<PAGE>

                                 UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

                                   (Mark One)

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

              For the quarterly period ended September 30, 2000.

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

                        Commission File Number: 0-28133

                               LIFEMINDERS, INC.
            (Exact name of registrant as specified in its charter)

                    DELAWARE                              52-1990403
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)             Identification Number)

13530 Dulles Technology Dr., Suite 500, Herndon, VA           20171
     (Address of principal executive offices)              (Zip Code)

     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE IS (703) 707-8261

Indicate by check mark 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. [X] Yes [ ] No

The number of shares of the Registrant's Common Stock outstanding as of November
8, 2000 was 25,281,864.
<PAGE>

                               LIFEMINDERS, INC.

                                     INDEX
<TABLE>
<CAPTION>
                                                                                                        Page No.
                                                                                                        --------
<S>                                                                                                     <C>
PART I -    FINANCIAL INFORMATION...................................................................           1

Item 1.     Financial Statements....................................................................           1

Item 2.     Management's Discussion And Analysis Of Financial Condition And Results of Operations...           8

Item 3.     Quantitative and Qualitative Disclosure about Market Risk...............................          19

PART II - OTHER INFORMATION                                                                                   21

Item 1.     Legal Proceedings.......................................................................          21

Item 2.     Change in Securities....................................................................          21

Item 3.     Defaults Upon Senior Securities.........................................................          21

Item 4.     Submission of Matters to a Vote of Securities Holders...................................          21

Item 5.     Other Information.......................................................................          21

Item 6.     Exhibits and Reports on Form 8-K........................................................          21
</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

                               LIFEMINDERS, INC.

                                BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                              December 31,    September 30,
                                                                                                  1999            2000
                                                                                              ------------    ------------
<S>                                                                                           <C>             <C>
                                                                                                               (Unaudited)
                  Assets
Current assets:
Cash and cash equivalents............................................................         $ 55,524,189    $ 45,246,954
Marketable securities, held to maturity..............................................            1,968,203      32,720,013
Accounts receivable, net of allowance for doubtful accounts of
     $493,992 and $680,158...........................................................            6,526,264       9,995,783
Prepaid expenses and other current assets............................................            6,769,673       6,359,995
                                                                                              ------------    ------------

Total current assets.................................................................           70,788,329      94,322,745

Property and equipment, net..........................................................            5,379,992      24,147,085
Goodwill, net of accumulated amortization of $- and
     $5,250,628, respectively........................................................                   --      46,874,052
Intangible assets, net of accumulated amortization
     Of $- and $1,237,778, respectively..............................................                   --       9,554,921
Investments in unconsolidated entities, at cost......................................                   --       2,823,545
Restricted cash......................................................................                   --       7,600,000

Other assets.........................................................................              688,863         774,488
                                                                                              ------------    ------------

Total assets.........................................................................         $ 76,857,184    $186,096,836
                                                                                              ============    ============


          Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable.....................................................................         $  3,121,247    $  6,053,403
Accrued advertising costs............................................................            4,299,565       2,614,673
Accrued acquisition costs............................................................                   --         750,000
Accrued expenses.....................................................................            1,690,285       2,588,572
Deferred revenue.....................................................................              243,354         549,590
Notes payable........................................................................               80,993       1,061,886
Capital lease obligations............................................................              724,111       1,377,027
                                                                                              ------------    ------------

Total current liabilities............................................................           10,159,555      14,995,151
Notes payable, net of current portion................................................               74,243         662,186
Capital lease obligations, net of current portion....................................              906,034         610,487
Deferred rent........................................................................               40,415          43,185
                                                                                              ------------    ------------

Total liabilities....................................................................           11,180,247      16,311,009
                                                                                              ------------    ------------

Commitments and contingencies

Stockholders' equity:
 Preferred stock, $.01 par value; 9,665,240 shares authorized
  at December 31, 1999 and September 30, 2000, no shares issued and
  outstanding at December 31, 1999 and September 30, 2000............................                   --              --
 Common stock, $.01 par value; 60,000,000 shares authorized;
  20,299,039 and 25,170,620 (unaudited) shares issued and outstanding at
  December 31, 1999 and September 30, 2000, respectively.............................              202,990         251,706
Additional paid-in capital...........................................................          104,621,740     249,208,618
Deferred compensation on employee stock options......................................           (5,076,892)     (6,589,158)
Accumulated deficit..................................................................          (34,070,901)    (73,085,339)
                                                                                              ------------    ------------

Total stockholders' equity...........................................................           65,676,937     169,785,827
                                                                                              ------------    ------------

Total liabilities and stockholders' equity...........................................         $ 76,857,184    $186,096,836
                                                                                              ============    ============
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       1
<PAGE>

                               LIFEMINDERS, INC.

                           STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                    For the three months ended,    For the nine months ended,
                                                           September 30,                 September 30,
                                                           -------------                 -------------
                                                       1999            2000           1999           2000
                                                    -----------   -------------   ------------   ------------
                                                    (Unaudited)    (Unaudited)     (Unaudited)    (Unaudited)
<S>                                                 <C>           <C>             <C>            <C>
Revenue:
Advertising......................................   $ 3,168,873     $14,679,679   $  4,064,962   $ 34,722,658
Opt-in...........................................     1,368,399       1,340,207      1,914,531      6,430,979
Consulting.......................................            --         656,975             --      1,198,095
                                                    -----------     -----------   ------------   ------------

Total revenue....................................     4,537,272      16,676,861      5,979,493     42,351,732
Cost of revenue..................................       260,061       1,730,274        535,300      4,025,085
                                                    -----------     -----------   ------------   ------------

Gross margin.....................................     4,277,211      14,946,587      5,444,193     38,326,647
                                                    -----------     -----------   ------------   ------------

Operating expenses:
Sales and marketing..............................    10,257,265      14,744,275     16,526,211     59,145,056
Research and development.........................       495,890       2,170,344      1,024,057      5,447,407
General and administrative.......................     1,367,317       3,456,198      2,405,476     10,389,549
Depreciation and amortization....................        57,986         895,966         65,927      1,628,561
Amortization of goodwill.........................            --       2,941,820             --      5,250,628
                                                    -----------     -----------   ------------   ------------

Total operating expenses.........................    12,178,458      24,208,603     20,021,671     81,861,201
                                                    -----------     -----------   ------------   ------------

Loss from operations.............................    (7,901,247)     (9,262,016)   (14,577,478)   (43,534,554)
Interest income, net.............................        56,015       1,566,123        124,237      4,545,292
Loss from investment in unconsolidated entities..            --              --             --        (25,173)
                                                    -----------     -----------   ------------   ------------

Net loss.........................................    (7,845,232)     (7,695,893)   (14,453,241)   (39,014,435)
Accretion on mandatorily redeemable convertible
  preferred stock................................      (432,755)             --       (664,377)            --
                                                    -----------     -----------   ------------   ------------

Net loss available to common
  shareholders...................................   $(8,277,987)    $(7,695,893)  $(15,117,618)  $(39,014,435)
                                                    ===========     ===========   ============   ============

Basic and diluted net loss per common share......   $     (2.48)    $     (0.32)  $      (4.59)  $      (1.67)
                                                    ===========     ===========   ============   ============

Basic and diluted weighted average common
  shares and common share equivalents............     3,339,056      24,277,549      3,296,421     23,352,193
                                                    ===========     ===========   ============   ============
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>

                               LIFEMINDERS, INC.

                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                        For the nine months ended
                                                                                                               September 30,
                                                                                                               -------------
                                                                                                           1999           2000
                                                                                                       ------------   ------------
                                                                                                       (Unaudited)    (Unaudited)
<S>                                                                                                    <C>            <C>
Cash flows from operating activities:
 Net loss............................................................................................  $(14,453,241)  $(39,014,435)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
 Depreciation........................................................................................       200,894      3,215,322
 Amortization of intangibles and goodwill............................................................            --      6,488,407
 Provision for doubtful accounts receivable..........................................................       201,232      1,312,431
 Amortization of deferred compensation on employee
  stock options......................................................................................       268,671      1,111,756
 Issuance of stock options in exchange for services..................................................         9,000             --
 Loss from unconsolidated entities...................................................................            --         25,173
 Changes in assets and liabilities, net of effects for
  acquisitions:
 Accounts receivable.................................................................................    (4,368,802)    (4,780,589)
 Prepaid expenses and other assets...................................................................    (6,990,942)      (184,939)
 Accounts payable....................................................................................     3,230,863        151,919
 Accrued expenses....................................................................................       956,269        (36,605)
 Deferred revenue....................................................................................      (234,726)        33,131
 Deferred rent.......................................................................................        38,925          2,770
                                                                                                       ------------   ------------

   Net cash used in operating activities.............................................................   (21,141,857)   (31,675,659)
                                                                                                       ------------   ------------

Cash flows from investing activities:
 Acquisition of property and equipment...............................................................    (2,891,319)   (19,036,678)
 Purchase of marketable securities...................................................................            --    (58,690,601)
 Proceeds from maturities of marketable securities...................................................            --     27,938,791
 Payment of collateral for letter of credit..........................................................            --     (7,600,000)
 Payments for investments in unconsolidated entities, net of return of capital.......................            --     (2,598,718)
 Advances made under notes receivable................................................................            --       (250,000)
 Payments for acquisitions, net of cash acquired.....................................................            --     (5,401,905)
                                                                                                       ------------   ------------

 Net cash used in investing activities...............................................................    (2,891,319)   (65,639,111)
                                                                                                       ------------   ------------

Cash flows from financing activities:
 Issuance of mandatorily redeemable preferred stock, net of issuance costs...........................    35,033,038             --
 Proceeds from issuance of note payable..............................................................       161,986      1,728,396
 Deferred offering costs.............................................................................      (174,284)            --
 Payments of note payable............................................................................            --       (732,795)
 Payments of capital lease obligations...............................................................            --       (736,838)
 Proceeds from issuance of common stock, net of
  issuance costs.....................................................................................            --     85,898,389
 Proceeds from exercise of stock options.............................................................        59,500        880,383
                                                                                                       ------------   ------------

 Net cash provided by financing activities...........................................................    35,080,240     87,037,535
                                                                                                       ------------   ------------

