<PAGE>   1

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB


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

                 FOR THE QUARTERLY PERIOD ENDED OCTOBER 1, 2000

                                       OR

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

                FOR THE TRANSITION PERIOD FROM _______ TO _______


                         COMMISSION FILE NUMBER 0-23243
--------------------------------------------------------------------------------

                                POPMAIL.COM, INC.
        (Exact Name of Small Business Issuer as specified in Its Charter)

               MINNESOTA                                31-1487885
    (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
     Incorporation or Organization)

               1333 CORPORATE DRIVE, SUITE 350, IRVING, TX. 75038
                    (Address of Principal Executive Offices)

                                  972-550-5500
                (Issuer's Telephone Number, Including Area Code)



              (Former Name, Former Address and Former Fiscal Year,
                          If Changed Since Last Report)


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

As of November 1, 2000, there were 4,747,052 shares of common stock, $.01 par
value, outstanding.

Transitional Small Business Disclosure Format (check One): Yes [ ] No [X]


                                       1
<PAGE>   2



                           FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in the following pages constitute
"forward-looking statements" within the meaning of the Securities Act of 1933,
as amended and the Securities Exchange Act of 1934, as amended. Forward-looking
statements involve a number of risks and uncertainties, and, in addition to the
factors discussed in this Form 10-QSB, other factors that could cause actual
results to differ materially are the following: the economic conditions in the
new markets into which the Company expands and the possible uncertainties in the
customer base in these areas; competitive pressures from other providers of
Internet marketing services and other restaurant companies; ability to raise
additional capital required to support the Company's operations and enable the
Company to pursue its business plan; government regulation of the Internet;
business conditions, such as inflation or a recession, and growth in the general
economy; changes in monetary and fiscal policies, other risks identified from
time to time in the Company's SEC reports, registration statements and public
announcements.

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



                                       2

<PAGE>   3


                                POPMAIL.COM, INC.
                                FORM 10-QSB INDEX
                                 OCTOBER 1, 2000

                                                                            Page
                                                                            ----
PART I   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         Condensed Consolidated Balance Sheets -
               As of October 1, 2000 and January 2, 2000                       4

         Condensed Consolidated Statements of Operations -
               For the thirteen weeks and thirty-nine weeks ended
               October 1, 2000 and October 3, 1999                             5

         Condensed Consolidated Statements of Cash Flows -
               For the thirty-nine weeks ended October 1, 2000
               and October 3, 1999                                             6

         Notes to the Condensed Consolidated Financial Statements              7


ITEM 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations                  14



PART II  OTHER INFORMATION

ITEM 1.  Legal Proceedings                                                    28

ITEM 2.  Changes in Securities and Use of Proceeds                            28

ITEM 6.  Exhibits and Reports on Form 8-K                                     29

         Signatures                                                           30



                                       3
<PAGE>   4


                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                                POPMAIL.COM, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  October 1, 2000        January 2, 2000
                                                                                 ------------------     ------------------
       <S>                                                                       <C>                    <C>
                                     ASSETS
       CURRENT ASSETS
            Cash and equivalents                                                    $   322,514            $ 1,136,137
            Restricted cash                                                           2,000,000                     --
            Accounts receivable, net                                                    656,350                270,558
            Notes receivable                                                            315,000                     --
            Inventories                                                                  76,602                     --
            Other current assets                                                        813,097                450,015
                                                                                 ------------------     ------------------
                Total current assets                                                  4,183,563              1,856,710

       PROPERTY AND EQUIPMENT, net                                                    3,257,435              2,946,584
       ASSETS HELD FOR SALE, net                                                      3,000,000              7,549,644
       GOODWILL, net                                                                 74,796,430             36,277,346
       OTHER ASSETS                                                                   2,982,695                  7,312
                                                                                 ------------------     ------------------
                                                                                    $88,220,123           $ 48,637,596
                                                                                 ==================     ==================
                       LIABILITIES AND SHAREHOLDERS' EQUITY
       CURRENT LIABILITIES
            Notes payable                                                           $   343,952           $  6,037,518
            Convertible promissory notes payable                                      1,500,000              1,460,417
            Accounts payable                                                          2,041,444              1,329,222
            Due to affiliates                                                                --                120,000
            Accrued expenses                                                          3,362,600              1,111,204
                                                                                 ------------------     ------------------
                      Total current liabilities                                       7,247,996             10,058,361

       LONG-TERM OBLIGATIONS, less current maturities                                        --              1,321,643
                                                                                 ------------------     ------------------
                      Total liabilities                                               7,247,996             11,380,004
                                                                                 ------------------     ------------------

