Travelzoo 2015 Annual Report Download - page 59

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Our reported total number of members may be higher than the number of our actual individual members and may not be
representative of the number of persons who are active potential customers.
The total number of members we report may be higher than the number of our actual individual members because some
members have multiple registrations, other members have died or become incapacitated and others may have registered under
fictitious names. Given the challenges inherent in identifying these members, we do not have a reliable system to accurately
identify the number of actual individual members, and thus we rely on the number of total members shown on our records as
our measure of the size of our member base. In addition, the number of members we report includes the total number of
individuals that have completed registration through a specific date, less individuals who have unsubscribed. Those numbers
may include individuals who do not receive our e-mails because our e-mails have been blocked or are otherwise undeliverable.
As a result, the reported number of members should not be considered as representative of the number of persons who continue
to actively consider our deals by reviewing our e-mail offers.
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, 2015, our cash and cash equivalents decreased by $20.3 million to $35.1 million, of
which $22.6 million was held outside the U.S. in certain of our foreign operations. We intend to continue to grow our business
and fund our current operations using cash on hand. However, this may not be sufficient to meet our needs, including the
payments required to settle various commitments and contingencies, as described under Note 5 and 6 to the accompanying
consolidated financial statements. 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, existing stockholders may experience
significant dilution of their ownership interest and holders of the additional equity securities may have rights senior to existing
stockholders of our common stock. If we obtain additional financing by issuing debt securities or bank borrowings, the terms of
these arrangements 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 primarily dependent on the demand for online advertising from travel and entertainment
companies. The most recent recession decreased consumer travel and caused travel and entertainment 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. Moreover, declines or disruptions in the travel
industry could adversely affect our launch of the hotel booking platform and financial performance.
Our operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event.
Our operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, unexpected
technical problems in the systems that power our websites and distribute our e-mail newsletters, break-ins and similar events. In
addition, a significant portion of our network infrastructure is located in Northern California, an area susceptible to
earthquakes. We do not have multiple site capacity to protect us against any such occurrence. Outages could cause significant
interruptions of our service. In addition, despite our implementation of network security measures, our servers are vulnerable to
computer viruses, physical and electronic break-ins, and similar disruptions from unauthorized tampering with our computer
systems. We do not carry business interruption insurance to compensate us for losses that may occur as a result of any of these
events.
Technological or other assaults on our service could harm our business.
We are vulnerable to coordinated attempts to overload our systems with data, which could result in denial or reduction of
service to some or all of our users for a period of time. We have experienced denial of service attacks in the past, and may
experience such attempts in the future. Any such event could reduce our revenue and harm our operating results and financial
condition. We do not carry business interruption insurance to compensate us for losses that may occur as a result of any of these
events.