Net increase (decrease) in cash and cash equivalents.................................................    11,047,064    (10,277,235)
Cash and cash equivalents, beginning of period.......................................................       232,073     55,524,189
                                                                                                       ------------   ------------

Cash and cash equivalents, end of period.............................................................  $ 11,279,137   $ 45,246,954
                                                                                                       ============   ============

Supplemental disclosures of non-cash investing and financing activities:
  Capital lease obligations incurred for the purchase of new equipment...............................  $         --   $    998,930
                                                                                                       ============   ============
  Liabilities assumed in acquisitions of businesses..................................................  $         --   $  3,083,405
                                                                                                       ============   ============
  Issuance of stock options in exchange for services.................................................  $      9,000   $         --
                                                                                                       ============   ============
  Accretion on mandatorily redeemable convertible preferred stock....................................  $    664,377   $         --
                                                                                                       ============   ============
  Issuance of common stock in business acquisitions..................................................  $         --   $ 55,036,668
                                                                                                       ============   ============
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

                               LIFEMINDERS, INC.
                         NOTES TO FINANCIAL STATEMENTS

1.  The Company

LifeMinders, Inc. (the Company), formerly LifeMinders.com, Inc., a Delaware
corporation, is an online direct marketing company that provides personalized
content and advertisements via e-mail to a community of members. E-mail messages
contain reminders and tips that enable the Company's members to better organize
and manage their lives. Proprietary member information and targeting
capabilities provide advertising partners the opportunity to more effectively
reach their target audiences.

2.  Basis of Presentation

The interim financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, financial statements
included in this report reflect all normal recurring adjustments that the
Company considers necessary for the fair presentation of the results of
operations for the interim periods covered, and of the financial position of the
Company at the date of the interim balance sheet. Certain information and
footnote disclosures normally included in the annual financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. However, the
Company believes that the disclosures are adequate to understand the information
presented. The operating results for interim periods are not necessary
indicative of the operating results for the entire year. These financial
statements should be read in conjunction with the Company's Form 10-K annual
report for the year ended December 31, 1999.

Certain prior period amounts have been reclassified to conform to the current
period presentation.

3.  Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation
of these financial statements are as follows:

Use of Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results could differ from these estimates.

Cash and Cash Equivalents

Highly liquid investments having original maturities of 90 days or less at the
date of acquisition are classified as cash equivalents. The carrying value of
cash equivalents approximates fair value.

Restricted Cash

Restricted cash consists of amounts held as collateral to secure a letter of
credit required in lieu of a deposit for a new office lease.

Marketable Securities

Marketable securities include investments in commercial paper for which the
original maturity dates exceed three months. The maturity of the marketable
securities range from 91 days to twelve months. Marketable securities are
classified as held-to-maturity and are accounted for at amortized cost. No
marketable securities were sold prior to maturity.  At September 30, 2000 and
December 31, 1999, the cost of marketable securities approximates their fair
value.

                                       4
<PAGE>

Allowance for Doubtful Accounts

The Company estimates an allowance for doubtful accounts based on the credit
worthiness of its customers as well as general economic conditions.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
three to five years. When property and equipment are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in operations.

Internal use software and web site development costs are capitalized in
accordance with Statement of Position (SOP) No. 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use, and EITF Issue No.
00-02, Accounting for Web Site Development Costs. Qualifying costs incurred
during the application development stage, which consist primarily of outside
services and consultants, are capitalized and amortized over the estimated
useful life. All other costs are expensed as incurred. To date, software
development costs qualifying for capitalization total $1,662,309 net of
amortization of $46,175.

Intangible Assets

The cost of business acquisitions accounted for using the purchase method is
allocated first to identifiable assets and liabilities based on estimated fair
values. The excess of cost over identifiable assets and liabilities is recorded
as goodwill. Identifiable intangible assets related to the acquisition of
assembled workforces are amortized over one year, the approximate length of
employment contracts. Goodwill, technology, patents and other intangible assets
are amortized on a straight-line basis over three years. The carrying amounts of
intangible assets and goodwill are reviewed if facts and circumstances suggest
that they may be impaired. If this review indicates that the carrying amounts of
intangible assets and goodwill will not be recoverable, as determined based on
estimated undiscounted future cash flows of the acquired assets, the carrying
amounts of the intangible assets and goodwill are reduced accordingly. No
impairments existed as of September 30, 2000.

Advertising Costs

Advertising costs are expensed as the contractual terms of the advertising
contracts are fulfilled.

Research and Development Costs

Research and development costs are expensed as incurred.

Revenue Recognition

Advertising

Advertising arrangements consist primarily of advertisements that are displayed
within the Company's e-mails. Generally, advertisers pay the Company and the
Company recognizes revenue on a per e-mail basis, based on the number of e-mails
delivered to members in which the advertisements are displayed. From time to
time, the Company may guarantee a minimum number of e-mails to be delivered
containing an advertisement directed at a specific group. Under these contracts,
the Company is not required to forfeit fees received for e-mails previously
delivered and the Company has historically fulfilled the guaranteed minimum
number of e-mails; therefore, revenue is recognized as e-mails are delivered.
The Company may also guarantee a minimum number of sales orders for the
advertiser based on the e-mails delivered. Under these contracts the Company
defers all revenue until notification is received from the advertiser that the
minimum number of sales orders have been achieved by the advertiser. In
addition, the Company may provide advertisers the opportunity for the exclusive
right to sponsor advertisements within a specific e-mail category for a
specified period of time for a fixed fee. Under these contracts the Company
recognizes revenue ratably during the period the advertisement is displayed in
the Company's e-mails since there is no obligation to provide a minimum number
of e-mails for that individual advertiser during the specific period. The
Company's advertising contracts generally have terms ranging from one to twelve
months.

Advertising revenue may also include barter transactions, where the Company
exchanges advertising space on its e-mails for reciprocal advertising space or
traffic on other Web sites. Revenue from barter transactions is recognized in
accordance with APB Opinion No. 29, Accounting for Nonmonetary Transactions (APB
No. 29), and Emerging Issues Task Force Issue (EITF Issue) No. 99-17, Accounting
for Advertising Barter Transactions, during the period in which the
advertisements are displayed in the Company's e-mails. In the absence of
sufficient evidence of fair value, the acquired assets are recorded at the book
value of the surrendered assets. No gain or loss is recorded from barter
transactions as the revenue recognized equals the advertising costs incurred.
For the nine months ended September 30, 1999, the Company did not enter into any
barter arrangements. For the nine months ended September 30, 2000, the Company
entered into four barter arrangements for which value could not be reasonably
determined. No revenue or expense was recognized as sufficient evidence of fair
value was indeterminable and the Company's carrying cost of the surrendered
assets was insignificant.

Opt-in Services

Revenue is recognized as affirmative member responses to advertisers'
newsletters and other promotions offered during the Company's sign up process
are delivered to the Company's opt-in partners. The Company derives revenue from
its services through fees that its opt-in advertising partners pay. The Company
records revenue net of estimated duplicate member responses to its opt-in
partners' newsletters and other promotions. Duplicate member responses are
names, generally in the form of e-mail addresses, that the Company provides to
opt-in advertising partners for which the Company's members have previously
registered either through the Company's sign up process or with the Company's
opt-in advertising partners directly. Historically, opt-in partners have
immediately notified the Company of duplicate member responses upon receipt of
member registration information, which is transmitted to opt-in partners twice a
week. The Company issues credits upon notification of duplicate member responses
and, therefore, has not experienced significant differences between the actual
and estimated amounts of duplicate member responses. Opt-in partners pay a fixed
rate per registration and, upon delivery of the registrations, the Company has
no further obligation under the agreements. The Company does not currently
anticipate any significant change in the nature of the fees it charges its opt-
in partners or in its customer base and believes its historical experience with
its opt-in service is predictive of future estimates. For the nine months ended
September 30, 1999 and 2000, revenue was recorded net of approximately $0.4 and
$0.8 million for estimated duplicate member responses to the Company's opt-in
partners' newsletters and other promotions.

Cash received in advance of advertising and opt-in services is recorded as
deferred revenue. Revenue is recognized for advertising and opt-in services as
e-mails and affirmative member responses, respectively, are delivered.

Consulting Revenue

Consulting revenue consists of revenue earned under contracts relating to
services for the development of weather related content. These contracts are for
services that require customization and modification of our customer's current
software systems. Revenue is recognized under the percentage-of-completion
method of accounting, based on the ratio of costs incurred to total estimated
costs. The percentage-of-completion method is deemed the most appropriate method
of revenue recognition as the Company is generally entitled to payment for work
performed to date even though it may not coincide with a specific billing
milestone.  The billing milestones are considered to be interim billing points
for the purposes of providing funding to the Company for its efforts and not
true output measures of the Company's progress to completion.  Additionally, the
ratio of costs incurred to total estimated costs has a direct relationship to
the performance of services specified in the arrangement due to the types of
costs that are incurred.  Costs incurred relating to performance of the services
specified in the arrangement consist primarily of costs for consulting services
and payroll relating to individuals performing the software
modification/customization procedures.  The consultant and payroll costs
incurred directly coincide with the input of effort into the
modification/customization process.  Direct material costs on this project are
immaterial.  Project-related overhead costs included within the calculation of
the percentage complete are consistent with industry practice and there are no
significant up-front costs charged to the contract. Cash received in advance of
services to be provided is recorded as deferred revenue and recognized upon the
completion of the related services.

                                       5
<PAGE>

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of
credit risk consist of cash and cash equivalents, marketable securities and
accounts receivable.

The Company's cash and cash equivalents are maintained at three U.S. financial
institutions. Deposits held with banks may exceed the amount of insurance
provided on such deposits. The majority of the Company's cash equivalents are
invested in short-term commercial paper.

No one customer exceeded 10% of the Company's revenue and accounts receivable at
September 30, 1999 or 2000. Additionally, the Company estimates an allowance for
doubtful accounts based on the credit worthiness of its customers as well as
general economic conditions.

