<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                   FORM 10-K/A

                                 AMENDMENT NO. 1

               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934
                     For the period from _______ to _______.

                        Commission File Number: 000-21751

                               MESSAGEMEDIA, INC.
             (Exact Name of Registrant as specified in its charter)


              DELAWARE                          33-0612860
    (State or jurisdiction of     (I.R.S. Employer Identification Number)
  incorporation or organization)

                             371 CENTENNIAL PARKWAY
                           LOUISVILLE, COLORADO 80027
          (Address, including zip code, of principal executive offices)

                                 (303) 440-7550
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of Act: None



          Securities registered pursuant to section 12(g) of the Act:
                          COMMON STOCK, $.001 PAR VALUE
                                (Title of Class)

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.    Yes  X    No
                                                 ---     ---

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this form 10-K: [ ]

As of March 22, 2001, there were outstanding 68,507,101 shares of the
Registrant's common stock, $.001 par value. As of that date, the aggregate
market value of the voting stock held by non-affiliates of the Registrant was
approximately $19,223,447 when the closing price of such stock, as reported on
the NASDAQ National Market, was $.5625.* Shares of common stock held by each
officer and director and each person who owns 5% or more of the outstanding
common stock have been excluded in that such persons may be affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain information called for by Part III is incorporated by reference from the
Proxy Statement relating to the Annual Meeting of Stockholders of the Registrant
held on May 16, 2001, which was filed with the Securities and Exchange
Commission on April 19, 2001.


---------
* Excludes 34,332,084 shares of common stock held by directors and executive
officers and stockholders whose ownership exceeds 5% of the shares outstanding
at March 27, 2001. Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or indirect,
to direct or cause the direction of the management or policies of the
Registrant, or that such person is controlled by or under common control with
the Registrant.



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                                     PART I

         This amended Annual Report on Form 10-K/A amends and restates in its
entirety MessageMedia's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 as of the date of filing the original Form 10-K, March 27,
2001, except for the "Liquidity and Capital Resources" section in Part I, Item
7, which is amended and restated as of the date of filing this Form 10-K/A, and
the third and fourth paragraphs of Note 1 to Financial Statements, which are
amended and restated as of September 28, 2001. Except for the "Liquidity and
Capital Resources" section and Note 1 to Financial Statements, this amended
Annual Report on Form 10-K/A speaks as of the end of the fiscal year 2000 or as
of the date of filing the original Annual Report on Form 10-K, as required by
Form 10-K, and does not update any of the statements contained therein. This
amended Annual Report on Form 10-K/A contains, in addition to historical
information, forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act that were made at the time
the original Form 10-K was filed on March 27, 2001. Actual results could differ
materially from those projected in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those discussed
in the subsection entitled "Factors Affecting Operating Results and Market Price
of Stock" commencing on page 7. Readers are cautioned not to place undo reliance
on these forward-looking statements, which speak only as of the date the
original Form 10-K was filed.

ITEM 1. BUSINESS

         We are a leader in permission-based e-mail marketing and messaging
solutions. We use advanced technology, tools and applications to help our
customers fully utilize the Internet to increase sales, improve customer
communications and develop long-term customer loyalty and customer dialogue.

Our outsourced services provide customers with:

         o        a comprehensive set of e-messaging solutions for businesses
                  that seek to increase sales, improve customer communications
                  and develop long-term customer loyalty;

         o        permission-based e-messaging to create an immediate two-way
                  dialogue with customers;

         o        tools to track, review and refine e-messaging campaigns by
                  leveraging our expertise and proprietary technology;

         o        rapidly deployable, cost-effective outsourced solutions that
                  eliminate the need to invest in the technology, hardware and
                  human resources necessary to implement and manage a
                  comprehensive set of e-messaging and e-intelligence solutions;
                  and

         o        the ability to manage large volumes of simple or complex
                  customer communications and easily integrate more advanced
                  e-messaging and e-survey and database applications.

Our software solutions provide customers with:

         o        a complete solution for e-mail marketing and communications
                  that integrates with relational databases such as Oracle or
                  SQL Server;

         o        functions such as targeted e-mail, including both filtering
                  and data segmentation, personalized e-mail, dynamic content
                  editing and trackable URLs and campaign sequencing; and

         o        all standard e-mail list server functions such as reliable
                  high throughput e-mail delivery, bounce management, discussion
                  lists, announcement lists and easy unsubscribes.

INDUSTRY BACKGROUND

         E-mail marketing has its basis in traditional direct marketing
principles. For decades, direct marketers have used traditional mail to
communicate with their customers. The purpose of the direct mail pieces was to
give customers promotional information, offers and incentives that would
encourage them to purchase particular products. Direct marketers soon realized
that e-mail could be used to supplant or enhance traditional methods. E-mail can
be used to effectively interact with customers and for a variety of purposes
other than purchase incentives.

Permission-based E-mail can be a Highly Strategic Tool for Online Business

         Permission-based, or "opt-in," e-mail is a highly reliable,
cost-effective and timely way for businesses to create a personal, two-way
dialogue with their customers. The complexity and functionality of commercial
e-mail is changing dramatically. For example, e-mail can be used for a variety
of highly strategic functions such as marketing, customer service and
transaction confirmations. E-mail functions can also be quickly customized or
adapted to allow businesses to target and shape their communications to meet the
rapidly changing needs of their customers. As businesses and consumers grow more
comfortable with conducting commerce over the Internet, e-mail volume associated
with business communication and e-commerce is expected to grow even more
quickly. As the cost benefits and flexibility of e-mail are more widely
recognized, we expect businesses to more rapidly embrace e-mail as a strategic
tool for building customer relationships and responding to large volumes of
inbound e-mail communications.



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Changing Business Environment and Need to Foster Customer Relationships

         The dramatic growth of the Internet and the proliferation of e-mail in
the last five years have changed the way businesses and customers interact.
Prior to the advent of e-mail, businesses relied primarily on in-person
interaction and physical proximity to the customer as well as techniques such as
direct mail and telemarketing to foster customer relationships. Such methods,
however, vary in their degree of effectiveness and are often characterized by
high costs and slow response times.

         E-mail marketing is effective, fast and inexpensive. Response rates of
15% or more are common and marketers receive immediate feedback from customers.
E-mail marketing costs may be 90% less than traditional direct marketing costs.
Moreover, many companies use e-mail as a strategic tool to drive Web site
traffic, facilitate transactions and test new offers.

         As a result, businesses are increasingly in need of strategic
applications that enable them to expand their customer base, foster customer
loyalty and provide personalized, one-to-one communication.

Complexity of E-messaging Supports Comprehensive Outsourced Services.

         To create strong and effective e-messaging programs, businesses will
need a broad range of technology and strategic expertise to adapt and implement
effective solutions in today's rapidly changing business and regulatory
environment. We believe this will lead to an increase in the outsourcing of
e-messaging applications. In order to effectively leverage e-messaging as a key
competitive tool, businesses not only must be able to gather information about
customer preferences and needs, but employ systems that are robust enough to
seamlessly and quickly respond to such data.

         The implementation of effective e-messaging systems requires
substantial hardware, software and technical and administrative resources. As
e-mail grows in volume and sophistication, the resources and expertise required
to cost-effectively implement, enhance and scale e-messaging applications
increases exponentially. Given the complexities of these strategic and technical
problems and the need to deploy a solution quickly and cost-effectively,
businesses increasingly are looking to outsource their e-messaging services to
"one-stop" outsourced providers. In general, as the level of complexity
increases, outsourcing becomes a more attractive option.

OUR KEY CAPABILITIES

We currently offer the following:

o        Account Management and Customer Services -- Through our professional
         staff of account management and customer service representatives, we
         deliver e-messaging services specifically tailored to each customer's
         business objectives. Each customer is assigned an account management
         team comprised of an account director and one or more customer services
         representatives, who act as the customer's primary point of contact for
         all relationship and campaign management issues. They work with the
         customer to develop an e-messaging calendar, create a specification of
         campaign needs, develop the necessary web interfaces, customize the
         customer database through which we maintain, import and manipulate
         data, implement project plans, and manage pre-production and production
         testing, campaign roll-out and post-mailing analysis. Additionally, our
         customer services professionals have extensive experience in the
         development and delivery of effective customer communications programs.

o        Outbound Messaging -- We manage all logistics of e-messaging delivery,
         from time-scheduled outbound message distribution to highly interactive
         and event-driven communications, such as confirming an Internet
         consumer purchase. E-messages with personalized content can be
         precisely targeted to segments of our customers' e-mailing list. Our
         technology determines which format the e-mail reader uses in order to
         maximize the visual impact of the sender's message. We provide
         reliable, large-scale delivery of messages, personalized and customized
         to each of our customer's customers in an e-messaging campaign, as well
         as sophisticated error-handling and "bounce" processing to ensure a
         clean and current customer e-mailing list. Our outbound messaging
         capabilities include the ability to include audio and video media in
         the e-mail messages being sent by customers.

o        Inbound Messaging -- We manage all logistics of response processing
         from customers of our customers, including response validation,
         response tracking, performance of customer defined actions and
         automated database updates. Our response-handling capabilities enable
         our customers to engage in interactive, two-way marketing campaigns,
         entirely using e-mail. The ability to process and respond to customers'
         inquiries improves the quality of the customer relationship by ensuring
         our customer's ability to hear, acknowledge and respond to such
         requests in a personalized manner.

o        e-Survey -- We provide our customers with a wide array of e-mail based
         survey services. These services range from the development of the
         permission profiling questions that may be asked in the permission
         center to periodic and on-going transaction surveys to measure customer
         satisfaction to surveys directed at a specific target audience,
         question or problem. We employ quantitative methods professionals with
         extensive experience in the design, development and deployment of



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         surveys in both the conventional and e-survey delivery modes. These
         professionals also have extensive data analysis and data modeling
         experience that is used by customers in the targeting and database
         segmentation aspects of their outbound e-messaging campaigns.

o        Database Services -- We track and review the success of current and
         past e-messaging campaigns and can deliver multiple offers to
         separately defined customer groups. This allows our customers to
         identify what worked and what did not and adaptively update and manage
         their campaigns in a proactive manner. All messaging activity is
         automatically tracked and logged into our database, creating a clear
         history of all customer actions to aid in resolution of individual
         requests as well as total campaign analysis. This detailed customer
         record provides a wealth of information and enables customers to
         fine-tune their direct marketing efforts and increase the return on
         investment in the next campaign. Additionally, customers often bring
         other data from their legacy systems to their e-messaging database
         maintained by us so that this additional data may be used to more
         effectively segment and target their customer communications.

OUR SERVICES AND SOFTWARE OFFERINGS

         We offer a broad range of solution sets including complete outsourced
services, hosted software and services and licensed software, all powered by our
next-generation M(3) Platform. The M(3) Platform features the industry's most
robust systems architecture, which can support e-mail campaigns of various
sizes. The next generation platform is readily customized to store a diverse
range of customer and campaign data. It optimizes any e-mail format, including
HTML, text, AOL and streaming audio or video, and includes support for
international and double-byte character sets without requiring specialized
software. Campaigns may be targeted to customer segments depending on user
preferences, behavior or demographic information. A customized web-based
interface allows customers to deliver content, setup campaigns, review reports,
test messages, optimize content and schedule mail events. This platform makes it
easy for customers to migrate between our three solution sets and allows them to
choose the level of self-service that meets their specific needs.

Outsourced Services

         Our outsourced services are offered in a full or partial service bureau
model depending on our customer's need for self-service. The full service model
M(3) Connect includes dedicated account management and customized services.
Professional account managers share their breadth of e-mail marketing expertise
in developing customer acquisition, retention and growth strategies. Customers
also have the option of choosing additional services from a continuum of
value-added offerings.

         M(3) Connect is a full-service outsourced solution to create and
deliver permission-based, targeted, e-mail campaigns including account
management and production support. A dedicated account manager helps customers
execute every phase of an e-mail campaign from planning and setup, through
testing, integration, customization, delivery and reporting. In addition, a
dedicated account director provides best practices consulting on
permission-based marketing, customer acquisition and retention, campaign
management and customer contact strategy.

         Also included in M3 Connect are inbound e-mail response management
tools, such as automated and agent-managed response handling of bounces,
unsubscribes and customer preferences, data services tools such as customer data
loading, transformation and synchronization, data cleansing and list brokerage
services and creative services tools such as graphic and content design for rich
media, text, AOL or HTML.

         M(3) Connect includes TargetDB, a robust database offering, which
allows marketers to develop highly targeted campaigns based on a wide variety of
customer data. This service has a full range of features including query and
select functionality, data visualization and campaign management tools and
comprehensive, customized reporting options. It is able to capture rich
marketing information including promotional history, click-through rates and
demographic and customer preference information.

         Survey is our premier online survey solution that allows companies to
stay in touch with customers through cost-effective and flexible e-mail based
surveys. Marketers may use this service for customer loyalty and employee
satisfaction studies, product or service evaluations, Web site assessments,
customer segmentation and profiling and content analysis. We help customers
develop effective survey methodologies, questionnaire content and sampling,
analysis and reporting plans.

         Our outsourced services are targeted towards six major industry groups:
Internet service providers and portals, publishing, retail/e-tail, technology,
financial services and the travel and entertainment industry. In each of these
industry groups, we have developed an understanding of the unique marketing
requirements and can customize e-marketing and communications programs that meet
the challenges unique to each specific industry.

Hosted Software and Services

         Our hosted software solution, UnityMail Express, provides customers
complete end-user control without the installation, set-up and maintenance
associated with implementing software in-house. This solution has defined
functionality and a finite set of



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services. UnityMail Express allows customers to take advantage of advanced
e-mail marketing technology without buying software or maintaining e-mail list
servers. Customers pay monthly recurring charges based on messaging volume.

         Our hosted services offering is a partial service bureau model called
M3 Professional, which includes program design and management services from our
world-class account management team, while allowing customers to control the
execution of campaigns by using a web-based interface. This service gives
marketers access to the full set of M3 Professional features, while providing a
greater degree of control in content design and campaign scheduling. This
offering gives marketers the tools needed to create and deliver
permission-based, targeted e-mail campaigns at a lower price than M(3) Connect.

Licensed Software

         Our licensed software solution is called UnityMail. UnityMail
integrates relational databases into advanced e-mail list servers, allowing the
development of one-to-one relationships with customers. UnityMail performs
standard e-mail delivery, bounce management, discussion lists, announcement
lists and easy unsubscribes. Feature sets include dynamic content management,
trackable URLs, targeted e-mail marketing, sampling and testing e-mail lists,
personalized e-mail, auto-sensing HTML or text, load-balancing which controls
message frequency and subscriber deliveries, campaign management for sequencing
messages and comprehensive statistical reporting to help measure program
effectiveness. UnityMail is database-enabled and is easily installed on customer
servers.

         UnityMail 4.0 is offered as a single server license, or as UnityMail
Enterprise for distributed or multi-server environments. UnityMail ASP is
licensed to resellers that wish to rent UnityMail software to their domestic or
international end-user customers. Today, over ten advertising agencies and 12
application service providers use UnityMail as their e-mail platform. For our
software products, we provide help desk support 24 hours a day, seven days a
week. Additionally, we provide installation, training and integration services
on a billable hours basis.

         Additionally, for customers with small databases and the need for
limited e-mail marketing functionality, we offer MailKing, an entry-level
PC-based e-mail distribution software package. MailKing is priced at $199.95 for
single copy purchases.

COMPETITION

         Our principal competitors are in the e-messaging services arena, and we
may experience additional competition from Internet service providers and other
large established businesses that may enter the market for e-messaging services.
We compete for customers based on service levels, product offerings and price.

         Internet marketing companies, in general, and our e-messaging
solutions, in particular, also must compete for a share of advertisers' total
advertising budgets with traditional advertising media such as television,
radio, cable and print. Consequently, we compete with advertising and direct
marketing agencies. To the extent that e-messaging is perceived to be a limited
or ineffective advertising medium, companies may be reluctant to devote a
significant portion of their advertising budget to our e-messaging solutions,
which could limit the growth of e-messaging and negatively affect our business.

         We also expect that competition may increase as a result of industry
consolidation. Potential competitors may choose to enter the market for
e-messaging solutions by acquiring one or more of our existing competitors or by
forming strategic alliances with such competitors. In addition, current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our potential customers.
Accordingly, it is possible that new competitors or alliances may emerge and
rapidly acquire significant market share. Increased competition may result in
price reductions, reduced gross margins and loss of market share, any of which
would harm our business, results of operations and financial condition.

SALES

         Our sales efforts currently are conducted through a regionally based,
direct sales force. Our sales force typically markets our solutions to the
senior level marketing personnel and senior corporate management within
potential customer organizations. We have worked with a number of "blue chip"
customers who have agreed to help facilitate our sales efforts by acting as
customer references.

         We maintain a separate group of regionally based sales professionals
that are responsible for selling our packaged software applications, principally
UnityMail.

         Our regionally based, direct sales force is focused on attracting new
customers. Our existing customers are supported by the account management and
customer services organization. This group is responsible for working with
current customers on their communications and dialog programs, for retaining
these customers and for increasing the usage of our services by these



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customers. Our account management and customer services professionals are highly
effective at managing relationships and selling additional services to existing
customers when the need arises.

RESEARCH, DEVELOPMENT AND ENGINEERING

         Our research, development and engineering activities are focused
primarily on the design, development and enhancement of e-messaging services, as
well as on increasing the capacity and reliability of existing products and
services. We have devoted a significant portion of our resources to research,
development and engineering programs. Our research, development and engineering
expenses were $6.2 million, $4.9 million and $4.8 million for the years ended
December 31, 2000, 1999 and 1998, respectively. We believe that significant
research, development and engineering expenditures will be required in order for
us to remain competitive. Accordingly, we expect that research, development and
engineering expenses will continue to constitute a significant portion of our
overall expenses in the future.

         Our ability to design, develop, test and support new software products
and enhancements on a timely basis is critical to our future success. There can
be no assurance that we will be successful in developing and marketing new
software products and enhancements that meet changing customer needs and respond
to such technological changes or evolving industry standards. Our current
services are designed around standards that are widely used and accepted within
the Internet community, including the MIME and SMTP e-mail standards, and
integrate process-based security using e-mail confirmation. Current and future
use of our services will depend, in part, on industry acceptance of such
standards and practices as they apply to the Internet and Internet commerce.

