SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                        AMENDMENT NO. 2 ON FORM 10-QSB/A
                                 TO FORM 10-QSB

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

For the quarterly period ended            March 31, 2001
                               -----------------------------------------

                                       OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

For the transition period from                     to
                               -------------------    -------------------

                           Commission File No. 0-25435

                      CROSS MEDIA MARKETING CORPORATION
            (Exact Name of Registrant as Specified in Its Charter)


                Delaware                               13-4042921
      (State or Other Jurisdiction        (I.R.S. Employer Identification No.)
   of Incorporation or Organization)

461 Fifth Avenue, 19th Floor, New York, NY                  10017
(Address of Principal Executive Office)                   (Zip Code)

      Registrant's telephone number, including area code: (212) 457-1200

      Indicate by check |X| whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.   Yes  |X|     No
                                                     -------     -------

As of June 5, 2001, there were 35,188,455 shares of the registrant's Common
Stock, par value $.001, outstanding.




<PAGE>



                        Cross Media Marketing Corporation

 Amendment No. 2 on Form 10-QSB/A to the Quarterly Report on Form 10-QSB for
                  the Quarterly Period Ended March 31, 2001

Explanatory Note

      On May 15, 2001, Cross Media Marketing Corporation (the "Company") filed
its Quarterly Report on Form 10-QSB for the three months ended March 31, 2001.
On June 7, 2001, the Company filed Amendment No. 1 on Form 10-QSB/A to its
Quarterly Report on Form 10-QSB for the three months ended March 31, 2001.

      As discussed in Note J to the consolidated financial statements,
subsequent to the issuance of the Company's 2000 consolidated financial
statements, the management of the Company determined that the Company's practice
of reporting remittances to publishers as direct costs and expenses was
inconsistent with the Company's role as an agent for publishers. Accordingly,
the Consolidated Statements of Operations for the three months ended March 31,
2001 and for the three months ended March 31, 2000 have been restated to reflect
the recording of revenues as the amount billed to a customer, less the amount
paid to a publisher when the Company is acting as an agent. The effect of the
restatement is to decrease revenues, net and direct costs and expenses for the
quarters ended March 31, 2001 and March 31, 2000 by $2,111,251 and $1,573,649,
respectively. Gross profit, income (loss) before income taxes, net income (loss)
and the related per share amounts were not affected.

      In addition, certain expenses have been combined and reclassified.

      No attempt has been made to update disclosures for events subsequent to
the amended filing date of June 7, 2001.

      The Financial Statements, Notes to Consolidated Financial Statements and
Management's Discussion and Analysis or Plan of Operation in this filing have
been accordingly revised.

      The items amended are as follows:

      Part I, Item 1          Financial Statements
      Part I, Item 2          Management's Discussion and Analysis or Plan
                              of Operation


<PAGE>



                        CROSS MEDIA MARKETING CORPORATION

                        AMENDMENT NO. 1 ON FORM 10-QSB/A

                               TO QUARTERLY REPORT

                                ON FORM 10-QSB/A

                                 March 31, 2001

                               C O N T E N T S


PART I.     FINANCIAL INFORMATION                                       PAGE

Item 1.           Financial Statements

Consolidated Balance Sheet March 31, 2001 (unaudited)

Consolidated Statements of Operations (unaudited) for the three months ended
March 31, 2001 and March 31, 2000

Consolidated Statement of Stockholders' Equity (unaudited) for
the three months ended March 31, 2001

Consolidated Statements of Cash Flows (unaudited) for the three months ended
March 31, 2001 and March 31, 2000

Notes to Consolidated Financial
Statements...............................................................F-1

Item 2.     Management's Discussion and Analysis or Plan of
Operation................................................................. 1


SIGNATURE




<PAGE>



Item 1. Condensed Consolidated Financial Statements


        Cross Media Marketing Corporation and Subsidiaries
               Condensed Consolidated Balance Sheet
                            (unaudited)

                          March 31, 2001

Assets:
Current assets
       Cash and cash equivalents                                   $  1,825,350
       Trade accounts receivable, net of
       collection and cancellation reserve of $24,358,487            28,029,964
       Other receivables                                              2,860,679
       Prepaid expenses                                                 509,895
       Deferred expense                                               1,052,487
                                                                   ------------
                              Total current assets                   34,278,375
                                                                   ------------
       Property and equipment (at cost, less
       accumulated depreciation)                                      1,061,214
       Deferred financing costs                                         713,389
       Goodwill                                                       8,192,436
       Other assets                                                     661,460
                                                                   ------------
                                                                   $ 44,906,874
                                                                   ============

Liabilities and Stockholders' Equity:

Liabilities
      Revolving credit facility                                    $ 12,167,170
      Accounts payable and accrued expenses                           5,479,545
      Accrued closing costs                                           1,400,000
      Amounts due to publishers                                       7,745,262
      Deferred revenue                                                2,288,015
                                                                   ------------
           Total liabilities                                         29,079,992
                                                                   ------------
      Stockholders'  equity:
      Convertible preferred stock, $5,062,500
      liquidation value; authorized
      10,000,000 shares; 50,625 outstanding                           3,303,951
      Common stock, par value $.001 per share;
      authorized 100,000,000
      shares; 35,743,669 issued and outstanding                          35,744
      Additional paid in capital
                                                                     69,612,694
      Note receivable - common stock                                 (2,497,500)
      Accumulated deficit                                           (54,628,007)
                                                                   ------------
        Total stockholders' equity                                   15,826,882

                                                                   $ 44,906,874
                                                                   ============


The accompanying notes are an integral part of this statement.

<PAGE>



                Cross Media Marketing Corporation and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (unaudited)

<TABLE>
<CAPTION>
                                                               For the Three Months Ended
                                                                        March 31,
                                                                    2001           2000
                                                                 (Restated)     (Restated)
                                                               ------------    ------------
<S>                                                            <C>             <C>
Revenues, net                                                  $ 18,783,330    $ 11,112,964
                                                               ------------    ------------

Direct costs and expenses
        Commission expense                                        9,580,950       6,251,547
        Other direct costs                                        4,286,221       1,707,072
                                                               ------------    ------------
                                                                 13,867,171       7,958,619

        Gross profit                                              4,916,159       3,154,345

        General and Administrative Expenses                       2,906,534       1,477,962
        Consulting expenses                                         284,704       1,558,379
        Amortization of goodwill and other intangible assets        226,568          96,931
                                                               ------------    ------------
        Total expenses                                            3,417,806       3,133,272

Income from operations                                            1,498,353          21,073

Other income, (expense)
        Interest expense                                           (458,089)     (2,108,637)
        Other income                                                112,682         126,704
                                                               ------------    ------------

Income (loss) before income taxes                                 1,152,946      (1,960,860)

Provision for income taxes                                          232,137               -
                                                               ------------    ------------
Net income (loss)                                                   920,809      (1,960,860)

Preferred dividends
                                                                  1,130,653      20,441,927
                                                               ------------    ------------
Net loss to common stockholders                                $   (209,844)   $(22,402,787)
                                                               ============    ============

Basic and diluted loss per share                               $      (0.01)   $      (1.39)
                                                               ============    ============
Weighted - average shares of common stock outstanding -
   basic and diluted                                             32,791,690      16,136,457
                                                               ============    ============
</TABLE>



The accompanying notes are an integral part of this statement.