Income Taxes

The Company accounts for income taxes under the asset and liability method,
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and tax bases of assets and liabilities. The Company provides a
valuation allowance on net deferred tax assets when it is more likely than not
that such assets will not be realized.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock-Based Compensation, and related Interpretations, in
accounting for its employee and non-employee directors stock options and
complies with the disclosure requirements of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.  Accordingly,
the Company measures compensation expense for its employee stock-based
compensation using the intrinsic value method and provides pro forma disclosures
of net loss as if the fair value method had been applied in measuring
compensation expense. Under the intrinsic value method of accounting for stock-
based compensation, when the exercise price of options granted to employees is
less than the estimated fair value of the underlying stock on the date of grant,
deferred compensation is recognized and is amortized to compensation expense
over the applicable vesting period.

The Company measures compensation expense for its non-employee stock-based
compensation awards. The fair value of the options and warrants issued is used
to measure the transaction as this is more reliable than the fair value of the
services received. The fair value is measured as the value of the Company's
common stock on the date that the commitment for performance by the counterparty
has been reached or the counterparty's performance is complete. The fair value
of the equity instrument is charged directly to compensation expense and
additional paid in capital. No options or warrants have been issued to
non-employees during the nine-month periods ended September 30, 1999 and 2000.

Impairment of Long-lived Assets

The Company periodically evaluates the recoverability of long-lived assets. An
impairment loss is recognized in the event that facts and circumstances indicate
that the carrying amount of an asset may not be recoverable, and an estimate of
future undiscounted cash flows is less than the carrying amount of the asset.
Based on management's assessment as of September 30, 2000, the Company has
determined that no impairment of long-lived assets exists.

Basic and Diluted Net Loss Per Common Share

Basic net loss per common share is based on the weighted average number of
shares of common stock outstanding during each year. Diluted net loss per common
share is based on the weighted average number of shares of common stock
outstanding during each year, adjusted for the effect of common stock
equivalents arising from the assumed exercise of stock options, if dilutive.

Certain Risks and Uncertainties

The Company is subject to all the risks inherent in an early stage business in
the technology industry. The risks include, but are not limited to, limited
operating history, successful integration of acquired businesses, dependence on
the Internet and related security risks and the changing nature of the Internet
industry.

                                       6
<PAGE>

Segment Reporting

The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information. SFAS No. 131 replaces the "industry segment" approach
with the "management" approach to reporting financial information about an
enterprise's segments. The management approach designates the internal
organization that is used by management for allocating resources and assessing
performance as the source of the Company's reportable segments. SFAS No. 131
also requires disclosures about products and services, geographic areas, and
major customers.

Comprehensive Income

The Company has adopted SFAS No. 130, Reporting Comprehensive Income. SFAS No.
130 requires additional reporting with respect to certain changes in assets and
liabilities that previously were reported in the statement of stockholders'
equity. During the periods presented, the Company has not had any significant
transactions that are required to be reported in comprehensive income.

Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission ("SEC") released Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the SEC. Subsequently,
the SEC released SAB 101A, which delayed the implementation date of SAB 101 for
registrants with fiscal years that begin between December 16, 1999 and March 15,
2000. The Company is required to be in conformity with the provisions of SAB
101, as amended by SAB 101A. In June 2000, the SEC issued SAB No. 101B, further
delaying the required implementation of SAB 101 by the Company until the fiscal
fourth quarter of year 2000.   The Company is currently evaluating the impact
the adoption of SAB 101 will have on its financial statements.

In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
which delays the effective date of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which will be effective for the Company's
fiscal year 2001. This statement establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized in earnings
unless specific hedge accounting criteria are met. The Company has not entered
into derivative contracts and does not have plans to enter into such contracts,
accordingly the adoption of SFAS Nos. 133 and 137 is not expected to have a
material effect on the financial statements.

4.  Marketable Securities

At December 31, 1999 and September 30, 2000, all marketable debt securities were
classified as held-to-maturity and carried at amortized cost.  Investments
consisted of the following:

<TABLE>
<CAPTION>
                                 December 31, 1999  September 30, 2000
<S>                              <C>                <C>
Commercial paper                     $1,968,203         $24,724,389
U.S. government securities                   --           7,995,624
                                     ----------         -----------
    Total                            $1,968,203         $32,720,013
                                     ==========         ===========
</TABLE>

At December 31, 1999 and September 30, 2000, the estimated fair value of each
investment approximated its amortized cost and therefore, there were no
unrealized gains or losses.

5.  Basic and Diluted Loss per Common Share

     The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per common share computations.

    Basic and diluted net loss per common share:

<TABLE>
<CAPTION>
                                              Three Months Ended         Nine Months Ended
                                                 September 30,              September 30,
                                                 -------------              -------------

                                              1999         2000          1999           2000
                                              ----         ----          ----           ----
<S>                                       <C>           <C>          <C>           <C>
Net loss available to common
  stockholders........................... $(8,277,987) $(7,695,893)  $(15,117,618) $(39,014,435)
                                          ===========  ===========   ============  ============

Weighted-average shares of common stock
  outstanding............................   3,339,056   24,277,549      3,296,181    23,352,193
                                          ===========  ===========   ============  ============

Basic and diluted net loss per common
  share.................................. $     (2.48) $     (0.32)  $      (4.59) $      (1.67)
                                          ===========  ===========   ============  ============
</TABLE>

Options to purchase 1,700,374 and 4,544,381 shares of common stock at weighted
average exercise prices of $2.11 and $17.54 per share, respectively, have been
excluded from the computation of diluted earnings per share as their effect
would be anti-dilutive for the nine months ended September 30, 1999 and 2000,
respectively.

6.  Commitments and Contingencies

In August 2000, the Company entered into an agreement for future distribution
services valued at $3.3 million. Of the total contract price, the Company
prepaid $2.3 million.  The remaining amount due is payable in equal installments
of $0.5 million in February and May 2001. The total contract price will be
amortized over the period the distribution services are performed, which is
expected to begin November 2000 and to be completed November 2001.

Additionally, the Company has committed to lease approximately 132,000 square
feet of office space for a term of 10 years, beginning September 2000. Rent is
payable monthly in advance and approximates $3.5 million per year and escalates
annually by approximately 3%.

The Company has also entered into a collocation agreement for the housing,
security and maintenance of its production and data warehouse computer servers.
This contract totals approximately $2.9 million and has a term of 12 months.

On February 4, 2000, the Company was sued for breach of contract and
misappropriation of trade secrets.  The complaint filed by the plaintiff was
dismissed with prejudice on May 3, 2000, with no payment due from the Company.

7.  Acquisitions

On August 31, 2000, the Company acquired smartRay Network, Inc. in a purchase
business combination for $32.5 million, consisting of $2.3 million in cash,
1,252,198 shares of the Company's common stock valued at $22.5 million (based on
the average of the Company's common stock two days prior to, the day of and two
days subsequent to the announcement of the business combination), the assumption
of options that are exercisable to acquire a total of 251,447 shares of the
Company's common stock with a fair value of $6.9 million (calculated using the
Black-Scholes option pricing model), the assumption of $0.5 million in
liabilities and approximately $296,000 in acquisition costs.  Results of
smartRay have been included with those of the Company for periods subsequent to
the date of acquisition.

The total purchase price of $32.5 million, including acquisition costs of
$296,000, was allocated to the assets acquired and liabilities assumed based on
their estimated fair values are as follows:

<TABLE>
<S>                                     <C>
Tangible assets and liabilities         $   675,163
Assembled workforce                         770,000
Technology                                4,000,000
Goodwill                                 24,424,839
Deferred compensation                     2,624,022
                                        -----------

                                        $32,494,024
                                        ===========
</TABLE>

Tangible assets are depreciated on a straight-line basis over the estimated
useful lives of the assets, generally three to five years. Assembled workforce
is amortized on a straight-line basis over one year. Technology and goodwill are
amortized over three years. Deferred compensation is amortized on a straight-
line basis over the remaining vesting period, which approximates 1 1/2 years.

On March 29, 2000, the Company acquired WITI Corporation in a purchase business
combination for $30.5 million, consisting of $3.5 million in cash, 345,796
shares of the Company's common stock valued at $23.0 million (based on the
average price of the Company's common stock two days prior to, the day of and
two days subsequent to the announcement of the business combination), the
assumption of options that are exercisable to acquire 38,266 shares of the
Company's common stock with a fair value of $2.5 million (calculated using the
Black-Scholes option pricing model), the assumption of $1.3 million in
liabilities and approximately $156,000 in acquisition costs. Results of
operations for WITI have been included with those of the Company for periods
subsequent to the date of acquisition.

The total purchase price of $30.5 million, including acquisition costs of
$156,000, was allocated to the assets acquired and liabilities assumed based on
their estimated fair values are as follows:

<TABLE>
<S>                                                    <C>
Tangible assets and liabilities.....................   $   298,000
Assembled workforce.................................       260,000
Technology..........................................     3,190,000
Noncompete agreement................................     1,830,000
Patent..............................................       710,000
Goodwill............................................    24,167,824
                                                       -----------

                                                       $30,455,824
                                                       ===========
</TABLE>

Tangible assets are depreciated on a straight-line basis over the estimated
useful lives of the assets, generally three to five years. Assembled workforce
is amortized on a straight-line basis over the term of the employment contracts,
which is one year. All other intangibles, including goodwill, are amortized on a
straight-line basis over three years.

On March 14, 2000, the Company acquired PleaseRSVP.com,Inc., in a purchase
business combination for a purchase price of approximately $3.5 million,
consisting of $500,000 in cash and 40,000 shares of the Company's common stock
valued at $3.0 million based on the average price of the Company's common stock
two days prior to, the day of and two days subsequent to the consummation of the
business combination. The Company allocated the entire purchase price to
goodwill, which is being amortized over three years.

                                       7
<PAGE>

The following unaudited pro forma results of operations for the nine months
ended September 30, 2000 and 1999 are presented as though smartRay, WITI and
PleaseRSVP.com had been acquired at the beginning of 1999, after giving effect
to purchase accounting adjustments relating to amortization of intangible
assets.