INTELLECTUAL PROPERTY

         We hold or have applied for various patents, trademarks and copyrights,
including trademark applications for "MessageMedia" and "UnityMail." Other than
our rights to "MessageMedia" and "UnityMail," however, we do not believe that
any of these proprietary rights offer us a material competitive advantage. We
believe that our ability to establish and maintain a position of technology
leadership in the e-messaging industry depends more on the skills of our
development personnel than on any of our proprietary rights.

INTERNATIONAL OPERATIONS

         On March 13, 2000, we entered into a definitive agreement with @viso
Limited, a strategic partnership between Vivendi and SOFTBANK Corp., to create
MessageMedia Europe B.V., a joint venture between MessageMedia and @viso. We own
51% and @viso owns 49% of the joint venture. The initial capitalization of the
joint venture was funded with $14.8 million during the second quarter of 2000.
MessageMedia Europe B.V. is consolidated into MessageMedia's financial
statements. For the year ended December 31, 2000, revenues of approximately
$932,000 and a loss after minority interest of approximately $4.7 million were
included in MessageMedia's consolidated financial statements. SOFTBANK Corp.
indirectly owns 50% of the interest in @viso and approximately 17% of our
outstanding common stock. SOFTBANK Corp. is not represented on our board of
directors.

GOVERNMENT REGULATION

         A number of states have adopted laws restricting the distribution of
unsolicited commercial e-mails, or Spam. We actively monitor such legislation
and regulatory development to minimize the risk of our participation in
activities that violate anti-Spam legislation. Additionally, a number of
legislative and regulatory proposals are under consideration by federal and
state lawmakers and regulatory bodies and may be adopted with respect to the
Internet. Some of the issues that such laws or regulations may cover include
user privacy, obscenity, fraud, pricing and characteristics and quality of
products and services. The adoption of any such laws or regulations may decrease
the growth of the Internet, which could in turn decrease the projected demand
for our products and services or increase our cost of doing business. Moreover,
the applicability to the Internet of existing United States and international
laws governing issues such as property ownership, copyright, trade secret,
libel, taxation and personal privacy is uncertain and developing. Any new
legislation or regulation, or application or interpretation of existing laws,
could have a material adverse effect on our business, results of operations,
financial condition and prospects.

EMPLOYEES

         As of December 31, 2000, we employed 360 full time employees and 1 part
time employee. Of these 361 employees, 100 were in research, development and
engineering, 84 were in operations, 73 were in marketing and sales, 39 were in
administration and 65 were in Europe, primarily in operations.

EXECUTIVE OFFICERS OF THE COMPANY

         The following table sets forth the names, ages and positions of our
executive officers as of March 27, 2001:



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<Table>
<Caption>
Name                       Age      Position
----                       ---      --------
<S>                        <C>      <C>
A. Laurence Jones          48       President and Chief Executive Officer
William E. Buchholz        58       Senior Vice President, Finance and Administration and Chief Financial Officer
Bruce Chittenden           53       Chief Technical Officer
Mary Beth Loesch           40       Senior Vice President, Corporate Development
Prabhuling Patel           55       Senior Vice President, Online Marketing and Communication
</Table>


         Mr. Jones became our President in March 1999 and our Chief Executive
Officer and a director in April 1999. Prior to joining our company, Mr. Jones
served as an operating affiliate of McCown De Leeuw & Co., a private equity
firm, from January 1998 to February 1999. From 1993 to January 1998, Mr. Jones
served as President and Chief Executive Officer of Neodata Services, Inc., a
privately held direct marketing company. Mr. Jones serves as a director of
Exabyte Corp. and Cooperative Computing, Inc./Triad. Mr. Jones received a B.S.
in Computer Science from Worcester Polytechnic Institute in 1975 and an M.B.A.
from Boston University in 1980.

        Mr. Buchholz was appointed our Senior Vice President, Finance and
Administration and Chief Financial Officer in March 2001. Prior to joining our
company, Mr. Buchholz served as Senior Vice President and Chief Financial
Officer of Nalco Chemical Company. At Nalco, a publicly-held specialty chemical
company, Mr. Buchholz managed U.S. and international treasury controls, investor
relations, internal audit, tax and financial systems and investment and
commercial banking relationships. He also co-founded Nalco's acquisition
program, which managed the acquisition of 38 companies in three years. Prior to
Nalco, Mr. Buchholz was Vice President and Chief Financial Officer for
Cincinnati Milacron, an industrial equipment supplier, and he handled SEC
matters at Arthur Andersen & Co. in Cincinnati, Ohio. Mr. Buchholz, who is a
C.P.A., received an M.B.A. from Michigan State University and a degree in
accounting from its Honors College.

         Mr. Chittenden became our Chief Technical Officer in September 2000.
Prior to joining our company, from 1993 to September 2000, he served as Senior
Vice President of Software Products at Citrix Systems, Inc. Prior to Citrix, Mr.
Chittenden served as head of product development for Uniquest, Computone
Corporation, and The Santa Cruz Operation. Mr. Chittenden served in the U.S.
Navy from 1970 to 1974 and holds an M.S. in Computer Science from the University
of Hawaii and a B.S. in Mathematics from the University of Missouri.

         Ms. Loesch has served as our Senior Vice President of Corporate
Development since February 2000. From April 1999 to February 2000, she served as
our Vice President of Corporate Development. From January 1998 until April 1999,
she served as President of the Advanced Network Solutions Group at Internet
Communications Corp. From 1996 until 1998, she worked for KPMG Peat Marwick
where she served as Managing Director of the high-technology consulting
practice. Prior to that she held various executive-level positions at CSG
Systems Incorporated and US WEST, Inc. Ms. Loesch received an M.B.A. from
Creighton University in 1986 and graduated summa cum laude with a B.S.B.A. from
Creighton University in 1982.

         Mr. Patel became our Senior Vice-President, Online Marketing and
Communication in October 2000. From June 2000 to October 2000, he served as our
General Manager of Messaging Services. From 1991 to May 2000, Mr. Patel served
as President of the Telecommunications Energy & Cable Group of Experian and was
President, On-Line Services at Metromail Corporation, the predecessor company.
Previously, Mr. Patel served as Senior Vice President and General Manager of the
Information Group with oversight of privacy policies and start-up of the
Internet Division. He has also held positions with the direct marketing arm of
Montgomery Ward, Household International, Rapid-American Corporation, CitiGroup
and CIGNA. Mr. Patel holds an M.B.A. in Marketing and Finance with honors from
Columbia University; an M.S. in Electrical Engineering with distinction from the
Indian Institute of Science; and a B.S. in Electrical Engineering summa cum
laude from Bangalore University.


FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK

         You should consider carefully the risks described below before deciding
to purchase our common stock. The risks and uncertainties described below are
not the only ones we face. If any of the following risks actually occur, our
business, financial condition or results of operations could be harmed. In that
case, the trading price of our common stock could decline, and you may lose all
or part of your investment.

WE HAVE A HISTORY OF OPERATING LOSSES AND FUTURE LOSSES ARE LIKELY.

         We had an accumulated deficit of approximately $178.2 million as of
December 31, 2000. We have not achieved profitability and expect to continue to
incur operating losses at least through the end of 2001. We intend to continue
to invest in research and development and strategic marketing activities.
Accordingly, we expect to continue to incur significant operating expenditures
and, as a result, will need to generate significant revenues to achieve and
maintain profitability. We cannot assure you that we will achieve sufficient
revenues for profitability. Even if we do achieve profitability, we cannot
assure you that we can sustain or



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increase profitability on a quarterly or annual basis in the future. If revenues
grow slower than we anticipate, or if operating expenses exceed our expectations
or cannot be adjusted accordingly, we likely will incur future operating losses.

WE ANTICIPATE FLUCTUATIONS IN OUR FUTURE OPERATING RESULTS, WHICH COULD CAUSE
OUR STOCK PRICE TO FALL.

         We expect that our future operating results will fluctuate
significantly, both in absolute terms and relative to analyst and investor
expectations, which could cause our stock price to fall. These fluctuations may
be due to a number of factors, many of which are beyond our control. Some of the
factors that may cause fluctuations include the following:

         o        fluctuating market demand for our e-messaging solutions;

         o        difficulties in the integration of existing technologies and
                  the development or deployment of new products or services;

         o        seasonal and cyclical spending patterns in our industry;

         o        the mix of the products and services that we provide; and

         o        the cost of compliance with applicable government regulations,
                  including privacy legislation.

         Our revenue for the foreseeable future will remain dependent on sales
of our e-messaging solutions, the fees that we charge for our services and
license fees for our software products. These future revenues may fluctuate due
to the factors listed above and therefore are difficult to forecast. As a
result, we may be unable to adjust our internal operating expenses quickly
enough to offset any unexpected revenue shortfall. If we have a shortfall in
revenue in relation to our expenses, or if our expenses precede increased
revenue, our financial condition would be materially and adversely affected.
This could affect the market price of our common stock in a manner that may be
unrelated to our long-term operating performance.

         Due to these risks, we believe that period-to-period comparisons of our
operating results are not meaningful and should not be relied upon as an
indication of our future performance.

OUR STOCK PRICE HAS BEEN VOLATILE IN THE PAST AND MAY BE VOLATILE IN THE FUTURE
DUE TO REASONS OTHER THAN OUR OPERATING RESULTS.

         Our common stock has experienced extreme price and volume fluctuations
that often have been unrelated or disproportionate to our operating performance.
The trading price of our common stock has in the past and could in the future
fluctuate in response to factors such as:

         o        changes in recommendations of securities analysts;

         o        announcements of technological innovations or of new services
                  or products by us or our competitors;

         o        publicity regarding actual or potential results with respect
                  to technologies, services or products under development by us
                  or our competitors; and

         o        limited investment analyst coverage.

         In addition, the stock market has experienced extreme price and volume
fluctuations. The market prices of securities of Internet-related companies have
been especially volatile. If such volatility continues, our stock price may
fluctuate greatly regardless of our operating results.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR EXPECTED STOCK
PRICE VOLATILITY, WHICH COULD NEGATIVELY IMPACT OUR BUSINESS.

         In the past, securities class action litigation has often been brought
against companies following periods of volatility in the market prices of their
securities. We may in the future be the target of similar litigation. Securities
litigation could harm our reputation, result in substantial costs and divert our
management's attention and resources, regardless of the merits or outcome of the
case.



                                       8
<PAGE>
OUR COMMON STOCK MAY BE DELISTED FROM THE NASDAQ NATIONAL MARKET, RESULTING IN A
LIMITED PUBLIC MARKET FOR OUR COMMON STOCK.

         Our common stock is currently listed on the NASDAQ National Market. If
we fail to maintain the qualification for our common stock to trade on The
NASDAQ National Market, including the requirement that our common stock maintain
a $1.00 minimum per share bid price, our common stock could be subject to
delisting. We currently do not comply with The NASDAQ National Market's
continued listing requirements because our common stock has failed to maintain a
$1.00 minimum per share bid price, but we have a probationary period in which we
can achieve compliance before we are delisted from The NASDAQ National Market.
There can be, however, no assurance that we will be able to achieve the
continued listing requirements and maintain them for the necessary period for
continued listing on The NASDAQ National Market.

         If our common stock is delisted from The Nasdaq National Market,
trading, if any, would be conducted in the over-the-counter market in the
so-called "pink sheets" or the OTC Bulletin Board, which was established for
securities that do not meet the listing requirements of The Nasdaq National
Market. Consequently, selling our common stock would be more difficult because
smaller quantities of shares could be bought and sold, transactions could be
delayed and security analysts' and news media's coverage of us may be reduced.
These factors could result in lower prices and larger spreads in the bid and ask
prices for shares of our common stock.

         In addition, if our common stock is delisted from The Nasdaq National
Market, our common stock may become subject to the 'penny stock' regulations,
including Rule 15g-9 under the Securities Exchange Act of 1934. That rule
imposes additional sales practice requirements on broker-dealers that sell
low-priced securities to persons other than established customers and
institutional accredited investors. For transactions covered by this rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, the rule may affect the ability of broker-dealers to sell
our common stock and affect the ability of holders to sell their shares of our
common stock in the secondary market. In the event that our common stock becomes
subject to the penny stock rules, the market liquidity for the shares would be
adversely affected.

WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING TO SUPPORT OUR CAPITAL NEEDS,
WHICH COULD ADVERSELY AFFECT OUR BUSINESS.

         It may be necessary for us to raise additional capital in the future in
order to execute our business plan, develop or enhance our products and
services, take advantage of business opportunities or respond to competitive
pressures. Any required additional financing might not be available on terms
acceptable to us, or at all. If our common stock is delisted from The Nasdaq
National Market, our ability to raise capital through debt or equity financing
could be impaired greatly. If additional financing is not available when
required or is not available on acceptable terms, we may be unable to fund our
operations or repay our outstanding obligations.

SUBSTANTIAL SALES OF OUR COMMON STOCK BY OUR LARGE STOCKHOLDERS COULD CAUSE OUR
STOCK PRICE TO FALL.

         A small number of stockholders hold a large portion of our common
stock. To the extent our large stockholders sell substantial amounts of our
common stock in the public market, the market price of our common stock could
fall. A private placement transaction completed by us in February 2001 increased
both the number of our securities that will become available for resale to the
public and the number of our securities held by several of our larger
stockholders. In this instance, we issued 7,746,479 shares of our common stock
to affiliates of SOFTBANK Venture Capital, who together constitute our largest
stockholder, 704,225 shares to affiliates of Pequot Capital Management, Inc.,
and 2,816,902 shares to REBAR LLC. Not earlier than May 23, 2001, these
investors may demand that we effect the registration of these shares, after
which they may be sold in the public markets without restriction.

OUR FAILURE TO ENHANCE OUR EXISTING PRODUCTS AND SERVICES OR INTRODUCE NEW
PRODUCTS AND SERVICES ON A TIMELY BASIS COULD CAUSE OUR REVENUES TO FALL.

         We continually strive to develop significant enhancements to our
products and services and introduce new products and services. We may not be
able to develop the underlying core technologies necessary to create new
enhancements or new products and services and may not be able to license those
technologies from third parties, on a timely basis or at all. Any delay or
difficulty associated with the introduction of these enhancements, new products
or new services by us could cause our customers to use the products and services
of our competitors. This could cause our revenues to decline.

IF WE FAIL TO EFFECTIVELY MANAGE CHANGES TO OUR OPERATIONS, OUR BUSINESS COULD
SUFFER.

         We continue to adjust the scope of our operations and manage
adjustments to the size of our workforce. Rapid changes to our business have
placed and may continue to place a significant strain on our management systems
and resources. We expect that we will need to continue to improve our financial
and managerial controls and reporting systems and procedures. Our business,
results of operations and financial condition will be harmed if we are unable to
effectively manage these changes to our operations.



                                       9
<PAGE>



WE DEPEND ON THIRD-PARTY INTERNET AND TELECOMMUNICATIONS PROVIDERS TO OPERATE
OUR BUSINESS. INTERRUPTIONS IN THE SERVICES THESE COMPANIES PROVIDE COULD HAVE
AN ADVERSE EFFECT ON OUR REVENUE.

         We depend heavily on several third-party providers of Internet and
related telecommunication services, including hosting and co-location companies,
in operating our business. These companies may not continue to provide services
to us without disruptions in service or within the time frame required by us, at
the current cost or at all. These disruptions in or loss of services could cause
a loss of revenue and customers. The costs associated with any transition to a
new service provider would be substantial, requiring us to reengineer our
computer systems and telecommunications infrastructure to accommodate a new
service provider. This process would be both expensive and time-consuming.

COMPETITION IN OUR INDUSTRY IS INTENSE AND LIKELY WILL CONTINUE TO INTENSIFY,
WHICH COULD CAUSE A LOSS OF MARKET SHARE AND REVENUE.

         The market for our products and services is intensely competitive. Our
principal competitors are in the e-messaging services arena, but we also compete
for a share of advertisers' total advertising budgets with traditional
advertising media such as television, radio, cable and print. Consequently, we
compete with advertising and direct marketing agencies. There are no substantial
barriers to entry into our business and we expect that established and new
entities, such as Internet service providers, will enter the market for
e-messaging solutions.

         We also expect that competition within our market may increase as a
result of industry consolidation. Potential competitors may choose to enter the
market for e-messaging solutions by acquiring one or more of our existing
competitors or by forming strategic alliances with such competitors. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their products or services to address the needs of our potential
customers. Accordingly, it is possible that new competitors or alliances may
emerge and rapidly acquire significant market share.

         Many of our current and potential competitors have longer operating
histories, greater name recognition, larger customer bases, more diversified
lines of products and services and significantly greater resources than we do.
These competitors may be able to undertake more extensive marketing campaigns,
adopt more aggressive pricing policies and make more attractive offers to
potential customers. In addition, many of our current or potential competitors
have broad distribution channels that may result in better access to end-users
or purchasers. Increased competition as a result of any of the above factors may
result in price reductions, reduced revenues and loss of market share, any of
which would harm our business, results of operations and financial condition.

TECHNICAL STANDARDS UPON WHICH OUR PRODUCTS AND SERVICES ARE BASED ARE RAPIDLY
CHANGING, WHICH COULD CAUSE REVENUES TO DECLINE.

         The e-messaging market is characterized by rapidly changing technical
standards. Our products and services are designed around current technical
standards and our revenue depends on continued industry acceptance of these
standards. While we intend to provide compatibility with the most popular
industry standards, widespread adoption of a proprietary or closed standard
could prevent us from doing so. The standards on which our products and services
are or will be based may not be accepted by the industry, which would make it
more difficult for us to generate future revenues.

OUR COMPETITORS MAY DEVELOP PRODUCTS OR SERVICES THAT RENDER OUR PRODUCTS AND
SERVICES UNCOMPETITIVE, WHICH COULD CAUSE A DECREASE IN REVENUES.

