Travelzoo 2010 Annual Report Download - page 39

• our ability to attract and retain key personnel;
• our ability to manage our anticipated growth and expansion;
• our ability to attract traffic to our websites;
• technical difficulties or system downtime affecting the Internet generally or the operation of our products
and services specifically;
• 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, or escheat claims related to shares not
issued in the Company’s merger with Travelzoo.com Corporation; and
• volatility of our operating results in new markets.
We may significantly 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, if we find it necessary to respond to
increased brand marketing by a competitor, or if we decide to accelerate our acquisition of new subscribers.
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.
Our business model may not be adaptable to a changing market.
Our current revenue model depends on advertising fees paid primarily by travel, entertainment and local
companies. If current advertisers decide not to continue advertising their offers with us and we are unable to replace
them with new advertisers, our business may be adversely affected. To be successful, we must provide online
marketing solutions that achieve broad market acceptance by travel, entertainment and local companies. In
addition, we must attract sufficient 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 affected.
We may not be able to obtain sufficient funds to grow our business and any additional financing may be
on terms adverse to your interests.
For the year ended December 31, 2010 our cash and cash equivalents increased by $21.4 million to
$41.2 million. We intend to continue to grow our business, and intend to fund our current operations and
anticipated growth from the cash on hand. However, this may not be sufficient to meet our needs. We may not be
able to obtain financing on commercially reasonable terms, or at all.
If additional financing 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 effect on our business.
If we choose to raise additional funds through the issuance of equity securities, you may experience significant
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 financing by issuing debt securities, the terms of these securities
could restrict or prevent us from paying dividends and could limit our flexibility in making business decisions.
Our business may be sensitive to recessions.
The demand for online advertising may be linked to the level of economic activity and employment in the
U.S. and abroad. Specifically, our business is dependent on the demand for online advertising from travel,
entertainment and local companies. The recent recession decreased consumer travel and entertainment purchases
and caused travel, entertainment and local companies to reduce or postpone their marketing spending generally, and
their online marketing spending in particular. Continued or future recessions could have a material adverse effect on
our business and financial condition.
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