<TABLE>
<CAPTION>
                                               Nine Months Ended
                                                 September 30,
                                                 -------------

                                          2000                    1999
                                          ----------------------------
     <S>                                  <C>                 <C>
     Revenue.........................     $42,814,578         $ 6,874,007
                                          ===========         ===========

     Net loss........................     $(47,509,390)       $15,001,462
                                          ============        ===========

     Basic and diluted net loss per
       share.........................     $(1.90)             $(3.07)
                                          ======              ======

     Weighted average common
       shares outstanding............      24,950,187          4,894,415
                                           ==========          =========
</TABLE>

The pro forma results of operations are not necessarily indicative of the
results that would have occurred had the smartRay, WITI and PleaseRSVP.com
acquisitions been consummated on January 1, 1999, nor are they necessarily
indicative of future operating results.

8.  Investments in Unconsolidated Entities

On March 15, 2000, the Company acquired a 12% interest in an Internet- related
astrology business for approximately $1.45 million in cash. The Company
accounted for this investment using the equity method since the Company could
exercise influence over the operations of the investee as it had an option to
purchase the remaining 88% of the investee on or before July 15, 2000. The
equity method requires the Company to record its proportionate share of the
investee's income or loss. For the nine months ended September 30, 2000, the
Company recorded $25,173 as a loss from investment in unconsolidated entities.
On June 29, 2000, the Company sold its investment to an unrelated third party in
exchange for a note receivable in the amount of $1.45 million. A loss on the
sale of investment of approximately $ 39,000, comprising unrecovered acquisition
costs, is included in operating expenses in the statement of operations.

On March 24, 2000, the Company acquired a 9% interest in an Internet-related
shopping comparison business for $2.26 million in cash. The Company accounts for
this investment using the cost method since it cannot exercise any influence
over the operations of the investee. The cost of the investment is reduced by
cash received from the investee related to advertising services provided by the
Company. To date, the Company has received approximately $1.4 million in cash
from the investee.

On June 27, 2000, the Company acquired a 5% interest in an electronic messaging
company for $2 million in cash. The Company accounts for this investment using
the cost method since it cannot exercise any influence over the operations of
the investee.

9. Segment Information

Prior to the third quarter of 2000, the Company operated in one segment: the
Internet and related services. Beginning in the third quarter of 2000, however,
management began evaluating the Company by strategic business unit. The Company
currently operates within three business units: business to consumer marketing,
wireless marketing and business to business marketing. The reportable segments
derive revenue from the sale of advertising within each unit's corresponding
medium. The segment operating loss is revenue less direct and allocable
expenses. Segment identifiable assets are those that are directly used in or
identified to segment operations.

Financial information by segment for the nine months ended September 30, 2000
follows:

<TABLE>

                                 Consumer        B2B        Wireless     Corporate        Total
                                 --------        ---        --------     ---------        -----
<S>                          <C>           <C>           <C>           <C>            <C>
Revenue                        $40,688,879  $    464,758  $ 1,198,095   $          -   $ 42,351,732
Operating loss                  (5,514,574)  (11,709,307)  (2,240,514)   (19,550,040)   (39,014,435)
Depreciation and amortization      994,612       264,390      531,666      7,913,061      9,703,729

</TABLE>


Item 2. Management's Discussion And Analysis Of Financial Condition And Results
of Operations

The following discussion should be read in conjunction with the financial
statements and related notes included elsewhere in this report. The following
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
those discussed below and in the section entitled "Risk Factors" of this Form
10-Q.

Overview

We provide online direct marketing opportunities to our advertising partners by
delivering personalized e-mail messages to our members. Our e-mail messages
contain helpful reminders and tips that enable our members to better organize
and manage their busy lives. Our proprietary information about our members and
highly precise targeting capabilities provide our advertising partners the
opportunity to more effectively reach their target audiences.

We were incorporated in Maryland on August 9, 1996 ("Date of Inception") under
the name of MinderSoft, Inc. In January 1999, we changed our name to
LifeMinders.com, Inc. and reincorporated in Delaware on July 2, 1999. In
June 2000, we changed our name again to LifeMinders, Inc.

                                       8
<PAGE>

Significant Transactions

In 2000, we announced two transactions that we expect will have a significant
effect on our results of operations and financial condition. These transactions
were:

WITI Merger

On March 29, 2000, we acquired WITI Corporation in a purchase business
combination for $30.5 million, consisting of $3.5 million in cash, 345,796
shares of our common stock valued at $23.0 million (based on the
average price of our common stock two days prior to, the day of and two days
subsequent to the announcement of the business combination), the assumption of
options that are exercisable to acquire 38,266 shares of our common stock with a
fair value of $2.5 million (calculated using the Black-Scholes option pricing
model), the assumption of $1.3 million in liabilities and approximately $156,000
in acquisition costs. The acquisition pairs WITI's advanced weather products
with our subscriber base and provides us with a platform to offer high-
resolution weather forecasting and alerts to its members, as well as an
unobtrusive daily weather product to its existing customers. With the
acquisition, the Company assumed a consulting contract that we anticipate will
provide approximately $1.5 million in revenue for 2000.

smartRay Merger

On August 31, 2000, we acquired smartRay Network, Inc. in a purchase business
combination for $32.5 million, consisting of $2.3 million in cash, 1,252,198
shares of our common stock valued at $22.5 million (based on the average of our
common stock two days prior to, the day of and two days subsequent to the
announcement of the business combination), the assumption of options that are
exercisable to acquire a total of 251,447 shares of our common stock with a fair
value of $6.9 million (calculated using the Black-Scholes option pricing model),
the assumption of $0.5 million in liabilities and approximately $296,000 in
acquisition costs. The acquisition enhances our wireless message delivery
capabilities to provide intelligent content and commerce messages to our
subscriber base. The smartRay technology complements the technology previously
acquired from WITI by employing an alert-based, wireless platform that we expect
will be able to support our rapidly expanding customer base. SmartRay's results
of operations are expected to be insignificant in 2000.

Revenue

Since the beginning of calendar year 1999, we have generated revenue primarily
through advertising and opt-in services. Our advertising revenue is subject to
the effects of seasonality. If purchasing patterns or timing of purchasing by
advertisers were to change, our operations and quarter-to-quarter comparisons
could be materially affected.

Advertising

Advertising arrangements consist primarily of advertisements that are displayed
within our e-mails. Generally, advertisers pay us and we recognize revenue on a
per e-mail basis, based on the number of e-mails delivered to our members in
which the advertisements are displayed. From time to time, we may guarantee a
minimum number of e-mails to be delivered containing an advertisement directed
at a specific group. Under these contracts, we are not required to forfeit fees
received for e-mails previously delivered and we have historically fulfilled our
guaranteed minimum number of e-mails; therefore, revenue is recognized as e-
mails are delivered. We may also guarantee a minimum number of sales orders for
the advertiser based on the e-mails delivered. Under these contracts we defer
all revenue until notification is received from the advertiser that the minimum
number of sales orders have been achieved by the advertiser. In addition, we may
provide advertisers the opportunity for the exclusive right to sponsor
advertisements within a specific e-mail category for a specified period of time
for a fixed fee. Under these contracts we recognize revenue ratably during the
period the advertisement is displayed in our e-mails since there is no
obligation to provide a minimum number of e-mails for that individual
advertiser. Our advertising contracts generally have average terms ranging from
one to twelve months.

Advertising revenue may also include barter transactions, where the Company
exchanges advertising space on its e-mails for reciprocal advertising space or
traffic on other Web sites. Revenue from barter transactions is recognized in
accordance with APB Opinion No. 29, Accounting for Nonmonetary Transactions (APB
No. 29), and Emerging Issues Task Force Issue (EITF Issue) No. 99-17, Accounting
for Advertising Barter Transactions, during the period in which the
advertisements are displayed in our Company's e-mails. In the absence of
sufficient evidence of fair value, the acquired assets are recorded at the book
value of the surrendered assets. No gain or loss is recorded from barter
transactions as the revenue recognized equals the advertising costs incurred.
For the nine months ended September 30, 1999, we did not enter into any barter
agreements. For the nine months ended September 30, 2000, we entered into four
barter arrangements for which fair value could not be determined. No revenue or
expense was recognized as sufficient evidence of fair value was indeterminable
and the Company's carrying cost of the surrendered assets was insignificant.

Opt-in Services

Revenue is recognized as affirmative member responses to advertisers'
newsletters and other promotions offered during our sign up process are
delivered to our opt-in partners. We derive revenue from our services through
fees that our opt-in advertising partners pay. We record revenue net of
estimated duplicate member responses to our opt-in partners' newsletters and
other promotions.

Duplicate member responses are names, generally in the form of e-mail addresses,
that we provide to opt-in advertising partners for which our members have
previously registered either through our sign up process or with our opt-in
advertising partners directly. Historically, opt-in partners have immediately
notified us of duplicate member responses upon receipt of member registration
information, which is transmitted to opt-in partners twice a week. We issue
credits upon notification of duplicate member responses and, therefore, has not
experienced significant differences between the actual and estimated amounts of
duplicate member responses. Opt-in partners pay a fixed rate per registration
and, upon delivery of the registrations, we have no further obligation under the
agreements. We do not currently anticipate any significant change in the nature
of the fees it charges its opt-in partners or in its customer base and believes
its historical experience with its opt-in service is predictive of future
estimates. For the nine months ended September 30, 1999 and 2000, revenue was
recorded net of approximately $0.4 and $0.8 million for estimated duplicate
member responses to our opt-in partners' newsletters and other promotions.

Cash received in advance of advertising and opt-in services is recorded as
deferred revenue. Revenue is recognized for advertising and opt-in services as
e-mails and affirmative member responses, respectively, are delivered.

Consulting revenue

Consulting revenue consists of revenue earned under contracts relating to
services for the development of weather related content. These contracts are for
services which require customization and modification of our customer's current
software systems. Revenue is recognized under the percentage-of-completion
method of accounting, based on the ratio of costs incurred to total estimated
costs. The percentage-of-completion method is deemed the most appropriate method
of revenue recognition as we are generally entitled to payment for work
performed to date even though it may not coincide with a specific billing
milestone. The billing milestones are considered to be interim billing points
for the purposes of providing funding to us for our efforts and not true output
measures of our progress to completion. Additionally, the ratio of costs
incurred to total estimated costs has a direct relationship to the performance
of services specified in the arrangement due to the types of costs that are
incurred. Costs incurred relating to performance of the services specified in
the arrangement consist primarily of costs for consulting services and payroll
relating to individuals performing the software modification/customization
procedures. The consultant and payroll costs incurred directly coincide with the
input of effort into the modification/customization process. Direct material
costs on this project are immaterial. Project-related overhead costs included
within the calculation of the percentage complete are consistent with normal
practice and there are no significant up-front costs charged to the contract.
Cash received in advance of services to be provided is recorded as deferred
revenue and recognized upon the completion of the related services.