<PAGE>




         Cross Media Marketing Corporation and Consolidated Subsidiaries
            Condensed Consolidated Statement of Stockholders' Equity
                    For the Three Months Ended March 31, 2001

<TABLE>
<CAPTION>
                                                                   Common stock
                                                                                                      Additional
                                                   Preferred        Number of                          Paid-in
                                                     Stock            Shares           Amount          Capital
                                                    ------------       ----------       ----------     ------------
<S>                                                 <C>                <C>              <C>            <C>
Balance at January 1, 2001                          $  3,303,951       29,604,519       $   29,605     $ 63,221,911

Sales of common stock                                                   1,500,000            1,500        1,406,500

Common stock issued for consulting services                                26,500               27           41,049

Warrants issued primarily for consulting services                                                            76,743

Common stock issued in connection with
  preferred stock conversion                                            4,612,650            4,612        4,841,278

Contractual dividends                                                                                        25,213
Net income for the three months ended
  March 31, 2001
Balance at March 31, 2001                           $  3,303,951       35,743,669       $   35,744     $ 69,612,694
                                                    ============       ==========       ==========     ============
</TABLE>




<TABLE>
<CAPTION>

                                                         Note         Accumulated
                                                      Receivable        Deficit           Total
                                                      ------------    -------------      ------------
<S>                                                   <C>             <C>                <C>
Balance at January 1, 2001                            $ (2,497,500)   $ (54,418,163)     $  9,639,804

Sales of common stock                                                                       1,408,000

Common stock issued for consulting services                                                    41,076

Warrants issued primarily for consulting services                                              76,743

Common stock issued in connection with
  preferred stock conversion                                               (899,640)        3,946,250

Contractual dividends                                                      (231,013)         (205,800)
Net income for the three months ended
  March 31, 2001                                                            920,809           920,809
Balance at March 31, 2001                             $ (2,497,500)   $ (54,628,007)     $ 15,826,882
                                                      ============    =============      ============
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>


                 Cross Media Marketing Corporation and Subsidiaries
                  Condensed Consolidated Statements of Cash Flows
                                    (unaudited)


<TABLE>
<CAPTION>
                                                                                                For the Three Months Ended
                                                                                                         March 31,
                                                                                                  2001                2000
                                                                                              ------------        ------------
<S>                                                                                         <C>                 <C>
 Cash flows from operating activities:
            Net income (loss)                                                                 $    920,809        $ (1,960,860)
            Adjustments to reconcile results of operations to net cash provided
            by operating activities:
            Value of common stock and common stock purchase warrants issued for
            services                                                                               111,975           1,614,523
            Non cash interest expense                                                               92,167           1,688,667

            Depreciation and amortization                                                          316,780             227,475

            Net change in asset and liability accounts, net of business acquired:
                  Accounts receivable                                                           (1,793,855)         (1,699,003)

                  Prepaid expenses                                                                 (39,405)            268,150

                  Other assets                                                                     215,297            (988,162)

                   Payment of an Acquisition Liability                                             (75,000)

                  Accounts payable and other accrued expenses                                      334,307           1,202,073
                                                                                              ------------        ------------
            Net cash provided by operating activities                                               83,075             352,863
                                                                                              ------------        ------------
Cash flows from investing activities:
            Purchase of equipment                                                                 (285,134)            (22,870)

            Acquisition of DSI, net of cash acquired                                                    --         (23,235,190)
                                                                                              ------------        ------------
            Net  cash used in investing activities                                                (285,134)            (22,870)
                                                                                              ------------        ------------

Cash flows from financing activities:

            Proceeds from sales of preferred stock                                                                   8,418,000

            Proceeds from sales of common stock                                                  1,423,000                  --

            Payments received on note receivable                                                        --               2,500

            Proceeds from acquisition bridge notes                                                      --           1,100,000

            Repayment of bridge note                                                                    --            (500,000)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                                For the Three Months Ended
                                                                                                         March 31,
                                                                                                  2001                2000
                                                                                              ------------        ------------
<S>                                                                                        <C>                        <C>
            Repayment of short term notes                                                              (891)                     --

            Redemption of preferred stock                                                        (2,100,000)                     --

            Net funds drawn on revolver for DSI Acquisition                                      20,800,000              15,775,000

            Net repayments of Revolving Credit Agreement                                        (20,254,340)             (1,673,399)

            Preferred dividends paid                                                               (167,177)                     --

            Deferred financing costs                                                                     --                (190,000)
                                                                                                -----------              ----------
            Net  cash (used in) provided by financing activities                                   (299,408)             22,932,101
                                                                                                -----------              ----------
Net increase (decrease) in cash and cash equivalents                                               (501,467)             23,262,094

            Cash and cash equivalents at beginning of period                                      2,326,817                 337,615
                                                                                                -----------              ----------
            Cash and cash equivalents at end of period                                         $  1,825,350            $ 23,599,709
                                                                                               ============            ============
Supplemental disclosure of cash flow information:                                              $    360,080            $    414,545
                                                                                               ============            ============
             Interest paid during the period
</TABLE>


The accompanying notes are an integral part of this statement.

<PAGE>



              Cross Media Marketing Corporation and Subsidiaries

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 2001
                                   (Unaudited)



NOTE A - Organization

    We were incorporated in Delaware on May 9, 1997 under the name of Brack
Industries Inc. We changed our name to Symposium Corporation in December 1998
and subsequently changed our name to Cross Media Marketing Corporation in
December 2000. Our principal business strategy is to integrate well established
direct marketing skills with a variety of new technologies, including e-mail
marketing, web-based systems and interactive voice response, ultimately
resulting in a multi-faceted marketing platform for the sale of products and
services.

       In November 1999, we formed Media Outsourcing, Inc. ("MOS"), a
wholly-owned subsidiary, to acquire the assets of Direct Sales International,
LP. We completed this acquisition in January 2000 (see Note C).


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation: The accompanying unaudited financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB and do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments consisting of normal recurring accruals, considered
necessary for a fair presentation of the results for the interim period have
been included. Operating results for the three months ended March 31, 2001 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2001. The accompanying condensed consolidated financial
statements and the information included under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" should
be read in conjunction with our consolidated financial statements and related
notes for the year ended December 31, 2000 as filed with our Form 10-KSB.

      Revenues: Revenues derived from originating magazine subscriptions are
recognized by us when we receive the first installment payment for subscriptions
purchased. The customer can cancel the subscription within ten days of the
order. Amounts collected from customers prior to the expiration of the
cancellation period are recorded as deferred revenues. Magazine subscription
revenues are recorded net of cancellation, collection reserves, and payments
made to publishers for fulfillment costs. Such cancellation and collection
reserves are based upon our historical cancellation and collection experience.

      Revenues also include commissions earned from publishers in connection
with originating paid subscriptions for certain publications. Commissions are
also earned from outside parties for securing memberships in a discount-buying
club and sales of long-distance telephone services. Commission income is
recognized when the related subscriptions or memberships are obtained. In the
year ended December 31, 2000, two independent call centers accounted for
approximately 35% of our magazine subscription revenues. These call centers
could terminate their relationships with us, which could have a material adverse
effect on our business.

      Commission Expense: Commission expense is recognized by us when we receive
the first installment payment for subscriptions purchased. Amounts paid to
brokers prior to the expiration of the cancellation period are recorded as
deferred expenses.

      Reclassification: Certain amounts in the 2000 financial statements have
been reclassified to conform to the 2001 classifications, and certain other
amounts have been combined and reclassified.


                                      F-1

<PAGE>


      Use of estimates in the Preparation of Financial Statements: The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

NOTE C- ACQUISITION OF DIRECT SALES INTERNATIONAL, LP ("DSI ACQUISITION")

      On January 28, 2000, through our wholly-owned subsidiary MOS, we acquired
substantially all of the assets and assumed certain liabilities of Direct Sales
International, LP ("DSI"), a Georgia limited partnership, for approximately
$27.6 million, including closing costs of approximately $1.1 million and an
agreement to provide approximately $1.5 million of funding to AmeriNet, Inc.
("AmeriNet"). The transaction was accounted for as a purchase business
combination. We also granted to the seller of DSI the right, which has an
intrinsic value of $1.2 million, to sell up to 600,000 shares of our Common
Stock back to us at a fixed price.

      The acquisition was financed by borrowing $16 million ($15.8 million of
proceeds, net of fees) under a revolving credit facility entered into
contemporaneous with consummating the acquisition and the remainder was funded
with proceeds received from sales of common stock and common stock purchase
warrants, Series A, B and C convertible preferred stock and certain acquisition
bridge loans that the company repaid during the year ended December 31, 2000.

      The following table provides an analysis of the purchase price of the DSI
acquisition. The excess of the purchase price over the book value of the net
assets acquired, which has been allocated to goodwill, is as follows:

      Cash consideration paid to the seller                $25,000,000
      Commitment to fund AmeriNet, Inc.                      1,500,000
      Seller's stock put right                               1,200,000
      Transaction expenses                                   1,114,317
                                                           -----------

      Total purchase cost                                   28,814,317

      Fair value of net assets acquired                     21,798,469
                                                            ----------

      Purchase price in excess of fair value
         of net assets acquired allocated to goodwill     $  7,015,848
                                                           ===========

   Goodwill is being amortized on a straight-line basis over a ten-year period.

