As Filed with the Securities and Exchange Commission on April __, 2001

================================================================================
                                                      Registration No. 333-55026

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 AMENDMENT NO. 1
                                       TO
                                    FORM S-4

                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933
                                 Travelzoo Inc.
             (Exact name of registrant as specified in its charter)

                Delaware                                7373
     (State or other jurisdiction of        (Primary Standard Industrial
     incorporation or organization)          Classification Code Number)

                                   36-4415727
                                (I.R.S. Employer
                              Identification No.)


                       800 West El Camino Real, Suite 180
                             Mountain View, CA 94040
                                  650-943-2400
                                fax 650-943-2433

               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)


              Ralph Bartel                                     Copies to:
         Chief Executive Officer                            Denis P. McCusker
             Travelzoo Inc.                                  Bryan Cave LLP
   800 West El Camino Real, Suite 180                    One Metropolitan Square
         Mountain View, CA 94040                               36th Floor
              650-943-2400                                 St. Louis, MO 63102
            fax 650-943-2433                                  314-259-2455
 (Name and address of agent for service)                    fax 314-259-6580


             ------------------------------------------------------

     Approximate   date  of   commencement   of   proposed   sale   to   public:
_________________________________.

     If any of the securities being registered on this form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933, check the following box.                                               [ ]

     If this form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering.                      [ ]

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.                                                       [ ]

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.                                                       [ ]

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>

======================================== ================= ================= ======================= =====================
                                                               Proposed
                                                               maximum
                                                              aggregate         Proposed maximum          Amount of
 Title of each class of securities to      Amount to be     offering price     aggregate offering      registration fee
             be registered                  registered         per unit              price                  (1)(2)
---------------------------------------- ----------------- ----------------- ----------------------- ---------------------
<S>                                         <C>                  <C>                <C>                      <C>
      Common Stock, no par value            19,425,147           N/A                $643,527                 $170
======================================== ================= ================= ======================= =====================

<FN>

(1)  Pursuant to Rule 457(f)(2), the registration fee has been calculated on the
     basis of the book value of the securities offered hereby, computed on a pro
     forma basis as of the consummation of the merger described herein.

(2)  Registration   fee  previously   paid  with  the  initial  filing  of  this
     Registration Statement on February 5, 2001

</FN>
</TABLE>


The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933 or  until  this  Registration  Statement  shall  become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.



<PAGE>

                   SUBJECT TO COMPLETION, DATED APRIL __, 2001


                            Travelzoo.com Corporation
                       800 West El Camino Real, Suite 180
                             Mountain View, CA 94040

                      Notice of Special Meeting of Members
                                  , 2001 at am
                              at ,

To the members of Travelzoo.com Corporation:

     We  will  hold  a  special  meeting  of  the  members   (stockholders)   of
Travelzoo.com  Corporation,  a  corporation  organized  under the  International
Business  Companies  Act of the  Bahamas,  on  [_________],  2001 at  ______a.m.
[_________] Time, at [___________________], for the following purposes:

     1.   To  consider  and vote  upon an  Agreement  and Plan of  Merger  dated
          January 19, 2001 between Travelzoo.com Corporation and Travelzoo Inc.,
          a Delaware corporation,  under which Travelzoo.com Corporation will be
          merged into Travelzoo Inc.; and

     2.   To  transact  any other  business  that may  properly  come before the
          special  meeting or any  adjournment  or  postponement  of the special
          meeting.

     Earlier this year, we  determined  that our  operations  should be combined
with those of our affiliate, Silicon Channels Corporation.  Silicon Channels was
100% owned by Ralph Bartel,  who currently owns 52% of our stock. On January 22,
2001, Mr. Bartel  contributed all the outstanding  shares of Silicon Channels to
Travelzoo Inc. in exchange for 42% of the stock of Travelzoo Inc. and options to
acquire up to ____% of Travelzoo Inc. Upon  consummation of the proposed merger,
Mr. Bartel's ownership interest in the surviving entity will increase to 72% and
the   ownership   interests   of  our  other   stockholders   will  be   diluted
proportionately.

     The  proposed  merger is  described in the  attached  proxy  statement  and
prospectus. The merger will accomplish our goal of combining our operations with
those of Silicon  Channels,  now a  subsidiary  of  Travelzoo  Inc. The stock of
Travelzoo Inc. after the merger,  unlike the stock of Travelzoo.com  Corporation
you currently  hold,  will be redeemable if you withdraw your consent to receive
communications  electronically  from  Travelzoo,  as more fully described in the
attached  proxy  statement and  prospectus.  Holders of record of  Travelzoo.com
Corporation  common  stock at the close of business on , 2001,  the record date,
are  entitled  to  vote  at  the  special   meeting  and  any   adjournments  or
postponements of the special meeting.  The approval of the merger agreement will
require  the  affirmative  vote of the  holders of a  majority  of the shares of
common stock  outstanding on the record date. Since Mr. Bartel,  the holder of a
majority  of the shares,  has  indicated  that he will vote for  approval of the
merger, approval is assured.

     We consider  your vote to be very  important,  regardless  of the number of
shares you own.  Please  vote as soon as  possible to make sure that your shares
are  represented  at the meeting.  We  encourage  you to vote on the Internet as
described in the attached proxy statement and prospectus.  You may also complete
and return the form of proxy included with the proxy  statement and  prospectus,
or you may cast your vote in person at the special meeting.  If you do not vote,
it will have the same effect as voting against the merger.

By Order of the Board of Directors,

TRAVELZOO.COM CORPORATION

Ralph Bartel
President and Secretary
                          , 2001


<PAGE>



                                TABLE OF CONTENTS


Questions and Answers About The Merger.........................................1
Summary........................................................................4
Selected Combined Historical and Pro Forma  Financial Data.....................7
Risk Factors...................................................................8
Forward-Looking Statements....................................................16
The Merger....................................................................17
The Merger Agreement..........................................................21
The Special Meeting...........................................................23
Rights of Dissenters..........................................................25
Information About Travelzoo...................................................26
Legal Proceedings.............................................................34
Market for Our Common Stock...................................................34
Management's Discussion and Analysis of
   Financial Condition and Results of Operations..............................35
Voting Securities and Principal Holders.......................................42
Management....................................................................43
Certain Transactions Between Travelzoo and Its Affiliates ....................45
Travelzoo Delaware Charter and by-Laws........................................48
Description of Capital Stock..................................................48
Book-Entry Share Ownership....................................................50
Indemnification of Directors and officers.....................................50
Comparative Rights of Stockholders............................................51
Where You Can Find Additional Information.....................................59
Legal Opinion.................................................................59
Experts.......................................................................59
Index to Combined Financial Statements.......................................F-1



<PAGE>


                     QUESTIONS AND ANSWERS ABOUT THE MERGER

What is the transaction on           We are asking the members (stockholders) to
  which we are voting?                  approve  the  merger  of   Travelzoo.com
                                        Corporation,    the   existing   Bahamas
                                        corporation,  which  we  call  Travelzoo
                                        Bahamas,  into  Travelzoo  Inc.,  a  new
                                        Delaware  corporation,   which  we  call
                                        Travelzoo  Delaware.  Travelzoo  Bahamas
                                        will no  longer  exist  and the  current
                                        stockholders   will,  by  following  the
                                        procedures   specified   in  the  merger
                                        agreement,    become   stockholders   of
                                        Travelzoo  Delaware.  Travelzoo Delaware
                                        will  continue to operate  the  business
                                        now operated by Travelzoo Bahamas.

Why are you proposing the            The merger will accomplish  three goals for
  merger?                               Travelzoo:

                                     o  provide our  stockholders  with properly
                                        registered and freely tradable shares;

                                     o  allow  Travelzoo to become  incorporated
                                        in the United States; and

                                     o  combine  our  operations   with  Silicon
                                        Channels Corporation.

                                     We consider  it in the  best  interests  of
                                        Travelzoo  to  be  incorporated  in  the
                                        United  States,  and have  decided  that
                                        Delaware is the most suitable  state for
                                        incorporation.   Delaware  is  the  most
                                        common state of incorporation for public
                                        companies  in  the  United  States.   In
                                        addition,    we    believe    that   the
                                        corporation  laws of  Delaware  are well
                                        defined and will  provide a  predictable
                                        framework  under  which  Travelzoo  will
                                        operate.    Travelzoo's    offices   and
                                        operations  are in the United States and
                                        its  stockholders  are  primarily in the
                                        United States.  Also, we have determined
                                        that it would be  desirable  to  combine
                                        the operations of our affiliate, Silicon
                                        Channels    Corporation,     with    our
                                        operations.  Upon  consummation  of  the
                                        merger,  Silicon  Channels  will  be our
                                        wholly-owned subsidiary. Consummation of
                                        the  merger  will have no effect on your
                                        ability   to   exercise   any   remedies
                                        available to you under  federal or state
                                        securities   laws   resulting  from  the
                                        unregistered offering of our shares.

                                       1

<PAGE>

Are my shares of Travelzoo           The original Internet offering of Travelzoo
  registered with the SEC?              common    stock   to   our    "Netsurfer
                                        Stockholders"  was not  registered  with
                                        the   United   States   Securities   and
                                        Exchange  Commission.  Although  the SEC
                                        has not asserted any violation of law by
                                        Travelzoo,  we  understand  that the SEC
                                        takes the position  that the issuance of
                                        shares such as our Netsurfer Stockholder
                                        program  should be  registered  with the
                                        SEC. In connection  with the merger,  we
                                        are  registering the shares of Travelzoo
                                        Delaware  which  we are  offering  under
                                        this  proxy  statement  and  prospectus.
                                        Consummation    of   the    merger   and
                                        registration  of our shares will have no
                                        effect on your  ability to exercise  any
                                        remedies  which may be  available to you
                                        under federal or state  securities  laws
                                        resulting from the unregistered offering
                                        of our shares.

What stockholder vote is required    The approval by the  holders  of at least a
  to approve the merger?                majority  of the  outstanding  shares of
                                        Travelzoo  Bahamas  is  required.  Ralph
                                        Bartel,   the   holder  of  52%  of  the
                                        outstanding    shares,    has    already
                                        indicated  that he will vote to  approve
                                        the  merger,  and the merger has already
                                        been  approved  by  Travelzoo  Delaware,
                                        which   is   controlled   by   Travelzoo
                                        Bahamas. As the majority stockholders of
                                        both  Travelzoo  Bahamas  and  Travelzoo
                                        Delaware have either indicated  approval
                                        or approved the merger,  approval of the
                                        merger is assured.  The  approval of the
                                        remaining  stockholders is not necessary
                                        to consummate the merger.

How do I vote for the merger?        You  may  vote for  the merger  in  several
                                        ways:

                                        o You may complete a proxy and submit it
                                          via the Internet

                                        o You may print and complete the form of
                                          proxy  which  is  included  with  this
                                          proxy  statement  and  prospectus  and
                                          submit it by mail

                                        o You may attend the special meeting and
                                          vote in person

After the merger is effective,       Since  Delaware law requires us to maintain
  how do I receive my shares in         addresses of our stockholders, you  will
  Travelzoo Delaware?                   be required to provide us with your name
                                        and  address  in order to  receive  your
                                        shares.    Share   ownership   will   be
                                        maintained on a book-entry basis and you
                                        will not receive  certificates  for your
                                        shares unless you  specifically  request
                                        them. We will encourage our shareholders
                                        to hold their certificates in book entry
                                        form.

Will I receive dividends on my       We have not paid dividends on the shares of
  shares?                               Travelzoo   Bahamas   and   we  do   not
                                        currently intend to pay dividends on the
                                        shares of Travelzoo Delaware.


                                        2

<PAGE>

Will my shares of Travelzoo          The shares of  Travelzoo  Bahamas  have not
  Delaware be listed on a stock         been listed on any stock exchange and we
  exchange?                             do not have any immediate  plans to list
                                        the shares of Travelzoo  Delaware on any
                                        stock  exchange.  We hope to apply for a
                                        listing  of  our  common  stock  on  the
                                        Nasdaq stock exchange at such time as we
                                        determine  that we are in a position  to
                                        meet   the    listing    qualifications.
                                        Following  completion of the merger, and
                                        prior to any Nasdaq  listing,  we expect
                                        that the  shares of  Travelzoo  Delaware
                                        will   trade  on  the   over-the-counter
                                        market in the United States.

Can I sell my shares?                Your  shares  of  Travelzoo  Bahamas   were
                                        issued to you without registration under
                                        the  US  securities  laws.  Accordingly,
                                        transfer of those shares is  restricted.
                                        You may only  transfer them  pursuant to
                                        a specific exemption from registration.

                                     Shares of Travelzoo Delaware issued in  the
                                        merger will be  registered  with the SEC
                                        and  may  be  transferred,  although  we
                                        cannot  assure you that there will be an
                                        active market for the shares.

How do I know what my shares         There  has  been  no active  market for the
  are worth?                            shares of Travelzoo Bahamas,  and we are
                                        unable to predict  what the price of the
                                        shares of common stock would be if there
                                        were such an   active  market. Financial
                                        statements  of Travelzoo are included in
                                        this proxy statement and prospectus.

What are the tax consequences        In most cases,  the exchange of your shares
  of the merger to me?                  in  Travelzoo   Bahamas  for  shares  in
                                        Travelzoo Delaware should be tax-free to
                                        you for US federal  income tax purposes.
                                        To review the tax  consequences  in more
                                        detail,  see page 19.  You  should  also
                                        consult your tax advisor.

Where can I find additional          You  can  find    additional    information
 information about the merger?          concerning       the      merger      at
                                        http://www.travelzoo.com/delaware.

Can I change my vote after I have    Yes.  You can change your vote at any  time
  mailed my signed proxy card?          before   your  proxy  is  voted  at  the
                                        special meeting in several ways. You can
                                        submit a new proxy,  on the  Internet by
                                        mail,  bearing  a  later  date or send a
                                        written  notice  stating  that  you  are
                                        revoking  your  proxy.  You must  submit
                                        your  notice of  revocation  or your new
                                        proxy to the Secretary of  Travelzoo.com
                                        Corporation  at 800 West El Camino Real,
                                        Suite  180,  Mountain  View,  California
                                        94040.  You can  also  revoke a proxy by
                                        attending the special meeting and voting
                                        in person.


                                       3

<PAGE>


                                     SUMMARY

     This  summary  highlights  information  contained  elsewhere  in this proxy
statement and  prospectus.  This summary may not contain all of the  information
that is  important  to you.  You should  read the  entire  proxy  statement  and
prospectus  and  attachments   carefully,   especially  the  merger   agreement.
References  to  "we,"  "our"  and "us"  refer to  either  Travelzoo  Bahamas  or
Travelzoo Delaware, as the context indicates.

Travelzoo

     Travelzoo provides online marketing  services for the travel industry.  Our
website,  www.Travelzoo.com,  and our Travelzoo Top 20 newsletter  enable travel
companies to promote their special offers in a fast, flexible and cost-effective
manner.  More than 150 companies use our services.  Our customers  include Alamo
Rent-A-Car,  American Airlines Vacations, Budget Rent A Car, Hertz, Holiday Inn,
Lowestfare.com,  Park Place Entertainment,  Starwood Hotels and United Airlines.
Our offices are located at 800 West El Camino Real,  Suite 180,  Mountain  View,
California 94040. Our telephone number is (650) 943-2400.

Revenues and Profitability

     Our revenues are primarily  derived from  advertising  fees on our website.
Revenues have grown from approximately  $84,000 for the period from May 21, 1998
(inception)  to December 31, 1998,  to  approximately  $3.9 million for the year
ended December 31, 2000. Our pre-tax income increased from approximately $35,000
in the period  ended  December 31, 1998 to  approximately  $750,000 for the year
ended December 31, 2000. Our net income increased from approximately $29,000 for
the period ended December 31, 1998 to approximately  $362,000 for the year ended
December 31, 2000.  Excluding  nonrecurring merger expenses,  our pre-tax income
and net income for the year ended  December 31, 2000 was $981,000 and  $593,000,
respectively.

Our Market Opportunity

     We  believe  that  the  Internet  provides  better  opportunities  for  the
advertising of special  travel  offers,  and that the industry has not yet taken
full advantage of these opportunities. We believe we are in a position to become
a leading  provider  of online  marketing  solutions  for the  travel  industry,
primarily because:

     o    We have established a successful and profitable identity in the market

     o    We have built a high quality client base which continues to grow

     o    Our solution allows travel companies to:

          o    update their listings at any time

          o    remove offers which have sold out

          o    have  real-time  performance  tracking so they can optimize their
               campaigns.

Our History

     Travelzoo  was  founded by Ralph  Bartel in 1998 as a Bahamas  corporation.
Following the  organization  of Travelzoo in 1998, we issued shares in Travelzoo
to approximately 700,000 visitors who registered on our website.

                                       4

<PAGE>

     We believe that our offering was the first  offering of "free  shares" over
the Internet.  Mr.  Bartel,  who was a resident of Germany at the time,  was not
advised by U.S.  securities counsel and believed that the offering of the shares
could be made without any registration or qualification with the U.S. Securities
and Exchange  Commission or other  regulatory body since no payment was received
for the shares.  However,  the SEC takes the position  that programs for issuing
shares such as our Netsurfer  Stockholder  program should be registered with the
SEC. See "Information About Travelzoo" on page 26 for a more thorough discussion
of the Netsurfer  Stockholder  program and its consequences.  In connection with
the merger,  we are registering the shares to be offered in the merger under the
U.S. Securities Act.

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
performs all  operation  services with respect to the  Travelzoo.com  website in
return for 50% of the income  before taxes  generated  from the operation of the
Travelzoo.com  website.  All assets,  other than the domain name  Travelzoo.com,
used  in the  operation  of the  Travelzoo.com  website  are  owned  by  Silicon
Channels.  As the Travelzoo  business  continued to grow, the Board of Directors
determined  that  it  would  be  advisable  to  combine  Silicon  Channels  with
Travelzoo.  On January 22, 2001,  pursuant to an agreement between Travelzoo and
Silicon  Channels,  and based on a fairness opinion received from an independent
investment banking firm as discussed below under "Certain  Transactions  Between
Travelzoo  And Its  Affiliates--Silicon  Channels  Corporation"  on page 45, Mr.
Bartel  contributed  the shares of Silicon  Channels to a newly formed  Delaware
corporation,   Travelzoo  Delaware,  which  was  a  wholly-owned  subsidiary  of
Travelzoo  Bahamas.  Silicon  Channels  continues  to conduct its  business as a
wholly-owned  subsidiary of Travelzoo Delaware.  Travelzoo Delaware is now owned
58% by Travelzoo Bahamas and owned 42% by Ralph Bartel and will be the surviving
corporation in the merger as described below.

The Merger

     We are asking the  stockholders of Travelzoo  Bahamas to approve the merger
of Travelzoo Bahamas with and into Travelzoo  Delaware.  Travelzoo  Delaware has
already  approved  the merger.  In the merger,  the  stockholders  of  Travelzoo
Bahamas who follow the procedures specified in the merger agreement will receive
one share of common stock of  Travelzoo  Delaware for each share of common stock
of  Travelzoo  Bahamas  they hold.  The stock of  Travelzoo  Delaware  after the
merger,  unlike the stock of  Travelzoo  Bahamas  you  currently  hold,  will be
redeemable if you withdraw your consent to receive communications electronically
from Travelzoo,  as more fully described in the section entitled "Description of
Capital  Stock" on page 48.  You will be  required  to provide us with a mailing
address,  because  Delaware law requires that we provide  certain notices to our
stockholders by mail.

The Special Meeting; Shares Entitled to Vote

     Our special stockholder meeting will be held at [_________] on [_________],
2001 at [__]. The board of directors has fixed  [_________],  2001 as the record
date for determining the stockholders who are eligible to vote at the meeting. A
majority of the  outstanding  shares of our common  stock must be present at the
meeting  in  person or by  proxy,  and  holders  of at least a  majority  of the
outstanding  shares of our common stock must vote to approve the merger in order
for the merger to be completed. Ralph Bartel, who holds approximately 52% of the
outstanding shares of our common stock, has indicated that he intends to vote in
favor of the merger. See "The Special Meeting" on page 23.

Risk Factors

     See "Risk  Factors,"  starting on page 8, to read about  factors you should
consider with respect to your vote on the merger.

                                       5

<PAGE>

Dissenters' Rights of Appraisal

     Any of our  stockholders  who  disapprove of the proposed  transaction  and
follow the  dissent  procedure  under  Section 82 of the  Bahamas  International
Business Companies Act 2000 may be entitled to receive payment of the fair value
of their shares. For a more detailed explanation of these rights, see "Rights of
Dissenters" on page 25.

Tax Consequences of the Transaction

     In most cases,  stockholders who exchange their shares in Travelzoo Bahamas
for shares in Travelzoo  Delaware should not recognize income,  gain or loss for
United States federal income tax purposes in connection  with the exchange.  See
"Material United States Federal Income Tax Consequences" on page 19.

Accounting Treatment of the Transaction

     The merger will be accounted  for similar to a  pooling-of-interests  under
the "as if pooling"  method for  combinations  of entities under common control.
Under this  method of  accounting,  each of  Travelzoo  Bahamas'  and  Travelzoo
Delaware's historical recorded assets and liabilities will be carried forward to
the  combined  company at their  historical  cost.  In addition,  the  operating
results  reported  in  the  combined   financial   statements  of  Travelzoo.com
Corporation  and  affiliate  presented  elsewhere  in this proxy  statement  and
prospectus  will  become the  historical  results of  operations  for  Travelzoo
Delaware. Costs of the merger are charged to operations as incurred.



                                       6

<PAGE>

                   SELECTED COMBINED HISTORICAL AND PRO FORMA
                                 FINANCIAL DATA

     The following  selected  financial  data  presents the combined  historical
financial data of Travelzoo.com Corporation and its affiliate,  Silicon Channels
Corporation.  The combined  financial data  represents the historical  financial
data of our business conducted by entities founded by the principal stockholder,
Ralph Bartel.

     The selected  combined  financial  data as of December  31, 2000,  1999 and
1998, and for each of the years in the two-year  period ended December 31, 2000,
and the period from May 21, 1998  (inception)  to December  31, 1998 are derived
from  the  combined  financial  statements  of  Travelzoo.com   Corporation  and
affiliate, which financial statements have been audited by KPMG LLP, independent
certified public accountants.  The combined financial  statements as of December
31, 2000 and 1999 and for the periods  ended  December 31, 2000,  1999 and 1998,
and the auditors'  report thereon,  appear elsewhere in this proxy statement and
prospectus.  The selected combined  financial data should be read in conjunction
with the Travelzoo.com  Corporation and affiliate combined financial  statements
and the related notes  thereto  included  elsewhere in this proxy  statement and
prospectus, and "Management's Discussion and Analysis of Financial Condition and
Results  of  Operations,"  starting  on page 35. The pro forma per share data is
unaudited  and is  calculated on a basis that reflects the effect of events that
have occurred or will occur in connection  with the  consummation of the mergers
as described in Note 10 to the combined  financial  statements of  Travelzoo.com
Corporation  and  affiliate  appearing  elsewhere  in this proxy  statement  and
prospectus.


<TABLE>
<CAPTION>

                                        Period from May 21,
                                        1998 (inception) to     Year ended        Year ended
Combined Statements of                     December 31,         December 31,      December 31,
  Operations                                   1998                1999               2000
                                        -------------------- ------------------ ------------------

Revenues:
<S>                                        <C>                       <C>              <C>
  Advertising                              $     57,327              893,244          3,852,066
  Commissions                                    26,774               61,015             97,451
                                        -------------------- ------------------ ------------------
         Total revenues                          84,101              954,259          3,949,517
Cost of revenues                                 25,362              132,803            282,195
                                        -------------------- ------------------ ------------------
         Gross profit                            58,739              821,456          3,667,322
                                        -------------------- ------------------ ------------------
Operating expenses:
  Sales and marketing                             1,595              350,720          1,484,495
  General and administrative                     22,046              326,686          1,201,982
  Merger expenses                                    --                   --            231,303
                                        -------------------- ------------------ ------------------
         Total operating expenses                23,641              677,406          2,917,780
                                        -------------------- ------------------ ------------------
         Income before income taxes              35,098              144,050            749,542
Income taxes                                      6,213               38,646            387,856
                                        -------------------- ------------------ ------------------
         Net income                        $     28,885              105,404            361,686
                                        ==================== ================== ==================
Pro forma per share data:
Pro forma  basic and diluted net income
  per share                                $      --                     .01               .02
                                        ==================== ================== ==================
Shares used in computing pro forma
  basic net income per share                  9,431,741           19,323,064         19,372,791
                                        ==================== ================== ==================
Shares used in computing pro forma
  diluted net income per share                9,431,741           19,355,147         19,466,810
                                        ==================== ================== ==================

Combined Balance Sheet Data:            As of December 31,   As of December 31,  As of December 31,
                                        -------------------- ------------------ ------------------
                                               1998                1999               2000
                                        -------------------- ------------------ ------------------
Working capital                            $     78,172              171,282            185,734
Total assets                                    107,051              404,796          1,555,506
Long-term debt                                       --                   --                 --
Stockholders' equity                             88,885              194,289            574,148

</TABLE>


                                       7

<PAGE>


                                  RISK FACTORS

     You should  carefully  consider the risk factors listed below and the other
information  contained in this proxy statement and prospectus before deciding to
vote for the merger.  Investing  in our common  stock  involves a high degree of
risk. Any or all of the risks listed below 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.  We have  identified  all of the material
risks which we believe may affect our business and the  principal  ways in which
we anticipate that they may affect our business or financial condition.

Risks Related to Our Financial Condition and Business Model

Our limited operating history makes our business difficult to evaluate.

     We  were   incorporated  and  began   generating   revenues  in  May  1998.
Accordingly,  we have only a limited  operating  history  for you to consider in
evaluating  our  business.  As a new  company,  we face risks and  uncertainties
relating to our ability to  successfully  implement our business  plan. You must
consider the risks,  expenses and uncertainties  which can materially affect the
business of an early stage company like ours.  These risks  include  uncertainty
whether we will be able to:

     o    increase awareness of the Travelzoo brand;

     o    attract and retain  additional  travel companies to list their special
          offers with us;

     o    attract additional Internet users to www.Travelzoo.com;

     o    increase the functionality of our products and services;

     o    maintain our current, and develop new, business relationships;

     o    respond effectively to competitive pressures; and

     o    continue to develop and upgrade our technology.

We cannot assure you that we will sustain profitability.

     Although we have been profitable for nine consecutive quarters, there is no
assurance that we will continue to be profitable. We forecast our future expense
levels based on our operating plans and our estimates of future revenues. We may
find it necessary to accelerate expenditures relating to our sales and marketing
efforts  or  otherwise  increase  our  financial   commitment  to  creating  and
maintaining  brand awareness  among travel  companies and Internet users. 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 sustain profitability.  In this case,
the value of your shares could be reduced.

Fluctuations in our operating results may negatively impact our stock price.

     Our quarterly  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 quarter. 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:

     o    mismatches  between  resource  allocation  and customer  demand due to
          difficulties in predicting customer demand in a new market;

                                       8

<PAGE>

     o    changes in general  economic  conditions  that could affect  marketing
          efforts generally and online marketing efforts in particular;

     o    the magnitude and timing of marketing initiatives;

     o    the maintenance and development of our strategic relationships;

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

     o    our ability to attract and retain key personnel;

     o    our ability to manage our anticipated growth and expansion;

     o    our ability to attract traffic to our website; and

     o    technical  difficulties  or system  downtime  affecting  the  Internet
          generally or the operation of our products and services specifically.

In addition, we plan to significantly  increase our operating expenses to expand
our sales and marketing,  administration,  maintenance and technical support and
research and development  groups. If revenues fall below our expectations in any
quarter  and we are  unable to quickly  reduce our  spending  in  response,  our
operating results would be lower than expected and our stock price may fall.

Our business model is unproven and may not be adaptable to a changing market.

     Our current  revenue  model  depends on listing fees from travel  companies
using our website.  Our revenue  model and profit  potential  are  unproven.  If
current  customers  decide not to continue  listing their special offers with us
and we are  unable to  replace  them with new  customers,  our  business  may be
adversely affected. To be successful, we must provide online marketing solutions
that achieve broad market acceptance by travel companies.  In addition,  we must
attract sufficient Internet users with attractive demographic characteristics to
our  website.  It is  possible  that we will be  required  to further  adapt our
business  model in  response  to  additional  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 which could
reduce the value of your shares.

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.

     We intend to continue to grow our business,  and intend to fund our current
operations, our anticipated growth and the costs of the proposed merger from the
cash flow  generated from our  operations  and our retained  earnings.  However,
these  sources may not be  sufficient  to meet our needs.  We may not be able to
obtain additional 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 and the value of your
shares.

     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.

                                       9

<PAGE>

Our business may be sensitive to recessions.

     The  demand for online  marketing  solutions  may be linked to the level of
economic  activity  and  employment  in the U.S. and abroad.  Specifically,  our
business is dependent  on the amount of travel by consumers  and the spending of
travel  companies.  A recession could decrease  consumer travel and cause travel
companies to reduce or postpone their marketing  spending  generally,  and their
online marketing spending in particular.  If a significant  economic downturn or
recession  occurs in the U.S.  or  abroad,  our  business  and the value of your
shares could be materially adversely affected.

There has been no active market for our shares.

     Since our shares  have not been  registered  with the U.S.  Securities  and
Exchange  Commission or listed on any stock  exchange,  there has been no active
market for our shares. We cannot assure you that an active market for the shares
of Travelzoo  Delaware will develop  following  completion of the merger.  If no
market develops,  stockholders will not be able to readily sell their shares. In
addition,  if there is an  absence  of an active  market,  the  large  number of
Travelzoo  stockholders and shares  outstanding that will likely exist following
the  merger may also  affect the  ability  of a  stockholder  to sell  shares of
Travelzoo and the price of the shares.

We are controlled by a principal stockholder.

     Ralph Bartel,  who founded  Travelzoo and who is our Chairman of the Board,
Chief Executive Officer,  President and Secretary,  is our largest  stockholder,
holding  approximately  52% of our outstanding  shares prior to the merger.  Mr.
Bartel will hold  approximately 72% of our outstanding  shares upon consummation
of the merger with  options to increase  his  percentage  ownership  to 75% on a
fully-diluted  basis,  assuming all outstanding  shares of Travelzoo Bahamas are
exchanged for shares of Travelzoo Delaware. Through his share ownership, he will
be in a  position  to  control  Travelzoo  and to  elect  our  entire  board  of
directors.

Investors may face  significant  restrictions  on the resale of our stock due to
  federal penny stock regulations

     Because there has been no active market for our shares,  we cannot  predict
the prices at which our shares may trade.  If our shares trade at less than five
dollars per share, since the shares will not initially be listed on a recognized
national  exchange or on NASDAQ,  our common  stock may be deemed to be a "penny
stock" under Rule 3a51-1 under the Securities  Exchange Act of 1934.  Compliance
with the  requirements  governing  penny stocks may make it more  difficult  for
investors  in our common  stock to resell  their  shares to third  parties or to
otherwise dispose of them.

     Section  15(g) of the Exchange  Act, and Rule 15g-2 under the Exchange Act,
require  broker-dealers  dealing in penny stocks to provide potential  investors
with a document  disclosing  the risks of penny  stocks and to obtain a manually
signed  and  dated  written  receipt  of  the  document  before   effecting  any
transaction in a penny stock for the investor's  account.  Moreover,  Rule 15g-9
promulgated under the Securities Exchange Act of 1934 requires broker-dealers in
penny  stocks to approve the account of any investor  for  transactions  in such
stocks before selling any penny stock to that investor.  This procedure requires
the broker-dealer to (i) obtain from the investor information  concerning his or
her financial situation,  investment experience and investment objectives;  (ii)
reasonably  determine,  based on that  information,  that  transactions in penny
stocks are  suitable  for the  investor  and that the  investor  has  sufficient
knowledge and experience as to be reasonably  capable of evaluating the risks of
penny stock  transactions;  (iii) provide the investor with a written  statement
setting forth the basis on which the  broker-dealer  made the  determination  in
(ii) above;  and (iv) receive a signed and dated copy of such statement from the
investor,  confirming  that it  accurately  reflects  the  investor's  financial
situation, investment experience and investment objectives.

                                       10

<PAGE>

We may face  significant  costs  with  respect to the  redemption  of our common
   stock.

     Our  certificate  of  incorporation  provides that Travelzoo may redeem the
stock  of  any   stockholder  who  revokes  consent  to  receipt  of  electronic
communications or who fails to give such consent. This provision was designed to
protect  Travelzoo  from  incurring  the  costs of  providing  paper  copies  of
communications to our hundreds of thousands of stockholders. However, if a large
number of stockholders revoke consent to receipt of electronic communications or
fail to give such consent upon becoming a stockholder,  we may face  significant
costs relating to the redemption of these shares.  These  redemptions  may drain
our resources and may have a materially  adverse  effect on our business and the
value of our  shares.  Alternatively,  if we decide not to redeem the stock upon
revocation of consent, we may face significant costs for delivery and production
of paper copies of  communications  to those  stockholders who revoke or fail to
give consent to electronic communications from Travelzoo. These costs could also
have a materially adverse effect on our business and the value of your shares.

Risks Related to Our Markets and Strategy

The Internet is not a proven marketing medium.

     The future of our business is dependent on the ongoing acceptance by travel
companies  of the Internet as an effective  marketing  tool,  and on the ongoing
acceptance by consumers of the Internet as a source for valuable  information on
offers from travel companies.  The online  advertising market is new and rapidly
evolving, and we do not yet know how effective online advertising is compared to
traditional  advertising  methods.  The  adoption of online  marketing by travel
companies,   particularly  among  those  that  have  historically   relied  upon
traditional  advertising  methods,  requires  the  acceptance  of a new  way  of
conducting business, marketing and advertising.  Many of our potential customers
have little or no experience using the Internet as a marketing tool, and not all
Internet users have experience using the Internet to look for travel offers.  As
a result,  we cannot be sure that we will be able to  effectively  compete  with
traditional  advertising  methods.  If we are unable to compete with traditional
advertising  methods,  our business and results of  operations  and the value of
your shares could be materially adversely affected.

We will only be able to execute our business model if use of the Internet grows.

     If  Internet  usage  does not  continue  to  grow,  our  business  could be
adversely  affected.  Internet  usage may be inhibited  by any of the  following
factors:

     o    the  Internet  infrastructure  may not be able to support  the demands
          placed on it, or its  performance and reliability may decline as usage
          grows;

     o    websites   may  not  be  able  to  provide   adequate   security   and
          authentication of confidential  information contained in transmissions
          over the Internet; and

     o    the Internet industry may not be able to adequately respond to privacy
          concerns of potential users. Our business model anticipates  continued
          growth in Internet usage. If Internet usage does not continue to grow,
          we may not be  able  to meet  our  business  objectives,  which  could
          decrease the value of your shares.

We may not be able to develop awareness of our brand name.

     We believe that  continuing to build  awareness of the Travelzoo brand name
is  critical  to  achieving  widespread   acceptance  of  our  business.   Brand
recognition is a key differentiating  factor among providers of online marketing
solutions,  and we believe it could become more  important as competition in the
online  advertising  industry  increases.  In order to maintain  and build brand
awareness,  we must  succeed in our  marketing  efforts,  provide  high  quality
services and increase the number of Internet users with  favorable  demographics

                                       11

<PAGE>

using  Travelzoo.  If we fail to  successfully  promote and  maintain our brand,
incur  significant  expenses  in  promoting  our  brand 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 name, our
business and the value of your shares could be materially adversely affected.

We may not be able to successfully introduce new products and services.

     We expect to introduce  new and enhanced  products and services in order to
generate  additional  revenues,  attract  and retain more  travel  companies  as
customers,   attract  more  Internet   users  to  our  website  and  respond  to
competition.  We plan to launch a service  for  online  marketing  of movies and
local  events.  While we have  experience  with online  marketing,  our previous
experience  has  been  tailored  to the  travel  industry.  We have no  previous
experience  with products in the  entertainment  industry.  We must develop this
expertise in order to successfully integrate this new product into our business.
Any new product or service we introduce  that is not  favorably  received  could
damage our  reputation  and the perception of our brand name. The failure of our
new products  and services to achieve  market  acceptance  and generate  revenue
could result in a material  adverse effect on our business and the value of your
shares.

We will not be able to attract travel 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 companies and
Internet users find attractive. This could reduce the number of travel companies
and Internet users using  www.Travelzoo.com  and materially adversely affect our
business and the value of your shares.

We   may  lose  business  if  we  fail  to  keep  pace  with  rapidly   changing
     technologies and customer needs.

     Our  success  is  dependent  on our  ability to  develop  new and  enhanced
software,  services and related products to meet rapidly evolving  technological
requirements for online marketing solutions. Our current technology may not meet
the future technical requirements of travel companies.  Trends that could have a
critical impact on our success include:

     o    rapidly changing technology in online marketing;

     o    evolving  industry  standards,  including  both  formal  and de  facto
          standards relating to online marketing;

     o    developments and changes relating to the Internet;

     o    competing  products and services that offer  increased  functionality;
          and

     o    changes in travel company and Internet user requirements.

     If we are unable to timely  and  successfully  develop  and  introduce  new
products and  enhancements  to existing  products in response to our  industry's
changing technological  requirements,  our business and the value of your shares
could be materially adversely affected.

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

     Our future success depends on our ability to attract,  train,  motivate and
retain highly skilled  employees.  Competition  for highly skilled  employees is
intense,  particularly in the Internet industry.  We may be unable to retain our
skilled  employees  or  attract,  assimilate  and retain  other  highly  skilled
employees in the future. We have from time to time in the past experienced,  and
we expect to continue to  experience  in the  future,  difficulty  in hiring and
retaining highly skilled  employees with appropriate  qualifications.  If we are


                                       12

<PAGE>

unable to hire and retain skilled personnel,  our growth may be restricted,  the
quality  of our  products  and  services  reduced  and the value of your  shares
reduced.

We may not be able to effectively manage our expanding operations.

     We have recently  experienced a period of rapid growth. In order to execute
our business plan, we must continue to grow significantly. As of March 31, 2001,
we had 14 employees. We expect that the number of our employees will continue to
increase for the foreseeable future. This growth has placed, and our anticipated
future growth  combined with the  requirements  we face as a public company will
continue  to  place,  a  significant  strain  on  our  management,  systems  and
resources.  We expect that we will need to continue to improve our financial and
managerial  controls and reporting systems and procedures.  We will also need to
continue  to  expand  and  maintain  close  coordination  among  our  technical,
accounting, finance and sales and marketing organizations. We may not succeed in
these  efforts.  Our inability to expand our  operations in an efficient  manner
could cause our expenses to grow disproportionately to revenues, our revenues to
decline or grow more slowly than expected and otherwise have a material  adverse
effect on our business and the value of your shares.

Intense  competition  may  adversely  affect our  ability to achieve or maintain
  market share and operate profitably.

     We compete with large  Internet  portal sites,  such as About.com,  America
Online,  Excite, Lycos, MSN and Yahoo!, that offer listings or other advertising
opportunities  for travel companies These companies have  significantly  greater
financial, technical, marketing and other resources and larger client bases than
we do. We also compete with smaller sites that specialize in listing last-minute
offers   or   list   deals   for   free,   such  as   Lastminutetravel.com   and
Smarterliving.com.  In addition, we compete with newspapers, magazines and other
traditional media companies that provide online  advertising.  We expect to face
additional  competition as other established and emerging  companies,  including
print media companies, enter the online advertising market.

     We believe that there will be rapid  business  consolidation  in the online
advertising  industry.  Accordingly,  new  competitors  may emerge  and  rapidly
acquire  significant market share. The development of competing  technologies by
market  participants  or  the  emergence  of new  industry  standards  may  also
adversely affect our competitive  position.  Competition could result in reduced
margins on our services, loss of market share or less use of Travelzoo by travel
companies and consumers.  If we are not able to compete effectively with current
or future competitors as a result of these and other factors, our business could
be materially adversely affected.

Loss of any  of  our  key  management  personnel  could  negatively  impact  our
   business.

     Our future success depends to a significant extent on the continued service
and  coordination  of  our  management  team,  particularly  Ralph  Bartel,  our
Chairman,  President,  Chief  Executive  Officer  and  Secretary.  The  loss  or
departure of any of our officers or key  employees  could  materially  adversely
affect our ability to implement our business plan. We do not maintain key person
life insurance for any member of our management team. In addition, we expect new
members to join our management team in the future.  These  individuals  will not
previously have worked  together and will be required to become  integrated into
our  management  team.  If our key  management  personnel  are not  able to work
together effectively or successfully, our business could be materially adversely
affected.

                                       13

<PAGE>

Risks Related to the Internet and Our Technology Infrastructure

We may  experience  reduced  visitor  traffic,  reduced revenue and  harm to our
     reputation  in the  event of  unexpected  network  interruptions  caused by
     system failures.

     Our  servers  and  software  must be able to  accommodate  a high volume of
traffic.  Any substantial  increase in demands on our servers will require us to
expand and adapt our network infrastructure.  If we are unable to add additional
software and  hardware to  accommodate  increased  demand,  we could  experience
unanticipated  system  disruptions and slower response times.  Any  catastrophic
failure  at our  co-location  facility  could  prevent us from  serving  our web
traffic for up to several days, and any failure of our Internet service provider
may  adversely  affect  our  network's  performance.   Our  clients  may  become
dissatisfied  by any system  failure that  interrupts our ability to provide our
products and  services to them or results in slower  response  times.  We do not
maintain business interruption insurance. Any system failure, including network,
software or hardware failure, that causes an interruption in the delivery of our
products and  services or a decrease in  responsiveness  of our  services  could
result in reduced revenue and could  materially  adversely affect our reputation
and brand.

Breaches of our network security could be costly.

     A significant barrier to confidential  communications over the Internet has
been the need for security.  We may incur  significant  costs to protect against
the  threat  of  security  breaches  or to  alleviate  problems  caused by these
breaches.  If unauthorized  persons penetrate our network  security,  they could
misappropriate  proprietary  information or cause interruptions in our services.
As a result,  we may be required  to expend  capital  and  resources  to protect
against  or to  alleviate  these  problems.  In  addition,  we may be  liable to
customers or Internet users who experience losses or damages due to our security
failures. As a result, security breaches could have a material adverse effect on
our business and the value of your shares.

Computer viruses may cause our systems to incur delays or interruptions  and may
  adversely affect our business.

     Computer  viruses  may cause our systems to incur  delays or other  service
interruptions.  In addition,  the inadvertent  transmission of computer  viruses
could expose us to a material risk of loss or litigation and possible liability.
Moreover,  if a computer virus  affecting our system is highly  publicized,  our
reputation could be materially damaged and our visitor traffic may decrease. Any
of these events could materially  adversely affect our business and the value of
your shares.

We may not be able to access third party technology upon which we depend.

     We use  technology  and  software  products  from third  parties  including
Microsoft.  In light of the rapidly evolving nature of Internet  technology,  we
may increasingly need to rely on technology from other vendors.  Technology from
our  current  or  other  vendors  may  not  continue  to be  available  to us on
commercially  reasonable  terms,  or at all. Our business  will suffer if we are
unable to access this  technology,  to gain access to additional  products or to
integrate new technology with our existing  systems.  This could 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.  If  we
experience  these  delays,  our  business  and the value of your shares could be
materially adversely affected.

                                       14

<PAGE>

Risks Related to Legal Uncertainty

We  may  become  subject  to   burdensome   government   regulations  and  legal
   uncertainties  affecting   the  Internet  which  could  adversely  affect our
   business.

     To date, governmental regulations have not materially restricted use of the
Internet in our markets.  However,  the legal and  regulatory  environment  that
pertains  to the  Internet is  uncertain  and may  change.  Uncertainty  and new
regulations  could  increase  our  costs  of  doing  business,  prevent  us from
delivering our products and services over the Internet or slow the growth of the
Internet.  In addition to new laws and regulations being adopted,  existing laws
may be applied to the  Internet.  New and  existing  laws may cover issues which
include:

     o    user privacy;

     o    consumer protection;

     o    copyright, trademark and patent infringement;

     o    pricing controls;

     o    characteristics and quality of products and services;

     o    sales and other taxes; and

     o    other claims based on the nature and content of Internet materials.