         New market entrants have introduced or are developing products and
services for use on the Internet that compete with our products. The products,
services or technologies developed by others may render our products and
services uncompetitive or obsolete. Accordingly, our future success will depend
on our ability to adapt to rapidly changing technologies, enhance existing
solutions and develop and introduce a variety of new solutions to address our
customers' changing demands. We may experience difficulties that could delay or
prevent the successful design, development, introduction or marketing of our
solutions. In addition, our new solutions or enhancements to new or existing
solutions must meet the requirements of our current and prospective customers.
Material delays in introducing new solutions and enhancements may cause
customers to forego purchases of our solutions and purchase those of our
competitors, which would negatively impact our revenues.

E-MAIL MARKETING MAY NOT GAIN MARKET ACCEPTANCE, WHICH COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.

         The degree to which our e-messaging platform is accepted and used in
the marketplace depends on market acceptance of e-mail as a method for targeted
marketing of products and services. Our ability to successfully differentiate
our services from random mass e-mailing products and services, which have
encountered substantial resistance from consumers, also will be important.
Businesses that already have invested substantial resources in traditional or
other methods of marketing may be reluctant to adopt new commercial methods or
strategies, such as e-mail marketing. In addition, individuals with established
patterns of purchasing goods and services based on traditional marketing methods
may be reluctant to alter those patterns. As a



                                       10
<PAGE>
result of the factors listed above, e-mail marketing may not be accepted by the
marketplace, which would have a material adverse effect on our business.

WE FACE RISKS OF DEFECTS AND DEVELOPMENT DELAYS IN OUR PRODUCTS AND SERVICES,
WHICH COULD HARM OUR REPUTATION AND REVENUE GROWTH.

         Products and services based on sophisticated software and computing
systems often encounter defects and development delays. Our underlying software
may contain hidden errors and failures when introduced or when usage increases.
We may experience delays in the development of the software and computing
systems underlying our services. We may not locate these errors if they occur.
These occurrences could harm our reputation and revenue growth.

ANY SYSTEM FAILURE MAY HARM OUR BUSINESS OR REPUTATION.

         The continuing and uninterrupted performance of our computer systems
and our customers' computer systems is critical to our ability to provide
outsourced services. Sustained or repeated system failures would reduce the
attractiveness of our solutions to our customers and could harm our business
reputation. Our systems are dependent in part upon our ability to protect our
operating systems against physical damage from fire, floods, earthquakes, power
loss, telecommunications failures and similar events. We do not currently have
redundant, multiple site capacity in the event of any such occurrence. Our
systems also are potentially vulnerable to computer viruses, break-ins and
similar disruptions from unauthorized tampering with our computer systems. To
the extent that we do not effectively address any system failures, our business,
results of operations and financial condition would be materially and adversely
affected.

WE FACE SECURITY RISKS AND POTENTIAL LIABILITY ASSOCIATED WITH MISAPPROPRIATION
OF CONFIDENTIAL INFORMATION, WHICH COULD HARM OUR BUSINESS.

         We currently retain highly confidential customer information in a
secure database server. We cannot assure you, however, that we will be able to
prevent unauthorized access to and use of this database server. Any unauthorized
access to or use of our servers could result in the theft of confidential
customer information such as e-mail addresses. It also is possible that one of
our employees could attempt to misuse confidential customer information,
exposing us to liability. Our use of disclaimers and limitation of warranty
provisions in our customer agreements in an attempt to limit our liability to
our customers may not be effective in limiting our exposure to damage claims.

IF WE ARE UNABLE TO EFFECTIVELY PROTECT OUR PROPRIETARY RIGHTS, OUR COMPETITORS
MAY GAIN ACCESS TO OUR TECHNOLOGY, WHICH COULD IMPAIR OUR COMPETITIVENESS OR
CAUSE OUR EXISTING PRODUCTS AND SERVICES TO BECOME OBSOLETE.

         We rely on a combination of trade secret, copyright and trademark laws,
nondisclosure agreements and other contractual provisions and technical measures
to protect our proprietary rights. These legal protections, however, may be
inadequate to safeguard the proprietary software underlying our products and
services, and we may not have adequate remedies for any breach. In addition, we
have applied for various patents and trademarks, including trademarks for
"MessageMedia" and "UnityMail," and cannot assure you that any of these
applications will be approved. Our competitors also may be able to develop
e-messaging technologies that are functionally equivalent to ours without
infringing any of our proprietary rights.

         Parties may also attempt to disclose, obtain or use our solutions or
technologies. We cannot assure you that the steps we have taken will prevent
misappropriation of our solutions or technologies, particularly in foreign
countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.

         Any failure by us to adequately protect our proprietary rights may
allow our competitors to gain access to our technology. This may result in our
competitors developing functionally equivalent or superior e-messaging
technologies, which may impair our competitiveness or render our existing
products and services obsolete.

WE MAY BECOME SUBJECT TO INCREASED GOVERNMENT REGULATION, WHICH COULD MAKE OUR
BUSINESS MORE COSTLY TO OPERATE OR DECREASE THE DEMAND FOR OUR PRODUCTS AND
SERVICES.

         Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent. We believe that we
currently are not subject to direct regulation by any governmental agency in the
United States, other than regulations that are generally applicable to all
businesses, newly enacted laws prohibiting the sending of "spam" and laws
intended to protect minors. A number of legislative and regulatory proposals are
under consideration by federal and state lawmakers and regulatory bodies and may
be adopted with respect to the Internet. Some of the issues that such laws or
regulations may cover include user privacy, obscenity, fraud, pricing and
characteristics and quality of products and services. The adoption of any such
laws or regulations may hinder the growth of the Internet, which could in turn
decrease the projected demand for our products and services or increase our cost
of doing business. Moreover, the applicability to the Internet of existing
United States and international laws governing issues such as property
ownership, copyright, trade secret, libel, taxation



                                       11
<PAGE>



and personal privacy is uncertain and developing. Any new application or
interpretation of existing laws could have a material adverse effect on our
business.

FACTORS RELATED TO INTERNATIONAL EXPANSION COULD IMPAIR OUR BUSINESS.

         On March 13, 2000, we signed a definitive agreement with @viso to
create MessageMedia B.V., our European joint venture. Since this date, this
joint venture developed its service platform and commenced the sale of its
services. Recently, the two shareholders of the joint venture, @viso and
MessageMedia, initiated an evaluation of the strategic direction of the joint
venture and are evaluating potential alternatives to the current business plan
of the joint venture. Because we are only in the preliminary stages of
evaluating options, any potential change to the business cannot presently be
assessed, and there can be no assurance that the ultimate decision of the
shareholders will not have a material adverse affect upon our business.

YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN.

         This document contains forward-looking statements that involve risks
and uncertainties. We use words such as "anticipate," "believe," "expect,"
"future," "intend," "plan" and similar expressions to identify forward-looking
statements. These statements are only predictions. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of filing of our original Annual
Report on Form 10-K, March 27, 2001. Our actual results could differ materially
from those anticipated in these forward-looking statements for many reasons,
including the risks faced by us and described on the preceding pages and
elsewhere in this document.

         We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this document, provide examples of
risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this document
could have a material adverse effect on our business, operating results,
financial condition and stock price.

ITEM 2. PROPERTIES

         Our corporate facilities consist of approximately 73,485 square feet of
leased space in Louisville, Colorado and 33,805 square feet in Superior,
Colorado. The Louisville facility lease expires on October 14, 2010 and the
Superior facility lease expires on April 30, 2005. We lease space in Denver,
Colorado for our computer processing center. On January 11, 1999, we closed our
San Diego operations and did not renew the facility lease, which expired in May
1999. In connection with our December 1998 acquisition of Email Publishing,
Inc., we acquired a facility lease consisting of approximately 6,500 square feet
of leased space in Boulder, Colorado. This facility lease expires on June 30,
2002. Additionally, we lease facilities in Huntsville, Alabama, New York, New
York, Chicago, Illinois and San Francisco, California. We currently are in the
process of subleasing some of these facilities in connection with our year 2000
restructuring (see note 9 to the financial statements).

ITEM 3. LEGAL PROCEEDINGS

         We are not subject to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no submissions of matters to a vote of security holders
during the quarter ended December 31, 2000.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock commenced trading in the over-the-counter market on
December 13, 1996 and was quoted on The NASDAQ National Market under the symbol
"FVHI" (First Virtual Holdings Incorporated). On December 15, 1998, we changed
our NASDAQ symbol to "MAIL" and on March 30, 1999, we changed our NASDAQ symbol
to "MESG." The following table represents the high and low sales prices for our
common stock on The NASDAQ National Market.



                                       12
<PAGE>



<Table>
<Caption>
                                           2000                  1999
                                    -------------------   -------------------
                                      High       Low        High        Low
                                    --------   --------   --------   --------
<S>                                 <C>        <C>        <C>        <C>
First Quarter                       $  21.88   $  10.25   $   9.56   $   4.88
Second Quarter                         12.63       2.19      26.75       7.00
Third Quarter                           5.50       2.50      22.75       9.75
Fourth Quarter                          3.22       0.33      20.00       9.94
</Table>


         We have not paid any dividends on our common stock and we do not
anticipate that we will do so in the foreseeable future. As of March 22, 2001,
there were approximately 513 holders of record. The number of holders of our
common stock does not include beneficial owners of common stock whose shares are
held in the name of banks, brokers, nominees or other fiduciaries.

ITEM 6. SELECTED FINANCIAL DATA

         The following selected financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related notes thereto
appearing elsewhere in this amended Report on Form 10-K/A.

STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA):

<Table>
<Caption>
                                                                        YEARS ENDED DECEMBER 31,
                                             ---------------------------------------------------------------------------------
                                                 2000             1999             1998             1997             1996
                                             -------------    -------------    -------------    -------------    -------------
<S>                                          <C>              <C>              <C>              <C>              <C>
Revenues .................................   $      33,648    $      10,021    $       1,288    $       1,451    $         696
Costs and operating expenses:
    Cost of revenues .....................          17,325            4,589               98              271              266
    Marketing and sales ..................          21,526            9,704            1,935            5,424            1,836
    Research, development and
           engineering ...................           6,234            4,936            4,828            6,687            4,653
    General and administrative ...........          20,083            7,678            4,095            4,378            4,238
    Restructuring expenses ...............           7,009            1,025              812               --               --
    Write-off of in-process
           technology ....................              --               --            1,300               --               --
    Depreciation expense .................           5,022            1,358            1,148            1,097              524
    Amortization expense .................          50,497           27,565            1,038               --               --
                                             -------------    -------------    -------------    -------------    -------------
Total costs and operating expenses .......         127,696           56,855           15,254           17,857           11,517
                                             -------------    -------------    -------------    -------------    -------------
Loss from operations .....................         (94,048)         (46,834)         (13,966)         (16,406)         (10,821)
Interest income (expense) ................             977              565              134              459              131
                                             -------------    -------------    -------------    -------------    -------------
Net loss before minority interest
   and effect of accounting change .......         (93,071)         (46,269)         (13,832)         (15,947)         (10,690)

Minority interest ........................           5,109               --               --               --               --
                                             -------------    -------------    -------------    -------------    -------------
Net loss before cumulative effect of
   change in accounting principle ........         (87,962)         (46,269)         (13,832)         (15,947)         (10,690)

Cumulative effect of change in
   accounting principle ..................            (192)              --               --               --               --
                                             -------------    -------------    -------------    -------------    -------------
Net loss .................................         (88,154)         (46,269)         (13,832)         (15,947)         (10,690)

Dividends imputed on
   preferred stock .......................              --               --           (1,233)          (1,250)              --
                                             -------------    -------------    -------------    -------------    -------------
Net loss applicable to
   common shares .........................   $     (88,154)   $     (46,269)   $     (15,065)   $     (17,197)   $     (10,690)
                                             =============    =============    =============    =============    =============
Net loss per share, basic and diluted ....   $       (1.57)   $       (1.00)   $       (0.68)   $       (1.94)   $       (2.33)

Shares used in per share
    computation, basic and diluted .......      56,080,224       46,367,195       22,304,902        8,842,367        4,588,262
</Table>



                                       13
<PAGE>



BALANCE SHEET DATA:

<Table>
<Caption>
                                                                   YEARS ENDED DECEMBER 31,
                                             -------------------------------------------------------------------------
                                                 2000           1999           1998           1997            1996
                                             ------------   ------------   ------------   ------------    ------------
<S>                                          <C>            <C>            <C>            <C>             <C>
Cash, cash equivalents and
short term investments ...................   $     11,273   $     37,920   $      4,659   $      6,331    $     17,128
Restricted cash ..........................          4,549             --             --             --              --
Furniture, equipment, software
and information technology, net ..........         15,050          4,728          1,476          1,879           2,024
Goodwill, net ............................         24,100         75,162         23,895             --              --
Total Assets .............................         66,255        123,191         31,221          9,048          19,693

Current Liabilities ......................         28,372          5,765          2,671          4,770           3,236
Notes and amounts payable
noncurrent ...............................          2,123             36             54            163           1,913
Stockholders' equity (net
capital deficiency) ......................         33,614        117,390         28,484           (572)         14,944
</Table>




ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         This Report on Form 10-K/A may contain forward-looking statements
including statements regarding our strategy, financial performance and revenue
sources that involve risks and uncertainties. Our actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in the subsection entitled "Factors Affecting Operating Results
and Market Price of Stock" commencing on page 7. Readers are urged to carefully
review and consider the various disclosures made in this report and in our other
reports filed with the SEC that attempt to advise interested parties of certain
risks and factors that may affect our business. The following discussion should
be read in conjunction with our financial statements and notes thereto.

         We were originally incorporated in the state of Wyoming on March 11,
1994, under the name of First Virtual Holdings Incorporated. We were
reincorporated in the state of Delaware on January 12, 1996. From inception
through 1998, our revenues principally were derived from our Internet payment
system and related services. In June 1998, we were recapitalized by SOFTBANK
Corp. and affiliates through a series of transactions resulting in their
acquisition of 19.1 million shares of our common stock. In July 1998, we made a
strategic decision to focus exclusively on e-messaging and related services,
leveraging the expertise of our key technical personnel and our existing
proprietary technology from the Internet payment system, which was phased out.
In December 1998, we changed our name from First Virtual Holdings Incorporated
to MessageMedia, Inc. in connection with our acquisitions of two e-messaging
companies, Email Publishing, Inc., also known as Epub, and Distributed Bits,
L.L.C., also know as DBits. As a result of the acquisitions, EPub and DBits
became our wholly-owned subsidiaries. These acquisitions enabled us to expand
our suite of e-messaging services. In August 1999, we acquired two additional
e-messaging companies, Revnet Systems, Inc., also known as Revnet, and Decisive
Technology Corporation, also known as Decisive, to further broaden our
comprehensive suite of e-messaging solutions and our customer base. All of these
acquisitions were accounted for as purchase transactions. A summary of these
acquisitions follows:

         o        EPub was a leading provider of outsourced e-mail message
                  delivery services to businesses and organizations. On December
                  9, 1998, we acquired all of the common stock of Epub in
                  exchange for 5,582,676 shares of our common stock and assumed
                  all of its options and warrants in exchange for approximately
                  417,324 additional shares of our common stock.

         o        DBits was a development stage company developing customer
                  e-mail management systems and solutions. On December 11, 1998,
                  we acquired all equity interests in Dbits in exchange for
                  1,305,320 shares of our common stock and warrants to purchase
                  an additional 500,000 shares of our common stock.

         o        Revnet was a leading developer and supplier of software
                  solutions providing businesses and organizations with
                  "in-house" e-mail message delivery capability. Revnet also
                  provided outsourced e-mail message delivery services. On
                  August 9, 1999, we acquired all of the common stock of Revnet
                  in exchange for 3,262,120 shares of our common stock and
                  assumed all of its options and warrants in exchange for
                  approximately 681,675 additional shares of our common stock.

         o        Decisive was a leading provider of online customer
                  intelligence solutions such as e-surveys. On August 16, 1999,
                  we acquired all of the common stock of Decisive in exchange
                  for 2,054,498 shares of our common stock and assumed all of
                  its options and warrants in exchange for approximately 466,818
                  additional shares of our common stock.

SOURCES OF REVENUE AND REVENUE RECOGNITION

E-Messaging Solutions

         We derive revenue from outsourced e-messaging services and software
products and related support services.

         o        Messaging and related services:

                  Revenue is recognized as earned in accordance with individual
                  customer contracts which typically provide for monthly
                  minimums and varying revenue on a per message basis, depending
                  upon monthly message volumes and message complexity. Set-up
                  fees are recognized over the life of the contract. We
                  recognize revenue from survey service agreements on a
                  percentage-of-completion basis and typically bill customers as
                  services are provided. Accordingly, revenue recognized in
                  advance of billing milestones is recorded as unbilled accounts
                  receivable, and collections resulting from billing milestones
                  achieved in advance of recognizing revenue are recorded as
                  deferred revenue on the balance sheet.



                                       14
<PAGE>



         o        Software licenses and services:

                  We recognize software license revenue in accordance with the
                  American Institute of Certified Public Accountants Statement
                  of Position 97-2, "Software Revenue Recognition." We recognize
                  revenue on a software contract with a term of one-year or less
                  over the life of the contract. Revenue on a multi-year
                  contract is typically recognized upon delivery, unless
                  extended payment terms exist. Substantially all of our
                  customers that purchase our software products also enter into
                  annual support and maintenance contracts. Revenue attributable
                  to annual support and maintenance contracts is recognized
                  ratably over the term of the respective agreements. Revenue on
                  hosted software services is recognized as we provide services
                  to the customer. Set-up fees on these services are recognized
                  over the term of the contract.

Internet Payment System

         In connection with our strategic decision to focus exclusively on
e-messaging solutions, in August 1998 we phased out our Internet payment system
and related services. Revenue related to the Internet payment system, including
consumer and merchant registrations, transaction, marketing and merchandising
revenue, consulting fees and interactive advertising development, are separately
reported as "Internet payment system" revenue. We currently do not generate any
Internet payment system revenue. Revenue from registration fees and the related
direct costs of processing such registrations was recognized over a 12-month
period. Transaction and marketing revenue was recognized when earned.

