As Filed with the Securities and Exchange Commission on January 15, 2002
================================================================================
                                                      Registration No. 333-55026

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                          PRE-EFFECTIVE AMENDMENT NO. 4
                                       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                       36-4415727
(State or other             (Primary Standard              (I.R.S. Employer
jurisdiction of         Industrial Classification         Identification No.)
incorporation                 Code Number)
or organization)

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

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

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

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

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

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

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

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

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

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>

======================================== ================= ================= ======================= =====================
                                                               Proposed
                                                               maximum
                                                              aggregate         Proposed maximum          Amount of
 Title of each class of securities to      Amount to be     offering price     aggregate offering      registration fee
             be registered                  registered         per unit              price                  (1)(2)
---------------------------------------- ----------------- ----------------- ----------------------- ---------------------
<S>                                         <C>                  <C>                <C>                      <C>
      Common Stock, no par value            19,425,147           N/A                $643,527                 $170
======================================== ================= ================= ======================= =====================
</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 JANUARY 15, 2002

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

                   Notice of Special Meeting of Stockholders
                                               , 2002 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 [_________],  2002 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  and freely
               tradable 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.

     Early last 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
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  Travelzoo  business  through  their  holdings in
Travelzoo  Bahamas.  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  Travelzoo  business  (which  will then  consist of  Travelzoo
Delaware and Silicon  Channels) and the remaining  stockholders will continue to
own  28% 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 , 2002, 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.

     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
January      , 2002



<PAGE>

               Proxy Statement for Special Meeting of Stockholders
                          of Travelzoo.com Corporation
                         to be Held on [_________], 2002

                             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 9.

     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.  Following  completion  of the  merger,  we expect that our
shares will trade on the over-the-counter market in the United States. If we are
in a  position  to meet the  requirements  for  listing  our  shares  on a stock
exchange in the future,  we will consider the  advisability of such a listing at
the time.

          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 [_________],
2002.

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

     The date of this proxy statement and prospectus is [_________], 2002.



<PAGE>


                                Table of Contents


Questions and Answers About the Merger.........................................1
Summary........................................................................5
Selected Combined Historical and Pro Forma Financial Data .....................8
Risk Factors...................................................................9
Forward-Looking Statements....................................................17
The Merger....................................................................18
The Merger Agreement..........................................................24
The Special Meeting...........................................................27
Rights of Dissenters..........................................................28
Information About Travelzoo...................................................30
Legal Proceedings.............................................................39
Market for Our Common Stock...................................................39
Management's Discussion and Analysis of Financial Condition and
   Results of Operations......................................................40
Voting Securities and Principal Holders.......................................49
Management....................................................................50
Certain Transactions Between Travelzoo and Its Affiliates.....................52
Travelzoo Delaware Charter and By-Laws........................................55
Description of Capital Stock..................................................55
Book-Entry Share Ownership....................................................57
Indemnification of Directors and officers.....................................57
Comparative Rights of Stockholders............................................58
Where You Can Find Additional Information.....................................66
Legal Opinion.................................................................66
Experts.......................................................................66
Index to Combined Financial Statements.......................................F-1


<PAGE>

                     Questions and Answers about the Merger

What is the transaction on              We are asking the stockholders to
 which we arevoting?                         approve the merger of Travelzoo.com
                                             Corporation, the existing Bahamas
                                             corporation,  which  we  call
                                             Travelzoo Bahamas, into Travelzoo
                                             Inc., a new Delaware corporation,
                                             which we call Travelzoo Delaware.
                                             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,
                                             your  password and your mailing
                                             address. If you no longer have
                                             access to your registered e-mail
                                             address, you will be required to
                                             provide  either your  registered
                                             e-mail  address  or the  serial
                                             numbers of your Travelzoo shares, a
                                             copy of your passport or other
                                             photo id and your mailing 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 registered   The original Internet offering of
  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,
                                             the SEC takes the position that the
                                             issuance of shares such as our
                                             Netsurfer  Stockholder  program
                                             should be registered with the SEC.
                                             In connection with the merger, we
                                             are  registering  the shares of
                                             Travelzoo Delaware which we are
                                             offering under this proxy statement
                                             and prospectus. Consummation of the
                                             merger and  registration of our
                                             shares will have no effect on your
                                             ability to exercise any remedies
                                             which may be available to you under
                                             federal or state securities laws
                                             resulting from the  unregistered
                                             offering of our shares.

What stockholder vote is required to    The approval by  the holders of at least
  approve the merger?                        a 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
  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.


                                        2

<PAGE>

What rights do I have if I vote         You may still become a stockholder of
  against the merger?                        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, your e-mail address
                                             registered with us, your password
                                             and your mailing address. If you no
                                             longer have access to your
                                             registered e-mail address, you must
                                             provide either your registered
                                             e-mail address or the serial
                                             numbers of your Travelzoo shares, a
                                             copy of your passport or other
                                             photo id and your 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.

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

What are the tax consequences 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.

                                        3


<PAGE>

Can I change my vote after I            Yes. You can change your vote at any
  have mailed my signed proxy card?          time 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 (if by mail) 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.

                                        4

<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, Delta Air Lines,  Expedia,  Hilton  Hotels,  Holiday Inn,  Mandalay  Resort
Group,  Park Place  Entertainment,  Travelocity.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 nine months ended September 30, 2001,  revenues
increased  to  approximately  $4.4 million from $2.8 million for the nine months
ended  September  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 nine months  ended  September  30, 2001,
pre-tax income  increased to  approximately  $802,000 from $744,000 for the nine
months ended  September 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 nine months ended  September 30, 2001, net
income decreased to approximately  $348,000 from approximately  $437,000 for the
nine months  ended  September  30,  2000.  During 2000 and the nine months ended
September  30,  2001,   Travelzoo  incurred   nonrecurring  merger  expenses  of
approximately $231,000 and $304,000, 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 nine months ended
September 30, 2001, excluding  nonrecurring merger expenses,  our pre-tax income
and net income was approximately $1.1 million and $652,000, 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.

                                       5

<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 30 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 52, 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,  your e-mail address  registered with us, your
password  and  your  mailing  address.  If you no  longer  have  access  to your
registered  e-mail  address,  you must  provide  either your  registered  e-mail
address or the serial numbers of your Travelzoo  shares, a copy of your passport
or other photo id and your mailing  address.  You will have two years  following
the  effective  date of the merger to comply with those  procedures  and receive
your stock in Travelzoo  Delaware.  Should you make a mistake in  attempting  to
comply with these  procedures,  you will be given an opportunity to correct your
mistake.  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 55.


                                       6

<PAGE>

The Special Meeting; Shares Entitled to Vote

     Our special stockholder meeting will be held at [_________] on [_________],
2002  at   [_________________________________________________].   The  board  of
directors has fixed  [_________],  2002 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 27.

Risk Factors

     See "Risk  Factors,"  starting on page 9, 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 28.

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.



                                       7

<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 September 30, 2001 and
for the nine months  ended  September  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
nine months ended September 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 40. 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                  Nine months
Combined Statements of               December 31,       December 31,       December 31,             ended September 30,
  Operations                             1998              1999               2000              2000                2001
                                   ----------------- ------------------ ----------------- ------------------ -------------------
<S>                                   <C>                 <C>                <C>               <C>                <C>

Revenues:
  Advertising                         $     57,327           893,244          3,852,066         2,688,877          4,418,705
  Commissions                               26,774            61,015             97,451            92,354              6,455
                                   ----------------- ------------------ ----------------- ------------------ -------------------
         Total revenues                     84,101           954,259          3,949,517         2,781,231          4,425,160
Cost of revenues                            25,362           132,803            282,195           226,262            225,188
                                   ----------------- ------------------ ----------------- ------------------ -------------------
         Gross profit                       58,739           821,456          3,667,322         2,554,969          4,199,972
                                   ----------------- ------------------ ----------------- ------------------ -------------------
Operating expenses:
  Sales and marketing                        1,595           350,720          1,484,495         1,141,113          2,160,339
  General and administrative                22,046           326,686          1,201,982           669,845            935,688
  Merger expenses                               --                --            231,303                --            303,669
                                   ----------------- ------------------ ----------------- ------------------ -------------------
         Total operating expenses           23,641           677,406          2,917,780         1,810,958          3,399,696
                                   ----------------- ------------------ ----------------- ------------------ -------------------
        Income from operations              35,098           144,050            749,542           744,011            800,276
Interest Income                                 --                --                 --                --              1,714
                                   ----------------- ------------------ ----------------- ------------------ -------------------
         Income before income               35,098           144,050            749,542           744,011            801,990
  taxes
Income taxes                                 6,213            38,646            387,856           307,494            453,646
                                   ----------------- ------------------ ----------------- ------------------ -------------------
         Net income                   $     28,885           105,404            361,686           436,517            348,344
                                   ================= ================== ================= ================== ===================
Pro forma per share data:
Pro forma  basic and  diluted  net
  income per share                    $      --                  .01               .02               .02                .02
                                   ================= ================== ================= ================== ===================
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        19,480,505         19,425,147
                                   ================= ================== ================= ================== ===================

Combined Balance Sheet Data:         As of December    As of December     As of December                      As of September
                                        31, 1998          31, 1999           31, 2000                             30, 2001
                                   ----------------- ------------------ -----------------                    -------------------
Working capital                       $     78,172             171,282          185,734                              607,966
Total assets                               107,051           404,796          1,555,506                            1,917,529
Long-term debt                                  --                --                 --                                   --
Stockholders' equity                        88,885           194,289            574,148                              922,492

</TABLE>


                                       8

<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;

                                       9

<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.