       COMMITMENTS AND CONTINGENCIES
       SHAREHOLDERS' EQUITY
            Common stock, $.01 par value, 100,000,000 shares authorized;
                 46,196,044 and 24,695,872 shares issued and outstanding                461,960                246,958
             Series C 8% convertible preferred stock                                         --                693,000
             Series D 8% convertible preferred stock                                         --              2,288,000
             Series E convertible preferred stock                                       386,366                350,000
             Series F preferred stock                                                48,640,477                     --
             Series G 10% convertible redeemable preferred stock                      6,000,000                     --
            Additional paid-in capital                                              110,470,734             74,901,160
            Less common stock subscribed and notes receivable
                  from affiliates                                                    (3,386,000)            (2,850,000)
            Accumulated deficit                                                     (81,601,410)           (38,371,526)
                                                                                 ------------------     ------------------
                  Total shareholders' equity                                         80,972,127             37,257,592
                                                                                 ------------------     ------------------
                                                                                    $88,220,123           $ 48,637,596
                                                                                 ==================     ==================
</TABLE>


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



                                       4

<PAGE>   5


                                POPMAIL.COM, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                      Thirteen weeks ended                      Thirty-nine weeks ended
                                              October 1, 2000     October 3, 1999         October 1, 2000     October 3, 1999
                                            ------------------- --------------------    ------------------- --------------------
<S>                                         <C>                 <C>                     <C>                 <C>
REVENUES
     Internet marketing services, net          $   1,008,831       $     2,910              $  2,194,792         $      2,910

COSTS AND EXPENSES:
     General, administrative & develop.            5,247,755         1,827,570                12,777,765            2,788,346
     Amortization of goodwill                      9,788,488           885,844                22,302,813              885,844
                                            ------------------- --------------------    ------------------- --------------------
               Total costs and expenses           15,036,243         2,713,414                35,080,578            3,674,190
                                            ------------------- --------------------    ------------------- --------------------

LOSS FROM OPERATIONS                             (14,027,412)       (2,710,504)              (32,885,786)          (3,671,280)

OTHER INCOME (EXPENSE)
     Interest expense                               (280,095)         (372,165)               (1,820,731)            (759,497)
     Interest income                                      --             1,567                    83,355                4,754
     Debt guarantee costs                                 --                --                  (155,000)                  --
     Financial advisory services                    (380,215)               --                (2,565,359)                  --
     Loss on sale of assets                               --                --                  (761,707)                  --
                                            ------------------- --------------------    ------------------- --------------------
                                                    (660,310)         (370,598)               (5,219,442)            (754,743)
                                            ------------------- --------------------    ----------------------------------------
NET LOSS FROM CONTINUING
OPERATIONS                                       (14,687,722)       (3,081,102)              (38,105,228)          (4,426,023)

DISCONTINUED OPERATIONS
     Loss from operations of discontinued
     restaurant division                            (188,256)          (88,674)                 (816,213)          (1,119,457)
     Loss on disposal of restaurant
     division including provision of
     $200,000 for operating losses during
     Phase-out period                             (4,058,443)               --                (4,058,443)                  --
                                            ------------------- --------------------    ------------------- --------------------
NET LOSS                                       $ (18,934,421)      $(3,169,776)             $(42,979,884)        $ (5,545,480)

PREFERRED STOCK DIVIDENDS
AND ACCRETION                                        150,000         3,146,232                   250,000            3,338,461
                                            ------------------- --------------------    ------------------- --------------------

LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS                            $ (19,084,421)      $(6,316,008)             $(43,229,884)        $ (8,883,941)
                                            =================== ====================    =================== ====================

BASIC AND DILUTED LOSS
PER COMMON SHARE:
     Continuing operations                  $          (0.34)      $     (0.25)             $      (1.03)        $      (0.46)
     Discontinued operations                           (0.10)            (0.01)                    (0.13)               (0.12)
                                            ------------------- --------------------    ------------------- --------------------
     Net loss                               $          (0.44)      $     (0.26)             $      (1.16)        $      (0.58)
                                            =================== ====================    =================== ====================

BASIC AND DILUTED NET LOSS
ATTRIBUTABLE TO COMMON
SHAREHOLDERS PER COMMON
SHARE                                          $       (0.45)      $     (0.51)             $      (1.16)        $      (0.93)
                                            =================== ====================    =================== ====================

BASIC AND DILUTED WEIGHTED
AVERAGE OUTSTANDING SHARES                        42,736,862        12,423,730                37,206,305            9,601,808
                                            =================== ====================    =================== ====================
</TABLE>


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



                                       5

<PAGE>   6


                                POPMAIL.COM, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   Thirty-nine weeks ended
                                                                           October 1, 2000         October 3, 1999
                                                                          ------------------      ------------------
       <S>                                                                <C>                     <C>
       OPERATING ACTIVITIES:
          Net cash used in operating activities                              (11,269,967)             (3,182,982)

