What changed in this filing

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Item 1A. Risk Factors

2024-03-22 compared with 2023-03-31 · 136 added, 152 removed, 354 unchanged (45% of the section changed)

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Risks Related to Our Financial Condition and Business Model

The COVID pandemic had, and the after-effects of the pandemic may continue to have, a material adverse impact on the travel industry and our business and financial performance.

The COVID pandemic resulted in a significant negative effect on our business, financial condition, and results of operations and cash flows.

Specifically, the measures implemented in 2020 to contain the virus (quarantine restrictions, testing and vaccination requirements, business closures, etc.) led to a steep decline in travel and entertainment demand, which led to (1) many of our advertisers pausing or stopping advertising with us, (2) a high level of cancellations for our hotel partners and travel package partners, and (3) refund requests for vouchers sold by Travelzoo for restaurant and spa partners.

At the time, we modified our policies to respond to the changing circumstances, particularly with our vouchers, where we extended expiration dates and allowed for full refundability, which enabled Travelzoo to mitigate some of the negative effects of the pandemic on Travelzoo’s financial performance.

Now that the pandemic and its lingering effects have mostly subsided, we are seeing most of our advertisers and partners return to advertising with us and have altered our policies again to align with the changing environment (including reverting to a 14-day return window for vouchers and implementing a surcharge for full refundability for vouchers), although with the emergence of new variants, this trend could stop or even reverse.

Any changes in laws or regulations that again impair the ability or desire of individuals to travel, including laws or regulations banning travel, requiring vaccination, COVID testing requirements in connection with travel, the closure of hotels or other travel-related businesses or other restrictions in connection with or as a result of the pandemic, may exacerbate the negative impact on our business, financial condition, results of operations, and cash flows.

The ultimate extent of the pandemic and its impact on travel is unknown and difficult to predict.

The pandemic and the emergence of new variants could continue to hamper global economic activity for an extended period of time, even as restrictions are lifted and vaccination rates increase, leading to decreased disposable income for consumers, increased and ongoing unemployment and/or a decline in consumer confidence, all of which could significantly reduce discretionary spending on travel.

In turn, that could have a negative impact on demand for our services.

Although all countries have opened their borders for travel again, there is inconsistency in testing, vaccination and safety protocols across countries, making trip planning unpredictable and undermining consumer confidence.

Because we operate in various countries (including through our licensing arrangements), we are subject to varying rates of recovery.

The aforementioned circumstances could result in a material adverse impact on our business, financial condition, results of operations and cash flows, potentially for a prolonged period.

Impairments of goodwill, long-term investments and long-lived assets have a negative impact on our results of operations.

We perform our impairment test annually in October unless there are events that trigger the need for an interim test.

We recorded a $200,000 impairment charge in connection with the indefinite lived intangible assets (JFC Trade name) in the annual impairment test for 2022.

No impairment charge was identified in connection with the annual impairment test for 2021.

The determination of the fair value reflects numerous assumptions that are subject to various risks and uncertainties.

It requires significant judgments and estimates and actual results could be materially different.

Future events and changing market conditions may lead us to re-evaluate the assumptions reflected in the current forecast, particularly the assumptions related to the length and severity of the global pandemic and the shape and timing of the subsequent recovery, which may result in a need to recognize additional impairment charges, which could have a material adverse effect on our results of operation s.

See Note 3 to the Consolidated Financial Statements for fu rther information.

We cannot assure you that we will be profitable.

In the year ended December 31, 2023, we generated consolidated net income of $12.5 million, of which $12.4 million income was attributable to Travelzoo.

In the year ended December 31, 2021, we generated consolidated net income of $902,000 of which $911,000 income was attributable to Travelzoo .

Our profitability was adversely impacted in 2022 and 2021 due to the global pandemic, and there is no assurance that we will be profitable in the future.

In the year ended December 31, 2022, we generated consolidated net income of $6.6 million, of which $ 6.6 million income was attributable to Travelzoo .

Our profitability was adversely impacted in 2022 and 2021 due to the global COVID pandemic.

We forecast our future expense levels based on our operating plans and our estimates of future revenues.

Given the impact of the pandemic in 2020, we significantly cut expenses to preserve profitability as much as possible.

In the future, depending on various factors, including but not limited to, market conditions, the improvement of the economy and the return of the travel industry, we may need to continue to cut expenses to preserve profitability or alternatively we may find it necessary to significantly accelerate expenditures to meet increased demand or to maintain brand awareness.

We may also expand and upgrade technology and make investments in existing or new products that may impact our profitability.

In the future, depending on various factors, including but not limited to, market conditions, changes in the general economy and the travel industry, we may need to cut expenses to preserve profitability or, alternatively, we may find it necessary to significantly accelerate expenditures to meet increased demand or to maintain brand awareness.

We may also expand, upgrade and/or add technology and make investments in existing or new products (including, but not limited to the move to a paid membership model) that may impact our profitability.

If our revenues grow at a slower rate than we anticipate or decline, or if our spending levels exceed expectations or cannot be adjusted to reflect slower growth, we may not be profitable.

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the magnitude and timing of marketing initiatives, including member acquisition and expansion efforts;

the introduction, development, timing, competitive pricing and market acceptance of our products and services and those of our competitors;

the introduction, development, timing, competitive pricing and market acceptance of our products and services (including our move to a paid membership model) and those of our competitors;

our ability to attract, hire and retain key personnel;

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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.

Expansion of product offerings may result in additional costs that exceed revenue and may trigger additional stock volatility.

In March of 2022, we announced the creation of our new Metaverse business and our plans to launch Travelzoo META, a subscription membership service that provides members with exclusive access to Metaverse travel experiences.

In response to the global pandemic, we expanded our voucher product offering to include fully refundable vouchers and have now added a surcharge option where members can pay extra for full refundability.

We have also historically invested in packaging technology and expansion of our hotel booking platform.

We may in the future invest in the technology for our email products or invest in completely new products.

Expansion of product offerings may result in additional costs that exceed revenue and may trigger additional stock price volatility.