                                       9
<PAGE>

Expenses

Cost of Revenue

Cost of revenue consists of salaries, employee benefits and related expenses of
our Member Experience personnel, fees paid to freelance writers of our content
and depreciation of and collocation costs associated with the computer equipment
necessary to run our service. We believe that a significant increase in these
expenses will be necessary as we expand the number of e-mail categories offered
to our members.

Sales and Marketing

Sales and marketing expenses include salaries, sales commissions, employee
benefits, travel and related expenses of our direct sales force, advertising and
promotional expenses, marketing, and sales support functions. In an effort to
increase our revenue, member base and brand awareness, we expect to increase
significantly the amount of spending on sales and marketing over the next year.
Marketing costs associated with increasing our member base are expensed in the
period incurred.

Research and Development

Research and development costs include expenses for the development of new or
improved technologies designed to enhance the performance of our service,
including the salaries and related expenses for our engineering department, as
well as costs for contracted services and content facilities and depreciation on
equipment. A significant level of product development activity is necessary for
our business and we intend to increase significantly the amount of spending to
fund this activity.

General and Administrative

General and administrative expenses include salaries, employee benefits and
expenses for our executive, finance, legal and human resources personnel. In
addition, general and administrative expenses include fees for professional
services and occupancy costs. General and administrative expenses are expected
to increase in absolute dollars, in part due to the costs associated with being
a public company.

We do not currently anticipate that inflation will have a material impact on our
cash flows, results of operations or financial position.

Stock-Based Compensation

In connection with the grant of stock options to employees during the year ended
December 31, 1999, deferred compensation of $5.7 million was recorded as a
reduction to stockholders' equity. This deferred compensation represented the
difference between the estimated fair value of our common stock and the exercise
price of these options at the date of grant prior to our initial public
offering. Additionally, in accordance with FIN 44, $2.6 million of deferred
compensation was recognized upon the assumption of outstanding options that are
exercisable to acquire our common stock associated with the acquisition of
smartRay Networks. Deferred compensation is amortized over the vesting periods
of the applicable options.

Results of Operations

Revenue. Revenue was $16.7 million and $42.4 million for the three and nine
months ended September 30, 2000, respectively, which represent increases of 268%
and 608%, respectively, when compared with the corresponding periods in 1999.
Advertising revenue was $14.7 million and $34.9 million for the three and nine
months ended September 30, 2000, respectively, which represent increases of 363%
and 760%, respectively, when compared with the corresponding periods in 1999.
Opt- in revenue was $1.3 million and $6.2 million for the three and nine months
ended September 30, 2000, respectively, which represent a decrease of 2% and an
increase of 224%, respectively, when compared with the corresponding periods in
1999. The increase in revenue was due to significant expansion and sale of
advertising resulting from an increase in our membership base. The decline in
opt-in revenue is due to the redirection of the focus of the sales department to
new business lines, principally the business to business unit.

Cost of revenue. Cost of revenue was $1.7 million and $4.0 million, or 10% of
total revenue, for the three and nine months ended September 30, 2000,
respectively. Cost of revenue was $0.3 million and $0.5 million, or 6% and 9% of
total revenue, respectively, for the comparable periods in 1999. Our cost of
revenue for the three and nine months ended September 30, 2000 primarily
consisted of expenses related to the maintenance of existing member profiles,
the expansion of e-mail categories, which increases the staff required to write
content for those categories, and housing fees associated with and depreciation
of the computer systems necessary to operate our service. Of the $1.4 million
increase for the three months ended September 30, 2000 as compared to the
comparable period in 1999, 31% is due to an increase in the housing and
depreciation of additional computer equipment required to operate our service
resulting from the Company's rapid growth in membership, 20% resulted from an
increase in the
                                       10
<PAGE>

personnel in our Member Experience department, which is responsible for
identifying, composing and editing the content delivered in our emails, 19% is
attributable to the costs of revenue associated with the consulting revenue
acquired in the WITI acquisition and 18% is the amortization of WITI technology
acquired.  Of the $3.5 million increase for the nine months ended September 30,
2000 as compared to the comparable period in 1999, 42% is due to an increase in
the housing and depreciation of additional computer equipment, 20% resulted from
an increase in the personnel in our Member Experience department, 14% is
attributable to the costs of revenue associated with the consulting revenue
acquired in the WITI acquisition and 15% is the amortization of WITI technology
acquired.

Sales and marketing. Sales and marketing expenses were $14.7 million and $59.1
million, or 88% and 140% of total revenue, for the three and nine months ended
September 30, 2000, respectively. Sales and marketing expenses were $10.3
million and $16.5 million, or 226% and 276%, respectively, of total revenue, for
the comparable periods in 1999. Of the $4.4 million increase for the three
months ended September 30, 2000 as compared to the comparable period in 1999,
33% resulted from a major expansion in our efforts to acquire new members
through the purchase of banner advertisements and similar services on the Web,
27% resulted from an increase in our sales and marketing staff, 20% related to
an increase in housing fees and depreciation associated with computer systems
used to analyze customer metrics and 13% was attributable to the outsourcing of
certain corporate marketing functions associated with being a public company. Of
the $42.6 million increase for the nine months ended September 30, 2000 as
compared to the comparable period in 1999, 68% was attributed to the increased
purchase of banner advertisements and similar services on the Web, 10% resulted
from an increase in our sales and marketing staff, 3% related to an increase in
housing fees and depreciation associated with computer systems used to analyze
customer metrics, and 11% was attributable to the outsourcing of certain
corporate marketing functions.

Research and development. Research and development expenses were $2.2 million
and $5.4 million, or 13% and 13% of total revenue, for the three and nine months
ended September 30, 2000, respectively. Research and development expenses were
$0.5 million and $1.0 million, or 11% and 17% of total revenue, respectively,
for the comparable periods in 1999. Of the $1.7 million increase for the three
months ended September 30, 2000 as compared to the comparable period in 1999,
64% is attributable to expansion of technical personnel and related recruiting
fees and 24% is due to professional fees incurred to further develop and enhance
our service. Additionally, 14% of the increase is due to research and
development associated with our PleaseRSVP product. Of the $4.4
million increase for the nine months ended September 30, 2000 as compared to the
comparable period in 1999, 56% is attributable to the expansion of staff, 28% is
due to professional fees incurred to further develop and enhance our service and
10% is related to research and development associated with the PleaseRSVP
product.

General and administrative. General and administrative expenses were $3.5
million and $10.4 million, or 21% and 25% of total revenue, for the three and
nine months ended September 30, 2000, respectively. General and administrative
expenses were $1.4 million and $2.4 million, or 30% and 40% of total revenue,
respectively, for the comparable periods in 1999. Of the $2.1 million increase
for the three months ended September 30, 2000 as compared to the comparable
period in 1999, 58% is the result of our rapid growth and expansion,
requiring additional personnel and related fringe benefit expenses, relocation
and recruiting; 14% is attributable to the outsourcing of the processing of
bounty payments related to an advertising campaign; and 14% is directly related
to increases in professional fees as a result of becoming a public company. Of
the $8.0 million increase for the nine months ended September 30, 2000 as
compared to the comparable period in 1999, 46% is the result of the Company's
rapid growth and expansion in personnel, 5% is attributable to the outsourcing
of the processing of bounty payments, and 12% is due to increases in
professional fees as a result of going public. Additionally, 14% is due to an
increase in bad debt expense directly attributable to the increase in revenue.

Depreciation and amortization. Depreciation and amortization expenses were $0.9
million and $1.6 million, or 5% and 4% of total revenue, for the three and nine
months ended September 30, 2000, respectively. Depreciation and amortization
expenses were $58,000 and $66,000, or 1% and 1% of total revenues, respectively,
for the comparable periods in 1999.

Amortization of goodwill. As part of the smartRay, WITI and PleaseRSVP.com, Inc.
acquisitions, we recorded goodwill in the amount of $51.5 million.
Goodwill is being amortized over three-year periods, which resulted in
charges totaling $2.9 and $5.3 million, or 18% and 12% of total revenue, for the
three and nine months ended September 30, 2000, respectively.

Interest income, net. Interest income, net was $1.6 million and $4.5 million, or
9% and 11% of total revenue, for the three and nine months ended September 30,
2000, respectively. For the comparable periods in 1999, interest income, net was
$56,000 and $124,000, or 1% and 2% of total revenue, respectively. This increase
was due primarily to an increase in funds available for investment in short term
investments. The majority of the increase in funds was attributable to the
approximately $147.6 million in net proceeds from our initial public offering in
November 1999 and follow-on offering in February 2000. Interest expense for the
nine and three months ended September 30, 1999 and 2000, was immaterial.

Loss from investment in unconsolidated entities.  Loss from investment in
unconsolidated entities consists of losses attributable to our 12% interest
acquired on March 15, 2000 in an Internet-related business. During the nine
months ended September 30, 2000 we recorded losses totaling $25,173.

Income taxes.  No income taxes have been recorded for any of the periods
presented.  We have provided a full valuation allowance on our deferred tax
assets, consisting primarily of net operating loss carryforwards, because of the
uncertainty regarding their potential realization.

Accretion on mandatorily redeemable convertible preferred stock. Accretion on
mandatorily redeemable convertible preferred stock decreased from $433,000 and
$664,000 for the three and nine months ended September 30, 1999, respectively,
to $0 for the three and nine months ended September 30, 2000. The preferred
stock dividends and direct issuance costs on Series A, Series B, and Series C
preferred stock resulted in the accretion. During the three months ended
September 30, 1999, shares of Series A, Series B, Series C and Series D
preferred stock were outstanding. During the three and nine months ended
September 30, 2000, no shares of preferred stock were outstanding as a result of
their conversion into common stock concurrent with our initial public offering
in November 1999.