   The following pro-forma information illustrates, as restated, the estimated
effects of the DSI Acquisition as if such transaction was consummated on January
1, 2000 (see Note J):

                                          For the three months
                                             ended March 31,
                                                     2000
                                                     ----
                                          (in thousands except
                                             per share data)

      Total revenues            As reported           $11,113
                                Pro forma              16,154

      Loss from                 As reported          $(1,961)
         continuing operations  Pro forma             (1,565)

      Basic and diluted         As reported           $(1.39)
         Loss per share         Pro forma              (0.10)


                                      F-2
<PAGE>


NOTE D: REVOLVING CREDIT FACILITY

      On January 28, 2000, we and MOS entered into a three-year revolving credit
facility ("Coast"), as amended, with a bank providing for borrowings of up to
$20 million subject to certain availability limitations stipulated in the
agreement. All borrowings under this facility are repayable with interest at the
prime rate plus 2% per annum but not less than 9%. Cross Media Marketing and MOS
are also required to maintain certain minimum earnings ratios and levels of net
worth as defined in the agreement and MOS is restricted from making
distributions to Cross Media Marketing in excess of $1.8 million annually plus
any amounts necessary for tax obligations attributable to MOS's operations. All
of MOS's assets are pledged as collateral for this obligation. As of March 31,
2001 MOS had an outstanding balance on the Coast facility of approximately $12.2
million compared to total availability of $18.3 million resulting in $6.1
million of funds available to MOS at March 31, 2001.

      In connection with the execution and delivery of the Coast facility, Coast
held 443,884 five-year common stock purchase warrants at an exercise price of
$2.39 per share as of December 31, 2000. As a result of the anti-dilution
provisions, the exercise price has been reduced to $2.25 per share and the
number of shares has been increased to 471,965 as of March 31, 2001.
Accordingly, we recorded a non-cash interest charge of approximately $5,844 in
the first quarter of 2001.

      MOS incurred fees and expenses in connection with this facility of
approximately $1.1 million, which are being amortized over three years.

      As of March 31, 2001 the outstanding loan balance under the Coast Facility
was approximately $12.2 million and the total amount available for borrowing was
$18.3 million. Therefore, MOS was entitled to borrow an additional $6.1 million
under the Coast Facility as of March 31, 2001. In May 2001, we agreed with Coast
to amend the Coast Facility as follows: (i) Coast waived the requirement that we
maintain a minimum Tangible Net Worth through March 31, 2001; (ii) Coast waived
any violation of the limitation on distributions by MOS to Cross Media Marketing
with respect to a $1,000,000 distribution in February 2001 and agreed that
commencing in May 2001, as long as MOS has excess borrowing availability of at
least $2.0 million under the facility, MOS will be permitted to distribute a
total of up to $400,000 per month to Cross Media Marketing (in addition to any
amounts necessary for Cross Media Marketing to satisfy tax obligations
attributable to MOS's operations) (prior to the May 2001 amendment, MOS was only
entitled to distribute a total of $150,000 per month plus tax distributions);
(iii) we agreed to maintain a minimum Senior Debt to EBITDA ratio of no greater
than 1.5 to 1; and (iv) as long as MOS has excess borrowing availability of at
least $2.0 million under the facility, Coast permitted us loan up to a total of
$200,000 to our officers and key employees to enable them to acquire shares of
our common stock, the loan to any individual being limited to 10% of their
annual base salary. Management expects to be fully in compliance with the
provisions of this agreement going forward.


NOTE E - CONVERTIBLE PREFERRED STOCK

Series A Convertible Preferred Stock ("New Series A Shares")

      On June 9, 2000, we issued 30,375 shares of New Series A Shares and a five
year warrant to purchase 225,000 shares of Common Stock at an initial exercise
price of $1.4850 (subject to certain anti-dilution and similar adjustments). The
aggregate purchase price for the New Series A Shares and the warrant was
$2,250,000. We also granted the purchaser of the New Series A Shares an option,
exercisable in the purchaser's sole discretion during the sixty day period
following June 9, 2000, to purchase up to an additional $2,025,000 face amount
of New Series A Shares and a warrant to purchase an additional 150,000 shares of
Common Stock for the same purchase price. The purchaser exercised its option,
and we issued and sold to the purchaser an additional 20,250 New Series A Shares
and the additional warrant on August 1, 2000 for an aggregate purchase price of
$1,500,000. The face amount and liquidation value of the New Series A Shares is
$5,062,500.

      Dividends accrue on the New Series A Shares at an annual rate of 10% of
the face amount, payable semi-annually in cash and/or Common Stock at our option
under certain conditions. We have reserved 220,521 shares of common stock in
payment of dividends accrued on the New Series A Shares as of January 1, 2001.
Such shares are issuable to the holder of the Series A Shares at any time, upon
request. The New Series A Shares are redeemable, at


                                      F-3
<PAGE>


the option of us under certain conditions, at a redemption price of 100% of face
value plus any accrued and unpaid dividends.

            The New Series A Shares are convertible at a conversion price equal
to the lesser of: (i) $1.93 (110% of the closing bid price of the Common Stock
on the date of the issuance, subject to adjustments); or (ii) 91% of the average
of the three lowest, non-consecutive closing bid prices for the Common Stock in
the ten trading days preceding the date of the holder's conversion notice to us
(the "Conversion Notice"). The conversion price and the exercise price of the
warrants are subject to downward adjustment to equal the lowest price at which
shares of the Common Stock or securities convertible into, or exchangeable or
exercisable for, shares of Common Stock are issued while the New Series A Shares
and warrants remain outstanding (if such price is lower than the then effective
conversion or exercise price), subject to certain exceptions. These exceptions
include: (i) the issuance of shares of Common Stock upon conversion or exercise
of presently outstanding options, warrants or convertible securities in
accordance with the terms of such options, warrants or convertible securities as
in effect upon the initial issuance date of the New Series A Shares (but subject
to certain anti-dilution adjustments).

      By letter agreement dated December 28, 2000, the holder of all the
outstanding New Series A Shares agreed not to convert the New Series A Shares
prior to June 9, 2001 if, on the date of such proposed conversion, the
then-current market price of our Common Stock is less than $1.50 per share (the
"Conversion Floor"). On and after June 9, 2001 there will be no Conversion
Floor. The holders agreed that they would not redeem the New Series A Shares
prior to June 9, 2001. The conversion provisions of the New Series A Shares and
warrants create a substantial risk of dilution to the holders of our Common
Stock.

NOTE F: MANDATORILY REDEEMABLE PREFERRED STOCK

Series C Mandatorily Redeemable Convertible Preferred Stock ("Series C
Preferred")

      On January 28, 2000, in a private placement, we issued 52,892 Series C
Preferred shares resulting in proceeds to us totaling approximately $5.0
million. The Series C Preferred was initially convertible into shares of Common
Stock at a conversion ratio of $2.00 per share and was entitled to a 10%
cumulative dividend. In connection with the initial issuance and sale of the
Series C Preferred in January 2000 (the "Series C Shares"), we also issued
1,763,067 shares of Common Stock to the holders of the Series C Shares and
reduced the exercise price of the 2,000,000 Common Stock purchase warrants
previously issued to a holder of Series C Shares from $3.50 per share to $1.00
per share.

      The Series C Shares were originally mandatorily redeemable on the earlier
of July 26, 2000 or upon the consummation of a financing transaction resulting
in gross proceeds of at least $10.0 million. On April 24, 2000, the holders of
the Series C Shares agreed to extend the mandatory redemption date of the Series
C Shares from July 26, 2000 to December 26, 2000 (the "Mandatory Redemption
Date") in exchange for 2,247,067 shares of our Common Stock and a reduction in
the conversion ratio from $2.00 per share to $1.00 per share. The value of the
shares of Common Stock issued and change in the effective conversion ratio was
reflected during the second quarter of 2000 as an additional deemed dividend in
the amount of $8,560,417.

      On June 14, 2000, we issued an additional 7,500 shares of Series C
Preferred (the "New Series C Shares") and 250,000 shares of Common Stock,
resulting in proceeds of $750,000. We also agreed to reduce the effective
exercise price of 2,000,000 Common Stock purchase warrants held by the purchaser
of the New Series C Shares from $1.00 to $0.50 per share. We also paid a fee in
connection with the issuance of the New Series C Shares of 562.5 shares of
Series C Preferred, five-year warrants to purchase 100,000 shares of Common
Stock at a price of $1.88 per share and 18,750 shares of Common Stock.