In December of 2023, we announced that effective January 1, 2024, we would be moving to a paid membership model, with existing Travelzoo members grandfathered in through the end of the year.

In March of 2022, we announced the creation of our new Metaverse business and in 2023, we launched Travelzoo META Founding Membership, following a test and learn strategy, with plans for the launch of a subscription membership service that provides members with exclusive access to Metaverse travel experiences to follow.

We previously expanded our voucher offering to include fully refundable vouchers and later added a surcharge option where members can pay extra for full refundability.

We have historically invested in packaging technology and expansion of our hotel booking platform.

We may in the future invest in upgraded technology for our email

products or invest in completely new technology or products.

Such product modifications and expansions may result in an increase in costs in the near-term and an increase in cost structure in the long-term, which may be in excess of incremental revenue.

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If we cannot attract members to our product offerings, our financial results could be affected.

Fully refundable vouchers may also result in significant refunds and costs for the Company.

In addition, the hotel booking platform and travel packages will be sensitive to fluctuations in hotel supply, occupancy and average daily rates and a fluctuation in any of these factors could impact our revenue.

We can give no assurances that any of our product offerings will yield the benefits we expect and will not result in additional costs.

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Our Local Deals and Getaways products include the sale of vouchers directly to consumers to advertise promotional offers provided by merchants.

This format may require additional investments to maintain and grow the business including the hiring of additional sales force and additional spend on customer service, marketing, technology tracking systems and payment processing.

This format may require additional investments to maintain and grow the business including the hiring of additional sales personnel and additional spend on customer service, marketing, technology tracking systems and payment processing.

Such vouchers had been typically non-refundable or refundable by the Company within 7-14 days of purchase.

In March 2020, the Company expanded its voucher products to include fully refundable vouchers, which allow the consumer to request a refund through the expiration date of the voucher.

In March 2020, the Company expanded its voucher products to include fully refundable vouchers, which allowed the consumer to request a refund through the expiration date of the voucher.

This shift increased the rate at which our existing customers purchased vouchers.

However, as market conditions have continued to shift, we have seen a decline in demand for vouchers again.

We have therefore pivoted back to 14 day voucher refundability, but have also added a surcharge option, where members

can pay an extra fee for full refundability of the voucher.

It is possible in the future that the Company may strategically move away from offering the surcharge or vouchers in general.

It is also possible that travel restrictions may change again, resulting in consumers being unable to utilize their vouchers in the near-term or at all, meaning we would need to again work with partners to extend travel windows and expirations dates or implement again full refundability without a surcharge.

We therefore pivoted back to 14 day voucher refundability in April 2022, but also added a surcharge option, where members can pay an extra fee for full refundability of the voucher.

It is possible in the future that the Company may strategically move away from offering the surcharge or vouchers in general, or the Company may invest further in voucher offerings to expand them from a product perspective.

It is also possible that travel restrictions may change again, resulting in consumers being unable to utilize their vouchers in the near-term or at all, meaning we would need to again work with partners to extend travel windows and expiration dates or reinstate full refundability without a surcharge.

While we are continually evolving our strategy, we may not always be successful in doing so and the demand for our vouchers may decline or refund rates may increase and may adversely impact revenues.

A change in our estimate of our refund rates with respect to unredeemed vouchers could result in a change of our reported revenues and an increase in our refund rates could reduce our liquidity and adversely affect our profitability.

According to accounting standards for revenue recognition, revenue that is subject to refunds or returns is considered variable consideration and must be constrained so that it is probable that a significant reversal will not occur in the future as the uncertainty is resolved.

To comply with this standard, we estimate future refunds and refund rates for Local Deals and Getaways vouchers utilizing a model that incorporates qualitative and quantitative factors, including but not limited to, historical refund rates based on deal category, relative risk of refund based on voucher type, and changing business and market conditions.

However, accurately predicting refund rates requires judgement, and we can make no guarantees that our estimates will be correct.

If our refund estimates are materially understated, it will result in a reversal of revenues previously reported and we may be required to restate our financial statements for the relevant periods, which could damage our reputation and impact our stock price.

Impairments of goodwill, long-term investments and long-lived assets have a negative impact on our results of operations.

We perform our impairment test annually in October unless there are events that trigger the need for an interim test.

No impairment was identified in connection with the annual impairment test for 2023.

For the annual impairment test in 2022, we recorded a $200,000 impairment charge in connection with the indefinite lived intangible assets (JFC Trade name).

The determination of fair value reflects numerous assumptions that are subject to various risks and uncertainties.

It requires significant judgments and estimates and actual results could be materially different.

Future events and changing market conditions may lead us to re-evaluate the assumptions reflected in the current forecast which may result in additional impairment charges, which could have a material adverse effect on our results of operation s.

Our business could be negatively affected by changes in search engine algorithms or other traffic-generating arrangements.

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Pricing and operating dynamics for these traffic sources can experience rapid change, both technically and competitively.

Also, we may scale back our expenditures in paid search, pay-per-click and display advertising campaigns at any time.

Moreover, a search or metasearch engine could, for competitive or other purposes, alter its search algorithms or display of results causing a website to place lower in search query results.

Also, we may scale back our expenditures at any time.

Moreover, a search or metasearch engine could alter its search algorithms or display of

results, causing a website to place lower in search query results.

This would adversely affect our business and financial performance, potentially to a material extent.

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We have experienced a significant shift of both business and traffic to mobile.

Advertising and distribution opportunities may be more limited on mobile devices given their smaller screen sizes.

The gross profit earned on a mobile transaction may be less than that earned from a typical desktop transaction.

The consumer experience with mobile applications, as well as brand recognition and loyalty, has become even more important.

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In the future, marketplaces may make changes that make access to our products more difficult.

We believe that mobile bookings continue to present an opportunity for growth.

Further development of our mobile offerings is necessary to maintain and grow our business.

As a result, it is increasingly important for us to develop and maintain effective mobile websites optimized for mobile devices.

We believe that the Travelzoo mobile experience continues to present an opportunity for growth.