       INVESTING ACTIVITIES:
          Purchases of property and equipment                                 (2,328,206)             (4,504,680)

       FINANCING ACTIVITIES:
          Proceeds from issuance of stock                                     10,603,252                      --
          Proceeds from issuance of preferred stock, net                       4,100,000               6,200,000
          Proceeds from exercise of options and warrants                       7,938,545                 262,420
          Proceeds from short-term notes payable                                      --               1,435,000
          Proceeds from long-term debt                                                --               1,000,000
          Proceeds from convertible notes payable                                     --               2,000,000
          Tenant allowance collected                                                  --               1,962,500
          Advances from shareholder                                                   --                (100,000)
          Cash restricted during the period                                   (2,000,000)                     --
          Payments on advances from shareholders and officers                   (120,000)                     --
          Payments on convertible notes payable                                 (500,000)                     --
          Payments on short-term notes payable                                (7,109,291)             (4,738,756)
          Payments on long-term debt                                            (127,956)               (127,938)
                                                                          ------------------      ------------------
                   Net cash provided by financing activities                  12,784,550               7,893,226
                                                                          ------------------      ------------------

       INCREASE (DECREASE) IN CASH EQUIVALENTS                                  (813,623)                205,564

       CASH AND EQUIVALENTS,
             Beginning of period                                               1,136,137                 106,247
                                                                          ------------------      ------------------

       CASH AND EQUIVALENTS, end of period                                   $   322,514              $  311,811

                                                                          ==================      ==================

       SUPPLEMENTAL DISCLOSURE OF CASH
              FLOW INFORMATION:
                Cash paid for interest                                       $   268,504              $  380,523
</TABLE>


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



                                       6

<PAGE>   7


                                POPMAIL.COM, INC.
                   CONDENSED NOTES TO THE FINANCIAL STATEMENTS
                                 OCTOBER 1, 2000
                                   (UNAUDITED)


NOTE A  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been
prepared by PopMail.com, inc. ("the Company" or "PopMail"), in accordance with
accounting principles generally accepted in the United States of America ("US
GAAP"), for interim financial information pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, they do not include all
of the information and footnotes required by US GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the thirteen weeks and thirty-nine weeks ended
October 1, 2000 are not necessarily indicative of the results that may be
expected for the year as a whole. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended January 2, 2000.

Net Loss Per Common Share

Basic and diluted net loss per common share is computed by dividing the net loss
by the weighted average number of common shares outstanding during the periods
presented. The impact of common stock equivalents has been excluded from the
computation of weighted average common shares outstanding, as the net effect
would be antidilutive.

Use of Estimates

Preparing financial statements in conformity with US GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Income Taxes

The Company accounts for income taxes using the liability method to recognize
deferred income tax assets and liabilities. Deferred income taxes are provided
for differences between the financial reporting and tax bases of the Company's
assets and liabilities at currently enacted tax rates.

As of October 1, 2000 and January 2, 2000, the Company's deferred taxes
consisted primarily of net operating loss carryforwards, pre-opening costs not
currently deductible and accelerated methods of depreciation. The Company has
recorded a full valuation allowance against the net deferred tax asset due to
the uncertainty of realizing the related benefits.

Restricted Cash

Restricted cash represents cash and certificates of deposit maturing within one
year that are restricted in use by the Company. As of October 1, 2000, the
restricted cash balance represents a deposit reserved to satisfy the Company's
obligation in connection with the acquisition of Fan Asylum. See Note H for
further discussion regarding Fan Asylum.

Other Assets

The Company has made investments in other entities through common stock swaps.
Since the investments have less than 20% ownership rights in the entities, the
Company has recorded these investments at cost in Other Assets on the balance
sheet.



                                       7



<PAGE>   8


NOTE B  -  NATURE OF THE BUSINESS

PopMail is an online fan club marketing company, connecting people with their
passions. PopMail accomplishes this by providing official fan clubs and fan club
services for recording artists, sports teams, and clients in the broadcast and
entertainment industry. These marketing services include access to preferred
tickets, merchandise, exclusive news, chat, discussion, permission marketing and
vanity web based email, official fan sites and access to discounted products
related to the artist, sports team and/or personality.

The Company had a working capital deficit of $3,064,433 at October 1, 2000, (net
of any assets held for sale) compared to working capital deficit of $8,696,477
on January 2, 2000, prior to any discontinued operation reclassifications. Cash
and equivalents were $322,514 at October 1, 2000, representing a decrease of
$813,623 from the cash and equivalents of $1,136,137 at January 2, 2000. Our
ability to continue our present operations and successfully implement our
expansion plans is contingent upon our ability to raise additional capital and
increase our revenues and ultimately attain and sustain profitable operations.
Without immediate additional financing, the cash generated from our current
operations will not be adequate to fund operations and service our indebtedness
during the remainder of 2000. There can be no assurance that additional
financing will be available on terms acceptable to the Company or on any terms
whatsoever. In the event we are unable to fund our operations and our business
plan, we will be unable to continue as a going concern.