We may  be  unable to protect  our  registered  trademark  or other  proprietary
   intellectual property rights.

     Our success  depends to a  significant  degree upon the  protection  of the
Travelzoo brand name. We rely upon a combination of copyright,  trade secret and
trademark laws and non-disclosure and other contractual  arrangements to protect
our  intellectual  property  rights.  The  steps we have  taken to  protect  our
proprietary rights,  however,  may not be adequate to deter  misappropriation of
proprietary information.

     The  U.S.  Patent  and  Trademark  Office   registered  the  trademark  for
"Travelzoo"  on January 23, 2001.  If we are unable to protect our rights in the
mark, a key element of our  strategy of promoting  Travelzoo as a brand could be
disrupted    and   our    business    could   be   adversely    affected.    See
"Business--Intellectual Property." 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 is
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. The unauthorized  reproduction or other
misappropriation  of our  proprietary  technology  could enable third parties to
benefit from our  technology  and brand name without paying us for them. If this
were to occur, our business could be materially adversely affected.

We may face  liability from  intellectual  property  litigation  that  could  be
   costly  to prosecute  or defend and distract  management's  attention with no
   assurance of success.

     We cannot be certain that our  products,  content and brand names do not or
will not infringe  valid  patents,  copyrights  or other  intellectual  property
rights held by third parties.  We expect that infringement claims in our markets
will  increase  in number as more  participants  enter  the  markets.  We may be
subject  to legal  proceedings  and  claims  from time to time  relating  to the
intellectual  property of others in the ordinary course of our business.  We may
incur substantial  expenses in defending against these third party  infringement
claims, regardless of their merit, and such claims could result in a significant
diversion of the efforts of our management  personnel.  Successful  infringement
claims against us may result in monetary  liability or a material  disruption in
the conduct of our business.

                                       15

<PAGE>

We   may be liable as a result of information retrieved from or transmitted over
   the Internet.

     We  may  be  sued  for  defamation,   negligence,  copyright  or  trademark
infringement or other legal claims relating to information  that is published or
made  available on  www.Travelzoo.com,  the Travelzoo Top 20 newsletter  and the
other sites  linked to our  website.  These  types of claims have been  brought,
sometimes  successfully,  against online  services in the past. The fact that we
distribute our Travelzoo Top 20 newsletter and other  information  via email may
subject us to potential  risks,  such as  liabilities  or claims  resulting from
unsolicited email or spamming, lost or misdirected messages,  security breaches,
illegal or fraudulent use of email or  interruptions or delays in email service.
In addition,  we could incur  significant  costs in investigating  and defending
such claims, even if we ultimately are not liable. If any of these events occur,
our  business  and the  value  of your  shares  could  be  materially  adversely
affected.


                           FORWARD-LOOKING STATEMENTS

     Certain   statements   under  the  captions   "Summary,"   "Risk  Factors,"
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and  "Information  About  Travelzoo"  and  elsewhere  in this proxy
statement and prospectus are forward-looking  statements.  These forward-looking
statements  include,  but  are not  limited  to,  statements  about  our  plans,
objectives,   expectations,  prospects  and  intentions,  markets  in  which  we
participate  and  other  statements   contained  in  this  proxy  statement  and
prospectus that are not historical  facts. When used in this proxy statement and
prospectus,  the words "expect," "project," "anticipate," "believe," "estimate,"
"intend,"  "plan,"  "seek" and similar  expressions  are  generally  intended to
identify forward-looking  statements.  Because these forward-looking  statements
involve risks and  uncertainties,  there are important  factors that could cause
actual  results to differ  materially  from those  expressed or implied by these
forward-looking   statements,   including  changes  in  our  plans,  objectives,
expectations,  prospects and intentions and other factors  discussed under "Risk
Factors"  and  elsewhere  in this  proxy  statement  and  prospectus.  We cannot
guarantee any future levels of activity,  performance or  achievements.  We will
update  these  forward-looking  statements,  to the extent  required  by law, to
reflect material changes in the information previously disclosed.




                                       16

<PAGE>



                                   THE MERGER

Background

     Travelzoo.com   Corporation  was  incorporated  on  May  21,  1998  in  the
Commonwealth of The Bahamas under The  International  Business  Companies Act of
1989. Ralph Bartel,  our Chairman of the Board and President,  was initially our
sole  stockholder.  In 1998 we  offered  shares in  Travelzoo  to  visitors  who
registered  on  our  website,  resulting  in  approximately  700,000  "Netsurfer
Stockholders," each of whom received three shares plus up to an additional seven
shares for referrals.  The number of shares held by each  Netsurfer  Stockholder
has been doubled as a result of a  two-for-one  stock split which we effected in
December 2000.

     The grant of the shares to the Netsurfer  Stockholders was made without any
registration or qualification with the U.S.  Securities and Exchange  Commission
or other  regulatory  body. We  understand  that the SEC takes the position that
programs for issuing shares such as our Netsurfer  Stockholder program should be
registered  with the SEC.  We are  registering  the  shares to be offered in the
merger under the U.S.  Securities  Act. This proxy statement and prospectus is a
part of that registration statement.

     Silicon  Channels  Corporation,  an  affiliate  of  Travelzoo  Bahamas  and
wholly-owned by Ralph Bartel, did business under the name "Travelzoo.com  Sales,
Inc." Pursuant to an agreement dated January 2, 1999, Silicon Channels agreed to
perform all  operation  services  with respect to the  Travelzoo.com  website in
return for 50% of the income  before taxes  generated  from the operation of the
Travelzoo.com  website.  All assets,  other than the domain name  Travelzoo.com,
used in the  operation  of the  Travelzoo.com  website  were  owned  by  Silicon
Channels.

     In November  1999,  as the business of Travelzoo  became  established,  and
following election of a Board of Directors  consisting  primarily of independent
directors, the Board of Directors discussed the advisability of reorganizing the
business so that all of the operations  previously  conducted  through Travelzoo
Bahamas and Silicon Channels would be conducted through a single company,  which
would be organized as a corporation in the United States.  At the same time, the
board also  considered the  advisability  of effecting a  registration  with the
United States  Securities  and Exchange  Commission of its  outstanding  shares,
including the shares which had been issued to the Netsurfer Stockholders. Before
structuring the combination of Travelzoo Bahamas and Silicon  Channels,  in July
2000, the Board of Directors of Travelzoo  Bahamas  determined  that it would be
advisable to obtain an opinion  regarding the fairness of the combination to the
Travelzoo  Bahamas  stockholders.  The board also decided to form an independent
committee in order to consider and approve the combination. After evaluating the
proposals of various  investment  banking firms, the Travelzoo  Bahamas Board of
Directors selected The Mentor Group to deliver the fairness opinion.

     The  independent  committee of the Board of Directors of Travelzoo  Bahamas
considered various  structures for the combination.  Based on The Mentor Group's
evaluation of both  companies,  it was determined  that a combination of the two
entities would result in Ralph Bartel owning  approximately  75% of the combined
operations.  In order to achieve the suggested  75%  ownership  interest for Mr.
Bartel,  in November 2000, the independent  committee made the decision to offer
Mr. Bartel a combination  of stock and options in Travelzoo  Bahamas in exchange
for  his  shares  of  Silicon  Channels.  The  independent  committee  felt  the
combination of stock and options would be a motivational  tool for Mr. Bartel to
continue the growth of Travelzoo.  Silicon  Channels would then be operated as a
wholly-owned  subsidiary of Travelzoo  Bahamas and merged into Travelzoo Bahamas
upon our  domestication  and  registration  of our shares with the SEC. Over the
course of several weeks during November, 2000, the independent committee and Mr.
Bartel reached an agreement that Mr. Bartel would  contribute all the issued and
outstanding  stock of Silicon  Channels to  Travelzoo  Bahamas in  exchange  for


                                       17

<PAGE>

7,769,274  shares of  Travelzoo  Bahamas'  common stock and an option to acquire
2,118,348  shares of Travelzoo  Bahamas'  common  stock at an exercise  price of
$1.00 per share.

     However,  in December  2000,  upon the advice of tax  counsel,  the initial
agreement  between the  independent  committee  and Mr.  Bartel was  modified to
reflect  that  Mr.  Bartel's  stock  would  be  contributed  to a  newly  formed
subsidiary of Travelzoo Bahamas,  Travelzoo  Delaware,  in exchange for stock in
Travelzoo  Delaware.  Mr.  Bartel  was  to  contribute  all of  the  issued  and
outstanding  stock of Silicon  Channels  in  exchange  for  8,129,273  shares of
Travelzoo  Delaware  and the option to purchase  2,158,349  shares of  Travelzoo
Delaware at an exercise price of $1.00 per share.  Under the revised  structure,
Silicon  Channels  would be operated as a  wholly-owned  subsidiary of Travelzoo
Delaware.  Then,  upon  consummation  of the  merger of  Travelzoo  Bahamas  and
Travelzoo Delaware,  Silicon Channels would remain a wholly-owned  subsidiary of
the domesticated  surviving entity.  The number of shares of Travelzoo  Delaware
issued to Mr. Bartel was  determined so that Mr. Bartel would own  approximately
75% of the surviving entity on a fully-diluted basis.

     On January 18, 2001,  The Mentor  Group issued its fairness  opinion on the
revised  structure.  A copy of the opinion is attached as Annex F hereto.  After
considering  the  opinion  provided  by The  Mentor  Group  as  discussed  under
"Exchange  of Shares of Silicon  Channels"  on page 45, the board  approved  the
acquisition of Silicon Channels by Travelzoo  Delaware in exchange for shares of
common  stock of  Travelzoo  Delaware  and options to purchase  shares of common
stock of Travelzoo Delaware.  This transaction occurred on January 22, 2001. The
board also  approved  the  transactions  described in this proxy  statement  and
prospectus, including the merger of Travelzoo Bahamas into Travelzoo Delaware.

Merger with Travelzoo Delaware

     We are now  proposing  that  Travelzoo  Bahamas  be merged  into  Travelzoo
Delaware.  We believe  that it is in the best  interests  of our company and our
stockholders  that  Travelzoo be  incorporated  in the United  States,  and have
decided that Delaware is the most suitable state for incorporation.  Delaware is
the most  common  state of  incorporation  for  public  companies  in the United
States.  In addition,  we feel the laws of Delaware with respect to corporations
which will govern  Travelzoo  are well  defined and will  provide a  predictable
framework under which Travelzoo may operate. The merger will also accomplish the
combination of our operations with those of Silicon Channels.

     In connection with the merger, we are filing a registration  statement with
the SEC relating to the shares of Travelzoo Delaware which will be issued in the
merger.  As discussed more fully in  "Information  About  Travelzoo" on page 26,
this  registration  is being effected to allow our  stockholders  to have freely
tradable and properly registered shares.

     Travelzoo Bahamas and Travelzoo Delaware have entered into an Agreement and
Plan of Merger,  dated  January 19, 2001, a copy of which  appears as Annex A to
this proxy  statement and  prospectus and is  incorporated  herein by reference.
Information  concerning  the merger  agreement  is set forth  under "The  Merger
Agreement" on page 21.

Effects of the Merger

     On  completion  of the  merger,  Travelzoo  Bahamas  will  be  merged  into
Travelzoo Delaware, Travelzoo Bahamas will cease to exist as a separate company,
and all the  stockholders  of Travelzoo  Bahamas who comply with the  applicable
provisions  of the merger  agreement  will  receive one share of common stock of
Travelzoo  Delaware  in  exchange  for each share of common  stock of  Travelzoo
Bahamas  they now hold.  The  business  which has been  conducted  by  Travelzoo
Bahamas and its  affiliate,  Silicon  Channels,  will be  continued by Travelzoo
Delaware and its  subsidiary,  Silicon  Channels,  and all of the shares held by
Travelzoo Delaware stockholders,  other than persons considered affiliates under
the Securities Act, will be registered and freely tradable. The current officers
and  members of the board of  directors  of  Travelzoo  Bahamas  will become the


                                       18

<PAGE>

officers and directors of Travelzoo  Delaware.  The stock of Travelzoo  Delaware
you will hold  after the  merger,  unlike  the stock of  Travelzoo  Bahamas  you
currently  hold,  will be  redeemable  if you  withdraw  your consent to receive
communications  electronically  from  Travelzoo,  as more fully  described under
"Description of Capital Stock" on page 48.

Material United States Federal Income Tax Consequences

     General.

     The following  discussion  summarizes the material U.S.  federal income tax
consequences of the merger to holders of Travelzoo Bahamas securities, including
the receipt of securities of Travelzoo  Delaware in exchange for their Travelzoo
Bahamas  securities.  The  following  summary also sets forth the material  U.S.
federal  income  tax  consequences  of the  merger  at the  corporate  level  to
Travelzoo.

     The   discussion   is  based  upon  current  law  and  is  subject  to  the
qualifications  contained therein.  The discussion assumes that the holders hold
their  Travelzoo  Bahamas  securities  as capital  assets  within the meaning of
Section 1221 the U.S. Internal Revenue Code.

     This summary does not purport to discuss all aspects of U.S. federal income
taxation that may be relevant to a particular holder of Travelzoo Bahamas stock.
In particular,  it does not apply to holders entitled to special treatment under
U.S.  federal  income  tax  law  (including,   without  limitation,  dealers  in
securities,  tax-exempt  organizations,  banks or other financial  institutions,
trusts,  insurance companies,  persons that hold Travelzoo Bahamas stock as part
of a  straddle,  a hedge  against  currency  risk or as a  constructive  sale or
conversion  transaction,  persons that have a functional currency other than the
United States dollar,  investors in pass-through  entities and foreign  persons,
including foreign individuals,  partnerships and corporations).  This discussion
also  does not  describe  tax  consequences  arising  out of the tax laws of any
state, local or foreign jurisdiction.

     Further,  this summary does not purport to discuss the U.S.  federal income
taxation of holders of Travelzoo  Bahamas stock who acquired such  securities or
stock  pursuant to the exercise or  cancellation  of employee  stock  options or
otherwise as compensation.

     You are urged to consult your tax advisor as to specific tax considerations
of the merger,  including  your receipt of stock of  Travelzoo  Delaware and the
application  and effect of  federal,  state,  local and foreign tax laws in your
particular circumstances.

     Consequences of the Initial Receipt of the Travelzoo Bahamas Stock.

     In the opinion of Bryan Cave LLP,  our  counsel,  under  current  law,  the
initial  receipt of common stock by our  Netsurfer  Stockholders  was taxable to
them upon  receipt in an amount  equal to the fair market  value of the stock at
the time of  receipt.  Each  holder's  aggregate  tax basis in the common  stock
received  will equal the fair market  value of the stock at the time of receipt.
The holding period of the common stock received began on the day after receipt.

     Consequences of the Merger.

     In the opinion of Bryan Cave LLP, our counsel, under current law:

     o    the merger will  qualify as a  "reorganization"  within the meaning of
          Section 368(a) of the Code,

     o    Travelzoo  Bahamas and  Travelzoo  Delaware will each be a "party to a
          reorganization" within the meaning of Section 368(b) of the Code, and

     o    except as more fully described below, no income,  gain or loss will be
          recognized by Travelzoo  Bahamas or Travelzoo  Delaware as a result of
          the merger.

                                       19

<PAGE>

     This opinion is subject to qualifications set forth herein and assumes that
the merger is consummated in accordance  with the terms of the merger  agreement
and as described in this proxy  statement  and  prospectus.  It also assumes the
accuracy  of the  representations  and  assumptions  set  forth in  certificates
delivered to our counsel. The opinion is based on the Code, Treasury regulations
promulgated   thereunder   and  in  effect  as  of  the  date  hereof,   current
administrative  rulings and practice and  judicial  precedent,  all of which are
subject  to  change,  possibly  with  retroactive  effect.  Any change in law or
failure of the factual  representations  and  assumptions to be true could alter
the tax consequences discussed herein.

     The  merger is not  conditioned  upon a ruling  from the  Internal  Revenue
Service as to any of the U.S.  federal income tax  consequences of the merger or
the distribution of the stock of Travelzoo Delaware.  As a result,  there can be
no  assurance  that the  Internal  Revenue  Service  will not  disagree  with or
challenge any of the conclusions set forth in this discussion.

     Consequences to Holders of Travelzoo Stock.

     This section  sets forth the opinion of Bryan Cave LLP, our counsel,  as to
the material U.S.  federal income tax  consequences  of the merger to holders of
Travelzoo Bahamas stock.

     Exchange of Travelzoo  Bahamas Common Stock.  Holders of Travelzoo  Bahamas
common  stock who do not own 10  percent  or more of the total  combined  voting
power of our common  stock and who exchange  their  common  stock for  Travelzoo
Delaware  common stock in the merger will not recognize  gain or loss,  assuming
the individual  holders'  Travelzoo Bahamas common stock has a fair market value
of less than $50,000 on the date of the exchange.  Each  holder's  aggregate tax
basis in the Travelzoo  Delaware common stock received in the merger will be the
same as his or her  aggregate tax basis in the  Travelzoo  Bahamas  common stock
surrendered in the merger.  The holding period of the Travelzoo  Delaware common
stock  received in the merger will include the holding  period of the  Travelzoo
Bahamas common stock surrendered in the merger.

     Additional Consequences to Holders of Travelzoo Bahamas Securities.

     This section  sets forth the opinion of Bryan Cave LLP, our counsel,  as to
additional  U.S.  federal  income tax  consequences  of the merger to holders of
Travelzoo Bahamas Securities.

     Dissenter's  Rights.  Holders of Travelzoo Bahamas common stock who receive
cash as a result  of the  exercise  of the  right  to  dissent  from the  merger
(assuming thereafter that, directly or indirectly, such holder owns no Travelzoo
Delaware  capital  stock) will  recognize  gain or loss equal to the  difference
between the amount of cash  received  and the  holder's  allocable  tax basis in
stock exchanged  therefor.  That gain or loss generally will constitute  capital
gain or loss. It will  constitute  long-term gain or loss if the holder has held
the Travelzoo Bahamas common stock for more than 12 months.

     Backup  withholding.  Certain  noncorporate  holders of  Travelzoo  Bahamas
common  stock  may be  subject  to backup  withholding  at a rate of 31% on cash
payments  received  upon  exercise of  dissenter's  rights of Travelzoo  Bahamas
common stock unless such holder:

     o    furnishes a correct taxpayer identification number and certifies under
          penalty of perjury that he or she is not subject to backup withholding
          on the substitute  Form W-9 (or successor form) which will be provided
          to holders of Travelzoo  Delaware common stock following  consummation
          of the merger,

     o    provides a  certification  of foreign status on Form W-8 (or successor
          form), or

     o    is otherwise exempt from backup withholding.

     Any amount withheld under these rules will be credited against the holder's
U.S. federal income tax liability.

                                       20

<PAGE>

     Because of the complexity of the tax laws, and because the tax consequences
to any  particular  holder of Travelzoo  Bahamas common stock may be affected by
matters not discussed  herein,  each holder of Travelzoo Bahamas common stock is
urged to consult his or her personal tax advisor concerning the applicability to
him or her of the foregoing discussion, as well as of any other tax consequences
of the merger.


                              THE MERGER AGREEMENT

     The  following  is a summary of the merger  agreement,  and is qualified by
reference to the  complete  text of the merger  agreement,  which is attached as
Annex A to this proxy  statement  and  prospectus.  We urge you to read the full
text of the merger agreement.

Structure of the Merger

     On the  effectiveness  of the  merger,  Travelzoo  Bahamas  will merge into
Travelzoo  Delaware,  and Travelzoo Delaware will be the surviving  corporation.
Travelzoo Bahamas will cease to exist and Travelzoo Delaware will succeed to all
of the rights,  powers,  properties  and assets of Travelzoo  Bahamas,  and will
continue to operate the business which has been  conducted by Travelzoo  Bahamas
and will continue to own all outstanding shares of Silicon Channels.

Exchange of Shares

     The merger  agreement  provides that, on the  effectiveness  of the merger,
each  outstanding  share of common stock of Travelzoo  Bahamas will be converted
into the right to receive one share of common stock of Travelzoo  Delaware.  The
shares of Travelzoo  Delaware  which are now held by  Travelzoo  Bahamas will be
canceled.  The shares of Travelzoo  Delaware  which are now held by Ralph Bartel
will remain  outstanding,  and his shares of Travelzoo Bahamas will be exchanged
for additional shares of Travelzoo  Delaware.  Following the merger,  Mr. Bartel
will hold approximately 72% of the outstanding shares.

     In order to receive shares of common stock of Travelzoo Delaware,  you will
be required to:

     o    Identify  yourself as a stockholder of Travelzoo  Bahamas by providing
          us with your name, the email address you have  registered with us, and
          a new password which we will send to your  registered  e-mail address.
          If you do not have access to your registered  e-mail address,  and are
          unable to receive  your new  password,  you will be required to update
          your  registered  e-mail address by giving us a written  request which
          includes your name, a copy of your passport or other photo id, as well
          as either your current registered e-mail address or the serial numbers
          of your Travelzoo  shares,  which were assigned to you at the time you
          received your shares.

     o    Provide us with a mailing address.

     o    Advise us whether you consent to receiving by electronic  transmission
          any notices to be given by Travelzoo Delaware to its stockholders,  in
          accordance with Section 323 of the Delaware General Corporation Law.

     o    Advise us whether you consent to receiving by electronic  transmission
          our proxy  statements,  annual  reports  and other  information  to be
          provided  to you in  accordance  with  the  requirements  of the  U.S.
          Securities and Exchange Commission.

Although we have not previously  required our Netsurfer  Stockholders to provide
us  with  a  mailing  address,  we  will  require  a  mailing  address  for  all
stockholders  of  Travelzoo  Delaware.  Even though we intend to use  electronic
delivery of stockholder  communications  whenever possible, the Delaware General
Corporation  Law and the rules and  regulations  of the SEC  require  us,  under
certain  circumstances,  to provide  notices  to our  stockholders  by mail.  We


                                       21

<PAGE>

strongly  encourage  all our  stockholders  to  consent  to  receive  electronic
communications.  As  discussed  under  "Description  of Capital  Stock -- Common
Stock" on page 48,  your  shares  will be  subject to  redemption  if you do not
consent to the receipt of electronic communications.

     You may provide us with the  information  described above over the Internet
at http://www.travelzoo.com/delaware, and we encourage you to use this method of
communication.  You may also  use the  form  which  is  attached  to this  proxy
statement  and  prospectus  as  Annex D,  which  you may fax to us or mail to us
following the  instructions on the form. If you attend the meeting in person you
may also deliver the form to us at the meeting.

Book-Entry

     The share register of Travelzoo Bahamas has been maintained electronically,
and  share  certificates  have not  been  issued.  Ownership  of the  shares  of
Travelzoo  Delaware will also be on a book-entry  basis  initially,  and we will
encourage our  stockholders to continue holding their shares in book entry form.
See "Book-Entry Share Ownership" on page 50.

Conditions to the Merger

     The obligations of Travelzoo Bahamas and Travelzoo Delaware to complete the
merger  are  subject  to the  satisfaction  or waiver of  specified  conditions,
including the following:

     o    the approval of the merger agreement by the affirmative vote of:

     o    the  holders  of a majority  of the  outstanding  shares of  Travelzoo
          Bahamas common stock; and

     o    the holder of the  outstanding  shares of  Travelzoo  Delaware  common
          stock (which has already taken place);

     o    the  absence  of  any  law,  order  or  injunction   prohibiting   the
          consummation of the merger;

     o    the receipt of all approvals and the  completion of filings or notices
          necessary for completion of the merger;

     o    the declaration of effectiveness of the registration statement on form
          S-4, of which this proxy statement and prospectus forms a part, by the
          SEC,  and the  absence  of any stop  order or  threatened  or  pending
          proceedings seeking a stop order.

Termination

     The merger  agreement may be terminated at any time prior to the completion
of the  merger,  whether  before or after the  stockholder  approvals  have been
obtained:

     o    by mutual consent of Travelzoo Bahamas and Travelzoo Delaware;

     o    by either  Travelzoo  Bahamas or  Travelzoo  Delaware  if any  decree,
          permanent injunction,  judgment, order or other action by any court of
          competent  jurisdiction,  any arbitrator or any governmental authority
          preventing or prohibiting consummation of the merger shall have become
          final and non-appealable;

     o    by either Travelzoo Bahamas or Travelzoo  Delaware if the merger shall
          not have been consummated before May 1, 2001 unless the failure of the
          effective  time to occur by such date  shall be due to the  failure of
          the party seeking to terminate the merger  agreement in performing its
          covenants and agreements in the merger agreement;

     o    by either Travelzoo Bahamas or Travelzoo  Delaware if the transactions
          contemplated  by the  merger  agreement  shall  fail  to  receive  the
          requisite vote for approval by the stockholders of Travelzoo Bahamas;

                                       22

<PAGE>

     o    by Travelzoo  Bahamas if its board of directors  shall have  withdrawn
          its approval or  recommendation  of the merger in connection  with the
          exercise of its fiduciary duties; or

     o    by either  Travelzoo  Bahamas or  Travelzoo  Delaware  if the board of
          directors of either company determines that the number of stockholders
          requesting  paper  delivery  (as opposed or in addition to  electronic
          delivery) of this proxy statement and prospectus  makes it inadvisable
          to proceed with the merger.

Representations and Warranties

     The merger agreement contains  representations  and warranties of Travelzoo
Bahamas and Travelzoo Delaware relating to, among other things:

     o    corporate organization and good standing;

     o    capitalization; and

     o    authorization.

Completion and Effectiveness of the Merger

     The merger will become  effective  when a certificate of merger is filed in
the State of Delaware in  accordance  with  Sections 252 and 103 of the Delaware
General  Corporation  Law. We anticipate  that we will file the  certificate  of
merger promptly following the stockholder meeting to approve the merger.


                               THE SPECIAL MEETING

General

     This  proxy  statement  and  prospectus  is being  furnished  to holders of
Travelzoo Bahamas common stock in connection with the special meeting of members
(stockholders)  to be held at  ________________________  on  _________,  2001 at
[_________] _.m., [_________] time, and any adjournment or postponement thereof.
This proxy statement and prospectus and the accompanying form of proxy are first
being sent to stockholders of Travelzoo Bahamas on or about _______ __, ______.

Matters to be Considered

     At the Special meeting, the stockholders of Travelzoo Bahamas will be asked
to consider and vote upon a proposal to approve and adopt the merger agreement.

Board of Directors' Recommendation

     THE TRAVELZOO BOARD OF DIRECTORS HAS  UNANIMOUSLY  APPROVED AND ADOPTED THE
MERGER  AGREEMENT AND  RECOMMENDS  THAT THE  STOCKHOLDERS  OF TRAVELZOO VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.

Record Date; Voting Rights

     Our board of directors has fixed the close of business on ____________ ___,
____ as the record  date for  determining  holders  entitled to notice of and to
vote at the special meeting.

     As of the  record  date,  there  were  outstanding  and  entitled  to  vote
11,295,874 shares of Travelzoo Bahamas common stock held by 699,960 stockholders
of record.  Each share of Travelzoo Bahamas common stock is entitled to one vote
on each matter to be voted upon at the special  meeting,  which vote may be cast
either in person or by properly executed proxy.

                                       23

<PAGE>

Quorum

     The  presence  in person or by  properly  executed  proxy of  holders  of a
majority of the issued and outstanding  shares of Travelzoo Bahamas common stock
is necessary to constitute a quorum at the special meeting.

Required Vote

     The approval and adoption of the merger agreement  requires the affirmative
vote of the holders of a majority of the outstanding shares of our common stock.

     Mr.  Bartel holds an aggregate  of  5,910,000  shares of our common  stock,
representing  approximately 52% of the outstanding shares. He has indicated that
he  intends  to vote  in  favor  of the  approval  and  adoption  of the  merger
agreement.

     The approval of the merger also requires the affirmative vote of a majority
of the  outstanding  shares of common  stock of  Travelzoo  Delaware.  Travelzoo
Bahamas and Mr.  Bartel,  who  together  hold all of the  outstanding  shares of
Travelzoo Delaware, have already given that approval.

Proxies

     The  proxy  statement  and  prospectus  is  being  furnished  to  Travelzoo
stockholders in connection with the  solicitation of proxies by and on behalf of
the  Travelzoo  board  of  directors  for  use at the  special  meeting,  and is
accompanied by a form of proxy.

     In order for your shares of  Travelzoo  common  stock to be included in the
vote, you must vote your shares by one of the following means:

     o    by proxy by completing  the proxy and following the  instructions  for
          return located on the Internet at http://www.travelzoo.com/delaware.

     o    by proxy by printing,  completing, signing and dating the proxy in the
          form attached hereto and mailing it to the address shown thereon

     o    in person at the special meeting

     If you cannot attend the special  meeting in person,  you are encouraged to
vote by proxy over the Internet.

     All shares of  Travelzoo  common  stock  represented  by properly  executed
proxies  will,  unless such proxies have been  previously  revoked,  be voted in
accordance with the instructions  indicated on such proxies.  If no instructions
are indicated,  such shares of Travelzoo common stock will be voted for approval
and adoption of the merger agreement and, in the discretion of the proxies, with
respect to such other  business as may properly come before the special  meeting
or any adjournment or postponement thereof.

     Travelzoo  does not know of any  matters  other than the merger that are to
come before the special meeting. If any other matters are properly presented for
action at the special  meeting,  the persons named in the enclosed form of proxy
and  acting  thereunder  will have the  discretion  to vote on such  matters  in
accordance with their best judgment, unless such authorization is withheld.

     Mailing the enclosed  proxy card or voting  through the  Internet  does not
preclude  you from  voting in person at the  special  meeting.  You may revoke a
proxy at any time prior to the vote by:

     o    notifying the  Secretary of Travelzoo in writing of the  revocation of
          the proxy;

     o    submitting, via the Internet or through the U.S. mail, a duly executed
          proxy to the Secretary of Travelzoo bearing a later date; or

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<PAGE>

     o    appearing at the special meeting and voting in person.

     Simply attending the special meeting,  without voting at the meeting,  will
not  constitute  revocation  of a proxy.  Any written  notice of  revocation  or
subsequent proxy should be completed at http://www.travelzoo.com/proxy,  sent to
Travelzoo.com  Corporation,  800 West El Camino Real, Suite 180,  Mountain View,
California 94040,  Attention:  Secretary,  or hand delivered to the Secretary of
Travelzoo at or before the taking of the vote at the special meeting.

                              RIGHTS OF DISSENTERS

     Under Bahamian law, as a result of the merger proposal, you are entitled to
demand  appraisal and, upon  consummation  of the merger,  obtain payment of the
fair value of your  shares.  To  exercise  the right to  dissent,  you must give
written  notice to  Travelzoo  Bahamas  at or before the  stockholders'  meeting
described above under "The Special Meeting" on page 23. Such written notice must
include a statement  that you  propose to demand  payment for your shares if the
merger is approved.

     Within 20 days after the date of the  special  meeting,  Travelzoo  Bahamas
will give written notice of the  authorization  of the merger to you if you have
given written objection.  Within 20 days after the date on which the copy of the
plan of merger or an outline  thereof  was given to you,  you must give  written
notice to Travelzoo Bahamas of your decision to elect to dissent,  provided that
you must dissent with respect to all shares that you hold in Travelzoo  Bahamas.
Such notice must state:

     o    your name and address;

     o    the  number  and  classes  or series of shares in respect of which you
          dissent; and

     o    a demand for payment of the fair value of your shares.

     Upon giving  notice of election to dissent,  you will no longer have any of
the rights of a stockholder of Travelzoo Bahamas except the right to be paid the
fair value of your shares.  Within seven days immediately  following the date of
the  expiration  of the period within which you may give your notice of election
to dissent,  or within seven days  immediately  following  the date on which the
proposed merger effective,  whichever is later,  Travelzoo  Delaware will make a
written offer to you to purchase your shares at a specified price that Travelzoo
Delaware  determines  to be their fair  value.  If,  within 30 days  immediately
following the date on which the offer is made, you and Travelzoo  Delaware agree
upon the price to be paid for your shares,  Travelzoo Delaware will pay you that
amount in cash upon your signing and delivering to Travelzoo Delaware a document
satisfactory  to  Travelzoo  Delaware  in which you  acknowledge  surrender  and
cancellation of your shares.

     If you and  Travelzoo  Delaware  fail within such 30 day period to agree on
the price to be paid for your shares,  within 20 days immediately  following the
date on which the 30 day period expires, the following shall apply:

     o    you and Travelzoo Delaware will each designate an appraiser;

     o    the  two  designated   appraisers  together  will  designate  a  third
          appraiser;

     o    the three  appraisers will fix the fair value of your shares as of the
          close of  business  on the day prior to the date of the  stockholders'
          meeting,  and that value is binding on you and Travelzoo  Delaware for
          all purposes; and

     o    Travelzoo will send to you, by check mailed to the address you provide
          to us, the amount of the fair value of the shares.


                                       25

<PAGE>

                           INFORMATION ABOUT TRAVELZOO

Our History

     Travelzoo Bahamas

     Travelzoo.com   Corporation  was  incorporated  on  May  21,  1998  in  the
Commonwealth of The Bahamas under The  International  Business  Companies Act of
1989. Ralph Bartel,  our Chairman of the Board and President,  was initially our
sole stockholder.

     Our principal  business office is located at 800 West El Camino Real, Suite
180, Mountain View, California 94040.

     Internet Stock Offering

     Following the organization of Travelzoo  Bahamas in 1998, we offered shares
in Travelzoo to visitors who registered on our website.  We limited the offer to
approximately  700,000  "Netsurfer  Stockholders,"  each of whom received  three
shares plus up to an additional  seven shares for referrals.  The offering ended
on July 31, 1998 when we obtained  approximately  700,000 new  stockholders.  To
register,  the Netsurfer  Stockholders  provided us with their e-mail addresses,
first names and countries of  residence.  Upon receipt of this  information,  we
e-mailed a personal  identification  number to the e-mail address each Netsurfer
Stockholder  had  provided.  Once  the  Netsurfer  Stockholders  received  their
personal  identification  numbers,  in order to receive  their stock,  they were
asked to provide us with their first and last names, e-mail addresses, countries
of residence and personal  identification  numbers,  and to represent  that they
were at least 18 years old and residents of the United States or Canada. No cash
payments were  required or received for any of the stock issued  pursuant to the
Netsurfer  Stockholder  offering.  The only  item  received  from the  Netsurfer
Stockholders was the information they provided in the registration  process. The
only benefit we  anticipated  receiving from the offering was an increase in our
website traffic.

     We believe that our offering was the first  offering of "free  shares" over
the Internet.  Mr.  Bartel,  who was a resident of Germany at the time,  was not
advised by U.S.  securities  counsel,  and believed that the grant of the shares
could be made without any registration or qualification with the U.S. Securities
and Exchange  Commission or other  regulatory body since no payment was received
for the shares.  Although Mr. Bartel  received an inquiry from the SEC about the
issuance of shares to the Netsurfer  Stockholders,  the SEC has not asserted any
violation of law by Travelzoo.  However,  we  understand  that the SEC takes the
position  that  programs for issuing  shares such as our  Netsurfer  Stockholder
program should be registered  with the SEC or qualify for an exemption from such
registration.  We are  registering  the shares to be offered in the merger under
the U.S. Securities Act.

     Federal and state  securities laws provide certain remedies for persons who
acquire securities in an offering that was not registered with the SEC and which
did not qualify for any exemption from registration.  Under Section 12(1) of the
Securities  Act of 1933,  such persons are entitled to  rescission,  which means
that the  stockholders  would return the securities to the seller and the seller
would be required to return the purchase  price paid for such  securities.  If a
purchaser no longer holds the  securities,  the  purchaser  would be entitled to
damages  equal to the  difference  between  the price paid for the stock and the
price at which the stockholder sold the stock.  However, any such action must be
brought within one year of the date of the sale, and so these remedies would not
be available to the  Netsurfer  Stockholders,  since the  Netsurfer  Stockholder
offering ended on July 31, 1998. In addition,  Travelzoo  believes that, even if
such remedies would be available,  Travelzoo  would have no financial  liability
because no amount was paid for the shares issued to the Netsurfer Stockholders.

     The remedies available to purchasers of unregistered securities under state
law vary by state,  but most states have a remedy  similar to the rescission and
damages  remedies  described above with respect to federal law. Most states hold


                                       26

<PAGE>

an entity which sells or offers to sell an unregistered  or non-exempt  security
liable to the person purchasing the security, and the holder may generally bring
an action to recover the  consideration  paid for the  security,  together  with
interest from the date of payment,  court costs and  attorneys'  fees,  less the
amount of any  income  received  on the  security.  If a holder no longer  holds
securities received in an unregistered and non-exempt  offering,  the holder may
be entitled to receive  damages equal to the  difference  between the price paid
for the  security  and the price at which the  holder  sold the  security,  plus
interest.  Moreover,  most  state  laws  expressly  provide  that the rights and
remedies provided by the securities laws are in addition to any other rights and
remedies that may exist. However, some state laws limit the applicable remedy to
rescission and other state laws limit the applicable remedy to damages.

     Most state securities laws provide for a statute of limitations,  requiring
a purchaser of unregistered securities to bring an action within a stated period
of time from either the date of the sale,  the date of the  violation,  the date
when the  violation  should  have been  detected  or some  combination  thereof.
Although most state securities laws provide for limitations periods of 2-3 years
from the date of sale,  laws of other  states  provide for  limitations  periods
ranging  from 2 years  from the  date of sale or 6  months  from the date of the
violation or  discovery  of the  violation to 7 years from the date of sale or 5
years from the date of the discovery of the violation.  The  securities  laws of
several states do not provide  statutes of  limitations.  The securities laws of
most  states bar an action for  rescission  or damages  for an  unregistered  or
non-exempt  offering if the offeree knew of the securities law violations at the
time he or she received the securities.

     In those states in which the applicable statute of limitations may not have
expired, Travelzoo may be subject to liability for rescission or other remedies.
However,  we do not have any  information  as to the states of  residence of the
Netsurfer Stockholders.  As noted above, since no amount was paid for the shares
issued to the Netsurfer  Stockholders,  we believe  that,  even if such remedies
would be available, Travelzoo would have no financial liability.

     Silicon Channels Corporation

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
was  incorporated  in  California on September 28, 1998 with Ralph Bartel as the
sole  stockholder.  Silicon Channels did business under the name  "Travelzoo.com
Sales, Inc." On October 10, 1998, Travelzoo.com Corporation and Silicon Channels
Corporation  entered into a letter agreement  whereby Silicon Channels agreed to
manage the technical platform,  marketing,  customer support and billing for the
classified  publishing business of the Travelzoo.com  website in return for a 5%
commission on the quarterly net income from such business.  The October 10, 1998
agreement  was  subsequently  replaced by a Service  Agreement  dated January 2,
1999. In the January 2, 1999 Agreement,  Silicon  Channels agreed to perform all
operation  services with respect to the Travelzoo.com  website in return for 50%
of the net income before taxes generated from the operation of the Travelzoo.com
website.  All  assets,  other than the domain  name  Travelzoo.com,  used in the
operation  of the  Travelzoo.com  website  were  owned by Silicon  Channels.  On
January 22, 2001 Silicon Channels became a subsidiary of Travelzoo  Delaware,  a
newly-formed  subsidiary  of  Travelzoo  Bahamas,  as described  under  "Certain
Transactions between Travelzoo and Its Affiliates" on page 45.

     Merger with Travelzoo Delaware

     Travelzoo Inc. was  incorporated  as a Delaware  corporation on January 18,
2001.  The initial  stockholder  of Travelzoo  Delaware was  Travelzoo  Bahamas.
Following the  contribution  of the shares of Silicon  Channels  Corporation  to
Travelzoo  Delaware,  Travelzoo  Bahamas owns 58% of the  outstanding  shares of
Travelzoo  Delaware  and Ralph  Bartel owns 42% of the  outstanding  shares.  On
completion  of the merger  described  in this proxy  statement  and  prospectus,
Travelzoo Bahamas will be merged into Travelzoo Delaware, Travelzoo Bahamas will


                                       27

<PAGE>

cease to exist as a separate  company,  and all the  stockholders  of  Travelzoo
Bahamas,  other than persons considered affiliates under the Securities Act, who
comply with the applicable  provisions of the merger  agreement will receive one
share of common stock of Travelzoo Delaware in exchange for each share of common
stock of Travelzoo Bahamas they now hold.

Our Business

     Travelzoo provides online marketing solutions for the travel industry.  Our
website,  www.Travelzoo.com,  and our Travelzoo Top 20 newsletter  enable travel
companies to promote their special offers in a fast, flexible and cost-effective
manner.  While  our  website  is an  ongoing  listing  of travel  specials,  our
Travelzoo Top 20 newsletter is sent to subscribers  weekly and highlights twenty
individual  travel specials offered by our customers and other travel suppliers.
We believe we allow  travel  companies  to  effectively  promote  their  special
offers.  More than 150 companies use our services.  Our customers  include Alamo
Rent-A-Car,  American Airlines Vacations, Budget Rent A Car, Hertz, Holiday Inn,
Lowestfare.com, Park Place Entertainment, Starwood Hotels and United Airlines.

     Our  advertising  revenues are  primarily  derived from listing fees on our
website,  www.Travelzoo.com.  Our  listing  management  software  allows  travel
companies  to add,  update,  and delete  special  offer  listings on a real-time
basis.  Our software also provides travel  companies with real-time  performance
tracking, enabling them to optimize their marketing campaigns.

     Revenue  from  our  listing  services  has  grown  rapidly  since  we began
operations in 1998, primarily driven by an increasing number of travel companies
listing their special offers on  www.Travelzoo.com.  Our revenues increased from
approximately  $84,000 for the period from May 21, 1998  (inception) to December
31, 1998, to approximately $3.9 million for the year ended December 31, 2000.

Industry Background

     Market for Advertising Special Offers

     We believe  that travel  companies  require  efficient  and  cost-effective
advertising of special offers.  Promoting  special offers helps travel companies
to sell excess  inventory and travel  services to consumers who otherwise  might
not travel.  According to the Newspaper Association of America, travel companies
spent $1.5 billion in 1999 on national  advertising in local newspapers (Source:
Market and Business Analysis, NAA, June 2000). Based on its understanding of the
industry,  our management believes that newspapers are currently the main medium
for advertising special travel offers.

     We believe that several  factors are causing and will  continue to cause an
increase in spending on advertising special offers:

     o    Online Advertising Opportunities. The Internet allows travel companies
          to advertise  their special offers in an efficient and  cost-effective
          manner that has not been possible before. We believe this will lead to
          greater  expenditures  by  travel  companies  on  advertising  special
          offers.

     o    Suppliers  Selling  Directly.  We believe  that many travel  suppliers
          prefer to sell their  travel  services  directly to  consumers,  as an
          alternative  to  more  costly  distribution   through  travel  agents.
          Promotion of special offers allows them to sell directly to consumers.

     Our management believes that newspaper advertising suffers from a number of
limitations which do not apply to the Internet:

     o    typically  ads must be submitted 2 to 5 days prior to the  publication
          date, which makes it difficult to advertise last-minute inventory;

     o    once an ad is published, it cannot be updated or deleted when an offer
          is sold out;

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<PAGE>

     o    once an ad is published, the travel company cannot change a price;

     o    the  newspaper  industry  is not  very  competitive  in many  markets,
          resulting in high rates for newspaper advertising; and

     o    the medium does not allow for the  detailed  tracking of visitors  and
          actual responses to a particular advertisement.

     Market Opportunity

     We believe that the opportunities created by the Internet and the desire of
many travel  suppliers to sell  directly to consumers  will cause an  increasing
percentage  of these  expenditures  to be directed to  Internet  advertising  of
special offers.

     We believe that the advantages offered by Internet  technology have not yet
been fully realized and applied to the marketing of special  travel offers,  and
that  Travelzoo  has an  opportunity  to  become a  leading  provider  of online
marketing solutions for the travel industry.

The Travelzoo Solution

     We  offer  travel  companies  a  flexible,  effective,  and  cost-efficient
solution for promoting their special offers to consumers.  Our solutions include
listings on our website, www.Travelzoo.com,  and listing in our Travelzoo Top 20
newsletter.  As travel  companies  increasingly  utilize the Internet to promote
their special offers,  we believe that our solution will enable our customers to
leverage  the lower cost and  real-time  communication  enabled by the  Internet
while  retaining  many of the positive  attributes  of  traditional  advertising
methods.