Further development of and investment into our mobile offering is necessary to maintain and grow our business.

It is increasingly important for us to develop and maintain effective mobile websites optimized for mobile devices.

If we are unable to continue to rapidly innovate and create new, user-friendly and differentiated mobile offerings and efficiently and effectively advertise and distribute on these platforms, or if our mobile applications are not downloaded and used by travel consumers, we could lose market share to existing competitors or new entrants and our future growth and results of operations could be adversely affected.

We may have exposure to additional tax liabilities .

As a global business, we are subject to income taxes as well as non-income based tax, in the U.S.

As a global business, we are subject to income taxes as well as non-income based taxes, in the U.S.

and various foreign jurisdictions.

Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities.

Although we believe that our tax estimates are reasonable, there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Although we believe that our tax estimates are reasonable, there is no assurance that the final determination of any tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate.

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A number of European Union member states have taken steps to unilaterally introduce a services tax.

For example, effective in January 2021, Spain began taxing digital services at 3% for companies that operate globally and have a significant digital footprint in Spain.

For example, effective in January 2021, Spain began taxing digital services at 3% of revenues for companies that operate globally and have a significant digital footprint in Spain.

Many questions remain regarding these digital services taxes.

It is not clear whether digital services taxes can be deducted for income tax purposes or whether there is potential for double taxation on the same transaction.

The interpretation and implementation of these taxes (especially if there is inconsistency in the application of these taxes across tax jurisdictions) could have a materially adverse impact on our business, results of operations and cash flows.

We are also subject to non-income based taxes, such as value-added, payroll, sales, use, net worth, property and goods and services taxes, in the U.S.

and various foreign jurisdictions, including for Jack’s Flight Club.

The interpretation and implementation of these taxes (especially if there is inconsistency in the application of these taxes across tax jurisdictions) could have a material adverse impact on our business, results of operations and cash flows.

We also may be subject to non-income based taxes, such as value-added, payroll, sales, use, net worth, property and goods and services taxes, in the U.S.

and various foreign jurisdictions.

From time to time, the Company may by audited by tax authorities with respect to these non-income based taxes and may have exposure to additional non-income based tax liabilities.

These examinations may lead to ordinary course adjustments or proposed adjustments to its taxes or its net operating income or may result in recognition of previously unrecognized tax benefits.

The Company’s use of the NOLs of MTE is subject to a possible audit by the Internal Revenue Service (“IRS”).

These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating income.

The Company’s use of the net operating losses (“NOLs”) of MTE or the NOLs themselves maybe audited by the Internal Revenue Service (“IRS”) or other taxing agency.

The IRS may disagree with the Company’s position that the NOLs may be fully utilized, resulting in a whole or partial limitation on the use of the NOLs by the Company.

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In addition, a number of municipalities initiated audit proceedings, issued proposed tax assessments or started inquiries relating to the payment of such taxes.

Given our hotel booking platform and packaging technology consist of an agency model whereby we will facilitate reservations on behalf of a hotel or other supplier, the payment of hotel occupancy taxes and other taxes should be the responsibility of the applicable hotel or packaging partner, which are typically responsible for remitting applicable taxes to the various tax authorities.

Nevertheless, to the extent that any tax authority succeeds in asserting that we have a tax collection responsibility (for hotel bookings, packaging or any other aspects of our business, including Jack’s Flight Club), or we determine that we have one, with respect to future transactions, we may collect any such additional tax obligation from our customers, which would have the effect of increasing the cost to our customers and, consequently, could make our services less competitive and reduce reservation transactions.

We operate our hotel booking platform and packaging technology as an agency model, whereby we facilitate reservations on behalf of a hotel or other supplier, therefore the payment of hotel occupancy taxes and other taxes should be the responsibility of the applicable hotel or packaging partner, which are typically responsible for remitting applicable taxes to the various tax authorities.

obligation from our customers, which would have the effect of increasing the cost to our customers and, consequently, could make our services less competitive and reduce reservation transactions and with respect to past transactions, we could have a liability for tax that we did not collect from our customers.

This could have a material adverse effect on our business and results of operations.

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Our current revenue model depends primarily on advertising fees paid by travel and entertainment companies and still relies significantly on email communications with our members.

If current clients/partners decide not to continue or are unable to continue advertising their offers with us and we are unable to replace them with new clients/partners or alternative revenue streams, our business may be adversely affected.

To be successful, we must provide online marketing solutions that achieve broad market acceptance by travel and entertainment 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 and products in response to changes in the online advertising market or travel industry or if our current business model is not successful.

For example, uncertainty surrounding the ability to travel would require us to adapt our product offerings to move away from our reliance on advertising fees and to provide consumers with additional flexibility in order to attract them to purchase.

If we do not adapt to these trends fully or quickly enough, we may lose revenue as consumer usage of our products and services may decline.

If we do not adapt to these trends fully or quickly enough, we may lose revenue as consumer usage may decline.

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.

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Further, the new revenue may cost more to generate, impacting our operating results.

In order to adapt to the shift in consumer demand due to the pandemic, we modified our refund policy for Local Deals and Getaways vouchers to allow refunds through the expiration date of the voucher, which is typically at least 6-12 months from the date of purchase.

Our previous policy allowed refunds for only 7-14 days after purchase with no limitations.

To comply with this standard, we estimated future refunds and refund rates utilizing a sophisticated model that incorporates qualitative and quantitative factors, including but not limited to, historical refund rates based on deal category, relative risk of refund based on voucher type, and changing business and market conditions.

However, due to constantly shifting market factors, particularly due to COVID, and limited historical data due to the recent change in policy, accurately predicting the refund rate is difficult, and we can make no guarantees that our estimates will be correct.

If our advertisers do not meet the needs and expectations of our members, our business could suffer.

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As for our travel business, although the advertiser is responsible directly to the consumer to provide the offer it advertised, our business can be adversely affected should an advertiser fail to comply with the terms of the advertised offer or provide us with misleading information about the offer that we use in our advertisements.