                                       10

<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 the current  economic  downturn
continues  or worsens in the U.S. or abroad,  our business and the value of your
shares could be materially adversely affected.

Our  business  may be  sensitive  to events  affecting  the travel  industry  in
general.

     The recent  terrorist  attacks on the United  States have had a  short-term
negative impact on the travel industry. We are not in a position to evaluate the
net effect of these  circumstances  on the business of Travelzoo.  In the longer
term,  our business might be negatively  affected by financial  pressures on its
customer  industry.  However,  our business may also benefit if travel providers
increase  their efforts to promote  special offers or other  marketing  programs
through our website.  If the events result in a long-term negative impact on the
travel  industry,  such  impact  could  have a  material  adverse  effect on our
business and the value of your shares.

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.


                                       11

<PAGE>

We  may face  significant  costs with respect to the delivery of paper copies of
    reports to our stockholders.

     The Securities  Exchange Act of 1934 requires us to provide paper copies of
certain reports to our stockholders. If a significant number of our stockholders
do not consent to electronic  delivery of stockholder  communications  or revoke
such consent,  we may face significant costs related to the printing and mailing
of such  reports.  These costs may drain our  resources  and may have a material
adverse effect on our business and the value of our 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
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.

                                       12

<PAGE>

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

                                       13

<PAGE>

     o    changes in travel company and Internet user requirements.

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

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

     Our future success depends on our ability to attract,  train,  motivate and
retain highly skilled  employees.  Competition  for highly skilled  employees is
intense,  particularly in the Internet industry.  We may be unable to retain our
skilled  employees  or  attract,  assimilate  and retain  other  highly  skilled
employees in the future. We have from time to time in the past experienced,  and
we expect to continue to  experience  in the  future,  difficulty  in hiring and
retaining highly skilled  employees with appropriate  qualifications.  If we are
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 December 31,
2001,  we had 19  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,  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.
                                       14

<PAGE>

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

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

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 30
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;
                                       15

<PAGE>


     o    characteristics and quality of products and services;

     o    sales and other taxes; and

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

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

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

     The  U.S.  Patent  and  Trademark  Office   registered  the  trademark  for
"Travelzoo"  on January 23, 2001.  If we are unable to protect our rights in the
mark, a key element of our  strategy of promoting  Travelzoo as a brand could be
disrupted    and   our    business    could   be   adversely    affected.    See
"Business--Intellectual Property." We may not be able to detect unauthorized use
of our  proprietary  information  or  take  appropriate  steps  to  enforce  our
intellectual  property rights.  In addition,  the validity,  enforceability  and
scope of protection of intellectual  property in Internet-related  industries is
uncertain and still evolving. The laws of other countries in which we may market
our services in the future are  uncertain  and may afford little or no effective
protection of our intellectual property. The unauthorized  reproduction or other
misappropriation  of our  proprietary  technology  could enable third parties to
benefit from our  technology  and brand name without paying us for them. If this
were to occur, our business could be materially adversely affected.

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

     We cannot be certain that our  products,  content and brand names do not or
will not infringe  valid  patents,  copyrights  or other  intellectual  property
rights held by third parties.  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 e-mail may
subject us to potential  risks,  such as  liabilities  or claims  resulting from
unsolicited e-mail or spamming, lost or misdirected messages, security breaches,
illegal  or  fraudulent  use of  e-mail  or  interruptions  or  delays in e-mail
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.


                                       16

<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.



                                       17

<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.


                                       18

<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 52, 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 have filed 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 30,
this  registration  is being effected to allow our  stockholders  to have freely
tradable and properly registered shares.

                                       19

<PAGE>

     Travelzoo Bahamas and Travelzoo Delaware have entered into an Agreement and
Plan of Merger,  dated January 19, 2001, as amended,  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 24.

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 transaction  diagram on the following page outlines
the structure of the Travelzoo business before and after the merger.

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.

                                       20

<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.

                                       22

<PAGE>

[transaction diagram]

                                       22

<PAGE>

     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.

     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.

                                       23

<PAGE>

     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 the appropriate 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,
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
          your  password.  If you do not remember your  password,  you can use a
          form available on the Travelzoo  website to request that your password
          be  e-mailed to your  registered  e-mail  address.  If you do not have
          access to your  registered  e-mail  address,  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.

                                       24

<PAGE>

     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 hope most of our stockholders
will consent to the use of electronic delivery of stockholder  communications so
that we may use this method 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  whether  you  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.

     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 57.

Conditions to the Merger

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

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

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

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

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

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

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


                                       25

<PAGE>

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 March 1, 2002 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.


                                       26

<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  _________,  2002 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 _______ __, 2002.

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 ____________ ___,
2002 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:


                                       27

<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 or  copying,  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 27. 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.

                                       28

<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 becomes 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.

     A copy of the statute governing these dissenters' rights appears as Annex E
to this proxy statement and prospectus and is incorporated herein by reference.


                                       29

<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
(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.



                                       30

<PAGE>

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

                                       31

<PAGE>

     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 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, Delta Air Lines, Expedia,
Hilton Hotels,  Holiday Inn,  Mandalay Resort Group,  Park Place  Entertainment,
Travelocity.com,  United Airlines and Virgin Atlantic Vacations.  We received at
least $10,000 from each of these customers in 2001.

     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 nine months ended September 30, 2001,  revenues
were approximately $4.4 million.

                                       32

<PAGE>

Industry Background

     Market for Advertising Special Offers

     According to the Newspaper  Association of America,  travel companies spent
$1.4 billion in 2000 on national  advertising in newspapers (source:  Market and
Business Analysis, NAA, March 2001). 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 1.5
          million unique visitors per month,  as reported by Media Metrix,  Inc.
          for the month of April  2001.  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 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,  2001,  our  customer  base  included  over 150 travel
companies, including travel suppliers, consolidators, and travel agents. Some of
our customers are:

         Alamo Rent-a-Car                    Mandalay Resort Group
         America West Vacations              Northwest Airlines Vacations
         Budget Rent A Car                   Norwegian Cruise Line
         Cheap Tickets, Inc.                 Park Place Entertainment
         Delta Air Lines                     Starwood Hotels & Resorts
         Expedia                             Tollman Hundley
         Hilton Hotels                       Travel Services International
         Holiday Inn                         Travelocity.com
         JetBlue Airways                     Uniglobe.com
         Lowestfare.com                      United Airlines
         Lufthansa                           Virgin Atlantic Vacations

We received at least $10,000 of revenue from each of these customers in 2001.

     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 nine months  ended  September  30,  2001,  two  customers
accounted  for 15% and 13% of our  revenues,  respectively.  No other  customers
accounted  for 10% or more of  revenues in 1999,  2000 or the nine months  ended
September 30, 2001.

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<PAGE>

Sales and Marketing

     As of  December  31,  2001,  our direct  sales  force  consisted  of a Vice
President of Advertising Sales and three advertising sales managers.

     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.  In October  2001, we also  purchased the
Internet domain name "Weekends.com."

Competition

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

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

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<PAGE>

     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.

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.

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<PAGE>

     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 December 31, 2001, we had 19  employees,  of whom 13 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 and to the extent our stockholders
consent to such electronic communication.  A stockholder who does not consent to
electronic delivery will receive paper copies of such communications.  Also, any
other  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,  if the cost of delivery
of printed stockholder communications is not economically feasible, we will take
necessary steps to avoid excessive  financial burden to us and our stockholders.
Among the options  available to us to avoid the  financial  burden of paper copy
deliveries  are  effecting  a  reverse  stock  split to  reduce  the  number  of
outstanding shares and, accordingly,  the number of stockholders,  or sponsoring
an odd-lot  tender  offer which would  reduce the number of holders with a small
number of shares.

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<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 30,
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.  In order  to meet  the  NASDAQ  listing  requirements,  Travelzoo
Delaware would have to achieve the following:

     o    stockholders'   equity  of  $5,000,000,   market   capitalization   of
          $50,000,000  or net  income in the  latest  fiscal  year or two of the
          three last fiscal years of $750,000;

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<PAGE>

     o    public float of 1,000,000 shares with a market value of $5,000,000;

     o    a minimum per share bid price of $4;

     o    have three market makers; and

     o    at least 300 round lot (holding 100 shares or more) stockholders.

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.

     EquiTrade Securities Corporation, of 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
December 31, 2001, Travelzoo Inc. operated with 19 employees.



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<PAGE>

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

     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.


                                       41

<PAGE>

     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.

     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 nine months ended September
30, 2000, we reported  pre-tax income of  approximately  $744,000.  For the nine
months ended  September 30, 2001, we reported  pre-tax  income of  approximately
$802,000.  As of December  31, 1999,  and  December  31,  2000,  we had retained
earnings of approximately $134,000 and $496,000,  respectively. As September 30,
2001, we had retained earnings of approximately $844,000.