     Benefits to Travel Companies

     Key features of our solution for travel companies include:

     o    Real-Time  Listings of Special  Offers.  Our technology  allows travel
          companies to list new special offers on a real-time basis.

     o    Real-Time  Updates.  Our technology  allows travel companies to update
          their listings on a real-time basis.

     o    Real-Time  Performance  Reports.  We  provide  travel  companies  with
          real-time tracking of the performance of their listings.  Our solution
          enables  travel  companies to optimize  their  promotion  campaigns by
          removing  or  updating   unsuccessful  listings  and  further  promote
          successful listings.

     o    Access to a Large  Number of Travel  Shoppers.  Through  our  website,
          www.Travelzoo.com,  we offer  travel  companies  access  to more  than
          600,000 unique visitors per month,  as reported by Media Metrix,  Inc.
          for the month of September 2000.  Media Metrix is a leading company in
          Internet and digital media measurement. In addition, our Travelzoo Top
          20 newsletter reaches 1.2 million subscribers,  which are not measured
          in audience ratings.

     o    National  Reach.  Through  our  website,  www.Travelzoo.com,  and  our
          newsletter, we offer travel companies access to travel shoppers across
          the U.S.

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<PAGE>

     Benefits to Consumers

     Our website, www.Travelzoo.com, and our Travelzoo Top 20 newsletter provide
travel  shoppers  information on current special offers at no cost to the travel
shopper. Key features of our solution for consumers include:

     o    Offers  From  More  Than  One  Hundred   Companies   Aggregated.   Our
          www.Travelzoo.com  site offers  consumers  aggregated  information  on
          current  special offers from more than one hundred  travel  companies.
          This saves time.

     o    Current  Information.  Compared to newspaper ads, we provide consumers
          more  current   information,   since  our  technology  enables  travel
          companies to update their listings on a real-time basis.

     o    Search  tools.  We provide  consumers  with the  ability to search for
          specific  special offers.  Additionally,  each listing includes a date
          stamp,  giving the consumer  information about the age of a particular
          listing.

The Travelzoo Strategy

     Our  objective is to become the leading  provider of  solutions  for online
promotion of special offers for travel  companies.  Key elements of our strategy
include:

     o    Build Brand Awareness.  We believe that it is essential to establish a
          strong brand. We utilize a marketing program, including advertising on
          other websites.  In addition, we believe that we build brand awareness
          by product excellence that is promoted by word-of-mouth.  We intend to
          expand our public relations and other marketing programs.

     o    Increase  Number of Travel  Companies  Listing their Special Offers on
          www.Travelzoo.com.  We intend to accelerate the growth of our customer
          base by  expanding  the size of our  sales  force.  See  "--Sales  and
          Marketing."

     o    Increase Number of Consumers Using the  www.Travelzoo.com  Website. In
          order to attract  more users to our  website,  we intend to expand our
          advertising  on other  websites.  We believe  that we also can attract
          more users by product excellence that is promoted by word-of-mouth.

     o    Continue  to Enhance  Our  Technology.  We intend to provide  the best
          available tools to travel companies to more  effectively  manage their
          promotion  campaigns.  We intend to dedicate a  significant  amount of
          engineering time to continue enhancements of our technology.

     o    Expand Our Services Into Other Areas. We intend to expand our services
          in other areas.  We plan to accomplish this by developing new products
          and  services  within our company and by  evaluating  acquisition  and
          investment  opportunities.  We intend to launch a service  for  online
          marketing of movies and local events in the near future.

Customers

     As of  December  31,  2000,  our  customer  base  included  over 150 travel
companies, including travel suppliers, consolidators, and travel agents. Some of
our customers are:

Air New Zealand                              Park Place Entertainment
Alamo Rent-a-Car                             Skyauction.com
America West Vacations                       Tollman Hundley
Budget Rent A Car                            Travel Services International
Cheap Tickets, Inc.                          Travelocity.com
Holiday Inn                                  Travelscape.com
Lowestfare.com                               Uniglobe.com
Lufthansa                                    United Airlines
Mandalay Resort Group                        Virgin Atlantic Vacations
Northwest Airlines Vacations

                                       30

<PAGE>

     We received at least  $10,000 of revenue  from each of these  customers  in
2000.

     For the year ended December 31, 1999, our four largest customers  accounted
for 23%,  10%,  10% and 7% of our  revenues,  respectively.  For the year  ended
December 31, 2000,  our two largest  customers  accounted  for 22% and 6% of our
revenues,  respectively.  For the year ended December 31, 2000,  there were only
two customers accounting for more than 5% of our revenues.

Sales and Marketing

     As  of  December  31,  2000,  our  direct  sales  force  consisted  of  two
advertising sales managers,  one campaign manager, and our Senior Vice President
Sales and Marketing.  We obtain customers  primarily  through leads generated at
industry  conferences and inquiries received from a form on our website. We plan
to add three to five advertising sales representatives to our sales force in the
near future.

     We utilize a marketing  program  involving  online  advertising  to promote
www.Travelzoo.com  as a leading site for special travel offers. In addition,  we
believe that we build brand awareness by product  excellence that is promoted by
word-of-mouth.  We plan to continue to use  industry  conferences,  coupled with
public relations efforts, to promote awareness of the Travelzoo brand.

     We have entered into an outsourcing  agreement for banner advertising sales
and  ad  serving  with  DoubleClick,   Inc.,  a  leading  advertising   network.
DoubleClick sells banner advertising, services the banners on www.Travelzoo.com,
provides  customers  with  reporting,  and  bills  the  customer  and  remits  a
percentage  of the proceeds to Travelzoo  which is reported as net revenue.  Our
latest  agreement with  DoubleClick  has been in effect since June 23, 2000, and
may be terminated by either party on three months' notice.

Technology

     We have  designed our  technology to serve a large volume of web traffic in
an efficient, scaleable and fault-tolerant manner.

     We co-locate our  production  servers with Exodus  Communications,  Inc., a
major  co-location and Internet  service  provider.  Exodus'  facility  includes
features such as power  redundancy,  multiple  egress and peering to other ISPs,
fire  suppression and access to our own separate  physical space. We believe our
arrangements  with Exodus will allow us to grow without being limited by our own
physical and  technological  capacity,  and will also provide us with sufficient
bandwidth for our anticipated needs.  Because of the design of our website,  our
users are not required to download or upload large files from or to our website,
which allows us to continue increasing the number of our visitors and page views
without adversely  affecting our performance or requiring us to make significant
additional capital expenditures.

     Our software is written using open standards,  such as Visual Basic Script,
and HTML, and interfaces with products from Microsoft.  We have standardized our
hardware platform on Compaq servers and Cisco switches.

Plans for New Products and Services

     We intend to launch a service  for  online  marketing  of movies  and local
events in the near future.  In December  2000, we purchased the Internet  domain
name "Weekend.com" for this purpose.

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<PAGE>

Competition

     We compete with large  Internet  portal sites,  such as About.com,  America
Online,  Excite, Lycos, MSN and Yahoo!, that offer listings or other advertising
opportunities  for travel  companies.  We also compete  with smaller  sites that
specialize  in  listing  last-minute  offers or list  deals  for  free,  such as
Lastminutetravel.com  and  Smarterliving.com.   In  addition,  we  compete  with
newspapers,  magazines and other traditional media companies that provide online
advertising.  We expect to face additional  competition as other established and
emerging   companies,   including  print  media  companies,   enter  the  online
advertising market.

     Many  of our  current  and  potential  competitors  have  longer  operating
histories,  significantly  greater  financial,  technical,  marketing  and other
resources and larger client bases than we do. In addition, current and potential
competitors   may  make   strategic   acquisitions   or  establish   cooperative
relationships  to  expand  their  businesses  or  to  offer  more  comprehensive
solutions.

     We believe that there will be rapid  business  consolidation  in the online
advertising  industry.  Accordingly,  new  competitors  may emerge  and  rapidly
acquire  significant  market share. In addition,  new  technologies  will likely
increase the  competitive  pressures that we face. The  development of competing
technologies by market  participants or the emergence of new industry  standards
may  adversely  affect our  competitive  position.  Competition  could result in
reduced  margins  on  our  services,  loss  of  market  share  or  less  use  of
www.Travelzoo.com  by  travel  companies  and  consumers.  If we are not able to
compete  effectively with current or future competitors as a result of these and
other factors, our business could be materially adversely affected.

Government Regulation and Legal Uncertainties

     There are  increasing  numbers of laws and  regulations  pertaining  to the
Internet,  including laws or regulations relating to user privacy, liability for
information  retrieved  from or  transmitted  over the Internet,  online content
regulation,   user  privacy  and  domain  name   registration.   Moreover,   the
applicability  to the  Internet  of  existing  laws  governing  issues  such  as
intellectual property ownership and infringement,  copyright, patent, trademark,
trade secret, obscenity, libel and personal privacy is uncertain and developing.

     Privacy Concerns.  Government agencies are considering adopting regulations
regarding the collection and use of personal  identifying  information  obtained
from individuals when accessing web sites.  While we have implemented and intend
to  implement  additional  programs  designed to enhance the  protection  of the
privacy of our users, these programs may not conform to any regulations  adopted
which may be  adopted by these  agencies.  In  addition,  these  regulatory  and
enforcement  efforts may adversely affect our ability to collect demographic and
personal  information  from  users,  which  could have an adverse  effect on our
ability to provide advertisers with demographic information.  The European Union
(the "EU") has adopted a directive that imposes  restrictions  on the collection
and use of personal data. The directive could impose  restrictions that are more
stringent than current  Internet  privacy  standards in the United  States.  The
directive may adversely  affect our activities to the extent that we may seek to
collect data from users in EU member countries.

     Domain Names. Domain names are the user's Internet "addresses." The current
system  for  registering,  allocating  and  managing  domain  names has been the
subject  of  litigation  and  of  proposed   regulatory   reform.   We  own  the
Travelzoo.com  domain  name,  and have  registered  "Travelzoo"  as a trademark.
Because of these protections,  it is unlikely, yet possible,  that third parties
may bring claims for infringement  against us for the use of our domain name and
trademark. In the event such claims are successful, we could lose the ability to
use the  Travelzoo.com  domain name.  There can be no assurance  that our domain
name will not lose its value,  or that we will not have to obtain  entirely  new
domain names in addition to or in lieu of our current  domain name if changes in
overall  Internet  domain name rules  result in a  restructuring  in the current
system of using domain names which include  ".com,"  ".net,"  ".gov," ".edu" and
other extensions.


                                       32

<PAGE>


     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 taxes
and other regulations.

Intellectual Property

     Our success  depends to a  significant  degree upon the  protection  of the
Travelzoo brand name. If we were unable to protect the Travelzoo brand name, 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. 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  is 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.

     On June 21, 1999,  Mr.  Bartel,  our founder,  filed with the United States
Patent and Trademark office to register the trademark "Travelzoo" for "providing
information and news in the field of travel via an on-line global communications
network and travel agency services,  namely making  reservations and booking for
transportation,"  "providing  information and news in the field of travel via an
on-line global communications network and travel agency services,  namely making
reservations  and booking for temporary  lodging," and  "promoting the goods and
services of others  through the offer of travel  goods and services and shopping
club  services,  namely  providing  information  on travel goods and services to
members."  The PTO  published  that mark for  opposition on October 31, 2000. On
January  22,  2001,  Mr.  Bartel,  who filed  the  trademark  application  as an
individual,  transferred the ownership of the pending  trademark  "Travelzoo" to
Travelzoo Delaware. The mark was registered by the PTO on January 23, 2001.

Employees

     As of March  31,  2001,  we had 14  employees,  of whom 7 worked  in sales,
marketing,  client services,  and business development,  1 in network operations
and 6 were involved in finance,  administration,  and corporate operations. None
of our employees is  represented  under  collective  bargaining  agreements.  We
consider our relations with our employees to be good. Because of our anticipated
further growth combined with the  requirements  we face as a public company,  we
expect  that the number of our  employees  will  continue  to  increase  for the
foreseeable future.

Reports to Security Holders

     We have not in the past filed  reports with the SEC,  although we have made
certain financial information available to our stockholders through our website.
This information includes income statements and other statements of revenues and
expenses as well as  narratives  on our  financial  condition  from  management.
Following  completion  of the  merger,  we will  be  required  to  file  annual,
quarterly  and  other  financial  reports  with the SEC in  accordance  with the
requirements  of the U.S.  Securities  Exchange Act of 1934, as amended,  and we
will be  required  to  provide  an  annual  report  and proxy  statement  to our


                                       33

<PAGE>

stockholders.  We expect to provide  such  reports to our  stockholders,  and to
otherwise  communicate with our  stockholders,  using e-mail or other electronic
communications  to the extent  permitted by the rules and regulations of the SEC
and by the Delaware  General  Corporation Law. A stockholder may receive a paper
copy of any  stockholder  communication  by submitting a written  request to the
Secretary  of  Travelzoo  at the address set forth in this proxy  statement  and
prospectus.  However,  as described under "Description of Capital Stock - Common
Stock" on page 48, we will have the right to redeem  shares of common stock held
by  a   stockholder   who  revokes   such   stockholder's   consent  to  receive
communications  and notices from us in electronic form or who fails to give such
consent on request.

     You may  read  and copy any  materials  we file  with the SEC at the  SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain  information on the operation of the Public Reference Room by calling the
Securities  and  Exchange  Commission  at  1-800-SEC-0330.  The  Securities  and
Exchange Commission also maintains an Internet site that contains reports, proxy
and information  statements,  and other information  regarding issuers that file
electronically with the Securities and Exchange Commission.  The address of that
site is http://www.sec.gov.

Use of Stockholder Information

     In 1998, we offered  shares in Travelzoo to visitors who  registered on our
website.  The offering ended on July 31, 1998 when we obtained 700,000 Netsurfer
Stockholders.  To register,  the Netsurfer  Stockholders  provided us with their
e-mail addresses,  first names and countries of residence.  Upon receipt of this
information,  we e-mailed a personal identification number to the e-mail address
each  Netsurfer  Stockholders  had  provided.  Once the  Netsurfer  Stockholders
received their personal identification numbers, in order to receive their stock,
they were asked to provide us with their first and last names, e-mail addresses,
countries of residence  and personal  identification  numbers,  and to represent
that they  were at least 18 years  old and  residents  of the  United  States or
Canada. We use this information  solely for communication of financial and other
relevant information about Travelzoo, including new features on our site.

Facilities

     Our offices are  currently  located in  approximately  3,000 square feet of
office  space in Mountain  View,  California  under an  operating  lease with HQ
Global  Workplaces,  Inc. that expires on December 31, 2001. We believe that our
leased facilities are adequate to meet our current needs;  however, we intend to
expand our sales operations and therefore may require  additional  facilities in
the future. We believe that such additional facilities are available.


                                LEGAL PROCEEDINGS

     There are no  material  legal  proceedings  pending  or, to our  knowledge,
threatened against us.


                           MARKET FOR OUR COMMON STOCK

     Our shares  have not  previously  been  registered,  and our shares are not
listed on any stock  exchange  or included in any  over-the-counter  market.  As
described above under  "Information  About Travelzoo -- Our History" on page 26,
we have  approximately  700,000 Netsurfer  Stockholders who hold an aggregate of
5,155,874 shares of our common stock, or an average of approximately  7.4 shares
per   Netsurfer   Stockholder.   Our   stockholder   register   has  been   kept
electronically,  and no share  certificates have been issued. We cannot estimate
what the trading  price of our common  stock might have been if there had been a
market for the shares.

                                       34

<PAGE>

     Following  completion of the merger,  and the registration  with the SEC of
the shares of Travelzoo  Delaware,  our  stockholders  will be permitted to sell
their shares and a market in our shares may develop.  However,  we cannot assure
you that a significant  market for the shares will develop or be maintained.  We
have no immediate  plans to apply for a listing of our common stock on any stock
exchange. We hope to apply for a listing on our common stock on the Nasdaq stock
exchange  at such time as we  determine  that we are in a  position  to meet the
listing  qualifications.  Following  completion of the merger,  and prior to any
Nasdaq  listing,  we expect that the shares of Travelzoo  Delaware will trade on
the over-the-counter market in the United States.

     At the date of this proxy  statement and  prospectus,  there are 11,295,874
shares of our common stock outstanding.

     We have not paid any  dividends  on our common stock in the past and do not
expect to pay dividends in the foreseeable future.



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The  following  discussion  and  analysis of our  financial  condition  and
results of operations  should be read in  conjunction  with, and is qualified in
its entirety by reference to, the combined financial statements of Travelzoo.com
Corporation  and  affiliate and the notes  thereto  appearing  elsewhere in this
proxy   statement  and  prospectus.   This  discussion  and  analysis   contains
forward-looking  statements  that involve  risks and  uncertainties.  Our actual
results could differ  materially from those  anticipated in the  forward-looking
statements as a result of factors including, but not limited to, those discussed
in "Risk Factors" and elsewhere in this proxy statement and prospectus.

Overview

     We are a provider of online  marketing  solutions for the travel  industry.
Our website,  www.Travelzoo.com,  and our  Travelzoo  Top 20  newsletter  enable
travel  companies  to  promote  their  special  offers in a fast,  flexible  and
cost-effective  manner.  Our revenues  are  primarily  derived from  advertising
placed on our website, www.Travelzoo.com.

     Travelzoo.com  Corporation was  incorporated  in May 1998.  Until September
1998,  Ralph  Bartel,  our founder,  operated the website as an  individual.  In
September 1998, Ralph Bartel  incorporated  Silicon Channels  Corporation d.b.a.
Travelzoo.com Sales, Inc. At that time Travelzoo.com Corporation entered into an
outsourcing  agreement with Silicon Channels.  In January 1999, Silicon Channels
hired its first two employees.  Ralph Bartel was the first  employee.  Our early
operating  activities  related  primarily to the  development  of the  necessary
technological  infrastructure for the operation of Travelzoo.  In November 1999,
we launched our Travelzoo Top 20 newsletter. During 2000, Silicon Channels hired
additional  sales  personnel and continued to grow our  advertising  revenue and
customer  base.  As of December  31, 2000,  Silicon  Channels  operated  with 11
employees.

     The following  discussion is based on the combined financial  statements of
Travelzoo.com Corporation and affiliate (Silicon Channels), which represents the
historical  financial  statements  of  the  Travelzoo  business  founded  by our
principal stockholder.

                                       35

<PAGE>

     We classify our revenues as follows:

     o    Advertising  revenues,  consisting  of  listing  fees  paid by  travel
          companies to list their special offers on www.Travelzoo.com and banner
          advertising sales through DoubleClick,  Inc. Listing fees are based on
          placement,  number of listings,  number of  impressions,  or number of
          click-throughs.  Banner advertising rates are based on CPM rates (cost
          per thousand  impressions).  Smaller advertising  agreements-typically
          $2,000 or less per  month-typically  renew automatically each month if
          they  are  not  terminated  by the  customer.  Larger  agreements  are
          typically  related to advertising  campaigns and are not automatically
          renewed.

     o    Commissions  revenue,  consisting  of  commissions  paid by  customers
          for generating sales through www.Travelzoo.com.

     We recognize revenue as follows:

     o    Advertising  Revenues. We recognize advertising revenues in the period
          in which the advertisement is displayed,  provided that evidence of an
          arrangement   exists,   the  fees  are  fixed  and  determinable,   no
          significant   obligations  remain  at  the  end  of  the  period,  and
          collection of the  resulting  receivable  is  reasonably  assured.  If
          advertising is displayed within one month,  revenues are recognized at
          the end of the display period. If advertising is displayed over two or
          more months,  revenues are recognized  ratably over the period. To the
          extent that the minimum guaranteed  impressions are not met during the
          contract period, we defer  recognition of the  corresponding  revenues
          until  the  guaranteed  impressions  are  achieved.  Fees  for  banner
          advertising  are  recognized   based  on  the  number  of  impressions
          displayed or clickthroughs  delivered during the period.  We recognize
          revenues  from  barter  transactions  in the period  during  which the
          advertisements  are  displayed  on  www.Travelzoo.com.  Expenses  from
          barter  transactions  are  recognized  in the period  during which the
          advertisements are displayed on the barter partner's  website.  Barter
          transactions  are  recorded  at the  fair  value  of  the  advertising
          provided  based on cash  received by  Travelzoo  for similar  types of
          advertising within six months.  These transactions involve the receipt
          by Travelzoo of advertising services on other websites in exchange for
          advertising services on www.Travelzoo.com. Our last barter arrangement
          expired on April 21, 2000.

     o    Commissions.  We record  commissions  as the net amount  received.  We
          recognize  the revenue in the period that the  commissions  earned are
          reported to Travelzoo by the e-commerce partner.  Typically,  it takes
          e-commerce  partners  between  two weeks  and  three  months to report
          commissions to us.

     We classify our cost of revenue and operating expenses as follows:

     o    Cost of  Revenues.  Cost of  revenues  consists  of network  expenses,
          including  fees  we pay  for  co-location  services,  depreciation  of
          network   equipment  and  salary  expenses   associated  with  network
          operations staff.

     o    Sales and Marketing. Sales and marketing expenses consist primarily of
          advertising  and  promotional  expenses,  public  relations  expenses,
          conference expenses,  printing fees, sales and marketing compensation,
          including  base  salary  and  sales  commissions,   and  telemarketing
          communications  expenses.  Sales commissions have remained  relatively
          constant as a percentage of revenues, and we expect this to continue.

     o    General  and  Administrative.   General  and  administrative  expenses
          consist  primarily of compensation  for  administrative  and executive
          staff,  fees for  professional  services,  rent,  bad debt expense and
          general office expense.

                                       36

<PAGE>

     o    Merger Expenses.  Merger expenses consist of expenses  relating to the
          registration  statement and proxy  statement  being filed with the SEC
          relating to the merger of Travelzoo Bahamas into Travelzoo Delaware.

     For the year  ended  December  31,  1999,  we  reported  pre-tax  income of
approximately  $144,000.  For the year ended  December  31,  2000,  we  reported
pre-tax income of approximately  $750,000. As of December 31, 1999, and December
31,  2000,  we had retained  earnings of  approximately  $134,000 and  $496,000,
respectively.

     We  intend  to  devote  significant  resources  to  advertising  and  brand
marketing  programs  designed  to  attract  more site  traffic  and more  travel
companies listing their special offers on www.Travelzoo.com. We expect growth in
the number of travel companies listing their special offers on www.Travelzoo.com
to result in substantial growth in advertising revenues, both in terms of dollar
amounts and as a percentage  of total  revenue.  Our strategy  anticipates  that
revenue from advertising will likely be the single largest source of revenue for
us in the immediate future.

     As a result of our  expansion  plans  and our  expectation  that  operating
expenses will increase  significantly  in the next several years,  especially in
the areas of sales and marketing and brand promotion,  we cannot be sure that we
will sustain profitability.

Results of Operations:

     The  following  table sets forth,  as a percentage of total  revenues,  the
results of our operations for the periods indicated:


<TABLE>
<CAPTION>

                                         Period from
                                        May 21, 1998
                                         (Inception)          Year ended           Year ended
                                       to December 31,       December 31,         December 31,
                                     -------------------- -------------------- ----------------------
                                            1998                 1999                  2000
                                     -------------------- -------------------- ----------------------
                                                  (As a Percentage of Total Revenues)
Revenues:
<S>                                            <C>                  <C>                  <C>
   Advertising                                 68%                  94%                  98%
   Commissions                                 32                    6                    2
                                     -------------------- -------------------- ----------------------
      Total revenues                          100                  100                  100
Cost of revenues                               30                   14                    7
                                     -------------------- -------------------- ----------------------
      Gross profit                             70                   86                   93
Operating expenses:
   Sales and marketing                          2                   37                   38
   General and administrative                  27                   34                   30
   Merger expenses                              -                    -                    6
                                     -------------------- -------------------- ----------------------
      Total operating expenses                 29                   71                   74
                                     -------------------- -------------------- ----------------------
Income before income taxes                     41                   15                   19
Income taxes                                    7                    4                   10
                                     -------------------- -------------------- ----------------------
      Net income                               34%                  11%                   9%
                                     ==================== ==================== ======================
</TABLE>



Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     Revenues

     Our total  revenues  increased to $3.9 million for the year ended  December
31, 2000,  from $954,000 for the year ended  December 31, 1999.  The increase in
our total revenues was primarily due to an increase in advertising revenues.

                                       37

<PAGE>

     o    Advertising.  Advertising  revenue  increased  to $3.9 million for the
          year  ended  December  31,  2000,  from  $893,000  for the year  ended
          December 31, 1999. This increase  resulted  primarily from an increase
          in the number of travel companies advertising on www.Travelzoo.com.

     o    Commissions.  Commissions  revenue  increased  to $97,000 for the year
          ended December 31, 2000,  from $61,000 for the year ended December 31,
          1999.  This increase was primarily due to an increase of the number of
          site visitors to www.Travelzoo.com.

     Cost of Revenues

     Our cost of revenues  increased to $282,000 for the year ended December 31,
2000,  from  $133,000 for the year ended  December 31, 1999.  As a percentage of
revenue,  cost of revenues decreased to 7% for the year ended December 31, 2000,
from 14% for the year ended December 31, 1999. This decrease resulted  primarily
from an increase  in revenues  that was not offset by an increase in our network
operations costs.

     Operating Expenses

     o    Sales and Marketing.  Sales and marketing  expenses  increased to $1.5
          million for the year ended  December 31, 2000,  from  $351,000 for the
          period  ended  December  31, 1999,  and  increased as a percentage  of
          revenue to 38% for the year ended  December  31, 2000 from 37% for the
          year ended  December  31, 1999.  The  increase in sales and  marketing
          expenses was primarily due to an increase in advertising  expenses for
          marketing the Travelzoo brand.

     o    General  and  Administrative.   General  and  administrative  expenses
          increased to $1.2 million for the year ended  December 31, 2000,  from
          $327,000  for  the  year  ended   December   31,  1999.   General  and
          administrative  expenses increased primarily due to increased salaries
          and related expenses associated with hiring additional  administrative
          personnel.

     o    Merger  Expenses.  In the fourth  quarter ended  December 31, 2000, we
          incurred $231,000 in merger expenses related to the preparation of the
          registration  statement and proxy  statement  being filed with the SEC
          relating to the merger of Travelzoo  Bahamas into Travelzoo  Delaware.
          The expenses comprise mostly fees for professional services, primarily
          legal and accounting.

     Income Taxes

     For the year ended  December 31, 2000,  we recorded an income tax provision
of $388,000.  For the year ended  December  31, 1999,  we recorded an income tax
provision of $39,000.  Our income is generally  taxed in the U.S. and our income
tax provision  principally reflects federal and state statutory rates applicable
to our levels of income  and the effect of  non-deductible  merger  expenses  in
2000.

Year Ended  December 31, 1999 Compared to the Period from May 21  (inception) to
   December 31, 1998

     Revenues

     Our total  revenues  increased to $954,000 for the year ended  December 31,
1999,  from $84,000 for the period ended  December 31, 1998. The increase in our
total revenues was primarily due to an increase in advertising revenues.

     o    Advertising.  Advertising  revenue  increased to $893,000 for the year
          ended  December 31, 1999,  from $57,000 for the period ended  December
          31, 1998.  This increase  resulted  primarily  from an increase in the
          number of travel companies advertising on www.Travelzoo.com.

     o    Commissions.  Commissions  revenue  increased  to $61,000 for the year
          ended  December 31, 1999,  from $27,000 for the period ended  December
          31, 1998. This increase was primarily due to an increase of the number
          of site visitors of www.Travelzoo.com.

     Cost of Revenues

     Our cost of revenues  increased to $133,000 for the year ended December 31,
1999,  from $25,000 for the period ended  December 31, 1998.  As a percentage of
revenue, cost of revenues decreased to 14% for the year ended December 31, 1999,
from  30% for the  period  ended  December  31,  1998.  This  decrease  resulted
primarily from an increase in revenues that was not offset by an increase in our
network operations costs.

     Operating Expenses

     o    Sales  and  Marketing.  Sales  and  marketing  expenses  increased  to
          $351,000 for the year ended  December  31,  1999,  from $2,000 for the
          period  ended  December  31, 1998,  and  increased as a percentage  of
          revenue to 37% for the year ended  December  31,  1999 from 2% for the
          period ended  December 31, 1998.  The increase in sales and  marketing
          expenses was  primarily  due to an increase in the number of our sales
          and marketing personnel.

     o    General  and  Administrative.   General  and  administrative  expenses
          increased  to $327,000  for the year ended  December  31,  1999,  from
          $22,000  for  the  period  ended   December  31,  1998.   General  and
          administrative  expenses increased primarily due to an increase in the
          number of administrative personnel.

     Income Taxes

     For the year ended  December 31, 1999,  we recorded an income tax provision
of $39,000.  For the period ended  December 31, 1998,  we recorded an income tax
provision of $6,000.  Our income is  generally  taxed in the U.S. and our income
tax provision  principally  reflects  federal and state rates  applicable to our
levels of income.

Quarterly Results of Operations

     The  following  table  sets  forth  a  summary  of our  unaudited  combined
quarterly results for 1999 and 2000. This information was derived from unaudited
combined interim financial  statements that, in the opinion of management,  have
been  prepared on a basis  consistent  with the financial  statements  contained
elsewhere in this proxy  statement and prospectus  and include all  adjustments,
consisting  of only  normal  recurring  adjustments,  necessary  for their  fair
presentation when read in conjunction with the combined financial statements and
notes  thereto.  The results of operations  for any quarter are not  necessarily
indicative of the results of operations for any future period.


                                       38

<PAGE>


<TABLE>
<CAPTION>

                                                                       Quarter Ended
                                   --------------------------------------------------------------------------------------
                                   March 31,   June 30,   Sept 30,  Dec 31,   March 31,   June 30,  Sept 30,    Dec 31,
                                      1999       1999       1999      1999       2000       2000      2000       2000
                                   ----------- ---------- --------- --------- ----------- --------- ---------- ----------
                                                                      (In Thousands)
Revenues:
<S>                                 <C>         <C>        <C>       <C>       <C>         <C>       <C>        <C>
    Advertising                     $    55     $ 138      $ 212     $ 488     $   728     $  873    $1,088     $1,163
    Commissions                          18        15         17        11          19         21        52          5
                                   ----------- ---------- --------- --------- ----------- --------- ---------- ----------
      Total revenues                     73       153        229       499         747        894     1,140      1,168
Cost of revenues                         25        25         25        58          55         74        97         56
                                   ----------- ---------- --------- --------- ----------- --------- ---------- ----------
    Gross profit                         48       128        204       441         692        820     1,043      1,112
Operating expenses:
    Sales and marketing                  13        59         84       195         309        388       444        343
    General and administrative           34        66        112       115         147        283       240        532
    Merger expenses                       -         -          -         -           -          -         -        231
                                   ----------- ---------- --------- --------- ----------- --------- ---------- ----------
    Total operating expenses             47       125        196       310         456        671       684      1,106
    Income before income taxes            1         3          8       131         236        149       359          6
Income taxes                              -         1          2        35          98         63       146         81
                                   ----------- ---------- --------- --------- ----------- --------- ---------- ----------
    Net income                      $     1     $   2      $   6     $  96     $   138     $   86    $  213     $  (75)
                                   =========== ========== ========= ========= =========== ========= ========== ==========
Net income, before merger expenses  $     1     $   2      $   6     $  96     $   138     $   86    $  213     $  156
                                   =========== ========== ========= ========= =========== ========= ========== ==========
</TABLE>


     Excluding the effect of merger expenses,  income before income taxes in the
fourth quarter of 2000 was $237,000.

     The following table sets forth, as a percentage of revenues, our results of
operations for the quarters  indicated,  excluding merger expenses in the fourth
quarter of 2000.

<TABLE>
<CAPTION>

                                                                   Quarter Ended
                             ----------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept 30,   Dec 31,   March 31,   June 30,   Sept 30,   Dec 31,
                                 1999        1999       1999      1999       2000        2000       2000       2000
                             ------------- ---------- ----------- --------- ------------ ---------- ---------- ------------
                                                        (As a Percentage of Total Revenues)
Revenues:
<S>                                <C>         <C>        <C>       <C>         <C>         <C>       <C>        <C>
   Advertising                     75%         90%        92%       98%         98%         98%       95%        100%
   Commissions                     25          10          8         2           2           2         5           -
                             ------------- ---------- ----------- --------- ------------ ---------- ---------- ------------
      Total revenues              100         100        100        100          100         100       100         100
Cost of revenues                   34          16         11         12            7           8         8           5
                             ------------- ---------- ----------- --------- ------------ ---------- ---------- ------------
   Gross profit                    66          84         89         88           93          92        92          95
Operating expenses
   Sales and marketing             18          39         36         39           41          43        39          29
   General and administrative      47          43         49         23           20          32        21          46
                             ------------- ---------- ----------- --------- ------------ ---------- ---------- ------------
     Total operating expenses      65          82         85         62           61          75        60          75
Income before income taxes          1           2          4         26           32          17        32          20
     Income taxes                   -           1          1          7           14           7        13           7
                             ------------- ---------- ----------- --------- ------------ ---------- ---------- ------------
         Net income                 1%          1%         3%        19%          18%         10%       19%         13%
                             ============= ========== =========== ========= ============ ========== ========== ============

</TABLE>


     In light of the  evolving  nature of our  business  and  limited  operating
history,  we  believe  that  period  to  period  comparisons  of our  historical
operating  results  may not be  meaningful  and  should  not be  relied  upon as
indications  of future  performance.  Although our revenue has increased in each
consecutive  quarter as a result of increased market acceptance of our services,
our  historical  revenue growth rates are not  necessarily  indicative of future
revenue growth rates.

Liquidity and Capital Resources

     As of December  31,  2000,  we had  $46,000 in cash.  Cash  increased  from
$11,000 on December 31, 1999  primarily as a result of net income and  increases
in income tax payable and payable to employee  offset by  increases  in accounts
receivable and capital  expenditures  made during the period. As of December 31,
1998,  we had  $12,000  in cash.  We  expect  that  cash  flows  generated  from
operations  will continue to be sufficient to provide for working  capital needs
in the near future.

                                       39

<PAGE>

     Since inception,  we financed our activities  primarily  through cash flows
generated from  operations.  In addition,  we sold common stock to Ralph Bartel,
our  founder and Chief  Executive  Officer,  for $60,000 in cash and  received a
non-interest bearing loan of $50,000 from Ralph Bartel. The loan from Mr. Bartel
was repaid on March 31,  2001.  See  "Related  Party  Transactions--Transactions
Involving Ralph Bartel" on page 45.

     Net cash  generated  from  operating  activities was $4,000 during 1999 and
$409,000  during  2000.  In  both  years,  net  cash  generated  from  operating
activities resulted primarily from our net income, adjusted for certain non-cash
items,  and  increases in accounts  payable,  income  taxes  payable and accrued
expenses,  partly  offset  by a  higher  level  of  accounts  receivable  due to
increased  sales.  In 1998,  net cash used in operating  activities was $24,000,
principally due to our net income being exceeded by the increase in our accounts
receivable.

     Net cash used in  investing  activities  was $24,000  during  1998,  $6,000
during 1999 and $428,000  during 2000.  In 1998,  net cash was used in investing
activities  for purchases of equipment and a loan provided to Ralph Bartel.  See
"Related Party Transactions--Transactions Involving Ralph Bartel" on page 45. In
1999,  net cash was used in investing  activities  for  purchases of  equipment,
partly offset by the repayment of the loan by Ralph  Bartel.  In 2000,  net cash
was used in investing  activities for equipment purchases and the purchase of an
Internet domain name.

     Net cash  provided by financing  activities  was $60,000  during  1998,  $0
during  1999 and  $54,000  during  2000.  In 1998,  we  generated  net cash from
financing  activities  from the sale of  common  stock to Mr.  Bartel  described
above.  During  2000,  we  generated  net cash from  financing  activities  by a
non-interest-bearing  loan  received from Mr. Ralph Bartel and exercise of stock
options by an employee.

     We believe that our cash flows  generated from  operations will continue to
be sufficient to provide for our working  capital needs in the near future.  Our
capital  requirements  will  depend on a number  of  factors,  including  market
acceptance of our products and  services,  the amount of our resources we devote
to  www.Travelzoo.com  and  expansion  of our  operations  and the amount of our
resources we devote to promoting  awareness of the Travelzoo  brand.  Consistent
with our growth,  we have  experienced a  substantial  increase in our sales and
marketing expenses, capital expenditures since inception, and we anticipate that
these increases will continue for the foreseeable future. In addition, we expect
significant  expenses to occur in the first and second  quarters of 2001 related
to the consummation of the merger described herein and the related  registration
of our  shares  with the SEC.  Our  expenses  will also  depend on the number of
stockholders,   following   the  merger,   who  revoke   consent  to  electronic
communications from Travelzoo.  These revocations will lead to costs relating to
either the redemption of shares held by those revoking consent or the production
and  delivery of paper copies of  stockholder  communications  to such  revoking
stockholder.  We believe cash on hand and generated during those periods will be
sufficient  to pay such  expenses.  In  addition,  we will  continue to evaluate
possible investments in businesses,  products and technologies, the consummation
of any of which would increase our capital requirements.

     Although we currently believe that we have sufficient  capital resources to
meet our anticipated working capital and capital expenditure requirements beyond
the next 12 months,  unanticipated  events and  opportunities  may require us to
sell additional  equity or debt securities or establish new credit facilities to
raise capital in order to meet our capital  requirements.  If we sell additional
equity or convertible  debt  securities,  the sale could dilute the ownership of
our existing stockholders. If we issue debt securities or establish a new credit
facility, our fixed obligations could increase and result in operating covenants
that would  restrict our  operations.  We cannot be sure that any such financing
will be available in amounts or on terms acceptable to us.

                                       40

<PAGE>

Recent Accounting Pronouncements

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities.  SFAS No.
133,  as  amended  by SFAS  No.  137,  Deferral  of the  Effective  Date of FASB
Statement  No.  133,  and  SFAS  No.  138,  Accounting  for  Certain  Derivative
Instruments and Certain Hedging  Activities,  an Amendment of FASB Statement No.
133, established  accounting and reporting standards for derivative  instruments
and requires  recognition  of all  derivatives  as assets or  liabilities in the
statement of financial  position and  measurement  of those  instruments at fair
value.  SFAS No.  133 is  effective  for all  fiscal  quarters  of fiscal  years
beginning  after June 15, 2000. We adopted SFAS No. 133 on January 1, 2001.  The
adoption did not have an impact on the combined financial statements.

     In December 1999, the SEC issued Staff  Accounting  Bulletin (SAB) No. 101,
Revenue  Recognition  in Financial  Statements,  as amended by SAB Nos. 101A and
101B, which provides guidance on the recognition,  presentation,  and disclosure
of revenue in financial  statements filed with the SEC. SAB No. 101 outlines the
basic criteria that must be met to recognize  revenue and provides  guidance for
disclosure related to revenue  recognition  policies.  We adopted SAB No. 101 in
the fourth quarter of 2000.  The adoption did not impact our combined  financial
statements or revenue recognition policies.




                                       41

<PAGE>



                     VOTING SECURITIES AND PRINCIPAL HOLDERS

     The  following  table shows,  as of December 31,  2000,  information  about
record and  beneficial  ownership of our shares by our  directors  and executive
officers and by any persons known to us to be the beneficial  owner of more than
5% of our common stock:

<TABLE>
<CAPTION>

                                   Name and Address of          Amount and Nature of
        Title of Class               Beneficial Owner             Beneficial Owner             Percent of Class
----------------------------------------------------------------------------------------------------------------------
<S>                            <C>                             <C>                                   <C>
Common Stock                   Ralph Bartel                    5,910,000 shares (1)                  52%
                               800 West El Camino Real,
                               Suite 180
                               Mountain View, CA 94040
Common Stock                   Suzanne L. Durfee                     10,000 (1)                       *
                               59 Alvarado Street
                               San Francisco, CA 94110
Common Stock                   David J. Ehrlich                      10,000 (1)                       *
                               290 Beacon Street
                               San Francisco, CA 94131
Common Stock                   Suzanna Mak                           10,000 (1)                       *
                               1709 Sapphire Court
                               Davis, CA 95616
Common Stock                   Donovan Neale-May                    110,000 (1)                       1%
                               409 Sherman Avenue
                               Palo Alto, CA 94301
Common Stock                   Carol J. S. Roth                      10,000 (1)                       *
                               1643 Johnson Drive, #418
                               Buffalo Grove, IL 60089
Common Stock                   Kelly M. Urso                         10,000 (1)                       *
                               38 Brookwood Drive
                               Newton, CT 06470
Common Stock                   All directors and officers         6,070,000 shares                   54%
                                 as a group
<FN>

*    Less than one percent.
(1)  Record and beneficial ownership.
</FN>
</TABLE>



                                       42

<PAGE>

                                   MANAGEMENT

     The following  table sets forth,  as of March 31, 2001,  the name,  age and
position within Travelzoo of each of our directors and executive officers.

          Name                  Age                        Position
------------------------    -----------     ------------------------------------
Ralph Bartel                    35          President, Chief Executive Officer,
                                              Secretary, and Chairman of the
                                              Board of Directors
Lisa Su                         25          Controller
Suzanne L. Durfee               34          Director
David J. Ehrlich                38          Director
Suzanna Mak                     31          Director
Donovan Neale-May               48          Director
Carol J. S. Roth                28          Director
Kelly M. Urso                   35          Director

     Ralph Bartel founded Travelzoo in May 1998 and has served as our President,
Chief Executive  Officer and Chairman of the Board of Directors since inception.
Prior to his founding of  Travelzoo,  from 1996 to 1997,  Mr.  Bartel  served as
Managing Assistant at Gruner + Jahr AG, the magazine division of Bertelsmann AG.
Mr.  Bartel  holds a Ph.D.  in  Communications  from the  University  of  Mainz,
Germany,  an MBA in  Finance  and  Accounting  from  University  of St.  Gallen,
Switzerland,  and a Master's degree in Journalism from University of Eichstaett,
Germany.

     Lisa Su joined  Travelzoo on October 1, 2000.  From April 1999 to September
2000,  Ms. Su was a Treasury  Accountant  for Webvan Group,  Inc. Ms. Su holds a
bachelor's degree in economics/accounting from Claremont McKenna College.

     Suzanne L. Durfee has served as a director since February 1999. Since 1999,
Ms. Durfee has been employed as Director of Sales for BBC, a San Francisco based
catering  service.  From 1996 to 1999,  Ms. Durfee  worked as a Corporate  Sales
Manager  for  Budget  Rent-A-Car.  From  1990 to 1996,  Ms.  Durfee  worked as a
Marketing Director for a regional charter airline. Ms. Durfee holds a bachelor's
degree in communications from Southern Connecticut State University.

     David J. Ehrlich has served as a director since February 1999.  Since 1998,
Mr. Ehrlich has been employed by Visual Networks, Inc., where he currently holds
the position of Vice President, Product Management and Strategic Partnering. Mr.
Ehrlich  holds a  bachelor's  degree  in  Sociology  and a  master's  degree  in
Industrial Engineering from Stanford University and an MBA from Harvard Business
School.

     Suzanne Mak has served as a director since February 1999. Since March 2000,
she has been employed as a Deputy District  Attorney for Yolo County.  From 1998
to 1999, Ms. Mak served as a Judicial  Officer at Stanford  University.  Ms. Mak
received her  bachelor's  degree from Stanford  University  and her Juris Doctor
degree from Santa Clara University.

     Donovan Neale-May has served as a director since February 1999. Since 1987,
Mr. Neale-May has been President of Neale-May & Partners,  a strategic marketing
and  public  relations  firm  with  80  full-time  communications  professionals
headquartered in Palo Alto, California.

     Carol J. S. Roth has served as a director since February 1999. From 1995 to
July 2000, Ms. Roth was an investment banker at Bank of America  Securities LLC.
In July 2000,  Ms. Roth  co-founded  Roth  Advisors,  Inc., an  investment  bank
focusing on  start-ups  and  early-stage  growth  companies.  She  received  her
bachelor's  degree from The Wharton  School of  Business  at the  University  of
Pennsylvania.