From time to time, merchants and advertisers risk the insolvency, bankruptcy or closure of their business and can face regulatory issues (including losing their licenses), which can result in the cancellation of services booked by consumers through the advertiser.

From time to time, merchants and advertisers experience insolvency, bankruptcy or closure of their businesses and can face regulatory issues (including losing their licenses), which can result in the cancellation of services booked by consumers through the advertiser.

Advertisers who fail to fulfill the travel services advertised in the promotions run by us can negatively impact our reputation, and advertisers that fail to pay for the advertisements can also negatively impact revenue growth.

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In addition, negative publicity and member sentiment generated as a result of fraudulent or deceptive conduct by our merchants or partners could also damage our reputation, reduce our ability to attract new members or retain our current members, and diminish the value of our brand.

Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or a decrease in member willingness to receive messages could adversely affect our revenue and business.

Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or a decrease in member willingness to receive emails or messages could adversely affect our revenue and business.

Our business is highly dependent upon email and other messaging services.

Email offers sent by us, or on our behalf by our affiliates, generate a substantial portion of our revenue.

Because of the importance of email and other messaging services, if we are unable to successfully deliver emails or messages, or if members decline to open our emails or messages, our revenue and profitability could be adversely affected.

Laws and regulations regulating the sending of commercial emails, including those enacted in foreign jurisdictions (such as Canada and Europe), may affect our ability to deliver emails or messages and may also result in increased compliance costs.

Because of the importance of email and other messaging services, if we are unable to successfully deliver emails or messages, or if members decline to open our emails or messages, or purchase

any of our advertised offers, our revenue and profitability could be adversely affected.

Laws and regulations regulating the sending of commercial emails, including those enacted in foreign jurisdictions (such as Canada, the U.K.

and Europe), may affect our ability to deliver emails or messages and may also result in increased compliance costs.

Further, actions by third parties to block, impose restrictions on, or charge for the delivery of emails or other messages could also materially and adversely impact our business.

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In addition, our use of email and other messaging services to send communications about our website or other matters may result in legal claims against us, which if successful might limit or prohibit our ability to send emails or other messages.

Any disruption or restriction on the distribution of emails or other messages or any increase in the associated costs would materially and adversely affect our revenue and profitability.

In addition, the shift in our website traffic originating from mobile devices accessing our services may decrease our members' willingness to use our services and could decrease their willingness to be an email member.

Any disruption or restriction on the distribution of emails or other messages or any increase in costs would materially and adversely affect our revenue and profitability.

In addition, the shift in our traffic originating from mobile devices accessing our services may decrease our members' willingness to use our services and could decrease their willingness to be an email member.

“Cookie” laws could negatively impact the way we do business.

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Cookies are valuable tools to improve the customer experience and increase conversion.

Many jurisdictions, including the European Union and more recently, California, have adopted regulations governing the use of "cookies." To the extent any such regulations require "opt-in" consent before certain cookies can be placed on a user's computer or mobile device, our ability to serve certain customers in the manner we currently do might be adversely

affected and our ability to continue to improve and optimize performance on our website might be impaired, either of which could negatively affect a consumer's experience using our services and our business, market share and results of operations.

Many jurisdictions, including the European Union and more recently, California, have adopted regulations governing the use of cookies.

To the extent any such regulations require "opt-in" consent before certain cookies can be placed on a user's computer or mobile device, our ability to serve certain consumers in the manner we currently do might be adversely affected and our ability to continue to improve and optimize performance on our website might be impaired, either of which could negatively affect a consumer's experience using our services and our business, market share and results of operations.

Additionally, in January 2024, Google began the process of phasing out third-party cookies in its Chrome browser.

We expect that similar changes to Apple, Google or other browser or mobile platforms could occur, further limiting our ability to optimize performance for consumers.

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 or with email addresses they no longer use, and different members may have selected different preferences for email communications.

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.

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 fully unsubscribed.

Those numbers of members may include individuals who do not receive our emails because our emails have been blocked or are otherwise undeliverable.

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The payable to merchants is generally due upon redemption of the voucher.

The vouchers have maturities that extend from January 2023 through December 2025 with the majority of vouchers expiring in 2023 and the remaining primarily expiring in 2024;

provided, that these expiration dates may sometimes be extended on a case-by-case basis.

However, if redemption and refund activities are more accelerated, or if we are not able to increase operating income, we may need to obtain additional financing to meet our working capital needs in the future.

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 merchant payables and various commitments and contingencies, as described under Note 6 to the accompanying consolidated financial statements.

The expiration dates of vouchers range between January 2024 through December 2025;

however, these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration.

However, if redemption activities are more accelerated, if our business is not profitable, and if our planned targets for cash flows from operations are not met, we may need to obtain additional financing in the future.

We did receive certain subsidies, tax relief or other financial aid from various governmental programs relating to COVID (particularly in the US, Canada, UK and Germany), however, we repaid back any funds received that were required to be repaid.

We may have been required to agree to certain restrictions, audit requirements and/or obligations to reimburse support payments in part or in total, which could negatively impact the business.

We may not be able to obtain financing on commercially reasonable terms, or at all, especially due to volatile market conditions.

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If we choose to raise funds through an equity issuance, existing stockholders may experience dilution and holders of the additional equity securities may have rights senior to existing stockholders of our common stock.

If we obtain additional financing through debt securities, the terms of these arrangements could restrict or prevent us from paying dividends, could require the pledging of assets, could subject the Company to restrictive covenants or large fees, and could limit our flexibility.

Utilization of governmental stimulus packages may negatively impact our business, operations and/or reputation.

Certain governments have passed legislation to help businesses through the COVID pandemic with loans, wage subsidies, tax relief or other financial aid.

We have been participating in, or have applied to participate in, several government programs, including but not limited to, the programs offered in the United States, Canada, the United Kingdom, Germany, and certain other jurisdictions.

To the extent we have received or will receive any assistance, we may be, or may have been required to agree to certain restrictions, audit requirements and/or obligations to reimburse support payments in part or in total, which could negatively impact the business.

