As Filed with the Securities and Exchange Commission on August 31, 2001

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                          PRE-EFFECTIVE AMENDMENT NO. 3
                                       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.                                                       [ ]


<TABLE>
<CAPTION>

                         CALCULATION OF REGISTRATION FEE
======================================== ================= ================= ======================= =====================
                                                               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
======================================== ================= ================= ======================= =====================
</TABLE>


(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 

     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 AUGUST 31, 2001



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


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

To the stockholders of Travelzoo.com Corporation:


     We  will  hold a  special  meeting  of the  stockholders  of  Travelzoo.com
Corporation  (Bahamas) on [_________],  2001 at ______a.m.  [_________] time, at
[___________________], for the following purposes:

     1.   To  consider  and vote  upon a  merger  with a newly  formed  Delaware
          subsidiary,  Travelzoo Inc., which will accomplish the following three
          goals:

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


          o   allow Travelzoo to become incorporated in the United States;

          o   combine our operations with Silicon Channels Corporation; 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,  our controlling  stockholder.  On January 22, 2001,
Mr.  Bartel  contributed  all the  outstanding  shares of  Silicon  Channels  to
Travelzoo Delaware in exchange for 42% of the stock of Travelzoo Delaware.  Upon
consummation of the proposed merger,  Mr. Bartel will receive  additional shares
of Travelzoo  Delaware in exchange for his 52%  ownership  interest in Travelzoo
Bahamas. Currently, Mr. Bartel effectively holds a 72% ownership interest in the
value of the  Travelzoo  business  (Travelzoo  Bahamas,  Travelzoo  Delaware and
Silicon Channels  together)  through his combined  holdings of Travelzoo Bahamas
and  Travelzoo  Delaware.   The  remaining  stockholders  of  Travelzoo  Bahamas
effectively  hold an  aggregate  28%  interest  in the  value of such  Travelzoo
business. After the merger, when Travelzoo Delaware is the surviving entity with
Silicon Channels  remaining its subsidiary,  Mr. Bartel will continue to own 72%
of the value of the  Travelzoo  business  (which will then  consist of Travelzoo
Delaware and Silicon  Channels) and the remaining  stockholders will continue to
own 28% of the  value of such  business  through  their  ownership  of shares of
Travelzoo  Delaware,  assuming  all  stockholders  elect to  participate  in the
merger.

     The  proposed  merger is  described in the  attached  proxy  statement  and
prospectus.  Holders of record of Travelzoo Bahamas 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. If you choose to participate in
the  merger,  you will be  required to follow the  procedures  specified  in the
merger  agreement,  and indicate  whether you consent to receive  communications
from Travelzoo in electronic form. If you do not give your consent to electronic
delivery  or revoke such  consent,  your shares of  Travelzoo  Delaware  will be
subject to  redemption as more fully  described  under  "Description  of Capital
Stock" on page 51 of the prospectus and proxy statement.

     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 print,
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.


By Order of the Board of Directors,

TRAVELZOO.COM CORPORATION

Ralph Bartel
President and Secretary

                          , 2001


<PAGE>


                 SUBJECT TO COMPLETION, DATED AUGUST   , 2001


               Proxy Statement for Special Meeting of Stockholders
                          of Travelzoo.com Corporation
                            to be Held on [_________]

                             Prospectus Relating to
               19,425,147 Shares of Common Stock of Travelzoo Inc.

     This proxy statement and prospectus is being furnished to the  stockholders
of  Travelzoo.com  Corporation,  a Bahamas  corporation,  in connection with the
solicitation  of proxies for use at the special  meeting of the  stockholders of
Travelzoo.com  Corporation to be held at  [_________] on [_________]  and at any
adjournments or postponements thereof.

       At the meeting, the stockholders will consider and vote upon the proposed
merger of Travelzoo.com  Corporation with our newly formed Delaware  subsidiary,
Travelzoo Inc., which is described in this proxy statement and prospectus.


     This  constitutes  the prospectus of Travelzoo Inc.  relating to 19,425,147
shares of common stock of Travelzoo Inc. which will be issuable in the merger.

     We  strongly  urge  you to read  and  consider  this  proxy  statement  and
prospectus  in its  entirety,  including  the  matters  referred  to under "Risk
Factors," starting on page 8.

     There is no  established  public  trading  market for the  Travelzoo  stock
offered in the merger.  We do not have any immediate plans to list our shares on
any stock exchange. We hope to apply to have our shares quoted on NASDAQ at such
time,  if any,  as we  determine  that we are in a position  to meet the listing
requirements.  Following  completion of the merger,  and prior to any listing of
our shares, we expect that our shares will trade on the over-the-counter  market
in the United States.


          Neither the Securities and Exchange Commission nor any state
      securities commission has approved or disapproved of these securities
           or passed upon the adequacy or accuracy of this prospectus.
                       Any representation to the contrary
                             is a criminal offense.

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


     This proxy statement and prospectus is first being sent to the stockholders
of Travelzoo.com Corporation by electronic transmission on or about [_________],
2001.


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

      The date of this proxy statement and prospectus is [_________], 2001.


                                TABLE OF CONTENTS


         Questions and Answers About the Merger....................1
         Summary...................................................4
         Selected Combined Historical and Pro Forma
           Financial Data .........................................7
         Risk Factors..............................................7
         Forward-Looking Statements...............................16
         The Merger...............................................17
         The Merger Agreement.....................................21
         The Special Meeting......................................24
         Rights of Dissenters.....................................25
         Information About Travelzoo..............................27
         Legal Proceedings........................................36
         Market for Our Common Stock..............................36
         Management's Discussion and Analysis of
           Financial Condition and Results of Operations..........37
         Voting Securities and Principal Holders..................45
         Management...............................................46
         Certain Transactions Between Travelzoo and
           Its Affiliates.........................................48
         Travelzoo Delaware Charter and By-Laws...................51
         Description of Capital Stock.............................51
         Book-Entry Share Ownership...............................54
         Indemnification of Directors and officers................54
         Comparative Rights of Stockholders.......................55
         Where You Can Find Additional Information................62
         Legal Opinion............................................62
         Experts..................................................63
         Index to Combined Financial Statements..................F-1




<PAGE>

                     QUESTIONS AND ANSWERS ABOUT THE MERGER


What is the transaction on which       We are asking the stockholders to approve
  we are voting?                          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. Following  
                                          completion  of the  merger,  Travelzoo
                                          Bahamas  will no  longer  exist.  The
                                          current  stockholders  of Travelzoo  
                                          Bahamas will, by following the 
                                          procedures  specified in the merger  
                                          agreement,  become  stockholders  of
                                          Travelzoo  Delaware. These  procedures
                                          will require  you to  provide  us with
                                          your  name,  your  e-mail  address
                                          registered  with us and your  address.
                                          Travelzoo  Delaware  will  continue to
                                          operate the business now operated by
                                          Travelzoo Bahamas.


Why are you proposing the merger?      The merger will accomplish three goals
                                          for 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 prior unregistered
                                          offering of our shares.


                                       1

<PAGE>

Are my shares of Travelzoo             The original Internet offering of
  registered with the SEC?                Travelzoo 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 prior unregistered offering of our
                                          shares.

What stockholder vote is required to   The approval by the holders of at least a
  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, how     Since Delaware law requires us to
  how do I receive my shares in           maintain the names and addresses of
  Travelzoo Delaware?                     our stockholders, you will be required
                                          to provide  us with your name and
                                          address in order to receive your
                                          shares, in addition to identifying 
                                          yourself as a Travelzoo stockholder. 
                                          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 stockholders to
                                          hold their shares in book-entry form.

What rights do I have if I vote        You may still become a stockholder of
   against the merger?                    Travelzoo Delaware You may still 
                                          become a  stockholder  of Travelzoo  
                                          Delaware if you vote against the 
                                          merger.  To receive your shares in
                                          Travelzoo  Delaware,  you will be 
                                          required to provide us with your name,
                                          e-mail address and mailing address. In
                                          addition, if you vote against the 
                                          merger and you do not wish to become a
                                          stockholder of Travelzoo Delaware, you
                                          may exercise your  dissenters'  rights
                                          under Bahamian law as  described  more
                                          fully in this proxy  statement  and
                                          prospectus.



                                       2

<PAGE>

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


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


Can I sell my shares?                  Shares of Travelzoo Delaware issued in
                                          the merger will be registered with
                                          the SEC and may be transferred. Your
                                          shares of Travelzoo Bahamas were
                                          issued to you without registration
                                          under the US securities laws, and
                                          the transfer of your shares was
                                          accordingly restricted under US
                                          securities laws. Shares which you
                                          have held for at least two years are
                                          now eligible for resale under Rule
                                          144(k) under the Securities Act.
                                          However, there has been no active
                                          market for the shares of Travelzoo
                                          Bahamas. We hope that, following the
                                          merger, there will be greater market
                                          interest in the shares of Travelzoo
                                          Delaware. We cannot assure you,
                                          however, that an active market for
                                          the shares will develop or be
                                          maintained.

How do I know what my shares are       There has been no active market for the
  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 of the   In most cases, the exchange of your
  merger to me?                           shares 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
                                          20. 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 or 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.

Travelzoo


     Travelzoo  provides online marketing  solutions to the travel industry.  We
believe that travel  companies,  because of the quickly expiring nature of their
inventory,   need  fast  and  efficient  ways  to  promote  special  offers  and
last-minute sales. Through our website at  www.Travelzoo.com,  our Travelzoo Top
20 newsletter,  and by using our listing management  software,  travel companies
can  inform  Internet  users  about  their  specials  in a fast,  flexible,  and
cost-effective  manner.  More than 150 companies  use our services.  Some of our
larger customers include Alamo Rent-A-Car, America West Vacations, Budget Rent A
Car,   Holiday  Inn,   Mandalay   Resort   Group,   Park  Place   Entertainment,
Travelocity.com, Travelscape.com, United Airlines and Virgin Atlantic Vacations.
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.  For the six months  ended June 30,  2001,  revenues
increased  to  approximately  $2.9  million from $1.6 million for the six months
ended June 30, 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.  For the six months  ended June 30,  2001,  pre-tax  income
increased to approximately  $656,000 from $385,000 for the six months ended June
30, 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.  For the six months  ended June 30,  2001,  net income  increased  to
approximately $288,000 from approximately $224,000 for the six months ended June
30, 2000. During 2000 and the six months ended June 30, 2001, Travelzoo incurred
nonrecurring   merger   expenses  of   approximately   $231,000  and   $241,000,
respectively. Excluding nonrecurring merger expenses, our pre-tax income and net
income for the year ended  December  31,  2000 was  approximately  $981,000  and
$593,000,  respectively.  For the six  months  ended  June 30,  2001,  excluding
nonrecurring   merger   expenses,   our  pre-tax   income  and  net  income  was
approximately $897,000 and $529,000, respectively.


Our Market Opportunity


     We  believe  that  the  Internet  provides  better  opportunities  for  the
advertising  of travel  specials,  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.