     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                                        Nine months    Nine months
                                   (Inception) to     Year ended      Year ended         ended         ended
                                    December 31,     December 31,    December 31,    September 30,  September 30,
                                 ----------------- ---------------- --------------- --------------- --------------
                                        1998             1999            2000            2000           2001
                                 ----------------- ---------------- --------------- --------------- --------------
                                                       (As a Percentage of Total Revenues)

Revenues:
<S>                                       <C>                <C>             <C>             <C>             <C>
   Advertising                             68%                94%             98%             97%            100%
   Commissions                             32                  6               2               3               -
                                 ----------------- ---------------- --------------- --------------- --------------
      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              41              49
   General and administrative              27                 34              30              24              21
   Merger expenses                          -                  -               6               -               7
                                 ----------------- ---------------- --------------- --------------- --------------
      Total operating expenses             29                 71              74              65              77
                                 ----------------- ---------------- --------------- --------------- --------------
Income from Operations                     41                 15              19              27              18
                                 ----------------- ---------------- --------------- --------------- --------------
Interest Income                             -                  -               -               -               -
Income before income taxes                 41                 15              19              27              18
Income taxes                                7                  4              10              11              10
                                 ----------------- ---------------- --------------- --------------- --------------
      Net income                           34%                11%              9%             16%              8%
                                 ================= ================ =============== =============== ==============
</TABLE>



                                       42

<PAGE>

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
     2000

     Revenues

     Our total  revenues  increased  to $4.4  million for the nine months  ended
September  30, 2001 from $2.8  million for the nine months ended  September  30,
2000.  The increase in our total  revenues was due to an increase in advertising
revenues.

     o    Advertising.  Advertising  revenue  increased  to $4.4 million for the
          nine months ended  September 30, 2001,  from $2.7 million for the nine
          months ended September 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 $6,000  for the nine
          months  ended  September  30,  2001,  from $92,000 for the nine months
          ended  September  30,  2000.  The  decrease  resulted  primarily  from
          replacement   of   commission-based    agreements   with   advertising
          agreements.

     Cost of Revenues

     Our cost of  revenues  decreased  to  $225,000  for the nine  months  ended
September 30, 2001,  from $226,000 for the nine months ended September 30, 2000.
As a percentage of revenue, cost of revenues decreased to 5% for the nine months
ended  September 30, 2001, from 8% for the nine months ended September 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 $2.2
          million  for the nine  months  ended  September  30,  2001,  from $1.1
          million for the nine months ended  September 30, 2000. 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 $936,000 for the nine months  ended  September  30, 2001,
          from $670,000 for the nine months ended  September  30, 2000.  General
          and administrative  expenses increased primarily due to an increase in
          expenses for office space. General and administrative expenses for the
          nine months ended September 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 nine months ended  September  30,  2001,  we
          incurred $304,000 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 nine months ended  September  30,  2001,  we recorded an income tax
provision of $454,000. For the nine months ended September 30, 2000, we recorded
an income tax provision of $307,000.  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.



                                       43

<PAGE>

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.

     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.

                                       44

<PAGE>

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

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

     Cost of Revenues

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

     Operating Expenses

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

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

     Income Taxes

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

Quarterly Results of Operations

     The  following  table  sets  forth  a  summary  of our  unaudited  combined
quarterly  results for the last 10 quarters.  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.


                                       45

<PAGE>


<TABLE>
<CAPTION>

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

Revenues:
<S>                           <C>      <C>      <C>     <C>      <C>      <C>      <C>      <C>     <C>       <C>
    Advertising               $ 138    $ 212    $ 488   $   728  $  873   $1,088   $1,163   $1,308  $1,537    1,574
    Commissions                  15       17       11        19      21       52        5        3       3        1
                             ------------------------------------------------------------------------------------------
   Total revenues               153      229      499       747     894    1,140    1,168    1,311   1,540    1,575
Cost of revenues                 25       25       58        55      74       97       56       77      75       74
                             ------------------------------------------------------------------------------------------
    Gross profit                128      204      441       692     820    1,043    1,112    1,234   1,465    1,501
Operating expenses:
    Sales and marketing          59       84      195       309     388      444      343      450     790      920
    General and                  66      112      115       147     283      240      532      197     366      373
  administrative

    Merger expenses               -        -        -         -       -        -      231      128     113       62
                             ------------------------------------------------------------------------------------------
    Total operating expenses    125      196      310       456     671      684    1,106      775   1,269    1,355
Income from operations            3        8      131       236     149      359        6      459     196      146
Interest income                   -        -        -       -        -        -        -        -        1        1
                             ------------------------------------------------------------------------------------------
Income before income

      taxes                       3        8      131       236     149      359        6      459     197      147
Income taxes                      1        2       35        98      63      146       81      241     127       86
                             ------------------------------------------------------------------------------------------
    Net income                $   2    $   6    $  96   $   138  $   86   $  213   $  (75)    $218     $70      $61
                             ==========================================================================================
  Net income, before merger
    expenses                  $   2    $   6    $  96   $   138  $   86   $  213   $  156     $346    $183     $123
                             ==========================================================================================

</TABLE>


     Excluding the effect of the merger expenses,  income before income taxes in
the fourth  quarter of 2000,  the first quarter of 2001,  the second  quarter of
2001  and the  third  quarter  of 2001  was  $237,000,  $587,000,  $310,000  and
$209,000, 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 and all quarters in 2001.

<TABLE>
<CAPTION>

                                                                 Quarter Ended
                            ----------------------------------------------------------------------------------------
                            June 30, Sept 30, Dec 31, Mar 31,  June 30, Sept 30, Dec 31,  Mar 31, June 30, Sept 30,
                              1999     1999     1999    2000     2000     2000     2000    2001     2001     2001
                            ----------------------------------------------------------------------------------------
                                                                (In Thousands)
Revenues:
<S>                            <C>      <C>      <C>       <C>     <C>     <C>      <C>      <C>     <C>      <C>

   Advertising                  90%      92%      98%       98%     98%     95%     100%     100%    100%     100%
   Commissions                  10        8        2         2       2       5        -        -       -        -
                            ----------------------------------------------------------------------------------------
      Total revenues           100      100      100       100     100     100      100      100     100      100
Cost of revenues                16       11       12         7       8       8        5        6       5        5
                            ----------------------------------------------------------------------------------------
      Gross profit              84       89       88        93      92      92       95       94      95       95
                            ----------------------------------------------------------------------------------------
Operating expenses:
   Sales and marketing          39       36       39        41      43      39       29       34      51       58
   General and                  43       49       23        20      32      21       46       15      24       24
     administrative         ----------------------------------------------------------------------------------------
      Total  operating
        expenses                82       85       62        61      75      60       75       49      75       82
                            ----------------------------------------------------------------------------------------
Income from operations           2        4       26        32      17      32       20       44      20       13
Interest income                  -        -        -         -       -       -        -        -       -        -
                            ----------------------------------------------------------------------------------------
      Income before income
        taxes                    2        4       26        32      17      32       20       44      20       13
   Income taxes                  1        1        7        14       7      13        7       18       8        5
                            ----------------------------------------------------------------------------------------
      Net income                 1%       3%      19%       18%     10%     19%      13%      26%     12%       8%
                            ========================================================================================

</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.


                                       46

<PAGE>

Liquidity and Capital Resources

     As of September  30, 2001,  we had $270,000 in cash.  Cash  increased  from
$46,000 on December 31, 2000 primarily as a result of net income offset by a net
use of cash for working capital items,  capital  expenditures 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.

     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 52.

     Net cash  generated  from  operating  activities  was $4,000  during  1999,
$409,000  during 2000 and $296,000 in the nine months ended  September 30, 2001.
In the nine months ended  September 30, 2001,  net cash generated from operating
activities resulted primarily from our net income, adjusted for certain non-cash
items,  and a decrease  in prepaid  expenses  offset by  increases  in  accounts
receivable and deposits and a decrease of accounts payable.  Accounts receivable
increased because of higher sales and slower collections.  Deposits increased as
a result of an advance  payment of $125,000 made in September in anticipation of
the  acquisition  of a domain name. 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 nine months ended
September  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 52. 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 nine months ended  September 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 nine months ended September 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 nine months ended  September 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 fourth quarter 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 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.



                                       47

<PAGE>

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

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 our 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 are adopting this  statement as of the beginning of fiscal
2002 and the effect of adoption will not have a material impact on our financial
statements since we have no recorded goodwill.

     In October 2001, the Financial  Accounting  Standards Board issued SFAS No.
144,  "Impairment of Long-lived  Assets.  SFAS No. 144 supersedes  SFAS No. 121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
be Disposed  of." SFAS No. 144 retains the  requirements  of SFAS No. 121 to (a)
recognize an impairment loss only if the carrying  amount of a long-lived  asset
is not  recoverable  from  its  undiscounted  cash  flows  and  (b)  measure  an
impairment loss as the difference between the carrying amount and the fair value
of the asset.  SFAS No. 144  removes  goodwill  from its scope.  SFAS No. 144 is
applicable to our financial  statements  beginning in 2002. We do not expect the
effect  of  adoption  to  have  a  material  impact  on  our combined  financial
statements.