Seasonality and Quarterly Fluctuations in Operating Results

We believe that our revenue will be subject to seasonal fluctuations as a result
of general patterns of retail advertising and marketing and consumer purchasing,
which are typically higher during the fourth calendar quarter and lower in the
first and third quarters. In addition, expenditures by advertisers and marketers
tend to be cyclical, reflecting overall economic conditions and consumer buying
patterns. Due to these and other factors, we believe that quarter-to-quarter
comparisons of our operating results may not be meaningful and you should not
rely upon them as an indication of our future performance.

                                       11
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Liquidity and Capital Resources

Prior to our initial public offering in November 1999, we funded our operations
primarily through the private placement of preferred equity securities. Our
initial public offering raised approximately $61.7 million in net proceeds. In
February 2000, we completed a follow-on offering that raised approximately $85.9
million in net proceeds. As of September 30, 2000, we had approximately $78.0
million of cash, cash equivalents and marketable securities. Outstanding
equipment financing, comprising both notes payable and capital leases,  totaled
approximately $3.7 million at September 30, 2000. The outstanding principal
balances of the various equipment financings must be repaid in equal monthly
installments through August 2002. Additionally, the Company has outstanding
commitments to lease office and computer warehouse space totaling $44.4 million
as of September 30, 2000. The commitments have various terms expiring through
January 2011. Associated with its acquisition of WITI, we assumed two notes
payable totaling $1.6 million: $1.0 million was a note payable to us, which will
be cancelled, and $0.6 million will be repaid out of cash flows from operations
associated with consulting revenue. Upon our acquisition of smartRay, we assumed
a note payable to ourself of $1.3 million, which will be cancelled.

Net cash used in operating activities was approximately $31.7 million for the
nine months ended September 30, 2000. Cash used in operating activities for the
nine months ended September 30, 2000 resulted primarily from net losses and
increases in accounts receivable, which were partially offset by noncash
adjustments. During the nine months ended September 30, 2000, we entered into an
agreement for future distribution services totaling $3.3 million, of which $2.3
million was prepaid. The remaining balance under the one-year agreement, which
is expected to expire in November 2001, will be paid in equal installments of
$0.5 million in February and May 2001.  The remaining commitment of $1 million
will be funded out of cash available from operations.

Net cash used in investing activities was approximately $65.6 million for the
nine months ended September 30, 2000. Cash used in investing activities for the
nine months ended September 30, 2000 was related to business acquisitions,
investments in unconsolidated entities, marketable securities, collateral
securing a letter of credit, purchases of marketable securities and purchases of
property and equipment.

Net cash provided by financing activities was approximately $87.0 million for
the nine months ended September 30, 2000. Cash provided by financing activities
for the nine months ended September 30, 2000 resulted primarily from the sale of
common stock in our follow-on public offering in February 2000 as well as the
borrowings under notes payable.

We anticipate that we will continue to experience significant capital
expenditures consistent with our anticipated growth in our member base. We
anticipate that we will continue to experience significant growth in our
operating expenses for the foreseeable future and that our operating expenses
will be a material use of our cash resources. Also, we anticipate substantial
expenditures and use of cash resources in our efforts to acquire new members.
Additionally, we will continue to evaluate possible acquisitions of companies
and investments in businesses, products and technologies that are complementary
to us which may require the use of cash. We believe that our existing cash, cash
equivalents and available credit facilities, will be sufficient to meet our
anticipated cash needs for working capital, member acquisition expenses,
investment or acquisition related expenditures and capital expenditures for the
foreseeable future.

                                 RISK FACTORS

In addition to the other information in this Form 10-Q, the following factors
should be carefully considered in evaluating LifeMinders and our business. The
risks and uncertainties described below are not the only ones facing our company
and there may be additional risks that we do not presently know of or that we
currently deem immaterial. All of these risks and uncertainties and actual
results may differ materially from the results we discuss in the forward-looking
statements. If any of the following risks actually occur, our business,
financial condition, cash flow or results of operations could be materially
adversely affected. In such case, the trading price of our common stock could
decline.

We have incurred significant losses, we expect losses for the foreseeable
future, and we may never become profitable.

We have not achieved profitability in any previous quarter and expect to
continue to incur operating losses for the foreseeable future. As of September
30, 2000, we had an accumulated deficit of approximately $73.1 million. We
incurred net losses of approximately $0.5 million, $1.9 million and $31.6
million for the years ended December 31, 1997, 1998 and 1999, respectively, and
a net loss of approximately $39.0 million for the nine months ended September
30, 2000. Although our revenue has grown in recent quarters, we cannot be
certain that we will be able to sustain these growth rates or that we will
realize sufficient revenue to achieve profitability. We also expect to incur
significant product development, sales and marketing and administrative expenses
and, as a result, we expect to continue to incur losses. We will need to
generate significant revenue to achieve profitability. We plan to increase our
operating expenses as we continue to acquire new members, build infrastructure
and create brand awareness. If our revenue growth is slower than we anticipate
or our operating expenses exceed our expectations, our losses will significantly
increase. Moreover, even if we do achieve profitability, we may not be able to
sustain or increase profitability on a quarterly or annual basis.

                                       12
<PAGE>

Due to our limited operating history we may fail to manage our expansion and
expected growth effectively which could strain our resources and could impair
the expansion of our business.

Although we have continued to expand our member base, if we fail to manage our
growth effectively this could adversely affect our ability to attract and retain
our members and advertising partners. We have increased the scope of our
operations and have increased the number of our employees substantially. In
addition, we have only recently engaged several key members of our executive
management team. We have expanded our technology, sales, administrative and
marketing organizations. These factors have placed and will continue to place a
significant strain on our management systems and resources. We will need to
continue to improve our operational, financial and managerial controls and
reporting systems and procedures to expand, train and manage our workforce in
order to manage our expected growth.

We may not be able to sustain revenue growth or achieve or sustain profitability
if we have to refine or change our business strategy.

We have only a limited operating history upon which to evaluate our business and
prospects and the online direct marketing industry is relatively new and rapidly
evolving. This presents many risks and uncertainties that could require us to
further refine or change our business strategy. If we are unsuccessful in
addressing these risks and uncertainties, we may not be able to sustain revenue
growth or achieve or sustain profitability.

Our quarterly results of operations may fluctuate in future periods and we may
be subject to seasonal and cyclical patterns that may negatively impact our
stock price.

If we do not successfully anticipate or adjust to quarterly fluctuations in
revenue, our operating results could fall below the expectations of public
market analysts and investors, which could negatively impact our stock price. We
believe that our revenue will be subject to seasonal fluctuations as a result of
general patterns of retail advertising and marketing, and consumer purchasing,
which are typically higher during the fourth calendar quarter and lower in the
following quarter. In addition, expenditures by advertisers and marketers tend
to be cyclical, reflecting overall economic conditions and consumer buying
patterns. Due to these and other factors, our revenues and operating results may
vary significantly from quarter-to-quarter.

We may not be able to generate sufficient revenue if the acceptance of online
advertising, which is new and unpredictable, does not develop and expand as we
anticipate.

We have to derive a substantial portion of our revenue from online advertising
and direct marketing, including both e-mail and Web-based programs. If these
services do not continue to achieve market acceptance, we may not generate
sufficient revenue to support our continued operations. The Internet has not
existed long enough as an advertising medium to demonstrate its effectiveness
relative to traditional advertising. Advertisers and advertising agencies that
have historically relied on traditional advertising may be reluctant or slow to
adopt online advertising. Many potential advertisers have limited or no
experience using e-mail or the Web as an advertising medium. They may have
allocated only a limited portion of their advertising budgets to online
advertising, or may find online advertising to be less effective for promoting
their products and services than traditional advertising media. If the market
for online advertising fails to develop or develops more slowly than we expect,
we may not sustain revenue growth or achieve or sustain profitability.

The market for e-mail advertising in general is vulnerable to the negative
public perception associated with unsolicited e-mail, known as "spam." Public
perception, press reports or governmental action related to spam could reduce
the overall demand for e-mail advertising in general, which could reduce our
revenue and prevent us from achieving or sustaining profitability.

If we do not maintain and expand our member base we may not be able to compete
effectively for advertisers.

Our revenue has been derived primarily from advertisers seeking targeted member
groups in order to increase their return on advertising investments. If we are
unable to maintain and expand our member base, advertisers could find our
audience less attractive and effective for promoting their products and services
and we could experience difficulty retaining our existing advertisers and
attracting additional advertisers. To date, we have relied on referral-based
marketing activities to attract a portion of our members and will continue to do
so for the foreseeable future.

                                       13
<PAGE>

This type of marketing is largely outside of our control and there can be no
assurance that it will generate rates of growth in our member base comparable to
what we have experienced to date.

We would also be unable to grow our member base if a significant number of our
current members stopped using our service. Members may discontinue using our
service if they object to having their online activities tracked or they do not
find our content useful. In addition, our service allows our members to easily
unsubscribe at any time by clicking through a link appearing at the bottom of
our e-mail messages and selecting the particular categories from which they want
to unsubscribe.

Our business depends on our ability to develop and maintain relevant and
appealing content in our e-mail messages, if we are not able to continue to
deliver such content we may not be able to maintain and expand our member base,
which could negatively impact our ability to retain and attract the advertisers
we need to sustain revenue growth.

We have relied on our editorial staff to identify and develop substantially all
of our content utilizing content from third parties. Because our members'
preferences are constantly evolving, our editorial staff may be unable to
accurately and effectively identify and develop content that is relevant and
appealing to our members. As a result, we may have difficulty maintaining and
expanding our member base, which could negatively impact our ability to retain
and attract advertisers. If we are unable to retain and attract advertisers our
revenue will decrease. Additionally, we license a small percentage of our
content from third parties. The loss of or increase in cost of our licensed
content may impair our ability to assimilate and maintain consistent, appealing
content in our e-mail messages or maintain and improve the services we offer to
consumers. We intend to continue to strategically license a portion of our
content for our e-mails from third parties, including content that is integrated
with internally developed content. These third-party content licenses may be
unavailable to us on commercially reasonable terms, and we may be unable to
integrate third-party content successfully. The inability to obtain any of these
licenses could result in delays in product development or services until
equivalent content can be identified, licensed and integrated. Any delays in
product development or services could negatively impact our ability to maintain
and expand our member base.