                                       4

<PAGE>

Our History

     Travelzoo  was  founded by Ralph  Bartel in 1998 as a Bahamas  corporation.
Following  the  organization  of  Travelzoo  in 1998,  we created the  Netsurfer
Stockholder  program,  in which we issued  shares in Travelzoo to  approximately
700,000 visitors who registered on our website.  After the Netsurfer Stockholder
offering,  2,577,937  shares of Travelzoo  were owned by  approximately  700,000
Netsurfer  Stockholders,  and  3,070,000  were owned by eight  stockholders  who
obtained their shares through other  issuances.  In December 2000, the number of
shares held by each stockholder doubled in a two-for-one stock split.

     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 or qualify for an exemption from such  registration.  You may be entitled to
certain  remedies under Federal and state securities laws if you acquired shares
in the Netsurfer  Stockholder  program.  In connection  with the merger,  we are
registering  the shares to be offered  in the merger  under the U.S.  Securities
Act. See "Information About Travelzoo" on page 27 for a more thorough discussion
of the Netsurfer Stockholder program and its consequences.


     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
operates the Travelzoo.com  website,  produces and distributes the Travelzoo Top
20 newsletter and handles sales and marketing for the Travelzoo business.  Until
January 22,  2001,  Silicon  Channels  received  50% of the income  before taxes
generated  from the  operation  of the  Travelzoo.com  website in  exchange  for
providing the services  described above. 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 of Travelzoo Bahamas  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 48, 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 procedures for  participation  in the
merger  require  you to  provide  your  name,  e-mail  address  registered  with
Travelzoo  Bahamas and your mailing  address.  The stock of  Travelzoo  Delaware
after the merger, unlike the stock of Travelzoo Bahamas you currently hold, will
be  redeemable  if you do not  provide  your  consent to receive  communications
electronically  from  Travelzoo,  either on the proxy card or on the Internet at
http://www.travelzoo.com/delaware,  or revoke such consent. 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. See "Description of Capital
Stock" on page 51.


                                       5

<PAGE>

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 24.

Risk Factors


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


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 26.

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 20.

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,  Travelzoo Inc.
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 as of June 30, 2001 and for the
six months ended June 30, 2001 and 2000 are derived from the unaudited condensed
interim combined financial statements of Travelzoo.com Corporation and affiliate
which appear  elsewhere in this proxy  statement and  prospectus and include all
adjustments  necessary for a fair  presentation  on the same basis as the annual
financial  statements.  The results of operations  for the six months ended June
30, 2001 are not  necessarily  indicative of results to be expected for the year
ended December 31, 2001. 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 37. The pro forma per
share data is unaudited and is calculated on a basis that reflects the effect of
the  consummation  of the  proposed  merger  as  described  in Note  1(b) 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         Six months       Six months
Combined Statements of              December 31,         December 31,       December 31,     ended June 30,   ended June 30,
  Operations                             1998              1999               2000              2000               2001
                                   ----------------- ------------------ ----------------- ------------------ -----------------
Revenues:
<S>                                   <C>                    <C>              <C>               <C>                <C>       
  Advertising                         $     57,327           893,244          3,852,066         1,602,073          2,844,637 
  Commissions                               26,774            61,015             97,451            39,760              5,395 
                                   ----------------- ------------------ ----------------- ------------------ ----------------
      Total revenues                        84,101           954,259          3,949,517         1,641,833          2,850,032 
Cost of revenues                            25,362           132,803            282,195           129,235            151,269 
                                   ----------------- ------------------ ----------------- ------------------ ----------------
      Gross profit                          58,739           821,456          3,667,322         1,512,598          2,698,763 
                                   ----------------- ------------------ ----------------- ------------------ ----------------
Operating expenses:                                                                                                          
  Sales and marketing                        1,595           350,720          1,484,495           697,464          1,240,024 
  General and administrative                22,046           326,686          1,201,982           430,015            562,709 
  Merger expenses                               --                --            231,303                --            241,180 
                                   ----------------- ------------------ ----------------- ------------------ ----------------
      Total operating expenses              23,641           677,406          2,917,780         1,127,479          2,043,913 
                                   ----------------- ------------------ ----------------- ------------------ ----------------
      Income from operations                35,098           144,050            749,542           385,119            654,850
Interest Income                                 --                --                 --                --                656 
                                   ----------------- ------------------ ----------------- ------------------ ----------------
      Income before income taxes            35,098           144,050            749,542           385,119            655,506 
Income taxes                                 6,213            38,646            387,856           161,151            367,709
                                   ----------------- ------------------ ----------------- ------------------ -----------------
      Net income                      $     28,885           105,404            361,686           223,968            287,797
                                   ================= ================== ================= ================== =================
Pro forma per share data:
Pro forma  basic and  diluted  net
  income per share                    $      --                  .01               .02               .01                .01
                                   ================= ================== ================= ================== =================
Shares used in computing pro
  forma basic net income per share       9,431,741        19,323,064         19,372,791        19,355,147         19,425,147
                                   ================= ================== ================= ================== =================
Shares used in computing pro
  forma diluted net income per           9,431,741        19,355,147         19,466,810        19,478,820         19,425,147
  share
                                   ================= ================== ================= ================== =================
Combined Balance Sheet Data:         As of December    As of December     As of December                      As of June 30,
                                       31, 1998            31, 1999          31, 2000                               2001
                                   ----------------- ------------------ -----------------                    -----------------
Working capital                       $     78,172             171,282          185,734                              515,106
Total assets                               107,051           404,796          1,555,506                            1,741,172
Long-term debt                                  --                --                 --                                   --
Stockholders' equity                        88,885           194,289            574,148                              861,945
</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.  These  requirements
significantly  increase the time necessary for a  broker-dealer  to sell a stock
and limit the available purchasers for a stock.

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


                                       10

<PAGE>

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.  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. 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.

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


                                       11

<PAGE>

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.

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
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.

                                       12

<PAGE>

     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
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 June 30, 2001,
we had 16 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


                                       13

<PAGE>

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.

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.

Risks Related to Legal Uncertainty

We   may face liability as a result of the unregistered and non-exempt Netsurfer
     Stockholder offering.

     We may be sued by some of the  Netsurfer  Stockholders  as a result  of the
Netsurfer  Stockholder  offering.  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.  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.  We could be liable for an amount
equal to the cost of the shares held by the Netsurfer  Stockholders,  as well as
court costs and attorneys'  fees. See  "Information  About Travelzoo" on page 27
for a more  complete  discussion of the  Netsurfer  Stockholder  program and its
consequences.  If we are  sued  and  found  liable  by  some  of  the  Netsurfer
Stockholders,  our  business  and the value of your shares  could be  materially
adversely affected.

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

                                       14

<PAGE>

     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.  While we have a trademark for  "Travelzoo,"  many
companies in the industry have similar names  including  the word  "travel".  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.

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.

                                       15

<PAGE>
                           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," owning an aggregate of 2,577,937 shares. During the first week of
the Netsurfer Stockholder program, we credited 10 shares to the account of every
new  stockholder  who  participated  in the  program.  For the  remainder of the
program,  three  shares  were  credited to each  account of every new  Netsurfer
Stockholder who  participated in the program.  In addition,  following the first
week of the  program,  one share was  credited  to the  account  of an  existing
Netsurfer  Stockholder  if,  at  the  time  of  registration,  a  new  Netsurfer
Stockholder  accurately  provided the registered e-mail address of such existing
Netsurfer Stockholder. No more than 10 shares were credited to any one Netsurfer
Stockholder. The Netsurfer Stockholder program began on April 12, 1998 and ended
on July 30,  1998.  We ended  the  program  when we  reached  700,000  Netsurfer
Stockholders.  Throughout the Netsurfer  Stockholder  program,  we stated on the
Travelzoo website that the Netsurfer  Stockholder program was limited to 700,000
Netsurfer Stockholders.  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.   Currently,   5,155,874   shares  of  Travelzoo  are  owned  by
approximately  700,000  Netsurfer  Stockholders and 6,140,000 are owned by eight
stockholders who obtained their shares through other issuances.


     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.

                                       17

<PAGE>

     The  independent  committee of the Board of Directors of Travelzoo  Bahamas
considered  various  structures  for the  combination.  After  receiving an oral
report from The Mentor Group with respect to the  valuation of Silicon  Channels
and Travelzoo Bahamas,  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
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.  Upon  completion  of this
contribution  transaction,  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. On June 30, 2001, The Mentor Group issued an updated fairness
opinion  that  includes  additional   information   concerning  the  transaction
analysis.  A copy of the updated  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 48, 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 27,
this  registration  is being effected to allow our  stockholders  to have freely
tradable and properly registered shares.


                                       18

<PAGE>

     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 22.

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.  Travelzoo  Bahamas  stockholders  will  have two years
following  the  effective  date of the  merger  to  comply  with  the  necessary
procedures to receive shares of Travelzoo  Delaware common stock in exchange for
their shares of Travelzoo Bahamas common stock. If Travelzoo receives a response
from a stockholder  and  determines  that the  stockholder  has not followed the
proper procedures, it intends to advise the stockholder of the error and provide
an opportunity for the stockholder to submit corrected information.

     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 officers and  directors
of  Travelzoo  Delaware.  The stock of Travelzoo  Delaware,  unlike the stock of
Travelzoo  Bahamas,  will be  redeemable  if you fail to give  your  consent  to
receive communications  electronically from Travelzoo, or withdraw such consent,
as more fully described under "Description of Capital Stock" on page 51.


Material United States Federal Income Tax Consequences

     General.


     The following is a  description  of 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  also sets forth the material  U.S.  federal
income tax consequences of the merger at the corporate level to Travelzoo.

     The   description  is  based  upon  current  law  and  is  subject  to  the
qualifications  contained therein. The description 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  description  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 description
also does not address tax consequences arising out of the tax laws of any state,
local or foreign jurisdiction.

     Further,  this  description  does not purport to address  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.


                                       19

<PAGE>

     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.

     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.


                                       20

<PAGE>

     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 30.5% 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.

     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 which you hold will
be  converted  into the right to receive one share of common  stock of Travelzoo
Delaware  if you comply with the  requirements  below.  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,


                                       21

<PAGE>

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 e-mail 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 your mailing address.

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. At the
time you elect to  exchange  your  shares of  Travelzoo  Bahamas  for  shares of
Travelzoo Delaware, if you have not given such consent at the time of submitting
your proxy,  you will be asked to consent to electronic  delivery of any notices
to be given by Travelzoo Delaware to its stockholders in accordance with Section
323 of the Delaware  General  Corporation  Law and any annual  reports and other
information  to be provided to you in accordance  with the  requirements  of the
U.S.  Securities and Exchange  Commission.  As discussed  under  "Description of
Capital  Stock -- Common  Stock" on page 52,  your  shares  will be  subject  to
redemption   if  you  fail  to  give  consent  to  the  receipt  of   electronic
communications or at any time you choose to revoke such consent.


     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 54.


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;

                                       22

<PAGE>

     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 December 31, 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;

     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.

                                       23

<PAGE>

                               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
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.

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:


                                       24

<PAGE>

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

     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

     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 24. 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.

                                       25

<PAGE>

     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.