                                       43

<PAGE>

     Kelly M. Urso has served as a director since February 1999. Since 1997, Ms.
Urso has been employed by General Electric International,  Inc., where she leads
the  expatriate  tax group.  Ms.  Urso  holds a  bachelor's  degree in  business
administration  from the University of Cincinnati and a Juris Doctor degree from
the Thomas M. Cooley Law School in Lansing, Michigan.

Election of Directors

     The current  members of our board of  directors,  other than Ralph  Bartel,
were  initially   elected  on  November  20,  1999,  at  an  online  meeting  of
stockholders. They had been nominated in response to a request sent by Travelzoo
to its stockholders requesting nominations to serve on the board.

Director Compensation

     We have not paid any  compensation  to our directors  during 2000. In 1999,
each director was granted 5,000 shares (10,000 after the  two-for-one  split) of
our common stock in compensation for their services as a director.  We reimburse
directors for their  reasonable  travel  expenses  incurred in  connection  with
attending board meetings.

Employment Agreements

     Ralph Bartel has entered into an employment  agreement with us. His current
employment  agreement  became  effective on October 1, 2000, and provides for an
annual salary of $192,000.  We may terminate the agreement with or without cause
by delivering two weeks' advance written notice to Mr. Bartel.  He may terminate
his employment  agreement with or without cause by delivering two weeks' advance
written notice to us.

     Mr.  Bartel has agreed not to compete  with us,  solicit our  suppliers  or
employees  or  reveal  our  confidential  information  during  the  term  of his
employment  agreement and for one year  thereafter.  In addition,  Mr. Bartel is
bound by a proprietary  inventions  agreement  which  prohibits him from,  among
other things, disseminating or using confidential information about our business
or clients in any way that would be adverse to us.

Executive Compensation

     The  following  table  sets  forth  summary   information   concerning  all
compensation we paid our Chief Executive  officer during the year ended December
31, 2000. We did not pay any other executive officer over $100,000 in 2000.


<TABLE>
<CAPTION>

                                             Summary Compensation Table
----------------------------------------------------------------------------------------------------------------------
                                                                              Long Term
                                            Annual Compensation             Compensation
                                       -----------------------------------------------------------
                                                                          Shares Underlying           All Other
      Name and Principal Position       Salary ($)(1)   Bonus ($)            Options (#)             Compensation
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>               <C>                   <C>                     <C>
Ralph Bartel
   President, Chief Executive Officer,

   Secretary                             $ 178,000         --                    --                      --
<FN>

     (1) This  compensation  was provided by Silicon  Channels.  Mr. Bartel received no compensation  directly from
Travelzoo.
</FN>
</TABLE>


Stock Option Plan

     We do not  currently  have any  stock  option  plan or other  equity  based
compensation  plans in effect.  Management  anticipates  that an employee  stock
option plan may be implemented in the future.


                                       44

<PAGE>

            CERTAIN TRANSACTIONS BETWEEN TRAVELZOO AND ITS AFFILIATES

Silicon Channels Corporation

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
was  incorporated  in  California on September 28, 1998 with Ralph Bartel as the
sole  stockholder.  Silicon Channels did business under the name  "Travelzoo.com
Sales, Inc." On October 10, 1998, Travelzoo.com Corporation and Silicon Channels
Corporation  entered into a letter agreement under which Silicon Channels agreed
to manage the technical  platform,  marketing,  customer support and billing for
the classified  publishing business of the Travelzoo.com website in return for a
5% commission on the  quarterly net income from such  business.  The October 10,
1998 agreement was subsequently replaced by a Service Agreement dated January 2,
1999. In the January 2, 1999 Agreement,  Silicon  Channels agreed to perform all
operational services with respect to the Travelzoo.com website in return for 50%
of the net income before taxes generated from the operation of the Travelzoo.com
website.  All  assets,  other than the domain  name  Travelzoo.com,  used in the
operation of the Travelzoo.com website were owned by Silicon Channels.

Exchange of Shares of Silicon Channels

     On January 22, 2001, Mr. Bartel,  formerly the sole  stockholder of Silicon
Channels,  and  Travelzoo  Delaware  entered into an agreement  and  completed a
transaction in which:

     o    Mr.  Bartel  contributed  all of the  outstanding  shares  of  Silicon
          Channels to Travelzoo Delaware, a newly-formed subsidiary of Travelzoo
          Bahamas;

     o    Travelzoo  Delaware issued an aggregate of 8,129,273  shares of common
          stock to Mr. Bartel, representing 42% of the outstanding shares; and

     o    Travelzoo  Delaware issued to Mr. Bartel options to acquire  2,158,349
          shares of common stock of Travelzoo  Delaware at an exercise  price of
          $1.00 per share,  exercisable  at any time during the ten-year  period
          following the date of issuance.

     This  transaction  is  described in more detail in "The Merger" on page 17.
The  fairness  opinion  issued  by The  Mentor  Group  in  connection  with  the
transaction is more fully described below under "Opinion of Travelzoo  Financial
Advisor"  on page 45. The  shares of  Travelzoo  Delaware  which are now held by
Travelzoo Bahamas will be canceled as a result of the merger, as described under
"The Merger" on page 17. Silicon  Channels is now a  wholly-owned  subsidiary of
Travelzoo Delaware.  Travelzoo Bahamas now owns 58% of the outstanding shares of
Travelzoo Delaware and Mr. Bartel owns 42% of the outstanding shares.  Travelzoo
Delaware will be the surviving corporation of the merger described in this proxy
statement and prospectus.

     On June 21,  1999,  Mr.  Bartel  filed with the U.S.  Patent and  Trademark
Office to register the trademark "Travelzoo," and it was registered with the PTO
on January 23, 2001. On January 22, 2001, Mr. Bartel  transferred  the ownership
of the pending trademark "Travelzoo" to Travelzoo Delaware.

     In 2000, Mr. Bartel loaned Silicon  Channels $50,000 on an unsecured basis.
The loan did not bear interest and was repayable on or before December 31, 2000.
On December 31, 2000, Mr. Bartel agreed to extend the loan until March 31, 2001.
The loan was repaid on March 31, 2001.

Opinion of Travelzoo Financial Advisor

     The  independent  committee of the  Travelzoo  Bahamas'  Board of Directors
retained The Mentor Group to provide a fairness  opinion in connection  with the
combination  of the business  operations of Travelzoo  Delaware (a  wholly-owned
subsidiary  of Travelzoo  Bahamas) and Silicon  Channels.  The opinion was to be


                                       45

<PAGE>

issued  with  respect  to the  fairness,  from a  financial  point of  view,  to
Travelzoo  Bahamas and Travelzoo  Delaware of the contribution of all the issued
and  outstanding  stock of Silicon  Channels  (owned by Ralph  Bartel,  majority
stockholder of Travelzoo Bahamas) to Travelzoo Delaware,  in anticipation of the
merger of Travelzoo  Bahamas into  Travelzoo  Delaware.  Additional  information
about the contribution transaction is under "The Merger" on page 17.

     On November 4, 2000,  The Mentor Group orally  delivered its opinion to the
independent  committee of the Travelzoo  Bahamas  Board of  Directors,  which it
later confirmed in a written opinion,  to the effect that, as of the date of the
opinion and based upon and subject to various  assumptions  and  limitations set
forth in the opinion, the contribution transaction was fair to Travelzoo Bahamas
and Travelzoo  Delaware from a financial  point of view.  Travelzoo  Bahamas and
Ralph  Bartel  determined  the  amount  and the  form of  consideration  through
arms-length   negotiations   and  did  not  base  this   determination   on  any
recommendation by The Mentor Group, although The Mentor Group provided advice to
Travelzoo  Bahamas from time to time during the course of the  negotiations  and
the independent  committee of the Travelzoo  Bahamas Board of Directors did take
into  consideration  the opinion of The Mentor Group,  among other  factors,  in
making its  determination  to approve the contribution  transaction.  The Mentor
Group was  engaged  solely as advisor to  Travelzoo  Bahamas  and did not act as
advisor to or agent of any other person.

     The full text of The Mentor Group's  opinion which sets forth,  among other
things, the procedures followed, assumptions made, matters considered and limits
on the  review  undertaken  by The  Mentor  Group in  rendering  its  opinion is
attached as Annex F to this proxy  statement and prospectus and is  incorporated
by this  reference.  References  to The  Mentor  Group's  opinion  in this proxy
statement and prospectus  and the summary of The Mentor Group's  opinion in this
section are qualified in their entirety by reference to Annex F. Shareholders of
Travelzoo  Bahamas  are urged to,  and  should,  read The Mentor  Group  opinion
carefully and in its  entirety.  The Mentor Group opinion was for the benefit of
the independent  committee of the Board of Directors of Travelzoo Bahamas in its
consideration  of the  contribution  transaction.  The  Mentor  Group's  opinion
addressed only the fairness, from a financial point of view, to the shareholders
of Travelzoo Bahamas and Travelzoo  Delaware of the contribution  transaction in
anticipation of the pending merger. The Mentor Group did not express any view on
any  other  aspect of the  contribution  transaction  or any other  terms of the
anticipated merger. Specifically, the opinion did not address Travelzoo Bahamas'
underlying  business  decision  to  enter  into or to  effect  the  contribution
transaction  or the merger.  The Mentor  Group's  opinion does not  constitute a
recommendation   to  any  shareholder  of  Travelzoo  Bahamas  as  to  how  such
shareholder  should vote with respect to the merger, or otherwise act in respect
of the merger, and shareholders should not rely upon it as such.

     In arriving at its opinion, The Mentor Group reviewed, among other things:

     o    financial statements of Travelzoo Bahamas;

     o    financial statements of Silicon Channels;

     o    a draft of the Contribution  Agreement between Travelzoo  Delaware and
          Ralph Bartel; and

     o    internal   information,   including   financial  forecasts  and  other
          information and data regarding Travelzoo Bahamas and Silicon Channels,
          provided  to or  otherwise  discussed  with  The  Mentor  Group by the
          management of Travelzoo Bahamas and Silicon Channels.

     In rendering its opinion, The Mentor Group relied upon and assumed, without
independent  verification  or assumption of  responsibility,  that the financial
information  provided  to The  Mentor  Group had been  reasonably  prepared  and
reflected the best currently  available  estimates of the financial  results and
conditions of Travelzoo Bahamas and Silicon Channels.  Further, The Mentor Group


                                       46

<PAGE>

assumed,  based on management's  representation  to The Mentor Group, that there
had been no material  changes in the assets,  financial  condition,  business or
prospects of Travelzoo  Bahamas and Silicon  Channels since the date of the most
recent financial statements made available to The Mentor Group.

     The  Mentor  Group  did not make any  physical  inspection  or  independent
appraisal of any of the  properties  or assets of  Travelzoo  Bahamas or Silicon
Channels. The Mentor Group's opinion is necessarily based on business, economic,
market,  and other  conditions  as they  existed and could be  evaluated  by The
Mentor Group at the date of the fairness opinion.

     The opinion of The Mentor Group does not constitute a recommendation to any
shareholder  or board member as to how the  shareholder  or board member  should
vote on the proposed transaction. The Mentor Group did not express an opinion as
to the prices at which any security of Travelzoo Bahamas,  Travelzoo Delaware or
Silicon  Channels might trade in the future.  The  independent  committee of the
Travelzoo  Bahamas Board of Directors was the sole intended  beneficiary  of the
fairness opinion. The opinion states that it may not be relied upon by any other
person or entity without The Mentor Group's prior expressed written consent, and
that any use of the fairness opinion by a third party, or any reliance on it, or
decision to be made based upon it, are the  responsibilities  of that party. The
Mentor Group opinion is subject to further  assumptions and limiting  conditions
as set forth in the opinion as attached as Annex F hereto.

     In  arriving  at its  opinion,  The  Mentor  Group  performed  quantitative
analyses and considered a number of factors.  The  preparation of opinions as to
the fairness of a transaction  from a financial  point of view involves  various
determinations  as to the most appropriate and relevant methods of financial and
comparative  analyses and the  applications  of those methods to the  particular
circumstances.  In arriving at its opinion,  The Mentor Group did not  attribute
any  relative  weight to any  analysis  or factor  considered  but  rather  made
qualitative judgments as to the significance of each analysis and factor.

     The following is a summary of the material  financial analyses performed by
The Mentor Group in connection  with  providing  its opinion to the  independent
committee of the Travelzoo Bahamas Board of Directors.

     Comparable Companies Trading Analysis

     The Mentor Group  reviewed the stock market  trading  multiples and certain
other  financial  characteristics  for selected  companies that The Mentor Group
deemed comparable to Travelzoo Bahamas and Silicon Channels, as the case may be,
because of factors such as the businesses in which the companies are engaged and
the companies' market capitalization.

     Discounted Cash Flow Analysis

     The Mentor Group also used a discounted cash flow analysis to determine the
value of Travelzoo Bahamas and Silicon Channels.  The Mentor Group's  discounted
cash flow  methodology  forecasts  the cash  flows to  invested  capital  that a
typical  buyer of  Travelzoo  Bahamas or Silicon  Channels,  as the case may be,
would anticipate  receiving through continued  operations of each company over a
four year period.  Cash flows to invested capital are defined as earnings before
interest  and taxes,  less  corporate  income  tax  obligations,  plus  non-cash
expenses,  plus or minus changes in working capital,  less capital expenditures.
These invested  capital cash flows are discounted to their present value and are
then added to the residual value of the fourth year projected  invested  capital
cash flow. The residual  value of the fourth year is calculated by  capitalizing
the invested  capital cash flow projected in the fifth year and discounting that
value to present  value using the  discount  rate.  The  capitalization  rate is
calculated by subtracting the projected  long-term growth rate from the discount
rate. The discount rate is the required rate of return for all invested capital.
In  calculating  the discount  rate,  The Mentor Group  considered  the weighted
average  cost of capital.  The  weighted  average  cost of capital is based upon


                                       47

<PAGE>

Travelzoo Bahamas' and Silicon  Channels',  as the case may be, invested capital
structure,  with a weighting on equity and interest-bearing  debt. This analysis
results in the fair market  value of each  enterprise.  The fair market value of
the equity would be calculated by subtracting the interest bearing debt from the
fair market value of the invested  capital.  The Mentor Group's  discounted cash
flow  methodology was based upon discussions with management and the projections
that  management  created.  Factors of  significance  to the future  earnings of
Travelzoo Bahamas and Silicon Channels were current management's  experience and
their ability to successfully  meet the demands of the industry to achieve their
projections.

     General Information

     The Mentor Group is an investment banking and advisory firm and, as part of
its  investment  banking  activities,  is regularly  engaged in the valuation of
businesses and their securities.  As compensation for its services in connection
with the  contribution  transaction,  Travelzoo  Bahamas  has  agreed to pay The
Mentor Group fees of  approximately  $46,000 for  providing  financial  advisory
services in connection with the contribution  transaction,  including  providing
the opinion described above. In addition,  Travelzoo  Bahamas has agreed,  among
other things, to reimburse The Mentor Group for the expenses reasonably incurred
in connection with its engagement  (including  counsel fees and expenses) and to
indemnify The Mentor Group and certain related parties from certain  liabilities
that may arise out of its  engagement  by Travelzoo  Bahamas,  which may include
certain liabilities under federal securities laws.


                     TRAVELZOO DELAWARE CHARTER AND BY-LAWS

     Upon completion of the merger,  the articles of  incorporation of Travelzoo
Delaware will be in substantially  the form set forth in Annex B and the by-laws
of Travelzoo Delaware will be in substantially in the form set forth on Annex C.
For a summary of the material  provisions of the articles of  incorporation  and
by-laws of, and the rights of stockholders under these articles of incorporation
and by-laws,  see  "Description  of Capital  Stock" and  "Comparative  Rights of
Stockholders."


                          DESCRIPTION OF CAPITAL STOCK

General

     We are authorized to issue 40,000,000  shares of our common stock, $.01 par
value, and 5,000,000 shares of undesignated preferred stock, $.01 par value. The
following  description  of our capital  stock is subject to and qualified by our
certificate of incorporation and by-laws,  which are included as Annexes to this
proxy  statement and  prospectus,  and by the provisions of applicable  Delaware
law.

Common Stock

     The holders of our common  stock are  entitled to one vote per share on all
matters to be voted upon by our stockholders. Subject to preferences that may be
applicable to any outstanding  preferred  stock, the holders of our common stock
are entitled to receive such dividends,  if any, as may be declared from time to
time by our board of directors out of funds legally  available for that purpose.
In the event of our  liquidation,  dissolution or winding up, the holders of our
common stock are entitled to share ratably in all assets remaining after payment
of liabilities,  subject to prior distribution rights of our preferred stock, if
any,  then  outstanding.  The holders of our common stock have no  preemptive or
conversion rights or other subscription rights.

     We will  have the  right to  redeem  all,  but not less  than  all,  of the
outstanding  common stock held by a stockholder  who either  revokes  consent to
electronic notice and communications from us or fails to provide such consent at
our request. In that event, the redemption price per share will be equal to:

     o    if there is no public  market for our common  stock,  the fair  market
          value  per share of our  common  stock as  determined  by our Board of
          Directors, or

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<PAGE>

     o    if our common stock has an  established  public  trading  market,  the
          market  value per share of the common  stock on such then current date
          or for such then current period as shall be determined by our Board of
          Directors.

     We must  exercise our right to redeem our common  stock by  providing  each
holder from whom we will redeem  shares of  Travelzoo  stock  written  notice by
electronic  mail,  facsimile or  overnight  courier.  Such  written  notice must
indicate the anticipated date on which we will redeem the shares.

Preferred Stock

     Our  board  of  directors  has  the   authority,   without  action  by  the
stockholders,  to designate and issue our preferred  stock in one or more series
and to designate the rights,  preferences  and privileges of each series,  which
may be greater than the rights of our common stock.  It is not possible to state
the actual effect of the issuance of any shares of our preferred  stock upon the
rights of holders of our common  stock until the board of  directors  determines
the specific rights of the holders of our preferred stock.  However, the effects
might include:

     o    restricting dividends on our common stock;

     o    diluting the voting power of our common stock;

     o    impairing the liquidation rights of our common stock; or

     o    delaying  or  preventing  a change of control  of us  without  further
          action by our stockholders.

     At the completion of the merger,  no shares of our preferred  stock will be
outstanding,  and we have no present  plans to issue any shares of our preferred
stock.

Anti-Takeover  Effects of Our  Certificate  of  Incorporation  and  By-laws  and
   Delaware Law

     Some  provisions of Delaware law and our certificate of  incorporation  and
by-laws could make the following more difficult:

     o    acquisition of us by means of a tender offer;

     o    acquisition of us by means of a proxy contest or otherwise; or

     o    removal of our incumbent officers and directors.

     These provisions are intended to discourage coercive takeover practices and
inadequate  takeover  bids.  These  provisions  also are  designed to  encourage
persons  seeking to acquire  control of us to first  negotiate with our board of
directors.  We believe  that the benefits of  increased  protection  give us the
potential   ability  to  negotiate  with  the  proponent  of  an  unfriendly  or
unsolicited proposal to acquire or restructure us and outweigh the disadvantages
of  discouraging  such proposals  because  negotiation  of such proposals  could
result in an improvement of their terms.

Stockholder Meetings

     Under our  by-laws,  only our Chairman of the Board,  our  President or our
board of directors may call special meetings of our stockholders.

Requirements for Advance Notification of Stockholder Nominations and Proposals

     Our by-laws establish advance notice procedures with respect to stockholder
proposals and  nomination of  candidates  for election as directors,  other than
nominations made by or at the direction of our board of directors.

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<PAGE>

Delaware Anti-Takeover Law

     Section 203 of the Delaware General  Corporation Law generally  prohibits a
publicly held  Delaware  corporation  from engaging in a "business  combination"
with an "interested  stockholder" for a period of three years following the date
the person became an interested  stockholder,  unless the "business combination"
or the  transaction  in which the person  became an  interested  stockholder  is
approved in a prescribed  manner.  A "business  combination"  includes a merger,
asset or stock sale, or other  transaction  resulting in a financial  benefit to
the  interested  stockholder.  An  "interested  stockholder"  is a  person  who,
together with affiliates and associates, owns or within three years prior to the
determination  of  interested  stockholder  status,  did  own,  15% or more of a
corporation's  voting stock.  Section 203 may have an anti-takeover  effect with
respect to transactions  not approved in advance by our board of directors,  and
may discourage attempts that might result in a premium over the market price for
the shares of common stock held by stockholders.

No Cumulative Voting

     Our certificate of incorporation  and by-laws do not provide for cumulative
voting in the election of directors.

Undesignated Preferred Stock

     The authorization of undesignated preferred stock makes it possible for our
board of directors to issue our  preferred  stock with voting or other rights or
preferences  that could  impede the success of any attempt to change  control of
us.  These  and  other  provisions  may have the  effect  of  deferring  hostile
takeovers or delaying changes of control of our management.


                           BOOK-ENTRY SHARE OWNERSHIP

     The share register of Travelzoo Bahamas has been maintained electronically,
and  share  certificates  have not  been  issued.  Ownership  of the  shares  of
Travelzoo  Delaware will also be on a book-entry  basis  initially,  and we will
encourage our  stockholders to continue holding their shares in book-entry form,
and effecting  any purchases or sales of their shares on a book entry basis.  On
exchange  of your  shares of common  stock of  Travelzoo  Bahamas  for shares of
common stock of Travelzoo Delaware,  your ownership interest will be credited to
an account maintained in your name by the firm we designate as our registrar and
transfer  agent.  Stockholders  will  have  the  right  to  request  that  share
certificates be issued to them, but we expect to charge a fee for such issuance.


                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The  Delaware  General  Corporation  Law permits the  indemnification  by a
Delaware  corporation  of its  directors,  officers,  employees and other agents
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in  settlement in  connection  with  specified  actions,  suits or  proceedings,
whether civil, criminal,  administrative or investigative (other than derivative
actions which are by or in the right of the  corporation)  if they acted in good
faith and in a manner  they  reasonably  believed to be in or not opposed to the
best interests of the  corporation,  and, with respect to any criminal action or
proceeding,  had no reasonable  cause to believe  their conduct was unlawful.  A
similar standard of care is applicable in the case of derivative actions, except
that  indemnification  only  extends to  expenses  (including  attorneys'  fees)
incurred in connection with defense or settlement of such an action and requires
court approval before there can be any indemnification  where the person seeking
indemnification has been found liable to the corporation.

     As permitted by Delaware law, the certificate of incorporation of Travelzoo
Delaware  provides  that no  director  will be  personally  liable to  Travelzoo
Delaware or its  stockholders  for monetary damages for breach of fiduciary duty


                                       50

<PAGE>

as a  director,  except for  liability  (a) for any breach of duty of loyalty to
Travelzoo or to its stockholders, (b) for acts or omissions not in good faith or
that involve  intentional  misconduct  or a knowing  violation of law, (c) under
Section 174 of the Delaware General  Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit.

     The certificate of  incorporation  of Travelzoo  Delaware  further provides
that we must  indemnify our  directors and executive  officers and may indemnify
our other officers and employees and agents to the fullest  extent  permitted by
Delaware  law.  We  believe  that  indemnification   under  our  certificate  of
incorporation  covers negligence and gross negligence on the part of indemnified
parties.

     Travelzoo Delaware has entered into indemnification agreements with each of
its directors and officers. These agreements,  among other things, require us to
indemnify such directors and officers for certain expenses (including attorneys'
fees),  judgments,  fines and settlement  amounts incurred by any such person in
any action or proceeding,  including any action by or in the right of Travelzoo,
arising out of such person's services as a director or officer of Travelzoo, any
subsidiary  of Travelzoo or any other  company or enterprise to which the person
provides services at our request.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our  directors,  officers  and  controlling  persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange  Commission such  indemnification  is
against public policy as expressed in the Act and is, therefore, unenforceable.


                       COMPARATIVE RIGHTS OF STOCKHOLDERS

     As a result of the merger,  the  stockholders of Travelzoo  Bahamas,  whose
rights are currently  governed by the Bahamas  International  Business Companies
Act 2000, and the  memorandum  and articles of  association  of Travelzoo,  will
become  stockholders  of  Travelzoo  Delaware,  whose rights will be governed by
Delaware  law, the  Travelzoo  Delaware  certificate  of  incorporation  and the
Travelzoo  Delaware by-laws.  The following  discussion  identifies the material
differences between the rights of corporate  stockholders under Bahamian law and
Delaware  law  generally  and  specifically  with  respect  to  stockholders  of
Travelzoo  Bahamas and  stockholders  of  Travelzoo  Delaware  pursuant to their
respective  charters and by-laws.  The discussion does not constitute a complete
comparison  of the  differences  between  the  rights  of  such  holders  or the
applicable  provisions of the BIBC, the DGCL, the Travelzoo  Bahamas  memorandum
and articles and the Travelzoo Delaware certificate and by-laws.

Election of Directors

     Under  Delaware  law,  directors,  unless  their terms are  staggered,  are
elected at each annual stockholder meeting.  Vacancies on the board of directors
may be filled by the  stockholders  or  directors,  unless  the  certificate  of
incorporation or a by-law provides  otherwise.  The certificate of incorporation
may authorize the election of certain directors by one or more classes or series
of shares,  and the certificate of incorporation,  an initial by-law or a by-law
adopted by a vote of the  stockholders  may provide for staggered  terms for the
directors.  The certificate of  incorporation  or the by-laws also may allow the
stockholders or the board of directors to fix or change the number of directors,
but a corporation must have at least one director.

     The  Travelzoo  Delaware  board of  directors,  which will consist of seven
members  following  completion of the merger,  will not have staggered terms for
directors and will not be divided into classes. Subject to certain restrictions,
nominations  to the Travelzoo  Delaware board of directors may be made by either
the board or  stockholders.  Each share of  Travelzoo  Delaware  common stock is
entitled to one vote per share with respect to the  election of  directors  (and
each other matter coming before any meeting of the stockholders). Under Delaware


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<PAGE>

law, stockholders do not have cumulative voting rights unless the certificate of
incorporation so provides.  The Travelzoo Delaware  certificate does not provide
for cumulative voting, so stockholders  holding more than 50% of the outstanding
shares  entitled  to vote  may be able to  elect  all  members  of the  board of
directors. Ralph Bartel will hold more than 50% of the outstanding shares.

     Under Bahamian law,  directors are elected by stockholders for such term as
the  stockholders  may  prescribe.  The articles of a company may  authorize the
stockholders to elect directors for such term as they prescribe.  Currently, the
Travelzoo Bahamas articles of association  provide that the number of members of
the  Travelzoo  Bahamas  board of directors  shall be at least two, but not more
than seven.  The Travelzoo  Bahamas  memorandum of association and the Travelzoo
Bahamas  articles  of  association  do not  provide  for a  staggered  board  of
directors. Under Bahamian law, all shares vote as one class and each whole share
has one vote unless the  memorandum or articles state  otherwise.  The Travelzoo
Bahamas memorandum and articles do not provide for cumulative voting.

Removal of Directors

     Under  Delaware  law,  non-classified  directors or the entire board may be
removed,  with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of the directors.

     Under Bahamian law, a director remains in office until his or her successor
takes office, or until his or her death, resignation or removal. If the director
is a company  then it remains in office until the making of an order for winding
up or dissolution or in the event the company becomes defunct. A director can be
removed if not less than  three  directors  request  his or her  resignation  in
writing  unless the  memorandum  or articles or any  unanimous  agreement of the
stockholders limit this right. A director may resign by giving written notice to
the company expressing the intent to resign.

Action by Written Consent

     Delaware  law  provides  that,   unless  limited  by  the   certificate  of
incorporation,  any action that could be taken by  stockholders at a meeting may
be taken without a meeting if a consent (or consents) in writing,  setting forth
the action so taken,  is signed by the  holders of record of  outstanding  stock
having not less than the  minimum  number of votes that  would be  necessary  to
authorize or take such action at a meeting at which all shares  entitled to vote
thereon  were  present  and  voted.  The  Travelzoo   Delaware   certificate  of
incorporation does not limit such action by written consent.

     Bahamian law provides that,  unless limited by the memorandum,  articles or
any  unanimous  stockholder  agreement,  any  action  that  may be  taken by the
directors  or a  committee  of  directors  at a  meeting  may also be taken by a
resolution  of directors  or a committee  of directors  consented to in writing,
telex,  telefax,  telegram,  cable or other  written  electronic  communication.
Bahamian law does not require notice under this provision.  Also, unless limited
by the  memorandum  or  articles,  stockholders  may take any action that may be
taken by members at a meeting  by  resolution  of all  members  consented  to in
writing,  telex, telefax,  cable or other written electronic  communication.  As
with  consents of directors,  no notice is required  under this  provision.  The
Travelzoo Bahamas memorandum and articles do not limit or prohibit taking action
by written consent.

Amendments to Charter

     Under Delaware law,  unless a higher vote is required in the certificate of
incorporation, an amendment to the certificate of incorporation of a corporation
may be approved by a majority of the  outstanding  shares  entitled to vote upon
the proposed amendment. The Travelzoo Delaware certificate of incorporation does
not require a higher vote to amend its terms and provisions.

     Under Bahamian law, unless the memorandum or articles limit amendment,  the
memorandum may be amended by resolution of the directors or stockholders. A copy
of any resolution authorizing the amendment to the memorandum shall be submitted


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<PAGE>

to the Registrar with proper authentication. The amendment will take effect from
the time it is registered  with the  Registrar.  Companies  and  directors  that
willfully  and  knowingly  do not permit the  amendment  to be  submitted to the
Registrar are subject to monetary penalties. The Travelzoo Bahamas memorandum of
association  provides that the memorandum may be amended by the directors or the
stockholders.

Amendments to By-laws

     Delaware law provides that a  corporation's  by-laws may be amended by that
corporation's stockholders,  or, if so provided in the corporation's certificate
of  incorporation,  the power to amend  the  corporation's  by-laws  also may be
conferred on the corporation's directors. The Travelzoo Delaware by-laws provide
that the board of  directors  may amend,  repeal or alter the  by-laws,  but the
stockholders  may make  additional  by-laws  and may alter or repeal  any by-law
whether or not adopted by the directors.

     Under Bahamian law, unless the memorandum or articles limit amendment,  the
articles may be amended by resolution of the directors or  stockholders.  A copy
of any resolution  authorizing  the amendment to the articles shall be submitted
to the Registrar with proper authentication. The amendment will take effect from
the time it is registered  with the  Registrar.  Companies  and  directors  that
willfully  and  knowingly  do not permit the  amendment  to be  submitted to the
Registrar are subject to monetary  penalties.  The Travelzoo Bahamas articles of
association   provide  that  they  may  be  amended  by  the  directors  or  the
stockholders.

Special Meetings of Stockholders

     Delaware  law  provides  that  special  meetings of the  stockholders  of a
corporation  may be called by the  corporation's  board of  directors or by such
other  persons  as  may  be  authorized  in  the  corporation's  certificate  of
incorporation  or by-laws.  The Travelzoo  Delaware by-laws provide that special
meetings may only be called by the Travelzoo  Delaware  board of directors,  the
Chairman of the Travelzoo Delaware board or the President of Travelzoo Delaware.

     Bahamian law provides  that meetings of the  stockholders  may be called by
the  directors of the company,  unless the  memorandum,  articles or a unanimous
stockholder agreement provide otherwise.  In addition,  subject to any provision
in the memorandum,  articles or a unanimous stockholder agreement,  stockholders
comprising  more than 50% of the votes of  outstanding  shares  may,  by written
request,  compel the  directors  to convene a meeting of the  stockholders.  The
Travelzoo  Bahamas  articles provide that a special meeting may be called by the
Travelzoo Bahamas board of directors or two or more stockholders.

Vote on Extraordinary Corporate Transactions

     Delaware law provides that,  unless otherwise  specified in a corporation's
certificate of  incorporation  or unless the provisions of Delaware law relating
to  "business  combinations"  discussed  below are  applicable,  a sale or other
disposition of all or substantially all of the corporation's assets, a merger or
consolidation  of the corporation  with another  corporation or a dissolution of
the corporation  requires the affirmative vote of the board of directors (except
in certain limited circumstances) plus, with certain exceptions, the affirmative
vote of a the holders of a majority of the  outstanding  stock  entitled to vote
thereon.   The  foregoing   provisions  apply  to  Travelzoo  Delaware  and  its
stockholders.

     Bahamian law provides  that any sale,  transfer,  lease,  exchange or other
disposition of more than 50%, by value, of the company must first be approved by
the  directors.   Second,   the  directors  must  submit  the  proposal  to  the
stockholders  for  authorization  by a  resolution  of  the  stockholders.  If a
stockholders  meeting is to be called,  the company  must  provide  stockholders
notice of the meeting  with an outline of the  transaction,  whether or not they
are  entitled  to vote.  If it is proposed to obtain  written  consent,  then an


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<PAGE>

outline of the  transaction  must be given to every  stockholder  whether or not
such stockholder is entitled to vote on the transaction.

Rights of Inspection

     Delaware law allows any stockholder of a Delaware corporation, upon written
demand  under oath  stating the purpose  thereof,  to have the right  during the
usual hours for  business to inspect  for any proper  purpose the  corporation's
stock ledger, a list of its stockholders,  and its other books and records,  and
to make  copies  or  extracts  therefrom.  A  proper  purpose  means  a  purpose
reasonably related to such person's interest as a stockholder.

     Bahamian law allows any  stockholder,  or his or her  representative,  of a
Bahamas corporation, upon written request specifying a proper purpose, the right
to inspect the books,  records,  minutes and consents kept by the company and to
make copies or extracts thereof.  The purpose must be reasonably  related to the
stockholder's  interest.  If,  by  resolution  of  the  directors,  the  company
determines  that the request is not in the best interest of the company,  it may
deny the request. A stockholder has the right to pursue a judicial remedy within
90 days of  receiving  notice of a  company's  refusal to provide  access to the
records.

Dividends

     Subject to any  restrictions  contained in a  corporation's  certificate of
incorporation,  Delaware law generally  provides that a corporation  may declare
and pay dividends out of a surplus (defined as the excess, if any, of net assets
over capital) or, when no surplus exists, out of net profits for the fiscal year
in which the dividend is declared  and/or the preceding  fiscal year.  Dividends
may not be paid out of net  profits if the  capital of the  corporation  is less
than the amount of capital  represented by the issued and  outstanding  stock of
all classes having a preference upon the  distribution of assets.  The Travelzoo
Delaware certificate of incorporation contains no additional restrictions on the
declaration or payment of dividends.

     Under  Bahamian  law,  subject  to any  limitations  in the  memorandum  or
articles of a company incorporated under Bahamian law, directors may declare and
pay dividends in money,  shares or property.  The declaration  will be made by a
resolution of the  directors.  The directors  may only make the  declaration  if
immediately  after  paying the  dividend the company will be able to meet all of
its liabilities in the ordinary  course of business and the realizable  value of
its assets  will be equal to or greater  than its total  liabilities  (excluding
deferred  taxes) and its issued and  outstanding  share capital.  The realizable
value of the  assets as  determined  by the  directors  is  conclusive  unless a
question  of  law  is  involved.   The  Travelzoo   Bahamas   articles   contain
substantially  similar  provisions as the BIBC,  and also provide that dividends
may be paid to one class of  stockholder  to the  exclusion of other  classes or
paid in unequal amounts.

Indemnification and Limitation of Liability of Directors and Officers

     Delaware law permits a corporation to adopt a provision in its  certificate
of incorporation eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director,  except that such provision shall not limit the liability of
a  director  for:  (i) any  breach  of the  director's  duty of  loyalty  to the
corporation  or its  stockholders,  (ii) acts or omissions  not in good faith or
which  involve  intentional  misconduct  or a knowing  violation  of law,  (iii)
liability  under  Section 174 of the DGCL for  unlawful  payment of dividends or
stock purchases or redemptions,  or (iv) any transaction from which the director
derived an improper  personal  benefit.  The Travelzoo  Delaware  certificate of
incorporation  limits the personal liability of Travelzoo  Delaware's  directors
for monetary damages to the fullest extent permissible under applicable law.

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<PAGE>

     Under Delaware law, a corporation  may indemnify any person made a party or
threatened to be made a party to any type of proceeding (other than an action by
or in the right of the  corporation)  because  such person is or was an officer,
director, employee or agent of the corporation, or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or entity,  against  expenses,  judgments,  fines and amounts paid in settlement
actually and reasonably incurred in connection with such proceeding: (1) if such
person acted in good faith and in a manner he or she  reasonably  believed to be
in or not opposed to the best interests of the  corporation;  or (2) in the case
of a criminal  proceeding,  such person had no reasonable  cause to believe that
his or her conduct was unlawful.  A corporation  may indemnify any person made a
party or threatened to be made a party to any  threatened,  pending or completed
action or suit brought by or in the right of the corporation because such person
was an officer,  director,  employee or agent of the  corporation,  or is or was
serving at the request of the  corporation as a director,  officer,  employee or
agent of another  corporation  or other entity,  against  expenses  actually and
reasonably incurred in connection with such action or suit if he or she acted in
good faith and in a manner  reasonably  believed  to be in or not opposed to the
best  interests  of  the   corporation,   except  that  there  may  be  no  such
indemnification if the person is found liable to the corporation unless, in such
a case, the court determines the person is entitled thereto.  A corporation must
indemnify a director,  officer,  employee or agent against expenses actually and
reasonably incurred by him or her who successfully defends a proceeding to which
such person was a party because he or she was a director,  officer,  employee or
agent of the corporation.  Expenses incurred by an officer or director (or other
employees  or  agents  as  deemed  appropriate  by the  board of  directors)  in
defending  a civil or  criminal  proceeding  may be paid by the  corporation  in
advance  of  the  final  disposition  of  such  proceeding  upon  receipt  of an
undertaking  by or on behalf of such director or officer to repay such amount if
it  shall  ultimately  be  determined  that  he or  she is  not  entitled  to be
indemnified by the  corporation.  The Delaware law  indemnification  and expense
advancement  provisions  are not  exclusive  of any  other  rights  which may be
granted by the  by-laws,  a vote of  stockholders  or  disinterested  directors,
agreement or otherwise.  As described  under  "Indemnification  of Directors and
Officers" on page 50, the Travelzoo Delaware by-laws provide for indemnification
to the fullest extent not prohibited by law.

     Under Bahamian law, subject to any limitations in the memorandum,  articles
or in any unanimous stockholder agreement, a company incorporated in the Bahamas
may indemnify certain parties against all expenses, judgments, fines and amounts
paid  in  settlement   and  reasonably   incurred  in  connection   with  legal,
administrative or investigative proceedings in certain situations. Specifically,
any  person  who is or was a  party,  or is  threatened  to be made a party to a
threatened,   pending,   or  completed  civil,   criminal,   administrative   or
investigative  proceeding  by reason  of the fact  that such  person is or was a
director,  officer or liquidator may be indemnified.  Also any person who serves
or was serving as a director  officer or  liquidator  of another  company at the
request of the  indemnifying  company may be  indemnified.  Persons will only be
indemnified  if they  acted  honestly  and in good faith with a view to the best
interest of the company, and with respect to criminal  proceedings,  they had no
reasonable  cause to believe that the conduct was unlawful.  Absent  fraud,  the
decision of the  directors as to the nature of the conduct of the party  seeking
indemnification  is  conclusive  unless  a  question  of  law is  involved.  The
termination of any proceedings by any judgment, order, settlement, conviction or
the refusal of the  plaintiff  or  prosecutor  to continue the case will not, by
itself,  preclude  indemnification.  The successful  defense of any  proceedings
necessarily  lead to the companies  indemnification  of all reasonable  expenses
associated  with  the  judgment,  fines,  and  amounts  paid  in  settlement  in
connection  with the  proceedings.  The  Travelzoo  Bahamas  articles  authorize
indemnification of its officers and directors to the fullest extent permitted by
Bahamian law.

                                       55

<PAGE>

Appraisal Rights of Dissenting Stockholders

     Under  Delaware law, a stockholder  of a Delaware  corporation is generally
entitled to demand  appraisal and obtain payment of the fair value of his or her
shares  in the  event of any  plan of  merger  or  consolidation  to  which  the
corporation,  the shares of which he or she holds,  is a party.  The corporation
must notify its stockholders at least 20 days prior to the stockholders  meeting
at which the merger will be voted upon that such appraisal rights are available.
In order to exercise the  stockholder's  right to dissent,  the stockholder must
provide the company with a written  demand for appraisal  before the vote on the
merger.

     Within 10 days  after  the  effective  date of the  merger,  the  surviving
corporation  shall notify each dissenting  stockholder who did not vote in favor
of the merger.  Within 20 days after the mailing of such notice any  stockholder
entitled  to  appraisal  rights  may  make a  written  demand  to the  surviving
corporation for appraisal.

     Within 120 days  after the  effective  date of the  merger,  the  surviving
corporation or any stockholder  entitled to appraisal rights may file a petition
in the Delaware Court of Chancery  demanding a determination of the value of the
stock of such stockholder.  Also within 120 days after the effective date of the
merger, any stockholder  entitled to appraisal rights is entitled to a statement
from the surviving  corporation  of the aggregate  number of shares not voted in
favor of the merger and with respect to which  demands for  appraisal  have been
received and the aggregate number of holders of such shares.

     At a hearing on any petition filed with the court, the court will determine
which  stockholders  have  complied with the  appraisal  rights  process and are
entitled to appraisal  rights.  After  determining the stockholders  entitled to
appraisal, the court will appraise the shares and determine their fair value and
the  surviving   company  shall  pay  such  fair  value  immediately  for  those
stockholders  without  certificates  and upon surrender of the  certificates for
those stockholders with certificates.

     Under  Bahamian law, a stockholder  of a Bahamian  corporation is generally
entitled to demand  appraisal and obtain payment of the fair value of his or her
shares  in the  event of any  plan of  merger  or  consolidation  to  which  the
corporation  or the shares of which he or she holds,  is a party.  In  addition,
under Bahamian law, with permission of the court, stockholders have the right to
dissent in the event of a sale, transfer,  lease,  exchange or other disposition
of more than 50% of the assets of the company,  certain  redemptions of minority
stockholders and certain reorganizations. In order to exercise the stockholder's
right to dissent,  the stockholder must give written notice to the company at or
before the  stockholders  meeting at which the merger will be voted  upon.  Such
written notice shall include a statement that the stockholder proposes to demand
payment for his shares if the action is taken.  Within 20 days after the date on
which the vote of  stockholders  authorizing  the merger is taken,  the  company
shall give written notice of the  authorization  or consent to each  stockholder
who has given written objection. Within 20 days after the date on which the copy
of the plan of merger or an  outline  thereof  was given to the  stockholder,  a
dissenting  stockholder  must give  written  notice to the company of his or her
decision to elect to dissent,  provided  that a  stockholder  who dissents  must
dissent  with  respect to all shares that he or she holds in the  company.  Such
notice must state:

     o    the stockholder's name and address;

     o    the number  and  classes or series of shares in respect of which he or
          she dissents; and

     o    a demand for payment of the fair value of the shares.

     Upon the giving of a notice of  election to dissent,  the  stockholder  who
gave the notice  will no longer have any of the rights of a  stockholder  of the
company except the right to be paid the fair value of his or her shares.  Within
seven days immediately following the date of the expiration of the period within


                                       56

<PAGE>

which  stockholders  may give their  notices of election  to dissent,  or within
seven days  immediately  following the date on which the proposed merger becomes
effective,  whichever is later, the surviving company of the merger shall make a
written offer to each dissenting  stockholder to purchase his or her shares at a
specified price that the company determines to be their fair value. Unlike under
Delaware  law,  the parties may mutually  agree on the value of the shares.  If,
within 30 days  immediately  following the date on which the offer is made,  the
company making the offer and the dissenting  stockholder agree upon the price to
be paid for his or her shares,  the  company  shall pay to the  stockholder  the
amount in money upon the surrender of the certificates representing such shares.

     If the company and a dissenting  stockholder fail within such 30 day period
to agree on the price to be paid for the shares owned by the stockholder, within
20 days immediately  following the date on which the 30 day period expires,  the
following shall apply:

     o    the company and the  dissenting  stockholder  shall each  designate an
          appraiser;

     o    the  two  designated  appraisers  together  shall  designate  a  third
          appraiser;

     o    the three  appraisers  shall fix the fair value of the shares owned by
          the  dissenting  stockholder  as of the close of  business  on the day
          prior to the date on which the vote of  stockholders  authorizing  the
          merger was taken,  and that  value is binding on the  company  and the
          dissenting stockholder for all purposes; and

     o    the company shall pay to the  stockholder the amount in money upon the
          surrender by him or her of the certificates representing the shares.