         We have incurred net operating losses in each quarter since inception.
As of December 31, 2000, we had an accumulated deficit of approximately $178.2
million. There can be no assurance that our future revenues will increase or not
decrease. In addition, since we expect to introduce new functionality of our
services and explore opportunities to merge with or acquire complementary
businesses and technologies, we expect to continue to incur significant
operating losses for the foreseeable future.

RESULTS OF OPERATIONS

Revenues

         Prior to July 1998, we derived our revenue from our First Virtual
Internet Payment System, or FVIPS, and related services. In August 1998, we
phased out the operations of the FVIPS and launched our e-messaging services. In
December 1998, we acquired DBits and EPub, and in August 1999, we acquired
Revnet and Decisive. Revenue for the periods presented was earned as detailed in
the table below (in thousands):

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31,
                                                ------------------------------------
                                                  2000          1999         1998
                                                ----------   ----------   ----------
<S>                                             <C>          <C>          <C>
Messaging and related services                  $   23,897   $    8,214   $      425
Software licenses and services                       9,751        1,807           --
First Virtual Internet Payment System                   --           --          863
                                                ----------   ----------   ----------
Total revenues                                  $   33,648   $   10,021   $    1,288
                                                ==========   ==========   ==========
</Table>


         For the year ended December 31, 2000, revenues increased to
approximately $33.6 million compared to approximately $10.0 million for the year
ended December 31, 1999. This increase is primarily attributable to an increase
in the number of customers using our products and services, increased
e-messaging volume, an incremental increase in revenue as a result of the
Decisive and Revnet acquisitions and the startup of MessageMedia Europe.

         For the year ended December 31, 1999, revenues increased to
approximately $10.0 million compared to approximately $1.3 million for the year
ended December 31, 1998. This increase is primarily due to the change in our
business strategy from an Internet payment system product to e-messaging and
software products. In August 1998, we began our e-messaging services, which is
now our primary business, and phased out our FVIPS operations. The increase in
revenue also was due to increases in the number of customers using our services,
increased e-messaging volume and an incremental increase in revenue as a result
of the EPub, Revnet and Decisive acquisitions.

Cost of revenues

         The cost of revenues for e-messaging solutions consists of salaries,
benefits, consulting fees and operational costs related to providing our
outsourced services. Cost of revenues for software licenses consists of software
packaging and distribution costs. The cost of revenues from FVIPS consisted of
fees paid to third parties for processing transactions, costs of setting up new
accounts and communication expenses related to providing services from the
FVIPS. We have incurred cost of revenues from messaging services, software
products and FVIPS, as detailed in the table below (in thousands):



                                       15
<PAGE>



<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31,
                                                ------------------------------------
                                                   2000         1999          1998
                                                ----------   ----------   ----------
<S>                                             <C>          <C>          <C>
Messaging and related services                  $   15,375   $    4,353   $       30
Software licenses and services                       1,950          236           --
First Virtual Internet Payment System                   --           --           68
                                                ----------   ----------   ----------
Total cost of revenues                          $   17,325   $    4,589   $       98
                                                ==========   ==========   ==========
</Table>


         For the year ended December 31, 2000, the cost of revenues increased to
approximately $17.3 million compared to approximately $4.6 million for the year
ended December 31, 1999. This increase is primarily attributable to increased
headcount required to service our growing customer base, the related growth in
the number of mailings and e-messaging volume and the incremental increase in
cost of revenues as a result of the startup of MessageMedia Europe and the
acquisitions of Decisive and Revnet.

         For the year ended December 31, 1999, the cost of revenues increased to
approximately $4.6 million compared to approximately $98,000 for the year ended
December 31, 1998. This increase is primarily attributable to increased
headcount required to service our growing customer base, the related growth in
the number of mailings and e-messaging volumes and the Decisive and Revnet
acquisitions.

Marketing and sales expenses

         Marketing and sales expenses, which include salaries, wages, consulting
fees, advertising, trade shows, travel and other marketing expenses, increased
to approximately $21.5 million for the year ended December 31, 2000, compared to
approximately $9.7 million for the year ended December 31, 1999. This increase
is primarily due to growth in headcount in sales, customer services and
marketing staff as a result of increased sales efforts related to our new
e-messaging and e-intelligence solutions and an incremental increase in
headcount from the Decisive and Revnet acquisitions and the startup of
MessageMedia Europe. Additionally, advertising and promotional spending
increased as a result of promoting our new services and products in both the
United States and Europe.

         For the year ended December 31, 1999, marketing and sales expenses
increased to approximately $9.7 million compared to approximately $1.9 million
for the year ended December 31, 1998. This increase is primarily due to growth
in domestic sales, customer services and marketing headcount, and increased
advertising and promotional spending. Marketing and sales expense for the year
ended December 31, 1999 includes a one-time charge of approximately $855,000 in
compensation expense from acceleration of stock options. This compensation
expense relates to an employment agreement with a former officer, which included
an option vesting acceleration clause that was triggered upon the company
obtaining certain sales contracts and/or certain sales levels.

Research, development and engineering expenses

         Research, development and engineering expenses, which include salaries,
wages and consulting fees to support the development, enhancement and
maintenance of our products and services, increased to approximately $6.2
million for the year ended December 31, 2000, compared to approximately $4.9
million for the year ended December 31, 1999. This increase is due to growth in
headcount and related compensation expense associated with our ongoing research,
development and engineering efforts.

         For the year ended December 31, 1999, research, development and
engineering expenses increased to approximately $4.9 million, compared to
approximately $4.8 million for the year ended December 31, 1998. This increase
is due to growth in headcount and related compensation expense.

General and administrative expenses

         General and administrative expenses consist primarily of salaries,
wages, professional and consulting fees, facility costs and other expenses
associated with the general management and administration of our company.
General and administrative expenses increased to approximately $20.1 million for
the year ended December 31, 2000 compared to $7.7 million for the year ended
December 31, 1999. This increase is primarily due to increases in our
administrative staff and related compensation expense as a result of our growth.
These general and administrative expenses include facility costs of $3.0 million
for the year ended December 31, 2000, compared to $1.2 million for the year
ended December 31, 1999. Additionally, there was an incremental increase in
headcount and related expenses due to our acquisitions of Revnet and Decisive in
August 1999 and the startup of MessageMedia Europe.

         General and administrative expenses increased to approximately $7.7
million for the year ended December 31, 1999



                                       16
<PAGE>



compared to $4.1 million for the year ended December 31, 1998. This increase is
primarily due to growth in headcount and related compensation expense and the
Revnet and Decisive acquisitions. These general and administrative expenses
include facility costs of $1.2 million for the year ended December 31, 1999,
compared to $1.3 million for the year ended December 31, 1998.

Depreciation and amortization

         Depreciation and amortization expenses increased to $55.5 million in
2000 from $28.9 million in 1999. Of this amount, $3.7 million was related to
increased depreciation during 2000, and $23 million was due to a full year
amortization of goodwill for acquisitions made in 1999.

         From 1998 to 1999, depreciation and amortization increased from $2.3
million to $28.9 million, principally as a result of amortization of goodwill on
the acquisitions of Epub and Dbits in December 1998 and Revnet and Decisive in
August 1999.

Restructuring charges

         In the fourth quarter of the year 2000, we recorded a charge of $7.0
million as a result of our decision to eliminate certain business development
efforts, including e-service, an online customer care solution, our wireless
messaging research product and our secure e-mail delivery product. These product
lines had not yet contributed to revenue, and a decision was made to reduce
operating expense and conserve cash in future periods. The eliminations and
reductions in manpower supporting these product lines resulted in the
elimination of 125 positions. All of these product lines were discontinued and
positions were eliminated during December 2000, although severance payments have
been made throughout 2001. In addition to the cost of eliminating these
positions, the discontinuance of these development efforts resulted in the
recognition of restructuring charges for contractual obligations and software
investments incurred to support these product lines. Finally, this charge also
provided for a reduction in occupancy costs in Colorado as well as in our
Chicago and San Francisco sales offices. The $7.0 million charge included $1.5
million for severance cost, $1.1 million for terminations of contracts for
services and software planned to be included in the eventual product offerings,
$2.4 million for asset impairment, consisting of $1.2 million for leasehold
improvements, $300,000 for furniture write-downs and $900,000 for software
write-offs, and $2.0 million for facility costs, principally rent and real
estate fees for subleasing the abandoned facilities.

         The restructuring reserve at December 31, 2000 was $4.2 million and the
cash requirements are expected to be funded from operating cash flows. We do not
anticipate any future expense increases as a result of the restructuring.

         In the first quarter of 1999, we recorded a charge of $1.0 million as a
result of our decision to relocate our corporate headquarters from San Diego,
California to a new facility in Boulder, Colorado. This decision was made to
create efficiencies in our e-messaging services operations, reduce overhead by
centralizing our offices to one facility and eliminate duplication of efforts
from similar positions in the separate offices. The merger integration and
restructuring activity of MessageMedia, DBits and EPub included a company-wide
staff reduction, which resulted in approximately $632,000 of employee severance
pay and other related expenses and approximately $393,000 in moving expenses and
costs related to closing the San Diego facility.

         In the second quarter of 1998,we recorded a restructuring charge of
approximately $812,000 as a result of our decision to focus our efforts on the
messaging platform, initiate efforts to cease operations of our FVIPS and better
align our cost structure with expected revenue projections. The restructuring
activity included the elimination of job responsibilities company wide,
resulting in approximately $545,000 of employee severance pay and other related
expenses and approximately $267,000 of expenses related to relocating our
corporate office and termination fees for cancellation of certain contracts
related to FVIPS.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2000, we had $15.8 million in cash and cash
equivalents, including $4.5 million in restricted cash. Of the $15.8 million,
$11.1 million was in the United States and $4.7 million was in MessageMedia
Europe.

         On December 29, 2000, we received a $3.0 million bank loan from Wells
Fargo, and on February 22, 2001, we raised $8.0 million in funding from a
private placement of our common stock to SOFTBANK Venture Capital, Pequot
Capital Management, Inc., and REBAR, LLC. Historically, we have experienced
recurring losses and have been unable to generate sufficient working capital
needed to meet our cash needs. During 2000, we began restructuring our
organization to reduce our expenditures on infrastructure, including rent,
salaries and other service expenses. During 2001, we have continued to focus on
reducing expenses in order to reduce cash burn.

         The continuing weakness in the economy, which was further aggravated by
the recent World Trade Center attacks, has resulted in a decline in our revenues
as customers continue to reduce their marketing expenditures. Accordingly, we
have reduced our revenues forecast for the fourth quarter of 2001. The decline
in forecasted revenues is accompanied by reductions in forecasted expenses as we
continue to manage spending. The result is a decline in forecasted cash balances
for the remainder of 2001.



                                       17
<PAGE>



         We entered into an amended and restated merger agreement with
DoubleClick Inc. The merger is expected to close in December 2001. If this
merger does not occur, we plan to seek alternative sources of funding or another
merger partner. In connection with the amended and restated merger agreement,
DoubleClick agreed to lend us up to $1.5 million for operating requirements that
arise in the ordinary course of business, subject to conditions set forth in a
note purchase agreement and an escrow agreement. DoubleClick loaned us $1.0
million of this amount on October 29, 2001. The note purchase agreement,
together with the escrow agreement, provides that, if the Securities and
Exchange Commission, or the SEC, has not declared the registration statement on
Form S-4 relating to the merger effective by November 12, 2001, and there are no
outstanding comments from the SEC that relate to us at that time, and we certify
that we are in compliance with all of our obligations under the amended and
restated merger agreement, which shall not have been terminated, and the note
purchase agreement as of November 12, 2001, DoubleClick will loan us an
additional $500,000.

         We currently have a bank loan from Wells Fargo Equipment Finance, or
Wells Fargo. A financial covenant of the loan agreement requires that we
maintain an unrestricted cash balance of at least $2.0 million. We currently
forecast that we will have sufficient unrestricted cash to prevent triggering
Wells Fargo's right to require immediate repayment of the bank loan prior to the
closing of the merger with DoubleClick. If the loan from DoubleClick becomes due
and payable prior to December 1, 2001, however, we currently forecast that we
will not have sufficient unrestricted cash to comply with the Wells Fargo loan
and that Wells Fargo will have the right to require repayment during December
2001. Additionally, if the merger is not consummated pursuant to the terms of
the amended and restated merger agreement, we currently forecast that we will
not have sufficient unrestricted cash to comply with the Wells Fargo loan and
that Wells Fargo will have the right to require its repayment during January
2002. If Wells Fargo exercises its right to require immediate repayment at any
time, unless we have previously secured alternative sources of funding, we would
have insufficient working capital to remain solvent.

         Net cash used in operating activities was approximately $31.5 million,
$19.0 million and $11.9 million for the years ended December 31, 2000, 1999 and
1998, respectively. Net operating cash flows for the year ended December 31,
2000 were primarily attributable to net losses, and increases in minority
interest and accounts receivable, partially offset by non-cash charges for
depreciation and amortization, and increases in the restructuring reserve,
accounts payable, other accrued liabilities and the write-off of furniture,
equipment and software. Net operating cash flows for the year ended December 31,
1999 resulted from net losses, an increase in accounts receivable and a decrease
in other accrued liabilities, offset by depreciation and amortization and a
decrease in accrued compensation. Net operating cash flows for the year ended
December 31, 1998 were primarily due to net losses offset by depreciation and
amortization.

         Net cash used in investing activities was approximately $16.3 million,
$1.7 million and $422,000 for the years ended December 31, 2000, 1999 and 1998,
respectively. Investing activities related to additions to furniture, computer
equipment and software. For the year ended December 31, 1999, asset additions
were partially offset by cash acquired through the Revnet and Decisive
acquisitions.

         Net cash provided by financing activities was approximately $21.5
million, $54.0 million and $10.7 million for the years ended December 31, 2000,
1999 and 1998, respectively. Net cash provided by financing activities for the
year ended December 31, 2000 related primarily to proceeds from MessageMedia
Europe, the exercise of stock options and proceeds from the Wells Fargo bank
loan. The net cash flow from financing activities in 1999 primarily resulted
from proceeds from issuance of common stock as a result of two separate private
placements of equity in March 1999 and October 1999 and proceeds from the
exercise of stock options. Net cash flow from financing activities in 1998
primarily was due to proceeds from issuing common stock in a private placement
and borrowings from stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Our interest income is sensitive to changes in the general level of
United States interest rates and, as of December 31, 2000, to European interest
rates. Because all of our investments are short-term investments with maturities
of less than three months, however, we have concluded that there is no material
interest rate risk exposure for these investments. We also face interest rate
risk because we have fixed rate debt. As of December 31, 2000, we also faced
exposure to movements in foreign currency exchange rates because we had foreign
currency denominated debt.

         Below, we have summarized information on our foreign currency
denominated debt, which is sensitive to foreign currency exchange rates. This
summary presents, as of December 31, 2000, principal cash flows, related
weighted-average interest rates by expected maturity dates and applicable
average forward foreign currency exchange rates.


                             BALANCE SHEET EXPOSURE
            OPERATIONS WITH UNITED STATES DOLLAR FUNCTIONAL CURRENCY
                      PRINCIPAL AMOUNT BY EXPECTED MATURITY
      AVERAGE FORWARD FOREIGN CURRENCY EXCHANGE RATE (USD/FOREIGN CURRENCY)


<Table>
<Caption>
                                                                                            FAIR VALUE
                                                                                           DECEMBER 31,
                                                                  2001         TOTAL          2000
                                                               ----------    ----------    ----------
                                                                       (DOLLARS IN MILLIONS)
<S>                                                            <C>           <C>           <C>
LONG-TERM DEBT DENOMINATED IN FOREIGN CURRENCIES:
Euros
Fixed rate .................................................   $      7.7    $      7.7    $      7.7
Average interest rate ......................................            8%            8%           --
Average forward foreign currency exchange rate .............          .95           .95            --
</Table>



                                       18
<PAGE>



         Below is summarized, as of December 31, 2000, information on
MessageMedia's fixed rate debt, which is sensitive to changes in interest rates.
The table presents principal cash flows and related weighted-average interest
rates by expected maturity date.

                            INTEREST RATE SENSITIVITY
                      PRINCIPAL AMOUNT BY EXPECTED MATURITY
                              AVERAGE INTEREST RATE

<Table>
<Caption>
                                                                                                                FAIR VALUE
                                                                                                               DECEMBER 31,
                                                             2001          2002          2003         TOTAL         2000
                                                                                 (DOLLARS IN MILLIONS)
<S>                                                       <C>           <C>           <C>           <C>          <C>
LONG-TERM DEBT, INCLUDING CURRENT PORTION
Fixed rate ............................................   $      8.5    $      1.0    $      1.0    $     10.5   $     10.5
Average interest rate .................................          8.5%        13.28%        13.28%           --           --
</Table>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required by Item 8 is incorporated by reference herein
from Part IV, Item 14 (a) (1) and (2).


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         Not applicable.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

IDENTIFICATION OF DIRECTORS

         The information required by this item concerning our directors is
incorporated by reference from the section entitled "Election of Directors" in
our Proxy Statement filed with the Securities and Exchange Commission on April
19, 2001 with respect to our 2000 Annual Meeting of Stockholders held on May 16,
2001 (the "Proxy Statement").

IDENTIFICATION OF EXECUTIVE OFFICERS

         The information required by this item concerning our executive officers
is incorporated by reference from the information set forth in the section
entitled "Executive Officers of the Company" in Part I, Item 1 of this Report on
Form 10-K/A.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

         The information required by this item concerning our directors is
incorporated by reference from the section entitled "Section 16(a) Beneficial
Ownership Reporting Compliance" contained in the Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

         The section entitled "Executive Compensation" appearing in the Proxy
Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The section entitled "Security Ownership of Certain Beneficial Owners
and Management" appearing in the Proxy Statement is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The section entitled "Certain Relationships and Related Transactions"
appearing in the Proxy Statement is incorporated herein by reference.