                                       48

<PAGE>

                     VOTING SECURITIES AND PRINCIPAL HOLDERS

     The  following  table shows,  as of December 31,  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>
Common Stock                   Ralph Bartel                    5,910,000 shares (1)                  52%
                               800 West El Camino Real,
                               Suite 180
                               Mountain View, CA 94040
Common Stock                   David J. Ehrlich                  10,000 shares (1)                    *
                               290 Beacon Street
                               San Francisco, CA 94131
Common Stock                   Suzanne L. Kavert                 10,000 shares (1)                    *
                               59 Alvarado Street
                               San Francisco, CA 94110
Common Stock                   Suzanna Mak                       10,000 shares (1)                    *
                               1709 Sapphire Court
                               Davis, CA 95616
Common Stock                   Donovan Neale-May                 110,000 shares (1)                   1%
                               409 Sherman Avenue
                               Palo Alto, CA 94301
Common Stock                   Carol J. S. Roth                  10,000 shares (1)                    *
                               1643 Johnson Drive, #418
                               Buffalo Grove, IL 60089
Common Stock                   Kelly M. Urso                     10,000 shares (1)                    *
                               38 Brookwood Drive
                               Newton, CT 06470
Common Stock                   All directors and officers       6,070,000 shares (1)                 54%
                               as a group
</TABLE>

*        Less than one percent.

(1)  Record and beneficial ownership.

                                       49

<PAGE>

                                   MANAGEMENT

     The following  table sets forth, as of December 31, 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
David J. Ehrlich                             39          Director
Suzanne L. Kavert                            34          Director
Suzanna Mak                                  33          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.

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

     Suzanne L. Kavert has served as a director since  February 1999.  From 1996
to 1999, Ms. Kavert served as a Corporate  Sales Manager for Budget  Rent-A-Car.
From 1990 to 1996,  Ms.  Kavert  worked as a Marketing  Director  for a regional
charter airline.  Ms. Kavert holds a bachelor's  degree in  communications  from
Southern Connecticut State University.

     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,  an investment bank focusing on
start-ups and  early-stage  growth  companies.  Ms. Roth received her bachelor's
degree from The Wharton School of Business at the University of Pennsylvania.

                                       50

<PAGE>

     Kelly M. Urso has served as a director since February 1999. Since September
2001,  Ms. Urso has been  employed by Reynolds & Rowella LLP. From 1997 to 2001,
Ms. Urso served as the leader of the  expatriate  tax group at General  Electric
International,   Inc.   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

     In October 2001 we granted each director  30,000 options to purchase shares
of our common stock as  compensation  for their  services as a director  (10,000
options  for their  services in 2000 and 20,000  options  for their  services in
2001).  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, 2001. We did not pay any other executive officer over $100,000 in 2001.

<TABLE>
<CAPTION>

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

President, Chief Executive Officer,
   Secretary                             $ 192,000         --                  20,000                    --

</TABLE>


     (1) This salary was provided by Silicon  Channels.  Mr. Bartel  received no
salary 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.

                                       51

<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" below. 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
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.

                                       52

<PAGE>

     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

                                       53

<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.
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.

                                       55

<PAGE>

     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."


                                       55

<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.

    Preferred Stock

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

     o    restricting dividends on our common stock;

     o    diluting the voting power of our common stock;

     o    impairing the liquidation rights of our common stock; or

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

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

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

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

     o    acquisition of us by means of a tender offer;

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

     o    removal of our incumbent officers and directors.

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



                                       56

<PAGE>

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.

                           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 us or 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.


                                       57

<PAGE>

     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.

                       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.

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<PAGE>

     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.

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.

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<PAGE>

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.

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.

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<PAGE>

     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
over capital) or, when no surplus exists, out of net profits for the fiscal year
in which the dividend is declared  and/or the preceding  fiscal year.  Dividends
may not be paid out of net  profits if the  capital of the  corporation  is less
than the amount of capital  represented by the issued and  outstanding  stock of
all classes having a preference upon the  distribution of assets.  The Travelzoo
Delaware certificate of incorporation contains no additional restrictions on the
declaration or payment of dividends.

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

Indemnification and Limitation of Liability of Directors and Officers

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



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<PAGE>

     Under Delaware law, a corporation  may indemnify any person made a party or
threatened to be made a party to any type of proceeding (other than an action by
or in the right of the  corporation)  because  such person is or was an officer,
director, employee or agent of the corporation, or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or entity,  against  expenses,  judgments,  fines and amounts paid in settlement
actually and reasonably incurred in connection with such proceeding: (1) if such
person acted in good faith and in a manner he or she  reasonably  believed to be
in or not opposed to the best interests of the  corporation;  or (2) in the case
of a criminal  proceeding,  such person had no reasonable  cause to believe that
his or her conduct was unlawful.  A corporation  may indemnify any person made a
party or threatened to be made a party to any  threatened,  pending or completed
action or suit brought by or in the right of the corporation because such person
was an officer,  director,  employee or agent of the  corporation,  or is or was
serving at the request of the  corporation as a director,  officer,  employee or
agent of another  corporation  or other entity,  against  expenses  actually and
reasonably incurred in connection with such action or suit if he or she acted in
good faith and in a manner  reasonably  believed  to be in or not opposed to the
best  interests  of  the   corporation,   except  that  there  may  be  no  such
indemnification if the person is found liable to the corporation unless, in such
a case, the court determines the person is entitled thereto.  A corporation must
indemnify a director,  officer,  employee or agent against expenses actually and
reasonably incurred by him or her who successfully defends a proceeding to which
such person was a party because he or she was a director,  officer,  employee or
agent of the corporation.  Expenses incurred by an officer or director (or other
employees  or  agents  as  deemed  appropriate  by the  board of  directors)  in
defending  a civil or  criminal  proceeding  may be paid by the  corporation  in
advance  of  the  final  disposition  of  such  proceeding  upon  receipt  of an
undertaking  by or on behalf of such director or officer to repay such amount if
it  shall  ultimately  be  determined  that  he or  she is  not  entitled  to be
indemnified by the  corporation.  The Delaware law  indemnification  and expense
advancement  provisions  are not  exclusive  of any  other  rights  which may be
granted by the  by-laws,  a vote of  stockholders  or  disinterested  directors,
agreement or otherwise.  As described  under  "Indemnification  of Directors and
Officers" on page 57, 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.

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<PAGE>

Appraisal Rights of Dissenting Stockholders

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

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

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

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

     Under  Bahamian law, a stockholder  of a Bahamian  corporation is generally
entitled to demand  appraisal and obtain payment of the fair value of his or her
shares  in the  event of any  plan of  merger  or  consolidation  to  which  the
corporation  or the  shares  of which he or she holds is a party.  In  addition,
under Bahamian law, with permission of the court, stockholders have the right to
dissent in the event of a sale, transfer,  lease,  exchange or other disposition
of more than 50% of the assets of the company,  certain  redemptions of minority
stockholders and certain reorganizations. In order to exercise the stockholder's
right to dissent,  the stockholder must give written notice to the company at or
before the  stockholders  meeting at which the merger will be voted  upon.  Such
written notice shall include a statement that the stockholder proposes to demand
payment for his shares if the action is taken.

     Within 20 days after the date on which the vote of stockholders authorizing
the merger is taken, the company shall give written notice of the  authorization
or consent to each stockholder who has given written  objection.  Within 20 days
after the date on which the copy of the plan of merger or an outline thereof was
given to the stockholder,  a dissenting  stockholder must give written notice to
the  company  of his or her  decision  to  elect  to  dissent,  provided  that a
stockholder  who dissents must dissent with respect to all shares that he or she
holds in the company. Such notice must state:

     o    the stockholder's name and address;

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<PAGE>

     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.

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.

                                       64

<PAGE>

     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.

     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.

                                       65

<PAGE>

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

                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We have filed with the SEC a registration statement on form S-4 to register
the shares of common  stock of  Travelzoo  Delaware  which will be issued in the
merger.  This proxy  statement  and  prospectus  is a part of that  registration
statement. As allowed by the SEC rules, this proxy statement and prospectus does
not contain all the  information you can find in the  registration  statement or
the  exhibits  to that  registration  statement.  For further  information  with
respect to us, reference is made to the registration  statement and the exhibits
to  that  registration  statement.   Statements  in  this  proxy  statement  and
prospectus concerning the contents of any contract or any other document are not
necessarily  complete. If a contract or document has been filed as an exhibit to
the registration statement, we refer you to that exhibit. Each statement in this
proxy  statement and  prospectus  relating to a contract or document filed as an
exhibit to the  registration  statement is qualified by the filed exhibits.  You
can obtain a copy of the  registration  statement  and the exhibits  through the
SEC, at the SEC's public reference 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.