Preemptive Rights

     Neither Delaware nor Bahamian law provides for preemptive rights to acquire
a corporation's  unissued stock. However, such right may be expressly granted to
the stockholders in a corporation's  certificate of incorporation or articles of
association. Neither the Travelzoo Delaware certificate of incorporation nor the
Travelzoo Bahamas articles of association provide for preemptive rights.

Stockholder Suits

     Under  Delaware law, a stockholder  may institute a lawsuit  against one or
more  directors,  either on his or her own behalf,  or derivatively on behalf of
the corporation. An individual stockholder may also commence a lawsuit on behalf
of  himself  or  herself  and other  similarly  situated  stockholders  when the
requirements for maintaining a class action under Delaware law have been met. As
noted  above,  Section  102(b)(7)  of the  DGCL  enables  a  corporation  in its
certificate of incorporation  to eliminate or limit, and the Travelzoo  Delaware
certificate of incorporation eliminates, the personal liability of a director to
the corporation and its  stockholders for monetary damages for violations of the
director's  fiduciary  duty,  except (i) for any breach of a director's  duty of
loyalty to the corporation or its  stockholders,  (ii) for acts or omissions not
in good faith or which involve intentional  misconduct or a knowing violation of
law,  (iii) for  liability  pursuant to Section 174 of the DGCL  (providing  for
liability of  directors  for  unlawful  payment of  dividends or unlawful  stock
purchases  or  redemptions)  or (iv) for any  transaction  from which a director
derived an improper personal benefit.

     Bahamian  law does not  provide for  stockholder  suit causes of actions or
methods of commencing suit.

Business Combination Restrictions

     In general,  Delaware law  prevents an  "interested  stockholder"  (defined
generally  as a person with 15% or more of a  corporation's  outstanding  voting
stock,  with the  exception  of any  person who owned and has  continued  to own
shares in excess of the 15% limitation since December 23, 1987) from engaging in


                                       57

<PAGE>

a "business  combination" with a Delaware  corporation for three years following
the date  such  person  became an  interested  stockholder.  The term  "business
combination"  includes mergers or consolidations with an interested  stockholder
and  certain  other  transactions  with an  interested  stockholder,  including,
without limitation: (i) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (except  proportionately as a stockholder of such corporation)
to or with the interested  stockholder of assets  (except  proportionately  as a
stockholder of the corporation) having an aggregate market value equal to 10% or
more of the  aggregate  market  value of all  assets  of the  corporation  or of
certain subsidiaries thereof determined on a consolidated basis or the aggregate
market  value  of all  the  outstanding  stock  of  the  corporation;  (ii)  any
transaction  which results in the issuance or transfer by the  corporation or by
certain  subsidiaries  thereof of stock of the corporation or such subsidiary to
the interested stockholder, except pursuant to certain transfers in a conversion
or exchange or a pro rata distribution to all stockholders of the corporation or
certain other transactions, none of which increases the interested stockholder's
proportionate  ownership  of any class or series  of the  corporation's  or such
subsidiary's  stock; (iii) any transaction  involving the corporation or certain
subsidiaries thereof which has the effect, directly or indirectly, of increasing
the  proportionate  share of the stock of any  class or  series,  or  securities
convertible  into stock of the corporation or any subsidiary,  which is owned by
the  interested  stockholder  (except as a result of  immaterial  changes due to
fractional share adjustments or as a result of any purchase or redemption of any
shares  of  stock  not  caused   directly  or  indirectly   by  the   interested
stockholder);  or (iv) any receipt by the interested  stockholder of the benefit
(except  proportionately  as a stockholder  of such  corporation)  of any loans,
advances,  guarantees,  pledges,  or other  financial  benefits  provided  by or
through the corporation or certain subsidiaries.

     The three-year  moratorium may be avoided if: (i) before such person became
an interested  stockholder,  the board of directors of the corporation  approved
either the  business  combination  or the  transaction  in which the  interested
stockholder became an interested  stockholder;  or (ii) upon consummation of the
transaction   which   resulted  in  the   stockholder   becoming  an  interested
stockholder,  the  stockholder  owned at least  85% of the  voting  stock of the
corporation  outstanding at the time the transaction commenced (excluding shares
held by directors who are also officers of the corporation and by employee stock
ownership  plans  that do not  provide  employees  with the  right to  determine
confidentially  whether  shares  held  subject to the plan will be tendered in a
tender or  exchange  offer);  or (iii) on or  following  the date on which  such
person became an interested stockholder, the business combination is approved by
the board of directors of the corporation and authorized at an annual or special
meeting of stockholders  (not by written consent) by the affirmative vote of the
stockholders  of at  least  66  2/3%  of the  outstanding  voting  stock  of the
corporation not owned by the interested stockholder.

     The  business  combination  restrictions  described  above do not apply if,
among other things: (i) the corporation's  original certificate of incorporation
contains a provision expressly electing not to be governed by the statute;  (ii)
the  corporation  by action by the holders of a majority of the voting  stock of
the  corporation  approves an amendment to its certificate of  incorporation  or
by-laws expressly  electing not to be governed by the statute  (effective twelve
(12)  months  after the  amendment's  adoption),  which  amendment  shall not be
applicable  to any  business  combination  with a person  who was an  interested
stockholder at or prior to the time of the amendment;  or (iii) the  corporation
does  not  have a class  of  voting  stock  that  is (a)  listed  on a  national
securities  exchange,  (b)  authorized  for  quotation  on  Nasdaq  or a similar
quotation  system;  or (c) held of record by more than 2,000  stockholders.  The
statute also does not apply to certain business  combinations with an interested
stockholder when such combination is proposed after the public  announcement of,
and before the consummation or abandonment of, a merger or consolidation, a sale
of 50% or more of the aggregate market value of the assets of the corporation on
a consolidated  basis or the aggregate market value of all outstanding shares of
the  corporation,  or a tender offer for 50% or more of the  outstanding  voting
shares of the corporation,  if the triggering transaction is with or by a person
who either was not an interested  stockholder during the previous three years or


                                       58

<PAGE>

who became an interested stockholder with board approval, and if the transaction
is approved or not opposed by a majority of the current  directors who were also
directors  prior to any person  becoming an  interested  stockholder  during the
previous three years.  Travelzoo Delaware is subject to the business combination
restrictions described above.

     Under Bahamian law there are no  restrictions  on business  combinations of
International  Business  Companies  other than as described above under "Vote on
Extraordinary Corporate Transactions."


                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We have filed with the SEC a registration statement on form S-4 to register
the shares of common  stock of  Travelzoo  Delaware  which will be issued in the
merger.  This proxy  statement  and  prospectus  is a part of that  registration
statement. As allowed by the SEC rules, this proxy statement and prospectus does
not contain all the  information you can find in the  registration  statement or
the  exhibits  to that  registration  statement.  For further  information  with
respect to us, reference is made to the registration  statement and the exhibits
to  that  registration  statement.   Statements  in  this  proxy  statement  and
prospectus concerning the contents of any contract or any other document are not
necessarily  complete. If a contract or document has been filed as an exhibit to
the registration statement, we refer you to that exhibit. Each statement in this
proxy  statement and  prospectus  relating to a contract or document filed as an
exhibit to the  registration  statement is qualified by the filed exhibits.  You
can obtain a copy of the  registration  statement  and the exhibits  through the
SEC, at the SEC's public reference rooms at 450 Fifth Street, N.W.,  Washington,
D.C., 20549, Seven World Trade Center, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street,  Suite 1400, Chicago,  Illinois 60661,
or  the  SEC's   website  at   http://www.sec.gov.   Please   call  the  SEC  at
1-800-SEC-0330 for more information on the public reference rooms and applicable
copy charges.


                                  LEGAL OPINION

     Bryan Cave LLP, St. Louis,  Missouri, as our counsel, has issued an opinion
as to the legality of the common stock of Travelzoo Delaware to be issued in the
merger.


                                     EXPERTS

     The combined balance sheets of  Travelzoo.com  Corporation and affiliate as
of  December  31,  1999  and  2000,  and  the  related  combined  statements  of
operations,  stockholders'  equity,  and cash flows for the period  from May 21,
1998  (inception) to December 31, 1998 and for each of the years in the two-year
period ended December 31, 2000 have been included herein and in the registration
statement in reliance upon the report of KPMG LLP, independent  certified public
accountants,  appearing elsewhere herein, and upon the authority of that firm as
experts in accounting and auditing.




                                       59

<PAGE>



                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE



                     INDEX TO COMBINED FINANCIAL STATEMENTS

                                                                        Page

      Independent Auditors' Report......................................F-2

      Combined Balance Sheets...........................................F-3

      Combined Statements of Operations.................................F-4

      Combined Statements of Stockholders' Equity.......................F-5

      Combined Statements of Cash Flows.................................F-6

      Notes to Combined Financial Statements............................F-7



                                      F-1

<PAGE>





                          Independent Auditors' Report



The Board of Directors and Stockholders
Travelzoo.com Corporation:


We have  audited  the  accompanying  combined  balance  sheets of  Travelzoo.com
Corporation and affiliate (collectively,  the Companies) as of December 31, 1999
and 2000,  and the related  combined  statements  of  operations,  stockholders'
equity,  and cash flows for the period from May 21, 1998 (inception) to December
31, 1998 and for each of the years in the  two-year  period  ended  December 31,
2000.  These  combined  financial  statements  are  the  responsibility  of  the
Companies'  management.  Our  responsibility  is to  express an opinion on these
combined financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

The  accompanying   combined  financial   statements  include  the  accounts  of
Travelzoo.com  Corporation  and  affiliate,  as defined in Note 1. The  combined
financial statements present the combined accounts of entities majority-owned by
a  principal  stockholder  engaged  in the  operation  of the  www.Travelzoo.com
website.

In our opinion,  the combined  financial  statements  referred to above  present
fairly,  in  all  material   respects,   the  combined   financial  position  of
Travelzoo.com  Corporation  and affiliate as of December 31, 1999 and 2000,  and
the results of their operations and their cash flows for the period from May 21,
1998  (inception) to December 31, 1998 and for each of the years in the two-year
period  ended  December 31,  2000,  in  conformity  with  accounting  principles
generally accepted in the United States of America.







                                          /s/ KPMG LLP

Mountain View, California
March 22, 2001





                                      F-2

<PAGE>








                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                             Combined Balance Sheets


<TABLE>
<CAPTION>
                                                                                                   December 31,
                                                                                               ---------------------
                                    Assets                                                1999                  2000
                                                                                    ------------------   -------------------
Current assets:
<S>                                                                             <C>                           <C>
     Cash                                                                       $          11,130                45,586
     Accounts receivable, less allowance for doubtful accounts
        of $10,000 and $145,144 as of December 31, 1999
        and 2000, respectively                                                            327,542               783,960
     Deposits                                                                               8,186               110,752
     Prepaid expenses and other current assets                                             18,233               110,998
     Deferred income taxes                                                                 14,676               111,113
                                                                                    ------------------   -------------------

                 Total current assets                                                     379,767             1,162,409

Deferred income taxes                                                                       2,510                 2,115
Property and equipment, net                                                                22,519               194,315
Intangible asset, net                                                                          --               196,667
                                                                                    ------------------   -------------------

                 Total assets                                                   $         404,796             1,555,506
                                                                                    ==================   ===================

                     Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable                                                           $          63,806               176,892
     Accrued expenses                                                                      22,700               166,653
     Deferred revenue                                                                       5,800                 2,500
     Income tax payable                                                                    43,923               523,804
     Payroll taxes payable                                                                 54,709                47,210
     Payable to employee                                                                   16,500                 9,400
     Payable to principal stockholder                                                       1,047                50,216
                                                                                    ------------------   -------------------

                 Total current liabilities                                                208,485               976,675

Deferred income taxes                                                                       2,022                 4,683
                                                                                    ------------------   -------------------

                 Total liabilities                                                        210,507               981,358
                                                                                    ------------------   -------------------

Commitments and contingency

Stockholders' equity:
     Common stock                                                                          60,000                78,173
     Retained earnings                                                                    134,289               495,975
                                                                                    ------------------   -------------------

                 Total stockholders' equity                                               194,289               574,148
                                                                                    ------------------   -------------------

                 Total liabilities and stockholders'
                    equity                                                      $         404,796             1,555,506
                                                                                    ==================   ===================
</TABLE>


See accompanying notes to combined financial statements

                                      F-3

<PAGE>




                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                        Combined Statements of Operations


<TABLE>
<CAPTION>

                                                             Period from May
                                                                21, 1998
                                                             (inception) to        Years ended December 31,
                                                              December 31,     ----------------------------------
                                                                  1998              1999              2000
                                                            -----------------  ----------------  ----------------
   Revenues:
<S>                                                       <C>                      <C>               <C>
     Advertising                                          $          57,327           893,244         3,852,066
     Commissions                                                     26,774            61,015            97,451
                                                            -----------------  ----------------  ----------------
       Total revenues                                                84,101           954,259         3,949,517
   Cost of revenues                                                  25,362           132,803           282,195
                                                            -----------------  ----------------  ----------------
       Gross profit                                                  58,739           821,456         3,667,322
                                                            -----------------  ----------------  ----------------
   Operating expenses:
     Sales and marketing                                              1,595           350,720         1,484,495
     General and administrative                                      22,046           326,686         1,201,982
     Merger expenses                                                     --                --           231,303
       Total operating expenses                                      23,641           677,406         2,917,780
                                                            -----------------  ----------------  ----------------
       Income before income taxes                                    35,098           144,050           749,542
   Income taxes                                                       6,213            38,646           387,856
                                                            -----------------  ----------------  ----------------
       Net income                                         $          28,885           105,404           361,686
                                                            =================  ================  ================
   Pro forma net income per share (Note 10):
     Pro forma basic and diluted net income per share
                                                          $              --              0.01              0.02
                                                            =================  ================  ================
     Shares  used in  computing  pro  forma  basic  net
       income per share                                           9,431,741        19,323,064        19,372,791
                                                            =================  ================  ================

     Shares  used in  computing  pro forma  diluted net
       income per share                                           9,431,741        19,355,147        19,466,810
                                                            =================  ================  ================
</TABLE>


See accompanying notes to combined financial statements



                                      F-4

<PAGE>




                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                   Combined Statements of Stockholders' Equity
            Period from May 21, 1998 (inception) to December 31, 2000


<TABLE>
<CAPTION>
                                                            Common Stock
                                    --------------------------------------------------------------------------------------------
                                             Travelzoo.com               Silicon Channels
                                              Corporation                  Corporation                        Total
                                    -------------------------------- -----------------------------   Retained    stockholders'
                                        Shares            Amount        Shares          Amount       earnings        equity
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
<S>                                     <C>           <C>                  <C>      <C>                <C>             <C>
Issuance of common stock                11,155,874    $     10,000         1,000    $     50,000            --          60,000
Net income                                      --              --            --              --        28,885          28,885
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
Balances, December 31, 1998             11,155,874          10,000         1,000          50,000        28,885          88,885
Net income                                      --              --            --              --       105,404         105,404
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
Balances, December 31, 1999             11,155,874          10,000         1,000          50,000       134,289         194,289
Issuance   of  common   stock   upon
  exercise of options                       70,000           3,500            --              --            --           3,500
Stock-based compensation expense
                                                --           9,221            --              --            --           9,221
Issuance   of   common    stock   to
  directors                                 70,000           5,452            --              --            --           5,452
Net income                                      --              --            --              --       361,686         361,686
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
Balances, December 31, 2000             11,295,874    $     28,173         1,000    $     50,000       495,975         574,148
                                    ================   ============= =============   ============= ============= ===============
</TABLE>


See accompanying notes to combined financial statements





                                      F-5

<PAGE>


                            TRAVELZOO.COM CORPORATION

                                  AND AFFILIATE

                        Combined Statements of Cash Flows

<TABLE>
<CAPTION>

                                                        Period from May 21,
                                                        1998 (inception) to            Years ended December 31,
                                                           December 31,       -------------------------------------------
                                                               1998                   1999                  2000
                                                       ------------------------------------------------------------------
 Cash flows from operating activities:
<S>                                                        <C>                       <C>                      <C>
  Net income                                               $ 28,885                  105,404                  361,686
     Adjustments to reconcile net income to net
       cash (used in) provided by operating
       activities:
    Depreciation and amortization                               974                    5,795                   54,914
    Deferred income taxes                                    (4,294)                 (10,870)                 (93,381)
    Provision for losses on accounts receivable
                                                               --                     10,000                  135,144
    Loss on disposal of fixed assets                           --                       --                      4,212
    Stock-based compensation expense                           --                       --                      9,221
    Changes in operating assets and liabilities:
      Accounts receivable                                   (56,736)                (280,806)                (591,562)
      Deposits                                               (3,131)                  (5,055)                (102,566)
      Prepaid expenses and other current assets
                                                             (7,699)                 (10,534)                 (92,765)
      Accounts payable                                        8,476                   55,330                  113,086
      Accrued expenses                                         --                     22,700                  149,405
      Deferred revenue                                         --                      5,800                   (3,300)
      Income tax payable                                      9,457                   34,466                  479,881
      Payroll taxes payable                                    --                     54,709                   (7,499)
      Payable to employee                                      --                     16,500                   (7,100)
      Payable to principal stockholder                         --                      1,047                     (831)
                                                           --------                 --------                 --------
        Net cash (used in) provided by operating
         activities                                         (24,068)                   4,486                  408,545
                                                           --------                 --------                 --------
Cash flows from investing activities:
  Purchases of property and equipment                       (11,687)                 (17,601)                (227,589)
  Purchase of intangible asset                                 --                       --                   (200,000)
  Loan receivable from principal stockholder                (12,000)                  12,000                     --
                                                           --------                 --------                 --------
      Net cash used in investing activities                 (23,687)                  (5,601)                (427,589)
                                                           --------                 --------                 --------
Cash flows from financing activities:
  Proceeds from issuance of common stock                     60,000                     --                      3,500
  Loans from principal stockholder                             --                       --                     50,000
                                                           --------                 --------                 --------
      Cash provided by financing activities                  60,000                     --                     53,500
                                                           --------                 --------                 --------
Net increase (decrease) in cash                              12,245                   (1,115)                  34,456
Cash at beginning of period/year                               --                     12,245                   11,130
                                                           --------                 --------                 --------
Cash at end of period/year                                 $ 12,245                   11,130                   45,586
                                                           ========                 ========                 ========
Supplemental disclosure of cash flow information:
  Cash paid during period/year for income taxes
                                                           $  1,050                   15,050                    1,356
                                                           ========                 ========                 ========
</TABLE>


See accompanying notes to combined financial statements



                                      F-6

<PAGE>


                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE


                     Notes to Combined Financial Statements
                           December 31, 1999 and 2000

1)   Summary of Significant Accounting Policies

     (a)  Description of Business

          The accompanying combined financial statements include the accounts of
          Travelzoo.com   Corporation   and  its  affiliate   Silicon   Channels
          Corporation dba Travelzoo.com  Sales, Inc. and wholly owned subsidiary
          Travelzoo.com Canada, Inc. (collectively the Companies). Travelzoo.com
          Corporation was  incorporated in the Bahamas on May 21, 1998.  Silicon
          Channels  Corporation was  incorporated in California on September 28,
          1998 and its wholly owned subsidiary  Travelzoo.com  Canada, Inc., was
          incorporated in Canada on November 14, 2000. The Companies operate the
          www.Travelzoo.com  website that provides an on-line advertising medium
          for the travel industry.

     (b)  Basis of Presentation

          These  combined  financial  statements  present  the  Companies  on  a
          combined  basis because of their common  ownership by Mr. Ralph Bartel
          (the  Principal  Stockholder),  and because  these  entities  combined
          represent the historical operations of the  www.Travelzoo.com  website
          business.  As of December 31, 2000,  the Principal  Stockholder  owned
          100% of the outstanding  common stock of Silicon Channels  Corporation
          and approximately 52% of the outstanding common stock of Travelzoo.com
          Corporation.  The 48% of  Travelzoo.com  Corporation  common stock not
          owned by the Principal  Stockholder is owned by approximately  700,000
          individual stockholders.

          On October 10, 1998,  Travelzoo.com  Corporation and Silicon  Channels
          Corporation  entered into an agreement whereby Silicon Channels agreed
          to manage the technical  platform,  marketing,  customer support,  and
          billing   for   the    classified    publishing    business   of   the
          www.Travelzoo.com  website  in  return  for  a 5%  commission  on  the
          quarterly  net  income  from  such  business.  The  October  10,  1998
          agreement  was  subsequently  replaced  by a Service  Agreement  dated
          January 2, 1999. In the January 2, 1999  agreement,  Silicon  Channels
          agreed to perform all operation services for www.Travelzoo.com website
          in return for 50% of the income before  income taxes  generated by the
          website.  All assets,  other than the domain name,  www.Travelzoo.com,
          used in the  operation of the  www.Travelzoo.com  website are owned by
          Silicon  Channels.   The  income  share  transactions  and  all  other
          intercompany transactions have been eliminated on combination.

     (c)  Use of Estimates

          Management  of the  Companies  have  made a number  of  estimates  and
          assumptions  relating to the reporting of assets and  liabilities  and
          the disclosure of contingent  assets and  liabilities to prepare these
          financial   statements  in  conformity  with   accounting   principles
          generally  accepted in the United  States of America.  Actual  results
          could differ from those estimates.

     (d)  Property and Equipment

          Property  and  equipment  is  stated  at  cost,   net  of  accumulated
          depreciation.   Property   and   equipment   are   depreciated   on  a
          straight-line  basis over the estimated  useful lives of the assets of
          three years.

                                       F-7

<PAGE>

     (e)  Intangible Assets

          In December  2000,  the Companies  purchased the Internet  domain name
          Weekend.com  for cash of $200,000.  The intangible  asset is stated at
          cost,  net of  accumulated  amortization  and is being  amortized on a
          straight-line basis over the estimated useful life of five years.

     (f)  Revenue Recognition

          In December 1999, the Securities and Exchange  Commission (SEC) issued
          Staff  Accounting  Bulletin  (SAB) No.  101,  Revenue  Recognition  in
          Financial  Statements,  as  amended by SAB Nos.  101A and 101B,  which
          provides guidance on the recognition,  presentation, and disclosure of
          revenue  in  financial  statements  filed  with the SEC.  SAB No.  101
          outlines the basic criteria that must be met to recognize  revenue and
          provides  interpretations   regarding  the  application  of  generally
          accepted  accounting  principles to revenue recognition where there is
          an  absence  of   authoritative   literature   addressing  a  specific
          arrangement or a specific industry.  The Companies adopted SAB No. 101
          in the  fourth  quarter  of 2000.  The  adoption  did not  impact  the
          Companies'  combined  financial   statements  or  revenue  recognition
          policies.

          Revenue  consists  of  advertising  and  commissions  from  e-commerce
          transactions.  Advertising  revenues are derived  principally from the
          sale  of  display  advertising,  classified  advertising,  and  banner
          advertising on the www.Travelzoo.com website.  Commissions are derived
          from bookings of travel services through  customer  advertising on the
          www.Travelzoo.com website.

          Advertising  revenues  are  recognized  in the  period  in  which  the
          advertisement  is displayed,  provided that evidence of an arrangement
          exists,   the  fees  are  fixed  and   determinable,   no  significant
          obligations  remain at the end of the period,  and  collection  of the
          resulting   receivable  is  reasonably   assured.  If  advertising  is
          displayed within one month,  revenues are recognized at the end of the
          display  period.  If advertising is displayed over two or more months,
          revenues are  recognized  ratably over the period.  To the extent that
          the minimum  guaranteed  impressions  are not met during the  contract
          period, the Companies defer recognition of the corresponding  revenues
          until  the  guaranteed  impressions  are  achieved.  Fees  for  banner
          advertising  are  recognized   based  on  the  number  of  impressions
          displayed or clickthroughs delivered during the period.

          The Companies  have  outsourced  part of their  advertising  sales and
          production activities to DoubleClick,  Inc.  (DoubleClick).  Under the
          terms of the  agreement  with  DoubleClick,  the  Companies  receive a
          portion of the revenue  received by DoubleClick from customers for the
          display of advertising on the www.Travelzoo.com website. The Companies
          record these  revenues on a net basis.  The gross revenue  received by
          DoubleClick  from  advertising  on the  www.Travelzoo.com  website was
          $95,170,  $137,159,  and  $430,130  for the period  from May 21,  1998
          (inception) to December 31, 1998 and the years ended December 31, 1999
          and 2000, respectively. The Companies' share of this income, which has
          been recorded as revenue,  was $47,144,  $66,691, and $231,885 for the
          period from May 21,  1998  (inception)  to  December  31, 1998 and the
          years ended December 31, 1999 and 2000, respectively.

          Commissions  are recorded as the net amount  received by the Companies
          and are recognized in the period in which the  commissions  earned are
          reported to the Companies by the e-commerce partner.

                                       F-8

<PAGE>

          Revenues from  advertising  barter  transactions are recognized in the
          period   during  which  the   advertisements   are  displayed  on  the
          www.Travelzoo.com  website.  Expenses  from  barter  transactions  are
          recognized in the period during which the advertisements are displayed
          on the barter partner's website.  Barter  transactions are recorded at
          the fair value of the  advertising  provided based on cash received by
          the Companies for transactions  involving similar types of advertising
          during the six months  preceding the  transaction  in accordance  with
          Emerging  Issues Task Force (EITF)  Issue No.  99-17,  Accounting  for
          Advertising Barter  Transactions.  The amounts included in advertising
          revenues and sales and marketing expenses for barter transactions were
          $-0-,  $83,000,   and  $37,000  for  the  period  from  May  21,  1998
          (inception) to December 31, 1998 and the years ended December 31, 1999
          and 2000, respectively.

     (g)  Advertising Costs

          Advertising   costs  are  expensed  as  incurred.   Advertising  costs
          (including  barter  advertising)  amounted  to $1,595,  $169,374,  and
          $1,161,800  for the period from May 21, 1998  (inception)  to December
          31, 1998 and the years ended December 31, 1999 and 2000, respectively.

     (h)  Income Taxes

          Income taxes are accounted  for under the asset and liability  method.
          Deferred tax assets and  liabilities are recognized for the future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their   respective  tax  bases  and  operating  loss  and  tax  credit
          carryforwards.  Deferred tax assets and liabilities are measured using
          enacted tax rates  expected to apply to taxable income in the years in
          which those  temporary  differences  are  expected to be  recovered or
          settled. The effect on deferred tax assets and liabilities of a change
          in tax rates is  recognized  in income in the period that includes the
          enactment date.

     (i)  Impairment of Long-Lived  Assets and Long-Lived  Assets to Be Disposed
          Of

          The Companies  account for  long-lived  assets in accordance  with the
          provisions of Statement of Financial  Accounting  Standards (SFAS) No.
          121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
          Long-Lived  Assets to Be  Disposed  Of.  SFAS No.  121  requires  that
          long-lived assets and certain identifiable intangibles be reviewed for
          impairment  whenever events or changes in circumstances  indicate that
          the carrying amount of an asset may not be recoverable. Recoverability
          of  assets  to be held and used is  measured  by a  comparison  of the
          carrying  amount of an asset to future net cash flows  expected  to be
          generated by the asset.  If such assets are considered to be impaired,
          the impairment to be recognized is measured by the amount by which the
          carrying  amount of the assets  exceeds  the fair value of the assets.
          Assets to be  disposed of are  reported  at the lower of the  carrying
          amount or fair value less costs to sell.

                                       F-9

<PAGE>

     (j)  Stock-Based Compensation

          As  allowed   under  SFAS  No.   123,   Accounting   for   Stock-Based
          Compensation,   the  Companies  have  elected  to  follow   Accounting
          Principles Board Opinion (APB) No. 25,  Accounting for Stock Issued to
          Employees,  and related interpretations in accounting for stock awards
          to employees. Deferred stock-based compensation for options granted to
          employees is  determined as the excess of the deemed fair market value
          of the  Companies'  common stock over the  exercise  price on the date
          options were granted. Expense associated with stock-based compensation
          is amortized over the vesting period of the individual award.

     (k)  Website Development Costs

          Prior to June 30, 2000,  website  development  costs were  expensed as
          incurred.  The Companies adopted EITF Issue No. 00-02,  Accounting for
          Website  Development  Costs,  on June 30,  2000.  The adoption of EITF
          Issue No.  00-02  did not have a  significant  impact on the  combined
          financial statements. Subsequent to the adoption of EITF No. 00-02, no
          website  development costs that qualify for  capitalization  have been
          incurred.

     (l)  Recent Accounting Pronouncements

          In June 1998, the Financial  Accounting  Standards Board (FASB) issued
          SFAS No.  133,  Accounting  for  Derivative  Instruments  and  Hedging
          Activities.  SFAS No. 133, as amended by SFAS No. 137, Deferral of the
          Effective Date of FASB Statement No. 133, and SFAS No. 138, Accounting
          for Certain Derivative Instruments and Certain Hedging Activities,  an
          Amendment  of FASB  Statement  No.  133,  establishes  accounting  and
          reporting   standards   for   derivative   instruments   and  requires
          recognition  of  all  derivatives  as  assets  or  liabilities  in the
          statement of financial  position and measurement of those  instruments
          at fair value.  SFAS No. 133 is effective  for fiscal years  beginning
          after June 15, 2000.  The Companies will adopt SFAS No. 133 on January
          1,  2001.  The  adoption  will  not  have an  impact  on the  combined
          financial statements.

     (2)  Allowance for Doubtful Accounts

          The  details of  changes  to the  Companies'  allowance  for  doubtful
          accounts are as follows:

Balance at May 21, 1998 (inception)                      $                --
    Additions - charged to costs and expenses                             --
    Deductions                                                            --
                                                            --------------------

Balance at December 31, 1998                                              --
    Additions - charged to costs and expenses                         10,000
    Deductions                                                            --
                                                            --------------------

Balance at December 31, 1999                                          10,000
    Additions - charged to costs and expenses                        135,144
    Deductions                                                            --
                                                            --------------------

Balance at December 31, 2000                             $           145,144
                                                            ====================




                                      F-10

<PAGE>


     (3)  Property and Equipment

          Property and equipment consisted of the following:

                                                    December 31,
                                        -------------------------------------
                                              1999               2000
                                        ------------------ ------------------
Computer hardware and software        $           12,214            182,461
Office equipment                                  17,074             65,407
                                        ------------------ ------------------
                                                  29,288            247,868
Less accumulated depreciation                      6,769             53,553
                                        ------------------ ------------------
Total                                 $           22,519            194,315
                                        ================== ==================

     (4)  Payable to Employee

          Payable to employee  represents expense  reimbursements  payable to an
          employee.


     (5)  Payable to Principal Stockholder

          Payable to principal  stockholder  includes unsecured loans payable of
          $-0- and  $50,000,  and expense  reimbursements  payable of $1,047 and
          $216 as of December 31, 1999 and 2000, respectively.  The loans do not
          bear interest and are repayable on or before March 31, 2001.


     (6)  Common Stock

          (a)  Travelzoo.com Corporation

               As of December  31,  1999 and 2000,  authorized  common  stock of
               Travelzoo.com  Corporation  comprises  2,000,000 shares of series
               $0.01 par value common stock and 18,000,000 shares of series $-0-
               par value  common  stock.  Issued and  outstanding  common  stock
               comprises 2,000,000 shares of series $0.01 par value common stock
               as of December  31,  1999 and 2000 and  9,155,874  and  9,295,874
               shares of series  $-0- par value  common  stock as of December 31
               1999 and  2000,  respectively.  All  series  of  common  stock in
               Travelzoo.com Corporation have identical rights.

               On September 2, 1998, Travelzoo.com  Corporation issued 2,000,000
               shares of series $0.01 par value and  4,000,000  shares of series
               $-0- par value common stock to the principal stockholder for cash
               proceeds of $10,000. On the same date, Travelzoo.com  Corporation
               also issued for $-0-  consideration,  5,155,874  shares of series
               $-0- par value common stock to approximately  700,000 individuals
               who had  applied  for shares  during the period  from May to July
               1998 via the www.Travelzoo.com website.

                                      F-11

<PAGE>

               On February 20, 1999, a stock  program for  directors was adopted
               providing that each director of  Travelzoo.com  Corporation  will
               receive 10,000 shares of Travelzoo.com Corporation's common stock
               as compensation for their services  provided in 1999, and that if
               a director  vacated his office prior to  year-end,  the number of
               shares of common  stock  earned will be  prorated  for the period
               served.  Under  this  program,  the  directors  earned a total of
               70,000  shares of common  stock for  services  provided  in 1999.
               Compensation  expense based on the fair value of the stock on the
               date of  grant of  $5,452  was  accrued  in the  combined  income
               statements  for the year ended  December 31, 1999, and the shares
               of common stock were issued in December  2000.  No grant of stock
               to directors was made in 2000.

               In  March  2000,   the  Board  of  Directors   of   Travelzoo.com
               Corporation  authorized  a 2-for-1  stock split of  Travelzoo.com
               Corporation's  common stock. This stock split was effective as of
               December 1, 2000. All affected share amounts in the  accompanying
               combined  financial  statements  and notes have been presented to
               reflect retroactively this stock split.

               During 2000, Travelzoo.com  Corporation granted to an employee of
               Silicon Channels  Corporation  options to purchase 334,676 shares
               of common  stock with an  exercise  price of $0.05.  Compensation
               expense measured using the intrinsic-value  method and recognized
               on a  straight-line  basis over the  two-year  vesting  period of
               $9,221 is included in the combined  statement of  operations  for
               the year ended  December 31, 2000.  In September  2000,  upon the
               termination  of the  employee,  70,000  options were fully vested
               under the original terms of the grant and the remaining  unvested
               options were forfeited.  The 70,000 vested options were exercised
               in September 2000.  There are no outstanding  stock options as of
               December 31, 2000.

          (b)  Silicon Channels Corporation

               As of December  31,  1999 and 2000,  authorized  common  stock of
               Silicon Channels Corporation  comprises 10,000 shares of $-0- par
               value.  During 1998,  Silicon Channels  Corporation  issued 1,000
               shares  of common  stock to the  Principal  Stockholder  for cash
               proceeds of $50,000. These shares were outstanding as of December
               31, 1999 and 2000.

                                      F-12

<PAGE>


     (7)  Income Taxes

          Income tax expense for the period  from May 21,  1998  (inception)  to
          December  31,  1998 and  years  ended  December  31,  1999  and  2000,
          consisted of the following:

                              Current          Deferred             Total
                          -----------------  ---------------  ------------------
1998:
     Federal                        6,430            (3,630)             2,800
     State                          3,827              (664)             3,163
     Foreign                          250                --                250
                          -----------------  ---------------  ------------------
                        $          10,507            (4,294)             6,213
                          =================  ===============  ==================
1999:
     Federal                       35,013            (9,473)            25,540
     State                         14,253            (1,397)            12,856
     Foreign                          250                --                250
                          -----------------  ---------------  ------------------
                        $          49,516           (10,870)            38,646
                          =================  ===============  ==================
2000:
     Federal                      380,265           (79,706)           300,559
     State                        100,722           (13,675)            87,047
     Foreign                          250                --                250
                          -----------------  ---------------  ------------------
                        $         481,237           (93,381)           387,856
                          =================  ===============  ==================

     Income tax expense for the period from May 21, 1998 (inception) to December
     31, 1998 and the years ended December 31, 1999 and 2000,  differed from the
     amounts computed by applying the U.S. federal statutory tax rate applicable
     to the Companies' level of pretax income as a result of the following:


                                      F-13

<PAGE>


                                           1998           1999         2000
                                     --------------  ------------  -------------
Federal tax at statutory rates     $        3,875        26,195        254,844
State taxes, net of federal
  income tax benefit                        2,088        10,713         57,451
Foreign taxes                                 250           250            250
Non-deductible merger
 expenses and other                          --           1,488         75,311
                                     --------------  ------------  -------------
Total income tax expense           $        6,213        38,646        387,856
                                     ==============  ============  =============


     The types of temporary  differences that give rise to significant  portions
     of the  Companies'  deferred tax assets and  liabilities as of December 31,
     1999 and 2000, are as follows:

                                                     1999          2000
                                               --------------  -------------
Deferred tax assets:
  Accruals and allowances                      $       6,630        80,018
  State income taxes                                   8,046        31,095
  Capitalized start-up costs                           2,510         2,115
                                               --------------  -------------
        Gross deferred tax assets                     17,186       113,228

Deferred tax liabilities:
   Property and equipment                             (2,022)       (4,683)
                                               --------------  -------------
        Net deferred tax assets                $      15,164       108,545
                                               ==============  =============

     No  valuation  allowance  has been  recorded  for the  deferred  tax assets
     because management  believes that the Companies are more likely than not to
     generate  sufficient  future  taxable  income to realize  the  related  tax
     benefits.


(8)  Significant Customer Information and Segment Reporting

     SFAS No.  131,  Disclosure  about  Segments  of an  Enterprise  and Related
     Information,   establishes   standards   for  the   reporting  by  business
     enterprises of information about operating segments, products and services,
     geographic  areas,  and major  customers.  The method for determining  what
     information  to report is based on the way that  management  organizes  the
     operating  segments within a company for making  operational  decisions and
     assessing performance.

     The Companies' chief operating decision-maker,  as defined in SFAS No. 131,
     is considered to be the Principal  Stockholder.  The Principal  Stockholder
     reviews separate  financial  information for Travelzoo.com  Corporation and
     Silicon  Channels  Corporation dba  Travelzoo.com  Sales,  Inc.  Reportable
     segment information for each company is as follows:


<TABLE>
<CAPTION>

                                                    Period from May 21, 1998 (inception) to December 31, 1998
                                       ------------------------------------------------------------------------------------

                                          Travelzoo.com       Silicon Channels
                                           Corporation          Corporation          Eliminations           Combined
                                       -------------------- -------------------- ------------------------ -------------------
<S>                                   <C>                            <C>                   <C>                 <C>
Revenue from external customers       $                --               84,101                   --               84,101
Revenue from income sharing
  arrangements                                     41,823                   --              (41,823)                  --
                                       -------------------- -------------------- ------------------------ -------------------
Total revenues                        $            41,823               84,101              (41,823)              84,101
                                       ==================== ==================== ======================= ====================
Segment income before income taxes
                                      $            33,987                1,111                   --               35,098
                                       ==================== ==================== ======================= ====================
Depreciation                          $                --                  974                   --                  974
                                       ==================== ==================== ======================= ====================

</TABLE>


                                      F-14

<PAGE>


<TABLE>
<CAPTION>

                                                                  Year ended December 31, 1999
                                       ------------------------------------------------------------------------------------

                                          Travelzoo.com       Silicon Channels
                                           Corporation          Corporation          Eliminations           Combined
                                       -------------------- -------------------- ------------------------ -------------------
<S>                                   <C>                            <C>                   <C>                 <C>
Revenue from external customers       $                --              954,259                   --              954,259
Revenue from income sharing
  arrangements                                     89,430                   --              (89,430)                  --
                                       -------------------- -------------------- ------------------------ -------------------
Total revenues                        $            89,430              954,259              (89,430)             954,259
Segment income before income taxes
                                      $            78,969               65,081                   --              144,050
                                       ==================== ==================== ======================= ====================
Depreciation                          $                --                5,795                   --                5,795
                                       ==================== ==================== ======================= ====================
Total assets as of
                                      $           119,647              397,253             (112,104)             404,796
                                       ==================== ==================== ======================= ====================
December 31, 1999

</TABLE>


<TABLE>
<CAPTION>

                                                                  Year ended December 31, 2000
                                       ------------------------------------------------------------------------------------

                                          Travelzoo.com       Silicon Channels
                                           Corporation          Corporation          Eliminations           Combined
                                       -------------------- -------------------- ------------------------ -------------------
<S>                                   <C>                            <C>                   <C>                 <C>
Revenue from external customers                        --            3,949,517                   --            3,949,517
Revenue from income sharing
  arrangements                                    434,468                   --             (434,468)                  --
                                       -------------------- -------------------- ------------------------ -------------------
Total revenues                                    434,468            3,949,517             (434,468)           3,949,517
                                       ==================== ==================== ======================= ====================
Segment income before income taxes
                                                  218,582              530,960                   --              749,542
                                       ==================== ==================== ======================= ====================

Depreciation                                           --               51,581                   --               51,581
                                       ==================== ==================== ======================= ====================
Total assets as of
                                                  599,715            1,766,397             (810,606)           1,555,506
                                       ==================== ==================== ======================= ====================
December 31, 2000
</TABLE>


     For the period  ended  December  31, 1998 and the years ended  December 31,
     1999 and 2000, substantially all assets and customers of the Companies were
     located in the United States of America.

     Significant customer information is as follows:


<TABLE>
<CAPTION>

                                 Percent of total revenue
                  -------------------------------------------------------
                   Period from May
                       21, 1998                                              Percent of accounts receivable
                    (inception) to         Years ended December 31,                   December 31,
                     December 31,     -----------------------------------  -----------------------------------
    Customer             1998               1999              2000               1999              2000
----------------- ------------------- ----------------- -----------------  ------------------ ----------------
<S>                        <C>                 <C>                <C>               <C>               <C>
       A                   54%                  7%                 6%               10%               16%
       B                   25%                  4%                --                --                --
       C                   --                  10%                 3%               --                 4%
       D                   --                  23%                22%               39%               16%
       E                   --                  10%                 3%               22%               --
       F                   --                   1%                 4%                3%               11%
</TABLE>


(9)  Subsequent Events

     On January 18,  2001,  Travelzoo  Inc.  was  incorporated  in Delaware as a
     wholly owned  subsidiary of  Travelzoo.com  Corporation.  Travelzoo Inc. is
     authorized to issue  40,000,000  shares of $0.01 par value common stock and
     5,000,000 shares of $0.01 par value preferred stock.

                                      F-15

<PAGE>

     On  January  22,  2001,  the  Principal  Stockholder  contributed  all  the
     outstanding  shares of common  stock of  Silicon  Channels  Corporation  to
     Travelzoo  Inc.  in  exchange  for  8,129,273  shares  of  common  stock of
     Travelzoo Inc. and options to acquire  2,158,349  shares of common stock of
     Travelzoo  Inc. at $1.00 per share.  The total  estimated fair value of the
     shares of Silicon  Channels  contributed by the Principal  Shareholder  was
     $2,690,787.  Silicon Channels  Corporation became a wholly owned subsidiary
     of Travelzoo Inc. as a result of the contribution.  The transaction will be
     accounted  for as a  combination  of entities  under common  control  using
     "as-if  pooling-of-interests"  accounting. Under this method of accounting,
     the assets and  liabilities of Silicon  Channels  Corporation and Travelzoo
     Inc. will be carried  forward to the combined  company at their  historical
     costs.  In  addition,   the  financial   statements  of  Silicon   Channels
     Corporation and Travelzoo Inc. will be restated on a combined basis.

     During  January 2001, the Board of Directors of  Travelzoo.com  Corporation
     proposed  that  Travelzoo.com  Corporation  be merged with  Travelzoo  Inc.
     whereby  Travelzoo  Inc.  will  be the  surviving  entity.  Each  share  of
     Travelzoo.com  Corporation  outstanding at the consummation of the proposed
     merger will be  exchanged  for one share of  Travelzoo  Inc.  The  proposed
     merger will be  consummated  upon  approval of the holders of a majority of
     the  outstanding   common  stock  of  Travelzoo.com   Corporation  and  the
     registration of the common stock of Travelzoo Inc. with the U.S. Securities
     and Exchange  Commission.  The proposed  merger will be accounted  for as a
     combination    of   entities    under   common    control    using   "as-if
     pooling-of-interests"  accounting.  Under this  method of  accounting,  the
     assets and liabilities of Travelzoo.com Corporation and Travelzoo Inc. will
     be carried forward to the combined  company at their  historical  costs. In
     addition,  the  financial  statements  of  Travelzoo.com   Corporation  and
     Travelzoo Inc. will be restated on a combined basis.