Our reputation could also be harmed.

We may be sensitive to recessions or other macroeconomic circumstances or events effecting the travel industry generally.

If we obtain additional financing through debt securities, the terms of these

arrangements could require the pledging of assets, could subject the Company to restrictive covenants or large fees, and could limit our flexibility.

We may be sensitive to recessions or other macroeconomic circumstances or events affecting the travel industry generally.

The demand for online advertising may be linked to the level of economic activity and employment in the U.S.

Specifically, our business is primarily dependent on the demand for online advertising from travel and entertainment companies.

Events like war or other conflicts (including the war in Ukraine), terrorist attacks, mass shooting incidents, natural disasters, plane crashes, travel-related health events, such as the pandemic, and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations.

Events like war, political instability or other conflicts (including the war in Ukraine and the Israel-Hamas war), terrorist attacks, mass shooting incidents, strikes, natural disasters and extreme weather situations, plane crashes, major public health events, such as the COVID pandemic, and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations.

In addition, advertisers may choose to limit advertising spend, which can adversely impact our business.

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We are not in a position to evaluate the net effect of these circumstances as many of these events and developments cannot be reliably forecasted.

however, we believe there has been negative impact to our business by such events and developments.

In the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry and the economy overall.

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We pay interchange and other fees, which may increase over time, raise our operating expenses, and lower profitability.

We rely on third parties to provide payment processing services and it could disrupt our business if these companies become unwilling or unable to provide these services to us.

Because the global pandemic increased the risk profile of travel-related companies, such payment processing services may require larger deposits, impose stricter rules or requirements, or may decide to stop working with companies related to the travel industry altogether.

For example, Travelzoo was required to change processors in certain jurisdictions in 2021 because its previous processor decided to stop working with companies related to the travel industry.

We rely on third parties to provide payment processing services and it could disrupt our business if these companies become unwilling (on favorable terms or otherwise) or unable to provide these services to us.

Macroeconomic circumstances over which the Company has no control may result in payment processing services requiring larger deposits, imposing stricter rules or requirements, or deciding to stop working with companies related to the travel industry altogether.

If we are unable to pivot to a new payment processor quickly, this could lead to periods of time where we are unable to accept or process payments from our members, impacting our ability to generate revenue.

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If one or more of these contracts are terminated and we are unable to replace them on similar terms, or at all, it could adversely affect our results of operations.

Our reported financial results may be adversely affected by changes in United States generally accepted accounting principles, and we may incur significant costs to adjust our accounting systems and processes to comply.

United States generally accepted accounting principles are subject to interpretation by the Financial Accounting Standards Board ("FASB"), the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.

Our financial results may be adversely affected by changes in United States generally accepted accounting principles, and we may incur significant costs to adjust our accounting systems and processes to comply.

United States generally accepted accounting principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the American Institute of Certified Public Accountants (“AICPA”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.

We may need to change our accounting processes if we are required to adopt future or proposed changes in principles.

The cost of these changes may negatively impact our results of operations during the transition.

Increased focus on environmental, social, and governance ("ESG") responsibilities have and will likely continue to result in additional costs and risks, and may adversely impact our business.

There has been an increased focus on ESG practices of companies, including climate change, diversity, equity and inclusion, human capital management, data privacy and security, supply chains (including human rights issues), among other topics, by institutional, individual, and other investors, proxy advisory services, regulatory authorities, consumers, employees and other stakeholders.

These evolving expectations and our efforts and ability to respond to and manage these issues, provide updates on them, and establish and meet appropriate goals, commitments, and targets present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which may be outside of our control or could have a material adverse impact on our business.

Our efforts in this area may result in a significant increase in costs and may not meet expectations, evolving standards or regulatory requirements, which may negatively impact our financial results, our reputation, our ability to attract or retain employees, or business partners, or expose us to various types of legal actions.

Risks Related to Our Markets and Strategy

Our international operations may result in operating losses and are subject to other material risks.

We may continue to invest in marketing as well as additional employees to support our operations (including licensing arrangements) o r develop new products, such as Travelzoo META, whic h may generate operating losses.

Furthermore, operating losses in certain jurisdictions may not have any recognizable tax benefit.

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Moreover, fluctuations in currency exchange rates can impact our revenues.

currency movements relative to the U.S.

Foreign currency movements relative to the U.S.

dollar have negatively impacted our revenues from our operations in Europe.

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Many of these regions have different customs, currencies, levels of consumer acceptance and use of the Internet for commerce, legislation, regulatory environments, tax laws and levels of political stability.

International markets may have strong local competitors with an established brand that may make expansion in that market difficult and costly and take more time than anticipated.

International markets may have strong local competitors with established brands that may make expansion in that market difficult and costly and take more time than anticipated.

In addition, compliance with legal, regulatory or tax requirements in multiple jurisdictions places demands on our time and resources, and we may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax consequences.

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We believe that continuing to build awareness of the Travelzoo and Jack’s Flight Club brand names, and starting to build awareness of the Travelzoo META brand name, are critical to achieving widespread acceptance of our business.

Brand recognition is a key differentiating factor among providers of online advertising opportunities, and we believe it could become more important as competition in our industry continues to increase.

Brand recognition is a key differentiating factor among providers of online advertising opportunities.

In order to maintain and build brand awareness, we must succeed in our marketing efforts.

Our marketing spend is influenced by the marketing spend of our competitors as we seek to maintain and increase our brand recognition and to maintain and grow traffic to our platforms through performance marketing channels.

If we fail to successfully promote and maintain our brand consistently across numerous jurisdictions and channels, incur significant expenses in promoting our brands and fail to generate a corresponding increase in revenue as a result of our branding efforts, or encounter legal obstacles which prevent our continued use of our brand names, our business could be materially adversely affected.

If we fail to successfully promote and maintain our brand consistently across numerous jurisdictions and channels, incur significant expenses in promoting our brands and fail to generate a corresponding increase in revenues as a result of our efforts, or encounter legal obstacles which prevent our continued use of our brand names, our business could be materially adversely affected.

