Travelzoo 2012 Annual Report Download - page 61

Our revenues are advertising revenues, consisting primarily of listing fees paid by travel, entertainment and local businesses to advertise
their offers on Travelzoo's media properties. Listing fees are based on audience reach, placement, number of listings, number of impressions,
number of click-throughs, number of referrals, or percentage of the face value of vouchers sold. Insertion orders are typically for periods
between one month and twelve months and are not automatically renewed. Merchant agreements for Local Deals and Getaway advertisers are
typically for twelve months and are not automatically renewed. Our revenues have grown on an annual basis since we began operations in 1998.
Our revenues increased from approximately $84,000 for the period from May 21, 1998 (inception) to December 31, 1998, to approximately
$151 million for the year ended December 31, 2012 .
We have two operating segments based on geographic regions: North America and Europe. North America consists of our operations in
Canada and the U.S. Europe consists of our operations in France, Germany, Spain, and the U.K. For the year ended December 31, 2012,
European operations were 28% of revenues. Financial information with respect to our business segments and certain financial information about
geographic areas appears in Note 8 to the accompanying consolidated financial statements.
Our principal business office is located at 590 Madison Avenue, 37th Floor, New York, New York 10022.
Travelzoo is controlled by Ralph Bartel, who held beneficially approximately 50.5% of the outstanding shares as of December 31, 2012 .
The Company was formed as a result of a combination and merger of entities founded by the Company's majority stockholder, Ralph
Bartel. In 1998, Mr. Bartel founded Travelzoo.com Corporation, a Bahamas corporation, which issued 5,155,874 shares via the Internet to
approximately 700,000 “Netsurfer stockholders” for no cash consideration, but subject to certain conditions as referred to below. In 1998,
Mr. Bartel also founded Silicon Channels Corporation, a California corporation, to operate the Travelzoo website. During 2001, Travelzoo Inc.
was formed as a subsidiary of Travelzoo.com Corporation, and Mr. Bartel contributed all of the outstanding shares of Silicon Channels
Corporation to Travelzoo Inc. in exchange for 8,129,273 shares of Travelzoo Inc. and options to acquire an additional 2,158,349 shares at $1.00.
Mr. Bartel exercised these options in January 2009.
In April 2002, Travelzoo.com Corporation was merged into Travelzoo Inc. Under and subject to the terms of the merger agreement,
stockholders were allowed a period of two years following the effective date of the merger to receive one share of Travelzoo Inc. in exchange for
each outstanding share of common stock of Travelzoo.com Corporation. The records of Travelzoo.com Corporation showed that, assuming all of
the shares applied for by the Netsurfer stockholders were validly issued, there were 11,295,874 shares of Travelzoo.com Corporation
outstanding. As of April 25, 2004, two years following the effective date of the merger, 7,180,342 shares of Travelzoo.com Corporation had
been exchanged for shares of Travelzoo Inc. Prior to that date, the remaining shares which were available for issuance pursuant to the merger
agreement were included in the issued and outstanding common stock of Travelzoo Inc. and included in the calculation of basic and diluted
earnings per share. After April 25, 2004, the Company ceased issuing shares to the former stockholders of Travelzoo.com Corporation, and no
additional shares are reserved for issuance to any former stockholders, because their right to receive shares has now expired. On April 25, 2004,
the number of shares reported as outstanding was reduced from 19,425,147 to 15,309,615 to reflect actual shares issued as of the expiration date.
Earnings per share calculations reflect this reduction of the number of shares reported as outstanding. As of December 31, 2012 , there were
15,361,873 shares of common stock outstanding.
On April 21, 2011, the Company entered into an agreement with the State of Delaware resolving all claims relating to an unclaimed
property review which began in 2010. The primary issue raised in the preliminary findings from the review, received by the Company on
April 12, 2011, concerned the shares of Travelzoo which have not been claimed by former Netsurfer stockholders of Travelzoo.com as discussed
in the preceding paragraph. In the preliminary findings under the unclaimed property review, up to 3.0 million shares were identified as
“demandable” under Delaware escheat laws. While the Company continues to take the position that such shares were a promotional incentive
and were issuable only to persons who establish their eligibility as stockholders, the Company determined that it was in its best interest to
promptly resolve all claims relating to the unclaimed property review. The Company made a $20.0 million cash payment to the State of
Delaware on April 27, 2011 and received a complete release of those claims. Since March 2012, similar claims have been asserted by other
states. See Note 1 to the accompanying consolidated financial statements for further information on the unexchanged promotional merger shares
contingency.
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.”
4