                                       66

<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,           September 30,
                                                                          --------------------------------------------------
                                     Assets                                     1999            2000             2001
                                                                          --------------------------------------------------
                                                                                                             (unaudited)
 Current assets:
<S>                                                                      <C>                   <C>                <C>
     Cash                                                                $        11,130          45,586            270,397
     Accounts receivable, less allowance for doubtful accounts
        of $10,000, $145,144 and $34,149 as of December 31, 1999,
        December 31, 2000 and September 30, 2001, respectively                   327,542         783,960          1,041,392
     Deposits                                                                      8,186         110,752            157,508
     Prepaid expenses and other current assets                                    18,233         110,998             17,910
     Deferred income taxes                                                        14,676         111,113            111,113
                                                                          ---------------   -------------  -----------------
                 Total current assets                                            379,767       1,162,409          1,598,320

 Deferred income taxes                                                             2,510           2,115              2,115
 Property and equipment, net                                                      22,519         194,315            150,427
 Intangible asset, net                                                                --         196,667            166,667
                                                                          ---------------   -------------  -----------------
                 Total assets                                            $       404,796       1,555,506          1,917,529
                                                                          ===============   =============  =================
                      Liabilities and Stockholders' Equity

 Current liabilities:
     Accounts payable                                                    $        63,806         176,892             74,196
     Accrued expenses                                                             22,700         166,653            248,742
     Deferred revenue                                                              5,800           2,500             58,507
     Income tax payable                                                           43,923         523,804            591,109
     Payroll taxes payable                                                        54,709          47,210             17,468
     Payable to employees                                                         16,500           9,400                332
     Payable to principal stockholder                                              1,047          50,216                 --
                                                                          ---------------   -------------  -----------------
                 Total current liabilities                                       208,485         976,675            990,354
 Deferred income taxes                                                             2,022           4,683              4,683
                                                                          ---------------   -------------  -----------------
                 Total liabilities                                               210,507         981,358            995,037
                                                                          ---------------   -------------  -----------------
 Commitments and contingency

 Stockholders' equity:
     Common stock                                                                 60,000          78,173             78,173
     Retained earnings                                                           134,289         495,975            844,319
                                                                          ---------------   -------------  -----------------
                 Total stockholders' equity                                      194,289         574,148            922,492
                                                                          ---------------   -------------  -----------------
                 Total liabilities and stockholders'
                    equity                                               $       404,796       1,555,506          1,917,529
                                                                          ===============   =============  =================
</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              Nine months ended
                                              December 31,             December 31,               September 30,
                                          -------------------------------------------------------------------------------
                                                  1998             1999          2000          2000          2001
                                          -----------------------------------------------------------------------------
Revenues:                                                                                          (Unaudited)
<S>                                      <C>                     <C>           <C>           <C>           <C>
  Advertising                            $             57,327       893,244     3,852,066     2,688,877     4,418,705
  Commissions                                          26,774        61,015        97,451        92,354         6,455
                                          -----------------------------------------------------------------------------
    Total revenues                                     84,101       954,259     3,949,517     2,781,231     4,425,160
Cost of revenues                                       25,362       132,803       282,195       226,262       225,188
                                          -----------------------------------------------------------------------------
    Gross profit                                       58,739       821,456     3,667,322     2,554,969     4,199,972
                                          -----------------------------------------------------------------------------
Operating expenses:
  Sales and marketing                                   1,595       350,720     1,484,495     1,141,113     2,160,339
  General and administrative                           22,046       326,686     1,201,982       669,845       935,688
  Merger expenses                                          --            --       231,303            --       303,669
                                          -----------------------------------------------------------------------------
    Total operating expenses                           23,641       677,406     2,917,780     1,810,958     3,399,696
                                          -----------------------------------------------------------------------------
       Income from operations                          35,098       144,050       749,542       744,011       800,276
Interest Income                                            --            --            --            --         1,714
                                          -----------------------------------------------------------------------------
       Income before income taxes                      35,098       144,050       749,542       744,011       801,990
Income taxes                                            6,213        38,646       387,856       307,494       453,646
                                          -----------------------------------------------------------------------------
    Net income                           $             28,885       105,404       361,686       436,517       348,344
                                          =============================================================================
Pro forma net income per share (Note 1(b))(unaudited):

  Pro forma basic and diluted net
    income per share                     $                 --           .01           .02           .02           .02
                                          =============================================================================
  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    19,480,505    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 September 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

  (unaudited)                                    --              --     11,295,874             --            --                --
Net income (unaudited)                           --              --             --             --       348,344           348,344
                                     ----------------   ------------- --------------  ------------- -------------- ----------------
Balances, September 30, 2001
  (unaudited)                            11,295,874    $     28,173     19,425,147   $     50,000       844,319           922,492
                                     ================   ============= ==============  ============= ============== ================
</TABLE>



See accompanying notes to combined financial statements

                                      F-5

<PAGE>


                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                        Combined Statements of Cash Flows

<TABLE>
<CAPTION>

                                                       Period from
                                                      May 21, 1998
                                                     (inception) to                                          Nine months ended
                                                      December 31,     Years ended December 31,              September 30,
                                                     --------------- ---------------------------- ------------------------------
                                                         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        436,517          348,344
     Adjustments  to  reconcile  net  income
       to net cash (used in)  provided  by
       operating activities:
    Depreciation and amortization                              974          5,795       54,914         26,184           94,935
    Deferred income taxes                                   (4,294)       (10,870)     (93,381)            --               --
    Provision for losses on accounts receivable                 --         10,000      135,144         32,931         (109,586)
     Loss on disposal of property and equipment                 --             --        4,212             --              567
    Stock-based compensation expense                            --             --        9,221          9,221               --
    Changes in operating assets and liabilities:
      Accounts receivable                                  (56,736)      (280,806)    (591,562)      (303,120)        (147,847)
      Deposits                                              (3,131)        (5,055)    (102,566)      (120,453)         (46,756)
      Prepaid expenses and other current assets             (7,699)       (10,534)     (92,765)        (9,768)          93,088
      Accounts payable                                       8,476         55,330      113,086         87,378         (102,696)
      Accrued expenses                                          --         22,700      149,405         33,089           82,090
      Deferred revenue                                          --          5,800       (3,300)        (4,800)          56,007
      Income tax payable                                     9,457         34,466      479,881        286,939           67,305
      Payroll taxes payable                                     --         54,709       (7,499)       (14,788)         (29,742)
      Payable to employees                                      --         16,500       (7,100)       136,047           (9,068)
      Payable to principal stockholder                          --          1,047         (831)         5,648             (216)
                                                     --------------- ------------- -------------- ------------- ----------------
        Net cash (used in) provided by operating
         activities                                        (24,068)         4,486      408,545        601,025          296,425
                                                     --------------- ------------- -------------- ------------- ----------------
Cash flows from investing activities:

  Purchases of property and equipment                      (11,687)       (17,601)    (227,589)      (181,336)         (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)      (181,336)         (21,614)
                                                     --------------- ------------- -------------- ------------- ----------------
Cash flows from financing activities:

  Proceeds from issuance of common stock                    60,000             --        3,500          3,500               --
  Loans from principal stockholder                              --             --       50,000         40,000               --
  Repayment of loans from
       principal stockholder                                    --             --           --             --          (50,000)
                                                     --------------- ------------- -------------- ------------- ----------------
      Cash provided by (used in) financing
        activities                                          60,000             --       53,500         43,500          (50,000)
                                                     --------------- ------------- -------------- ------------- ----------------
Net increase (decrease) in cash                             12,245         (1,115)      34,456        463,189          224,811
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        474,319          270,397
                                                     =============== ============= ============== ============= ================
Supplemental disclosure of cash flow information:
  Cash paid during period/year for income taxes
                                                    $        1,050         15,050        1,356         20,255          385,102
                                                     =============== ============= ============== ============= ================
</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 September 30, 2000 and 2001

     (All information as of and for the nine months ended September 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  September   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  September  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
          Principal Stockholder owns 72% of the total ownership interests of the
          www.Travelzoo.com website business.



                                       F-7

<PAGE>

          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  September  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                                        --              --              --       348,344          348,344
                                        ----------------  ------------- ---------------- ------------  ---------------
 Balances, September 30, 2001              19,425,147      $  194,251        (116,078)      844,319          922,492
                                        ================  ============= ================ ============  ===============
</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                Nine months ended
                                             December 31,           December 31,                 September 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       125,358              --
                                           ----------------- -------------- -------------- --------------- ---------------
Weighted-average diluted number of shares      9,431,741       19,355,147      19,466,810    19,480,505      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 September 30,
          2001 and for the nine month periods ended  September 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
          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.

                                       F-10

<PAGE>

          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, $202,868 and $554,617 for the period from
          May 21,  1998  (inception)  to  December  31,  1998,  the years  ended
          December  31, 1999 and 2000 and the nine months  ended  September  30,
          2000 and 2001,  respectively.  The  Companies'  share of this  income,
          which has been recorded as revenue,  was $47,144,  $66,691,  $231,885,
          $105,008 and $310,734 for the period from May 21, 1998  (inception) to
          December 31, 1998,  the years ended December 31, 1999 and 2000 and the
          nine months ended September 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
          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, $37,000, and $-0- for the period from May 21,
          1998  (inception)  to December 31, 1998,  the years ended December 31,
          1999 and 2000 and the nine months ended  September  30, 2000 and 2001,
          respectively.

                                       F-11

<PAGE>

     (h)  Advertising Costs

          Advertising costs (including barter  advertising)  amounted to $1,595,
          $169,374, $1,161,800, $907,520, and $1,454,180 for the period from May
          21, 1998  (inception)  to December 31, 1998,  the years ended December
          31, 1999 and 2000 and the nine  months  ended  September  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.

     (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.

                                       F-12

<PAGE>

     (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,  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.  The   Companies
          will  adopt  this  statement  as  of  the  beginning  of  fiscal  2002
          and the  effect  of  adoption will not have a material  impact on  the
          combined financial  statements since there is no recorded goodwill.