                                       19
<PAGE>



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

<Table>
<Caption>
(a)(1) INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS                                              PAGE
                                                                                                  -----
<S>                                                                                               <C>
Report of Ernst & Young LLP, Independent Auditors                                                    22
Consolidated Balance Sheets as of December 31, 2000 and 1999                                         23
Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998           24
Consolidated Statements of Stockholders' Equity (Net Capital Deficiency) for the
   years ended December 31, 2000, 1999 and 1998                                                      25
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998           26
Notes to Financial Statements                                                                        27

(a)(2) INDEX TO THE CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

Schedule II - Valuation and Qualifying Accounts                                                      40

(a)(3) INDEX TO EXHIBITS
</Table>


Number                              Exhibit Title


2.1.1**        Agreement and Plan of Merger and Reorganization dated July 22,
               1999 among the Registrant, Revnet Systems Inc. and MM1
               Acquisition Corporation

2.1.2**        Agreement and Plan of Merger and Reorganization dated July 22,
               1999 among the Registrant, Decisive Technology Corporation and
               MM2 Acquisition Corporation

3.1*           Amended and Restated Certificate of Incorporation of the Company

3.2*           Bylaws of the Company

10.1*          Form of Indemnification Agreement entered into between Company
               and its officers and directors.

10.2*          The Company's 1994 Incentive and Non-Statutory Stock Option Plan

10.3**         The Company's 1995 Stock Plan

10.4**         The Company's 1999 Stock Plan

10.5**         The Company's Employee Stock Purchase Plan

10.6*          Amended and Restated Shareholder Rights Agreement dated August
               26, 1996 between the Company and First Data Corporation

10.7**         David Ehrenthal Employment Agreement

10.8**         A. Laurence Jones Employment Agreement

10.9**         Mary Beth Loesch Employment Agreement

10.10**        Elizabeth Wallace Employment Agreement

10.11**        Sue Morse Employment Agreement

10.12**        Stuart Obermann Employment Agreement

10.13**        Randy Bachmeyer Employment Agreement

10.14**        Kelly Wood Employment Agreement

10.15**        Denis Cagan Separation Agreement

23.1           Consent of Ernst & Young, LLP, Independent Auditors

24             Power of Attorney

 * Previously filed as exhibits to our Registration Statement on Form S-1 (SEC
   File # 333-14573).

** Previously filed as exhibits to our Form 10-K for the fiscal year ended
   December 31, 2001, filed on March 27, 2001.

(b) REPORTS ON FORM 8-K

None.

(c) EXHIBITS

See (a)(3) above.

(d) FINANCIAL STATEMENT SCHEDULES

See (a)(2) above.



                                       20
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, we have duly caused this report to be signed on
MessageMedia, Inc.'s behalf by the undersigned, thereunto duly authorized.


                                MESSAGEMEDIA, INC.

                                BY:      /s/ A. Laurence Jones
                                   ---------------------------------------------

                                   A. Laurence Jones
                                   President and Chief Executive Officer




Dated: November 8, 2001


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on our behalf and in the
capacities indicated.


<Table>
<Caption>
Signature                                   Title                                                Date
---------                                   -----                                                ----
<S>                                 <C>                                                 <C>
   /s/ A. Laurence Jones            President, Chief Executive Officer and Director     November 8, 2001
---------------------------         (Principal Executive Officer)
      A. Laurence Jones


  /s/ William Buchholz              Senior Vice President, Finance and Administration,  November 8, 2001
---------------------------         Chief Financial Officer and Secretary
      William Buchholz              (Principal Financial and Accounting Officer)


         *                          Director                                            November 8, 2001
---------------------------
      Bradley A. Feld

         *                          Director                                            November 8, 2001
---------------------------
      Gerald A. Poch

         *                          Director                                            November 8, 2001
---------------------------
      Dennis J. Cagan

         *                          Director                                            November 8, 2001
---------------------------
     R. Terry Duryea

                                    Director
---------------------------
     Howard S. Diamond
</Table>


*    By:   /s/ A. Laurence Jones
         -----------------------------------
         A. Laurence Jones,
         Attorney-in-Fact




                                       21
<PAGE>




                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


The Board of Directors
MessageMedia, Inc.

         We have audited the accompanying consolidated balance sheets of
MessageMedia, Inc. as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. Our audits also
include the financial statement schedule listed in the Index at Item 14a. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
MessageMedia, Inc. at December 31, 2000 and 1999, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.

         As discussed in Note 1 to the financial statements, the Company changed
its method of recognizing revenue in 2000.

         The accompanying financial statements have been prepared assuming that
MessageMedia will continue as a going concern. As more fully described in Note
1, MessageMedia has incurred recurring operating losses and negative cash flows
and has a substantial need for additional funding to support its operations.
These conditions raise substantial doubt about MessageMedia's ability to
continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.



                                                /s/ ERNST & YOUNG LLP
Denver, Colorado
February 15, 2001,
except for Note 14 as to which the date is
February 23, 2001,
and except for the third and fourth paragraphs of Note 1
as to which the date is
September 28, 2001




                                       22
<PAGE>



                               MESSAGEMEDIA, INC.
                           CONSOLIDATED BALANCE SHEETS
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


<Table>
<Caption>
                                                                        YEAR ENDED DECEMBER 31,
                                                                       --------------------------
                                                                          2000           1999
                                                                       -----------    -----------
                                             ASSETS
<S>                                                                    <C>            <C>
Current assets:
    Cash and cash equivalents ......................................   $    11,273    $    37,920
    Restricted cash ................................................         4,549             --
    Accounts receivable, net .......................................         7,909          4,278
    Prepaid expenses and other .....................................         2,750            749
                                                                       -----------    -----------
       Total current assets ........................................        26,481         42,947
Furniture, equipment and software, net .............................        15,050          4,728
Goodwill, net ......................................................        24,100         75,162
Deposits and other .................................................           624            354
                                                                       -----------    -----------
       Total assets ................................................   $    66,255    $   123,191
                                                                       ===========    ===========

                              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable ...............................................   $     6,156    $     2,482
    Accrued compensation and related liabilities ...................         1,859          1,912
    Deferred revenue ...............................................         1,822            324
    Note payable and capital lease obligations, current portion ....         1,591             25
    Payable to joint venture partner ...............................         9,094             --
    Restructuring reserve ..........................................         4,163             65
    Other accrued liabilities ......................................         3,687            957
                                                                       -----------    -----------
       Total current liabilities ...................................        28,372          5,765

Note payable and capital lease obligations, long term ..............         2,123             36

Minority interest ..................................................         2,146             --

Stockholders' equity:
Preferred stock, 5,000,000 shares authorized, none outstanding
     on December 31, 2000 and 1999, respectively ...................            --             --

Common stock, $0.001 par value; 100,000,000 shares
       authorized, 56,708,086 and 54,920,498 shares issued and
       outstanding on December 31, 2000 and 1999, respectively .....            57             55
    Additional paid-in capital .....................................       212,031        208,343
    Warrants .......................................................           321            321
    Accumulated other comprehensive income .........................          (296)            --
    Deferred compensation ..........................................          (348)        (1,332)
    Accumulated deficit ............................................      (178,151)       (89,997)
                                                                       -----------    -----------
       Total stockholders' equity ..................................        33,614        117,390
                                                                       -----------    -----------
          Total liabilities and stockholders' equity ...............   $    66,255    $   123,191
                                                                       ===========    ===========
</Table>



                             See accompanying notes.



                                       23
<PAGE>



                               MESSAGEMEDIA, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                       YEAR ENDED DECEMBER 31,
                                                          -----------------------------------------------
                                                              2000             1999              1998
                                                          -------------    -------------    -------------
<S>                                                       <C>              <C>              <C>
Revenues ..............................................   $      33,648    $      10,021    $       1,288
Costs and operating expenses:
    Cost of revenues ..................................          17,325            4,589               98
    Marketing and sales ...............................          21,526            9,704            1,935
    Research, development and engineering .............           6,234            4,936            4,828
    General and administrative ........................          20,083            7,678            4,095
    Restructuring expenses ............................           7,009            1,025              812
    Write-off of in-process technology ................              --               --            1,300
    Depreciation expense ..............................           5,022            1,358            1,148
    Amortization expense ..............................          50,497           27,565            1,038
                                                          -------------    -------------    -------------
Total costs and operating expenses ....................         127,696           56,855           15,254
                                                          -------------    -------------    -------------
Loss from operations ..................................         (94,048)         (46,834)         (13,966)
Interest income .......................................           1,522              654              218
Interest expense ......................................            (433)             (89)             (84)
Other expense .........................................            (112)              --               --
                                                          -------------    -------------    -------------
Net loss before minority interest and
   cumulative effect of accounting change .............         (93,071)         (46,269)         (13,832)

Minority interest .....................................          (5,109)              --               --
                                                          -------------    -------------    -------------
Net loss before cumulative effect of change
   in accounting principle ............................         (87,962)         (46,269)         (13,832)

Cumulative effect of change in
   accounting principle ...............................            (192)              --               --
                                                          -------------    -------------    -------------
Net loss ..............................................         (88,154)         (46,269)         (13,832)
Dividends imputed on preferred stock ..................              --               --           (1,233)
                                                          -------------    -------------    -------------
Net loss applicable to common shares ..................   $     (88,154)   $     (46,269)   $     (15,065)
                                                          =============    =============    =============
Net loss per share, basic and diluted .................   $       (1.57)   $       (1.00)   $       (0.68)


Pro forma net loss assuming the
   accounting change is applied retroactively .........   $     (87,962)   $     (46,436)   $     (15,090)

Pro forma net loss per share ..........................   $       (1.57)   $       (1.00)   $       (0.68)

Shares used in per share computation,
    basic and diluted .................................      56,080,224       46,367,195       22,304,902
</Table>



                             See accompanying notes.


                                       24
<PAGE>
                               MESSAGEMEDIA, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                 PREFERRED STOCK              COMMON STOCK          ADDITIONAL
                                              ----------------------     -----------------------     PAID-IN-
                                              SHARES          AMOUNT     SHARES           AMOUNT     CAPITAL       WARRANTS
                                              ------          ------     ------           ------    ----------     --------
<S>                                           <C>             <C>      <C>                <C>       <C>            <C>
Balance at December 31, 1997 ..........          250             1     8,903,855             9       26,300         3,017
Issuance of stock dividends to
 Series A preferred stockholders ......           --            --       108,125            --          153            --
Issuance of common stock for the
 exercise of warrants .................           --            --       947,495             1        1,604        (1,501)
Issuance of common stock for
 exercise of stock options ............           --            --       659,637             1          271            --
Conversion of Series A preferred
 stock ................................         (250)           (1)    1,752,141             2          473            --
Issuance of common stock for
 services rendered ....................           --            --        59,009            --           87            --
Charge associated with extending
 option terms .........................           --            --            --            --          406            --
Deferred compensation and related
 amortization .........................           --            --            --            --          166            --
Common stock issued to SOFTBANK
 and affiliates .......................           --            --    20,784,883            21       15,338            --
Dividend imputed on Series A
 convertible preferred stock,
 cancelled upon buyout of Series A
 convertible preferred by SOFTBANK ....           --            --            --            --          938            --
Employee stock purchase plan ..........           --            --        17,907            --           44            --
Common stock issued for EPub
 acquisition ..........................           --            --     5,582,676             5       20,258            --
Common stock and warrants issued
 for DBits acquisition ................           --            --     1,305,320             1        4,926           350
Net loss ..............................           --            --            --            --           --            --
                                               -----         -----   -----------         -----     --------         -----
Balance at December 31, 1998 ..........           --            --    40,121,048            40       70,964         1,866
                                               =====         =====   ===========         =====     ========         =====
Issuance of common stock for
 exercise of stock options ............           --            --     1,700,049             2        3,287            --
Issuance of common stock for
 exercise of warrants .................           --            --     1,280,074             1        2,582        (1,545)
Deferred compensation and related
 amortization .........................           --            --            --            --           29            --
Acceleration of stock options .........           --            --            --            --          916            --
Common stock issued for Revnet
 Acquisition ..........................           --            --     3,262,120             3       41,032            --
Common stock issued for Decisive
 Acquisition ..........................           --            --     2,054,498             2       39,159            --
Common stock issued for Private
 Offerings ............................           --            --     6,448,066             7       49,956            --
Employee stock purchase plan ..........           --            --        47,348            --          272            --
Issuance of common stock for
 forgiveness of stockholder debt ......           --            --         7,295            --          146            --
Net loss ..............................           --            --            --            --           --            --
                                               -----         -----   -----------         -----     --------         -----
Balance at December 31, 1999 ..........           --            --    54,920,498            55      208,343           321
                                               =====         =====   ===========         =====     ========         =====
Issuance of common stock for
 exercise of stock options ............           --            --     1,444,963             2        4,160            --
Deferred compensation and related
 amortization .........................           --            --            --            --         (304)           --
Costs associated with 1999 private
 offering .............................           --            --            --            --          (35)           --
Issuance of common stock for
 employee compensation ................           --            --       200,000            --           87            --
Decisive acquisition working
 capital adjustment ...................           --            --       (35,289)           --         (565)           --
Adjustment to shares issued ...........           --            --         8,248            --           --            --
Employee stock purchase plan ..........           --            --       169,666            --          345            --
Accumulated other comprehensive
 income - cumulative translation
 adjustment ...........................           --            --            --            --           --            --
Net loss ..............................           --            --            --            --           --            --
                                               -----         -----   -----------         -----     --------         -----
Balance at December 31, 2000 ..........           --            --    56,708,086            57      212,031           321
                                               =====         =====   ===========         =====     ========         =====

<CAPTION>

                                                                                ACCUMULATED
                                                                                   OTHER          TOTAL
                                                 DEFERRED       ACCUMULATED    COMPREHENSIVE  STOCKHOLDERS'
                                               COMPENSATION       DEFICIT          INCOME        EQUITY
                                               ------------     -----------    -------------  ------------
<S>                                              <C>            <C>                <C>         <C>
Balance at December 31, 1997 .............        (155)          (29,743)           --          (572)
Issuance of stock dividends to
 Series A preferred stockholders .........          --              (153)           --            --
Issuance of common stock for the
 exercise of warrants ....................          --                --            --           104
Issuance of common stock for
 exercise of stock options ...............          --                --            --           272
Conversion of Series A preferred
 stock ...................................          --                --            --           475
Issuance of common stock for
 services rendered .......................          --                --            --            87
Charge associated with extending
 option terms ............................          --                --            --           406
Deferred compensation and related
 amortization ............................         119                --            --           285
Common stock issued to SOFTBANK
 and affiliates...........................          --                --            --        15,359
Dividend imputed on Series A
 convertible preferred stock,
 cancelled upon buyout of Series A
 convertible preferred by SOFTBANK .......          --                --            --           938
Employee stock purchase plan .............          --                --            --            44
Common stock issued for EPub
 acquisition .............................        (583)               --            --        19,680
Common stock and warrants issued
 for DBits acquisition ...................         (39)               --            --         5,238
Net loss .................................          --           (13,832)           --       (13,832)
                                                ------         ---------         -----      --------
Balance at December 31, 1998 .............        (658)          (43,728)           --        28,484
                                                ======         =========         ======     ========
Issuance of common stock for
 exercise of stock options ...............          --                --            --         3,289
Issuance of common stock for
 exercise of warrants ....................          --                --            --         1,038
Deferred compensation and related
 amortization ............................        (674)               --            --          (645)
Acceleration of stock options ............          --                --            --           916
Common stock issued for Revnet
 Acquisition .............................          --                --            --        41,035
Common stock issued for Decisive
 Acquisition .............................          --                --            --        39,161
Common stock issued for Private
 Offerings ...............................          --                --            --        49,963
Employee stock purchase plan .............          --                --            --           272

Issuance of common stock for
 forgiveness of stockholder debt .........          --                --            --           146
Net loss .................................          --           (46,269)           --       (46,269)
                                                ------         ---------         -----      --------
Balance at December 31, 1999 .............      (1,332)          (89,997)           --       117,390
                                                ======         =========         ======     ========
Issuance of common stock for
 exercise of stock options ...............          --                --            --         4,162
Deferred compensation and related
 amortization ............................         984                --            --           680
Costs associated with 1999 private
 offering ................................          --                --            --           (35)
Issuance of common stock for
 employee compensation ...................          --                --            --            87
Decisive acquisition working
 capital adjustment ......................          --                --            --          (565)
Adjustment to shares issued ..............          --                --            --            --
Employee stock purchase plan .............          --                --            --           345
Accumulated other comprehensive
 income - cumulative translation
 adjustment ..............................          --                --          (296)         (296)
Net loss .................................          --           (88,154)           --       (88,154)
                                                ------         ---------         -----      --------
Balance at December 31, 2000 .............        (348)         (178,151)         (296)       33,614
                                                ======         =========         ======     ========
</TABLE>


                                       25
<PAGE>


                               MESSAGEMEDIA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                            ---------------------------------
                                                              2000        1999        1998
                                                            --------    --------    ---------
<S>                                                         <C>         <C>         <C>
OPERATING ACTIVITIES
Net loss ................................................   $(88,154)   $(46,269)   $(13,832)
Adjustments to reconcile net loss to net cash used in
   operating activities:
    Depreciation and amortization .......................     55,589      28,923       2,186
    Minority interest ...................................     (5,109)         --          --
    Exchange (gain)/loss ................................          8          --          --
    In-process technology charge ........................         --          --       1,300
    Write-off of impaired assets ........................      2,382          --          --
    Restricted cash .....................................     (4,549)         --          --
    Loss on disposal of assets ..........................         --          --          34
    Common stock issued for services ....................         87          --          87
    Compensation expense for stock options ..............        680       1,347         691
    Changes in operating assets and liabilities:
      Accounts receivable ...............................     (3,616)     (3,145)       (133)
      Prepaid expenses and other ........................     (1,982)       (317)         23
      Deposits and other ................................       (269)       (267)        116
      Accounts payable ..................................      3,652         385        (372)
      Accounts payable to related party .................      1,514          --          --
      Accrued compensation and related liabilities ......        (54)      1,477        (262)
      Deferred revenue ..................................      1,494         (51)       (538)
      Accrued interest ..................................         --         (15)       (275)
      Amount due to stockholders ........................         --          --         (97)
      Restructuring reserve .............................      4,155          --          --
      Other accrued liabilities .........................      2,646      (1,076)       (833)
                                                            --------    --------    --------
Net cash flows used in operating activities .............    (31,526)    (19,008)    (11,905)
INVESTING ACTIVITIES
Additions to furniture, equipment and software ..........    (16,309)     (3,775)       (436)
Proceeds from sales of fixed assets .....................         --          --          14
Cash and cash equivalents acquired with acquisitions ....         --       2,054          --
                                                            --------    --------    --------
Net cash flows used in investing activities .............    (16,309)     (1,721)       (422)
FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of issuance
   costs ................................................        310      50,235       8,908
Proceeds from issuance/extension of warrants ............         --       1,038         104
Proceeds from borrowings from stockholders and bank .....      3,004          --       1,412
Proceeds from exercise of stock options .................      4,162       3,289         271
Contribution from minority interest holder ..............      7,255          --          --
Proceeds from related party loan ........................      7,552          --          --
Repayment of amount due to stockholders .................         --        (395)         --
Repayment of loan from Bank .............................       (101)        (92)         --
Repayment of capital lease obligations ..................       (640)        (85)        (40)
                                                            --------    --------    --------
Net cash flows provided by financing activities .........     21,542      53,990      10,655
                                                            --------    --------    --------
Effect of exchange rate changes on cash .................       (354)         --          --
Net increase/(decrease) in cash and cash equivalents ....    (26,647)     33,261      (1,672)
Cash and cash equivalents at the beginning of year ......     37,920       4,659       6,331
                                                            --------    --------    --------
Cash and cash equivalents at the end of year ............   $ 11,273    $ 37,920    $  4,659
                                                            ========    ========    ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Interest paid ......................................   $    433    $     89    $     84
                                                            ========    ========    ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
   ACTIVITIES:
Capital lease entered into ..............................   $  1,390    $     --    $     --
                                                            ========    ========    ========
Issuance of common stock for forgiveness of stockholder
   debt .................................................   $     --    $    146    $  1,534
                                                            ========    ========    ========
Conversion of Series A redeemable convertible preferred
   stock ................................................   $     --    $     --    $  3,234
                                                            ========    ========    ========
Issuance of common stock for forgiveness of SOFTBANK
   loan .................................................   $     --    $     --    $  1,412
                                                            ========    ========    ========
</TABLE>


                             See accompanying notes.