     The following unaudited pro forma financial information for the period from
     inception to December 31, 2000 is presented to give effect to the completed
     combination  of Silicon  Channels  Corporation  and Travelzoo  Inc. and the
     proposed merger between Travelzoo.com Corporation and Travelzoo Inc. on the
     accompanying  historical  combined statement of shareholders'  equity as if
     the  mergers  had been  consummated  on May 21,  1998  using the actual and
     proposed exchange ratios.


<TABLE>
<CAPTION>
                                                Common Stock
                                        ------------------------------
                                               Travelzoo Inc.             Additional                       Total
                                        ------------------------------     paid-in        Retained     stockholders'
                                            Shares          Amount         capital        earnings        equity
                                        ---------------  -------------  --------------- ------------- ---------------
<S>                                        <C>               <C>             <C>           <C>              <C>
Issuance of common stock                   19,285,147        192,851         (132,851)          --           60,000
Net income                                         --             --               --       28,885           28,885
                                        ---------------  -------------  --------------- ------------- ---------------
Balances, December 31, 1998                19,285,147        192,851         (132,851)      28,885           88,885
Net income                                         --             --               --      105,404          105,404
                                        ---------------  -------------  --------------- ------------- ---------------
Balances, December 31, 1999                19,285,147        192,851         (132,851)     134,289          194,289
Issuance of common stock upon
   exercise of options                         70,000            700            2,800           --            3,500
                                        ---------------  -------------  --------------- ------------- ---------------
Stock-based compensation expense                   --             --            9,221           --            9,221
Issuance of common stock to directors
                                               70,000            700            4,752           --            5,452
Net income                                         --             --               --      361,686          361,686
                                        ---------------  -------------  --------------- ------------- ---------------
Balances, December 31, 2000                19,425,147        194,251         (116,078)     495,975          574,148
                                        ===============  =============  =============== ============= ===============
</TABLE>



                                      F-16

<PAGE>

(10) Pro Forma Net Income Per Share (Unaudited)

     Pro forma net income per share gives effect to the  combination  of Silicon
     Channels  Corporation  and Travelzoo Inc. which was  consummated on January
     22, 2001 and the proposed  merger  between  Travelzoo.com  Corporation  and
     Travelzoo Inc.  described in Note 9 as if the mergers had been  consummated
     on May 21, 1998 using the actual and proposed exchange ratios.

     Pro forma basic net income per share is computed using the weighted-average
     number of  outstanding  shares of common stock and shares  vested under the
     board of  directors'  share  program  (see Note 6). Pro forma  diluted  net
     income  per  share  is  computed  using  the  weighted-average   number  of
     outstanding  shares of common stock described above and dilutive  potential
     common  stock from  options to purchase  common  stock  using the  treasury
     method  and  unvested  shares  issuable  under the  directors'  program.  A
     reconciliation  of the  weighted-average  basic  number of  shares  and the
     weighted-average diluted number of shares used in the calculations follows:


<TABLE>
<CAPTION>

                                             Period from May
                                                 21, 1998
                                              (inception) to
                                               December 31,           Years ended December 31,
                                            -------------------  ----------------------------------------
                                                   1998                 1999                 2000
                                            -------------------  -------------------  -------------------
<S>                                                  <C>                 <C>                  <C>
Weighted-average basic number of
  shares                                             9,431,741           19,323,064           19,372,791
Effect of Directors shares vesting                          --               32,083                   --
Effect of employee stock options                            --                   --               94,019
                                            -------------------  -------------------  -------------------
Weighted-average   diluted   number  of
  shares                                             9,431,741           19,355,147           19,466,810
                                            ===================  ===================  ===================
</TABLE>


     For all periods  presented,  2,158,349 options to purchase shares of common
     stock at $1.00 per share were not included in the  calculation of pro forma
     diluted income per share because their effect was antidilutive.

(11) Commitments and Contingency

     The Companies  lease office space in Mountain  View,  California,  under an
     operating  lease which  expires in December  31, 2001.  The future  minimum
     rental  payments  under this  operating  lease as of December 31, 2000, was
     $190,145.

     Rent  expense was $-0-,  $75,000,  and $154,498 for the period from May 21,
     1998  (inception) to December 31, 1998 and for the years ended December 31,
     1999 and 2000, respectively.

     The Companies'  offering of "free shares" over the Internet in 1998 was not
     registered with the United States Securities and Exchange Commission (SEC).
     The SEC has not asserted any  violation of law by the  Companies,  however,
     has indicated that programs for issuing shares such as the Companies' "free
     share"  offering  should  be  registered  with  the SEC or  qualify  for an
     exemption from such a registration. Federal and state laws provide remedies
     for persons who acquire  securities in an offering that was not  registered
     with  the SEC and did not  qualify  for any  exemption  from  registration.
     Remedies include rescission, which means that the stockholders would return
     the securities to the seller and the seller would be required to return the
     purchase  price,  and  damages  for  losses  incurred  in cases  where  the
     purchaser no longer holds the  securities.  The  Companies  believe that no


                                      F-17

<PAGE>

     significant   liability  exists  for  potential  remedies  available  under
     securities  laws  to  recipients  of  "free  shares"   primarily  since  no
     consideration was received for the shares.


                                      F-18

<PAGE>


                                                                         Annex D

                Proxy For The Special Meeting Of Stockholders Of
                            Travelzoo.com Corporation
                      To Be Held _____________ _____, 2001

     I am a holder of shares of common  stock of  Travelzoo.com  Corporation,  a
Bahamas  corporation  ("Travelzoo").  I hereby appoint Ralph Bartel as my proxy,
with full power of  substitution,  to  represent  me at the  special  meeting of
members   (stockholders)   of  Travelzoo   to  be  held  at   _________________,
_______________,  on  __________ , 2001 at _______ a.m.  local time,  and at any
adjournments or postponements thereof, to consider and approve the Agreement and
Plan of Merger,  dated January 19, 2001,  under which  Travelzoo  will be merged
into a newly-formed Delaware corporation, Travelzoo Inc. ("Travelzoo Delaware"),
as follows:

            [ ]  FOR            [ ]  AGAINST        [ ]  ABSTAIN

     I understand that, if I don't check any of the boxes above, this proxy will
be voted for the merger.  The Board of Directors of  Travelzoo  has  unanimously
recommended a vote for the merger.

     Unless I check the NO box below, I confirm that:

     I consent to receiving by electronic  transmission  any notices to be given
by Travelzoo Delaware to its stockholders, in accordance with Section 323 of the
Delaware  General  Corporation  Law. My consent will be effective until revoked.
                                                           [ ]Yes          [ ]No

     I  consent  to  receiving  by  electronic   transmission  (including  email
transmission and postings on Travelzoo  Delaware's website) Travelzoo Delaware's
proxy  statements,  annual reports and other information to be provided to me in
accordance  with  the   requirements   of  the  U.S.   Securities  and  Exchange
Commission.* My consent will be effective until revoked.
                                                           [ ]Yes          [ ]No

     This Proxy is solicited on behalf of the Board of Directors.

Name(s):                                      ----------------------------------

                                              ----------------------------------

Registered email address (as you
  previously provided to Travelzoo**)         ----------------------------------

Voter Control Number (which Travelzoo
  previouslyprovided to you by email)         ----------------------------------


Mailing address:                              ----------------------------------

                                              ----------------------------------

                                              ----------------------------------


Signature(s)                                  ----------------------------------

                                              ----------------------------------

                                              ----------------------------------

                        Please sign exactly as your name appears above. Joint
                          owners should each sign. When signing as attorney,
                       executor, trustee or guardian, please give full title in
                                            that capacity.

                                  Date:                         , 2001

*    If you give your  consent to  electronic  delivery,  you may incur  certain
     costs  in  receiving  information  electronically,  such as the  cost of an
     Internet access subscription.

**   Travelzoo       has       provided      an      online       form,       at
     http://www.corporate.travelzoo.com/shareholders,  for stockholders who wish
     to  change  their  original  registered  email  addresses,  which  includes
     information to allow  Travelzoo to verify the identity of the  stockholder.
     Changes are effective only if properly made through the online form;  email
     or other informal notice is not effective.

Note     that     stockholders     may     vote    on    the     Internet     at
http://www.travelzoo.com/proxy.   Travelzoo   encourages   stockholders  to  use
Internet  voting,  which will help  minimize the cost of the voting  process for
Travelzoo and its stockholders.  If you wish to use a paper proxy,  please print
this page, mark, sign and date it, complete the information  required and return
it to Travelzoo by mail to 800 West El Camino Real, Suite 180, Mountain View, CA
94040.



<PAGE>
                                                                         Annex E


               BAHAMAS INTERNATIONAL BUSINESS COMPANIES ACT, 2000

Rights of dissenters.

     82.(1) A member of a company  incorporated under this Act shall be entitled
to payment of the fair value of his shares upon dissenting from -

          (a)  a merger,  if the company is a  constituent  company,  unless the
               company is the surviving company and the member continues to hold
               the same or similar shares;

          (b)  a consolidation, if the company is a constituent company;

          (c)  any sale, transfer,  lease, exchange or other disposition of more
               than 50 per cent of the assets or business of the company, if not
               made in the usual or regular course of the business carried on by
               the company, but not including -

               (i)  a  disposition  pursuant  to an order of the  court,  having
                    jurisdiction in the matter,

               (ii)adisposition   for   money   on   terms   requiring   all  or
                    substantially  all net  proceeds  to be  distributed  to the
                    members in accordance with their respective interests within
                    one year after the date of disposition, or

               (iii) a transfer pursuant to the power described in section 9(2);

          (d)  a redemption of his shares by the company pursuant to section 79;
               and

          (e)  an arrangement, if permitted by the court.

     (2) A member who desires to exercise his entitlement  under  subsection (1)
shall give to the company,  before the meeting of members at which the action is
submitted to a vote, or at the meeting but before the vote, written objection to
the action;  but an objection is not required  from a member to whom the company
did not give  notice of the  meeting  in  accordance  with this Act or where the
proposed action is authorized by written consent of members without a meeting.

     (3) An objection  under  subsection  (2) shall include a statement that the
member proposes to demand payment for his shares if the action is taken.

     (4)  Within  20 days  immediately  following  the date on which the vote of
members authorizing the action is taken, or the date on which written consent of
members without a meeting is obtained,  the company shall give written notice of
the  authorization or consent to each member who gave written  objection or from
whom written objection was not required,  except those members who voted for, or
consented to in writing, the proposed action.

     (5) A member to whom the company was  required to give notice who elects to
dissent shall, within 20 days immediately following the date on which the notice
referred to in subsection (4) is given,  give to the company a written notice of
his decision to elect to dissent, stating -

          (a)  his name and address;

          (b)  the number and classes or series of shares in respect of which he
               dissents; and

          (c)  a demand  for  payment  of the fair  value of his  shares;  

and a member who elects to dissent from a merger under  section 74 shall give to
the company a written  notice of his decision to elect to dissent within 20 days
immediately  following  the date on which  the copy of the plan of  merger or an
outline thereof is given to him in accordance with section 74.


<PAGE>

     (6) A member who  dissents  shall do so in  respect  of all shares  that he
holds in the company.

     (7) Upon the giving of a notice of election to dissent,  the member to whom
the notice relates ceases to have any of the rights of a member except the right
to be paid the fair value of his shares.

     (8) Within 7 days  immediately  following the date of the expiration of the
period within which  members may give their  notices of election to dissent,  or
within 7 days immediately following the date on which the proposed action is put
into  effect,  whichever  is later,  the  company or, in the case of a merger or
consolidation,  the surviving company or the consolidated company,  shall make a
written  offer to each  dissenting  member to purchase his shares at a specified
price that the company determines to be their fair value; and if, within 30 days
immediately  following the date on which the offer is made,  the company  making
the  offer and the  dissenting  member  agree  upon the price to be paid for his
shares,  the  company  shall pay to the  member  the  amount  in money  upon the
surrender of the certificates representing his shares.

     (9) If the  company  and a  dissenting  member fail within the period of 30
days  referred  to in  subsection  (8) to agree on the  price to be paid for the
shares owned by the member,  within 20 days  immediately  following  the date on
which the period of 30 days expires, the following shall apply -

          (a)  the company and the  dissenting  member  shall each  designate an
               appraiser;

          (b)  the 2  designated  appraisers  together  shall  designate a third
               appraiser;

          (c)  the 3 appraisers  shall fix the fair value of the shares owned by
               the  dissenting  member  as of the close of  business  on the day
               prior to the date on which the vote of  members  authorizing  the
               action was taken or the date on which written  consent of members
               without a meeting was  obtained,  excluding any  appreciation  or
               depreciation  directly or indirectly induced by the action or its
               proposal,  and  that  value is  binding  on the  company  and the
               dissenting member for all purposes; and

          (d)  the company  shall pay to the member the amount in money upon the
               surrender by him of the certificates representing his shares.

     (10)Shares  acquired by the company pursuant to subsection (8) or (9) shall
be canceled but if the shares are shares of a surviving  company,  they shall be
available for re-issue.

     (11)The  enforcement  by a member of his  entitlement  under  this  section
excludes the enforcement by the member of a right to which he might otherwise be
entitled by virtue of his holding  shares,  except  that this  section  does not
exclude the right of the member to institute proceedings to obtain relief on the
ground that the action is illegal.


                                      E-2

<PAGE>

                                                                         Annex F




January 18, 2001

Board of Directors of Travelzoo.com Corporation
Travelzoo.com Corporation
800 W. El Camino Real, Suite 180
Mountain View, CA 94040
Attn: Independent Committee

Independent Committee Members:

The Mentor Group, Inc. ("TMG") has been retained by the Independent Committee of
the  Board  of  Directors  (the   "Independent   Committee")  of   Travelzoo.com
Corporation,  a corporation organized under the International Business Companies
Act,  1989,  of the Bahamas  ("Travelzoo  Bahamas"),  to advise the  Independent
Committee  with  respect to the fairness  from a financial  point of view of the
Contribution (as herein defined) by Ralph Bartel, the Chief Executive Officer of
Travelzoo  ("Ralph  Bartel"),  of all of the  issued and  outstanding  shares of
capital  stock  of  Silicon  Channels  Corporation,   a  California  corporation
("Silicon"), to Travelzoo Inc., a Delaware corporation ("Travelzoo Delaware"), a
subsidiary of Travelzoo  Bahamas,  in exchange for shares of common  stock,  and
warrants to purchase  common stock of Travelzoo  Delaware (the  "Contribution").
Immediately following the consummation of the Contribution,  Silicon will be the
wholly-owned  subsidiary  of  Travelzoo  Delaware.   Pursuant  to  that  certain
Agreement and Plan of Merger dated  January 19, 2001,  by and between  Travelzoo
Bahamas and Travelzoo Delaware,  Travelzoo Bahamas will be merged into Travelzoo
Delaware  (the  "Merger").  Upon  consummation  of the  Merger,  each  share  of
Travelzoo Bahamas will be exchanged for one share of Travelzoo Delaware.  We are
acting as the non-exclusive  financial  advisor to the Independent  Committee in
connection with the Contribution  (although,  in so acting,  we are not entering
into an agency or other fiduciary  relationship with the Independent  Committee,
Travelzoo Bahamas,  Travelzoo Delaware,  either of their Boards or shareholders,
or any other  person)  and will  receive a fee from  Travelzoo  Bahamas  for our
services. In addition,  Travelzoo Bahamas has agreed to indemnify us for certain
liabilities  arising out of our engagement.  This fairness  opinion is issued to
explain whether,  in contemplation of the Merger,  the proposed  Contribution is
fair to the  shareholders  of Travelzoo  Bahamas and  Travelzoo  Delaware from a
financial point of view.

Subject  to the terms and  conditions  set forth in the  Contribution  Agreement
between Travelzoo Delaware and Ralph Bartel,  dated as of January 22, 2001, (the
"Contribution  Agreement"),  all of the issued and outstanding  capital stock of
Silicon will be contributed by Ralph Bartel to Travelzoo.  The  Contribution  is
intended to be a tax-free  contribution  pursuant to Section 351 of the Internal
Revenue Code of 1986,  as amended.  Ralph Bartel is the owner of 1,000 shares of
the  common  stock of  Silicon,  which  shares  represent  all of the issued and
outstanding  shares  of  capital  stock of  Silicon.  Subject  to the  terms and
conditions of the Contribution Agreement, Ralph Bartel will contribute,  assign,
transfer and convey to Travelzoo  Delaware,  and Travelzoo Delaware will receive
from Ralph Bartel all of Mr.  Bartel's  right,  title and interest in and to the
Silicon  shares in  consideration  for  8,129,273  shares of Travelzoo  Delaware
Common Stock, plus an option to purchase  2,158,349 shares of Travelzoo Delaware


<PAGE>

Common  Stock.  Travelzoo  Delaware  is  granting  to Ralph  Bartel an option to
purchase from Travelzoo  Delaware  2,158,349 shares of Travelzoo Delaware Common
Stock  at an  exercise  price of $1.00  per  share,  subject  to the  terms  and
conditions set forth in the Stock Option Agreement, dated January 22, 2001. This
option is not  intended  to be and shall not be  treated as an  incentive  stock
option under Section 422 of the Internal Revenue Code of 1986, as amended.

You requested that TMG render an opinion (the "Opinion") as to the Contribution.
The  Opinion  does  not  address  Travelzoo  Bahamas'  (as sole  shareholder  of
Travelzoo  Delaware)  underlying  business decisions to effect the Contribution.
The  Opinion  does  not  address  any  related   party  or  Travelzoo   Bahamas'
transactions.  TMG has not been  requested to, and did not,  solicit third party
indications  of  interest  in  acquiring  all or any of the  shares or assets of
Silicon.  Furthermore,  at your request, we have not negotiated the Contribution
or advised you with respect to alternatives to it.
In connection with this Opinion,  TMG made such reviews,  analyses and inquiries
as we deemed necessary and appropriate under the circumstances. The scope of TMG
work included the following:

1.   A reading of the financial  statements of Travelzoo  Bahamas for the fiscal
     years ending  December 31, 1997 through  December 31, 1999, and the interim
     financial  statements  through  September  30,  2000  which  Travelzoo  has
     identified as being the most current financial statements available.

2.   A reading  of the  financial  statements  of Silicon  for the fiscal  years
     ending  December  31,  1997  through  December  31,  1999,  and the interim
     financial   statements   through  September  30,  2000  which  Silicon  has
     identified as being the most current financial statements available.

3.   Visit to the business office of Travelzoo Bahamas.

4.   Visit to the business office of Silicon.

5.   Meetings with certain members of senior management of Travelzoo Bahamas and
     Silicon to discuss operations,  financial conditions,  future prospects and
     projected operations and performance of each company.

6.   Review of the Contribution Agreement.

7.   Review of and discussions  about the forecasts and projections  prepared by
     Travelzoo  Bahamas with respect to  Travelzoo  Bahamas'  outlook for future
     success and likelihood for continued operations.

8.   Review of and discussions  about the forecasts and projections  prepared by
     Silicon with respect to Silicon's outlook for future success and likelihood
     for continued operations.

9.   Review of certain  other  publicly  available  financial  data for  certain
     companies that TMG deems comparable to Travelzoo  Bahamas and Silicon,  and
     publicly  available prices and premiums paid in other transactions that TMG
     considers similar to the Contribution.

                                       2

<PAGE>

We have relied upon and assumed,  without independent verification or assumption
of  responsibility,  that the  financial  information  provided  to TMG has been
reasonably  prepared and reflects the best currently  available estimates of the
financial results and conditions of Travelzoo Bahamas and Silicon.  Further,  we
have assumed, based on management's  representation to TMG, that there have been
no material changes in the assets, financial condition, business or prospects of
Travelzoo  Bahamas  and  Silicon  since  the date of the most  recent  financial
statements made available to TMG.

TMG has not made any physical inspection or independent  appraisal of any of the
properties or assets of Travelzoo Bahamas or Silicon. Our opinion is necessarily
based on business,  economic,  market,  and other conditions as they existed and
could be evaluated by TMG at the date of this letter.

Our opinion does not  constitute a  recommendation  to any  shareholder or board
member as to how the  shareholder  or board  member  should vote on the proposed
Contribution.  TMG has not  expressed  an  opinion as to the prices at which any
security of Travelzoo Bahamas,  Travelzoo Delaware or Silicon might trade in the
future.  The  material in this  Opinion may not be reprinted in whole or in part
without the prior expressed written consent of TMG. The Independent Committee is
the sole intended  beneficiary  of this Opinion.  This Opinion may not be relied
upon by any  other  person or  entity  without  TMG's  prior  expressed  written
consent.  Any use of the  Opinion by a third  party,  or any  reliance on it, or
decision to be made based upon it, are the  responsibilities of that party. This
Opinion  is  subject  to the  attached  Statement  of  Assumptions  and  Limited
Conditions.

Based on the  foregoing,  and in  reliance  thereon,  it is The  Mentor  Group's
opinion that the  Contribution  is fair,  from a financial point of view, to the
shareholders of Travelzoo Bahamas and Travelzoo  Delaware assuming the Merger is
consummated.

Respectfully submitted,


/s/ The Mentor Group
------------------------------

THE MENTOR GROUP, INC.

                                       3

<PAGE>



                STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS

The analyses  and opinions  concluded by The Mentor Group (TMG) and set forth in
this  fairness  opinion  report are  subject to the  following  assumptions  and
limiting conditions:

We have no present or contemplated  material  interest in the business or assets
that are the subject of this report.

We have no personal  interest or bias with respect to the subject matter of this
report or the parties involved.

To the best of our knowledge  and belief,  the  statements of fact  contained in
this report, upon which the analyses,  opinions and conclusions expressed herein
are based, are true and correct.

TMG has made  personal  visits to the  premises of the  business  and  conducted
interviews with management.

The fee for  this  engagement  is not  contingent  upon any  particular  outcome
reported.

No  investigation  of legal fee or title to the  business or its assets has been
made and the ownership claim to the business and its assets is assumed valid. No
consideration  has been  given to  liens  or  encumbrances  that may be in place
against the business or assets, except as specifically stated in this report.

All  conclusions  are  presented as the  considered  opinion of TMG based on the
facts noted with this report. We assume no responsibility  for changes in values
or market  conditions  nor for the inability of the owner to locate a purchaser.
The conclusions  derived were for the specific  purpose set forth herein and may
be invalid if used for any other purpose. This is a fairness opinion and may not
be used out of the  context as  presented  herein nor used to solicit  potential
buyers.

Client  agrees to preserve the  confidential  format and content of our reports.
Our reports and the TMG name are not to be used in whole or in part outside your
organization,  without  our prior  written  approval,  except for review by your
legal counsel.  We will likewise preserve the confidential nature of information
received from you, or developed during this  engagement,  in accordance with our
established  professional standards.  Client agrees that TMG does not, either by
entering  into this  contract or by performing  the services  rendered,  assume,
abridge,  abrogate or  undertake  to  discharge  any duty of Client to any other
person.

                                       4

<PAGE>


All financial  statements  and other  pertinent  data relating to the income and
expense  attributed to the entity have been provided either by management or its
representatives  and accepted  without  further  verification,  except as may be
noted in the report. Therefore, to the extent that such information may be found
at a latter date to have been  inaccurate  or  misrepresented,  we cannot accept
liability for the consequences such inaccuracy or misrepresentation  may have on
our conclusion or the use of our conclusion in actions taken by our client.

While we accept as correct the information  furnished us by others, no guarantee
is expressed or implied herein for the validity of such information,  whether in
written or oral form. In addition,  we assume that the  information  supplied by
management  and others  represented a good faith effort to describe the business
or assets.  We further  assume that,  unless  indicated  otherwise,  there is no
intention of liquidating  any material assets other than in the normal course of
business.

Neither all nor any part of the contents of this report shall be conveyed to the
public through  advertising,  public  relations,  news,  sales,  or other media,
without the written consent and approval of TMG.

We assume that the terms of any leases  currently  in effect will not be altered
by any lessor  contending that the new financial  structure  triggers a material
change in the financial condition of the Company,  unless and to the extent that
these assertions are specifically disclosed to TMG.

We assume  there are no hidden or  unexpected  conditions  of either the real or
personal property utilized by the business  enterprise that would materially and
adversely affect value.

We express no opinion as to: a) the tax  consequences of any  transaction  which
may result;  b) the effect of the tax  consequences of any net value received or
to be received as a result of a transaction;  and, c) the possible impact on the
market price resulting from any need to effect a transaction to pay taxes.

No opinion is expressed for matters that require legal or specialized expertise,
investigation,  or knowledge  beyond that  customarily  employed by  appraisers.
Therefore,  this  report  does not  address  issues  of law,  engineering,  code
conformance,  toxic  contamination  or  discharge,  the  potential  presence  of
hazardous  substances,  etc., unless specifically  identified in the body of the
report.

                                       5

<PAGE>

Unless express written notice of  noncompliance  is delivered and brought to the
attention of TMG, we assume that the Company is in compliance  with all laws and
regulations  of  any  government  or  agency  significant  and  relevant  to its
operations.

TMG has no  responsibility  to update the opinions  stated herein for events and
circumstances   occurring  after  the  date  of  this  letter.   Any  additional
consultation,  attendance  during any  hearings or  depositions,  testimony,  or
additional  research required in reference to the present  engagement beyond the
opinions  expressed  herein,  as of the  date of this  letter,  are  subject  to
specific written arrangements between the parties.

The analyses  may, in part,  be based on  estimates  and  assumptions  which are
inherently  subject to uncertainty and variation,  depending on evolving events.
However,  some assumptions  inevitably will not materialize,  and  unanticipated
events and  circumstances may occur;  therefore,  actual results achieved during
the  period  covered  by our  analyses  will  vary from our  estimates,  and the
variations may be material.

This report contains prospective  financial estimates or opinions that represent
the appraiser's  view of  expectations  at a particular  point in time, but such
information,  estimates  or  opinions  are  not  offered  as  predictions  or as
assurances  that a particular  level of income or profit will be achieved,  that
events will occur, or that a particular price will be offered or accepted.

No consideration  has been given in this opinion to the underlying  market value
of real and  personal  property,  such as  furniture,  fixtures,  machinery  and
equipment located on the premises, unless otherwise identified in this report.

TMG assumes no  responsibility  for economic or physical factors that may effect
the  opinions  herein  stated  which  occur at some  date  after the date of the
opinion.  Forecasts of future  events that  influence  the fairness  opinion are
predicated on the continuation of historic and current trends in the market.

TMG reserves the right to make such  adjustments  to the analyses,  opinions and
conclusions  set forth in this  report as may be required  by  consideration  of
additional  data or more reliable data that may become  available.  We assume no
responsibility  for any financial  reporting  judgments which are  appropriately
those of  management.  Management  accepts  the  responsibility  for any related
financial reporting with respect to the assets or properties encompassed by this
opinion.

                                       6

<PAGE>

Any dispute of claim made with  respect to this  report  shall be  submitted  to
resolution in accordance with the rules of the American Arbitration  Association
for  arbitration,  and the  decision of the  Association  shall be binding.  All
services,  pursuant to this  report,  shall be deemed to be  contracted  for and
rendered  in the county of The Mentor  Group  office  contracted  to perform the
services,  and any arbitration or judicial  proceedings shall take place in that
county.

With regard to any intangible assets (patents,  trademarks, service marks, trade
names, copy rights, trade secrets, etc.) either valued separately and distinctly
from the business or which may contribute to the value for the shareholders, but
not be separately valued as a part of this engagement,  TMG expresses no opinion
regarding,  nor shall it have any  responsibility in connection with, any of the
following matters:

a.   verifying the ownership of the property;

b.   determining  whether the owner of the property has granted to other parties
     any licenses, options or security interests therein, or made any commitment
     to license or assign rights in such property;  or whether such property has
     liens or other encumbrances against it;

c.   the validity or  enforceability  of any patent,  copyright  registration or
     trademark (or service mark) registration;

d.   whether  property  identified  as a trade  secret  is,  in  fact a  legally
     enforceable trade secret, and the scope of protection offered;

e.   the scope of patent  claims;  that is, the range and types of  products  or
     processes covered by any patent;

f.   whether  the  inventor(s)  identified  in any  patent  is  (are)  the  true
     inventor(s), and whether all inventors have been named;

g.   the scope of rights in trademarks, service marks or trade names;

h.   the correct authorship of any copyrighted works;

i.   whether there has been litigation  relating to such  intangible  assets and
     the  results  of  any   adjudication  or  settlement  of  such  litigation,
     particularly with respect to issues of validity,  enforceability  and scope
     of protection afforded.

The liability of TMG and its employees and independent contractors is limited to
the client only and to the amount of the fee actually  received by TMG. There is
no accountability, obligation, or liability to any third party. If the report or
any part thereof is  disseminated  to anyone  other than the client,  the client
shall  make  such  parties  aware of all  limiting  conditions  and  assumptions
affecting  the  appraisal  assignment.  Neither  the  TMG nor  it's  independent
contractors  is in any way  responsible  for any costs  incurred  to discover or
correct any physical,  financial,  and/or legal deficiencies of any type present
in the subject company.

                                       7

<PAGE>
 

                                      II-1
 
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.  Indemnification of Directors and officers.

     The  Delaware  General  Corporation  Law permits the  indemnification  by a
Delaware  corporation  of its  directors,  officers,  employees and other agents
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in  settlement in  connection  with  specified  actions,  suits or  proceedings,
whether civil, criminal,  administrative or investigative (other than derivative
actions which are by or in the right of the  corporation)  if they acted in good
faith and in a manner  they  reasonably  believed to be in or not opposed to the
best interests of the  corporation,  and, with respect to any criminal action or
proceeding,  had no reasonable  cause to believe  their conduct was unlawful.  A
similar standard of care is applicable in the case of derivative actions, except
that  indemnification  only  extends to  expenses  (including  attorneys'  fees)
incurred in connection with defense or settlement of such an action and requires
court approval before there can be any indemnification  where the person seeking
indemnification has been found liable to the corporation.

     As permitted by Delaware law, the Registrant's certificate of incorporation
provides that no director of the  Registrant  will be  personally  liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (a) for any breach of duty of loyalty to the
Registrant or to its  stockholders,  (b) for acts or omissions not in good faith
or that involve intentional  misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General  Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit.

     The  Registrant's  certificate of  incorporation  further provides that the
Registrant must indemnify its directors and executive officers and may indemnify
its other officers and employees and agents to the fullest  extent  permitted by
Delaware law. The Registrant believes that indemnification under its certificate
of  incorporation  covers  negligence  and  gross  negligence  on  the  part  of
indemnified parties.

     The Registrant has entered into indemnification agreements with each of its
directors  and  officers.  These  agreements,  among other  things,  require the
Registrant  to  indemnify  such  directors  and  officers  for certain  expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred by
any such person in any action or  proceeding,  including any action by or in the
right of the Registrant,  arising out of such person's services as a director or
officer of the Registrant, any subsidiary of the Registrant or any other company
or  enterprise  to which the  person  provides  services  at the  request of the
Registrant.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be  permitted  to  directors,  officers or persons  controlling  the
Registrant pursuant to such provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange  Commission such  indemnification  is
against public policy as expressed in such Act and is therefore unenforceable.

Item 21.  Exhibits and Financial Statements.

     See Exhibit Index and Financial Statements schedule.

Item 22.  Undertakings.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


                                      II-1

<PAGE>

     The undersigned Registrant hereby undertakes to:

     1.  File,  during  any  period in which it offers  or sells  securities,  a
post-effective amendment to this registration statement to:

          i.  Include any  prospectus/consent  solicitation  required by section
     10(a)(3) of the Securities Act;

          ii. Reflect in the prospectus/consent solicitation any facts or events
     which,  individually  or together,  represent a  fundamental  change in the
     information  in  the  registration   statement;   and  Notwithstanding  the
     forgoing,  any increase or decrease in volume of securities offered (if the
     total dollar value of  securities  offered  would not exceed that which was
     registered)  and any  deviation  from the low or high end of the  estimated
     maximum offering range may be reflected in the form of prospects filed with
     the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
     the volume  and price  represent  no more than a 20% change in the  maximum
     aggregate offering price set forth in the "Calculation of Registration Fee"
     table in the effective registration statement;

          iii.  Include any  additional or changed  material  information on the
     plan of distribution.

     2.  For  determining   liability  under  the  Securities  Act,  treat  each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the offering of the securities at that time to be the initial bona
fide offering.

     3. File a post-effective  amendment to remove from  registration any of the
securities that remain unsold at the end of the offering.

     4. Respond to requests for  information  that is  incorporated by reference
into the  prospectus/consent  solicitation pursuant to Items 4, 10(b), 11, or 13
of this Form,  within one business day of receipt of such  request,  and to send
the  incorporated  documents by first class mail or other equally  prompt means.
This  includes  information  contained  in  documents  filed  subsequent  to the
effective date of the registration  statement  through the date of responding to
the request.

     5. Supply by means of a post-effective amendment all information concerning
a transaction,  and we being acquired involved therein, that was not the subject
of and included in the registration statement when it became effective.



                                      II-2

<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the Registrant
has duly caused this  Pre-effective  Amendment to  Registration  Statement to be
signed on its behalf by the undersigned,  thereunto duly authorized, in the City
of Mountain View, State of California, on April __, 2001.

                        TRAVELZOO INC.

                        By:
                             ------------------------------------------------
                                               Ralph Bartel
                                Chairman of the Board and Chief Executive
                                                  Officer

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>

                Signature                                   Title                                Date
                ---------                                   -----                                ----

<S>                                           <C>                                             <C>
                                              Chairman of the Board and Chief
                                                Executive Officer                             April , 2001
---------------------------------------

                Ralph Bartel

                                              Controller (Chief Accounting Officer)           April , 2001
---------------------------------------
                  Lisa Su

             SUZANNE L. DURFEE*               Director                                        April , 2001
---------------------------------------
             Suzanne L. Durfee

              DAVID J. EHRLICH*               Director                                        April , 2001
---------------------------------------
              David J. Ehrlich

                SUZANNA MAK*                  Director                                        April , 2001
---------------------------------------
                Suzanna Mak

             DONOVAN NEALE MAY*               Director                                        April , 2001
---------------------------------------
             Donovan Neale-May

              CAROL J. S. ROTH*               Director                                        April , 2001
---------------------------------------
              Carol J. S. Roth

               KELLY M. URSO*                 Director                                        April , 2001
---------------------------------------
               Kelly M. Urso

</TABLE>



                                       *BY:
                                            ------------------------------------
                                                        Ralph Bartel
                                                       Attorney-in-fact




                                      II-3

<PAGE>




                                  EXHIBIT INDEX

    Exhibit
    Number     Description
    ------     -----------

     2.1       Merger Agreement,  dated January 19, 2001, between  Travelzoo.com
               Corporation  and  Travelzoo  Inc.  (Incorporated  by reference to
               Annex A to the Proxy  Statement and  Prospectus  included in this
               Registration Statement)

     3.1       Certificate of Incorporation  of Travelzoo Inc.  (Incorporated by
               reference  to  Annex  B to the  Proxy  Statement  and  Prospectus
               included in this Registration Statement)

     3.2       By-laws of Travelzoo Inc.  (Incorporated  by reference to Annex C
               to  the  Proxy   Statement  and   Prospectus   included  in  this
               Registration Statement)

     5.1       Opinion of Bryan Cave LLP, counsel to Travelzoo Inc.*

     8.1       Opinion of Bryan Cave LLP regarding tax matters*

     10.1      Employment  Agreement,   dated  as  of  April  1,  2000,  between
               Travelzoo Bahamas and Ralph Bartel+

     10.2      Stock Option  Agreement  dated  January 22, 2001,  between  Ralph
               Bartel and Travelzoo Inc.+

     10.3      Letter Agreement,  dated October 10, 1998, between  Travelzoo.com
               Corporation and Silicon Channels Corporation

     10.4      Service Agreement,  dated January 2, 1999, between  Travelzoo.com
               Corporation and Silicon Channels Corporation

     10.5      Form of Director and Officer Indemnification Agreement

     21.1      List of Subsidiaries of Travelzoo.com Corporation+

     21.2      List of Subsidiaries of Travelzoo Inc.+

     23.1      Consent of KPMG LLP

     23.2      Consent of The Mentor Group

     23.3      Consent of Bryan Cave LLP (included in Exhibit 5.1)*

     24.1      Power of Attorney (included on signature page)+

     --------------
     + Previously filed.
     * To be filed by amendment.


                                      II-4




--------------------------------------------------------------------------------


                                                                         Annex A





                          AGREEMENT AND PLAN OF MERGER

                                 BY AND BETWEEN

                           TRAVELZOO.COM CORPORATION,
             a corporation organized under the Bahamas International
                          Business Companies Act 1989,

                                       and

                                 TRAVELZOO INC.,
                        a corporation organized under the
                General and Business Corporations Law of Delaware


                                   DATED AS OF

                                January 19, 2001








--------------------------------------------------------------------------------

<PAGE>
                                Table of Contents
                                                                            Page
                                                                            ----
ARTICLE I. THE MERGER; CLOSING.................................................1
         1.1. The Merger.......................................................1
         1.2. Directors and Officers...........................................2
         1.3. Certificate of Incorporation and Bylaws..........................2
ARTICLE II. EFFECT OF THE MERGERS ON SECURITIES OF TRAVELZOO DELAWARE 
            AND TRAVELZOO BAHAMAS..............................................2
         2.1. Conversion of Common Stock.......................................2
         2.2. Surrender and Payment............................................3
         2.3. Withholding Rights...............................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TRAVELZOO DELAWARE..............4
         3.1. Organization and Good Standing...................................4
         3.2. Capitalization...................................................4
         3.3. Authorization; Binding Agreement.................................4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TRAVELZOO BAHAMAS................5
         4.1. Organization and Good Standing...................................5
         4.2. Capitalization...................................................5
         4.3. Authorization; Binding Agreement.................................5
ARTICLE V.  ADDITIONAL COVENANTS OF TRAVELZOO BAHAMAS..........................6
         5.1. Shareholder Approval.............................................6
         5.2. Reasonable Best Efforts..........................................6
         5.3. Compliance.......................................................6
ARTICLE VI. ADDITIONAL COVENANTS OF TRAVELZOO DELAWARE AND TRAVELZOO
             BAHAMAS...........................................................6
         6.1. Director and Officer Liability...................................6
         6.2. Registration
 Statement; Prospectus/Proxy Statement...............7
         6.3. Tax Treatment....................................................8
ARTICLE VII. CONDITIONS........................................................8
         7.1. Conditions to Each Party's Obligations...........................8
              7.1.1. Shareholder Approvals.....................................8
              7.1.2. No Injunction or Action...................................8
              7.1.3. Governmental Approvals....................................8
              7.1.4. Registration Statement....................................9
         7.2. Conditions to Obligations of Travelzoo Delaware..................9
              7.2.1. Travelzoo Bahamas Representations and Warranties..........9
              7.2.2. Performance by Travelzoo Bahamas..........................9
         7.3. Conditions to Obligations of Travelzoo Bahamas...................9
              7.3.1. Travelzoo Delaware Representations and Warranties.........9
              7.3.2. Performance by Travelzoo Delaware.........................9
ARTICLE VIII. TERMINATION AND ABANDONMENT......................................9
         8.1. Termination......................................................9
         8.2. Effect of Termination...........................................10
ARTICLE IX. MISCELLANEOUS.....................................................11
         9.1. Amendment and Modification......................................11
         9.2. Waiver of Compliance; Consents..................................11
         9.3. Survival of Representations and Warranties......................11
         9.4. Notices.........................................................11

                                       i

<PAGE>

         9.5. Binding Effect; Assignment......................................12
         9.6. Expenses........................................................12
         9.7. Governing Law...................................................13
         9.8. Counterparts....................................................13
         9.9. Entire Agreement................................................13
         9.10. Third Parties..................................................13


                            GLOSSARY OF DEFINED TERMS
                            -------------------------
                                                    
                                                                    Page Where
                                                                    Term Defined



Agreement......................................................................1
Articles of Merger.............................................................2
Closing........................................................................1
Closing Date...................................................................1
Code...........................................................................1
DGCL...........................................................................1
Dissenting Shares..............................................................2
Effective Time.................................................................2
Exchange Agent.................................................................3
Form S-4.......................................................................7
IBCA...........................................................................2
Indemnified Losses.............................................................6
Indemnified Person.............................................................6
Merger.........................................................................1
Merger Consideration...........................................................2
Plan of Merger.................................................................1
Proxy Statement/Prospectus.....................................................7
Surviving Corporation..........................................................1
Travelzoo Bahamas..............................................................1
Travelzoo Bahamas Common Stock.................................................2
Travelzoo Bahamas Shareholders Meeting.........................................6
Travelzoo Delaware.............................................................1
Travelzoo Delaware Common Stock................................................2
Travelzoo Delaware Shareholders Meeting........................................7



                                       ii

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

     This  Agreement  and Plan of Merger (the  "Agreement")  is made and entered
into as of  January  19,  2001,  by and  between  Travelzoo.com  Corporation,  a
corporation  organized under the Bahamas  International  Business  Companies Act
1989 ("Travelzoo  Bahamas"),  and its subsidiary,  Travelzoo Inc., a corporation
organized  under  the  General  and  Business  Corporations  Law of the State of
Delaware, United States of America ("Travelzoo Delaware").

                                    Recitals

     A.  The  respective  Boards of Directors of Travelzoo Bahamas and Travelzoo
Delaware have approved and deem it advisable and in the best  interests of their
respective  companies and  shareholders  to consummate the merger (the "Merger")
provided  for herein,  pursuant to which  Travelzoo  Bahamas will be merged into
Travelzoo Delaware. Upon consummation of the Merger, the current shareholders of
Travelzoo Bahamas will become shareholders of Travelzoo Delaware.

     B.  For federal income tax purposes, it is intended that the Merger qualify
as a  reorganization  described in Section 368(a) of the United States  Internal
Revenue Code of 1986, as amended (the "Code").

     C.  Travelzoo  Delaware  and  Travelzoo  Bahamas  desire  to  make  certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger.

     NOW,   THEREFORE,   in   consideration   of  the  foregoing,   and  of  the
representations,  warranties,  covenants and agreements  contained  herein,  the
parties hereto agree as follows:

                                   ARTICLE I.
                               THE MERGER; CLOSING

     1.1. The  Merger.Pursuant  to the plan of merger, in substantially the form
attached hereto as Exhibit A (the "Plan of Merger"),  upon the terms and subject
to the conditions set forth in this Agreement and in the Plan of Merger:

     (a) Travelzoo  Bahamas shall be merged with and into Travelzoo  Delaware in
accordance with the applicable  provisions of the Delaware  General  Corporation
Law (the "DGCL").  Travelzoo  Delaware shall be the surviving  corporation  (the
"Surviving  Corporation")  in  the  Merger  and  shall  continue  its  corporate
existence under the laws of the State of Delaware.  The effects and consequences
of the Merger shall be as set forth in the Plan of Merger.

     (b) Subject to the terms and conditions of this  Agreement,  the closing of
the Merger  (the  "Closing")  shall take place (a) at the  offices of  Travelzoo
Bahamas, at 800 West El Camino Real, Suite 180, Mountain View, California 94040,
at 10:00 a.m.  local time, on the fifth  Business Day following the day on which
the last to be fulfilled or waived of the  conditions  set forth in Article VIII
(excluding conditions that, by their terms cannot be satisfied until the Closing
Date,  but subject to the  fulfillment  or waiver of such  conditions)  shall be
fulfilled or waived in  accordance  herewith or (b) at such other time,  date or
place as Travelzoo  Delaware and Travelzoo  Bahamas may agree. The date on which
the  Closing  occurs  is  hereinafter   referred  to  as  the  "Closing   Date."

                                       1

<PAGE>

     (c) As soon as  practicable  following  the Closing,  the parties shall (i)
file  articles of merger with  respect to each of the Merger (the  "Articles  of
Merger") in such form as is required by and executed in accordance with the DGCL
and (ii) make all other  filings or  recordings  required  under the laws of the
Commonwealth of the Bahamas.  The Merger shall become effective at such time and
date  (the  "Effective  Time")  which is the date and time of the  filing of the
Articles of Merger with respect to the Merger in the office of the  Secretary of
State of  Delaware  (or such  other  date and time as may be  specified  in such
certificate as may be permitted by the DGCL).  