                                       F-13

<PAGE>

          In October  2001, the Financial Accounting Standards Board issued SFAS
          No. 144,  "Impairment  of Long-lived  Assets.  SFAS No. 144 supersedes
          SFAS No. 121,  "Accounting for the Impairment of Long-lived Assets and
          for  Long-lived  Assets to be  Disposed  of." SFAS No. 144 retains the
          requirements  of SFAS No. 121 to (a) recognize an impairment loss only
          if the carrying amount of a long-lived  asset is not recoverable  from
          its undiscounted  cash flows and (b) measure an impairment loss as the
          difference  between  the  carrying  amount  and the fair  value of the
          asset.  SFAS No. 144 removes goodwill from its scope.  SFAS No. 144 is
          applicable  to the Companies' financial statements  beginning in 2002.
          The  Companies  do   not  expect  the  effect  of  adoption  to have a
          material  impact  on the combined financial statements.

(2)  Allowance for Doubtful Accounts

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

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

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

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

Balance at December 31, 2000                                        145,144
                                                             ------------------
    Deductions - credited to costs and expenses                    (109,586)
    Deductions - write-offs                                          (1,409)
                                                             ------------------

Balance at September 30, 2001                             $          34,149
                                                             ==================

(3)  Property and Equipment

     Property and equipment consisted of the following:

                                                December 31,    September 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        117,347
                                         --------- -----------  -------------
Total                                  $  22,519     194,315        150,427
                                         ========= ===========  =============

(4)  Payable to Employees

     Payable  to  employees   represents  expense   reimbursements   payable  to
employees.

                                       F-14

<PAGE>

(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
     $-0- as of December 31, 1999,  December 31, 2000,  and  September 30, 2001,
     respectively.  The loans did not bear interest and were repaid on March 31,
     2001.

(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 September 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 September 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 September 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.

          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 September 30, 2001.



                                       F-15

<PAGE>

     (b)  Travelzoo Inc.

          As of September 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 September
          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:

                                       F-16

<PAGE>

                              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:

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

                                       F-17

<PAGE>


     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-18

<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                                           --               54,914                   --               54,914
                                       ==================== ==================== ===================== ====================
                                     $
Total assets as of
  December 31, 2000                  $            599,715            1,766,397             (810,606)           1,555,506
                                       ==================== ==================== ===================== ====================
</TABLE>


                                       F-19

<PAGE>

<TABLE>
<CAPTION>

                                                              Nine months ended September 30, 2000
                                       ------------------------------------------------------------------------------------
                                          Travelzoo.com
                                           Corporation         Travelzoo Inc.        Eliminations           Combined
                                       -------------------- -------------------- --------------------- --------------------
<S>                                  <C>                             <C>                                       <C>
Revenue from external customers      $                 --            2,781,231                   --            2,781,231
Revenue from income sharing
  arrangements                                    400,340                   --             (400,340)                  --
                                       -------------------- -------------------- --------------------- --------------------
Total revenues                       $            400,340            2,781,231             (400,340)           2,781,231
                                       ==================== ==================== ===================== ====================
Segment income before income taxes
                                     $            240,208              497,974                5,829              744,011
                                       ==================== ==================== ===================== ====================

Depreciation                         $                 --               26,184                   --               26,184
Total assets as of
  September 30, 2000                 $            359,600            1,417,808             (353,861)           1,423,547
                                       ==================== ==================== ===================== ====================



                                                             Nine months ended September 30, 2001
                                       -----------------------------------------------------------------------------------
                                          Travelzoo.com
                                           Corporation        Travelzoo Inc.        Eliminations           Combined
                                       -------------------- -------------------- --------------------- --------------------
Revenue from external customers      $                 --            4,418,705                   --            4,418,705
Revenue from income sharing
  arrangements                                     59,333                   --              (59,333)                  --
                                       -------------------- -------------------- --------------------- --------------------
Total revenues                       $             59,333            4,418,705              (59,333)           4,418,705
                                       ==================== ==================== ===================== ====================
Segment income before income taxes                 41,623              760,367                   --              801,990
                                       ==================== ==================== ===================== ====================
Depreciation                         $                 --               64,935                   --               64,935
Total assets as of
  September 30, 2001                 $            660,181            2,336,623           (1,077,521)           1,917,529
</TABLE>



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

                                       F-20

<PAGE>

     Significant customer information is as follows:

<TABLE>
<CAPTION>

                                                                                             Percentage of Accounts
                                       Percent of Total Revenue                                    Receivable
                  -------------------------------------------------------------------    --------------------------------
                    Period from May
                       21, 1998             Years ended         Nine months ended
                    (inception) to         December 31,           September 30,            December 31,      September 30,
                     December 31,
                  -------------------- ---------------------- -----------------------    ------------------ -------------

Customer                  1998               1999       2000        2000        2001        1999      2000          2001
--------                  ----               ----       ----        ----        ----        ----      ----          ----
<S>                        <C>                <C>        <C>         <C>         <C>         <C>       <C>           <C>
        A                  54%                 7%         6%          4%          7%         10%       16%           10%
        B                  25%                 4%         --          --          --          --        --            --
        C                   --                10%         3%          4%          4%          --        4%            5%
        D                   --                23%        22%         24%         15%         39%       16%           16%
        E                   --                10%        11%          5%          --         22%        --            --
        F                   --                 1%         4%          4%          1%          3%       11%            --
        G                   --                 --         8%          7%         13%          --        9%           14%
        H                   --                 --         4%          --          8%          --       19%            --
        I                   --                 --         --          --          6%          --        --           22%
</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
     September 30, 2001, was $191,708 and as of December 31, 2000 was $190,145.

     Rent expense was $-0-,  $75,000,  $154,498,  $88,000,  and $213,268 for the
     period from May 21, 1998  (inception) to December 31, 1998, the years ended
     December 31, 1999 and 2000 and the nine months ended September 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.

(10) Subsequent Events

     (a)  Acquisition of a domain name.

          In October  2001,  the Companies  purchased  the Internet  domain name
          Weekends.com  for  $125,000 in cash and $89,000 in future  advertising
          services.

                                       F-21

<PAGE>

     (b)  Directors Stock Option Grant

          In October 2001,  Travelzoo Inc. granted to each director fully vested
          and exercisable options to purchase 30,000 shares of common stock with
          an exercise  price of $2.00 as  compensation  for their  services as a
          director in 2000 and 2001. A total of 210,000  options  were  granted.
          The options expire in October 2011.


                                       F-22

<PAGE>
                                                                         Annex A




                              AMENDED AND RESTATED
    
                          AGREEMENT AND PLAN OF MERGER

                                 BY AND BETWEEN

                           TRAVELZOO.COM CORPORATION,
             a corporation organized under the Bahamas International
                          Business Companies Act 2000,

                                       and

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


                                   DATED AS OF

                                December 31, 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...............................................3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TRAVELZOO DELAWARE..............3
         3.1. Organization and Good Standing...................................3
         3.2. Capitalization...................................................3
         3.3. Authorization; Binding Agreement.................................3
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TRAVELZOO BAHAMAS................4
         4.1. Organization and Good Standing...................................4
         4.2. Capitalization...................................................4
         4.3. Authorization; Binding Agreement.................................4
ARTICLE V.  ADDITIONAL COVENANTS OF TRAVELZOO BAHAMAS..........................4
         5.1. Shareholder Approval.............................................4
         5.2. Reasonable Best Efforts..........................................4
         5.3. Compliance.......................................................4
ARTICLE VI. ADDITIONAL COVENANTS OF TRAVELZOO DELAWARE AND TRAVELZOO
             BAHAMAS...........................................................5
         6.1. Director and Officer Liability...................................5
         6.2. Registration Statement; Prospectus/Proxy Statement...............5
         6.3. Tax Treatment....................................................6
ARTICLE VII. CONDITIONS........................................................6
         7.1. Conditions to Each Party's Obligations...........................6
              7.1.1. Shareholder Approvals.....................................6
              7.1.2. No Injunction or Action...................................6
              7.1.3. Governmental Approvals....................................6
              7.1.4. Registration Statement....................................6
         7.2. Conditions to Obligations of Travelzoo Delaware..................6
              7.2.1. Travelzoo Bahamas Representations and Warranties..........6
              7.2.2. Performance by Travelzoo Bahamas..........................6
         7.3. Conditions to Obligations of Travelzoo Bahamas...................6
              7.3.1. Travelzoo Delaware Representations and Warranties.........6
              7.3.2. Performance by Travelzoo Delaware.........................6
ARTICLE VIII. TERMINATION AND ABANDONMENT......................................7
         8.1. Termination......................................................7
         8.2. Effect of Termination............................................7
ARTICLE IX. MISCELLANEOUS......................................................7
         9.1. Amendment and Modification.......................................7
         9.2. Waiver of Compliance; Consents...................................8
         9.3. Survival of Representations and Warranties.......................8
         9.4. Notices..........................................................8
         9.5. Binding Effect; Assignment.......................................9
         9.6. Expenses.........................................................9
         9.7. Governing Law....................................................9
         9.8. Counterparts.....................................................9
         9.9. Entire Agreement.................................................9
         9.10. Third Parties...................................................9

                                       

<PAGE>

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



Agreement......................................................................1
Articles of Merger.............................................................1
Closing........................................................................1
Closing Date...................................................................1
Code...........................................................................1
DGCL...........................................................................1
Dissenting Shares..............................................................2
Effective Time.................................................................1
Exchange Agent.................................................................2
Form S-4.......................................................................5
IBCA...........................................................................2
Indemnified Losses.............................................................5
Indemnified Person.............................................................5
Merger.........................................................................1
Merger Consideration...........................................................2
Plan of Merger.................................................................1
Proxy Statement/Prospectus.....................................................5
Surviving Corporation..........................................................1
Travelzoo Bahamas..............................................................1
Travelzoo Bahamas Common Stock.................................................2
Travelzoo Bahamas Shareholders Meeting.........................................4
Travelzoo Delaware.............................................................1
Travelzoo Delaware Common Stock................................................2
Travelzoo Delaware Shareholders Meeting........................................5
                                       

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

     This  Amended and Restated Agreement  and Plan of Merger (the  "Agreement")
is made and entered into as of December 31, 2001,  by and between  Travelzoo.com
Corporation, a corporation  organized under the Bahamas  International  Business
Companies Act 2000 ("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.
 