Deterioration in our marketing efficiency could result in reduced revenues or revenue growth, or marketing expenses increasing faster than revenues, which would reduce margins and earnings growth.

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We spent $7.0 million and $5.3 million on marketing initiatives relating to member acquisition for the years ended December 31, 2023 and 2022, respectively, and expect to continue to spend significant amounts to acquire members.

Our long-term success depends on our continued ability to increase the overall number of members and engage those members.

Our long-term success depends on our continued ability to attract, retain and engage members.

We cannot assure you that the revenue from members we acquire will ultimately exceed the cost of acquiring new members.

If members do not perceive our offers to be of high value and quality or if we fail to introduce new and more relevant deals, we may not be able to acquire or retain members.

If members do not perceive our offers to be of high value and quality or if we fail to introduce new and more relevant deals, we may not be able to acquire or retain members, especially after the introduction of a paid membership.

If we reduce our member acquisition costs, we cannot assure you that this will not adversely impact our ability to acquire new members.

If we are unable to acquire new members who purchase our deals in numbers sufficient to grow our business, or if members cease to purchase our deals, the revenue we generate may decrease and our operating results will be adversely affected.

If the level of usage by our member base declines or does not grow as expected, we may suffer a decline in member growth or revenue.

A significant decrease in the level of usage or member growth would have an adverse effect on our business, financial condition and results of operations.

If we are unable to acquire new members who purchase our membership and deals in numbers sufficient to grow our business, or if members cease to purchase, the revenue we generate may decrease and our operating results will be adversely affected.

If the level of usage by our members declines or does not grow as expected, we may suffer a decline in growth or revenue.

A significant decrease in the level of usage or growth would have an adverse effect on our business, financial condition and results of operations.

We may not be able to attract travel and entertainment companies or Internet users if we do not continually enhance and develop the content and features of our products and services.

To remain competitive, we must continually improve the responsiveness, functionality, and features of our products and services.

We may not succeed in developing features, functions, products, or services that travel and entertainment companies and Internet users find attractive.

We may not succeed in developing features, functions, products, or services that travel and entertainment companies and Internet users find attractive, including in unsettled and untested areas like artificial intelligence (AI) and the Metaverse.

Our current technology may not meet the future technical requirements of travel and entertainment companies.

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It may take us longer than expected to fully realize the anticipated benefits, and those benefits may ultimately be smaller than anticipated, which could adversely affect our business.

While we are striving to improve functionality, usability and design in our products, the ongoing enhancements on

web and mobile and investment in packaging and other technology may not achieve the desired results we anticipate, and if unsuccessful, could result in a decline in revenues, an increase in costs, and a negative impact on our business.

While we are striving to improve functionality, usability and design in our products, the ongoing enhancements on web and mobile and investment in packaging and other technology may not achieve the desired results we anticipate, and if unsuccessful, could result in a decline in revenues, an increase in costs, and a negative impact on our business.

Our business and growth will suffer if we are unable to hire and retain highly skilled personnel.

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The markets for the services we offer are intensely competitive, constantly evolving and subject to rapid change, and current and new competitors can launch new services at a relatively low cost.

We compete for advertising dollars with large Internet portal sites, such as Trip Advisor, that offer listings or other advertising opportunities to travel, entertainment and local businesses.

We compete for advertising dollars with large Internet portal sites, such as Tripadvisor, that offer listings or other advertising opportunities to travel, entertainment and local businesses.

These companies have significantly greater financial, technical, marketing and other resources and larger advertiser bases.

They may be able to research, develop and deploy new products and technologies (including in the area of AI) faster than us.

We compete with companies like Groupon that sell vouchers for deals from local businesses such as spas, hotels and restaurants and tour operators for vacation packages.

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This could hinder our existing product offerings, cause delays in our development and introduction of new services and related products or enhancements of existing products until equivalent or replacement technology can be accessed, if available, or developed internally, if feasible.

experience these delays, our business could be materially adversely affected.

If we experience these delays, our business could be materially adversely affected.

We also rely on certain third-party service providers, including Global Distribution Systems and computerized central reservation systems, in connection with providing our hotel booking services and travel package offerings.

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Our agreements with some third-party service providers are terminable upon short notice and often do not provide recourse for service interruptions.

We are in the process of a multi-year phased migration to integrate and upgrade certain cross-brand global systems and processes.

The implementation of new information technology, payment, enterprise resource planning, or other systems could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.

Any failure to implement or adapt to new technologies in a timely manner or at all could adversely affect our ability to compete, increase our consumer acquisition costs or otherwise adversely affect our business, brand, market share, and results of operations.

The implementation of new information technology, payment, enterprise resource planning, or other systems (including AI) could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.

Any failure to implement or adapt to new technologies in a timely manner or at all could adversely affect our ability to compete, increase our costs or otherwise adversely affect our business, brand, market share, and results of operations.

Acquisitions, investments, licensing arrangements and joint ventures could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.

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Also, the anticipated benefit of an acquisition may not materialize.

As licensing arrangements typically involve third parties unrelated to the Company operating under our brand name in foreign jurisdictions, we risk, among other things, damage to our reputation or brand image if such third parties are unsuccessful or behave in a way that is contrary to Travelzoo.

For example, the business of MTE which Travelzoo acquired in December 2022 will require management resources to grow strategically and to realize the synergies that we believe exist between MTE and Travelzoo META.

We cannot guarantee that changes in management of MTE will not lead to disruption in the utilization of the contact network that MTE built up in the Metaverse creator community and that MTE as part of Travelzoo will be able to source Metaverse travel experiences as successfully as anticipated.

For example, the business of MTE which Travelzoo acquired in December 2022 will require management resources to grow strategically and we cannot guarantee that MTE as part of Travelzoo will be able to source Metaverse travel experiences as successfully as anticipated.

Risks Related to Legal Uncertainty

We may become subject to shareholder lawsuits over securities violations due to volatile stock price.