                                       26
<PAGE>

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and business activity

     We are a leading provider of permission-based, comprehensive e-messaging
solutions. Our services utilize the medium of e-mail to develop and foster
permission-based relationships with customers. Our suite of services and
products enables businesses to use e-messaging as strategic tools to increase
sales, improve customer communication and develop long-term customer loyalty.
Our e-messaging solutions, available either on an outsourced-subscription basis
or using in-house, packaged software, allow businesses to establish and enhance
two-way customer dialogue across the extended enterprise, from marketing to
sales to customer service.

     The accompanying financial statements have been prepared assuming we will
continue as a going concern. We have experienced recurring losses and have a
deficiency in working capital needed to meet our cash needs. During 2000, we
began restructuring our organization to reduce our expenditures on
infrastructure including rent, salaries and other service expenses related to
our e-services division. In addition, in early 2001 we completed a private
placement for net proceeds to us of $7.7 million. There can be no assurance that
the restructuring of our organization will achieve the desired results or that
revenues will increase to the level necessary to generate positive cash flow
from operations.

     The continuing weakness in the economy, which was further aggravated by the
recent World Trade Center attacks, has resulted in a decline in revenues as
customers continue to reduce their marketing expenditures. Accordingly, we have
reduced our revenues forecast for the third and fourth quarters of 2001. The
decline in forecasted revenues is accompanied by reductions in forecasted
expenses as we continue to manage spending. The result is a decline in
forecasted cash balances for the remainder of 2001.

     We entered into a merger agreement with DoubleClick Inc. The merger is
expected to close in the fourth quarter of 2001. If this merger does not occur,
we plan to seek alternative sources of funding or another merger partner.
Additionally, if this merger does not occur, we currently forecast that we will
not have sufficient unrestricted cash throughout November 2001 to satisfy the
terms of our $3.0 million bank loan from Wells Fargo. Specifically, a financial
covenant of the loan agreement requires that we maintain an unrestricted cash
balance of at least $2.0 million. A breach of this covenant would constitute a
default under the loan and entitle Wells Fargo to require its immediate
repayment. If Wells Fargo exercises this right, unless we could secure
alternative sources of funding, we would have insufficient working capital to
maintain our operations through December 31, 2001.

     On December 13, 1996, we completed an initial public offering (the
"Offering") of 2,000,000 shares of our common stock under the name First Virtual
Holdings Incorporated, with an offering price of $9.00 per share, resulting in
gross proceeds of $18.0 million and net proceeds (less the underwriters'
discount and offering expenses) of approximately $15.0 million. Upon completion
of the offering, all of the then outstanding shares of preferred stock were
converted to common stock.

     On June 23, 1998, at our Annual Meeting of Stockholders, the stockholders
approved an investment in MessageMedia by affiliates of SOFTBANK Corp. and
SOFTBANK Venture Capital (together "SOFTBANK") and E*Trade Group Inc. SOFTBANK
and affiliates purchased approximately 19.2 million shares of our common stock
and became our majority stockholder. On September 10, 1998, SOFTBANK purchased
approximately 1.6 million additional shares of our common stock.

     On December 9, 1998, we changed our name to MessageMedia and our NASDAQ
National Market symbol to "MAIL" and amended the Certificate of Incorporation to
increase the number of our authorized shares of our common stock from 40,000,000
to 100,000,000. On March 30, 1999, we changed our NASDAQ symbol to "MESG."

     On December 9, 1998, we acquired all of the common stock and all
outstanding rights of the common stock of EPub in exchange for 5,582,676 shares
of our common stock and the assumption by us of options and warrants to acquire
up to approximately 417,324 additional shares of our common stock at a weighted
average exercise price of $.04 per share.

     On December 11, 1998, we acquired all equity interests, including options,
warrants or other purchase rights, if any, in DBits, in exchange for 1,350,320
shares of our common stock and warrants to purchase an additional 250,000 shares
of our common stock at an exercise price of $6.00 per share and an additional
250,000 shares of our common stock at $8.00 per share.

     On March 26, 1999, we issued 2,352,942 shares of our common stock in a
private placement for net proceeds to us of $9,902,082.

     On August 9, 1999, we acquired all of the common stock and all outstanding
rights to acquire shares of the common stock of Revnet in exchange for 3,262,120
shares of our common stock and the assumption of options to acquire up to
approximately 681,675 additional shares of our common stock, at a weighted
average exercise price of $1.36 per share.

     On August 16, 1999, we acquired all of the common stock and all outstanding
rights to acquire shares of the common stock of Decisive in exchange for
2,054,498 shares of our common stock and the assumption by us of options to
acquire up to approximately 466,818 additional shares of our common stock, at a
weighted average exercise price of $2.69.


                                       27
<PAGE>
     On October 21, 22 and 25, 1999, in three separate closings, we completed a
private placement of 4,095,124 shares of our common stock for net proceeds of
$40,060,984.

Principles of Consolidation

     The consolidated financial statements include our accounts and the majority
owned subsidiaries in which we have a controlling interest. All significant
intercompany transactions and balances have been eliminated in consolidation.

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 amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.

Reclassifications of Prior Year Amounts

     Certain 1998 and 1999 balances have been reclassified to conform to the
year 2000 presentations.

Cash and Cash Equivalents

     We consider all highly liquid investments with an original maturity of less
than three months to be cash equivalents.

Restricted Cash

     Restricted cash consists of collateral for letters of credit on three of
our leased facilities.

Fair Value of Financial Instruments

     SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosures of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. Our financial instruments include current assets and
liabilities. The carrying amount of these financial instruments reported in the
balance sheets approximates their fair value.

Off Balance Sheet Risk and Concentration of Credit Risk

     Financial instruments that potentially subject us to concentration of
credit risk consists primarily of cash and cash equivalents and accounts
receivable. We maintain our cash and cash equivalents in high quality U.S.
financial institutions. We extend credit to various customers and establish an
allowance for doubtful accounts for specific customers that we determine to have
a significant credit risk.

Furniture, Equipment and Software

     Furniture, equipment and software are stated at cost and depreciated over
the estimated useful lives of the assets using the straight-line method. The
estimated useful lives are five years for furniture, and generally three years
for equipment and software.

Intangible Assets

     Intangible assets arose primarily from the acquisition of two entities in
December 1998 and two entities in August of 1999. The excess of cost over the
fair value of the net assets acquired has been allocated to goodwill and
developed technology. These intangible assets are being amortized over their
useful lives of two years.

Asset Impairment

     In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121), we recognize impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. SFAS 121 also addresses the accounting
for long-lived assets that we expect to dispose of. In the year 2000, we
recorded an impairment loss of $2.4 million as a result of the decision to
eliminate the e-services line of business and reduce overhead by centralizing
our Colorado offices to one facility. Of the $2.4 million loss, $1.0 million
related to software for e-services and $1.4 million for facilities. (See note
9.)

Foreign Currency Translation

     The financial statements of MessageMedia Europe are prepared in euros and
translated into U.S. dollars based on the current exchange rate at the end of
the period for the balance sheet and an average rate for the period for the
statement of income. The functional currency for MessageMedia Europe is the
euro, as such, translation adjustments are reflected as foreign currency
translation adjustments within comprehensive income in stockholders' equity and
accordingly have no effect on net income. Transaction adjustments for payables
denominated in a foreign currency are included in income. Foreign currency
transaction adjustments are not material to income.


                                       28
<PAGE>

Stock-Based Compensation

     We account for stock option grants to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) and related Interpretations because we believe the
alternative fair value accounting provided for under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation,"
requires the use of option valuation models that were not developed for use in
valuing employee stock options. Deferred compensation is recorded only when the
fair value of the stock on the date of the option grant exceeds the exercise
price of the option. The deferred compensation is amortized over the vesting
period of the option.

Revenue Recognition

     We derive our revenue from outsourced e-messaging services and software
products and related support services. Prior to July 1998, we derived our
revenue from the First Virtual Internet Payment System ("FVIPS") and related
consulting services. In the third quarter of 1998, we phased out the operations
of the FVIPS and launched our e-messaging services.

     FVIPS revenue consists of consumer and merchant registrations, transaction
revenue, and marketing revenue. Consumer registration fees and merchant
registration fees were recognized over a twelve month period. Also, the related
direct costs of processing such registrations and renewals were deferred and
amortized over a 12-month period. Transaction revenue and marketing revenue were
recognized when earned. The operation of the Internet payment system was
discontinued in the third quarter of 1998.

     Effective January 1, 2000, we changed our method of accounting for revenue
recognition in accordance with Staff Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements. Previously, we had recognized setup fees as
we invoiced the customers for these fees. Under the new accounting method
adopted retroactive to January 1, 2000, we now recognize setup fees over the
life of the contract. The cumulative effect of the change on prior years
resulted in a charge to operations of $192,000, which is included in operations
for the year ended December 31, 2000. The effect of the change on the year ended
December 31, 2000 was to decrease results of operations before the cumulative
effect of the accounting change by $93,000. The pro forma amounts presented in
the statement of operations were calculated assuming the accounting change was
made retroactively to prior periods. We recognized the $192,000 that was
included in the cumulative effect adjustment as follows: $90,000 in revenue for
the three months ended March 31, 2000; $50,000 in revenue for the three months
ended June 30, 2000; $31,000 in revenue for the three months ended September 31,
2000; and $10,000 in revenue for the three months ended December 31, 2000. The
remainder will be recognized in 2001.

     Messaging revenue is recognized as earned in accordance with individual
customer contracts, which typically provide for monthly minimums and varying
revenue on a per message basis, depending upon monthly message volumes and
message complexity. Revenue from e-intelligence service agreements is recognized
on a percentage completion basis.

     Statement of Position 97-2, "Software Revenue Recognition" (SOP 97-2), was
issued in October 1997 and was amended by Statement of Position 98-4 (SOP 98-4).
Our revenue recognition policies and practices for software license fees are
consistent with SOP 97-2 and SOP 98-4. Additionally, SOP 98-9 is effective for
transactions entered into beginning January 1, 2000. We recognize revenue on
software contracts with terms of one-year or less over the life of the
contracts. Revenue on multi-year contracts is typically recognized upon
delivery, unless extended payment terms exist. Substantially all of our
customers that purchase our software products also enter into annual support and
maintenance contracts. Revenue attributable to annual support and maintenance
contracts is recognized ratably over the term of the respective agreements.
Revenue on hosted software services is recognized as we provide services to the
customer.

Net Loss Per Share

     Basic and diluted earnings per share are calculated in accordance with FASB
Statement No. 128, "Earnings Per Share." All earnings per share amounts for all
periods, have been represented, and where appropriate, restated to conform to
the SFAS 128 requirements. Due to the antidilutive effect, options and warrants
were not included in the calculation of diluted earnings per share.

     The antidilutive securities consist of the following:

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                      ----------------------------------------
                                                         2000           1999          1998
                                                      -----------   -----------   ------------
<S>                                                   <C>           <C>           <C>
    Options .......................................   $10,916,913   $ 9,458,602   $ 4,124,787
    Warrants ......................................       505,660       505,660     1,776,073
            Total antidilutive securities .........   $11,422,573   $ 9,964,262   $ 5,900,860
</TABLE>


                                       29
<PAGE>


Impact of Recently Issued Accounting Standards

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. In June
1999, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 137, which amended SFAS 133, delaying its effective
date to fiscal years beginning after June 15, 2000. We do not currently hold any
derivative instruments nor do we engage in hedging activities. We adopted this
accounting standard as required effective January 1, 2001, and it did not have a
material impact on our consolidated financial position.


2. BALANCE SHEET DETAILS (IN THOUSANDS)

     Accounts receivable, net consist of the following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                 --------------------
                                                   2000        1999
                                                 --------    ---------
<S>                                              <C>         <C>
Trade accounts receivable .....................   $ 8,560    $ 4,546
Other receivables .............................       491        304
Less allowance for bad debt ...................    (1,142)      (572)
                                                  -------    -------
                                                  $ 7,909    $ 4,278
                                                  =======    =======
</TABLE>

     Furniture, equipment and software consist of the following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                 --------------------
                                                   2000        1999
                                                 --------    ---------
<S>                                              <C>         <C>
Equipment .....................................   $ 14,408    $  5,689
Software ......................................      5,129       2,122
Furniture .....................................      2,679         224
Leasehold improvements ........................      1,118          --
Less accumulated depreciation .................     (8,284)     (3,307)
                                                  --------    --------
                                                  $ 15,050    $  4,728
                                                  ========    ========
</TABLE>

     Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                 --------------------
                                                   2000        1999
                                                 --------    ---------
<S>                                              <C>         <C>
Developed technology-EPub .....................   $    900    $    900
Goodwill-Epub .................................     18,200      18,200
Goodwill-Dbits ................................      5,833       5,833
Goodwill-Revnet ...............................     39,405      39,405
Goodwill-Decisive .............................     38,863      39,428
Less accumulated amortization .................    (79,101)    (28,604)
                                                  --------    --------
                                                  $ 24,100    $ 75,162
                                                  ========    ========
</TABLE>

     Current portion of debt and capital lease obligations consist of the
following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                 --------------------
                                                   2000        1999
                                                 --------    ---------
<S>                                              <C>         <C>
    Note payable to bank ......................   $  872      $   --
    Obligation under capital leases ...........      719          25
                                                  ------      ------
                                                  $1,591      $   25
                                                  ======      ======
</TABLE>

     Long-term portion of debt and capital lease obligations consist of the
following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                 --------------------
                                                   2000        1999
                                                 --------    ---------
<S>                                              <C>         <C>
Note payable to bank ..........................   $2,031      $   --
Obligation under capital leases ...............       92          36
                                                  ------      ------
                                                  $2,123      $   36
                                                  ======      ======
</TABLE>


                                       30
<PAGE>

3. RELATED PARTY TRANSACTIONS

     Marketing and sales expense for the year ended December 31, 1999 included a
one-time charge of approximately $855,000 in compensation expense from
acceleration of stock options. This compensation expense relates to an
employment agreement with a former officer that included an option vesting
acceleration clause that was triggered upon MessageMedia obtaining certain sales
contracts and/or certain sales levels.

     Other long-term assets includes a note receivable from one of our officers.
On July 28, 2000, we entered into an agreement to loan $200,000 to one of our
current officers to be paid back to us at the end of two years at an annual
interest rate of 8%.

4. BUSINESS SEGMENTS

     Operating segments are components of an enterprise about which separate
financial information is available and regularly evaluated by the chief
operating decision makers of an enterprise. Under this definition, beginning in
the third quarter of 2000, we have operated under two segments: messaging and
related services, and software licenses and services. The factors used by
management to identify reportable segments are differences in products and
services and the management organization. Services included in the messaging and
related services segment are principally outsourced e-mail communication and
campaign management in a full service bureau model. Products and services
included in the software licenses and services segment include a software
product that is sold as both boxed software or as a hosted service. Separate
financial information by segment for total assets is not available and is not
evaluated by the chief operating decision makers of MessageMedia. We do not have
intersegment revenue, and the chief decision makers of MessageMedia evaluate
segment performance based on revenue.