     D.  Travelzoo Bahamas and Travelzoo Delaware entered into an Agreement  and
Plan of Merger dated January 19, 2001.

     E.  The parties have agreed to certain changes to such Agreement  and  Plan
of Merger and are entering into this Agreement to set forth such amendments  and
to restate the original  Agreement  and  Plan  of  Merger  to  incorporate  such
amendments.

     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  VII
(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: (i) 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; and (ii)
the shares of Travelzoo Delaware which are now held by Travelzoo Bahamas will be
canceled and retired and shall cease to  exist.  To  the extent  that dissenting
shareholders' rights are available under Section 82 of The Bahamas International
Business Companies  Act  2000  (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 canceled.

     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.

     5.1.1.  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.

     5.2.   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:
 
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<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  March 31, 2002 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.


                                       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.

     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:


<PAGE>

         (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 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.

                                       2

<PAGE>

     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.

                                       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.


<PAGE>

     Section  1.7.  Organization.  Meetings  of  stockholders  shall be presided
over  by  the  Chairman  of  the  Board, if  any, or  in his absence by the Vice
Chairman of the Board,  if any, or in  his absence by the  President,  or in his
absence by  a  Vice President,  or  in the absence of the foregoing persons by a
chairman  designated  by  the  Board  of  Directors,  or  in the absence of such
designation  by  a  chairman chosen  at the meeting.  The Secretary shall act as
secretary  of the  meeting, but in his  absence  the chairman of the meeting may
appoint any person to act as secretary of the meeting.

     Section  1.8.  Voting;   Proxies.   Unless   otherwise   provided  in   the
certificate  of  incorporation,   each  stockholder  entitled  to  vote  at  any
meeting of stockholders  shall be entitled to one vote for each  share of  stock
held by  him  which  has  voting  power  upon  the  matter  in  question.   Each
stockholder  entitled to  vote at  a  meeting  of  stockholders  or  to  express
consent  or  dissent  to  corporate  action  in  writing  without  a meeting may
authorize another person or persons  to act for him by proxy,  but no such proxy
shall be voted or acted upon after  three years from its date,  unless the proxy
provides  for  a  longer  period.  A  duly  executed  proxy shall be irrevocable
if it states that it is irrevocable  and if, and only as  long as, it is coupled
with  an  interest  sufficient  in  law  to support  an  irrevocable  power.   A
stockholder  may revoke  any  proxy  which is not  irrevocable  by attending the
meeting  and  voting in person or by filing an  instrument  in writing  revoking
the  proxy  or  another  duly  executed  proxy  bearing  a  later  date with the
Secretary of  the  Corporation.  Voting  at meetings of  stockholders  need  not
be by written  ballot and need not be conducted by inspectors unless the holders
of  a  majority of  the  outstanding shares of all classes of stock  entitled to
vote  thereon  present in person or by proxy at such meeting shall so determine.
At all  meetings of stockholders  for the election of directors,  a plurality of
the  votes  cast  shall  be  sufficient  to  elect.   All  other  elections  and
questions  shall,  unless  otherwise  provided  by law or by the certificate  of
incorporation  or these  by-laws,  be  decided by the vote of the  holders  of a
majority  of the outstanding  shares  of  all  classes of stock entitled to vote
thereon  present in person or by proxy at the meeting, provided  that (except as
otherwise  required by law or by the certificate of incorporation)  the Board of
Directors may require a larger vote upon any election or question.

     Section 1.9.  Fixing  Date for  Determination  of  Stockholders  of Record.
In  order  that  the  Corporation  may determine  the  stockholders  entitled to
notice of or to vote at any meeting of  stockholders or any adjournment thereof,
or  to  express consent to corporate  action  in writing  without a meeting,  or
entitled to receive payment of any dividend or other  distribution or  allotment
of any rights,  or entitled to exercise  any  rights  in respect of any  change,
conversion or exchange of stock or for the purpose of any other  lawful  action,
the  Board of Directors  may fix, in  advance,  a record  date,  which shall not
be more than sixty nor less than ten days before the date of such  meeting,  nor
more than  sixty  days prior to any other  action.  If no record  date is fixed:
(1) the  record date for  determining  stockholders  entitled to notice of or to
vote at a meeting of  stockholders shall be at the close of  business on the day
next  preceding  the day on which  notice is given,  or, if notice is waived, at
the close of business on the day next  preceding the day on which the meeting is
held;  (2) the  record date for determining  stockholders  entitled  to  express
consent to corporate  action in writing without a meeting, when  no prior action
by the Board is necessary,  shall be the day on which the first written  consent
is  expressed; and (3) the  record  date for  determining  stockholders  for any
other purpose shall be at the close of business on  the day on which   the Board
adopts the resolution  relating  thereto.  A  determination  of  stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any  adjournment  of the  meeting; provided, however, that the Board  may fix
a new record date for the adjourned meeting.

     Section  1.10.  List  of  Stockholders  Entitled  to  Vote.  The  Secretary
shall prepare and make, at least ten days before every meeting of  stockholders,
a  complete list of the  stockholders  entitled to vote at the meeting, arranged
in  alphabetical  order,  and showing  the  address of each  stockholder and the
number of shares  registered in the name of each stockholder.  Nothing contained
in this Section 1.10 shall require the Corporation  to  include electronic  mail
addresses  or  other  electronic  contact  information  on such list.  Such list
shall be open to the examination of any  stockholder,  for  any purpose  germane
to the meeting,  during ordinary  business hours,  for a period  of at least ten
days  prior  to  the  meeting,  either (i) on a reasonably accessible electronic
network, which the information required to gain access to such list is  provided
in  the  notice of the  meeting,  or (ii) at the principal  place of business of
the  corporation.  If the meeting is to be held at a place,  then the list shall
be produced and kept at the time and place of the meeting  during the whole time
thereof, and may be inspected by any stockholder who is present.  If the meeting
is to be held solely by means of remote  communication, then the list shall also
be open to  the  examination  of  any  stockholder  during the whole time of the
meeting  on  a  reasonably  accessible  electronic network,  and the information
required to access such list shall be provided with the notice of the meeting.

                                     C-2


<PAGE>

     Section 1.11.  Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the certificate of incorporation, any action  required  by law to be
taken at any annual or special  meeting of  stockholders  of the Corporation, or
any  action  which  may  be  taken  at  any  annual  or  special meeting of such
stockholders,  may be taken without a meeting,  without prior notice and without
a vote,  if a consent in writing,  setting forth the action so taken,  shall  be
signed  by  the  holders of  outstanding  stock having not less than the minimum
number of  votes that would be  necessary  to  authorize  or take such action at
a meeting at which all shares entitled to vote  thereon were present and  voted.
Prompt notice of the taking of the  corporate  action  without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.


                                  ARTICLE II
                              Board of Directors

     Section 2.1.  Powers;  Number;  Qualifications.  The  business  and affairs
of  the Corporation  shall be managed by the Board of  Directors,  except as may
be otherwise  provided by law or in the  certificate of incorporation. The Board
shall  consist of one or more members,  the number thereof to be determined from
time to time by the Board.  Directors need not be stockholders.

     Section 2.2.  Election;  Term of Office;  Resignation;  Removal; Vacancies.
Each director  shall hold office until the annual  meeting of  stockholders next
succeeding  his  election  and  until his  successor is elected and qualified or
until his earlier resignation  or removal.  Any  director may resign at any time
upon  written  notice  to  the  Board  of  Directors or to the  President or the
Secretary of the  Corporation.  Such  resignation  shall take effect at the time
specified  therein,  and  unless  otherwise  specified  therein no acceptance of
such  resignation  shall  be  necessary to make it effective.  Unless  otherwise
provided in the certificate of  incorporation or  these by-laws,  vacancies  and
newly  created  directorships  resulting  from  any  increase in the  authorized
number of  directors  or from any other cause may be filled by a majority of the
directors  then in office, although less than a quorum, or by the sole remaining
director.

     Section  2.3.  Regular   Meetings.   Regular  meetings   of  the  Board  of
Directors  may  be held  at such  places within or without the State of Delaware
and at such times as  the  Board may  from  time to time  determine,  and if  so
determined, notice thereof need not be given.

     Section 2.4.  Special Meetings.  Special meetings of the Board of Directors
may  be  held  at  any  time  or  place  within or without the State of Delaware
whenever  called by the  Chairman  of the  Board,  if any,  by the Vice Chairman
of  the  Board, if  any, by  the  President or by any two directors.  Reasonable
notice thereof shall be given by the person or persons calling the meeting.