                                       26

<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," owning an aggregate of 2,577,937
shares.  During the first week of the Netsurfer Stockholder program, we credited
10 shares  to the  account  of every new  stockholder  who  participated  in the
program.  For the  remainder of the program,  three shares were  credited to the
account of every new Netsurfer  Stockholder who participated in the program.  In
addition,  one  share was  credited  to the  account  of an  existing  Netsurfer
Stockholder  if,  at the  time  of  registration,  a new  Netsurfer  Stockholder
accurately  provided the registered  e-mail  address of that existing  Netsurfer
Stockholder.  The initial  distributions  resulted in the  issuance of 2,100,217
shares and the  additional  distributions  resulted  in the  issuance of 477,720
shares.   The  maximum  number  of  shares  distributed  to  any  one  Netsurfer
Stockholder  was 10.  The  offering  ended on July  31,  1998  when we  obtained
approximately 700,000 new stockholders. After the Netsurfer Stockholder offering
and subsequent two-for-one stock split, 5,155,874 shares of Travelzoo were owned
by approximately 700,000 Netsurfer Stockholders and 6,140,000 are owned by eight
stockholders who obtained their shares through other issuances.

     To register,  registrants in the Netsurfer  Stockholder program 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 registrant had provided. Once the registrants 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 Sections 12(a)(1) and


                                       27

<PAGE>

(2) 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,   less  any  amount  of  income  the  purchaser  received  from  the
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 action
based upon Section  12(a)(1) must be brought  within one year of the  violation,
but not more than 3 years after the security was offered to the public. Any such
action based upon Section 12(a)(2) must be brought within one year from the date
the violation  was  discovered or should have been  discovered  with  reasonable
diligence,  but not more than three  years from the date of sale.  In  addition,
Travelzoo  believes that,  even if such remedies  would be available,  Travelzoo
would have no financial liability because no cash 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
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.

     Actions under state securities laws are subject to statutes of limitations,
which require 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.  The  majority  of  state  securities  laws  provide  for
limitations  periods of 2-3 years from the date of sale.  The minority of states
typically  provide for  limitations  periods  which begin to run on the date the
stockholder   discovered  or  should  have   discovered  the  violation.   These
limitations  periods range from 6 months to 5 years.  Of these minority  states,
many place an  additional  limit in the form of a maximum  time period of 4 to 6
years from the date of violation or date of sale.  Additionally,  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 cash 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


                                       28

<PAGE>

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 48. The  service
agreement  between  Silicon  Channels and  Travelzoo  Bahamas was  terminated in
connection with that transaction.


     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
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 to the travel industry.  We
believe that travel  companies,  because of the quickly expiring nature of their
inventory,   need  fast  and  efficient  ways  to  promote  special  offers  and
last-minute sales. Through our website at  www.Travelzoo.com,  our Travelzoo Top
20 newsletter,  and by using our listing management  software,  travel companies
can  inform  Internet  users  about  their  specials  in a fast,  flexible,  and
cost-effective manner. Our real-time performance tracking software allows travel
companies to optimize their  campaigns.  We believe that our solutions  overcome
many of the limitations that exist with traditional newspaper advertising.

     More than 150  companies  use our  services.  Our  customers  include Alamo
Rent-A-Car,  America West Vacations,  Budget Rent A Car,  Holiday Inn,  Mandalay
Resort Group, Park Place Entertainment, Travelocity.com, Travelscape.com, United
Airlines and Virgin Atlantic  Vacations.  We received at least $10,000 from each
of these customers in 2000.

     While our  website at  www.Travelzoo.com  is an  ongoing  listing of travel
specials,  our  Travelzoo  Top 20  newsletter  is sent by e-mail to  subscribers
weekly and highlights twenty individual travel specials offered by our customers
and other travel suppliers.

     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.


     Our  advertising  revenues are  primarily  derived from listing fees on our
website,  www.Travelzoo.com.  Revenue from our listing service 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.  For the six months ended June 30, 2001,  revenues were
approximately $2.9 million.


                                       29

<PAGE>

Industry Background

     Market for Advertising Special Offers

     According to the Newspaper  Association of America,  travel companies spent
$1.5  billion in 1999 on  national  advertising  in locals  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  a  fast,   flexible,   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. Through
          online  advertising  of  special  offers  that  attract  consumers  to
          supplier's websites, travel suppliers can sell directly to consumers.

     Problems Travel Companies Face and Limitations of Newspaper Advertising

     Our  management  believes that travel  companies  often face the problem of
being able to effectively  market and sell excess inventory (i.e. airline seats,
hotel rooms,  or cruise cabins that are likely to be  unfilled).  The success of
marketing excess  inventory can have a substantial  impact on a travel company's
net income. Almost all costs of travel services are fixed. That is, the costs do
not vary with sales.  A relatively  small amount of unsold  inventory can have a
significant impact on the profitability of a travel company.

     Further,  our  management  believes  that  travel  companies  need a  fast,
flexible,  and  cost-effective  solution for  marketing  excess  inventory.  The
solution must be fast, because travel services are a quickly expiring commodity.
The  period  between  the time  when a  company  realizes  that  there is excess
inventory and the time when the value of the travel service has become worthless
is very short.  The solution  must be flexible,  because the travel  industry is
dynamic and the demand for excess  inventory is  difficult  to  forecast.  It is
difficult for travel  companies to price excess  inventory.  It is difficult for
travel  companies  to  forecast  the  marketing  effort  needed  to sell  excess
inventory.  The marketing must be  cost-effective  because  excess  inventory is
often  sold at  highly  discounted  prices,  which  lowers  the  margin.  Travel
companies need cost-effective solutions for marketing excess inventory.

     Our management believes that newspaper advertising, with respect to
advertising excess inventory, 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 update or deleted when an offer
          is sold out;

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

     o    in many markets,  the small number of newspapers and other print media
          reduces   competition,   resulting   in  high   rates  for   newspaper
          advertising; and

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


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<PAGE>

     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 fast, flexible, and cost-effective solution for
promoting their special offers to consumers.  Our solutions  include listings on
our website, www.Travelzoo.com, and listings 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 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.

     Benefits to Consumers

     Our website, www.Travelzoo.com, and our Travelzoo Top 20 newsletter provide
consumers  information  on  current  special  offers  at no cost  to the  travel
consumer. 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.

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<PAGE>

     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

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


     For the year ended December 31, 1999, our three largest customers accounted
for 23%, 10% and 10% of our revenues,  respectively. For the year ended December
31, 2000, our two largest  customers  accounted for 22% and 11% of our revenues,
respectively.  For the six months ended June 30, 2001, three customers accounted
for 15%, 13% and 12% of our revenues, respectively. No other customers accounted
for 10% or more of revenues in 1999, 2000 or the six months ended June 30, 2001.


                                       32

<PAGE>

Sales and Marketing


     As of June 30, 2001, our direct sales force consisted of three  advertising
sales  managers and a Vice  President of Sales.  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 online  advertising  network.
DoubleClick sells banner advertising,  serves 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.

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


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<PAGE>

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.

     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.

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<PAGE>

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 June 30,  2001,  we had 16  employees,  of whom 10  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
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 52, 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.


                                       35

<PAGE>

     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, to our
Netsurfer Stockholders.

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 May 31, 2002.  In addition,  we rent
approximately  250 square  feet of office  space in New York,  New York under an
operating lease with HQ Global Workplaces, Inc. that expires on May 31, 2002. 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 27,
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.

     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 to have our shares quoted on NASDAQ at such
time,  if any,  as we  determine  that we are in a position  to meet the listing
requirements.  Following  completion of the merger,  and prior to any listing of
our shares, we expect that our shares will trade on the over-the-counter  market
in the United States.


                                       36

<PAGE>

     EquiTrade Securities Corporation in Lake Forest,  California, has indicated
that it intends to attempt to make a market in our securities.  EquiTrade has no
obligation to make a market in our securities, and if it is able to do so, there
are no assurances that a market will be maintained.

     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

     Travelzoo  provides online marketing  solutions to the travel industry.  We
believe that travel  companies,  because of the quickly expiring nature of their
inventory,   need  fast  and  efficient  ways  to  promote  special  offers  and
last-minute sales. Through our website at  www.Travelzoo.com,  our Travelzoo Top
20 newsletter,  and by using our listing management  software,  travel companies
can  inform  Internet  users  about  their  specials  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 our website. 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.  In  January  2001,   Travelzoo  Inc.  was   incorporated  as  a
wholly-owned  subsidiary  of  Travelzoo.com  Corporation  and  Silicon  Channels
Corporation  became a wholly-owned  subsidiary of Travelzoo  Inc.  following the
transaction described in note 1(a) to the combined financial  statements.  As of
June 30, 2001, Travelzoo Inc. operated with 16 employees.


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

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<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
          clickthroughs.  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 us for similar types of advertising
          within six  months.  These  transactions  involve the receipt by us 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,
          amortization of intangible assets and general office expense.

                                       38

<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.  For the six months  ended June 30,
2000, we reported pre-tax income of approximately  $385,000.  For the six months
ended June 30, 2001, we reported pre-tax income of approximately $656,000. As of
December  31,  1999,  and  December  31,  2000,  we  had  retained  earnings  of
approximately  $134,000 and  $496,000,  respectively.  As June 30, 2001,  we had
retained earnings of approximately $784,000.


     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                                       Six months      Six months
                                    (Inception)       Year ended      Year ended         ended          ended
                                         to          December 31,    December 31,       June 30,       June 30,
                                    December 31,
                                 ----------------- ----------------- --------------- --------------- ---------------
                                        1998              1999            2000            2000            2001
                                 ----------------- ----------------- --------------- --------------- ---------------
                                                         (As a Percentage of Total Revenues)
Revenues:
<S>                                        <C>                 <C>             <C>             <C>            <C> 
   Advertising                             68%                 94%             98%             98%            100%
   Commissions                             32                   6               2               2               -
                                 ----------------- ----------------- --------------- --------------- ---------------
      Total revenues                      100                 100             100             100             100
Cost of revenues                           30                  14               7               8               5
                                 ----------------- ----------------- --------------- --------------- ---------------
      Gross profit                         70                  86              93              92              95
Operating expenses:
   Sales and marketing                      2                  37              38              42              44
   General and administrative              27                  34              30              26              20
   Merger expenses                          -                   -               6               -               8
                                 ----------------- ----------------- --------------- --------------- ---------------
      Total operating expenses             29                  71              74              68              72
                                 ----------------- ----------------- --------------- --------------- ---------------
Income from Operations                     41                  15              19              24              23
                                 ----------------- ----------------- --------------- --------------- ---------------
Interest Income                             -                   -               -               -               -
                                 ----------------- ----------------- --------------- --------------- ---------------
Income before income taxes                 41                  15              19              24              23
Income taxes                                7                   4              10              10              13 
                                 ----------------- ----------------- --------------- --------------- ---------------
      Net income                           34%                 11%              9%             14%             10%
                                 ================= ================= =============== =============== ===============
</TABLE>




                                       39

<PAGE>


Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

     Revenues

     Our total revenues  increased to $2.9 million for the six months ended June
30, 2001 from $1.6 million for the six months ended June 30, 2000.  The increase
in our total revenues was primarily due to an increase in advertising revenues.

     o    Advertising. Advertising revenue increased to $2.8 million for the six
          months ended June 30, 2001, from $1.6 million for the six months ended
          June 30, 2000. The increase resulted primarily from an increase in the
          number of travel companies advertising on www.Travelzoo.com.

     o    Commissions.  Commissions  revenue  decreased  to  $5,000  for the six
          months ended June 30, 2001, from $40,000 for the six months ended June
          30,  2000.  The  decrease  resulted   primarily  from  replacement  of
          commission-based agreements with advertising agreements.