We have limited experience with building our brand, and might not effectively
utilize the resources we spend to build our brand, which could negatively impact
our revenue and our ability to maintain and expand our member base and attract
advertisers.

We have and plan to continue to build our brand through expanded consumer and
trade advertising, including national print, outdoor and broadcast placements,
continued public relations campaigns, direct mail, participation in strategic
industry events and sustained consumer communications campaigns. We have minimal
practical experience with building our brand through these channels. If the
additional resources we expend to build our brand through these channels do not
generate a corresponding increase in revenue, our financial results could be
harmed. We believe that developing a strong brand identity is critical to our
ability to maintain and expand our member base and retain and attract
advertisers. If we do not successfully develop the LifeMinders.com brand we may
not be able to retain and expand our number of members and advertisers, which
would adversely affect our ability to sustain revenue growth or achieve or
sustain profitability.

Competition in the online advertising market industry is intense, and if we do
not respond to this competition effectively it may reduce our ability to retain
and attract advertisers, which would reduce our revenue and harm our financial
results.

We face intense competition from both traditional and online advertising and
direct marketing businesses. If we do not respond to this competition
effectively, we may not be able to retain current advertisers or attract new
advertisers, which would reduce our revenue and harm our financial results.
Currently, several companies offer competitive e-mail direct marketing services,
including coolsavings.com, MyPoints.com, NetCreations, YesMail.com (a subsidiary
of CMGI, Inc.), Digital Impact and Exactis (a subsidiary of 24/7 Media, Inc.).
We also expect to face competition from online content providers, list
aggregators as well as established online portals and community Web sites that
engage in direct marketing programs. Additionally, we may face competition from
traditional advertising agencies and direct marketing companies that may seek to
offer online products or services.

                                       14
<PAGE>

We rely heavily on our intellectual property rights and other proprietary
information, failure to protect and maintain these rights and information could
prevent us from competing effectively.

Our success and ability to compete are substantially dependent on our internally
developed technologies and trademarks, which we seek to protect through a
combination of patent, copyright, trade secret and trademark law, as well as
confidentiality or license agreements with our employees, consultants, and
corporate and strategic partners. If we are unable to prevent the unauthorized
use of our proprietary information or if our competitors are able to develop
similar technologies independently, the competitive benefits of our
technologies, intellectual property rights and proprietary information will be
diminished.

We depend heavily on our network infrastructure and if this fails it could
result in unanticipated expenses and prevent our members from effectively
utilizing our services, which could negatively impact our ability to attract and
retain members and advertisers.

Our ability to successfully create and deliver our e-mail messages depends in
large part on the capacity, reliability and security of our networking hardware,
software and telecommunications infrastructure. Failures of our network
infrastructure could result in unanticipated expenses to address such failures
and could prevent our members from effectively utilizing our services, which
could prevent us from retaining and attracting members and advertisers. The
hardware infrastructure on which our system operates is located at both PSINet
and Global Crossings in Reston, Virginia. We do not currently have fully
redundant systems or a formal disaster recovery plan. Our system is susceptible
to natural and man-made disasters, including earthquakes, fires, floods, power
loss and vandalism. Further, telecommunications failures, computer viruses,
electronic break-ins or other similar disruptive problems could adversely affect
the operation of our systems. Our insurance policies may not adequately
compensate us for any losses that may occur due to any damages or interruptions
in our systems. Accordingly, we could be required to make capital expenditures
in the event of unanticipated damage.

In addition, our members depend on Internet service providers, or ISPs, for
access to our Web site. Due to the rapid growth of the Internet, ISPs and Web
sites have experienced significant system failures and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
These problems could harm our business by preventing our members from
effectively utilizing our services.

Our management team has only worked together for a short period of time and the
inability of our management team to function effectively or the loss of any of
our officers or key employees could seriously harm our business by impairing our
ability to implement our business model.

Many of our executive officers, including our President, Chief Financial
Officer, Chief Operating Officer, Vice President, Marketing and Communications,
and Vice President, Sales Administration have joined our company since January
1999. We may not successfully assimilate our recently hired officers and may not
be able to successfully locate, hire, assimilate and retain qualified key
management personnel, which could seriously harm our business by impairing our
ability to implement our business strategy. Our business is largely dependent on
the personal efforts and abilities of our senior management, including Stephen
R. Chapin, Jr., our Chief Executive Officer and Chairman of the Board, and other
key personnel. Many of our officers or employees can terminate their respective
employment relationship at any time. The loss of these key employees or our
inability to attract or retain other qualified employees could seriously harm
our business.

We depend on our key personnel to manage our business effectively in a rapidly
changing market and we may not be able to hire or retain skilled employees,
which could prevent us from effectively growing and operating our business.

Our ability to support the growth of our business will depend, in part, on our
ability to attract and retain highly skilled employees, particularly management,
editorial, sales and technical personnel. In particular, due to the relatively
early stage of our business, we believe that our future success is highly
dependent on Stephen R. Chapin, our founder, Chief Executive Officer and
Chairman of the Board of Directors, and Allison Abraham, President, to provide
continuity in the execution of our growth plans. Furthermore, we rely on highly
skilled editorial personnel to create our e-mail messages, sales and marketing
personnel to maintain and expand our member base and the number of advertisers,
and technical personnel to maintain and improve our technological capabilities.
If we are unable to hire or retain key employees, our ability to operate and
grow our business will be adversely affected. Competition for employees with

                                       15
<PAGE>

these skills and experience is intense. As a result, we may be unable to retain
our key employees or to attract other highly qualified employees in the future.
We have experienced difficulty from time to time in attracting the personnel
necessary to support the growth of our business, and we may experience similar
difficulty in the future.

Our results of operations and financial condition may be adversely affected if
we do not successfully integrate current and future acquisitions into our
operations.

In order to respond to the competitive pressures of the online direct marketing
industry and support our intended growth, we intend to focus on acquiring, or
making significant investments in, additional companies, products and
technologies that complement our business. We do not have any present
understanding, nor are we having any discussions, relating to any significant
acquisition or investment not disclosed herein. Our ability to compete
effectively and support our intended growth may be adversely affected if we are
not able to identify suitable acquisition candidates or investments or acquire
companies or make investments on acceptable terms or at acceptable times. In
addition, acquiring companies, products, services or technologies involves many
potential difficulties and risks, including:

     .   difficulty in assimilating them into our operations;

     .   disruption of our ongoing business and distraction of our management
         and employees;

     .   negative effects on reported results of operations due to acquisition-
         related charges and amortization of acquired technology and other
         intangibles; and

     .   potential dilutive issuances of equity or equity-linked securities.

     These potential difficulties and risks could adversely affect our ability
     to realize the intended benefits of an acquisition and could result in
     unanticipated expenses and disruptions in our business, which could harm
     our operations, cash flows and financial condition.

     We may have to obtain additional capital to grow our business, which could
     result in significant costs and dilution that could adversely affect our
     stock price.

     Maintaining and expanding our member base and the number of our advertisers
     will require significant cash expenditures. If the cash on hand, cash
     generated from operations and existing loan and credit arrangements are not
     sufficient to meet our cash requirements, we will need to seek additional
     capital, which could result in significant costs and dilute the ownership
     interest of our stockholders and thereby adversely affect our stock price.
     Additional financing may not be available on terms favorable to us, or at
     all, which could result in significant costs to obtain the necessary
     capital and limit our ability to maintain and expand our member base and
     number of advertisers, or otherwise respond to competitive pressures. In
     addition, if we raise additional funds through the issuance of equity or
     equity-linked securities, the percentage ownership of our stockholders
     would be reduced. These securities may have rights, preferences or
     privileges senior to those of our stockholders. See ''Management's
     Discussion and Analysis of Financial Condition and Results of Operations--
     Liquidity and Capital Resources'' for a discussion of working capital and
     capital expenditures.

     We plan to increase our international sales activities significantly, which
     will subject us to additional business risks.

     An element of our growth strategy is to introduce our online marketing
     services in international markets. Our participation in international
     markets will be subject to a number of risks, including relative low levels
     of Internet usage in foreign countries, foreign government regulations,
     export license requirements, tariffs and taxes, fluctuations in currency
     exchange rates, introduction of the European Union common currency,
     difficulties in managing foreign operations and political and economic
     instability. To the extent our potential international members are impacted
     by currency devaluations, general economic crises or other negative
     economic events, the ability of our members to utilize our services could
     be diminished.

                                       16
<PAGE>

The content contained in our e-mails may subject us to significant liability for
negligence, copyright or trademark infringement or other matters.

If any of the content that we create and deliver to our members or any content
that is accessible from our e-mails through links to other Web sites contains
errors, third parties could make claims against us for losses incurred in
reliance on such information. In addition, the content contained in or
accessible from our e-mails could include material that is defamatory, violates
the copyright or trademark rights of third parties, or subjects us to liability
for other types of claims. Our general liability insurance may not cover claims
of these types or may not be adequate to indemnify us for all liability that may
be imposed. Any imposition of liability, particularly liability that is not
covered by insurance or is in excess of insurance coverage, could result in
significant costs and expenses and damage our reputation.

We also enter into agreements with certain e-commerce partners under which we
may be entitled to receive a share of certain revenue generated from the
purchase of goods and services through direct links to our e-commerce partners
from our e-mails. These agreements may expose us to additional legal risks and
uncertainties, including potential liabilities to consumers of those products
and services by virtue of our involvement in providing access to those products
or services, even if we do not provide those products or services. Any
indemnification provided to us in our agreements with these parties, if
available, may not adequately protect us.

Sweepstakes regulation may limit our ability to conduct sweepstakes and other
contests, which could negatively impact our ability to attract and retain
members.

The conduct of sweepstakes, lotteries and similar contests, including by means
of the Internet, is subject to extensive federal, state and local regulation,
which may restrict our ability to offer contests and sweepstakes in some
geographic areas or altogether. Any restrictions on these promotions could
adversely affect our ability to attract and retain members.