      On July 18, 2000, the holders of the Series C Shares and the New Series C
Shares agreed to waive the requirement that the failure of us to redeem the
Series C Preferred on or before the Mandatory Redemption Date would trigger a
reduction in the conversion ratio of the Series C Preferred from $1.00 to $0.25
per share. In consideration for this waiver, we agreed to issue to such holders
an aggregate of 1,523,750 shares of Common Stock, pro rata in accordance with
their percentage holdings of the Series C Shares and New Series C Shares, and to
issue as a fee in connection with such waiver, an additional 1,500 shares of
Series C Preferred and 50,000 shares of


                                      F-4
<PAGE>


Common Stock.  The value of the shares was reflected during the third quarter of
2000 as an additional deemed dividend in the amount of $3,026,028.

      On December 19, 2000, the holders of the Series C Shares and the New
Series C Shares agreed to extend the Mandatory Redemption Date of the Series C
Preferred from December 26, 2000 to January 26, 2001. On January 25, 2001, the
holders agreed to further extend the redemption date from January 26, 2001 to
February 15, 2001. On February 15, 2001, we redeemed an aggregate of 22,992
Series C Shares and New Series C Shares for an aggregate redemption price of
$2,299,200 including accrued and unpaid dividends of $122,300. The holders
converted all of the remaining Series C Shares and New Series C Shares into
3,946,250 shares of Common Stock (at an effective conversion ratio of $1.00 per
share). In consideration of the agreement of the holders to convert the Series C
Shares and New Series C Shares (which would otherwise have been mandatorily
redeemable by us in full on February 15, 2001), we agreed to issue to the
holders, pro rata in accordance with the number of shares converted by each of
them, an aggregate of 666,400 additional shares of Common Stock. The value of
the shares of Common Stock issued was reflected in the first quarter of 2001 as
an additional deemed dividend in the amount of $899,640. We agreed to pay a fee
of $100,000 to one of the Series C holders in connection with their services
relating to the negotiation of these agreements. There is a note payable of
$199,200 related to the redemption of the preferred stock.

      The redemption of the Series C Shares and the New Series C Shares was
funded in part through the issuance and sale by us, in private placements, of an
aggregate of 1,500,000 shares of Common Stock at a price of $1.00 per share.

NOTE G - NET LOSS PER SHARE

      Net loss per share is presented under Statement of Financial Accounting
Standards No. 128 ("SFAS No. 128"), "Earnings Per Share." In accordance with
SFAS No. 128, basic and diluted net loss per share has been computed using the
weighted-average number of shares of common stock outstanding during the period.
Potentially dilutive securities have been excluded from the computation, as
their effect is anti-dilutive. If we had reported net income, diluted earnings
per share would have included the shares used in the computation of net loss per
share plus common equivalent shares related to approximately 16.8 million and
11.2 million outstanding options and warrants for the three months ended March
31, 2001 and 2000, respectively.


NOTE H - Income Taxes

      We had Federal and State net operating loss carryforwards of approximately
$8 million available to offset future taxable income, if any, through December
2020. The utilization of the net operating losses is subject to a substantial
limitation due to the "change of ownership" provisions under Section 382 of the
Internal Revenue Code and similar State provisions. Such limitation may result
in the expiration of the net operating losses before their utilization. A
valuation allowance has been established to reserve for the deferred tax assets
arising from the net operating losses and other temporary differences since
there is no assurance that their benefit will be realized in the future. For the
three months ended March 31, 2001 we recorded a $232,137 tax provision based on
an estimate of our effective income tax rate projected for the year ended
December 31, 2001.

NOTE I - COMMON STOCK

      At March 31, 2000, we were authorized to issue 100,000,000 shares of
Common Stock, $.001 par value and 10,000,000 shares of preferred stock, $.001
par value. As of March 31, 2001 there were 35,743,669 shares of Common Stock
issued and outstanding. If the holders of all outstanding options and Common
Stock purchase warrants and the holders of the New Series A Shares converted
them into Common Stock as of March 31, 2001, we would be required to issue
approximately 23.2 million additional shares of Common Stock.


                                      F-5
<PAGE>



NOTE J - RESTATEMENT AMD RECLASSIFICATION

      Subsequent to the issuance of the Company's 2000 consolidated financial
statements, the management of the Company determined that the Company's practice
of reporting remittances to publishers as direct costs of revenues was
inconsistent with the Company's role as an agent for publishers. Accordingly,
the Consolidated Statements of Operations for the three months ended March 31,
2001 and for the three months ended March 31, 2000 have been restated to reflect
the recording of revenues as the amount billed to a customer, less the amount
paid to a publisher when the Company is acting as an agent. The effect of the
restatement is to decrease revenues, net and direct costs and expenses for the
quarters ended March 31, 2001 and March 31, 2000 by $2,111,251 and $1,573,649,
respectively. Gross profit, income (loss) before income taxes, net loss and the
related per share amounts were not affected.

      In addition, certain expenses have been combined and reclassified.


                                      F-6

<PAGE>


      The statements contained in this Quarterly Report on Form 10-QSB that are
not historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding the
expectations, beliefs, intentions or strategies regarding the future. We intend
that all forward-looking statements be subject to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements reflect our views as of the date they are made with respect to future
events and financial performance, but are subject to many risks and
uncertainties, which could cause our actual results to differ materially from
any future results expressed or implied by such forward-looking statements.
Examples of such risks and uncertainties include, but are not limited to:
obtaining sufficient financing to pursue our business strategy, including the
expansion of our business through acquisitions of other companies; and the
changing market conditions and the other risks detailed in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Certain Trends and Uncertainties" in this Quarterly Report on Form
10-QSB and elsewhere herein. We do not undertake to update any forward-looking
statements.


PART I - FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis or Plan of Operation

      The following discussion and analysis should be read together with the
Condensed Consolidated Financial Statements of Cross Media Marketing Corporation
and the notes to the Condensed Consolidated Financial Statements included
elsewhere in this Form 10-QSB.

      This discussion summarizes the significant factors affecting our
consolidated operating results, financial condition and liquidity and cash flows
for the three-month periods ended March 31, 2001 and 2000.

Introduction

      We were incorporated in Delaware on May 9, 1997 under the name of Brack
Industries Inc. We changed our name to Symposium Corporation in December 1998
and subsequently changed our name to Cross Media Marketing Corporation in
December 2000. Our principal business strategy is to integrate well established
direct marketing skills with a variety of new technologies, including e-mail
marketing, web-based systems and interactive voice response, ultimately
resulting in a multi-faceted marketing platform for the sale of products and
services.

      On January 28, 2000, through our wholly owned subsidiary Media
Outsourcing, Inc. ("MOS"), we acquired all the assets and assumed certain
liabilities of DSI, a magazine subscription agency based in Atlanta, Georgia
which sells new subscriptions to magazines of major US publishers. We paid
approximately $27.6 million to acquire DSI, including: (i) $25.0 million in
cash, (ii) an agreement to loan $1.5 million to a company in which DSI's former
owner holds a majority interest and (iii) approximately $1.1 million in closing
costs and fees. We also granted to the seller of DSI the right to sell up to
600,000 shares of common stock back to the Company at a fixed price. We included
the $1.2 million intrinsic value of this right in the calculation of purchase
price in excess of net assets acquired. We financed the cash portion of the
purchase price by borrowing $16.0 million under a credit facility provided by
Coast Business Credit (resulting in proceeds of $15.8 million net of fees) and
by using proceeds totaling approximately $9.2 million from the issuance of
common stock, warrants to purchase common stock, convertible preferred stock and
convertible debt.

      On November 30, 2000, we acquired WeFusion.com, Inc. ("WeFusion"), an
application service provider which has developed a database architecture that
will enable us to develop sophisticated customer profiles. We paid approximately
$2.5 million to acquire WeFusion, including $0.6 million in cash and
approximately $1.9 million in common stock and warrants to purchase common
stock.

                                       1

<PAGE>


Results of Operations

Results of Operations for the three months ended March 31, 2001 and March 31,
2000

      Revenues: During the three months ended March 31, 2001, revenues were
$18.8 million, a 69.4% increase from our revenues of $11.1 million for the three
months ended March 31, 2000. The increase primarily represents the inclusion of
operations of MOS for the full quarter in 2001 versus operations in 2000 from
the date of acquisition, January 28, 2000 to March 31, 2000, as well as
increased magazine sales, higher publisher bonuses and revenues from sales of
long distance telephone service. For the three months ended March 31, 2001,
revenues were derived primarily from the sales of magazine contracts at MOS
totaling approximately $17.1 million, commission revenues from sales of
memberships in a third party discount-buying club of $0.9 million and
commissions on sales of discount long distance telephone services of $0.5
million.