     Cost of Revenues

     Our cost of revenues  increased  to $151,000  for the six months ended June
30, 2001,  from $129,000 for the six months ended June 30, 2000. As a percentage
of revenue,  cost of revenues  decreased to 5% for the six months ended June 30,
2001,  from 8% for the six months  ended June 30, 2000.  The  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 $1.2
          million for the six months ended June 30, 2001,  from $697,000 for the
          six months  ended June 30, 2000.  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 $563,000  for the six months  ended June 30,  2001,  from
          $430,000  for  the  six  months  ended  June  30,  2000.  General  and
          administrative  expenses increased primarily due to increased salaries
          for administrative personnel.  General and administrative expenses for
          the six months ended June 30, 2001 includes a credit of $128,000 for a
          reduction to the bad debt reserve principally due to the collection of
          a doubtful account.

     o    Merger  Expenses.  In the six months ended June 30, 2001,  we incurred
          $241,000  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  consist  mostly  of  fees  for  professional  services,
          primarily legal and accounting.

     Income Taxes

     For the six months ended June 30, 2001, we recorded an income tax provision
of $368,000.  For the six months ended June 30, 2000,  we recorded an income tax
provision of $161,000.  Our income is generally taxed in the U.S. and our income
tax  provision  reflects  federal and state  statutory  rates  applicable to our
levels of income and the effect of non-deductible merger expenses in 2001.



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.


                                       40

<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
          year 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  consist  mostly  of  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.

                                       41

<PAGE>

     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,  2000, and the six months ended June 30, 2001. 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.




<TABLE>
<CAPTION>
                                                                         Quarter Ended
                             --------------------------------------------------------------------------------------------------
                             Mar 31,   June 30, Sept 30,  Dec 31,    Mar 31,   June 30, Sept 30,   Dec 31,    Mar 31, June 30,
                              1999       1999     1999      1999      2000       2000     2000      2000       2001     2001
                             -------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
                                                                      (In Thousands)

Revenues:
<S>                          <C>        <C>      <C>       <C>       <C>        <C>      <C>       <C>        <C>      <C>   
    Advertising              $    55    $ 138    $ 212     $ 488     $   728    $  873   $1,088    $1,163     $1,308   $1,537
    Commissions                   18       15       17        11          19        21       52         5          3        3
                             -------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
   Total revenues                 73      153      229       499         747       894    1,140     1,168      1,311    1,540
Cost of revenues                  25       25       25        58          55        74       97        56         77       75
                             -------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
    Gross profit                  48      128      204       441         692       820    1,043     1,112      1,234    1,465
Operating expenses:
    Sales and marketing           13       59       84       195         309       388      444       343        450      790
    General and                   34       66      112       115         147       283      240       532        197      366
  administrative

    Merger expenses                -        -        -         -           -         -        -       231        128      113
                             -------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
    Total operating expenses      47      125      196       310         456       671      684     1,106        775    1,269
Income from operations             1        3        8       131         236       149      359         6        459      196
Interest income                    -        -        -         -           -         -        -         -          -        1
Income before income
      taxes                        1        3        8       131         236       149      359         6        459      197
Income taxes                       -        1        2        35          98        63      146        81        241      127
                             -------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
    Net income               $     1    $   2    $   6     $  96     $   138    $   86   $  213    $  (75)      $218      $70
                             ======== ========= ========= ========= ========= ========= ========= ========= ========= =========
  Net income, before merger
    expenses                 $     1    $   2    $   6     $  96     $   138    $   86   $  213    $  156       $346     $183
                             ======== ========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>


 
                                      42

<PAGE>


     Excluding the effect of the merger expenses,  income before income taxes in
the fourth  quarter of 2000, in the first quarter of 2001 and the second quarter
of 2001 was $237,000, $587,000 and $310,000, respectively.

     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, first quarter of 2001 and second quarter of 2001.


<TABLE>
<CAPTION>

                                                                     Quarter Ended
                             -----------------------------------------------------------------------------------------------------
                              Mar 31,   June 30,   Sept 30,   Dec 31,   Mar 31,  June 30,  Sept 30,  Dec 31,   Mar 31,   June 30,
                                1999      1999       1999      1999      2000       2000      2000     2000      2001       2001
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
                                                              (As a Percentage of Total Revenues)                        
                                                                                                                        
Revenues:                                                                                                               
<S>                                <C>      <C>        <C>       <C>        <C>       <C>      <C>     <C>       <C>        <C> 
   Advertising                     75%      90%        92%       98%        98%       98%      95%     100%      100%       100%
   Commissions                     25       10          8         2          2         2        5        -         -          -
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
      Total revenues              100      100        100       100        100       100      100      100       100        100
Cost of revenues                   34       16         11        12          7         8        8        5         6          5
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
      Gross profit                 66       84         89        88         93        92       92       95        94         95
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
Operating expenses:                                                                                                     
   Sales and marketing             18       39         36        39         41        43       39       29        34         51
   General and administrative      47       43         49        23         20        32       21       46        15         24
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
      Total operating              65       82         85        62         61        75       60       75        49         75
      expenses                                                                                                          
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
Income from operations              1        2          4        26         32        17       32       20        44         20
Interest income                     -        -          -         -          -         -        -        -         -          -
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
      Income before income                                                                                              
                                                                                                                        
        taxes                       1        2          4        26         32        17       32       20        44         20
   Income taxes                     -        1          1         7         14         7       13        7        18          8
                             ---------- --------- ---------- --------- --------- -------- ---------- -------- --------- ----------
      Net income                    1%       1%         3%       19%        18%       10%      19%      13%       26%        12%
                             ========== ========= ========== ========= ========= ======== ========== ======== ========= ==========
</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 June 30, 2001, we had $484,000 in cash.  Cash  increased from $46,000
on  December  31,  2000  primarily  as a result of net income and  decreases  in
accounts  receivable,  prepaid  expenses and other current assets,  and deposits
offset by decreases in accrued  expenses and accounts payable and repayment of a
loan from Ralph  Bartel.  Cash  increased  to $46,000 on December  31, 2000 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.

                                       43

<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 "Certain  Transactions  Between  Travelzoo and
Its Affiliates" on page 48.

     Net cash  generated  from  operating  activities  was $4,000  during  1999,
$409,000  during 2000 and $510,000 in the six months ended June 30, 2001. In the
six months ended June 30, 2001, net cash  generated  from  operating  activities
resulted primarily from our net income, adjusted for certain non-cash items, and
decreases in accounts  receivable,  deposits,  and prepaid  expenses offset by a
decrease of accounts  payable.  Accounts  receivable  decreased  because of more
efficient  collections.  In 1999 and 2000,  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,  $428,000 during 2000, and $22,000 during the six months ended June
30, 2001. In 1998,  net cash was used in investing  activities  for purchases of
equipment and a loan provided to Ralph Bartel. See "Certain Transactions Between
Travelzoo  and Its  Affiliates"  on page  48.  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. In the six
months  ended  June 30,  2001,  net cash was used in  investing  activities  for
equipment purchases.

     Net cash  provided by financing  activities  was $60,000  during  1998,  $0
during 1999 and $54,000  during 2000.  Net cash used in financing  activities in
the six months ended June 30, 2001, was $50,000.  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. In the six months ended June 30, 2001, net cash was used
in financing activities for repayment of the loan by Ralph Bartel.

     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 and 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  third  and  fourth
quarters of 2001 related to the  consummation of the merger described herein and
the related  registration of our shares with the SEC. Our cash requirements will
also depend on the number of  stockholders,  following  the merger,  who fail to
consent to  electronic  communications  from  Travelzoo or revoke such  consent.
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 costs.  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


                                       44

<PAGE>

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.

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 July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets."  SFAS No.  141  provides  guidance  on the  accounting  for a  business
combination  at the date a business  combination  is  completed.  The  statement
requires  the  use of  the  purchase  method  of  accounting  for  all  business
combinations  initiated  after June 30,  2001,  thereby  eliminating  use of the
pooling-of-interests  method.  SFAS No. 142 provides  guidance on how to account
for goodwill and intangible  assets after an acquisition is completed.  The most
substantive change is that goodwill will no longer be amortized but instead will
be tested for  impairment  periodically.  This  statement will apply to existing
goodwill and  intangible  assets,  beginning  with fiscal years  starting  after
December 15, 2001. We will adopt this  statement at the beginning of fiscal 2002
and do not  expect  the  effect of  adoption  to have a  material  impact on our
financial statements.


                                       45

<PAGE>

                     VOTING SECURITIES AND PRINCIPAL HOLDERS


     The following table shows, as of June 30, 2001,  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>                  <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
</TABLE>


*    Less than one percent.
(1)  Record and beneficial ownership.

                                       46

<PAGE>

                                   MANAGEMENT


     The  following  table sets forth,  as of June 30, 2001,  the name,  age and
position within Travelzoo of each of our directors and executive officers.


<TABLE>
<CAPTION>

                Name                        Age                                 Position
-------------------------------------    -----------     -------------------------------------------------------


<S>                                          <C>         <C>                                               
Ralph Bartel                                 35          President, Chief Executive Officer, Secretary, and
                                                         Chairman of the Board of Directors
Lisa Su                                      26          Controller
Suzanne L. Durfee                            34          Director
David J. Ehrlich                             38          Director
Suzanna Mak                                  32          Director
Donovan Neale-May                            49          Director
Carol J. S. Roth                             28          Director
Kelly M. Urso                                36          Director
</TABLE>





     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.


     Suzanna 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.

                                       47

<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,  1998,  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>                                                              

Ralph Bartel

President, Chief Executive Officer,
   Secretary                             $ 178,000        --                    --                      --
</TABLE>


     (1) This compensation was provided by Silicon Channels. Mr. Bartel received
no compensation directly from Travelzoo.

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.


                                       48

<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. On January 22, 2001, the service agreement was terminated in connection
with the  contribution  of all the  outstanding  shares of Silicon  Channels  to
Travelzoo  Delaware as described below.  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 18.
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 48. 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 18. 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


                                       49

<PAGE>

subsidiary  of Travelzoo  Bahamas) and Silicon  Channels.  The opinion was to be
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 18.