We may become subject to shareholder lawsuits over alleged securities violations due to volatile stock price.

Shareholder lawsuits for securities violations are often launched against companies whose stock price is volatile.

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and foreign laws and regulations affect the Company’s activities including, but not limited to, in areas of employment, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, intellectual property, tax, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy, anti-competition, health and safety, and vacation packaging.

Compliance with these laws, regulations and similar requirements may be onerous and

expensive, and they may be inconsistent across jurisdictions, further increasing the costs of compliance and doing business.

Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent across jurisdictions, further increasing the costs of compliance and doing business.

For example, the Company and Jack’s Flight Club employ employees and engage contractors in various countries and therefore could be subject to misclassification or tax claims related to such arrangements or increased costs to ensure continued compliance as both companies grow and add to their workforce.

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Vouchers may be considered gift cards, gift certificates, stored value cards or prepaid cards (“gift cards”) and therefore governed by, among other laws, the Credit Card Act of 2009 (the “CARD Act”), and state laws governing gift cards.

Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive regulates the business of electronic money institutions.

Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive

regulates the business of electronic money institutions.

Many of these laws contain provisions governing the use of gift cards, including specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees.

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Such developments may materially and adversely affect the profitability or viability of our Local Deals and Getaways vouchers.

Certain gift card laws could require us to materially increase the estimated liability recorded in our financial statements and our operating result could be materially and adversely affected.

Some of states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between 1 and 5 years) and impose certain reporting and record keeping obligations.

The analysis of the potential application of the unclaimed and abandoned property laws to our vouchers is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationship with members and merchants and our role as it relates to the issuance and delivery of a voucher.

Certain gift card laws could require us to materially increase the estimated liability recorded in our financial statements and our operating results could be materially and adversely affected.

Some states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws, which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between 1 and 5 years) and impose certain reporting and record keeping obligations.

The analysis of the potential application of the unclaimed and abandoned property laws to our vouchers is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationships with members and merchants and our role as it relates to the issuance and delivery of a voucher.

In the event that one or more jurisdictions successfully challenges our position on the application of its laws to vouchers, or if the estimates that we use in projecting the likelihood of vouchers being redeemed prove to be inaccurate, our liabilities with respect to unredeemed vouchers may be materially higher than the amounts shown in our financial statements.

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We may be sued for legal claims relating to information that is published or made available on our websites or service offerings we make available.

The fact that we distribute information via email may subject us to additional potential risks, such as liabilities or claims resulting from unsolicited email or spamming, security breaches, illegal or fraudulent use of email or

interruptions or delays in email or mobile service, etc..

These risks are enhanced in certain jurisdictions, where our liability for such third-party actions may be less clear and we may be less protected.

We have also seen an increase in claims relating to the Federal Wire Tap Act and “trap and trace” software in connection with the California Invasion of Privacy Act.

These risks are elevated in certain jurisdictions, where our liability for such third-party actions may be less clear and we may be less protected.

In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not found liable.

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Our existing security measures may not be successful in preventing breaches.

Outside parties may attempt to fraudulently induce disclosure of sensitive information in order to gain access to our secure networks or to takeover customer accounts.

A party that is able to circumvent our security systems could steal proprietary information.

Outside parties may attempt to fraudulently induce disclosure of sensitive information in order to gain access to our secure networks or to take over customer accounts.

A party that is able to circumvent our security systems could steal proprietary or other sensitive information.

A security breach at any third-party supplier could result in negative publicity and exposure.

While we strive to use commercially acceptable means to protect personal data, no method of transmission over the Internet, or method of electronic storage, is 100% secure.

Cyberattacks are increasing in frequency and sophistication and are evolving.

Cyberattacks are increasing in frequency and sophistication and are

Consequently, we may be unable to anticipate these attacks or to implement adequate preventative measures.

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We could also be adversely affected if legislation or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business.

There are a number of proposals for enactment or modification of data privacy laws pending or proposed in other jurisdictions.

There are a number of proposals for enactment or modification of data privacy laws pending or proposed in other jurisdictions (including various states across the United States), including laws and regulations which dictate whether, how and under what circumstances we can transfer, process, or receive certain data that is critical to our operations and consent-related requirements for email marketing.

While we do not “sell” personal data and/or do not engage in “behavioral advertising”, as each are defined under the various laws and regulations in different jurisdictions, it is possible that these definitions may change and/or that regulators may not agree with our interpretations.

Complying with these varying requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

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Various federal laws, such as the Bank Secrecy Act and the USA PATRIOT Act and foreign laws and regulations, such as the European Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services.

For these purposes, financial institutions are broadly defined to include money services businesses such as money transmitters, check cashers and providers of prepaid access cards.

Examples of anti-money laundering requirements imposed on financial institutions include customer identification and verification programs, suspicious activity monitoring and reporting, record retention policies and procedures and transaction reporting.

For these purposes, financial institutions are broadly defined to include money services businesses such as providers of prepaid access cards.

Examples of requirements imposed include customer identification and verification programs, suspicious activity monitoring and reporting, record retention policies and transaction reporting.

We do not believe that we are a financial institution subject to these regulations based, in part, upon the closed loop nature and other characteristics of vouchers and our role with respect to the distribution of vouchers to members.

However, the Financial Crimes Enforcement Network previously issued final rules regarding the scope and requirements for non-bank parties involved in stored value or

prepaid access cards, including obligations on sellers or providers of “prepaid access”.

Under the final rule, providers or sellers of closed loop vouchers, such as those offered through the Local Deals and Getaways programs, would only be subject to registration if the vouchers exceed $2,000 in total value or if they are sold in aggregate amounts exceeding $10,000 to any single person in one day.

However, the Financial Crimes Enforcement Network previously issued final rules regarding the scope and requirements for non-bank parties involved in stored value or prepaid access cards, including obligations on sellers or providers of “prepaid access”.

Under the final rule, providers of closed loop vouchers, such as those offered through the Local Deals and Getaways , would only be subject to registration if the vouchers exceed $2,000 in total value or if they are sold in aggregate amounts exceeding $10,000 to any single person in one day.