      Commission Expense: Commission expense increased 52.4% to $9.6 million in
the first three months of 2001 from $6.3 million in the same period of 2000 as a
result of higher sales.

      Other Direct Costs: For the three months ended March 31, 2001, we recorded
$4.3 million of other direct costs related to the magazine sales, a $2.6 million
increase from the $1.7 million of costs recorded in the three months ended March
31, 2000. The increase consists primarily of $1.4 million of direct recurring
payroll, rent and leads costs related to our newly opened in-house telesales
operations in Illinois and Florida, as well as the impact of a full quarter of
operations in 2001 versus two months of operations in 2000, from the date of the
MOS acquisition on January 28, 2000 until March 31, 2000.

      General and Administrative Expenses: General and administrative expenses
increased $1.4 million to $2.9 million for the three months ended March 31, 2001
from $1.5 million for the same period in 2000. This increase primarily reflects
an increase in administrative personnel at MOS, the addition of personnel
previously employed by WeFusion.com and WeFusion's related general and
administrative expenses of $0.2 million.

      Consulting Expenses: Consulting expenses decreased $1.3 million to $0.3
million for the three months ended March 31, 2001 from $1.6 million for the
three months ended March 31, 2000. Consulting expenses for the first quarter of
2000 included approximately $225,000 of non-cash charges reflecting the
estimated fair value of warrants granted to purchase 1,025,000 shares of common
stock with exercise prices ranging between $1.00 to $5.00 per share. The terms
of these warrants range from two to five years. Consulting expenses for the
first quarter of 2000 also included $980,000, representing the fair value of
535,000 shares of common stock issued for professional services rendered during
that quarter. We estimated the fair value of these warrants using the
Black-Scholes option-pricing model.

      Amortization of Goodwill: During the three months ended March 31, 2001, we
amortized $0.2 million of the $7.0 million of goodwill recorded in connection
with the DSI Acquisition on January 28, 2000 and $1.9 million of goodwill
recorded in connection with the acquisition of WeFusion on November 30, 2000. We
amortized $0.1 million of goodwill from January 28, 2000 to March 31, 2000
related to the DSI Acquisition. We amortize goodwill on a straight-line basis
over periods of seven to ten years.

      Interest Expense: Interest expense for the three months ended March 31,
2001 was $0.5 million, a decrease of $1.6 million from $2.1 million for the
three months ended March 31, 2000. The decrease is primarily related to the one
time non-cash interest expense recorded in the three months ended March 31, 2000
representing the fair value of shares and warrants issued in connection with the
initial issuance and subsequent conversion of the DSI Acquisition bridge
financings. See "Financial Condition and Liquidity" below.

      Other Income: Other income for the three months ended March 31, 2001 of
$112,682 was virtually unchanged from the $126,704 recorded in the three months
ended March 31, 2000.

      Income Taxes: For the three months ended March 31, 2001 we recorded a
$232,137 tax provision based on an estimate of our effective tax rate projected
for the year ended December 31, 2001. We may adjust the tax rate in future
quarters if we adjust the assumptions of our projected earnings, used to
calculate such rate. We had Federal


                                       2
<PAGE>


and State net operating loss carryforwards of approximately $8 million available
to offset future taxable income,  if any,  through December 2020. Our ability to
use these net  operating  losses  may be  substantially  limited  because of the
"change of ownership"  provisions under Section 382 of the Internal Revenue Code
and similar State provisions.  As a result of these limitations,  some or all of
our net operating  losses may expire before we can use them. We have established
a valuation  allowance to reserve for the  deferred tax assets  arising from the
net operating  losses and other temporary  differences,  since we cannot be sure
that we will benefit from them in the future.

      Preferred Dividends: For the three months ended March 31, 2001, we
recorded $1.1 million of dividends including $0.9 million of non-cash deemed
dividends and approximately $0.2 million of contractual dividends. On February
15, 2001, we redeemed 22,992 Series C Shares and New Series C Shares. The
remaining 39,463 Series C Shares and New Series C Shares were converted into
3,946,250 shares of common stock. In consideration of the agreement of the
holders to convert the Series C Shares and New Series C Shares, we agreed to
issue to the holders a total of 666,400 additional shares of common stock, pro
rata in accordance with the number of shares each holder converted. The non-cash
deemed dividend of $0.9 million represents the fair value of the additional
shares issued. For the three months ended March 31, 2000, we recorded $20.4
million of dividends including $20.3 million of non-cash deemed dividends in
connection with the Series A, B and C preferred stock we issued to complete the
DSI Acquisition. The deemed dividends recorded in the first quarter of 2000
represent the accretion of the difference between the carrying value and the
mandatory redemption amounts of preferred stock that resulted from allocating a
portion of the proceeds to common stock, common stock purchase warrants and the
beneficial conversion features of the shares and also dividends received in
connection with the conversion of the Series A preferred stock into common stock
on March 27, 2000.

      Net Loss and Net Loss per Share: The net loss for the three months ended
March 31, 2001 was $0.2 million, or $0.01 per share, compared to a net loss of
$22.4 million, or $1.39 per share, for the three months ended March 31, 2000.
The decrease in the net loss to common shareholders reflects lower preferred
stock dividends, reduction of non-cash charges in consulting fees, and interest
and deemed dividends on preferred stock recorded during the period and increased
earnings from operations.

Financial Condition and Liquidity

      At March 31, 2001, we had cash on hand of $1.8 million. For the three
months ended March 31, 2001 we generated $0.2 million from operations and used
$0.3 million from financing activities and $0.4 million in investing activities.
Through the operations of MOS, we generate cash flow from the sale and
collection of consumer receivables, commissions earned from publishers in
connection with originating paid subscriptions for certain publications, and
commissions earned on the sale of third party discount buying club memberships.
MOS uses these funds as well as funds available under its revolving credit
facility to fund its working capital needs.

      Under the Coast Facility as amended in May 2001 (as discussed below), MOS
is generally permitted to make distributions to Cross Media Marketing of up to
$400,000 per month, plus any amounts necessary for Cross Media Marketing to
satisfy tax obligations attributable to MOS's operations. We believe that the
cash flow from operations at MOS, and the amount available for borrowing under
the revolving credit facility, is currently sufficient to meet our day-to-day
operating requirements. However, MOS's cash flow would not be sufficient to
complete any additional acquisitions in furtherance of our overall strategy.
Consequently, we may be required to raise additional financing to fund any
future acquisitions.

      During the quarter ended March 31, 2000, we financed the cash portion of
the purchase price of the DSI Acquisition by borrowing $16.0 million under a
credit facility provided by Coast Business Credit (described below) and by using
proceeds totaling approximately $9.2 million from the issuance of common stock,
warrants to purchase common stock, convertible preferred stock and convertible
debt. As of December 31, 2000, all of the convertible debt issued in connection
with the DSI Acquisition had either been converted into common stock or paid and
all of the convertible preferred stock issued in connection with the DSI
Acquisition other than the Series C Convertible Preferred Stock had either been
converted into common stock or redeemed. As described below, on February 15,
2001, we redeemed 22,992 shares of Series C Convertible Preferred Stock and the
holders converted the remaining shares into shares of common stock.

Coast Business Credit- Financing Facility


                                       3

<PAGE>


      In connection with the DSI Acquisition, Coast Business Credit ("Coast")
provided a credit facility (the "Coast Facility") used to fund the DSI
Acquisition and working capital needs of MOS. The Coast Facility has a three
year term, and provides a maximum credit line of $20.0 million subject to
certain availability limitations. As a result of these limitations, the amount
available for borrowing under the Coast Facility at the time of the DSI
Acquisition was $16.0 million, which MOS drew down in its entirety to finance
the DSI Acquisition. We pay interest under the Coast Facility at an annual rate
equal to the higher of (i) the prime rate plus 200 basis points, and (ii) 9.0%.
The Coast Facility requires Cross Media Marketing and MOS to comply with
specified financial covenants.