     On November 4, 2000, the independent committee of the Board of Directors of
Travelzoo  Bahamas received an oral report from The Mentor Group with respect to
the  valuation  of  Silicon  Channels  and  Travelzoo  Bahamas.   Based  on  the
information  provided by The Mentor Group,  their own judgment,  and arms-length
negotiations with Ralph Bartel,  the independent  committee decided to offer Mr.
Bartel a combination of shares and stock options in Travelzoo Delaware resulting
in Mr. Bartel's ownership of 75% of Travelzoo Delaware on a fully diluted basis.
Mr. Bartel accepted the independent  committee's offer. On January 18, 2001, The
Mentor Group issued a written opinion to the independent committee 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, in light of the pending merger of Travelzoo Bahamas and
Travelzoo  Delaware.  Travelzoo  does not  intend  to  request  an update of the
opinion of 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   took  the  opinion  of  The  Mentor  Group  into
consideration,  among other factors,  in making its determination to approve the
contribution   transaction,   the   independent   committee  did  not  base  its
determination  regarding  the  amount  and  form  of the  consideration  for the
contribution  transaction on any  recommendation of The Mentor Group. 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. Stockholders 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  and  the  pending  merger  of
Travelzoo Bahamas and Travelzoo  Delaware.  The Mentor Group's opinion addressed
only the  fairness,  from a  financial  point of view,  to the  stockholders  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  stockholder  of  Travelzoo  Bahamas  as  to  how  such
stockholder  should vote with respect to the merger, or otherwise act in respect
of the merger, and stockholders should not rely upon it as such.

     In arriving at its opinion, The Mentor Group reviewed:

     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

                                       50

<PAGE>

     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
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
stockholder  or board member as to how the  stockholder  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 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.


                                       51

<PAGE>

In  calculating  the discount  rate,  The Mentor Group  considered  the weighted
average  cost of capital.  The  weighted  average  cost of capital is based upon
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.

     Transaction Analysis

     Based on the analysis  described  above,  the estimated  value of Travelzoo
Bahamas was $2.52 million, and the combined estimated value of Travelzoo Bahamas
and Silicon Channels was $5.21 million. Before the contribution transaction, Mr.
Bartel held 100% of the outstanding  shares of Silicon Channels and 52.2% of the
shares of the outstanding  shares of Travelzoo  Bahamas.  The estimated value of
these holdings was $4.005  million,  which is calculated by adding the estimated
value of Silicon Channels ($2.69 million) to the estimated value of Mr. Bartel's
52.2% interest in Travelzoo Bahamas ($1.315 million). After the merger described
in this prospectus and proxy statement, Mr. Bartel will hold approximately 72.2%
of the combined entity.  The estimated value of this ownership,  on the basis of
the same values  specified  above,  will be  approximately  $3.76  million.  The
estimated  value of his  options  to  purchase  2,158,349  shares  of  Travelzoo
Delaware  common stock is $240,000.  The total  estimated  value of his holdings
following  the merger  will be  approximately  $4.000  million,  compared  to an
estimated  total value of $4.005  million  prior to the  transactions  described
herein.

     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.  The board of directors of Travelzoo  Bahamas
selected  The  Mentor  Group  based  on  an  analysis  of  its   experience  and
qualifications,  and also  taking into  account the fees  proposed by The Mentor
Group. Neither Travelzoo Bahamas, Travelzoo Delaware nor any of their affiliates
have had any prior  relationship  with The Mentor Group. As compensation for its
services in connection with the contribution transaction, Travelzoo Bahamas paid
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.  No  portion  of  these  fees is  contingent  on
consummation of the merger.  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."


                                       52

<PAGE>

                          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

     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.


                                       53

<PAGE>

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.

     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.


                                       54

<PAGE>

                           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
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.

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<PAGE>

                       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
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.

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<PAGE>

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
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.

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<PAGE>

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
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


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<PAGE>

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.

     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


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<PAGE>

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 54, 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 company's  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.

     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.

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<PAGE>

     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
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.

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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
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.

                                       62

<PAGE>

     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
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."


                                       63

<PAGE>

                    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 room at 450 Fifth Street,  N.W.,  Washington,
D.C., 20549, 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.



                                       64

<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(a). 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,                June 30,
                                                                                ----------------------------     --------------
                                    Assets                                         1999             2000               2001
                                                                                ----------------------------     --------------
                                                                                                                    (unaudited)
Current assets:
                                                                                                                                    
<S>                                                                             <C>                  <C>               <C>     
     Cash                                                                       $   11,130           45,586            483,657 
     Accounts receivable, less allowance for doubtful accounts                                                                 
        of $10,000, $145,144 and $15,387 as of December 31, 1999,                                                              
        December 31, 2000 and June 30, 2001, respectively                          327,542          783,960            746,038 
     Deposits                                                                        8,186          110,752             32,508 
     Prepaid expenses and other current assets                                      18,233          110,998             16,334 
     Deferred income taxes                                                          14,676          111,113            111,113 
                                                                                ----------------------------      -------------
                                                                                                                               
                 Total current assets                                              379,767        1,162,409          1,389,650 
                                                                                                                               
Deferred income taxes                                                                2,510            2,115              2,115 
Property and equipment, net                                                         22,519          194,315            172,740 
Intangible asset, net                                                                   --          196,667            176,667 
                                                                                ----------------------------      -------------
                                                                                                                               
                 Total assets                                                   $  404,796        1,555,506          1,741,172 
                                                                                ============================      =============
                                                                                                                               
                     Liabilities and Stockholders' Equity                                                                      
                                                                                                                 
Current liabilities:                                                                                             
     Accounts payable                                                           $   63,806          176,892            124,928 
     Accrued expenses                                                               22,700          166,653            192,099 
     Deferred revenue                                                                5,800            2,500             11,920 
     Income tax payable                                                             43,923          523,804            528,041 
     Payroll taxes payable                                                          54,709           47,210             17,469 
     Payable to employee                                                            16,500            9,400                 24 
     Payable to principal stockholder                                                1,047           50,216                 63 
                                                                                ----------------------------      -------------
                                                                                                                               
                 Total current liabilities                                         208,485          976,675            874,544 
                                                                                                                               
Deferred income taxes                                                                2,022            4,683              4,683 
                                                                                ----------------------------      -------------
                                                                                                                               
                 Total liabilities                                                 210,507          981,358            879,227 
                                                                                ----------------------------      -------------
                                                                                                                               
Commitments and contingency                                                                                                    
                                                                                                                               
Stockholders' equity:                                                                                                          
     Common stock                                                                   60,000           78,173             78,173 
     Retained earnings                                                             134,289          495,975            783,772 
                                                                                ----------------------------      -------------
                                                                                                                               
                 Total stockholders' equity                                        194,289          574,148            861,945 
                                                                                ----------------------------      -------------
                                                                                                                               
                 Total liabilities and stockholders'                                                             
                    equity                                                      $  404,796        1,555,506          1,741,172 
                                                                                ============================      =============
</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,         Six months ended June 30,
                                          ---------------- --------------- ------------- -------------- -------------
                                                1998            1999           2000           2000          2001
                                          ---------------- --------------- ------------- -------------- -------------
Revenues:                                                                                       (Unaudited)
<S>                                      <C>                   <C>          <C>            <C>            <C>      
  Advertising                            $       57,327        893,244      3,852,066      1,602,073      2,844,637
  Commissions                                    26,774         61,015         97,451         39,760          5,395
                                          ---------------- --------------- ------------- -------------- -------------
    Total revenues                               84,101        954,259      3,949,517      1,641,833      2,850,032
Cost of revenues                                 25,362        132,803        282,195        129,235        151,269
                                          ---------------- --------------- ------------- -------------- -------------
    Gross profit                                 58,739        821,456      3,667,322      1,512,598      2,698,763
                                          ---------------- --------------- ------------- -------------- -------------
Operating expenses:                                                                                     
  Sales and marketing                             1,595        350,720      1,484,495        697,464      1,240,024
  General and administrative                     22,046        326,686      1,201,982        430,015        562,709
  Merger expenses                                    --             --        231,303             --        241,180
                                          ---------------- --------------- ------------- -------------- -------------
    Total operating expenses                     23,641        677,406      2,917,780      1,127,479      2,043,913
                                          ---------------- --------------- ------------- -------------- -------------
       Income from operations                    35,098        144,050        749,542        385,119        654,850
Interest Income                                      --             --             --             --            656
                                          ---------------- --------------- ------------- -------------- -------------
       Income before income taxes                35,098        144,050        749,542        385,119        655,506
Income taxes                                      6,213         38,646        387,856        161,151        367,709
                                          ---------------- --------------- ------------- -------------- -------------
    Net income                           $       28,885        105,404        361,686        223,968        287,797
                                          ================ =============== ============= ============== =============
Pro forma net income per share                                                                          
(Note 1(b))(unaudited):                                                                                 
                                                                                                        
  Pro forma basic and diluted net                                                                       
    income per share                     $           --            .01            .02            .01            .01
                                          ================ =============== ============= ============== =============
  Shares used in computing pro forma                                                                    
    basic net income per share                9,431,741     19,323,064     19,372,791     19,355,147     19,425,147
                                          ================ =============== ============= ============== =============
  Shares used in computing pro forma                                                                    
    diluted net income per share              9,431,741     19,355,147     19,466,810     19,478,820     19,425,147
                                          ================ =============== ============= ============== =============
</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 June 30, 2001


<TABLE>
<CAPTION>

                                                            Common Stock
                                    --------------------------------------------------------------------------------------------
                                             Travelzoo.com
                                              Corporation                  Travelzoo Inc.                     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     8,129,273     $    50,000            --          60,000
Net income                                      --              --            --              --        28,885          28,885
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
Balances, December 31, 1998             11,155,874          10,000     8,129,273          50,000        28,885          88,885
Net income                                      --              --            --              --       105,404         105,404
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
Balances, December 31, 1999             11,155,874          10,000     8,129,273          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     8,129,273     $    50,000       495,975         574,148
Issuance of common stock to
  Travelzoo.com Corporation                     --              --    11,295,874              --            --              --
  (unaudited)
Net income (unaudited)                          --              --            --              --       287,797         287,797
                                    ----------------   ------------- -------------   ------------- ------------- ---------------
Balances, June 30, 2001
   (unaudited)                          11,295,874       $  28,173    19,425,147     $    50,000       783,772         861,945
                                    ================   ============= =============   ============= ============= ===============
</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                                        Six months ended
                                                     (inception) to    Years ended December 31,               June 30,
                                                       December 31, -----------------------------  ----------------------------
                                                          1998          1999          2000              2000          2001
                                                     -------------- ------------- ---------------  ------------- --------------
Cash flows from operating activities:                                                                     (unaudited)
<S>                                                 <C>                  <C>           <C>             <C>            <C>    
  Net income                                        $      28,885        105,404       361,686         223,968        287,797
     Adjustments  to  reconcile  net  income to 
       net cash (used in)  provided  by
       operating activities:

    Depreciation and amortization                             974          5,795        54,914          14,618         62,622
    Deferred income taxes                                  (4,294)       (10,870)      (93,381)            200             --
    Provision for losses on accounts receivable                --         10,000       135,144          23,915       (128,348)
     Loss on disposal of property and equipment                --             --         4,212           2,361          567
    Stock-based compensation expense                           --             --         9,221          12,669           --
    Changes in operating assets and liabilities:
      Accounts receivable                                 (56,736)      (280,806)     (591,562)       (371,974)       166,270
      Deposits                                             (3,131)        (5,055)     (102,566)       (108,191)        78,244
      Prepaid expenses and other current assets            (7,699)       (10,534)      (92,765)        (11,051)        94,664
      Accounts payable                                      8,476         55,330       113,086         103,966        (51,964)
      Accrued expenses                                         --         22,700       149,405          91,389         25,446
      Deferred revenue                                         --          5,800        (3,300)         (5,800)         9,420
      Income tax payable                                    9,457         34,466       479,881         167,295          4,237
      Payroll taxes payable                                    --         54,709        (7,499)          1,327        (29,741)
      Payable to employees                                     --         16,500        (7,100)         67,701         (9,376)
      Payable to principal stockholder                         --          1,047          (831)             --           (153)
                                                     -------------- ------------- --------------- -------------- --------------
        Net cash (used in) provided by operating
         activities                                       (24,068)         4,486       408,545         212,393        509,685
                                                     -------------- ------------- --------------- -------------- --------------
Cash flows from investing activities:

  Purchases of property and equipment                     (11,687)       (17,601)     (227,589)       (168,090)       (21,614)
  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)       (168,090)       (21,614)
                                                     -------------- ------------- --------------- -------------- --------------
Cash flows from financing activities:

  Proceeds from issuance of common stock                   60,000             --         3,500              --             --
  Loans from principal stockholder                             --             --        50,000          20,000             --
  Repayment of loans from
     principal stockholder                                     --             --            --              --        (50,000)
                                                     -------------- ------------- --------------- -------------- --------------
      Cash provided by (used in) financing
        activities                                         60,000             --        53,500          20,000        (50,000)
                                                     -------------- ------------- --------------- -------------- --------------
Net increase (decrease) in cash                            12,245         (1,115)       34,456          64,303        438,071
Cash at beginning of period/year                               --         12,245        11,130          11,130         45,586
                                                     -------------- ------------- --------------- -------------- --------------
Cash at end of period/year                          $      12,245         11,130        45,586          75,433        483,657
                                                     ============== ============= =============== ============== ==============
Supplemental disclosure of cash flow information:
  Cash paid during period/year for income taxes
                                                    $       1,050         15,050         1,356             900        363,601
                                                     ============== ============= =============== ============== ==============
</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
                           and June 30, 2000 and 2001

      (All information as of and for the six months ended June 30, 2000
                             and 2001 is unaudited)



1)   Summary of Significant Accounting Policies

     (a)  Description of Business and Basis of Presentation

          The accompanying combined financial statements include the accounts of
          Travelzoo.com Corporation and its majority owned subsidiary, Travelzoo
          Inc. consolidated with its subsidiaries (collectively, the Companies).
          The 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.
          Travelzoo.com  was  incorporated  in  the  Bahamas  on May  21,  1998.
          Travelzoo  Inc.  was  incorporated  in  Delaware  as  a  wholly  owned
          subsidiary  of  Travelzoo.com  Corporation  on January 18,  2001.  The
          Companies  operate the  www.Travelzoo.com  website,  which provides an
          online  advertising  medium for the travel industry.  All intercompany
          transactions have been eliminated in combination.

          Prior to January 22,  2001,  Travelzoo.com  Corporation  operated  the
          website through service agreements with Silicon Channels  Corporation.
          Silicon  Channels  Corporation  was  also  founded  by  the  Principal
          Stockholder  and  incorporated  in  California  on September 28, 1998.
          Under the latest service agreement dated January 2, 1999 and in effect
          for the  period  from  January 2, 1999 to January  22,  2001,  Silicon
          Channels Corporation operated the website,  produced and distributed a
          newsletter and sold advertising in return for 50% of the income before
          income taxes  generated  from the  website.  Prior to January 2, 1999,
          Silicon Channels  Corporation  received 5% of the net income generated
          by  the  website  under  a  service   agreement   with   Travelzoo.com
          Corporation  dated  October  10,  1998.  The  January 2, 1999  service
          agreement was  terminated  on January 22, 2001 in connection  with the
          merger of Silicon  Channels  Corporation and Travelzoo Inc.  described
          below.

          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.  Silicon  Channels  Corporation
          became a wholly owned  subsidiary of Travelzoo Inc. as a result of the
          contribution.  The  transaction  was 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. were
          carried forward to the combined company at their historical  costs. In
          addition, all prior period financial statements of Travelzoo Inc. have
          been restated to include the combined results of operations, financial
          position and cash flows of Silicon Channels Corporation.


          As of June 30,  2001, the Principal  Stockholder  owned  approximately
          52% of the outstanding common stock of Travelzoo.com Corporation.  The
          48%  of   Travelzoo.com   Corporation   not  owned  by  the  Principal
          Stockholder   was   owned   by   approximately    700,000   individual
          stockholders.  As of  June 30, 2001,  Travelzoo.com  Corporation owned
          58%  of the  outstanding  common  stock  of  Travelzoo  Inc.  and  the
          Principal Stockholder owned the remaining 42%. Through his holdings in
          the common stock of Travelzoo.com  Corporation and Travelzoo Inc., the

                                       F-7

<PAGE>


          Principal Stockholder owns 72% of the total ownership interests of the
          www.Travelzoo.com website business.


          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,  all
          prior period  financial  statements of Travelzoo Inc. will be restated
          to include the combined results of operations,  financial position and
          cash flows of Travelzoo.com Corporation.

          If all  stockholders  elect to receive  shares in Travelzoo  Inc., the
          Principal  Stockholder  will  continue  to own  72%  of the  ownership
          interests of the  www.Travelzoo.com  website  business  represented by
          holdings in the common stock of Travelzoo Inc.


          The following unaudited pro forma financial information for the period
          from  inception  to June 30,  2001 is  presented to give effect to the
          proposed merger between  Travelzoo.com  Corporation and Travelzoo Inc.
          on the  accompanying  historical  combined  statement of stockholders'
          equity as if the merger had been consummated on May 21, 1998 using the
          proposed  exchange  ratio.  The pro  forma  presentation  assumes  all
          stockholders elect to exchange their shares.




                                      F-8

<PAGE>



<TABLE>
<CAPTION>

                                                Common Stock
                                        ------------------------------
                                               Travelzoo Inc.             Additional                       Total
                                        ------------------------------     paid-in        Retained     stockholders'
                                            Shares          Amount         capital        earnings        equity
                                        ---------------  -------------  ---------------  ------------ ---------------

<S>                                        <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
Net Income                                         --             --               --       287,797         287,797
                                        ---------------  -------------  ---------------  ------------ ---------------
Balances, June 30, 2001                    19,425,147     $  194,251         (116,078)      783,772         861,945
                                        ===============  =============  ===============  ============ ===============
</TABLE>





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

          Pro forma net income per share  gives  effect to the  proposed  merger
          between Travelzoo.com Corporation and Travelzoo Inc. described in Note
          1(a) as if the merger had been  consummated  on May 21, 1998 using the
          proposed  exchange  ratio.  The pro  forma  presentation  assumes  all
          stockholders elect to exchange their shares.

          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:


                                      F-9

<PAGE>



<TABLE>
<CAPTION>

                                           Period from May
                                               21, 1998
                                            (inception) to          Years ended                Six months ended
                                             December 31,           December 31,                   June 30,
                                           ----------------- --------------- -------------- -------------- --------------
                                                 1998            1999           2000           2000             2001
                                           ----------------- --------------- -------------- -------------- --------------

<S>                                            <C>             <C>             <C>            <C>             <C>       
Weighted-average basic number of shares        9,431,741       19,323,064      19,372,791     19,355,147      19,425,147
Effect of directors shares vesting                    --           32,083              --             --              --
Effect of employee stock options                      --               --          94,019        123,673              --
                                           ----------------- --------------- -------------- -------------- --------------
Weighted-average diluted number of shares      9,431,741       19,355,147      19,466,810     19,478,820      19,425,147
                                           ================= =============== ============== ============== ==============
</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.


     (c)  Unaudited Interim Financial Statements

          The accompanying combined financial statements as of June 30, 2001 and
          for the six months  periods ended June 30, 2000 and 2001 are unaudited
          but  include  all  adjustments,  consisting  only of normal  recurring
          adjustments,   that  the  Companies  consider  necessary  for  a  fair
          presentation  of  their  combined  financial   position,   results  of
          operations and cash flows for the interim periods presented.

     (d)  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.


     (e)  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)  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.


          On January 22, 2001, the Principal  Stockholder  transferred ownership
          of the Travelzoo trademark to the Companies. The transfer was recorded
          at the historical cost basis of the Principal Stockholder of $-0-.



     (g)  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

                                       F-10

<PAGE>

          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, $430,130, $113,310 and $470,137 for the period from
          May 21,  1998  (inception)  to  December  31,  1998,  the years  ended
          December  31, 1999 and 2000 and the six months ended June 30, 2000 and
          2001,  respectively.  The Companies'  share of this income,  which has
          been recorded as revenue, was $47,144, $66,691,  $231,885, $55,012 and
          $262,507 for the period from May 21, 1998  (inception) to December 31,
          1998,  the years ended  December  31, 1999 and 2000 and the six months
          ended June 30, 2000 and 2001, 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.


          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



                                       F-11

<PAGE>


          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,  $37,000, $30,000, and $-0- for the period from May 21,
          1998  (inception)  to December 31, 1998,  the years ended December 31,
          1999  and 2000  and the six  months  ended  June  30,  2000 and  2001,
          respectively.

     (h)  Advertising Costs

          Advertising   costs  are  expensed  as  incurred.   Advertising  costs
          (including   barter   advertising)   amounted  to  $1,595,   $169,374,
          $1,161,800,  $556,251,  and  $804,221 for the period from May 21, 1998
          (inception)  to December 31, 1998,  the years ended  December 31, 1999
          and  2000  and  the  six  months   ended  June  30,   2000  and  2001,
          respectively.


     (i)  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.


     (j)  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-12

<PAGE>


     (k)  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 fixed plan
          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.


     (l)  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.


     (m)  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  adopted SFAS No. 133 on January 1,
          2001.  The adoption  did not have an impact on the combined  financial
          statements.


          In July 2001, the Financial Accounting Standards Board issued SFAS No.
          141,  "Business  Combinations"  and SFAS No. 142,  "Goodwill and Other
          Intangible  Assets." SFAS No. 141 provides  guidance on the accounting
          for a  business  combination  at the date a  business  combination  is
          completed.  The statement  requires the use of the purchase  method of
          accounting  for all  business  combinations  initiated  after June 30,
          2001, thereby eliminating use of the pooling-of-interests method. SFAS
          No.  142  provides  guidance  on  how  to  account  for  goodwill  and
          intangible  assets  after  an  acquisition  is  completed.   The  most
          substantive  change is that  goodwill  will no longer be amortized but
          instead will be tested for  impairment  periodically.  This  statement
          will apply to existing goodwill and intangible assets,  beginning with
          fiscal years  starting  after  December 15, 2001.  The Companies  will
          adopt this statement at the beginning of fiscal 2002 and do not expect
          the effect of  adoption to have a material  impact on their  financial
          statements.


