Travelzoo 2005 Annual Report Download - page 65

TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
predict the outcome of any future claims which might be asserted relating to the unissued shares. If such
claims were asserted, and were fully successful, that could result in the Company's being required to issue up
to an additional approximately 4,079,000 shares of common stock for no additional payment.
On October 15, 2004, the Company announced a program under which it would make cash payments to
persons who establish that they were former stockholders of Travelzoo.com Corporation, and who failed to
submit requests for shares in Travelzoo Inc. within the required time period. The accompanying consolidated
Ñnancial statements included a charge in general and administrative expenses of $1.2 million for the year
ended December 31, 2005 of which $11,000 remains as a liability as of December 31, 2005. The liability is
based on the number of actual requests received from former stockholders through the reporting date which
had not yet been processed for payment. The total cost of this program is not reliably estimable because it is
based on the ultimate number of valid requests received and future levels of the Company's common stock
price. The Company's common stock price aÅects the liability because the amount of cash payments under
the program is based in part on the recent level of the stock price at the date valid requests are received. The
Company does not know how many of the requests for shares originally received by Travelzoo.com
Corporation in 1998 were valid, but the Company believes that only a portion of such requests were valid. As
noted above, in order to receive payment under the program, a person is required to establish that such person
validly held shares in Travelzoo.com Corporation. Assuming 100% of the requests from 1998 were valid,
former stockholders of Travelzoo.com Corporation holding approximately 4,079,000 shares had not submitted
claims under the program.
(3) Allowance for Doubtful Accounts and Accrued Expenses
The details of changes to the allowance for doubtful accounts are as follows:
Balance at December 31, 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 55,925
Additions Ì charged to costs and expenses, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,534
Balance at December 31, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 71,459
Additions Ì charged to costs and expenses, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 121,088
Deductions Ì write-oÅs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (65,000)
Balance at December 31, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 127,547
Additions Ì charged to costs and expenses, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 317,301
Deductions Ì write-oÅs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (26,400)
Balance at December 31, 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $418,448
The details of accrued expenses as of December 31, 2005 and 2004 were as follows:
December 31,
2005 2004
Liability to former stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ 525,467
Accrued compensation expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 199,486 104,592
Accrued advertising expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,846,799 1,460,127
Accrued professional services expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 148,687 146,904
Other accrued expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 198,870 227,179
Total accrued expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,393,842 $2,464,269
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