      When the Coast Facility was established, we issued to Coast a five-year
warrant to purchase our common stock. As of December 31, 2000, Coast was
entitled to purchase 443,884 shares of common stock under this warrant at an
exercise price of $2.39 per share. As a result of anti-dilution adjustments, the
number of shares Coast was entitled to purchase under the warrant as of March
31, 2001 increased to 471,965 and the exercise price of the warrant was reduced
to $2.25 per share. We recorded a non-cash interest charge of approximately
$5,844 in the first quarter of 2001 as a result of these adjustments.

      Coast extended the facility to us subject to the condition that we raise
additional equity capital of not less than $3 million by February 28, 2000,
which was subsequently extended to March 31, 2000. On March 30, 2000 the Coast
Facility was amended as follows: (i) the covenant requiring us to raise
additional cash equity of $3.0 million was eliminated; (ii) the parties reduced
the consolidated net worth (defined as stockholder equity and subordinated debt)
covenant to $9.0 million from $12.0 million at March 31, 2000; and (iii) a new
covenant was added requiring that we maintain excess borrowing availability of
$750,000.

      As of March 31, 2001 the outstanding loan balance under the Coast Facility
was approximately $12.2 million and the total amount available for borrowing was
$18.3 million. Therefore, MOS was entitled to borrow an additional $6.1 million
under the Coast Facility as of March 31, 2001. In May 2001, we agreed with Coast
to amend the Coast Facility as follows: (i) Coast waived the requirement that we
maintain a minimum Tangible Net Worth through March 31, 2001; (ii) Coast waived
any violation of the limitation on distributions by MOS to Cross Media Marketing
with respect to a $1,000,000 distribution in February 2001 and agreed that
commencing in May 2001, as long as MOS has excess borrowing availability of at
least $2.0 million under the facility, MOS will be permitted to distribute a
total of up to $400,000 per month to Cross Media Marketing (in addition to any
amounts necessary for Cross Media Marketing to satisfy tax obligations
attributable to MOS's operations) (prior to the May 2001 amendment, MOS was only
entitled to distribute a total of $150,000 per month plus tax distributions);
(iii) we agreed to maintain a minimum Senior Debt to EBITDA ratio of no greater
than 1.5 to 1; and (iv) as long as MOS has excess borrowing availability of at
least $2.0 million under the facility, Coast permitted us loan up to a total of
$200,000 to our officers and key employees to enable them to acquire shares of
our common stock, the loan to any individual being limited to 10% of their
annual base salary. Management expects to be fully in compliance with the
provisions of this agreement going forward.

Series A Convertible Preferred Stock ("New Series A Shares" or "Series A
Shares")

      In June and August 2000, we issued and sold an aggregate of 50,625 Series
A Shares. The face amount of the Series A Convertible Preferred Stock is $100
per share or a total of $5,062,500 for all of the outstanding Series A Shares.
We also issued to the purchaser of the Series A Shares five year warrants to
purchase 375,000 shares of common stock at an initial exercise price of $1.4850
(subject to certain anti-dilution and similar adjustments).

      Dividends are payable on the Series A Shares on July 1 and January 1 of
each year, at an annual rate of 10% of the face amount. We have reserved 220,521
shares of common stock in payment of dividends accrued on the New Series A
Shares as of January 1, 2001. Such shares are issuable to the holder of the
Series A Shares at any time, upon request. Dividends are payable in cash or, if
the conditions described in the certificate of designations are satisfied, in
additional shares of common stock valued at the conversion price on the dividend
payment date.

      In the event of liquidation, the Series A Shares are entitled to receive a
liquidation preference before any amounts are paid to holders of common stock.
The liquidation preference equals the stated value plus any accrued and unpaid
dividends.


                                       4
<PAGE>



      Commencing June 9, 2001, we have the right to redeem all, but not less
than all, of the outstanding Series A Shares at a redemption price of 100% of
face value plus any accrued and unpaid dividends, provided that the average of
the closing asked prices of the common stock for the twenty trading days
preceding our notice of redemption is less than $5.00 per share.

      The Series A Shares are convertible at the option of the holder into a
number of shares of our common stock determined by dividing the applicable
conversion price into the stated value of the Series A Shares. The conversion
price is the lower of: (i) $1.9250 or (ii) 91% of the average of the three
lowest, non-consecutive closing bid prices for the common stock during the ten
trading days preceding the date of the holder's notice to us of the conversion.
The conversion price in effect on March 31, 2001 was $0.8038 and, accordingly,
on that date the outstanding Series A Shares would have been convertible into a
total of 6,674,167 shares of common stock, including 376,220 shares of common
stock representing payment of accrued dividends, which would be payable upon
conversion in either cash or shares of common stock at the option of the
Company.

      The conversion price of the Series A Shares, and the exercise price of the
related warrants, is subject to downward adjustment to equal the lowest price at
which shares of our common stock or securities convertible into, or exchangeable
or exercisable for, shares of our common stock, are issued while the Series A
Shares remain outstanding, subject to certain exceptions. These exceptions
include the issuance of shares of common stock upon conversion or exercise of
outstanding options, warrants or convertible securities, the grant of options
under our stock option plans and the issuance of common stock upon exercise of
those options. The conversion price of the Series A Shares is also subject to
other anti-dilution protections.

      By letter agreement dated December 28, 2000, the holder of all the
outstanding New Series A Shares agreed not to convert the New Series A Shares
prior to June 9, 2001 if, on the date of such proposed conversion, the
then-current market price of our Common Stock is less than $1.50 per share (the
"Conversion Floor"). Beginning June 9, 2001, there will be no Conversion Floor.
The holder agreed that it would not redeem the New Series A Shares prior to June
9, 2001. The conversion provisions of the New Series A Shares and warrants
create a substantial risk of dilution to the holders of our Common Stock.

Series C Mandatorily Redeemable Convertible Preferred Stock ("Series C
Preferred")

      On January 28, 2000, in a private placement, we sold 52,892 shares of
Series C Preferred Stock resulting in proceeds of approximately $5.0 million.
The Series C Preferred was initially convertible into shares of common stock at
a conversion ratio of $2.00 per share and was entitled to a 10% cumulative
dividend. In connection with the initial issuance and sale of these shares we
also issued 1,763,067 shares of common stock to the holders of the Series C
Shares and reduced the exercise price of warrants to purchase 2,000,000 shares
of common stock previously issued to a holder of Series C Shares from $3.50 per
share to $1.00 per share.

      The Series C Shares were originally mandatorily redeemable on the earlier
of July 26, 2000 or upon the consummation of a financing transaction resulting
in gross proceeds of at least $10.0 million. On April 24, 2000, the holders of
the Series C Shares agreed to extend the mandatory redemption date of the Series
C Shares from July 26, 2000 to December 26, 2000 in exchange for 2,247,067
shares of common stock and a reduction in the effective conversion ratio from
$2.00 per share to $1.00 per share. The value of the shares of common stock
issued and change in the effective conversion ratio were reflected during the
second quarter of 2000 as an additional deemed dividend in the amount of
$8,560,417.

      On June 14, 2000, we sold an additional 7,500 shares of Series C Preferred
(the "New Series C Shares") and 250,000 shares of common stock for a total price
of $750,000. We also agreed to reduce the exercise price of warrants to purchase
2,000,000 shares of common stock held by the purchaser of the New Series C
Shares from $1.00 to $0.50 per share. We paid a fee in connection with the
issuance of the New Series C Shares of 562.5 shares of Series C Preferred,
five-year warrants to purchase 100,000 shares of common stock at a price of
$1.88 per share and 18,750 shares of common stock.

      On July 18, 2000, the holders of the Series C Shares and the New Series C
Shares agreed to waive the requirement that a failure to redeem the Series C
Preferred on or before December 26, 2000 would trigger a reduction in the
conversion ratio of the Series C Preferred to $0.25 per share. In consideration
for this waiver, we

                                       5
<PAGE>


agreed to issue to the holders a total of 1,523,750  shares of common stock, pro
rata in accordance with their percentage holdings of the Series C Shares and New
Series C Shares.  We also paid a fee in connection with the waiver by issuing an
additional 1,500 shares of Series C Preferred and 50,000 shares of common stock.
The value of the shares we issued in order to obtain  the  waiver was  reflected
during the third quarter of 2000 as an additional  deemed dividend in the amount
of $3,026,028.