                                       F-13

<PAGE>

(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
                                                          --------------------
    Deductions - credited to costs and expenses                   (128,348)
    Deductions - write-offs                                         (1,409)
                                                          --------------------
Balance at June 30, 2001                               $            15,387
                                                          ====================

(3)  Property and Equipment

     Property and equipment consisted of the following:


                                             December 31,           June 30,
                                        -----------------------  -------------
                                          1999         2000           2001
                                        --------- ------------- --------------
Computer hardware and software        $  12,214        182,461        182,461
Office equipment                         17,074         65,407         85,313
                                        --------- ------------- --------------
                                         29,288        247,868        267,774
Less accumulated depreciation             6,769         53,553         95,034
                                        --------- ------------- --------------
Total                                 $  22,519        194,315        172,740
                                        ========= ============= ==============


(4)  Payable to Employees

     Payable  to  employees   represents  expense   reimbursements   payable  to
     employees.

(5)  Payable to Principal Stockholder


     Payable to principal  stockholder includes unsecured loans payable of $-0-,
     $50,000,  and $-0- and expense  reimbursements  payable of $1,047, $216 and
     $63 as of  December  31,  1999,  December  31,  2000,  and June  30,  2001,
     respectively.  The loans did not bear interest and were repaid on March 31,
     2001.


                                       F-14

<PAGE>

(6)  Common Stock

     (a)  Travelzoo.com Corporation


          As of December 31,  1999, the 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.  As of December  31,  2000 and June 30,  2001,  the  authorized
          common  stock  comprised  2,000,000  shares of  series  $.01 par value
          common stock and  20,000,000  shares of $-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, December
          31, 2000 and June 30,  2001 and  9,155,874,  9,295,874  and  9,295,874
          shares of series $-0- par value common stock as of December 31,  1999,
          December  31,  2000 and  June 30,  2001,  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- cash 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.


          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 statement of operations 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 or the six months  ended June
          30, 2001.


          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 June 30, 2001.


                                       F-15

<PAGE>

     (b)  Travelzoo Inc.


          As of June 30, 2001,  the  authorized  capital stock of Travelzoo Inc.
          comprised  40,000,000  shares  of $.01  par  value  common  stock  and
          5,000,000  shares of $.01 par value  preferred  stock.  As of June 30,
          2001,  19,425,147  shares of common  stock and no shares of  preferred
          stock were issued and  outstanding.  In January 2001,  Travelzoo  Inc.
          issued 11,295,874 shares of common stock to Travelzoo.com  Corporation
          and 8,129,273 shares of common stock to the Principal  Stockholder for
          all   outstanding   shares  of  common   stock  of  Silicon   Channels
          Corporation.   The  shares  of  common   stock  of  Silicon   Channels
          Corporation  were  originally  issued to the Principal  Stockholder in
          1998 for cash proceeds of $50,000.


          As part of the  consideration  issued  for the  outstanding  shares of
          Silicon  Channels  Corporation,  Travelzoo  Inc.  also  issued  to the
          Principal  Stockholder  in January 2001 fully  vested and  exercisable
          options to acquire  2,158,349 shares of common stock. The options have
          an exercise price of $1.00 and expire in January 2011.

(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-16

<PAGE>

<TABLE>
<CAPTION>


                                                             1998              1999              2000
                                                         --------------   ----------------   --------------

<S>                                                    <C>                        <C>             <C>    
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
                                                         ==============   ================   ==============
</TABLE>



     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
     Travelzoo  Inc.  Reportable  segment  information  for each  company  is as
     follows:


                                       F-17

<PAGE>

<TABLE>
<CAPTION>

                                                   Period from May 21, 1998 (inception) to December 31, 1998
                                       ----------------------------------------------------------------------------------
                                          Travelzoo.com
                                           Corporation         Travelzoo Inc.        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
                                       ==================   ==================   ==================   ===================
                                                                  Year ended December 31, 1999
                                       ----------------------------------------------------------------------------------
                                          Travelzoo.com
                                           Corporation         Travelzoo Inc.        Eliminations           Combined
                                       ------------------   ------------------   ------------------   -------------------
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
December 31, 1999                     $           119,647              397,253             (112,104)             404,796
                                       ==================   ==================   ==================   ===================
                                                                  Year ended December 31, 2000
                                       ----------------------------------------------------------------------------------
                                          Travelzoo.com
                                           Corporation         Travelzoo Inc.        Eliminations           Combined
                                       ------------------   ------------------   ------------------   -------------------
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 and amortization        $                 --               54,914                   --               54,914
                                       ==================   ==================   ==================   ===================
Total assets as of
December 31, 2000                    $            599,715            1,766,397             (810,606)           1,555,506
                                       ==================   ==================   ==================   ===================
</TABLE>


                                       F-18

<PAGE>


<TABLE>
<CAPTION>

                                                                Six months ended June 30, 2000
                                       ----------------------------------------------------------------------------------
                                          Travelzoo.com
                                           Corporation         Travelzoo Inc.        Eliminations           Combined
                                       ------------------   ------------------   ------------------   -------------------
<S>                                  <C>                             <C>                 <C>                   <C>      
Revenue from external customers      $                 --            1,641,833                   --            1,641,833
Revenue from income sharing
  arrangements                                    206,324                   --             (206,324)                  --
                                       ------------------   ------------------   ------------------   -------------------
Total revenues                       $            206,324            1,641,833             (206,324)           1,641,833
                                       ==================   ==================   ==================   ===================
Segment income before income taxes   $            102,132              282,987                   --              385,119
                                       ==================   ==================   ==================   ===================
Depreciation                                           --               14,618                   --               14,618
                                       ==================   ==================   ==================   ===================
Total assets as of
June 30, 2000                        $            238,861              979,507             (235,332)             983,036
                                       ==================   ==================   ==================   ===================


                                                               Six months ended June 30, 2001
                                       ----------------------------------------------------------------------------------
                                          Travelzoo.com       Travelzoo Inc.        Eliminations           Combined
                                           Corporation
                                       ------------------   ------------------   ------------------   -------------------
Revenue from external customers      $                 --            2,850,032                   --            2,850,032
Revenue from income sharing
  arrangements                                     59,333                   --              (59,333)                  --
                                       ------------------   ------------------   -------------------  -------------------
Total revenues                       $             59,333            2,850,032              (59,333)           2,850,032
                                       ==================   ==================   ==================   ===================
Segment income before income taxes   $             46,748              608,758                   --              655,506
                                       ==================   ==================   ==================   ===================
Depreciation and amortization                          --               62,622                   --               62,622
                                       ==================   ==================   ==================   ===================
Total assets as of
   June 30, 2001                                  665,306            2,152,018           (1,076,152)           1,741,172
                                       ==================   ==================   ==================   ===================
</TABLE>




To date,  substantially  all assets and  customers  of the  Companies  have been
located in the United States of America.


                                       F-19

<PAGE>

     Significant customer information is as follows:



<TABLE>
<CAPTION>

                                                                                            Percentage of Accounts
                                       Percent of Total Revenue                                   Receivable
                  -------------------------------------------------------------------    ------------------------------
                    Period from May
                       21, 1998
                    (inception) to          Years Ended          Six Months Ended
                     December 31,          December 31,             June 30,              December 31,       June 30,
                  -------------------- ---------------------- -----------------------    ------------------ -----------
Customer                  1998               1999       2000        2000        2001        1999      2000        2001
--------                  ----               ----       ----        ----        ----        ----      ----        ----

<S>                        <C>                 <C>        <C>         <C>         <C>        <C>       <C>         <C>
        A                  54%                 7%         6%          3%          9%         10%       16%         25%
        B                  25%                 4%         --          --          --          --        --          --
        C                   --                10%         3%          4%          4%          --        4%          7%
        D                   --                23%        22%         28%         15%         39%       16%          7%
        E                   --                10%        11%          5%          --         22%        --          --
        F                   --                 1%         4%         17%          1%          3%       11%          1%
        G                   --                 --         8%         13%         13%          --        9%          9%
        H                   --                 --         4%          --         12%          --       19%         16%
</TABLE>






(9)  Commitments and Contingency


     The Companies lease office space in Mountain View,  California,  and in New
     York City, New York,  under operating  leases which expire on May 31, 2002.
     The future minimum rental payments under these operating  leases as of June
     30, 2001, was $263,600.

     Rent expense was $-0-,  $75,000,  $154,498,  $65,377,  and $126,158 for the
     period from May 21,  1998  (inception)  to December  31, 1998 for the years
     ended December 31, 1999 and 2000 and the six months ended June 30, 2000 and
     2001, 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,
     the  SEC  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  significant  liability  exists  for  potential  remedies
     available under  securities  laws to recipients of "free shares"  primarily
     since no cash consideration was received for the shares.



                                       F-20

<PAGE>
                                                                         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
         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

                                       

<PAGE>

                            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
                                       

<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."

     (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.

                                       A-1

<PAGE>

                                   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.

     (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


                                       A-2

<PAGE>

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
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
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

                                       A-3

<PAGE>

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.


                                   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

                                       A-4

<PAGE>

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.

     (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
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:
 
                                       A-5

<PAGE>

                 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
         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

                                       A-6

<PAGE>

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 1 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;

     (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.

     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.

-------------
1 The date "May 1, 2001" was deleted and replaced with  "December 31, 2001"
pursuant to that  certain  Amendment to the  Agreement  and Plan of Merger dated
August 30, 2001 by and between Travelzoo.com Corporation and Travelzoo Inc.

                                       A-7

<PAGE>

     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  650-943-2433

                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 650-943-2433 

                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


     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.

                                       A-8

<PAGE>

     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]


     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: /s/ Ralph Bartel
                                                --------------------------------
                                                 Name:  Ralph Bartel
                                                 Title:  Chief Executive Officer


                                             TRAVELZOO INC.

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










                                      A-9

<PAGE>
                                                                         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 Upon Triggering
     Event.  At any time or times on or after a  Triggering  Event  (as  defined
     below),  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 a Triggering Holder (as defined below) (the "Redemption Shares") be
     redeemed ("Redemption Election") at a price per share of Common Stock equal
     to (A) if 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  Triggering  Holder  written notice
     ("Notice  of  Redemption")  by  electronic  mail,  facsimile  or  overnight
     courier,  after  the  occurrence  of a  Triggering  Event.  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 each Triggering 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.
                                      

<PAGE>

                  (b) "Triggering  Event". A "Triggering  Event" shall be deemed
     to have occurred at such time as the  occurrence  of the  revocation by any
     holder of Common Stock of consent to electronic  notice and  communications
     from the Corporation.  A "Triggering  Holder" shall be any holder of Common
     Stock who takes action resulting in a Triggering Event.

     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:

                  (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

                                       B-2

<PAGE>

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
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-3

<PAGE>

                                                                         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.

          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
                                       

<PAGE>

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.

          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

                                      C-2

<PAGE>

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.

                                   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.

                                       C-3

<PAGE>

                                   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 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

                                       C-4

<PAGE>

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,  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-5

<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
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.


     Please check the appropriate box below:


     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 with notice of such
posting via email transmission)  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.


