Travelzoo 2012 Annual Report Download - page 68

Jurisdictions.
Due to the global nature of the Internet, it is possible that, although our transmissions over the Internet originate primarily in
California, the governments of other states and foreign countries might attempt to regulate our business activities. In addition, because our
service is available over the Internet in multiple states and foreign countries, these jurisdictions may require us to qualify to do business as a
foreign corporation in each of these states or foreign countries, which could subject us to additional taxes and other regulations.
Intellectual Property
Our success depends to a significant degree upon the protection of our brand names, including Travelzoo
®
and Top 20
®
. If we were unable
to protect the Travelzoo and Top 20 brand names, our business could be materially adversely affected. We rely upon a combination of copyright,
trade secret and trademark laws to protect our intellectual property rights. We have registered the Travelzoo and Top 20 trademarks, among
others, with the United States Patent and Trademark Office. We have registered the Travelzoo and Travelzoo Top 20 trademarks with the Office
for Harmonization in the Internal Market of the European Community. We have registered the Travelzoo trademark in Australia, Canada, China,
Hong Kong, Japan, South Korea, and Taiwan. The steps we have taken to protect our proprietary rights, however, may not be adequate to deter
misappropriation of proprietary information.
We may not be able to detect unauthorized use of our proprietary information or take appropriate steps to enforce our intellectual property
rights. In addition, the validity, enforceability and scope of protection of intellectual property in Internet-related industries are uncertain and still
evolving. The laws of other countries in which we may market our services in the future are uncertain and may afford little or no effective
protection of our intellectual property.
Employees
As of December 31, 2012, we had 417 employees in Europe and North America. None of our employees are represented under collective
bargaining agreements. We consider our relations with our employees to be good. Because of our anticipated continued growth, we expect that
the number of our employees will continue to increase for the foreseeable future.
Internet Access to Other Information
We make available free of charge, on or through our website (www.travelzoo.com), annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the SEC. Information included on our website does not constitute part of this Report.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. Any or all of the risks listed below as well as other variables affecting our
operating results could have a material adverse effect on our business, our quarterly and annual operating results or financial condition, which
could cause the market price of our stock to decline or cause substantial volatility in our stock price, in which event the value of your common
stock could decline. You should also keep these risk factors in mind when you read forward-looking statements.
Risks Related to Our Financial Condition and Business Model
We cannot assure you that we will be profitable.
In the years ended December 31, 2012, 2011 and 2010, we generated a net income of $18.2 million, $3.3 million and $13.2 million.
Although we were profitable in 2012, 2011 and 2010, there is no assurance that we will continue to be profitable in the future. We forecast our
future expense levels based on our operating plans and our estimates of future revenues. We may find it necessary to significantly accelerate
expenditures relating to our sales and marketing efforts or otherwise increase our financial commitment to creating and maintaining brand
awareness among Internet users and advertisers. If our revenues grow at a slower rate than we anticipate, or if our spending levels exceed our
expectations or cannot be adjusted to reflect slower revenue growth, we may not generate sufficient revenues to be profitable. Any of these
developments could result in a significant decrease in the trading price of our common stock.
Fluctuations in our operating results may negatively impact our stock price.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors that could affect our revenues
or our expenses in any particular period. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of
future performance. Factors that may affect our quarterly results include:
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