      On December 19, 2000, the holders of the Series C Shares and the New
Series C Shares agreed to extend the mandatory redemption date of the Series C
Preferred from December 26, 2000 to January 26, 2001. On January 25, 2001, the
holders agreed to further extend the redemption date from January 26, 2001 to
February 15, 2001. On February 15, 2001, we redeemed 22,992 Series C Shares and
New Series C Shares for an aggregate redemption price of $2,299,200 including
accrued and unpaid dividends of $122,300. The holders converted all of the
remaining Series C Shares and New Series C Shares into 3,946,250 shares of
common stock (at an effective conversion ratio of $1.00 per share). In
consideration of the agreement of the holders to convert the Series C Shares and
New Series C Shares (which would otherwise have been mandatorily redeemable by
the Company in full on February 15, 2001), we agreed to issue to the holders
666,400 additional shares of common stock, pro rata in accordance with the
number of shares they converted. The value of the shares of common stock we
issued was reflected in the first quarter of 2001 as an additional deemed
dividend in the amount of $899,640. We also agreed to pay a fee of $100,000 to
one of the Series C holders in connection with its services relating to the
negotiation of these agreements. There is a note payable of $199,200 related to
the redemption of the Series C Preferred Stock.

      We obtained a portion of the funds required to redeem the Series C Shares
and the New Series C Shares by selling 1,500,000 shares of common stock, in
private placements, at a price of $1.00 per share.

Certain Trends and Uncertainties

Business Risks

We Have A Limited Operating History

      We developed our present business strategy in 1999 and completed our first
acquisition in January 2000. Therefore, we have a limited history of operations
under our present business strategy upon which you can evaluate the likelihood
of our success. The implementation of a new business strategy frequently
involves risks, expenses and uncertainties that may adversely affect our
business, results of operations, financial condition and prospects.

We May Need Additional Financing

      We may need additional debt or equity financing to pursue our strategy of
expanding our business through the acquisition of companies whose businesses are
strategically appropriate for us. The financing that we need may not be
available to us at all and, if available, may not be available on terms that are
acceptable to us. The failure to obtain such financing on a timely basis, or on
economically favorable terms, could prevent us from continuing our strategy or
from responding to changing business or economic conditions, and could cause us
to experience difficulty in withstanding adverse operating results or competing
effectively. Therefore, such failure could materially harm the Company.

      If we raise additional funds by issuing equity securities, shareholders
may experience dilution of their ownership interest. Moreover, we could issue
preferred stock that has rights senior to those of our common stock. If we raise
funds by issuing debt securities, these securities would have rights,
preferences and privileges senior to holders of common stock and our lenders may
place limitations on our operations.

We Are Subject To Restrictive Credit Facility Covenants Which Could Harm Our
Financial Status And Have A Negative Impact On Our Stock Price

      In January 2000, we entered into an agreement with Coast Business Credit
("Coast") to provide a credit facility to finance the acquisition of our
magazine subscription teleservicing business and the ongoing working capital
needs of our subsidiary, MOS. The credit facility has a term of three years, and
provides a maximum credit

                                       6

<PAGE>


line of $20.0  million,  subject to certain  availability  limitations.  We have
guaranteed MOS's obligations under the Coast Facility.  Under the agreement with
Coast, we are required, among other things, to maintain a consolidated net worth
of not less than $9.0 million (defined as shareholders'  equity and subordinated
debt) and excess borrowing  availability of $750,000. If we cannot satisfy these
or other  covenants  under the Coast  Facility,  we will be  required  to seek a
waiver or amendment from Coast. In May 2001,  Coast waived the requirement  that
we maintain a minimum  Tangible Net Worth  through March 31, 2001 and waived any
violation of the  limitation on  distributions  by MOS to Cross Media  Marketing
with respect to a $1,000,000  distribution in February 2001.  Although we expect
to be fully in  compliance  with the  provisions  of the Coast  agreement  going
forward, if we should require waivers or amendments to the agreement,  there can
be no  assurance  that  Coast  will  agree.  If we  default  in  performing  our
obligations  to Coast,  Coast would be entitled to  accelerate  the  maturity of
outstanding  indebtedness  under the credit  facility ($12.2 million as of March
31, 2001), and to enforce its security interest in our assets.

If Accounts Receivable Reserves Are Not Adequate, Our Results Of Operations
Could Be Materially Adversely Affected

      We extend credit to subscribers who purchase multi-magazine subscription
packages of four to five magazines having an average selling price of
approximately $600 per bundle, for an average subscription period of between one
and four years. We have established a reserve to cover bad debts based upon our
past history with subscriber receivables. If our accounts receivable reserves
are inadequate, our results of operations could be materially adversely
affected.

We May Be Adversely Affected By An Economic Slowdown

      Our business may be adversely affected by periods of economic slowdown or
recession, which may be accompanied by a decrease in the availability of
consumer credit. Any material decline in the availability of consumer credit may
result in a decrease in consumer demand to make credit card purchases, which
could adversely affect the demand for the our products and services.

We May Be Unable To Manage Our Future Growth

      We expect to experience significant growth. This anticipated growth in our
operations could place a significant strain on our operational, systems and
employee resources. As a result, we may have to implement new operational and
financial systems, procedures and controls. In order to manage and accommodate
our planned growth (if it occurs), we will need to continue to improve and adapt
our financial planning, accounting systems, information systems and management
structures. We will also need to expand, train, retain and manage our employee
base. If we are unable to manage our growth effectively, our financial condition
and results of operations could be materially adversely affected.

If We Acquire Or Make Strategic Investments In Other Businesses Or Acquire Or
License Technology And Other Assets, We May Have Difficulty Integrating These
Businesses Or Generating An Acceptable Return From Acquisitions

      We intend to acquire and enter into strategic relationships with other
businesses and acquire or license technology and other assets. We cannot assure
you that acquisition or licensing opportunities will be available on terms
acceptable to us or at all. These acquisitions and strategic relationships will
involve risks, including: inability to raise the required capital; inability to
compete successfully for available acquisition candidates or strategic partners;
difficulty in assimilating the acquired assets, operations and personnel;
disruption of our ongoing business; distraction of our management from other
responsibilities; and lack of the necessary experience to enter new markets. We
may not successfully overcome problems encountered in connection with potential
acquisitions or licensing arrangements. In addition, acquisitions or strategic
relationships could materially impair our operating results, causing us to incur
additional debt, or requiring us to amortize acquisition expenses and acquired
assets.

We Are Dependent On Key Personnel To Operate Our Business Effectively; We Are
Dependent On Certain Independent Call Centers

                                       7
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      Our future success may depend on the continued positive performance of our
senior management and other key personnel. Our future operating results may
depend, in part, upon our ability to retain the services of these individuals.
We cannot assure you that key personnel will not leave Cross Media Marketing or
compete with us, which could have a material adverse effect on our business,
results of operations and financial condition. The loss of the services of any
of our executive officers or other key employees could adversely affect our
business. Our senior management may not perform effectively as individuals or
work together as a team. In addition, competition for employees in our industry
and geographic area is intense.

      In the year ended December 31, 2000, two independent call centers
accounted for approximately 35% of our magazine subscription revenues. These
call centers could terminate their relationships with us, which could have a
material adverse effect on our business.

Government Regulation Could Add Significant Additional Costs To Our Business
And Impose Restrictions On Certain Of Our Marketing Practices Which Could
Have A Significant Adverse Effect On Revenues

      Laws and regulations applicable to direct marketing, telemarketing,
Internet marketing and consumer protection are becoming more prevalent. Each of
the fifty states and the Federal government has laws regulating telemarketing,
sweepstakes promotions, promotional incentives and advertising to consumers,
which vary from state to state. While we review our telemarketing scripts and
advertising copy to ensure that they comply with applicable laws, there is no
guarantee that Federal or State authorities will not find that our marketing
efforts do not comply with these laws. In addition, it is likely that additional
Federal and/or State regulations regarding telemarketing, sweepstakes, e-mail
marketing and other marketing practices engaged in by Cross Media Marketing will
be enacted. If enacted, these regulations could have an adverse effect on
revenues and result in additional expenses to us.

      The Federal Trade Commission is currently in the process of reviewing the
provisions of the Telemarketing Sales Rule to determine if any changes to the
Rule should be made. If the Federal Trade Commission determines that changes to
the rule are necessary, such changes could have a significant adverse effect on
our business.