Should the $2,000 limit be exceeded or should more than $10,000 in aggregate vouchers be sold to any individual person (sales to businesses for resale or distribution are excluded) then we may be deemed either a seller or provider of prepaid access subject to regulation.

In the event that we become subject to these requirements or any other anti-money laundering law or regulation imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income.

In the event that we become subject to these requirements or any other anti-money laundering laws or regulations imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income.

In addition, the costs for third parties to sell vouchers would increase, which may restrict our ability to enlist third parties to issue vouchers.

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The SEC approved amendments in 2018 that raised the cap for status as a “smaller reporting company” .

Travelzoo qualified as a smaller reporting company in 2020 meaning it is not subject to the SOX 404(b) requirement of having an auditor attestation report on internal control over financial reporting.

However, we may be obligated to evaluate our internal control over financial reporting if we are no longer smaller reporting company and we may identify areas of internal control that may need improvement or require remediation efforts.

Travelzoo qualified as a smaller reporting company since 2020, meaning it is not subject to the SOX 404(b) requirement of having an auditor attestation report on internal control over financial reporting.

However, we may be obligated to evaluate our internal control over financial reporting if we were no longer a s maller reporting company and if we identify areas of internal control that may need improvement or require remediation efforts.

For the year ended December 31, 2022, management identified a material weakness in our internal control over financial reporting related to having sufficient resources for the accounting for certain non-routine, non-recurring, unusual or complex transactions within our financial statement closing and reporting process.

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In some cases, multiple experts may be required.

Maintain adequate internal qualified personnel to properly supervise and review the information provided by outside subject matter experts and specialists.

Maintain adequate internal qualified personnel to properly supervise and review the information provided by outside experts.

We cannot assure you that these planned measures will be sufficient to avoid potential future material weaknesses.

We are unable to predict the time when we will again have a non-routine, non-recurring, unusual and complex transaction.

We are unable to predict the time when we will again have a non-routine, non-recurring, unusual and complex transactio n.

This material weakness continued to exist as of December 31, 2023.

We may be unable to protect our registered trademark or other proprietary intellectual property rights and may face liability from intellectual property litigation.

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We rely on a combination of copyright and trademark laws, non-disclosure and other contractual arrangements to protect our intellectual property (“IP”) rights.

The steps we have taken to protect our IP rights, however, may not always succeed in deterring misappropriation of proprietary information or preventing improper utilization the Travelzoo brand name.

The steps we have taken to protect our IP rights, however, may not always succeed in deterring misappropriation of proprietary information or preventing improper utilization of the Travelzoo brand name.

We have registered the Travelzoo and Jack’s Flight Club trademarks in various jurisdictions.

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During the twelve months ended December 31, 2023, the closing price of our common stock on NASDAQ ranged from $4.51 to $10.45.

stock price may fluctuate in response to a number of factors, such as quarterly variations in operating results;

Our stock price may fluctuate in response to a number of factors, such as quarterly variations in operating results;

announcements by us or our competitors;

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stockholder collateral arrangements, and cash requirement on funds or stockholders that result in stockholder trades;

and repurchases of our common stock, including failure to meet internal or external expectations around the timing or price of share repurchases and any reductions or discontinuances of repurchase activities.

There are several products offered in the market that allow stockholders to hedge stock, pledge their stock for collateral or engage in short selling, which can negatively impact the price of our stock.

The Company does not prohibit these arrangements but does have strict policies against trading with material non-public information.

Our stock price may be volatile given that operating results may vary from the expectations of securities analysts and investors, which are beyond our control.

Our stock price

may be volatile given that operating results may vary from the expectations of securities analysts and investors, which are beyond our control.

In the event that our operating results fall below expectations, the trading price of our common shares may decline significantly.

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Negative market conditions could adversely affect our ability to raise additional capital or the value of our stock in connection with merger and acquisition activities.

We are a controlled company.

Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro Capital Inc.

Azzurro is the Company’s largest shareholder, and as of December 31, 2022 together with Ralph Bartel, in his individual capacity (together, the “Azzurro Parties"), holds approximately 50.3% of the Company’s outstanding shares.

This means that the Company is a controlled company again.

Azzurro previously held greater than 50% ownership until approximately 2018.

We have a significant shareholder.

Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.

Azzurro is the Company’s largest shareholder, and as of December 31, 2023, holds approximately 40.2% of the Company's outstanding shares.

Azzurro previously held greater than 50% ownership until approximately 2018 and again from late 2022 until Q2 2023 and should Azzurro purchase additional shares or should the Company repurchase additional shares of its common stock, Azzurro’s ownership percentage could increase again, potentially above 50%, resulting in the Company being a controlled company again.

The Company already has in place applicable corporate governance processes and procedures necessary for a controlled company to ensure independence (e.g., board of directors with majority independent directors, committees comprised solely of independent directors, etc.).

Holger Bartel, the Company’s Global Chief Executive Officer, is Ralph Bartel’s brother and holds approximately 3.8% of the Company’s outstanding shares.

It is possible that the interests of the Azzurro Parties may conflict with those of the Company or the stockholders of the Company in the future.

As a result of the Azzurro Parties’ ownership interests and voting power, they are in a position to influence and control significant corporate actions, including corporate transactions such as mergers, business combinations or dispositions of assets.

Our other stockholders will therefore have limited influence and control on matters requiring stockholder approval and this controlling ownership position could discourage others from initiating any potential merger, or takeover that may otherwise be beneficial to Travelzoo stockholders.

Unresolved Staff Comments

It is possible that the interests of Azzurro may conflict with those of the Company or its other stockholders in the future.

As a result of Azzurro’s ownership interests and voting power, they could be in a position to influence significant corporate actions.

Our other stockholders will therefore have limited influence and control on matters requiring stockholder approval and this significant ownership position could discourage others from initiating any potential merger or takeover that may otherwise be beneficial to Travelzoo stockholders.

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What changed 10-K

Item 1A. Risk Factors