     1.2. Directors and  Officers.  The  directors  and  officers  of  Travelzoo
Delaware  immediately prior to the Effective Time shall remain the directors and
officers of the Surviving  Corporation  as of the Effective Time and until their
successors are duly appointed or elected in accordance with the laws of Delaware
or until their earlier death, resignation or removal.

     1.3. Certificate of Incorporation and Bylaws. The articles of incorporation
and bylaws of Travelzoo  Delaware  immediately prior to the Effective Time shall
be the articles of incorporation and bylaws of the surviving  corporation of the
Merger as of the Effective Time.

                                   ARTICLE II.
          EFFECT OF THE MERGERS ON SECURITIES OF TRAVELZOO DELAWARE AND
                               TRAVELZOO BAHAMAS

     2.1. Conversion of Common Stock.

     (a)  Subject to the provisions of this  Agreement, at  the  Effective  Time
each issued and outstanding share of common stock, par value U.S.$.01 per share,
and each outstanding share of common stock, no par value per share, of Travelzoo
Bahamas (the  "Travelzoo  Bahamas  Common  Stock"),  shall be converted into the
right to receive one (1) share of common stock, par value U.S.$.01 per share, of
Travelzoo Delaware (the "Travelzoo Delaware Common Stock"), subject to the terms
and conditions set forth herein (the "Merger Consideration").

     (b) As a result of the  Merger  and  without  any action on the part of the
holder  thereof,  at the Effective  Time all shares of Travelzoo  Bahamas Common
Stock shall cease to be outstanding  and shall be canceled and retired and shall
cease to exist,  and each holder of shares of  Travelzoo  Bahamas  Common  Stock
shall  thereafter  cease to have any  rights  with  respect  to such  shares  of
Travelzoo Bahamas Common Stock,  except the right to receive,  without interest,
the applicable Merger  Consideration  upon the delivery to Travelzoo Delaware of
the  information  required  pursuant to Section  2.2 hereof.  To the extent that
dissenting  shareholders'  rights are available  under Section 81 of The Bahamas
International  Business Companies Act 1989 (the "IBCA"), and the shareholders of
Travelzoo Bahamas properly take all actions necessary under the IBCA to exercise
and perfect  such rights in respect of their shares (the  "Dissenting  Shares"),
such  Dissenting  Shares shall not be converted into the right to receive Merger
Consideration at or after the Effective Time unless and until the holder of such
shares  subsequently  fails to or becomes  ineligible  to exercise  such rights.
Travelzoo  Bahamas shall give prompt notice to Travelzoo  Delaware of any demand
received by  Travelzoo  Bahamas from a  dissenting  shareholder  pursuant to the
IBCA.

                                       2

<PAGE>

     (c) Notwithstanding anything contained in this Section to the contrary, any
shares of Travelzoo  Bahamas Common Stock issued and held in Travelzoo  Bahamas'
treasury immediately prior to the Effective Time shall, by virtue of the Merger,
cease to be outstanding and shall be canceled and retired without payment of any
consideration  therefor  and will not be  deemed  outstanding  for  purposes  of
Section 2.2.

     2.2. Surrender and Payment.

     (a)  Prior to the Effective Time, Travelzoo  Delaware and Travelzoo Bahamas
shall  appoint an agent (the  "Exchange  Agent")  for the purpose of issuing the
Merger  Consideration in exchange for the outstanding  shares of Common Stock of
Travelzoo  Bahamas.  Prior to or promptly  after the Effective  Time,  Travelzoo
Bahamas  will send,  or will cause the  Exchange  Agent to send,  to each record
holder of shares of Travelzoo  Bahamas Common Stock  instructions for exercising
such holder's right to receive the Merger  Consideration,  which shall include a
requirement that the shareholder send a communication to Travelzoo Delaware,  by
electronic mail, Internet  communication,  written communication or other method
to be  specified  in such  instructions,  which  shall (i)  include the name and
country of residence of the  shareholder,  the  shareholder's  registered  email
address and the  shareholder's  password (ii) provide a mailing  address for the
shareholder  and (iii)  indicate  whether such  shareholder  consents to receive
communications  from Travelzoo  Delaware,  including notices,  reports and other
communications  required  under the DGCL and under the rules and  regulations of
the  United   States   Securities   and  Exchange   Commission,   by  electronic
transmission.  If the  shareholder no longer has access to his or her registered
email address, such shareholder will be required to update his or her registered
email address by making a written request to Travelzoo  Delaware,  by electronic
mail,  Internet  communication,  written  communication  or other  method  to be
specified  in  the   exercise   instructions,   which  shall   include  (x)  the
shareholder's  name,  (y) a copy of the  shareholder's  passport  or other photo
identification,  and (z)  either  the  shareholder's  current  registered  email
address or the serial  numbers of the  shareholder's  Travelzoo  Bahamas  Common
Stock issued to the  shareholder  when he or she received the Travelzoo  Bahamas
Common Stock.

     (b) Upon  delivery  to the  Exchange  Agent of a  notice  substantially  in
accordance with the instructions to be provided in accordance with paragraph (a)
above,   the  Exchange  Agent  shall  cause  to  be  issued  to  the  applicable
shareholders,  by book entry,  the shares of Common Stock of Travelzoo  Delaware
representing the Merger  Consideration  which they shall be entitled  hereunder,
and shall advise the shareholder of such issuance by electronic communication or
other method approved by Travelzoo Delaware.

     (c) Any holder of Common Stock of Travelzoo  Bahamas who has not  exchanged
such  holder's  shares  for the Merger  Consideration  in  accordance  with this
Section 2.2 within six months after the  Effective  Time shall  thereafter  look
only to Travelzoo Delaware for issuance of the Merger  Consideration,  and shall
not be entitled to any  dividends  or  distributions,  or any other  rights of a
holder of the Common Stock of Travelzoo  Delaware,  for any period prior to such
issuance,  and shall in any  event  not be  entitled  to any  interest  or other
consideration  in respect of the delay in  issuance to such  shareholder  of the
Merger  Consideration.  Travelzoo  Delaware shall not be liable to any Travelzoo
Bahamas Holder for any amounts paid or shares transferred to any public official
pursuant to applicable  abandoned property,  escheat or similar laws. Any rights
to receive the Merger Consideration remaining unclaimed by the former holders of

                                       3

<PAGE>

the Common Stock of  Travelzoo  Bahamas two years after the  Effective  Time (or
such  earlier  date,  immediately  prior to such  time  when the  amounts  would
otherwise escheat to or become property of any Governmental Authority) shall, to
the extent permitted by applicable law, be cancelled.

     2.3. Withholding Rights. Travelzoo Delaware shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this
Article 2 such amounts as it is required to deduct and withhold  with respect to
the making of such  payment  under any  provision  of federal,  state,  local or
foreign tax law. If Travelzoo Delaware so withholds amounts,  such amounts shall
be  treated  for all  purposes  of this  Agreement  as  having  been paid to the
Travelzoo  Bahamas  Holder in  respect  of which  Travelzoo  Delaware  made such
deduction and withholding.


                                  ARTICLE III.
              REPRESENTATIONS AND WARRANTIES OF TRAVELZOO DELAWARE

     Travelzoo  Delaware  represents and warrants to Travelzoo  Bahamas that the
statements  contained  in this  Article  III are  true  and  correct  except  as
otherwise expressly contemplated by this Agreement.

     3.1. Organization and Good  Standing.  Travelzoo  Delaware is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware.

     3.2. Capitalization. As of the date hereof, the authorized capital stock of
Travelzoo  Delaware consists of 40,000,000  shares of Travelzoo  Delaware Common
Stock,  par value  $.01 per share and  5,000,000  shares of  Travelzoo  Delaware
preferred stock, par value $.01 per share. Of such authorized  shares, as of the
date hereof,  there are 100 shares of Travelzoo Delaware Common Stock issued and
outstanding,  and no shares of  Travelzoo  Delaware  Common Stock are issued and
held in the treasury of Travelzoo Delaware,  and no shares of Travelzoo Delaware
preferred  stock are issued or  outstanding.  As of the date hereof there are no
options to purchase Travelzoo  Delaware Common Stock  outstanding.  There are no
other outstanding  rights,  subscriptions,  warrants,  puts, calls,  unsatisfied
preemptive  rights,  options or other  agreements of any kind relating to any of
the authorized but not issued or unauthorized shares of the capital stock or any
other  security  of  Travelzoo  Delaware,  and there is no other  authorized  or
outstanding  security of any kind  convertible into or exchangeable for any such
capital stock or other security.

     3.3. Authorization; Binding Agreement. Travelzoo Delaware has all requisite
corporate  power and  authority  to execute and deliver  this  Agreement  and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Travelzoo Delaware's Board of Directors, and
the Merger has been approved by the holder of all  outstanding  shares of Common
Stock of Travelzoo Delaware in accordance with the requirements of the DGCL, and
no other corporate  proceedings on the part of Travelzoo  Delaware are necessary
to authorize the execution and delivery of this  Agreement or to consummate  the
transactions  contemplated  hereby.  This  Agreement  has been duly and  validly
executed and delivered by Travelzoo  Delaware and constitutes  the legal,  valid
and binding  obligation of Travelzoo  Delaware,  enforceable  against  Travelzoo
Delaware in accordance with its terms,  except to the extent that enforceability

                                       4

<PAGE>

thereof may be limited by applicable bankruptcy,  insolvency,  reorganization or
other similar laws affecting the enforcement of creditors'  rights generally and
by principles of equity.

                                   ARTICLE IV.
               REPRESENTATIONS AND WARRANTIES OF TRAVELZOO BAHAMAS
 
     Travelzoo  Bahamas  represents and warrants to Travelzoo  Delaware that the
statements contained in this Article IV are true and correct.

     4.1. Organization  and  Good Standing.  Travelzoo  Bahamas is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
Commonwealth of the Bahamas.

     4.2. Capitalization.  As  of the date hereof, the authorized capital stock 
of Travelzoo  Bahamas consists of 20,000,000  shares of Travelzoo Bahamas Common
Stock. Of such authorized  shares,  as of the date hereof,  there are issued and
outstanding no shares of Travelzoo  Bahamas Common Stock,  11,295,874  shares of
Travelzoo  Bahamas Common Stock are issued and held in the treasury of Travelzoo
Bahamas,  and  no  other  capital  stock  of  Travelzoo  Bahamas  is  issued  or
outstanding. All issued and outstanding shares of Travelzoo Bahamas Common Stock
are  duly   authorized,   validly  issued  and   outstanding,   fully  paid  and
nonassessable.  There are no outstanding rights, subscriptions,  warrants, puts,
calls,  unsatisfied  preemptive rights,  options or other agreements of any kind
relating to any of the authorized but not issued or  unauthorized  shares of the
capital  stock or any  other  security  of  Travelzoo  Bahamas,  and there is no
authorized or outstanding  security of any kind convertible into or exchangeable
for any such capital stock or other security.

     4.3. Authorization;  Binding Agreement. Travelzoo Bahamas has all requisite
corporate  power and  authority  to execute and deliver  this  Agreement  and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Travelzoo  Bahamas' Board of Directors,  and
no other corporate proceedings on the part of Travelzoo Bahamas are necessary to
authorize  the execution  and delivery of this  Agreement or to  consummate  the
transactions  contemplated  hereby (other than the approval and adoption of this
Agreement,  the Plan of Merger and the transactions  contemplated  hereby by the
shareholders of Travelzoo Bahamas in accordance with the IBCA and the Memorandum
of Association and Articles of Association of Travelzoo Bahamas). This Agreement
has been duly and  validly  executed  and  delivered  by  Travelzoo  Bahamas and
constitutes  the legal,  valid and  binding  obligation  of  Travelzoo  Bahamas,
enforceable  against Travelzoo  Bahamas in accordance with its terms,  except to
the extent that enforceability  thereof may be limited by applicable bankruptcy,
insolvency,  reorganization  or other similar laws affecting the  enforcement of
creditors' rights generally and by principles of equity.

                                       5

<PAGE>


                                   ARTICLE V.
                    ADDITIONAL COVENANTS OF TRAVELZOO BAHAMAS

     Travelzoo Bahamas covenants and agrees as follows:

     5.1. Shareholder Approval.  As soon as practicable,  Travelzoo Bahamas will
take all steps  necessary  to duly  call,  give  notice of,  convene  and hold a
meeting of its shareholders (the "Travelzoo Bahamas  Shareholders  Meeting") for
the purpose of  approving  this  Agreement  and the Merger and the  transactions
contemplated  hereby.  Except as otherwise  contemplated  by this  Agreement and
subject to the  exercise of their  fiduciary  duties,  the Board of Directors of
Travelzoo  Bahamas will recommend to the shareholders of Travelzoo  Bahamas that
they approve the Merger.

     5.2.  Reasonable Best  Efforts.Subject  to the terms and conditions  herein
provided,  Travelzoo  Bahamas agrees to use its reasonable best efforts to take,
or cause to be taken,  all actions,  and to do, or cause to be done,  all things
necessary,  proper or advisable to consummate  and make effective as promptly as
practicable  the  Merger  and  the  other  transactions   contemplated  by  this
Agreement.  Upon the terms  and  subject  to the  conditions  hereof,  Travelzoo
Bahamas agrees to use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things  necessary to satisfy the
other conditions of the Closing set forth herein.

     5.3.   Compliance.   In  consummating   the  Merger  and  the  transactions
contemplated  hereby,  Travelzoo Bahamas shall comply, in all material respects,
with all applicable Laws.

                                   ARTICLE VI.
        ADDITIONAL COVENANTS OF TRAVELZOO DELAWARE AND TRAVELZOO BAHAMAS

     Travelzoo  Delaware and Travelzoo Bahamas covenant and agree that they will
take the  necessary  actions  prior  to the  Effective  Time to cause  Travelzoo
Delaware to do the following:

     6.1. Director and Officer Liability.

     (a) The Surviving Corporation shall indemnify and hold harmless and advance
expenses to the present and former officers and directors of Travelzoo  Delaware
and Travelzoo  Bahamas,  and each person who prior to the Effective Time becomes
an officer or  director of  Travelzoo  Delaware or  Travelzoo  Bahamas  (each an
"Indemnified  Person"),  in  respect  of acts  or  omissions  by  them in  their
capacities  as such  occurring  at or prior to the  Effective  Time  (including,
without  limitation,  for acts or omissions  occurring in  connection  with this
Agreement and the consummation of the Merger) to the fullest extent  permissible
under applicable law (collectively,  the "Indemnified Losses"). Without limiting
the generality of the foregoing, the Indemnified Losses shall include reasonable
costs of prosecuting a claim under this Section. The Surviving Corporation shall
periodically  advance or reimburse  each  Indemnified  Person for all reasonable
fees and expenses of counsel  constituting  Indemnified  Losses as such fees and
expenses are  incurred;  provided  that such  Indemnified  Person shall agree to
promptly repay to the Surviving Corporation the amount of any such reimbursement
if it shall be judicially determined by judgment or order not subject to further
appeal or discretionary  review that such Indemnified  Person is not entitled to
be indemnified by the Surviving Corporation in connection with such matter.

                                       6

<PAGE>

     (b) For at least  three  years  after the  Effective  Time,  the  Surviving
Corporation  shall  provide  officers'  and  directors'  liability  insurance in
respect of acts or omissions  occurring prior to the Effective Time  (including,
without  limitation,  for acts or omissions  occurring in  connection  with this
Agreement and the  consummation  of the Merger)  covering each such  Indemnified
Person  currently  covered by  Travelzoo  Delaware's  officers'  and  directors'
liability  insurance policy (with respect to officers and directors of Travelzoo
Delaware) or by Travelzoo Bahamas' officers' and directors'  liability insurance
policy (with  respect to officers and  directors of Travelzoo  Bahamas) on terms
with  respect to coverage and amount  (including  with respect to the payment of
attorney's  fees) no less  favorable  than those of such policy in effect on the
date hereof.

     (c) The  rights of each  Indemnified  Person and his or her heirs and legal
representatives  under this  Section 7.1 shall be in addition to any rights such
Person may have  under the  articles  of  incorporation  or bylaws of  Travelzoo
Delaware (with respect to the Travelzoo  Delaware officers and directors) or the
Memorandum of Association or Articles of Association of Travelzoo  Bahamas (with
respect  to  the  Travelzoo  Bahamas  officers  and  directors),  any  agreement
providing for indemnification,  or under the laws of the State of Delaware,  the
IBCA or any other applicable  Laws.  These rights shall survive  consummation of
the Merger and are  intended  to  benefit,  and shall be  enforceable  by,  each
Indemnified  Person.  

     6.2. Registration Statement; Prospectus/Proxy Statement.

     Travelzoo  Delaware and  Travelzoo  Bahamas  shall  cooperate  and promptly
prepare and Travelzoo  Delaware shall file with the SEC as soon as practicable a
Registration  Statement  on Form S-4 or other  applicable  form (the "Form S-4")
under the  Securities  Act,  with  respect to  Travelzoo  Delaware  Common Stock
issuable in the Merger,  a portion of which  Registration  Statement  shall also
serve as the joint proxy  statement with respect to the meeting of the Travelzoo
Delaware  shareholders  held for the purpose of approving this Agreement and the
Merger  and  the  transactions  contemplated  hereby  (the  "Travelzoo  Delaware
Shareholders  Meeting") and Travelzoo Bahamas  Shareholders  Meeting (the "Proxy
Statement/Prospectus").   The   respective   parties   will   cause   the  Proxy
Statement/Prospectus  and the  Form  S-4 to  comply  as to form in all  material
respects with the applicable  provisions of the Securities Act, the Exchange Act
and the rules and  regulations  thereunder.  Travelzoo  Delaware  and  Travelzoo
Bahamas will  cooperate  to have the Form S-4  declared  effective by the SEC as
promptly  as  practicable  and to keep  the  Form  S-4  effective  as long as is
necessary  to  consummate  the  Merger.  Travelzoo  Delaware  shall use its best
efforts to obtain,  prior to the  effective  date of the Form S-4, all necessary
state  securities  law or "Blue Sky" permits or approvals  required to carry out
the  transactions  contemplated  by this  Agreement  and will  pay all  expenses
incident   thereto.   Travelzoo   Delaware   shall   ensure   that   the   Proxy
Statement/Prospectus  and each amendment or supplement  thereto will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated  therein or necessary to make the statements  therein,  in light of
the circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue  statement
of a material  fact or omission to state a material  fact was made by  Travelzoo
Delaware in reliance upon and in conformity with written information  concerning
Travelzoo  Bahamas   furnished  to  Travelzoo   Delaware  by  Travelzoo  Bahamas
specifically for use in the Proxy  Statement/Prospectus.  Travelzoo Delaware and
Travelzoo  Bahamas  agree  that the  written  information  provided  by them for

                                       7

<PAGE>

inclusion in the Proxy  Statement/Prospectus  and each  amendment or  supplement
thereto will not include an untrue statement of a material fact or omit to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

     6.3. Tax Treatment. The Surviving Corporation shall use its reasonable best
efforts to cause the  Merger to qualify as either,  and will not take any action
which to its knowledge  could  reasonably be expected to prevent the Merger from
qualifying as either, a reorganization under Section 368(a) of the Code.

                                  ARTICLE VII.
                                   CONDITIONS

     7.1.Conditions to Each Party's Obligations.  The respective  obligations of
each party to effect the Merger shall be subject to the fulfillment or waiver on
or prior to the Closing Date of the following conditions:
 
                 7.1.1.   Shareholder  Approvals.  The  Merger  shall  have been
         approved  at or prior to the Effective  Time by the  requisite  vote of
         the shareholders of  Travelzoo  Bahamas in accordance with the IBCA and
         Travelzoo Bahamas' Memorandum of Association.

                  7.1.2.  No  Injunction  or Action.  No order,  statute,  rule,
         regulation, executive order, stay, decree, judgment or injunction shall
         have been  enacted,  entered,  promulgated  or enforced by any court or
         other   Governmental   Authority,   which  prohibits  or  prevents  the
         consummation of the Merger and which has not been vacated, dismissed or
         withdrawn by the  Effective  Time.  Travelzoo  Delaware  and  Travelzoo
         Bahamas  shall use their  reasonable  best  efforts  to have any of the
         foregoing vacated,  dismissed or withdrawn on or prior to the Effective
         Time.

                  7.1.3.     Governmental   Approvals.   All  Consents  of   any
         Governmental Authority required for the consummation of the  Merger and
         the  transactions  contemplated  by  this  Agreement  shall  have  been
         obtained.

                  7.1.4.  Registration  Statement.  The  Registration  Statement
         shall have been  declared  effective and no stop order  suspending  the
         effectiveness of the Registration  Statement shall have been issued and
         no action,  suit,  proceeding or  investigation  for that purpose shall
         have been initiated or threatened by any Governmental Authority.

     7.2. Conditions to  Obligations  of Travelzoo  Delaware.  The obligation of
Travelzoo  Delaware to effect the Merger shall be subject to the  fulfillment on
or prior to the Closing Date of the following additional  conditions,  which may
be waived by Travelzoo Delaware:

                  7.2.1.     Travelzoo  Bahamas Representations and  Warranties.
         As of the Closing Date, none of  the  representations  or warranties of
         Travelzoo  Bahamas  contained  in  this  Agreement  shall be  untrue or
         incorrect in any material respect as of the Closing Date.

                  7.2.2.  Performance by Travelzoo  Bahamas.  Travelzoo  Bahamas
         shall  have  performed  and  complied  with  all of the  covenants  and
         agreements  in all  material  respects  and  satisfied  in all material
         respects  all  of the  conditions  required  by  this  Agreement  to be

                                       8

<PAGE>

         performed or complied  with or  satisfied  by  Travelzoo  Bahamas on or
         prior to the Closing Date.

     7.3. Conditions to Obligations  of Travelzoo  Bahamas.  The  obligations of
Travelzoo Bahamas to effect the Travelzoo Bahamas Merger shall be subject to the
fulfillment  on or  prior  to  the  Closing  Date  of the  following  additional
conditions, which may be waived by Travelzoo Bahamas:

                  7.3.1.  Travelzoo  Delaware  Representations  and  Warranties.
         As of the  Closing Date, none of the  representations  or warranties of
         Travelzoo  Delaware  contained  in  this  Agreement  shall be untrue or
         incorrect in any material respect as of the Closing Date.

                  7.3.2.  Performance by Travelzoo Delaware.  Travelzoo Delaware
         shall have performed and complied with all the covenants and agreements
         in all material respects and satisfied in all material respects all the
         conditions  required by this Agreement to be performed or complied with
         or satisfied by Travelzoo Delaware on or prior to the Closing Date.


                                  ARTICLE VIII.
                           TERMINATION AND ABANDONMENT

     8.1. Termination. This Agreement may be terminated at any time prior to the
Effective  Time,  whether  before or after  approval of this  Agreement  and the
Merger  by the  shareholders  of  Travelzoo  Delaware  and the  shareholders  of
Travelzoo Bahamas:

     (a)  by mutual consent of Travelzoo Delaware and Travelzoo Bahamas;

     (b)  (1) by  Travelzoo  Delaware (provided  that Travelzoo  Delaware is not
then in  material  breach of any  representation,  warranty,  covenant  or other
agreement  contained herein), if there has been a breach by Travelzoo Bahamas of
any of its  representations,  warranties,  covenants or agreements  contained in
this  Agreement,  or any such  representation  and  warranty  shall have  become
untrue, and such breach or condition has not been cured within 30 days following
receipt by Travelzoo Bahamas of written notice of such breach;  (2) by Travelzoo
Bahamas  (provided that Travelzoo  Bahamas is not then in material breach of any
representation,  warranty,  covenant or other agreement  contained  herein),  if
there has been a breach by  Travelzoo  Delaware  of any of its  representations,
warranties,  covenants or agreements  contained in this  Agreement,  or any such
representation  and  warranty  shall  have  become  untrue,  and such  breach or
condition  has not been cured  within 30 days  following  receipt  by  Travelzoo
Delaware of written notice of such breach;

     (c) by either  Travelzoo  Bahamas  or  Travelzoo  Delaware  if any  decree,
permanent injunction,  judgment, order or other action by any court of competent
jurisdiction,  any  arbitrator  or  any  Governmental  Authority  preventing  or
prohibiting   consummation   of  the  Merger   shall  have   become   final  and
nonappealable;

     (d) by either Travelzoo  Bahamas or Travelzoo  Delaware if the Merger shall
not have been consummated before May 1, 2001 unless the failure of the Effective
Time to occur by such date shall be due to the  failure of the party  seeking to
terminate  this  Agreement  to perform or observe in all  material  respects the
covenants and agreements of such party set forth herein;

                                       9

<PAGE>


     (e) by either Travelzoo  Bahamas or Travelzoo  Delaware if the transactions
contemplated  by this  Agreement  shall fail to receive the  requisite  vote for
approval  and  adoption (1) by the  shareholders  of  Travelzoo  Delaware at the
Travelzoo  Delaware  Shareholders  Meeting or any  adjournment  or  postponement
thereof or (2) by the shareholders of Travelzoo Bahamas at the Travelzoo Bahamas
Shareholders Meeting or any adjournment or postponement  thereof;  provided that
the right to terminate  this  Agreement  under this Section  9.1(e) shall not be
available  to any party  whose  failure to  fulfill  any  obligation  under this
Agreement has been the cause of, or resulted in, the failure of such approval to
have been obtained;

     (f) By either  Travelzoo  Delaware or  Travelzoo  Bahamas,  if the Board of
Directors of the other shall have withdrawn,  or modified or changed in a manner
adverse to the terminating  party its approval or  recommendation  of the Merger
and/or the Travelzoo Delaware or Travelzoo Bahamas  Proposals,  each as the case
may be; or

     (g) by either  Travelzoo  Bahamas  or  Travelzoo  Delaware  if the Board of
Directors of either company  determines,  in its discretion,  that the number of
shareholders  requesting paper delivery (as opposed or in addition to electronic
delivery)  of the Proxy  Statement/Prospectus  impairs  the  feasibility  of the
consummation of the Merger.

     8.2.  Effect  of  Termination.  In the  event  of the  termination  of this
Agreement by either Travelzoo  Delaware or Travelzoo Bahamas pursuant to Section
8.1, this Agreement  shall  forthwith  become void,  there shall be no liability
under this Agreement on the part of Travelzoo Bahamas or Travelzoo Delaware.

                                   ARTICLE IX.
                                  MISCELLANEOUS

     9.1. Amendment and Modification. To the extent permitted by applicable Law,
this  Agreement  may be  amended,  modified  or  supplemented  only by a written
agreement  among  Travelzoo  Delaware and Travelzoo  Bahamas,  whether before or
after approval of this Agreement and the Plan of Merger by the  shareholders  of
Travelzoo Delaware and Travelzoo Bahamas,  except that following approval by the
shareholders of either Travelzoo Delaware or Travelzoo  Bahamas,  there shall be
no  amendment  or change to the  provisions  hereof  with  respect to the Merger
Consideration  without further approval by such approving  shareholders,  and no
other  amendment  shall be made which by law requires  further  approval by such
shareholders without such further approval.

     9.2. Waiver of Compliance;  Consents.  Any failure of Travelzoo Delaware on
the one hand,  or  Travelzoo  Bahamas  on the  other  hand,  to comply  with any
obligation,  covenant,  agreement or condition herein may be waived by Travelzoo
Bahamas on the one hand,  or  Travelzoo  Delaware on the other  hand,  only by a
written  instrument signed by the party granting such waiver, but such waiver or
failure  to  insist  upon  strict  compliance  with such  obligation,  covenant,
agreement  or  condition  shall not  operate  as a waiver of, or  estoppel  with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in  writing  in a manner  consistent  with  the  requirements  for a  waiver  of
compliance as set forth in this Section.

                                       10

<PAGE>

     9.3.   Survival  of   Representations   and   Warranties.   The  respective
representations  and  warranties  of Travelzoo  Delaware and  Travelzoo  Bahamas
contained herein or in any certificates or other documents delivered prior to or
at the Closing  shall  survive the  execution  and  delivery of this  Agreement,
notwithstanding  any  investigation  made or  information  obtained by the other
party, but shall terminate at the Effective Time.

     9.4. Notices.  All notices and other  communications  hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile, receipt confirmed, or on the next business day when sent by overnight
courier or on the second  succeeding  business  day when sent by  registered  or
certified mail (postage  prepaid,  return  receipt  requested) to the respective
parties at the  following  addresses  (or at such other  address  for a party as
shall be specified by like notice): 

                (i)  if to Travelzoo Delaware,  to: 

                     Travelzoo Inc.  
                     800 West El Camino Real,  Suite 180
                     Mountain View,  CA 94040
                     Attention: Chairman of the Board, Chief Executive  
                                Officer and President 
                     Fax  650-969-4295

                with a copy to:

                     Bryan Cave LLP
                     211 North Broadway, Suite 3600
                     St. Louis, Missouri 63102-2750
                     Attention: Denis P. McCusker, Esq.
                     Telecopy:  (314) 259-2020

                and

                (ii) if to Travelzoo Bahamas, to:

                     Travelzoo.com Corporation
                     800 West El Camino Real, Suite 180
                     Mountain View, CA 94040
                     Attention:  Chairman of the Board, Chief Executive
                                 Officer and President
                     Fax 650-969-4295 

                with a copy to:

                     Bryan Cave LLP
                     211 North Broadway, Suite 3600
                     St. Louis, Missouri 63102-2750
                     Attention:  Denis P. McCusker, Esq.
                     Telecopy:   (314) 259-2020

                                       11

<PAGE>


     9.5.  Binding Effect; Assignment.  This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties  hereto and
their respective  successors and permitted  assigns.  Neither this Agreement nor
any of the rights,  interests or obligations  hereunder shall be assigned by any
of the parties  hereto prior to the  Effective  Time  without the prior  written
consent  of the other  parties  hereto.  

     9.6.  Expenses.  All costs and expenses  incurred in  connection  with this
Agreement and the  transactions  contemplated  hereby shall be paid by the party
incurring  such costs or  expenses,  provided,  however,  that each of Travelzoo
Bahamas and  Travelzoo  Delaware  shall pay one-half of the expenses  related to
printing,  filing and  mailing the  registration  statement  and  related  prosy
statement for the Merger, the fees and expenses of Bryan Cave LLP and all filing
fees  incurred in  connection  with the Merger or the issuance of the  Travelzoo
Delaware Common Stock.

     9.7.  Governing Law. This  Agreement  shall be deemed to be made in, and in
all respects shall be  interpreted,  construed and governed by and in accordance
with the internal laws of, the State of Delaware, and the parties hereto consent
to the  jurisdiction  of the courts of or in the State of Delaware in connection
with any dispute or controversy relating to or arising out of this Agreement and
the transactions contemplated hereby.

     9.8. Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

     9.9. Entire Agreement.  This Agreement and the other agreements,  documents
or instruments  referred to herein or executed in connection herewith embody the
entire  agreement  and  understanding  of the  parties  hereto in respect of the
subject  matter  contained   herein.   There  are  no  restrictions,   promises,
representations,  warranties,  covenants,  or  undertakings,  other  than  those
expressly set forth or referred to herein.  This Agreement  supersedes all prior
agreements  and the  understandings  between  the parties  with  respect to such
subject matter.

     9.10. Third  Parties.  Nothing  contained  in   this  Agreement  or in  any
instrument or document executed by any party in connection with the transactions
contemplated  hereby  shall  create  any  rights  in,  or be deemed to have been
executed  for the benefit of, any person that is not a party  hereto or thereto,
or, a successor or permitted assign of such a party; provided, however, that the
parties  hereto  specifically  acknowledge  that the  provisions  of Section 6.1
above,  are  intended to be for the benefit  of, and shall  enforceable  by, the
officers and directors of Travelzoo Delaware and of Travelzoo Bahamas and/or the
Travelzoo   Bahamas   Subsidiaries   affected   thereby   and  their  heirs  and
representatives.

                  [Remainder of Page Intentionally Left Blank]

  


                                     12


<PAGE>


     IN WITNESS WHEREOF,  Travelzoo  Delaware and Travelzoo  Bahamas have caused
this Agreement to be signed and delivered by their  respective  duly  authorized
officers as of the date first above written.

                                             TRAVELZOO.COM CORPORATION

                                             By:
                                                --------------------------------
                                                 Name:  Ralph Bartel
                                                 Title:  Chief Executive Officer


                                             TRAVELZOO INC.

                                             By:
                                                --------------------------------
                                                 Name:  Ralph Bartel
                                                 Title:  Chief Executive Officer










                                       13


                                                                         Annex B

                                                                         -------
                          CERTIFICATE OF INCORPORATION
                                       OF
                                 TRAVELZOO INC.

     FIRST:   The name of the Corporation is TRAVELZOO INC.

     SECOND:  Its registered  office in the State of Delaware is located at 2711
Centerville Road, Suite 400, Wilmington,  New Castle County, Delaware 19808. The
name and address of its registered agent is Corporation  Service  Company,  2711
Centerville Road, Suite 400, Wilmington, Delaware 19808.

     THIRD:  The  purpose of the  Corporation  is to engage in any lawful act or
activity for which  corporations may be organized under the General  Corporation
Law of the State of Delaware ("GCL").

     FOURTH:

     A.  Classes and Number of Shares.

         The total  number of shares of stock which the  Corporation  shall have
authority  to issue is  40,000,000  shares of  common  stock of the par value of
$0.01  each,  amounting  in the  aggregate  to  Four  Hundred  Thousand  Dollars
($400,000) ("Common Stock"),  and 5,000,000 shares of preferred stock of the par
value of $0.01 each, amounting in the aggregate to $50,000 ("Preferred Stock").

     B.  Preemptive Rights.

         Except as may otherwise be provided by agreement among  stockholders of
the Corporation,  no stockholder of any class of stock of the Corporation  shall
have any  preemptive  right to  acquire  any  additional  shares of stock of the
Corporation
  of any  class  or  series  or any  security  convertible  into,  or
exercisable or exchangeable for, such stock.

     C.  Terms of Common Stock.

         The  voting  powers and  relative,  participating,  optional  and other
special  rights of the Common Stock,  and the  qualifications,  limitations  and
restrictions thereof, are as follows:

                  1. Voting  Rights and  Powers.  Except as provided in the GCL,
the holders of shares of the Common Stock shall vote  together as a single class
(with the holders of all series of  Preferred  Stock  entitled to vote  together
with the holders of the shares of Common  Stock) on all matters as to which such
holders are entitled to vote.

                  2. Dividend Rights. No cash dividends may be declared and paid
upon the Common Stock so long as any Preferred Stock is outstanding. Thereafter,
cash  dividends  may be declared  and paid upon the Common Stock in such amounts
and at such  times as the Board of  Directors  may  determine.  Funds  otherwise
legally  available for the payment of dividends on the Common Stock shall not be
restricted  or  reduced  by reason of there  being any  excess of the  aggregate
preferential  amount  of any  series of  Preferred  Stock  outstanding  over the
aggregate par value thereof.

                  3. Liquidation  Rights.  In  the  event  of  any  liquidation,
dissolution or winding up of the Corporation,  whether voluntary or involuntary,
after  there  shall  have been paid or set apart for  payment  of holders of any
outstanding  shares of Preferred  Stock the full  preferential  amounts to which
they are  entitled,  the entire  remaining  assets and funds of the  Corporation
legally  available  for  distribution,  if any,  to its  shareholders  shall  be
distributed  ratably  among the holders of the Common Stock in proportion to the
shares of Common Stock then held by them.

                  4.  Redemption.

                  (a) Redemption at the Corporation's  Election.  At any time or
times on or after such time as the occurrence of the revocation by any holder of
Common  Stock of  consent  to  electronic  notice  and  communications  from the
Corporation  or failure by any holder of Common Stock to provide such consent at
the  Corporation's  request,  the  Corporation  shall have the right in its sole
discretion,  to  require  that all,  but not less than all,  of the  outstanding
Common  Stock  held  by  such  Holder  (the  "Redemption  Shares")  be  redeemed
("Redemption  Election")  at a price per share of Common  Stock  equal to (A) if



<PAGE>

there is no public market for the Common Stock,  the fair market value per share
of the Common Stock as determined by the Board of Directors of the  Corporation,
or (B) if the Common Stock has an established  public trading market, the market
value per share of the Common Stock (the  "Redemption  Price").  The Corporation
shall  exercise its right to make a Redemption  Election by providing  each such
Holder written notice ("Notice of Redemption") by electronic mail,  facsimile or
overnight  courier,  after the  occurrence of such  revocation  of consent.  The
Notice  of  Redemption   shall  indicate  the  anticipated  date  on  which  the
Corporation  shall redeem the  Redemption  Shares  ("Redemption  Date").  If the
Corporation has exercised its right of Redemption Election and the conditions to
such  Redemption  Election have been satisfied then all such  Redemption  Shares
outstanding  shall be  redeemed  as of the  Redemption  Date by payment by or on
behalf of the  Corporation to the Holder of Redemption  Shares of the Redemption
Price. If the Corporation fails to pay the full Redemption Price with respect to
any Redemption  Shares on the Redemption Date, the Redemption  Election shall be
null and void with  respect  to such  Redemption  Shares  and the Holder of such
Redemption Shares shall be entitled to all the rights of a Holder of outstanding
Common Stock set forth in this Certificate of Incorporation.

         D.       Preferred Stock.

     Subject  to  the  requirements  of the  GCL  and  the  provisions  of  this
Certificate of Incorporation,  the Board of Directors is expressly authorized to
cause any number of the authorized and undesignated shares of Preferred Stock to
be issued from time to time in one or more series of  Preferred  Stock with such
voting  powers,  full or limited,  or no voting powers,  and such  designations,
preferences and relative,  participating,  optional or other special rights, and
qualifications,  limitations or  restrictions  thereof,  if any, as the Board of
Directors  may fix by resolution  or  resolutions,  prior to the issuance of any
shares of such series of Preferred  Stock,  each of which series may differ from
any and all other  series,  including,  without  limiting the  generality of the
foregoing, the following:

         (i) The number of shares constituting such series  of  Preferred  Stock
     and the designation thereof;

         (ii) The  dividend  rate,  if any,  on the  shares  of such  series  of
     Preferred  Stock,  whether and the extent to which any such dividends shall
     be cumulative or non-cumulative,  the relative rights of priority,  if any,
     of payments  of any  dividends,  and the times at which,  and the terms and
     conditions on which, any dividends shall be paid;

         (iii) The right,  if any,  of the  holders of shares of such  series of
     Preferred  Stock to vote and the manner of voting,  except as may otherwise
     be provided by the GCL;

         (iv) The right,  if any,  of the  holders  of shares of such  series of
     Preferred  Stock to convert  the same into,  or the right,  if any,  of the
     Corporation  to exchange the same for,  another class or series of stock of
     the Corporation  and the terms and conditions,  including any provision for
     future  adjustment  in the  conversion or exchange  rate,  under which said
     shares may be converted or exchanged;

         (v) The  redemption  or purchase  price or prices of the shares of such
     series of Preferred  Stock,  if any, and the times at which,  and the terms
     and conditions on which,  the shares of such series of Preferred  Stock may
     be redeemed or purchased;

         (vi) The terms of the sinking  fund,  if any,  to be provided  for such
     series of Preferred Stock, and the terms and amount of such sinking fund;

         (vii) The rights of the holders of shares of such  series of  Preferred
     Stock in the event of a voluntary or involuntary  liquidation,  dissolution
     or winding up of the Corporation  and the relative  rights of priority,  if
     any, of such holders with respect thereto; and

         (viii) Any other  relative  powers,  preferences  and  rights,  and any
     qualifications,  limitations or  restrictions,  of such series of Preferred
     Stock.

     FIFTH:  The name and mailing  address of the  incorporator  is Elizabeth A.
Creamer, 211 N. Broadway, Suite 3600, St. Louis, Missouri 63102.

     SIXTH:  All corporate  powers of the  Corporation  shall be exercised by or
under the  direction  of the Board of  Directors  except as  otherwise  provided
herein or by applicable  law. In furtherance and not in limitation of the powers
conferred by law, the Board of Directors is expressly authorized:

                                      B-2

<PAGE>

         (i) to adopt,  amend or repeal By-laws of the  Corporation,  subject to
     the right of the  stockholders  of the  Corporation  entitled  to vote with
     respect  thereto  to adopt,  amend or repeal  By-laws  made by the Board of
     Directors; and

         (ii) from time to time to determine whether and to what extent, at what
     time and place,  and under what conditions and regulations the accounts and
     books of the  Corporation,  or any of them, shall be open to the inspection
     of any stockholder;  and no stockholder shall have any right to inspect any
     account  or book or  document  of the  Corporation  except as  provided  by
     applicable  law or the  By-laws  of the  Corporation  or as  authorized  by
     resolution of the stockholders or Board of Directors of the Corporation.

     SEVENTH:  No director of the Corporation  shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such director as a director; provided, however, that the foregoing shall
not be deemed to  eliminate  or limit the  liability of a director to the extent
provided by applicable law (i) for any breach of the director's  duty of loyalty
to the Corporation or its  stockholders,  (ii) for acts or omissions not in good
faith or which involve  intentional  misconduct  or a knowing  violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derived an improper personal
benefit.  This  provision is not intended to eliminate or narrow any defenses to
or  protection  against  liability  otherwise  available  to  directors  of  the
Corporation.  No amendment  to or repeal of this Article  shall apply to or have
any  effect  on the  liability  or  alleged  liability  of any  director  of the
Corporation  for or with  respect  to any  acts or  omissions  of such  director
occurring prior to such amendment.

     EIGHTH:

     A. Every person who was or is a party or is  threatened  to be made a party
to or is  involved  in any  threatened,  pending or  completed  action,  suit or
proceeding, whether civil, criminal,  administrative or investigative, by reason
of the  fact  that  such  person  or a person  of whom  such  person  is a legal
representative  is or was a director or officer of the  Corporation or is or was
serving at the  request of the  Corporation  or for its  benefit as a  director,
officer, employee or agent of any other corporation, or as the representative of
the Corporation in a partnership, joint venture, trust or other entity, shall be
indemnified  and held harmless by the  Corporation to the fullest extent legally
permissible  under the  General  Corporation  Law of the State of  Delaware,  as
amended  from  time to  time,  against  all  expenses,  liabilities  and  losses
(including attorneys' fees,  judgments,  fines and amounts paid or to be paid in
settlement)  reasonably paid or incurred by such person in connection therewith.
Such right of indemnification  shall be a contract right that may be enforced in
any manner desired by such person.  Such right of indemnification  shall include
the right to be paid by the Corporation  the expenses  incurred in defending any
such action, suit or proceeding in advance of its final disposition upon receipt
of an  undertaking  by or on  behalf  of such  person  to repay  such  amount if
ultimately  it  should be  determined  that such  person is not  entitled  to be
indemnified by the Corporation under the General Corporation Law of the State of
Delaware.  Such right of  indemnification  shall not be  exclusive  of any other
right which such directors,  officers or  representatives  may have or hereafter
acquire and,  without  limiting the generality of such statement,  they shall be
entitled  to their  respective  rights  of  indemnification  under  any  By-law,
agreement, vote of stockholders, provision of law or otherwise, as well as their
rights under this Article.

     B. The Board of Directors  may adopt By-laws from time to time with respect
to indemnification to provide at all times the fullest indemnification permitted
by the General Corporation Law of the State of Delaware, as amended from time to
time, and may cause the Corporation to purchase and maintain insurance on behalf
of any  person  who is or was a  director,  officer,  employee  or  agent of the
Corporation,  or is or was serving at the request of the  Corporation or for its
benefit as a director,  officer, employee or agent of any other corporation,  or
as the representative of the Corporation in a partnership,  joint venture, trust
or other  entity,  against any expense,  liability or loss  asserted  against or
incurred  by any such  person in any such  capacity  or arising  out of any such
status,  whether or not the  Corporation  would have the power to indemnify such
person against such expense, liability or loss.