The revenue by segment is as follows (in thousands):

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                    -----------------------------
                                                      2000      1999       1998
                                                    --------   -------   --------
<S>                                                  <C>       <C>       <C>
   Revenues:
    Messaging and related services ...............   $23,897   $ 8,214   $   425
    Software licenses and services ...............     9,751     1,807        --
    First Virtual Internet Payment System ........        --        --       863
                                                     -------   -------   -------
   Total revenues ................................   $33,648   $10,021   $ 1,288
                                                     =======   =======   =======
</TABLE>

5.  JOINT VENTURE

     On March 13, 2000, we entered into an agreement with @viso Limited
("@viso"), a strategic partnership between Vivendi and SOFTBANK Corp., to create
MessageMedia Europe B.V., a joint venture between MessageMedia and @viso. Under
terms of the joint venture agreement, MessageMedia owns 51% and @viso owns 49%
of the joint venture. The initial capitalization of the joint venture was funded
with $14.8 million during the second quarter. MessageMedia Europe B.V. is
consolidated into our financial statements. As part of this agreement, we
entered into a loan agreement to borrow 8.124 million Euros from @viso, which we
then immediately contributed to MessageMedia Europe B.V. The note has an annual
interest rate of 8%. The note and accumulated interest are due in one lump sum
on June 15, 2001. At December 31, 2000, the balance payable to @viso was
comprised of principal due on this loan of $7.6 million and interest payable of
$0.4 million, with the remainder being trade accounts payable due to @viso. For
the year ended December 31, 2000, MessageMedia Europe B.V. recorded revenues of
approximately $932,000 and a loss after minority interest of approximately $4.7
million. The December 31, 2000 consolidated balance sheet includes total assets
of $3.5 million for MessageMedia Europe B.V.

6. NOTES PAYABLE

     In connection with our acquisition of EPub in December 1998, we assumed a
note owed to a bank with an interest rate of the bank's prime rate plus 1%, and
monthly principal payments of $6,250, due through the note's maturity date of
June 2000. The note was secured by our business assets. As of December 31, 1999,
the note has been paid in full. In connection with the note, detachable warrants
were issued by EPub. (See Note 8.)

     On December 29, 2000, we entered into a loan agreement to borrow $3.0
million from a bank with an annual interest rate of 13.28%. The note is payable
in monthly principal and interest payments of $100,510 due through the note's
maturity date of November 20, 2003. The note is secured by all of our trade
receivables. Total annual payments due on the note for the years 2001, 2002, and
2003 are $1.2 million, $1.2 million, and $1.1 million, respectively.

     During 2000, we entered into the following letters of credit related to
facility operating leases: $664,000 on April 11, 2000, $413,000 on May 15, 2000,
$2.3 million on August 24, 2000, and $1.2 million on November 28, 2000. All of
these letters of credit have terms of one year and automatically renew annually
for the life of the respective operating leases that they secure.


                                       31
<PAGE>

7. COMMITMENTS

Leases

     We lease our office facilities and some of our office and computer
equipment under non-cancelable operating lease agreements. The facility leases
require us to pay standard common area maintenance fees and are subject to
certain minimum escalation provisions. Rent expense for all operating leases was
approximately $2.8 million, $885,000 and $636,000 for the years ended December
31, 2000, 1999, and 1998, respectively.

     We acquired capital lease obligations relating to office and computer
equipment when we acquired Decisive in August 1999 and entered into additional
capital leases during the year 2000. Cost and accumulated depreciation of
equipment under capital leases were $1.5 million and $233,000, respectively at
December 31, 2000.

     Annual future minimum lease payments for operating and capital leases as of
December 31, 2000, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              OPERATING LEASES        CAPITAL LEASES
                                                              ----------------        --------------
<S>                                                           <C>                     <C>
     2001 .....................................................    4,785                   770
     2002 .....................................................    4,629                    99
     2003 .....................................................    4,498                    12
     2004 .....................................................    4,495                    --
     2005 .....................................................    3,357                    --
     Thereafter ...............................................   10,229                    --
                                                                  ------                ------
Total minimum lease payments ..................................   31,993                   881
                                                                  ======                ------
Less amount representing interest .............................                            (70)
                                                                                        ------
Present value of future minimum lease payments ................                            811
Less current portion ..........................................                           (719)
                                                                                        ------
Long-term portion of obligations under capital leases .........                             92
                                                                                        ======
</TABLE>

8. STOCKHOLDERS' EQUITY

Preferred Stock

     On October 22, 1997, we completed a private placement of preferred stock
and received net proceeds of $4.9 million. Under the private placement
agreement, 1,000 shares of Series A redeemable convertible preferred stock were
issued at $5,000 per share. The Series A redeemable convertible preferred stock
was convertible into common stock at the option of the investors at a per share
conversion price equal to the lesser of $5.50 or 80% of the average closing bid
price of the common stock for the prior ten days.

     The Series A redeemable convertible preferred stock was redeemable for cash
if a holder proposed to convert its shares at a conversion price below $4.00 and
carried an annual dividend of 7% payable quarterly, in cash or shares of common
stock. The Series A preferred stockholders converted 345 shares into common
stock during 1998.

     In June 1998, we issued approximately 9.8 million shares of common stock to
SOFTBANK and 833,333 shares of common stock to E*Trade for approximate net
proceeds of $6.6 million. In addition, SOFTBANK purchased $5.8 million of our
outstanding debt and preferred stock, which were subsequently converted into
approximately 8.5 million shares of our common stock. The $5.8 million amount
includes a settlement to two of our stockholders who, on February 5, 1998 had
filed civil actions against us seeking to recover the principal and interest due
under unsecured lines of credit. The total amount of principal and interest paid
out as settlement was approximately $1.5 million. Also included in the
transaction was the purchase of the 655 remaining outstanding shares from the
Series A redeemable convertible preferred stock.

Warrants

     In connection with the sale of Series B preferred stock in December 1995 to
a financial institution, we issued warrants to purchase shares of Series A and
Series B preferred stock. In April 1996, the Series B preferred stockholder
partially exercised its warrant by purchasing 465,000 shares of Series B
preferred stock at $3.189 per share. As of December 31, 2000, no warrants to
purchase shares of Series A or Series B preferred stock remained outstanding. In
addition, the Series B preferred stockholder paid us $3,017,115 for warrants to
purchase 852,272 shares of Series A preferred stock and 475,734 shares of Series
B preferred stock at $0.01 per share. In March 1998, the Series B stockholder
exercised its warrant to purchase 852,272 shares of Series A preferred stock,
which was immediately converted into shares of our common stock. In December
1999, the warrant for 475,734 series B preferred shares was exercised, and
immediately converted into common stock.

      In connection with a consulting agreement, an incentive warrant to
purchase 300,000 shares of common stock at $5.63 per share was issued on
September 24, 1997 to a third party. The first 100,000 shares of common stock
can be exercised when the


                                       32
<PAGE>
third party produces $10 million of net sales through the use of technology and
services that we would provide. The second 100,000 shares of common stock can be
exercised when the third party produces $25 million of net sales through the use
of technology and services that we would provide and the third 100,000 shares of
common stock can be exercised when the third party produces $50 million of net
sales through the use of technology and services that we would provide. These
warrants expire on December 20, 2003. As of December 31, 2000 no sales have been
attributed to the third party's efforts.

     Under a consulting agreement, dated September 8, 1997, a warrant to
purchase 65,000 shares of common stock at $5.63 per share was granted to a third
party as payment for consulting services rendered. Under the terms of the
September 8, 1997 warrant agreement, 20,000 shares became exercisable upon
completion (as defined in the agreement) with the remaining 45,000 shares to be
exercisable when the third party delivers two catalog merchants to us who
execute agreements with us in regards to either licensing of VirtualPINS or
interactive messaging services. These warrants expire on December 30, 2002. On
September 29, 1997, the warrant to purchase 20,000 shares of our common stock
became exercisable and accordingly, we estimated the fair value of the warrant
using the Black-Scholes option pricing model. However, no value was allocated to
the warrant as the estimated fair value was nominal. This warrant expires on
December 30, 2002. In June 1998, the warrant to purchase 45,000 shares of our
common stock expired as the incentive terms of this portion of the agreement
were not met. On March 3, 1999, an additional warrant for 10,000 common shares
at $5.63 was granted to the third party and are exercisable through December
2002. We estimated the fair value of the warrant using the Black-Scholes option
pricing model with the following assumptions: risk-free interest rate of 5.86%,
volatility factor of 1.25, dividend yield of 0% and a weighted average expected
life of four years. However, no value was allocated to the warrants as the
estimated fair value was nominal.

     In connection with the sale of Series A redeemable convertible preferred
stock in October 1997, warrants to purchase up to 850,000 shares of common stock
at $5.75 per share were issued to the Series A preferred stockholders. These
warrants will expire on October 15, 2001. In June 1998, the original Series A
preferred stockholders were granted a reduction in the exercise price of these
warrants from $5.75 per share to $1.00 per share. The fair value of these
revised warrants is $1,080,000 and has been reflected as a dividend to the
Series A preferred stockholders. The fair value of these warrants was calculated
using the Black-Scholes option pricing model with the following assumptions:
risk-free interest rate of 4.0%, volatility factor of 0.75, dividend yield of 0%
and a weighted average expected life of 3 years. Such warrants carry
restrictions as to their exercisability. As of December 31, 2000, all of these
warrants, with the exception of 17,000, have been exercised.

     In connection with our acquisition of EPub in December 1998, we assumed a
warrant issued to a financial institution which was convertible into 25,564
shares of our common stock at an exercise price of $0.40 per share. This warrant
was exercised in February 1999.

     In connection with our acquisition of DBits in December 1998, we issued
warrants to purchase an aggregate of 500,000 shares of our common stock, of
which 250,000 may be exercised for $6.00 per share and 250,000 may be exercised
for $8.00 per share. These warrants are exercisable immediately with the $6.00
warrants expiring on May 11, 2001 and the $8.00 warrants expiring on May 11,
2002. We estimated the fair value of these warrants to be $350,000 using the
Black-Scholes option pricing model with the following assumptions: risk-free
interest rate of 4.0%, volatility factor of 0.75, dividend yield of 0% and a
weighted average expected life of 1.5-2.0 years. 40,340 of the warrants were
exercised on April 5, 1999, and 1,000 of the warrants were exercised on June 23,
1999.

Stock Option Plan

     Our 1994 Incentive and Non-Statutory Stock Option Plan (1994 Plan), under
which options to purchase 482,300 shares of common stock were granted, was
replaced with the 1995 Stock Plan (1995 Plan). Under the 1995 Plan, we are
authorized to issue up to 9,000,000 common shares to officers, employees,
directors and consultants who provide services to us. In 1999, we authorized the
1999 Non-Officer Stock Option Plan (1999 Plan) was authorized under which we can
issue up to 3,000,000 common shares to officers and employees. Options granted
under the 1995 and 1999 Plans generally vest over four years and are exercisable
for a period of up to ten years from the date of grant. Incentive and
non-qualified stock options are granted at prices that approximate the fair
value of the shares at the date of grant as determined by the board of
directors. The following table summarizes stock option activity:


                                       33
<PAGE>

<TABLE>
<CAPTION>


                                                                     WEIGHTED AVERAGE
                                                    SHARES            EXERCISE PRICE
                                                   ---------         ----------------
<S>                                                <C>               <C>
Balance at December 31, 1997 .................     3,268,093            $4.80
     Options granted .........................     4,145,919             1.87
     Options assumed in acquisitions .........       391,760             0.02
     Options exercised .......................      (659,637)            0.41
     Options canceled ........................    (2,021,348)            4.48
                                                  ----------

Balance at December 31, 1998 .................     5,124,787            $2.85
     Options granted .........................     6,329,644             9.86
     Options assumed in acquisitions .........     1,148,493             1.90
     Options exercised .......................    (1,700,049)            1.96
     Options canceled ........................    (1,444,273)            5.11
                                                  ----------

Balance at December 31, 1999 .................     9,458,602            $7.17
     Options granted .........................     6,029,887             2.80
     Options exercised .......................    (1,444,963)            2.88
     Options canceled ........................    (3,126,613)            8.54
                                                  ----------

Balance at December 31, 2000 .................    10,916,913            $4.22
                                                  ==========           ======
</TABLE>

     Pursuant to the terms of the December 22, 1995 Series B preferred stock
Purchase Agreement, on April 11, 1996, our board of directors granted options to
purchase 1,000,000 shares of common stock to officers, directors and key
employees of the Company at $6.30 per share. These options are fully vested and
to date, 425,000 shares have been exercised. In 1999, our board of directors
granted additional options to purchase 2,173,000 shares of common stock to
officers and directors at a weighted-average exercise price of $7.86 per share.
As of December 31, 2000, 811,906 of these options were vested and 100,000 have
been cancelled. All of these options were granted outside of our stock option
plans, and are included in the table above.

     On April 29, 1998, we offered all employees of record the opportunity to
re-price their option grants under the 1995 Stock Option Plan to the fair market
value of the stock on that date which was $0.94 per share. We cancelled
1,363,876 at a weighted-average exercise price of $4.75 and re-issued the same
number of options at $0.94.

     As of December 31, 2000, the 1995 and 1999 plans, as well as the options
assumed under the Revnet and Decisive acquisitions, include 1,915,994 options
that are exercisable. There are 1,611,405 options available for future grant
under the 1995 and 1999 Plans.

     Exercise prices and weighted average remaining contractual life for all
options outstanding as of December 31, 2000 are as follows:


<TABLE>
<CAPTION>
                 OPTIONS OUTSTANDING                                             OPTIONS EXERCISABLE
-------------------------------------------------------          ----------------------------------------------------
                                           WEIGHTED
                                            AVERAGE                                                       WEIGHTED
                                           REMAINING                WEIGHTED                              AVERAGE
RANGE OF EXERCISE         NUMBER          CONTRACTUAL                AVERAGE             NUMBER           EXERCISE
      PRICE             OUTSTANDING          LIFE                 EXERCISE PRICE       EXERCISABLE         PRICE
-----------------    -------------------- -------------          ------------------ ------------------ --------------
<S>                    <C>               <C>                     <C>                  <C>              <C>
  $ 0.01 -  0.32           49,466            7.17                    $ 0.06               10,993           $ 0.05
  $ 0.33 -  0.99        3,911,191            8.86                    $ 0.52              498,596           $ 0.90
  $ 1.00 -  5.00        1,963,372            8.67                    $ 3.72              337,772           $ 2.70
  $ 5.01 - 10.00        2,841,404            7.63                    $ 6.39            1,629,136           $ 6.47
  $10.01 - 15.00        2,021,938            8.55                    $11.85              782,738           $11.70
  $15.01 - 20.00          129,542            8.80                    $17.16               43,665           $17.05
                      -----------                                                     ----------
                       10,916,913                                                      3,302,900
                      ===========                                                     ==========
</TABLE>

     Prior to the EPub and Revnet acquisitions, these companies had granted
unvested options to some of their key employees at a per share value below the
then current fair market value of such shares. As a result, when we acquired
EPub and Revnet, we recorded deferred compensation expense for the difference
between the exercise price and the fair value of our common stock for these
unvested options. Deferred compensation expense amounted to $285,000, $431,000,
and $680,000 for the years ended December 31, 1998, 1999, and 2000.

     Pro forma information regarding net loss is required by SFAS 123, and has
been determined as if we had accounted for our employee stock options under the
fair value method of that Statement. The fair value for the 2000 options was
estimated at the date of grant, using the Black-Scholes option pricing model,
with the following assumptions: risk-free interest rate of 5.75%; dividend yield
of 0%; and a weighted-average expected life of the option of five years with a
volatility factor of 1.95. The fair


                                       34
<PAGE>

value for the 1999 options was estimated at the date of grant, using the
Black-Scholes option pricing model, with the following assumptions: risk-free
interest rate of 5.875%; dividend yield of 0%; and a weighted-average expected
life of the option of five years with a volatility factor of 1.25. The fair
value for the 1998 options was estimated at the date of grant, using the
Black-Scholes option pricing model, with the following assumptions: risk-free
interest rate of 5.0%; dividend yield of 0%; and a weighted-average expected
life of the option of five years with a volatility factor of .75.

     The weighted average fair values of the options granted during 2000, 1999,
and 1998 were $2.64, $9.80, and $2.17, respectively.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because our employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The effects of
applying Statement 123 for pro forma disclosure purposes are not likely to be
representative of the effects on pro forma net income (loss) in the future years
because they do not take into consideration pro forma compensation expense
related to grants made prior to 1995. Our pro forma information follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                 ------------------------------------------
                                                     2000           1999          1998
                                                 ------------   -------------  ------------
<S>                                              <C>            <C>            <C>
Pro forma net loss applicable to
common shares ................................   $  (100,249)   $   (59,179)   $   (16,513)
Pro forma net loss per common share,
basic and diluted ............................   $     (1.79)   $     (1.28)   $     (0.74)
</TABLE>

Employee Stock Purchase Plan

     In 1996, we adopted an Employee Stock Purchase Plan (the "ESPP"), whereby
employees, at their option, can purchase shares of our common stock. This is
done through a payroll deduction at the lower of 85% of the fair market value on
the first day of each ESPP offering period or the end of each period. The ESPP
has been designed to qualify as a noncompensatory plan under Section 423 of the
Internal Revenue Code. The ESPP expires at the earliest of December 31, 2006,
the date on which all shares available for issuance have been sold or the
consummation of a change in control transaction. We have reserved 500,000 shares
of common stock for issuance under the ESPP. At December 31, 2000 employees have
purchased 257,081 shares through the ESPP and 242,919 shares are available for
future purchases. Due to immateriality, the estimated fair value of employee's
purchase rights under the ESPP has not been included in the SFAS 123 pro forma
disclosure above.

Shares Reserved for Future Issuance

     As of December 31, 2000, we have reserved shares of common stock for future
issuance as follows:

<TABLE>
<S>                                                                                  <C>
 Stock options...............................................................        12,528,318
 Warrants....................................................................           805,660
 Employee stock purchase plan................................................           242,919
                                                                                     ----------
                                                                                     13,576,897
                                                                                     ==========
</TABLE>

9. RESTRUCTURE CHARGE

     In the fourth quarter of the year 2000, we recorded a charge of $7.0
million as a result of the decision to eliminate certain business development
efforts, including e-service, an online customer care solution, our wireless
messaging research product and our secure e-mail delivery product. These product
lines had not yet contributed to revenue, and a decision was made to reduce
operating expense and conserve cash in future periods. The eliminations and
reductions in manpower supporting these product lines resulted in the
elimination of 125 positions. All of these product lines were discontinued and
the positions were eliminated during December 2000, although severance payments
have been made throughout 2001. In addition to the cost of eliminating these
positions, the discontinuance of these development efforts resulted in the
recognition of restructuring charges for contractual obligations and software
investments incurred to support these product lines. Finally, this charge also
provided for a reduction in occupancy costs in Colorado as well as in our
Chicago and San Francisco sales offices. The $7.0 million charge included $1.5
million for severance cost, $1.1 million for terminations of contracts for
services and software planned to be included in the eventual product offerings,
$1 million for facility rent expense for the six months following the December
2000 business restructuring, $500,000 for the estimated differential between
sublease income and rent expense, $400,000 for broker fees associated with
subleases of facilities, $100,000 for incidental expenses of the subleasing
process, $900,000 for a write-off


                                       35
<PAGE>
of the book value of software purchased in conjunction with product lines which
were eliminated in the December 2000 business restructuring, $1.2 million for
the write-off of the remaining unamortized leasehold improvements in vacated
facilities and $300,000 for the write-off of undepreciated furniture and
fixtures within vacated facilities. These assets provided no further value to
our continuing operations.

