may have rights
senior to those of the holders of our common stock. If we obtain additional Ñnancing by issuing debt securities,
the terms of these securities could restrict or prevent us from paying dividends and could limit our Öexibility in
making business decisions.
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