     Section  2.5.   Telephonic  Meetings Permitted. Unless otherwise restricted
by  the  certificate of incorporation or these by-laws,  members of the Board of
Directors, or  any  committee  designated  by  the  Board,  may  participate  in
a meeting  of the  Board or of such  committee,  as the case may be, by means of
conference  telephone or  similar  communications  equipment  by  means of which
all persons participating in the  meeting can hear each other, and participation
in a meeting pursuant to this by-law shall constitute presence in person at such
meeting.

     Section 2.6.  Quorum;  Vote  Required  for  Action.  At all meetings of the
Board of Directors  one-third of the entire Board shall  constitute a quorum for
the  transaction  of business.  The vote of a majority of  the directors present
at a meeting  at  which  a  quorum  is  present  shall be  the act of the  Board
unless  the  certificate  of incorporation  or  these  by-laws  shall  require a
vote of a greater  number.  In case at any meeting of the  Board a quorum  shall
not be present,  the members of the Board  present may adjourn the meeting  from
time to time until a quorum shall attend.

     Section  2.7.  Organization.  Meetings of the Board of  Directors  shall be
presided  over by the  Chairman of the  Board,  if any,  or in  his  absence  by
the Vice  Chairman  of the  Board,  if any,  or in his absence by the President,
or in  their absence by a chairman  chosen at the meeting.  The Secretary  shall
act as secretary of the meeting, but in his absence the chairman of the  meeting
may appoint any person to act as secretary of the meeting.

     Section 2.8.  Informal Action  by Directors.  Unless  otherwise  restricted
by the certificate of incorporation or these  by-laws,  any action  required  or
permitted to be taken at any meeting of  the  Board  of  Directors,  or  of  any
committee  thereof,  may be taken without a meeting if all members of the  Board
or of such  committee,  as the case may be, consent  thereto in writing, and the
writing or writings are filed with  the  minutes of  proceedings of the Board or
committee.

                                  C-3


<PAGE>
                              ARTICLE III
                              Committees

     Section 3.1.  Committees.  The  Board  of  Directors  may  designate one or
more  committees,  each  committee to consist  of  one or more of the  directors
of  the  Corporation.  The  Board  may   designate  one  or  more  directors  as
alternate   members   of   any  committee,  who  may   replace  any  absent   or
disqualified  member at any  meeting of the committee.  The  by-laws may provide
that in the absence or  disqualification of a member of a committee,  the member
or members present at any meeting and not  disqualified  from voting, whether or
not such member or members constitute a quorum,  may unanimously appoint another
member of the board of directors to act at the meeting in the  place of any such
absent  or  disqualified  member.  Any such  committee, to the  extent  provided
in  the  resolution  of  the  board  of  directors,  or  in  the  bylaws  of the
corporation,  shall have and may exercise all the powers and  authority  of  the
Board  of  Directors  in  the  management  of  the  business  and affairs of the
Corporation, and may  authorize  the seal of the  Corporation  to be  affixed to
all papers  which may  require  it; but no such committee  shall  have the power
or authority in reference to the following  matter:  (i) approving or  adopting,
or recommending  to the  stockholders,  any action or matter  expressly required
by these  by-laws to be submitted to stockholders for approval or (ii) adopting,
amending or repealing any by-law of the Corporation.

     Section 3.2. Committee Rules.  Unless  the  Board  of  Directors  otherwise
provides,  each committee  designated by  the  Board may make,  alter and repeal
rules for the conduct of its  business.  In the absence of  a  provision  by the
Board  or  a  provision  in  the  rules  of  such  committee  to  the  contrary,
a majority  of the entire  authorized number of members of such committee  shall
constitute a quorum for the  transaction  of  business,  the vote of  a majority
of the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these by-laws.


                             ARTICLE IV
                              Officers

     Section 4.1.   Officers;   Election;   Qualification;   Term   of   Office;
Resignation;  Removal;  Vacancies. As  soon  as  practicable  after  the  annual
meeting of  stockholders  in each year,  the Board of  Directors  shall  elect a
President and a Secretary,  and it may, if it so  determines,  elect  from among
its members a Chairman of the Board  and a  Vice  Chairman  of  the  Board.  The
Board may also elect one or more Vice  Presidents,  one or  more  Assistant Vice
Presidents,  one  or  more Assistant  Secretaries,  a Treasurer and  one or more
Assistant Treasurers and may  give any of  them  such  further  designations  or
alternate titles as it considers desirable.  Each such officer shall hold office
until the first  meeting of the Board after the annual  meeting of  stockholders
next  succeeding his election, and until his successor is elected and  qualified
or until his earlier  resignation  or removal.  Any  officer  may  resign at any
time upon  written  notice to the Board or to  the  President  or the  Secretary
of the Corporation.  Such resignation  shall take effect at  the  time specified
therein,   and  unless  otherwise  specified  therein  no   acceptance  of  such
resignation shall be  necessary to make it  effective.  The Board may remove any
officer with or without cause at  any  time. Any  such removal  shall be without
prejudice  to  the  contractual rights  of  such  officer,  if  any,  with   the
Corporation,  but the election or appointment of an officer shall not of  itself
create contractual rights. Any number of offices may be held by the same person.
Any vacancy  occurring in any office of the Corporation by  death,  resignation,
removal or otherwise may be filled for the unexpired  portion of the term by the
Board at any regular or special meeting.

     Section  4.2.  Powers and Duties of  Executive  Officers.  The  officers of
the  Corporation  shall have such powers  and  duties in the  management of  the
Corporation as may be prescribed by the Board of  Directors  and, to  the extent
not so provided,  as generally  pertain to their respective  offices, subject to
the control of the Board. The Board may require any  officer, agent or  employee
to give security for the faithful performance of his duties.


                             ARTICLE V
                           Miscellaneous

     Section 5.1.  Fiscal Year.  The fiscal  year of  the Corporation  shall  be
determined by the Board of Directors.

     Section 5.2. 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.

                               C-4

<PAGE>

     Section 5.3.  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 5.4.   Indemnification  of   Directors,  Officers  and   Employees.
The  Corporation  shall have power to indemnify  to the full  extent  authorized
by law any person made or  threatened  to be made a party to any action, suit or
proceeding,  whether criminal, civil, administrative or investigative, by reason
of the fact that he, his testator or  intestate  is or was a  director,  officer
or employee of the  Corporation or any  predecessor of the Corporation or serves
or  served   any other  enterprise  as a  director,  officer or  employee at the
request of the Corporation or any predecessor of the Corporation.

     Section 5.5.  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  5.6.  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 5.7.   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 _____________ _____, 2002

     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
__________  , 2002 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, as amended,  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  e-mail
transmission  and postings on Travelzoo  Delaware's  website with notice of such
posting via e-mail 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.

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

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


Voter Control Number
  (which Travelzoo previously
  provided to you by e-mail)       ---------------------------------------------


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

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

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


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

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


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

                           Date:                , 2002

*    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  e-mail  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; e-mail
     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

[GRAPHIC OMITTED]

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
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.



<PAGE>

     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.

     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.

                                 F-4
<page>

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

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

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

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

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

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

     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.

                                 F-5

<page>

     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
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                       II-1

<PAGE>

     The undersigned Registrant hereby undertakes to:

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

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

         ii. Reflect in the prospectus/consent  solicitation any facts or events
     arising after the  effective  date of this  registration  statement (or the
     most  recent  post-effective  amendment  thereof)  which,  individually  or
     together,  represent  a  fundamental  change  in  the  information  in  the
     registration  statement.  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 January 14, 2002.

                                   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                           January 14, 2002
---------------------------------------
                Ralph Bartel

            /s/ Lisa Su                       Controller (Chief Accounting Officer)         January 14, 2002
---------------------------------------
                  Lisa Su

              DAVID J. EHRLICH*               Director                                      January 14, 2002
---------------------------------------
              David J. Ehrlich

             SUZANNE L. KAVERT*               Director                                      January 14, 2002
---------------------------------------
             Suzanne L. Kavert

                SUZANNA MAK*                  Director                                      January 14, 2002
---------------------------------------
                Suzanna Mak

             DONOVAN NEALE-MAY*               Director                                      January 14, 2002
---------------------------------------
             Donovan Neale-May

              CAROL J. S. ROTH*               Director                                      January 14, 2002
---------------------------------------
              Carol J. S. Roth

               KELLY M. URSO*                 Director                                      January 14, 2002
---------------------------------------
               Kelly M. Urso

</TABLE>



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

                                      II-3

<PAGE>





                                  EXHIBIT INDEX

Exhibit
Number             Description

  2.1     Merger  Agreement,   dated  January  19,  2001,  as  amended,  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.



                                      II-4






                                                                    Exhibit 23.1

                         Consent of Independent Auditors

The Board of Directors
Travelzoo.com Corporation:

We consent to the use of our report dated March 22, 2001 on the combined balance
sheets of  Travelzoo.com  Corporation  and affiliate as of December 31, 1999 and
2000, and the related combined  statements of operations,  stockholders'  equity
and cash flows for the period from May 21, 1998 (inception) to December 31, 1998
and for each of the years in the  two-year  period  ended  December  31, 2000 in
Amendment  No. 4 to the  registration  statement on Form S-4 of  Travelzoo  Inc.
filed on or about January 15,  2002, 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
January 14, 2002