If our stock price remains volatile, we may become subject to securities
litigation, which is expensive and could divert our resources.

In the past, following periods of market volatility in the price of a company's
securities, security holders have instituted class action litigation. Many
companies in our industry have been subject to this type of litigation. Our
stock price has been volatile since our initial public offering in November
1999. If the market value of our stock experiences adverse fluctuations, and we
become involved in this type of litigation, regardless of the outcome, we could
incur substantial legal costs and our management's attention could be diverted,
causing our business to suffer.

Our executive officers and directors have and may continue to have substantial
voting control, which will allow them to influence the outcome of matters
submitted to stockholders for approval in a manner that may be adverse to your
interests.

Our executive officers, our directors and entities affiliated with them, in the
aggregate, beneficially own approximately 34% of our outstanding common stock as
of September 30, 2000. As a result, these stockholders will retain substantial
control over matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or preventing a
change in control, which could have an adverse affect on our stock price.

                                       17
<PAGE>

Anti-takeover provisions in our charter documents and Delaware law could prevent
or delay a change in control of our company, which could adversely affect our
stock price.

Our Restated Certificate of Incorporation and Bylaws may discourage, delay or
prevent a merger or acquisition that a stockholder may consider favorable by
authorizing the issuance of "blank check" preferred stock and providing for a
classified board of directors with staggered, three-year terms. Certain
provisions of Delaware law may also discourage, delay or prevent someone from
acquiring or merging with us. These anti-takeover provisions could adversely
affect our stock price.

                Risks Factors Related to the Internet Industry

Our business is in the online direct marketing industry and if we fail to adapt
to rapid change in this industry or our internally developed systems cannot be
modified properly for increased traffic or volume, our services may become
obsolete and unmarketable.

The online direct marketing industry is characterized by rapid change. The
introduction of products and services embodying new technologies, the emergence
of new industry standards and changing consumer needs and preferences could
render our existing services obsolete and unmarketable. If we do not respond
effectively to rapidly changing technologies, industry standards and customer
requirements, the quality and reliability of the services we provide to our
members and advertisers may suffer. We may experience technical difficulties
that could delay or prevent the successful development, introduction or
marketing of new products and services. In addition, any new enhancements to our
products and services must meet the requirements of our current and prospective
users. As a result, we could incur substantial costs to modify our services or
infrastructure to adapt to rapid change in our industry, which could harm our
financial results and cash flows.

Concerns about, or breaches of, the security of our member database could
prevent us from sustaining revenue growth and achieving or sustaining
profitability by adversely affecting our ability to attract and retain members
and develop our member profiles, resulting in significant expenses to prevent
breaches, and subjecting us to liability for failing to protect our members'
information.

We maintain a database containing information on our members, including their
account balances. Unauthorized users accessing our systems remotely may access
our database. If the security of our database is compromised, current and
potential members may be reluctant to use our services or provide us with the
personal data we need to adequately develop and maintain individual member
profiles, which could prevent us from retaining and attracting the advertisers
we require to sustain revenue growth. In addition, as a result of these security
and privacy concerns, we may incur significant costs to protect against the
threat of security breaches or to alleviate problems caused by security
breaches, and we may be unable to effectively target direct marketing offers to
members or may be subject to legal claims of members if unauthorized third
parties gain access to our system and alter or destroy information in our
database. Also, any public perception that we engaged in the unauthorized
release of member information, whether or not correct, would adversely affect
our ability to attract and retain members.

The unauthorized access of confidential member information that we transmit over
public networks could adversely affect our ability to attract and retain
members.

Our members transmit confidential information to us over public networks and the
unauthorized access of such information by third parties could harm our
reputation and significantly hinder our efforts to attract and retain members.
We rely on a variety of security techniques and authentication technology
licensed from third parties to provide the security and authentication
technology to effect secure transmission of confidential information, including
customer credit card numbers. Advances in computer capabilities, new discoveries
in the field of cryptography or other developments may result in a compromise or
breach of the technology used by us to protect customer transaction data.

                                       18
<PAGE>

Problems with the performance and reliability of the Internet infrastructure
could adversely affect the quality and reliability of the products and services
we offer our members and advertisers, which could prevent us from sustaining
revenue growth.

We depend significantly on the Internet infrastructure to deliver attractive,
reliable and timely e-mail messages to our members. If Internet usage grows, the
Internet infrastructure may not be able to support the demands placed on it by
this growth, and its performance and reliability may decline, which could
adversely affect our ability to sustain revenue growth. Among other things,
continued development of the Internet infrastructure will require a reliable
network backbone with necessary speed, data capacity and security. Currently,
there are regular failures of the Internet network infrastructure, including
outages and delays, and the frequency of these failures may increase in the
future. These failures may reduce the benefits of our products and services to
our members and undermine our advertising partners' and our members' confidence
in the Internet as a viable commercial medium. In addition, the Internet could
lose its viability as a commercial medium due to delays in the development or
adoption of new technology required to accommodate increased levels of Internet
activity or due to government regulation.

We may have to litigate to protect our intellectual property and other
proprietary rights or to defend claims of third parties, and such litigation may
subject us to significant liability and be time consuming and expensive.

There is a substantial risk of litigation regarding intellectual property rights
in Internet-related businesses and legal standards relating to the validity,
enforceability and scope of protection of certain proprietary rights in
Internet-related businesses are uncertain and still evolving. We may have to
litigate in the future to enforce our intellectual property rights, protect our
trade secrets or defend ourselves against claims of violating the proprietary
rights of third parties. This litigation may subject us to significant liability
for damages, result in invalidation of our proprietary rights, be time-consuming
and expensive to defend, even if not meritorious, and result in the diversion of
management time and attention. Any of these factors could adversely affect our
business operations, financial results, condition and cash flows.

Government regulation and legal uncertainties of doing business on the Internet
could significantly increase our costs and expenses.

Laws and regulations that apply to Internet communications, commerce and
advertising are becoming more prevalent and these laws and regulations could
significantly increase the costs we incur in using the Internet to conduct our
business. Recently, the United States Congress enacted Internet legislation
regarding children's privacy, copyright and taxation. The European Union
recently adopted a directive addressing data privacy that may result in limits
on the collection and use of member information. A number of other laws and
regulations may be adopted that regulate the use of the Internet, including user
privacy, pricing, acceptable content, taxation, use of the telecommunications
infrastructure and quality of products and services. The laws governing the
Internet remain largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing
laws, including those governing intellectual property, privacy, libel and
taxation apply to the Internet and Internet advertising. In addition, the growth
and development of the market for Internet commerce may prompt calls for more
stringent consumer protection laws, both in the United States and abroad, that
may impose additional burdens on companies conducting business over the
Internet. As a result of these uncertainties, we may incur unanticipated,
significant costs and expenses that could harm our financial results, condition
and cash flow.

Item 3  Quantitative and Qualitative Disclosure about Market Risk

We do not currently hold any derivative instruments and do not engage in hedging
activities and currently do not enter into any transactions denominated in a
foreign currency. Thus, our exposure to foreign exchange fluctuations is
minimal.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relate primarily to
our marketable securities, which generally have maturities of one year or less.
We do not use derivative financial instruments for speculative or

                                       19
<PAGE>

trading purposes. We invest our excess cash in short-term, fixed income
financial instruments with an investment strategy to buy and hold to maturity.
These fixed rate investments are subject to interest rate risk and may fall in
value if market interest rates increase. If market interest rates were to
increase immediately and uniformly by 10 percent from the levels at September
30, 2000, the fair value of the portfolio would decline by an immaterial amount.
We have the ability to hold our fixed income investments until maturity, and
therefore we do not expect our operating results or cash flows to be materially
affected by a sudden change in market interest rates on our investment
portfolio.

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<PAGE>

PART II - OTHER INFORMATION

Item 1  Legal Proceedings.

In the normal course of business, the Company is at times subject to pending and
threatened legal actions and proceedings. After reviewing pending and threatened
actions and proceedings with counsel, management believes that the outcome of
such actions or proceedings is not expected to have a material adverse effect on
the financial position, results of operations or cash flows of the Company.

Item 2  Changes in Securities and Use of Proceeds.

(a) None.

(b) None.

(c) Recent Sales of Unregistered Securities

On August 31, 2000, we issued 1,252,198 shares of our unregistered common stock
to the shareholders of smartRay Network, Inc. in connection with our acquisition
of that company. We believe that the issuances were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended.


(d) Use of Proceeds.

On February 8, 2000, we completed our secondary public offering of 2,767,500
shares of common stock. The aggregate offering amount including the
overallotment exercise was approximately $91.3 million. Proceeds have been used
to continue to fund working capital, member acquisition activities, capital
expenditures, and strategic investment. In addition, $4.4 million from these
proceeds were spent on acquisition activities.

Item 3  Defaults Upon Senior Securities.

None.

Item 4  Submission of Matters to a Vote of Securities Holders.

None.

Item 5  Other Information.

None.

Item 6  Exhibits and Reports on Form 8-K.

a. Exhibits

10.10 Lease Agreement, dated May 18, 2000, by and between
      the Company and DTC Associates, LLC

27.1 Financial Data Schedule

b. Reports on form 8-K.

Form 8-K was filed with the SEC on September 15, 2000, with respect to the
acquisition of smartRay Network, Inc.  See Note 7 of Notes to Financial
Statements included herein.

                                       21
<PAGE>

                               LIFEMINDERS, INC.
                                  SIGNATURES*

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.


                               LifeMinders, Inc.
                               -----------------
                                  (Registrant)

  November 14, 2000            /s/ Joseph S. Grabias
  -----------------            ---------------------

        Date                      (Signature)**

                                 Joseph S. Grabias
                                 Chief Financial Officer
                                 (Principal accounting officer and
                                 duly authorized officer)

                                       22
<PAGE>

                                   EXHIBITS

Item No.                  Description
--------                  -----------

10.10                     Lease Agreement, dated May 18, 2000, by and between
                          the Company and DTC Associates, LLC

27.1                      Financial Data Schedule

                                      23