     In the first quarter of 1999, we recorded a charge of $1.0 million as a
result of our decision to relocate our corporate headquarters from San Diego,
California to a new facility in Boulder, Colorado. This decision was made to
create efficiencies in our messaging services operations, reduce overhead by
centralizing our offices to one facility and eliminate duplication of efforts
from similar positions in the separate offices. The merger integration and
restructuring activity of MessageMedia, DBits and EPub included the elimination
of job responsibilities company wide, resulting in approximately $632,000 of
employee severance pay and other related expenses for 17 employees and,
approximately $393,000 in moving expenses and costs related to closing our
facility. No reversals occurred in 2000. As of December 31, 2000, all
termination and relocation costs have been incurred and offset against this
reserve.

     In the second quarter 1998, we recorded a restructuring charge of $812,000
as a result of our decision to focus our efforts on the messaging platform,
initiate efforts to cease operations of the FVIPS and better align our cost
structure with expected revenue projections. The restructuring charge included
the elimination of job responsibilities company wide, resulting in approximately
$545,000 of employee severance pay and other related expenses for 21 employees,
and approximately $267,000 related to relocating our corporate office and
termination fees for cancellation of contracts related to FVIPS of which we no
longer intended to make use. No reversals occurred in 2000. As of December 31,
2000, all termination and relocation costs have been incurred and offset against
this reserve.

    Under the 2000 restructure plan, we have made total payments, disposals and
reversals as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                          BALANCE AT
                                                THROUGH DECEMBER 31, 2000              DECEMBER 31, 2000
                                       --------------------------------------------  ----------------------
                                           CASH        NON-CASH         RESTRUCTURE  FUTURE CASH     TOTAL
                                       EXPENDITURES    CHARGES    TOTAL   REVERSAL   EXPENDITURES   CHARGES
                                       ------------    -------    ----- -----------  ------------   -------
<S>                                    <C>            <C>       <C>     <C>          <C>            <C>
Year 2000 Restructure Plan:
  Personnel reduction costs ............   $  441      $   --    $  441   $    --       $1,035      $1,476
  Contract termination costs ...........       23          --        23        --        1,149       1,172
  Impairment of assets .................       --       2,382     2,382        --           --       2,382
  Facility reduction costs .............       --          --        --        --        1,979       1,979
                                           ------      ------    ------   -------       ------      ------
     Total restructuring costs .........   $  464      $2,382    $2,846   $    --       $4,163      $7,009
                                           ======      ======    ======   =======       ======      ======
</TABLE>

    We estimate that all of the future cash expenditures related to this plan
will be made by December 31, 2001.

10.  INCOME TAXES

     For the years ended December 31, 2000, and 1999, there was no current or
deferred tax expense.

     The following table reconciles the federal statutory tax expense to the
effective income tax expense attributable to continuing operations:

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,
                                                                             --------------------
                                                                                2000       1999
                                                                             --------    --------
<S>                                                                          <C>         <C>
Variations from the federal statutory rate are as follows:
    Expected federal income tax expense at statutory rate are as
        Follows ..........................................................   $(27,243)   $(16,210)
    Effect of permanent differences ......................................     17,755       5,288
    State income tax expense net of federal benefit ......................     (1,145)     (1,319)
    Other ................................................................       (552)         --
    Valuation allowance ..................................................     11,185      12,241
                                                                             --------    --------
     Income tax expense ..................................................   $     --    $     --
                                                                             ========    ========
</TABLE>

     Significant components of our deferred tax assets as of December 31, 2000
and 1999 are shown below (in thousands). Valuation allowances of $44.4 million
and $30.4 million have been recognized for 2000 and 1999, respectively, to
offset the net deferred tax assets, as realization of such assets is uncertain.


                                       36
<PAGE>

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                        ---------------------
                                                          2000       1999
                                                        --------    --------
<S>                                                     <C>         <C>
Deferred tax assets:
    Net operating loss carryforwards ................   $ 36,983    $ 28,230
    R & D credit ....................................      2,478       1,329
    Restructuring expense ...........................      2,025          --
    Other ...........................................      2,874       1,135
                                                        --------    --------
         Total deferred tax assets ..................     44,360      30,694
Deferred tax liabilities:
    Acquired Intangibles ............................         --        (329)
                                                        --------    --------
         Total deferred tax liabilities .............         --        (329)
Valuation allowance for deferred tax assets .........    (44,360)    (30,365)
                                                        --------    --------
Net deferred tax assets .............................   $     --    $     --
                                                        ========    ========
</TABLE>

     At December 31, 2000, we had federal, California, and Colorado tax net
operating loss carryforwards of approximately $33.9 million, $1.8 million, and
$1.2 million. These federal, California and Colorado carryforwards will begin to
expire in 2010, 2000, and 2019, respectively, unless previously utilized. We
also have federal and California state research credit carryforwards of
approximately $1.6 million and $862,000, respectively, which will begin expiring
in 2010, unless previously utilized.

     Pursuant to Internal Revenue Code Sections 382 and 383, use of our net
operating losses and tax credit carryforwards will be limited because of a
cumulative change in ownership of more than 50% that occurred during 1999. Such
tax net operating losses and credit carryforwards have been reduced, including
the related deferred tax assets.

11.  ACQUISITIONS

Acquisition of EPub

         On December 9, 1998, we acquired all of the common stock and all
outstanding rights of the common stock of EPub in exchange for 5,582,676 shares
of our common stock and the assumption by us of options and warrants to acquire
up to approximately 417,324 additional shares of our common stock at a weighted
average exercise price of $0.04 per share. EPub's objective was to be the
leading provider of email message delivery services to businesses and
organizations on an "outsourced" basis. EPub's service offerings were intended
to make managing communications via email easy and accessible to companies with
a need to get their message to a larger audience, whether the message is in the
form of an advertisement, a newsletter, a picture, a software upgrade or just
information. The purchase price was calculated to be $20,763,300 based on the
fair market value of $3.38 per share of our common stock. The fair market value
per share was determined based on the average market price for several days
surrounding the date that both parties agreed on the terms of the acquisition.
The value assigned to options assumed was determined using the intrinsic value
of $3.34 per share resulting in a total value for options assumed of $1,393,862.
The purchase price included merger costs of $500,000. The transaction was
accounted for using the purchase method of accounting and as a result intangible
assets of $18,200,259 in goodwill and $900,000 of developed technology was
recorded related to this acquisition. The acquired goodwill and other developed
technology were amortized ratably from the date of acquisition over a period of
24 months. The results of operations of the acquired company were included in
our statement of operations from the date of acquisition forward.

 Acquisition of DBits

         On December 11, 1998, we acquired all equity interests, including
options, warrants or other purchase rights, if any, in DBits, in exchange for
1,305,320 shares of our common stock and warrants to purchase an additional
250,000 shares of our common stock at an exercise price of $6.00 per share and
an additional 250,000 shares of our common stock at $8.00 per share. DBits
developed an inbound e-mail management system that helps companies manage large
volumes of incoming e-mail inquiries. The purchase price was calculated to be
$5,577,635 based on the fair market value of $3.65 per share of our common
stock. The fair market value per share was determined based on the average
market price for several days surrounding the date that both parties agreed on
the terms of the acquisition. The value assigned to warrants was determined
using the Black-Scholes option pricing model with the following assumptions:
risk-free interest rate of 4.0%, volatility factor of 0.75, dividend yield of 0%
and weighted average expected life of 1.5-2 years. The purchase price included
merger costs of $300,000 and the value of warrants of $350,000. The transaction
was accounted for using the purchase method of accounting and as a result
intangible assets of $5,833,357 in goodwill was recorded related to this
acquisition. The acquired goodwill was amortized ratably from the date of
acquisition over a period of 24 months. The results of operations of the
acquired company were included in our statement of operations from the date of
acquisition forward.

Acquisition of Revnet

         On August 9, 1999, we acquired all of the common stock and all
outstanding rights to acquire shares of the common stock of Revnet Systems, Inc.
in exchange for 3,262,120 of our shares common stock and the assumption of
options to acquire up to approximately 681,675 additional shares of our common
stock, at a weighted average exercise price of $1.36. Revnet primarily marketed
and developed software and services for the management of Internet
communications. Revnet's products and services were designed to manage email
lists for firms involved in electronic commerce on the Internet, as well as for
associations,


                                       37
<PAGE>
universities and governments. The purchase price was calculated to be
$41,834,901 based on the fair market value of $10.64 per share of our common
stock. The fair market value per share was determined based on the average
market price for the ten days surrounding the date that both parties agreed on
the terms of the acquisition. The value assigned to options assumed was
determined using the intrinsic value of $9.28 per share resulting in a total
value for options assumed of $6,325,944. The purchase price also included
acquisition costs of $800,000. The transaction was accounted for using the
purchase method of accounting and as a result intangible assets of $39,404,967
in goodwill was recorded related to this acquisition. The acquired goodwill was
amortized ratably from the date of acquisition over a period of 24 months. The
results of operations of the acquired company were included in our statement of
operations from the date of acquisition forward.

 Acquisition of Decisive

         On August 16, 1999, we acquired all of the common stock and all
outstanding rights to acquire shares of the common stock of Decisive Technology
Corporation in exchange for 2,054,498 shares of our common stock and our
assumption of options to acquire up to approximately 466,818 additional shares
of our common stock, at a weighted average exercise price of $2.69. Decisive was
a leading online provider of customer intelligence solutions for Internet and
ecommerce businesses. The transaction was accounted for using the purchase
method of accounting and goodwill was recorded. The purchase price was
calculated to be $39,635,955 based on the fair market value of $16.03 per share
of our common stock. The fair market value per share was determined based on the
average market price for the ten days surrounding the date that both parties
agreed on the terms of the acquisition. The value assigned to options assumed
was determined using the intrinsic value of $13.34 per share resulting in a
total value for options assumed of $6,227,354. The purchase price also included
acquisition costs of $475,000. The transaction was accounted for using the
purchase method of accounting. The transaction was accounted for using the
purchase method of accounting and as a result intangible assets of $39,428,361
in goodwill was recorded related to this acquisition. The acquired goodwill was
amortized ratably from the date of acquisition over a period of 24 months. The
results of operations of the acquired company were included in our statement of
operations from the date of acquisition forward.

         On the date of the acquisition, we implemented a plan to relocate the
Decisive facility to Colorado. We established a reserve for approximately
$328,000 which included costs associated with employee relocation or termination
costs and other miscellaneous facility closure costs. As of December 31, 2000,
all termination and relocation costs have been incurred and offset against this
reserve.

         The accompanying statements of operations reflect the operating results
of Revnet, Decisive, Epub and Dbits since the date of their respective
acquisitions. The pro forma unaudited results of operations for the years ended
December 31, 1998 and 1999, assuming the purchase of the acquired companies had
occurred on January 1 of the respective years, are as follows:

<Table>
<Caption>
                                                                                  1998       1999
                                                                               ---------   ---------
                                                                                 (unaudited, in
                                                                                   thousands)
<S>                                                                            <C>         <C>
Net revenues ...............................................................   $  6,844    $ 13,635
Net loss attributed to common stockholders .................................   $(73,100)   $(73,831)
Net loss per share attributable to common stockholders,
  basic and diluted ........................................................   $  (2.14)   $  (1.49)
</Table>


                                       38
<PAGE>

12.  UNAUDITED QUARTERLY RESULTS (IN THOUSANDS, EXCEPT SHARE DATA)

     The following tables contain selected unaudited 2000 and 1999 consolidated
results of operations on a quarterly basis. The restated amounts were calculated
assuming the accounting change was made retroactively to prior periods in the
year 2000. (See note 1.)

<TABLE>
<CAPTION>
                                   FOURTH
                                  QUARTER
                                    ENDED        THIRD QUARTER ENDED   SECOND QUARTER ENDED     FIRST QUARTER ENDED
                                 DECEMBER 31,     SEPTEMBER 30, 2000       JUNE 30, 2000           MARCH 31, 2000
                                     2000         REPORTED RESTATED      REPORTED RESTATED       REPORTED RESTATED
                                 ------------   ---------- ----------  ---------- -----------  ---------- ----------
<S>                              <C>            <C>        <C>         <C>          <C>        <C>         <C>
Net revenues ................    $   8,014      $  10,231   $  10,278   $   8,476   $   8,403   $   7,043   $  6,953
Net loss
   before cumulative .........                                                                               (18,735)
   effect of change in
   accounting principle ......
Cumulative effect of
   change in accounting
   principle .................                                                                                  (192)
                                                                                                            --------
  Net loss ...................   $ (30,373)     $ (19,243)  $ (19,196)  $ (19,585)  $ (19,658)  $ (18,645)  $(18,927)
                                 =========      =========   =========   =========   =========   =========   ========

Amounts per common share:
Net loss before cumulative
   effect of  change in
   accounting principle ......                                                                              $   (.34)
Cumulative effect of change
   in accounting principle ...                                                                                    --
                                                                                                            --------
  Net loss ...................   $    (.54)     $    (.34)  $    (.34)  $    (.35)  $    (.35)  $    (.34)  $   (.34)
                                 =========      =========   =========   =========   =========   =========   ========
</TABLE>

<TABLE>
<CAPTION>
                                     FOURTH                 THIRD                 SECOND                 FIRST
                                 QUARTER ENDED          QUARTER ENDED         QUARTER ENDED          QUARTER ENDED
                               DECEMBER 31, 1999      SEPTEMBER 30, 1999      JUNE 30, 1999          MARCH 31, 1999
                               -----------------      ------------------      -------------          --------------
<S>                            <C>                     <C>                    <C>                     <C>
Net revenues ................       $  4,912              $  3,053               $  1,302                $    754
Net loss ....................       $(19,364)             $(13,749)              $ (6,152)               $ (7,004)
                                    ========              ========               ========                ========

Net loss per share, basic
   and diluted ...............      $   (.36)             $   (.29)              $   (.14)               $   (.17)
                                    ========              ========               ========                ========

</TABLE>

13.  401(k) PROFIT SHARING PLAN

     We maintain a 401(k) profit sharing plan which allows substantially all
employees to contribute up to 15% of their salary, subject to annual limitations
and requirements that we set. The Board of Directors may, at its sole
discretion, approve company contributions. To date, there have been no company
contributions under the plan.

14.  SUBSEQUENT EVENTS

     On February 23, 2001, we received additional funding from SOFTBANK Venture
Capital, Pequot Capital Management, Inc., and REBAR, LLC through a private
placement of 11,267,606 shares of our common stock for net proceeds to us of
$7.7 million, after issuance costs.


                                       39
<PAGE>

SCHEDULE II

                               MESSAGEMEDIA, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                         BALANCE AT           ADDITIONS           ADDITIONS
                                          BEGINNING        CHARGED TO COSTS       CHARGED TO                      BALANCE AT
DESCRIPTION                                OF YEAR           AND EXPENSES       OTHER ACCOUNTS    DEDUCTIONS     END OF YEAR
-----------                              -----------       ----------------    ----------------  ------------   -------------
<S>                                      <C>                 <C>               <C>                <C>             <C>
Allowance for Bad Debt
   Year ended December 31, 1999           $  --                $    462          $  153(2)          $   43(1)       $   572
   Year ended December 31, 2000           $ 572                $  2,100          $   --             $1,530(1)       $ 1,142
</TABLE>

(1)      Uncollectible accounts written off, net of recoveries.
(2)      Other accrued liability amount reclassified to allowance for bad debt.


                                       40
<PAGE>
                                  EXHIBIT INDEX


<Table>
<Caption>
EXHIBIT NO.       DESCRIPTION
-----------       -----------
<S>               <C>
2.1.1**           Agreement and Plan of Merger and Reorganization dated July 22,
                  1999 among the Registrant, Revnet Systems Inc. and MM1
                  Acquisition Corporation
2.1.2**           Agreement and Plan of Merger and Reorganization dated July 22,
                  1999 among the Registrant, Decisive Technology Corporation and
                  MM2 Acquisition Corporation
3.1*              Amended and Restated Certificate of Incorporation of the Company
3.2*              Bylaws of the Company
10.1*             Form of Indemnification Agreement entered into between Company
                  and its officers and directors.
10.2*             The Company's 1994 Incentive and Non-Statutory Stock Option Plan
10.3**            The Company's 1995 Stock Plan
10.4**            The Company's 1999 Stock Plan
10.5**            The Company's Employee Stock Purchase Plan
10.6*             Amended and Restated Shareholder Rights Agreement dated August
                  26, 1996 between the Company and First Data Corporation
10.7**            David Ehrenthal Employment Agreement
10.8**            A. Laurence Jones Employment Agreement
10.9**            Mary Beth Loesch Employment Agreement
10.10**           Elizabeth Wallace Employment Agreement
10.11**            Sue Morse Employment Agreement
10.12**           Stuart Obermann Employment Agreement
10.13**           Randy Bachmeyer Employment Agreement
10.14**           Kelly Wood Employment Agreement
10.15**           Denis Cagan Separation Agreement
23.1              Consent of Ernst & Young, LLP, Independent Auditors
24                Power of Attorney
</Table>

 * Previously filed as exhibits to our Registration Statement on Form S-1 (SEC
   File   333-14573).

** Previously filed as exhibits to our Form 10-K for the fiscal year ended
   December 31, 2001, failed on March 27, 2001.


                                       41