<TABLE>
<CAPTION>


<S>                                                      <C>    
Name(s):
                                                         -------------------------------------------------------------

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

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

Voter Control Number (which Travelzoo previously
  provided 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.
</TABLE>




                             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, 1989

                               (as amended, 1998)

Rights of dissenters.

81.(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) a   disposition   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.

(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
                                       

<PAGE>

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

                     [Letterhead of The Mentor Group, Inc.]


June 30, 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  stockholders,  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 stockholders 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 that has an estimated value of $2.69 million,  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  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



<PAGE>

not be treated as an incentive  stock  option under  Section 422 of the Internal
Revenue Code of 1986, as amended.  The estimated  value of Travelzoo  Bahamas is
$2.52 million.  The combined estimated value of Travelzoo Bahamas,  Silicon, and
Travelzoo Delaware is $5.21 million.  Before the Contribution,  Mr. Bartel holds
100% of the  outstanding  shares  of  Silicon  and  52.2% of the  shares  of the
outstanding shares of Travelzoo Bahamas. Before the Contribution,  the estimated
value of Mr. Bartel's holdings is $4.005 million,  which is calculated by adding
the value of  Silicon  ($2.69  million)  to the value of the 52.2%  interest  in
Travelzoo Bahamas ($1.315 million). After the Contribution and Merger, Mr Bartel
will hold approximately 72.2% of the combined entity. After the Contribution and
Merger, the estimated value of Mr. Bartel's  ownership,  excluding stock options
will be  approximately  $3.76  million.  The  estimated  value of the  option to
purchase 2,158,349 shares of Travelzoo Delaware Common Stock is $240,000.

     The analysis  considered  Travelocity.com,  Inc., Cheap Tickets,  Inc., and
Expedia, Inc. as guideline companies. The analysis considered the price-to-sales
multiple, the price-to-EBITDA  multiple,  and the price-to-pretax  multiple. The
valuation  multiples of Silicon were lower than the  multiples of the  guideline
companies. The valuation multiples of Travelzoo Bahamas were in the middle range
of the price-to  EBITDA  multiples and in the upper range of the price-to  sales
multiples  because  Travelzoo Bahamas did not have historical cost of goods sold
and the EBITDA,  as a percentage  of sales,  was much greater than the guideline
company's EBITDA to sales ratio.

     The analysis also  considered an income approach to value.  For Silicon,  a
127%  annual  growth  rate in earnings  was used over the  four-year  projection
period.  Thereafter,  a  long-term  growth  rate of 4% was used.  For  Travelzoo
Bahamas,  a 142%  annual  growth rate in  earnings  was used over the  four-year
projection  period.  Thereafter,  a long-term  growth  rate of 4% was used.  The
guideline  companies had historical  growth rates that ranged from 133% to 248%.
The estimated cost of capital for Silicon was 38% and for Travelzoo  Bahamas was
31%.  It was assumed  that the cost of capital  would be higher than the cost of
capital for the guideline companies.  The capital structure,  used in the income
approach for both Silicon and Travelzoo Bahamas, was assumed to be 100% equity.

     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.

                                       F-2

<PAGE>

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.

     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. 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, Inc.


THE MENTOR GROUP, INC.

                                       F-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.

     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.

                                       F-4

<PAGE>

     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.

     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


                                       F-5

<PAGE>

those of  management.  Management  accepts  the  responsibility  for any related
financial reporting with respect to the assets or properties encompassed by this
opinion.

     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.


                                       F-6

<PAGE>


 
                                    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


                                       II-1

<PAGE>

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.

     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 the company 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 August 30, 2001.


                           TRAVELZOO INC.

                           By:                /S/ RALPH BARTEL
                               -------------------------------------------------
                                                 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
              /S/ RALPH BARTEL                  Executive Officer                         August 30, 2001
---------------------------------------
                Ralph Bartel

                 /S/ LISA SU                  Controller (Chief Accounting
---------------------------------------         Officer)                                  August 30, 2001
                  Lisa Su

             SUZANNE L. DURFEE*               Director                                    August 30, 2001
---------------------------------------
             Suzanne L. Durfee


              DAVID J. EHRLICH*               Director                                    August 30, 2001
---------------------------------------
              David J. Ehrlich


                SUZANNA MAK*                  Director                                    August 30, 2001
---------------------------------------
                Suzanna Mak

             DONOVAN NEALE MAY*               Director                                    August 30, 2001
---------------------------------------
             Donovan Neale-May

              CAROL J. S. ROTH*               Director                                    August 30, 2001
---------------------------------------
              Carol J. S. Roth

               KELLY M. URSO*                 Director                                    August 30, 2001
---------------------------------------
               Kelly M. Urso
</TABLE>





                                       *BY:           /S/ RALPH BARTEL
                                            ------------------------------------
                                                        Ralph Bartel
                                                      Attorney-in-fact




                                  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.






                                 BRYAN CAVE LLP
                             ONE METROPOLITAN SQUARE
                           211 N. BROADWAY, SUITE 3600
                         ST. LOUIS, MISSOURI 63102-2750
                                 (314) 259-2000
                            FACSIMILE: (314) 259-2020


                                                                     Exhibit 8.1



                                August 30, 2001

Board of Directors
Travelzoo Inc.
800 West El Camino Real, Suite 180
Mountain View, CA 94040


Dear Board of Directors:


     This opinion is being delivered to you in connection with the Agreement and
Plan of Merger  dated as of January 19, 2001 (the  "Merger  Agreement"),  by and
between Travelzoo.com  Corporation,  a Bahamas corporation ("Travelzoo Bahamas")
and  Travelzoo  Inc.,  a Delaware  corporation  ("Travelzoo  Delaware").  Unless
otherwise  indicated,  capitalized  terms used  herein  shall  have the  meaning
ascribed to them in the Merger Agreement.


     In rendering this opinion, we have reviewed copies of the Merger Agreement,
the Proxy  Statement/Prospectus  filed on Form S-4  (Registration No. 333-55026)
(the  "Proxy   Statement/Prospectus"),   letters  containing  certain  customary
representations  to be executed by officers of Travelzoo  Bahamas and  Travelzoo
Delaware  (the  "Representation  Letters")  and such other  documents as we have
deemed necessary or relevant for purposes of this opinion.

     In  rendering  the  opinion  set  forth  herein,  we have  assumed  (i) the
genuineness of all signatures
 on documents we have examined,  (ii) the authority
and capacity of the individual or individuals who executed any such documents on
behalf of any person, (iii) the authenticity of all documents submitted to us as
originals,  (iv) the  conformity  to the  original  documents  of all  documents
submitted to us as copies,  (v) the accuracy and  completeness  of all documents
made available to us, (vi) the accuracy as to the facts of all  representations,
warranties   and  written   statements,   including   but  not  limited  to  the
Representation Letters and the Proxy Statement/Prospectus, (vii) the accuracy of
the facts  concerning  the  Merger  that have come to our  attention  during the
engagement, (viii) the Merger will be consummated in the manner described in the
Proxy  Statement/Prospectus  and the  Merger  Agreement  and that all  covenants
therein or  contemplated  thereby  are or will be  performed  without  waiver or
breach  thereof,  (ix) the Merger  will be  reported  by  Travelzoo  Bahamas and
Travelzoo  Delaware on their respective tax returns in a manner  consistent with
the opinion as set forth below, and (x) any representation or statement made and
qualified  with  respect to  "knowledge"  or  otherwise  similarly  qualified is
correct without such qualification. We have also assumed, without investigation,
that all documents,  warranties and covenants relating to the Merger on which we
have  relied in  rendering  the  opinion  set forth below and that were given or
dated earlier than the date of this letter continue to remain accurate,  insofar
as relevant to the opinion set forth herein,  from such earlier date through and
including the date of this letter.

     Our  opinion  is  expressly  conditioned  on, the  accuracy  as of the date
hereof, and the continuing accuracy, of all such facts, information,  covenants,
statements  and  representations  through  and as of the  effective  date of the


<PAGE>

Merger.  If the  assumptions  referred  to or set forth  herein,  in the  Merger
Agreement,  the Proxy  Statement/Prospectus or in the Representation Letters are
untrue for any reason, or if the Merger is consummated in a manner  inconsistent
with   the   manner   as   described   in  the   Merger   Agreement   or   Proxy
Statement/Prospectus, our opinion, as expressed below, may be adversely affected
and may not be relied upon.

     In rendering our opinion,  we have considered the applicable  provisions of
the Internal Revenue Code of 1986, as amended (the "Code"),  Treasury Department
regulations  promulgated  thereunder,  interpretative  rulings  of the  Internal
Revenue Service, pertinent judicial authorities and such other authorities as we
have  considered  relevant.   It  should  be  noted,   however,  that  statutes,
regulations,  judicial decisions and administrative  interpretations are subject
to  change  at any  time,  possibly  with  retroactive  effect.  A change in the
authorities or the facts, information,  covenants, statements,  representations,
or  assumptions  upon which our opinion is based could  affect our  conclusions.
This opinion is expressed as of the date hereof,  and we are under no obligation
to supplement or revise our opinion to reflect  changes  (including  any changes
that have retroactive effect) in the applicable statutes, regulations,  judicial
decisions or administrative interpretations, or any changes that would cause any
statement, representation or assumption herein to no longer be true or correct.

     Based solely upon and subject to the foregoing,  we are of the opinion that
the  discussion  contained in the Proxy  Statement/Prospectus  under the caption
"Certain  United  States  Federal  Income  Tax  Consequences,"  subject  to  the
limitations,  qualifications and assumptions  described therein,  sets forth the
material  United  States  federal  income tax  considerations  applicable to the
Travelzoo Bahamas' shareholders in the Merger.

     No  opinion is  expressed  as to any  transaction  other than the Merger as
described  in  the  Merger  Agreement,  or as  to  any  transaction  whatsoever,
including  the  Merger,  if all  of the  transactions  described  in the  Merger
Agreement  are not  consummated  in  accordance  with the  terms  of the  Merger
Agreement and without waiver of any material provision thereof.

     The foregoing opinion reflects our professional  judgment as to the matters
as to which it relates.  Our opinion is based on, and assumes the  validity  of,
the Code, rules and regulations  promulgated  thereunder and the interpretations
thereof  existing on this date.  Our  opinion  represents  judgments  concerning
complex  and  uncertain  issues,  and is  not  binding  upon  any  other  taxing
authority.  No assurance can be given that our opinion will not be challenged by
any taxing  authority or that any such  challenge  will not be  successful.  Any
change in applicable law or any of the facts and circumstances described herein,
or inaccuracy in any of the  assumptions  on which we have relied may affect the
continuing validity of our opinion.


     This  opinion  is being  delivered  solely  in  connection  with the  Proxy
Statement/Prospectus. We consent to the filing of this opinion as Exhibit 8.1 to
the Proxy Statement/Prospectus.  In giving this consent, we do not admit that we
are within the category of persons whose consent is required  under Section 7 of
the Securities  Act of 1933, as amended,  or the rules or regulations of the SEC
promulgated thereunder.


                                 Very truly yours,

                                 BRYAN CAVE LLP



                         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 Amendment No. 2 to the  registration  statement on Form S-4 of Travelzoo Inc.
filed on or about August 28,  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
August 28, 2001