      In 1999, Congress enacted the Deceptive Mail Prevention and Enforcement
Act, which imposes various restrictions on the offering of sweepstakes through
the mail. Additional sweepstakes legislation has been enacted or is pending in
various states. This additional regulation could have an adverse impact on our
marketing activities.

      Federal and State authorities have also been investigating various
companies' use of certain marketing practices, such as the use of personal
information, magazine subscription agents' sweepstakes practices and the
marketing of membership club services through the use of inbound and outbound
telemarketing campaigns. These investigations could result in additional rules,
regulations or industry standards which could have an adverse impact on our
marketing practices. At least two of the State investigations have directly
involved Memberworks, whose club memberships we are marketing. To the extent we
derive revenue from the sale of memberships in the Memberworks club, there is a
risk that we could be subject to investigation as well, which could have an
adverse impact on us.

Extensive Government Regulation And Legal Uncertainties Related To Doing
Business On The Internet Could Limit Our Sales Or Add Significant Additional
Costs To Our Business

      Laws and regulations directly applicable to Internet communications,
commerce, marketing and data protection are becoming more prevalent. If any of
these laws hinders the growth in use of the Internet generally or decreases the
acceptance of the Internet as a medium of communications, commerce and
marketing, our business and prospects may suffer materially. The United States
Congress has enacted Internet laws regarding children's privacy, copyrights and
taxation. Other laws and regulations may be adopted covering issues such as user
privacy, marketing activities, pricing, content, taxation and quality of
products and services. The governments of some States and foreign countries have
begun to regulate our transactions and levy sales or other taxes relating to our
activities and will likely continue to do so. The laws governing the Internet
remain largely unsettled, even in areas where legislation has been enacted. It
may take years to determine whether and how existing laws such as those
governing intellectual property, privacy, libel and taxation apply to the
Internet and Internet advertising and marketing services. In addition, the
growth and development of the market for Internet commerce may prompt calls for
more

                                       8

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stringent consumer  protection laws, both in the United States and abroad,  that
may  impose  additional  burdens  on  companies  conducting  business  over  the
Internet.

      Laws and regulations regulating the transmission of unsolicited email
marketing messages are being considered by many jurisdictions. Legislation of
that type has recently been adopted by numerous States, and similar legislation
is pending in several States and in Congress. These laws could have an adverse
impact on our Internet marketing activities. The Telecommunications Act of 1996
prohibits some types of information and content from being transmitted over the
Internet. The prohibition's scope and the liability associated with a
Telecommunications Act violation are currently unsettled. In addition, although
substantial portions of the Communications Decency Act were held to be
unconstitutional, we cannot be certain that similar legislation will not be
enacted and upheld in the future.

Changes In Laws Relating To Consumer Privacy And Potentially Heightened
Scrutiny Of Our Services Could Harm Our Business

      There has been increasing public debate about the collection, distribution
and use of information about consumers. Although this debate has primarily
focused on information collected through the Internet, many of the issues apply
to data gathered through other media. We interact with consumers through our
various direct marketing efforts, both online and offline. As a consequence of
government regulation or evolving standards of consumer privacy protection, we
may be required to make changes to our marketing media and platforms in ways
that could diminish the effectiveness of our marketing efforts, which could harm
our business. Recently Congress passed the Gramm-Leach-Bliley Act which
restricts the transfer of personal information, including credit card
information, by financial institutions. The Federal Trade Commission is also
considering regulations under that Act. This could restrict our ability to
acquire personal information from financial institutions and thus adversely
affect our direct marketing activities.

We Have A History Of Losses And May Incur Future Losses

      We continue to report net losses to our common shareholders. The net loss
to our shareholders for the three months ended March 31, 2001 was $0.2 million,
or $0.01 per share, primarily as a result of preferred stock dividends of $1.1
million. The preferred dividends include dividends of $0.2 million that we were
contractually required to pay to the holders of the preferred stock and non-cash
deemed dividends of $0.9 million. Deemed dividends represent the accretion of
the difference between the carrying value and the mandatory redemption amounts
of preferred stock that resulted from allocating a portion of the proceeds to
common stock, common stock purchase warrants, and the beneficial conversion
features of the shares. We may continue to incur deemed dividends in the future.
In addition, if our net revenues grow more slowly than we anticipate, or if our
operating expenses exceed our expectations, our business, results of operations,
financial condition and prospects would be materially and adversely affected.

Market Related Risks

Shares Eligible For Future Sale Could Cause Our Stock Price To Decline Due To
Dilution.

      As of March 31, 2001, there were 35,743,669 issued and outstanding shares
of our common stock. If the holders of all outstanding options and common stock
purchase warrants exercised those options and warrants, and the holders of all
outstanding convertible securities converted them into common stock, we would be
required to issue approximately 23.2 million additional shares of common stock,
based on current exercise and conversion prices. The conversion price of our
Series A Convertible Preferred Stock (the "Series A Shares") is subject to
adjustment in a manner that could result in substantial dilution to other
holders of the Company's equity securities. The Series A Shares are convertible
into common stock at a floating rate based on the average of the three lowest
non-consecutive closing bid prices of the common stock during the ten trading
days prior to the date on which the conversion price is determined, subject to
certain adjustments (although prior to June 9, 2001, the Series A Shares cannot
be converted into common stock if the closing bid price of the common stock is
less than $1.50 per share). Therefore, the lower the price of our common stock
is at the time of conversion, the more shares of common stock the holder of the
Series A Shares will receive upon conversion.

                                       9

<PAGE>


      The market price of the common stock could decline as a result of future
sales of substantial amounts of the common stock, or the perception that such
sales could occur. Furthermore, certain shareholders have the right to require
us to register for re-sale their shares of common stock, or shares of common
stock into or for which their convertible securities, options or warrants are
convertible or exercisable, which may facilitate the sale of these shares in the
public market. In excess of 34,000,000 shares of outstanding common stock and
shares of common stock into or for which outstanding options, warrants and
convertible securities are exercisable or convertible are entitled to these
"registration rights" or have been registered for re-sale by the holders
pursuant to registration rights.

Our Stock Price Is Volatile

      The market price of our common stock has been, and is likely to continue
to be, volatile, experiencing wide fluctuations. Some of these fluctuations
appear to be unrelated or disproportionate to our operating performance. Future
market movements may materially and adversely affect the market price of our
common stock.

Other Risks

Ownership Of The Company Is Concentrated

      The five largest shareholders of the Company beneficially owned in excess
of 60% of the Company's issued and outstanding common stock as of March 31,
2001. As a result, these shareholders have the ability to exert significant
influence over the Company's business, including the election of directors and
the approval of any other action requiring the approval of shareholders. This
concentration of share ownership may: (i) delay or prevent a change of control
of the Company; (ii) impede a merger, consolidation, takeover or other business
combination involving the Company; or (iii) discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of the Company.

Provisions Of Our Corporate Charter Documents And Delaware Law Could Delay Or
Prevent A Change Of Control.

      Our Certificate of Incorporation authorizes the board of directors (the
"Board of Directors") to issue up to 10,000,000 shares of preferred stock, par
value $.001 per share. The preferred stock may be issued in one or more series,
the terms of which may be determined at the time of issuance by the Board of
Directors, without further action by shareholders, and may include, among other
things, voting rights (including the right to vote as a series on particular
matters), preferences as to dividends and liquidation, conversion and redemption
rights, and sinking fund provisions. There is one series of preferred stock
currently outstanding which has a preference over the common stock if our
company is liquidated. In addition, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge with, or sell our
assets to a third party. The ability of the Board of Directors to issue
preferred stock could discourage, delay, or prevent a takeover of our Company,
thereby preserving control by the current shareholders.

As a Delaware corporation, we are subject to the General Corporation Law of the
State of Delaware, including Section 203, an anti-takeover law enacted in 1988.
In general, Section 203 restricts the ability of a public Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder. Subject to certain exceptions, an interested
stockholder is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of a corporation's voting stock. As a
result of the application of Section 203, potential acquirers may be discouraged
from attempting to acquire us, thereby possibly depriving our shareholders of
acquisition opportunities to sell or otherwise dispose of our stock at
above-market prices typical of such acquisitions.

                                       10

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                                    SIGNATURE


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                              CROSS MEDIA MARKETING CORPORATION


                              By:     /s/ Chet Borgida
                                   -------------------------------------------
                              Name:       Chet Borgida
                              Title:      Senior Vice President and Chief
                                          Financial Officer

Date:  July 26, 2001