     NINTH: To the maximum extent permitted by law, in the event that either the
Corporation or any  stockholder  of the  Corporation  acquires  knowledge of any
potential  transaction,  agreement,  arrangement or other matter which may be an
opportunity  for  both  the  Corporation  and  such  stockholder,   neither  the
Corporation nor such stockholder will have any duty to communicate or offer such

                                      B-3

<PAGE>

opportunity  to the  other  and  such  stockholder  will  not be  liable  to the
Corporation  for breach of any  fiduciary  or other duty,  as a  stockholder  or
otherwise, and the Corporation will not be liable to such stockholder, by reason
of the  fact  that  the  Corporation  or such  stockholder,  as the case may be,
pursues or acquires such  opportunity  for itself or does not  communicate  such
opportunity or information regarding such opportunity to such stockholder or the
Corporation, as the case may be.

     TENTH: The Corporation reserves the right to amend, alter, change or repeal
any provision  contained in this  Certificate of Incorporation in the manner now
or hereafter  prescribed by statute, and all rights conferred upon stockholders,
directors and officers herein are granted subject to this reservation.




                                      B-4


                                                                         Annex C
                                                                         -------
                                     BY-LAWS
                                       OF
                                 TRAVELZOO INC.


                                    ARTICLE I
                                  Stockholders

     Section 1.1. Annual  Meetings.  An annual meeting of stockholders  shall be
held for the election of directors at such date, time and place either within or
without  the State of Delaware as may be  designated  by the Board of  Directors
from time to time.  Stockholders  may, unless the  certificate of  incorporation
otherwise  provides,  act by  written  consent  to  elect  directors;  provided,
however,  that, if such consent is less than  unanimous,  such action by written
consent  may  be in  lieu  of  holding  an  annual  meeting  only  if all of the
directorships  to which  directors could be elected at an annual meeting held at
the effective time of such action are vacant and are filled by such action.  Any
other proper business may be transacted at the annual meeting.

     Section 1.2.  Special  Meetings.  Special  meetings of stockholders  may be
called at any time by the Chairman of the Board,  if any,  the Vice  Chairman of
the Board,  if any, the President or the Board of Directors,  to be held at such
date,  time and place  either  within or without the State of Delaware as may be
stated in the notice of the meeting.

     Section 1.3.  Notice of  Meetings.  Whenever  stockholders  are required or
permitted to take any
 action at a meeting, a written notice of the meeting shall
be given which shall state the place,  if any,  date,  hour of the meeting,  the
means of remote  communications,  if any, by which stockholders and proxyholders
may be deemed to be present in person and vote at such  meeting and, in the case
of a special  meeting,  the purpose or purposes for which the meeting is called.
Unless  otherwise  provided by law, the written  notice of any meeting  shall be
given not less than ten nor more than sixty days  before the date of the meeting
to each  stockholder  entitled to vote at such meeting.  If mailed,  such notice
shall be deemed to be given when  deposited in the United  States mail,  postage
prepaid, directed to the stockholder at his address as it appears on the records
of the Corporation.

     Section 1.4.  Remote  Communication.  The Board of Directors may authorize,
subject to such  guidelines  and procedures as the Board of Directors may adopt,
stockholders  and   proxyholders   not  physically   present  at  a  meeting  of
stockholders to, by means of remote  communication,  participate in a meeting of
stockholders and be deemed present in person.  Stockholders and proxyholders may
vote by means of remote  communication at a meeting of stockholders whether such
meeting  is to be held at a  designated  place or  solely  by  means  of  remote
communication.

     Section 1.5. Adjournments. Any meeting of stockholders,  annual or special,
may adjourn from time to time to reconvene at the same or some other place,  and
notice  need not be given of any such  adjourned  meeting  if the time and place
thereof and means of remote  communications,  if any, by which  stockholders and
proxyholders may be deemed to be present in person and vote at such meeting, are
announced at the meeting at which the  adjournment  is taken.  At the  adjourned
meeting,  the  Corporation  may  transact  any  business  which  might have been
transacted at the original  meeting.  If the adjournment is for more than thirty
days,  or if after the  adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.

     Section  1.6.  Quorum.  At  each  meeting  of  stockholders,  except  where
otherwise  provided by law or the certificate of incorporation or these by-laws,
the  holders  of a  majority  of the  outstanding  shares of each class of stock
entitled  to vote at the  meeting,  present in person or  represented  by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be  considered a single  class if the holders  thereof are
entitled to vote together as a single class at the meeting.  In the absence of a
quorum,  the stockholders so present may, by majority vote,  adjourn the meeting
from time to time in the manner provided by Section 1.5 of these by-laws until a
quorum shall  attend.  Shares of its own capital  stock  belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the  shares  entitled  to vote in the  election  of  directors  of such other
corporation is held, directly or indirectly,  by the Corporation,  shall neither
be entitled to vote nor be counted for quorum purposes;  provided, however, that
the  foregoing  shall  not limit the  right of the  Corporation  to vote  stock,
including but not limited to its own stock, held by it in a fiduciary capacity.



<PAGE>

     Section 1.7. Organization.  Meetings of stockholders shall be presided over
by the Chairman of the Board,  if any, or in his absence by the Vice Chairman of
the Board,  if any, or in his absence by the  President,  or in his absence by a
Vice  President,  or in the  absence  of the  foregoing  persons  by a  chairman
designated by the Board of Directors, or in the absence of such designation by a
chairman  chosen at the  meeting.  The  Secretary  shall act as secretary of the
meeting,  but in his absence the  chairman of the meeting may appoint any person
to act as secretary of the meeting.

     Section 1.8. Voting;  Proxies. Unless otherwise provided in the certificate
of  incorporation,   each  stockholder  entitled  to  vote  at  any  meeting  of
stockholders  shall be  entitled to one vote for each share of stock held by him
which has voting power upon the matter in question. Each stockholder entitled to
vote at a meeting of  stockholders or to express consent or dissent to corporate
action in writing  without a meeting may authorize  another person or persons to
act for him by proxy, but no such proxy shall be voted or acted upon after three
years  from its date,  unless the proxy  provides  for a longer  period.  A duly
executed proxy shall be irrevocable if it states that it is irrevocable  and if,
and only as long as, it is coupled with an interest sufficient in law to support
an  irrevocable  power.  A  stockholder  may  revoke  any  proxy  which  is  not
irrevocable  by  attending  the  meeting  and  voting  in person or by filing an
instrument in writing  revoking the proxy or another duly executed proxy bearing
a later  date with the  Secretary  of the  Corporation.  Voting at  meetings  of
stockholders  need  not be by  written  ballot  and  need  not be  conducted  by
inspectors  unless the  holders of a majority of the  outstanding  shares of all
classes of stock entitled to vote thereon  present in person or by proxy at such
meeting shall so determine.  At all meetings of stockholders for the election of
directors, a plurality of the votes cast shall be sufficient to elect. All other
elections  and  questions  shall,  unless  otherwise  provided  by law or by the
certificate of  incorporation  or these  by-laws,  be decided by the vote of the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote  thereon  present in person or by proxy at the  meeting,  provided  that
(except as otherwise required by law or by the certificate of incorporation) the
Board of Directors may require a larger vote upon any election or question.

     Section 1.9. Fixing Date for  Determination  of Stockholders of Record.  In
order that the Corporation may determine the stockholders  entitled to notice of
or to vote at any meeting of  stockholders  or any  adjournment  thereof,  or to
express consent to corporate action in writing without a meeting, or entitled to
receive  payment of any  dividend  or other  distribution  or  allotment  of any
rights, or entitled to exercise any rights in respect of any change,  conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.  If no record date is fixed:  (1) the record date for
determining  stockholders  entitled  to  notice  of or to vote at a  meeting  of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given,  or, if notice is waived,  at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining  stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is necessary, shall
be the day on which the first written  consent is expressed;  and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto. A
determination  of  stockholders  of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.

     Section 1.10.  List of  Stockholders  Entitled to Vote. The Secretary shall
prepare and make,  at least ten days before  every  meeting of  stockholders,  a
complete list of the stockholders  entitled to vote at the meeting,  arranged in
alphabetical  order,  and showing the address of each stockholder and the number
of shares registered in the name of each stockholder.  Nothing contained in this
Section 1.10 shall require the Corporation to include  electronic mail addresses
or other electronic contact information on such list. Such list shall be open to
the  examination  of any  stockholder,  for any purpose  germane to the meeting,
during ordinary  business hours,  for a period of at least ten days prior to the
meeting,  either (i) on a reasonably  accessible  electronic network,  which the
information  required  to gain  access to such list is provided in the notice of
the meeting,  or (ii) at the principal place of business of the corporation.  If
the meeting is to be held at a place,  then the list shall be produced  and kept
at the time and place of the meeting  during the whole time thereof,  and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of  remote  communication,  then  the  list  shall  also be open to the
examination  of any  stockholder  during  the  whole  time of the  meeting  on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting.

                                      C-2

<PAGE>

     Section 1.11. Consent of Stockholders in Lieu of Meeting.  Unless otherwise
provided in the certificate of  incorporation,  any action required by law to be
taken at any annual or special meeting of stockholders  of the  Corporation,  or
any  action  which  may be  taken  at any  annual  or  special  meeting  of such
stockholders, may be taken without a meeting, without prior notice and without a
vote,  if a consent in  writing,  setting  forth the  action so taken,  shall be
signed by the  holders of  outstanding  stock  having not less than the  minimum
number of votes that would be  necessary  to  authorize or take such action at a
meeting at which all shares  entitled to vote  thereon  were  present and voted.
Prompt  notice of the taking of the corporate  action  without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.


                                   ARTICLE II
                               Board of Directors
                               ------------------

     Section 2.1. Powers;  Number;  Qualifications.  The business and affairs of
the  Corporation  shall be managed by the Board of  Directors,  except as may be
otherwise  provided by law or in the  certificate  of  incorporation.  The Board
shall consist of one or more members,  the number thereof to be determined  from
time to time by the Board. Directors need not be stockholders.

     Section 2.2. Election;  Term of Office;  Resignation;  Removal;  Vacancies.
Each director  shall hold office until the annual meeting of  stockholders  next
succeeding  his  election and until his  successor  is elected and  qualified or
until his earlier  resignation  or removal.  Any director may resign at any time
upon  written  notice  to the  Board of  Directors  or to the  President  or the
Secretary of the  Corporation.  Such  resignation  shall take effect at the time
specified therein,  and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective.  Unless otherwise  provided
in the  certificate  of  incorporation  or these  by-laws,  vacancies  and newly
created  directorships  resulting from any increase in the authorized  number of
directors  or from any other cause may be filled by a majority of the  directors
then in office, although less than a quorum, or by the sole remaining director.

     Section 2.3. Regular  Meetings.  Regular meetings of the Board of Directors
may be held at such places  within or without the State of Delaware  and at such
times as the Board may from time to time determine, and if so determined, notice
thereof need not be given.

     Section 2.4. Special  Meetings.  Special meetings of the Board of Directors
may be held at any  time or place  within  or  without  the  State  of  Delaware
whenever  called by the Chairman of the Board,  if any, by the Vice  Chairman of
the Board, if any, by the President or by any two directors.  Reasonable  notice
thereof shall be given by the person or persons calling the meeting.

     Section 2.5. Telephonic Meetings Permitted.  Unless otherwise restricted by
the  certificate  of  incorporation  or these  by-laws,  members of the Board of
Directors,  or any  committee  designated  by the Board,  may  participate  in a
meeting  of the  Board or of such  committee,  as the  case may be,  by means of
conference telephone or similar  communications  equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting  pursuant to this  by-law  shall  constitute  presence in person at such
meeting.

     Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board
of Directors  one-third  of the entire  Board shall  constitute a quorum for the
transaction  of business.  The vote of a majority of the directors  present at a
meeting  at which a quorum is present  shall be the act of the Board  unless the
certificate of  incorporation or these by-laws shall require a vote of a greater
number.  In case at any meeting of the Board a quorum shall not be present,  the
members of the Board  present may adjourn the meeting  from time to time until a
quorum shall attend.

     Section  2.7.  Organization.  Meetings of the Board of  Directors  shall be
presided  over by the  Chairman  of the Board,  if any, or in his absence by the
Vice Chairman of the Board,  if any, or in his absence by the  President,  or in
their absence by a chairman  chosen at the meeting.  The Secretary  shall act as
secretary  of the  meeting,  but in his absence the  chairman of the meeting may
appoint any person to act as secretary of the meeting.

     Section 2.8. Informal Action by Directors.  Unless otherwise  restricted by
the  certificate  of  incorporation  or these  by-laws,  any action  required or
permitted  to be taken at any  meeting  of the  Board  of  Directors,  or of any
committee thereof, may be taken without a meeting if all members of the Board or
of such  committee,  as the case may be,  consent  thereto in  writing,  and the
writing or writings  are filed with the minutes of  proceedings  of the Board or
committee.

                                      C-3

<PAGE>

                                   ARTICLE III
                                   Committees
                                   ----------

     Section 3.1.  Committees.  The Board of Directors may designate one or more
committees,  each  committee  to consist of one or more of the  directors of the
Corporation.  The Board may designate one or more directors as alternate members
of any  committee,  who may  replace  any absent or  disqualified  member at any
meeting  of the  committee.  The  by-laws  may  provide  that in the  absence or
disqualification  of a member of a committee,  the member or members  present at
any  meeting and not  disqualified  from  voting,  whether or not such member or
members constitute a quorum, may unanimously appoint another member of the board
of  directors  to  act at the  meeting  in the  place  of  any  such  absent  or
disqualified  member.  Any  such  committee,  to  the  extent  provided  in  the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and  authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the  Corporation  to be affixed to all papers  which may require it;
but no such  committee  shall have the power or  authority  in  reference to the
following   matter:   (i)  approving  or  adopting,   or   recommending  to  the
stockholders,  any action or matter  expressly  required by these  by-laws to be
submitted to stockholders  for approval or (ii) adopting,  amending or repealing
any by-law of the Corporation.

     Section  3.2.  Committee  Rules.  Unless the Board of  Directors  otherwise
provides,  each  committee  designated  by the Board may make,  alter and repeal
rules for the conduct of its  business.  In the  absence of a  provision  by the
Board or a provision in the rules of such committee to the contrary,  a majority
of the entire  authorized number of members of such committee shall constitute a
quorum for the  transaction  of business,  the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present  shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board  conducts its business  pursuant to
Article II of these by-laws.


                                   ARTICLE IV
                                    Officers
                                    --------

     Section   4.1.   Officers;   Election;   Qualification;   Term  of  Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President and
a  Secretary,  and it may, if it so  determines,  elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents,  one or more Assistant Vice Presidents, one or more
Assistant Secretaries,  a Treasurer and one or more Assistant Treasurers and may
give any of them such further  designations or alternate  titles as it considers
desirable.  Each such officer  shall hold office until the first  meeting of the
Board after the annual meeting of stockholders next succeeding his election, and
until his successor is elected and qualified or until his earlier resignation or
removal.  Any officer may resign at any time upon written notice to the Board or
to the President or the Secretary of the  Corporation.  Such  resignation  shall
take  effect at the time  specified  therein,  and  unless  otherwise  specified
therein  no  acceptance  of  such  resignation  shall  be  necessary  to make it
effective.  The Board may remove any officer with or without  cause at any time.
Any such removal shall be without  prejudice to the  contractual  rights of such
officer,  if any, with the  Corporation,  but the election or  appointment of an
officer shall not of itself create contractual rights. Any number of offices may
be  held  by the  same  person.  Any  vacancy  occurring  in any  office  of the
Corporation  by death,  resignation,  removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or special meeting.

     Section 4.2. Powers and Duties of Executive  Officers.  The officers of the
Corporation  shall  have  such  powers  and  duties  in  the  management  of the
Corporation  as may be prescribed  by the Board of Directors  and, to the extent
not so provided,  as generally pertain to their respective  offices,  subject to
the control of the Board.  The Board may require any officer,  agent or employee
to give security for the faithful performance of his duties.


                                    ARTICLE V
                                      Stock
                                      -----

     Section 5.1.  Certificates.  Every holder of stock in the Corporation shall
be entitled to have a certificate signed by or in the name of the Corporation by
the Chairman or Vice Chairman of the Board of Directors, if any or the President
or a Vice  President,  and by the  Treasurer or an Assistant  Treasurer,  or the
Secretary or an Assistant Secretary,  of the Corporation,  certifying the number
of shares  owned by him in the  Corporation.  If such  certificate  is  manually
signed by one  officer or  manually  countersigned  by a transfer  agent or by a
registrar,  any other signature on the  certificate may be a facsimile.  In case

                                      C-4

<PAGE>

any  officer,  transfer  agent or  registrar  who has signed or whose  facsimile
signature  has been  placed  upon a  certificate  shall  have  ceased to be such
officer,  transfer agent or registrar before such certificate is issued,  it may
be issued by the  Corporation  with the same effect as if he were such  officer,
transfer agent or registrar at the date of issue.

     Section 5.2. Lost, Stolen or Destroyed Stock Certificates;  Issuance of New
Certificates.  The Corporation may issue a new certificate of stock in the place
of any certificate  theretofore  issued by it, alleged to have been lost, stolen
or destroyed,  and the Corporation may require the owner of the lost,  stolen or
destroyed  certificate,  or his legal representative,  to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.


                                   ARTICLE VI
                                  Miscellaneous
                                  -------------

     Section  6.1.  Fiscal  Year.  The fiscal year of the  Corporation  shall be
determined by the Board of Directors.
                   

     Section 6.2.  Seal. The  Corporation  may have a corporate seal which shall
have the name of the Corporation  inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors.  The corporate seal
may be used by causing it or a facsimile  thereof to be  impressed or affixed or
in any other manner reproduced.

     Section 6.3.  Waiver of Notice of Meetings of  Stockholders,  Directors and
Committees.  Whenever  notice  is  required  to be  given  by law or  under  any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof,  signed by the person  entitled to notice,  whether before or after the
time stated  therein,  shall be deemed  equivalent  to notice.  Attendance  of a
person at a meeting shall constitute a waiver of notice of such meeting,  except
when the person attends a meeting for the express  purpose of objecting,  at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully  called or convened.  Neither the business to be transacted  at,
nor the  purpose  of,  any  regular  or  special  meeting  of the  stockholders,
directors,  or members of a committee  of  directors  need be  specified  in any
written waiver of notice unless so required by the certificate of  incorporation
or these by-laws.

     Section 6.4.  Indemnification  of Directors,  Officers and  Employees.  The
Corporation  shall have power to indemnify to the full extent  authorized by law
any  person  made  or  threatened  to be  made a party  to any  action,  suit or
proceeding, whether criminal, civil, administrative or investigative,  by reason
of the fact that he, his testator or intestate is or was a director,  officer or
employee of the  Corporation or any  predecessor of the Corporation or serves or
served any other enterprise as a director, officer or employee at the request of
the Corporation or any predecessor of the Corporation.

     Section  6.5.  Interested  Directors;  Quorum.  No contract or  transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation  and any other  corporation,  partnership,  association or other
organization  in which one or more of its directors or officers are directors or
officers,  or have a financial  interest,  shall be void or voidable  solely for
this  reason,  or solely  because  the  director  or  officer  is  present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose,  if: (1) the material facts as to his  relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board or the committee,  and the Board or committee in good faith authorizes the
contract  or  transaction  by  the  affirmative  votes  of  a  majority  of  the
disinterested directors,  even though the disinterested directors be less than a
quorum;  or (2) the material facts as to his  relationship or interest and as to
the  contract or  transaction  are  disclosed  or are known to the  stockholders
entitled to vote  thereon,  and the  contract  or  transaction  is  specifically
approved  in good  faith by vote of the  stockholders;  or (3) the  contract  or
transaction  is  fair as to the  Corporation  as of the  time it is  authorized,
approved or ratified,  by the Board,  a committee  thereof or the  stockholders.
Common or interested  directors may be counted in determining  the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.

     Section 6.6. Form of Records.  Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute  books,  may be kept on, or be in the form of, punch cards,  magnetic
tape,  photographs,  microphotographs  or any other information  storage device,

                                      C-5

<PAGE>

provided  that the records so kept can be converted  into  clearly  legible form
within a reasonable  time. The Corporation  shall so convert any records so kept
upon the request of any person entitled to inspect the same.

     Section  6.7.  Amendment  of  By-Laws.  These  by-laws  may be  altered  or
repealed, and new by-laws made, by the Board of Directors,  but the stockholders
may make  additional  by-laws and may alter or repeal any by-law  whether or not
adopted by them.


                                      C-6


Travelzoo.com Sales
800 W. El Camino Real, Ste. 180
Mountain View, CA 9404
Tel: 650.323.7000
Fax 650-323.7014




October 10, 1998



Travelzoo.com Corporation
Rovert House, Market Street, North
PO Box N-259
Nassau
Bahamas


Dear Sirs,

This is to confirm our agreement that  Travelzoo.com  Corporation will outsource
the  classifieds  publishing  business  for  the  Travelzoo.com  website  to our
company.  We will manage the technical platform and manage and handle marketing,
customer support, and billing.

Our company  acts  independently  and conducts the business in such manner as it
regards appropriate.

Our company will pay Travelzoo.com Corporation quarterly the net income from the
classifieds publishing business, after deducting a 5% commission.

This contract can be terminated by each party with a 90 days notice.

Sincerely,


/s/  Ralph Bartel
----------------------------------------
Ralph Bartel
President




                                                                  [Logo Omitted]


Memo

       To:        Travelzoo.com Corporation; Travelzoo.com Sales, Inc.

       From:      Ralph Bartel

       CC:

       Date:      01/02/99

       Re:        Agreement




       Service Agreement

       This is to confirm  that both  parties  agreed  today that  Travelzoo.com
       Corporation outsources all operations to Silicon Channels Corporation dba
       Travelzoo.com  Sales, Inc..  Travelzoo.com Sales, Inc. will receive a 50%
       split of the net income  (before  income taxes)  generated from operating
       the Trazelzoo.com web site and its business.

       This agreement shall become  effective on January 1, 1999. This agreement
       replaces the existing contract dated October 10, 1998.




       /s/ R. Bartel
       -------------------------------
       Ralph Bartel
       President
       Silicon Channels Corporation dba Travelzoo.com Sales, Inc.



       /s/ R. Bartel
       -------------------------------
       Ralph Bartel
       Chairman and Chief Executive Officer
       Travelzoo.com Corporation




       January 2, 1999




                               INDEMNITY AGREEMENT

                  This Indemnity  Agreement,  dated as of ____, 2001, is made by
and between  Travelzoo Inc., a Delaware  corporation (the  "Company"),  and (the
"Indemnitee"), an "agent" (as hereinafter defined) of the Company.

                                    RECITALS
                                    --------

                  A. The  Company  recognizes  that  competent  and  experienced
persons  are  increasingly  reluctant  to  serve as  directors  or  officers  of
corporations  unless they are protected by comprehensive  liability insurance or
indemnification,  or both,  due to increased  exposure to  litigation  costs and
risks  resulting  from their service to such  corporations,  and due to the fact
that  the  exposure   frequently   bears  no  reasonable   relationship  to  the
compensation of such directors and officers;

                  B. The statutes and judicial decisions regarding the duties of
directors and officers are often  difficult to apply,  ambiguous or conflicting,
and  therefore  fail to provide  such  directors  and  officers  with  adequate,
reliable  knowledge  of legal  risks to which they are  exposed  or  information
regarding the proper course of action to take;

                  C. The Company and the Indemnitee  recognize  that  plaintiffs
often seek damages in such large amounts and the costs of  litigation  may be so
enormous  (whether  or not the case is
  meritorious),  that the  defense  and/or
settlement  of such  litigation  is  often  beyond  the  personal  resources  of
directors and officers;

                  D. The Company  believes  that it is unfair for its  directors
and executive  officers to assume the risk of huge  judgments and other expenses
which may occur in cases in which the director or executive  officer received no
personal  profit and in cases where the  director or  executive  officer was not
culpable;

                  E. The Company, after reasonable investigation, has determined
that the  liability  insurance  coverage  presently  available to the Company is
inadequate  to cover all possible  exposure for which the  Indemnitee  should be
protected.  The  Company  believes  that the  interests  of the  Company and its
stockholders  would best be served by a  combination  of such  insurance and the
indemnification  by the Company of the directors  and executive  officers of the
Company,

                  F.  Section  145 of the  General  Corporation  Law of Delaware
("Section 145"),  under which the Company is organized,  empowers the Company to
indemnify  its  directors,  officers,  employees  and agents by agreement and to
indemnify  persons who serve,  at the request of the Company,  as the directors,
officers,  employees  or  agents  of  other  corporations  or  enterprises,  and
expressly  provides  that the  indemnification  provided  by Section  145 is not
exclusive;


<PAGE>

                  G.  The Board of  Directors  has  determined that  contractual
indemnification  as set forth  herein is not only  reasonable  and  prudent  but
necessary to promote the best interests of the Company and its stockholders;

                  H.  The Company desires and has  requested  the  Indemnitee to
serve or  continue to serve as a director  or  executive  officer of the Company
free from undue concern for claims for damages arising out of or related to such
services to the Company, and

                  I.  The Indemnitee  is willing  to serve,  or to  continue  to
serve,  the Company,  only on the  condition  that he is furnished the indemnity
provided for herein.

                                    AGREEMENT
                                    ---------
    
                  NOW,  THEREFORE,  in consideration of the mutual covenants and
agreements set forth below,  the parties hereto,  intending to be legally bound,
hereby agree as follows:

1.       Definitions.
         -----------

                  (a) Agent.  For  purposes  of this  Agreement,  "agent" of the
Company  means any person who is or was a director,  officer,  employee or other
agent of the Company or a subsidiary of the Company, or is or was serving at the
request of, for the  convenience of, or to represent the interest of the Company
or a  subsidiary  of the  Company as a director,  officer,  employee or agent of
another foreign or domestic corporation,  partnership,  joint venture,  trust or
other enterprise.

                  (b)  Expenses.  For  purposes  of this  Agreement,  "expenses"
includes  all  direct  and  indirect  costs  of any  type or  nature  whatsoever
(including,  without limitation,  all attorneys' fees and related  disbursements
and  other  out-of-pocket  costs),  actually  and  reasonably  incurred  by  the
Indemnitee in connection with either the  investigation,  defense or appeal of a
proceeding or  establishing or enforcing a right to  indemnification  under this
Agreement,  Section 145 or  otherwise,  and amounts paid in  settlement by or on
behalf of the Indemnitee,  but shall not include any final  judgments,  fines or
penalties actually levied against the Indemnitee.

                  (c)   Proceedings.   For  the  purposes  of  this   Agreement,
"proceeding"  means any threatened,  pending or completed action,  suit or other
proceeding, whether civil, criminal, administrative or investigative.

                  (d) Subsidiary.  For purposes of this Agreement,  "subsidiary"
means  any  corporation  of  which  more  than  50%  of the  outstanding  voting
securities are owned  directly or indirectly by the Company,  by the Company and
one or more other subsidiaries or by one or more other subsidiaries.

                  (e) Other  Enterprise.  For purpose of this Agreement,  "other
enterprise"  shall include employee  benefit plans;  references to "fines" shall
include any excise tax  assessed  with respect to any  employee  benefit  plans;
references to "serving at the request of the Company"  shall include any service
as a director,  officer,  employee or agent of the Company which imposes  duties

                                       2

<PAGE>

on, or involves  services  by, such  director,  officer,  employee or agent with
respect to an employee benefit plan, its participants or beneficiaries;  and any
person who acts in good faith and in a manner he  reasonably  believes  to be in
the best interest of the participants  and  beneficiaries of an employee benefit
plan  shall  be  deemed  to have  acted  in a manner  "not  opposed  to the best
interests of the Company" as referred to in this Agreement.

                  2. Agreement to Serve.  The Indemnitee  agrees to serve and/or
continue  to serve as an agent of the  Company,  at the will of the  Company (or
under  separate  agreement,  if such  agreement  exists),  in the  capacity  the
Indemnitee  currently  serves as an agent of the Company,  so long as he is duly
appointed or elected and qualified in accordance with the applicable  provisions
of the  By-Laws of the  Company or any  subsidiary  of the Company or until such
time as he tenders his resignation in writing;  provided,  however, that nothing
contained  in this  Agreement  is  intended  to create  any  right to  continued
employment by the Indemnitee in any capacity.

                  3.  Indemnity in Third Party  Proceedings.  The Company  shall
indemnify  the  Indemnitee  if the  Indemnitee is a party to or threatened to be
made a party to or otherwise involved in any proceeding (other than a proceeding
by or in the right of the Company) by reason of the fact that the  Indemnitee is
or was an agent of the Company,  including any proceeding  based upon any act or
inaction by the  Indemnitee in his capacity as an agent of the Company,  against
any and all expenses,  judgments,  fines and penalties  actually and  reasonably
incurred by him in connection with such  proceeding,  but only if the Indemnitee
acted in good  faith  and in a manner  he  reasonably  believed  to be in or not
opposed to the best interests of the Company,  and, with respect to any criminal
proceeding,  had no reasonable  cause to believe his conduct was  unlawful.  The
termination  of  any  proceeding  by  judgment,   order  of  court,  settlement,
conviction  or on plea of nolo  contendere,  or its  equivalent,  shall not,  of
itself,  create a presumption  that the Indemnitee did not act in good faith and
in a manner  which he  reasonably  believed  to be in or not opposed to the best
interests of the Company,  and with  respect to any criminal  proceedings,  that
such person had reasonable cause to believe that his conduct was unlawful.

                  4.  Indemnity  in  Derivative   Actions.   The  Company  shall
indemnify  the  Indemnitee  if the  Indemnitee is a party to or threatened to be
made a party to or otherwise  involved in any  proceeding  by or in the right of
the  Company to  procure a judgment  in its favor by reason of the fact that the
Indemnitee  is or was an agent of the Company,  including any  proceeding  based
upon any act or inaction by the  Indemnitee  in his  capacity as an agent of the
Company, against all expenses actually and reasonably incurred by the Indemnitee
in connection  with such  proceeding,  but only if the Indemnitee  acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company,  except that no  indemnification  under this Section 4
shall  be made in  respect  of any  claim,  issue  or  matter  as to  which  the
Indemnitee  shall have been  finally  adjudged  to be liable to the Company by a
court of  competent  jurisdiction  for gross  negligence  or  misconduct  in the
performance  of his duty to the Company,  unless and only to the extent that any
court in which such  proceeding  was brought shall  determine  upon  application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper.

                                       3

<PAGE>

                  5.   Indemnification   of   Expenses  of   Successful   Party.
Notwithstanding  any other provisions of this Agreement,  to the extent that the
Indemnitee  has been  successful  on the merits or  otherwise  in defense of any
proceeding  or in defense of any claim,  issue or matter  therein,  the  Company
shall  indemnify the  Indemnitee  against all expenses  actually and  reasonably
incurred in connection with such proceeding.

                  6.  Partial  Indemnification.  If the  Indemnitee  is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion  of any  expenses,  judgments,  fines or  penalties,  actually  and
reasonably  incurred by him in a proceeding  but is not  entitled,  however,  to
indemnification  for the total amount  thereof,  the Company shall  nevertheless
indemnify  the  Indemnitee  for the portion  thereof to which the  Indemnitee is
entitled.

                  7.  Advancement of Expenses.  Subject to Section 11(a) hereof,
the Company shall advance all expenses  incurred by the Indemnitee in connection
with any  proceeding  to which the  Indemnitee is a party or is threatened to be
made a party by reason of the fact that the Indemnitee is or was an agent of the
Company.  The Indemnitee  hereby  undertakes to repay such amounts advanced only
if,  and to the  extent  that,  it  shall  ultimately  be  determined  that  the
Indemnitee  is not entitled to be  indemnified  by the Company as  authorized by
this  Agreement.  The advances to be made hereunder shall be paid by the Company
to or on behalf of the Indemnitee within thirty (30) days following  delivery of
a written request therefor by the Indemnitee to the Company.

                  8. Notice and Other Indemnification Procedures.
 

                     (a) Promptly  after receipt by the  Indemnitee of notice of
the  commencement  of or the  threat  of  commencement  of any  proceeding,  the
Indemnitee shall, if the Indemnitee believes that  indemnification  with respect
thereto may be sought from the Company under this Agreement,  notify the Company
of the commencement or threat of commencement  thereof,  provided the failure to
provide such  notification  shall not diminish the Indemnitee's  indemnification
hereunder.

                     (b) Any  indemnification  requested by the Indemnitee under
Section  3, 4, 5 or 6 hereof  shall be made no later than  forty-five  (45) days
after receipt of the written request of the Indemnitee unless a determination is
made within said forty-five (45) day period (i) by the Board of Directors of the
Company by a majority vote of a quorum  thereof  consisting of directors who are
not  parties  to such  proceeding,  or (ii) in the  event  such a quorum  is not
obtainable,  at the election of the Company, either by independent legal counsel
in a written  opinion or by a panel of  arbitrators  (selected in the manner set
forth in Section  8(c)  hereof)  that the  Indemnitee  has not met the  relevant
standards for indemnification set forth in Section 3, 4, 5 or 6 hereof.

                     (c)  Except   as  set   forth   herein,   the    right   of
indemnification   under  this  Agreement  and  any  dispute  arising  hereunder,
including  but not limited to matters of validity,  interpretation,  application
and  enforcement,  shall be  determined  exclusively  by and  through  final and
binding  arbitration in Mountain View,  California,  each party hereto expressly
and conclusively  waiving his right to proceed to a judicial  determination with
respect to such matter.  Such arbitration  shall be conducted in accordance with

                                       4

<PAGE>

the  commercial  arbitration  rules then in effect of the  American  Arbitration
Association before a panel of three  arbitrators,  one of whom shall be selected
by the Company,  the second of whom shall be selected by the  Indemnitee and the
third of whom shall be selected by the other two arbitrators.  If for any reason
arbitration under the arbitration rules of the American Arbitration  Association
cannot be initiated,  the necessary  arbitrator or arbitrators shall be selected
by the presiding  judge of the state court of general  jurisdiction  in Mountain
View, California.  Each arbitrator selected as provided hereto is required to be
serving or to have served as a director or an executive officer of a corporation
whose shares of common  stock,  during at least one year of such  service,  were
quoted in the  Nasdaq  National  Market  System or listed on the New York  Stock
Exchange.  It is expressly understood and agreed by the parties that a party may
compel arbitration  pursuant to this Section 8(c) through an action for specific
performance  and that any award  entered  by the  arbitrators  may be  enforced,
without further evidence or proceedings, in any court of competent jurisdiction.

                     (d) The  provisions  of Section 8(c) hereof shall not apply
if, and to the extent that, they may be inconsistent  with an undertaking  given
by the Company (including an undertaking given after the date of this Agreement)
to the  Securities  and  Exchange  Commission  to submit to a court of competent
jurisdiction  the question  whether  indemnification  for liabilities  under the
Securities  Act of 1933, as amended (the  "Securities  Act"),  by the Company is
against public policy as expressed in the Securities  Act, and to be governed by
the final  adjudication of such issue. In such case, the  determination  by such
court shall be deemed,  for purposes of this  Agreement,  to be a  determination
pursuant to Section 8(c) hereof.

                     (e) The Company  shall  reimburse  the  Indemnitee  for the
expenses  incurred in  prosecuting  or  defending  such  arbitration  unless the
arbitrator  finds that each of the claims and/or  defenses of the  Indemnitee in
any such proceeding was frivolous or in bad faith.

                  9. Assumption  of  Defense.  In the event the Company shall be
obligated  to pay the expenses of any  proceeding  against the  Indemnitee,  the
Company,  if  appropriate,  shall be  entitled  to assume  the  defense  of such
proceeding,  with counsel  reasonably  acceptable  to the  Indemnitee,  upon the
delivery to the  Indemnitee  of written  notice of its  election to do so. After
delivery of such  notice,  approval of such  counsel by the  Indemnitee  and the
retention of such counsel by the Company,  the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the  Indemnitee  with  respect  to the same  proceeding,  provided  that (a) the
Indemnitee  shall have the right to employ his counsel in such proceeding at the
Indemnitee's  expense and (b) if (i) the employment of counsel by the Indemnitee
has been previously authorized in writing by the Company, (ii) the Company shall
have reasonably  concluded that there may be a conflict of interest  between the
Company  and the  Indemnitee  in the  conduct  of any such  defense or (iii) the
Company shall not; in fact, have employed  counsel to assume the defense of such
proceeding,  the fees and expenses of the  Indemnitee's  counsel shall be at the
expense of the Company.

                  10. Insurance.  The  Company  may,  but is not  obligated  to,
obtain directors' and officers'  liability insurance ("D&O Insurance") as may be
or become  available  in  reasonable  amounts  from  established  and  reputable

                                       5

<PAGE>

insurers  with  respect  to  which  the  Indemnitee  is  named  as  an  insured.
Notwithstanding  any other provision of the Agreement,  the Company shall not be
obligated  to  indemnify  the  Indemnitee  for  expenses,  judgments,  fines  or
penalties  which have been paid directly to the Indemnitee by D&O Insurance.  If
the Company has D&O  Insurance in effect at the time the Company  receives  from
the Indemnitee any notice of the commencement of a proceeding, the Company shall
give prompt  notice of the  commencement  of such  proceeding to the insurers in
accordance  with the  procedures  set forth in the  policy.  The  Company  shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the lndemnitee,  all amounts payable as a result of such proceeding
in accordance with the terms of such policy.

                 11. Exceptions.  Any  other  provision  herein  to the contrary
notwithstanding,  the Company  shall not be  obligated  pursuant to the terms of
this Agreement:

                     (a) Claims Initiated  by the  Indemnitee.  To  indemnify or
advance  expenses  to the  Indemnitee  with  respect  to  proceedings  or claims
initiated or brought  voluntarily  by the  Indemnitee and not by way of defense,
except to the extent set forth in Section 8(e) hereof;  provided,  however, that
such  indemnification  or advancement of expenses may be provided by the Company
in specific cases if the Board of Directors finds it to be appropriate; or

                     (b) Unauthorized  Settlements.  To indemnify the Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding effected
without  the  Company's  written  consent;  the  Company  shall not  settle  any
proceeding without the Indemnitee's written consent; neither the Company nor the
Indemnitee will unreasonably withhold consent to any proposed settlement; or

                     (c) Certain Matters. To indemnify the Indemnitee on account
of any  proceeding  with respect to (i) payments made to the Indemnitee if it is
determined by final judgment or other final adjudication that such payments were
in violation of law or (ii) which it is  determined  by final  judgment or other
final  adjudication that the conduct of the Indemnitee  constituted bad faith or
active and deliberate dishonesty; or

                     (d) Section 16. To indemnify  the  Indemnitee on account of
any claim by or on behalf of the Company for recovery of profits  resulting from
the  purchase  and  sale  or sale  and  purchase  by the  Indemnitee  of  equity
securities of the Company  pursuant to Section 16(b) of the Securities  Exchange
Act of 1934, as amended; or

                     (e)  Unlawful.  To indemnify  the  Indemnitee to the extent
such  indemnification  has been determined pursuant to Section 8(c) hereof to be
unlawful.

                 12. Nonexclusivity.  The  provisions  for  indemnification  and
advancement  of  expenses  set  forth  in this  Agreement  shall  not be  deemed
exclusive of any other rights which the  Indemnitee may have under any provision
of law, the Company's  Certificate of Incorporation or By-Laws,  the vote of the
Company's   stockholders  or  disinterested   directors,   other  agreements  or
otherwise,  both as to action in his official  capacity and to action in another
capacity  while  occupying  his  position  as an agent of the  Company,  and the

                                       6

<PAGE>

Indemnitee's  rights  hereunder  shall  continue after the Indemnitee has ceased
acting as an agent of the  Company  and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.

                  13. Subrogation. In the event of payment under this Agreement,
the  Company  shall be  subrogated  to the extent of such  payment to all of the
rights of recovery of the Indemnitee,  who shall execute all papers required and
shall do everything  that may be necessary to secure such rights,  including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.

                  14.  Interpretation  of Agreement.  It is understood  that the
parties  hereto intend this  Agreement to be  interpreted  and enforced so as to
provide indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.

                  15.  Severability.  If any  provision  or  provisions  of this
Agreement shall be held to be invalid,  illegal or unenforceable  for any reason
whatsoever,  (a) the  validity,  legality and  enforceability  of the  remaining
provisions of the Agreement  (including  without  limitation all portions of any
paragraphs of this  Agreement  containing any such provision held to be invalid,
illegal  or  unenforceable,   that  are  not  themselves  invalid,   illegal  or
unenforceable)  shall not in any way be affected or impaired thereby, and (b) to
the fullest  extent  possible,  the  provisions  of this  Agreement  (including,
without limitation,  all portions of any paragraph of this Agreement  containing
any such provision held to be invalid,  illegal or  unenforceable,  that are not
themselves invalid,  illegal or unenforceable)  shall be construed so as to give
effect to the  intent  manifested  by the  provision  held  invalid,  illegal or
unenforceable and to give effect to Section 14 hereof.

                  16.  Modification and Waiver.  No supplement,  modification or
amendment of this Agreement  shall be binding unless executed in writing by both
of the parties  hereto.  No waiver of any of the  provisions  of this  Agreement
shall be deemed or shall  constitute  a waiver  of any  other  provision  hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

                  17.  Successor and Assigns.  The terms of this Agreement shall
bind,  and shall  inure to the  benefit  of, the  successors  and assigns of the
parties hereto.

                  18.  Notice. All notices, claims,  requests, demands and other
communications  hereunder  shall be in  writing  and shall be duly given if: (a)
personally  delivered  or sent via  telecopy,  (b) sent by telegram  (other than
where original payment or other documents must be delivered) for delivery within
24 hours or (c) sent by Federal  Express,  DHL  Worldwide  Express  or  Airborne
Courier (for next  business day  delivery),  shipping  prepaid to the  addresses
shown on the signature page of this Agreement or such other address or addresses
as the person to whom notice is to be given may have previously furnished to the
other party in writing in the manner set forth  above.  Notices  shall be deemed
given at the time of personal  delivery or  completed  telecopy,  or, if sent by
telegram,  24 hours  after the time sent,  or, if sent by Federal  Express,  DHL
Worldwide Express, or Airborne Courier, one (1) business day after such sending.

                  19.  Governing   Law.  This   Agreement   shall   be  governed
exclusively by and construed according to the laws of the State of Delaware,  as
applied to contracts between Delaware residents entered into and to be performed

                                       7

<PAGE>

entirely within Delaware,  without giving effect to conflict of laws principles.
If a court of competent  jurisdiction shall make a final  determination that the
provisions of the law of any state other than Delaware govern indemnification by
the Company of its directors and executive  officers,  then the  indemnification
provided  under this  Agreement  shall in all  instances be  enforceable  to the
fullest extent permitted under such law,  notwithstanding  any provision of this
Agreement to the contrary.

                  The parties hereto have entered into this Indemnity  Agreement
effective as of the date first above written.

                                    TRAVELZOO INC.


                                    By                                          
                                      ------------------------------------------
                                    Name:                                       
                                         ---------------------------------------
                                    Title:                                      
                                          --------------------------------------

                                    Address:  800 West El Camino Real, Suite 180
                                              Mountain View, California 94040





                                    INDEMNITEE:


                                    --------------------------------------------

                                    Address:



                                       8


                                                                    Exhibit 23.1


                         Consent of Independent Auditors


The Board of Directors
Travelzoo.com Corporation:

We consent to the use of our report dated March 22, 2001 on the combined balance
sheets of  Travelzoo.com  Corporation  and affiliate as of December 31, 1999 and
2000, and the related combined  statements of operations,  stockholders'  equity
and cash flows for the period from May 21, 1998 (inception) to December 31, 1998
and for each of the years in the two-year  period ended December 31, 2000 in the
registration statement on Form S-4 of Travelzoo Inc. filed on or about April 20,
2001 and to the  reference  to our firm under the  headings  "Selected  Combined
Historical and Pro Forma Financial Data" and "Experts" in the prospectus.


                                  /s/ KPMG LLP


Mountain View, California
April 20, 2001




                                                                    Exhibit 23.2

                          Consent Of Financial Advisor

     The Mentor Group,  Inc.  hereby consents to references to and the inclusion
of our opinion  dated as of January 18, 2001 in its  entirety in the  Prospectus
and Proxy Statement to be distributed to Travelzoo.com  Corporation stockholders
in connection with the merger of Travelzoo.com Corporation and Travelzoo Inc.



April 23, 2001
                                    The Mentor Group, Inc.



                                    /s/ Davis Blaine   
                                    ---------------------------          
                                    Chairman