PopMail consists of two divisions, an Internet marketing division and a
restaurant division.

Our Internet marketing division is in the business of connecting entertainment
and media brands with their fans through the use of e-mail and fan club sites.
The Internet division consists of three companies. PopMail Network, Inc.
("PopMail Network"), based in Irving, Texas, is a provider of permission and
vanity web based e-mail services to broadcast stations, professional sports
teams and other brand name clients in the media and entertainment industries.
Fan Asylum, Inc. ("Fan Asylum"), based in San Francisco, California, is a
provider of official online and offline fan club sites for recording artists in
the music industry. IZ.com, Inc. ("IZ"), based in Bellevue, Washington, is a
provider of digital publishing services, newsletters and technology for high-end
brands. See Note J for further discussion regarding IZ.

The restaurant division develops, owns and operates upscale casual restaurants
with multiple themed dining rooms. The Company has two "Cafe Odyssey"
restaurants, one at the Mall of America in Bloomington, Minnesota, which opened
in June 1998 and one at the Denver Pavilions, in Denver, Colorado, which opened
in March 1999. The accompanying unaudited condensed consolidated financial
statements have been prepared to reflect the restaurant division as a
discontinued operation. See Note C for further discussion regarding the
Company's announcement to divest its restaurant division.


NOTE C - DISCONTINUED OPERATIONS

Restaurant Management Agreement

On May 31, 2000, the Company entered into an agreement (the "Management Services
Agreement") with an officer of the Company (the "Manager") to manage
substantially all the operations of the Cafe Odyssey restaurant segment (the
"Management Services") under the auspices of an independent management company
(the "Management Company"). On May 31, 2000, the Manager resigned from the
Company to fulfill his obligation to the Management Company under the Management
Services Agreement. In exchange for the Management Services, the Company agreed
to pay the Management Company approximately $452,000 per year for the Management
Services. On July 1, 2000, a second officer of the Company resigned and became
employed by the Management Company, at which point the annual Management
Services fee increased to $675,000. The term of the Management Services
Agreement is three years, but may be terminated during the term with 30 days
advance notice. If terminated by the Company without cause prior to the second
anniversary date of the Management Services Agreement, the Company is obligated
to pay the Management Company (a) $1,474 per day for each day remaining in the
first year of the term and (b) $1,063 per day for each day remaining in the
second year of the term.

Concurrent with the execution of the Management Services Agreement, the Company
entered into a license agreement granting the Management Company certain
development and intellectual property rights associated with



                                       8
<PAGE>   9


the Cafe Odyssey restaurants (the "License Agreement"). The Company granted the
Management Company the right to develop up to four more Cafe Odyssey restaurants
and the right to develop an unlimited number of additional Cafe Odyssey
restaurants with the Company's approval, which shall not be unreasonably
withheld (the "Development Rights"). In conjunction with the Development Rights,
the Company agreed to (a) guarantee the leases for the first four Cafe Odyssey
restaurants developed by the Management Company, (b) loan the Management Company
up to $500,000 for the development of a new Cafe Odyssey restaurant located at a
specific location defined in the License Agreement (the "New Location"), and (c)
pledge the cash flows of the two Company owned Cafe Odyssey restaurants to
secure up to $1.3 million in Management Company loans drawn to develop the New
Location. The Company also granted the Management Company a perpetual,
nonexclusive right to all intellectual property owned by the Company associated
with the Cafe Odyssey restaurants.

In September 2000, the Company developed a formal plan for the divestiture of
the restaurant division and has executed a letter of intent to sell the net
assets to the Management Company's executive team. A definitive purchase
agreement has not yet been executed. The Company has made an estimate of the
realizable net value, should a sale occur, of approximately $3 million.

Pursuant to Accounting Principles Board opinion ("APB") No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," the accompanying unaudited condensed consolidated financial
statements have been reclassified to reflect the proposed sale of the restaurant
division. The net assets of the restaurant division have been reported as Net
Assets Held for Sale; the net operating results of the restaurant division have
been reported as Loss from operations of discontinued restaurant division; and
an estimated loss was recorded in the current period based on the Company's best
estimate of the amount expected to be realized on the sale of the division,
including a provision for an estimated loss from discontinued operations during
the phase-out period.

Summarized financial information for the discontinued operations are as follows:


<TABLE>
<S>                                   <C>                                <C>
                                      At October 1, 2000                 At January 2, 2000
Current Assets                        $        97,013                    $        150,385
Property and Equipment, net                11,017,513                          11,920,218
Other Assets                                  306,887                             336,809
                                      -----------------                  -----------------
Total Assets                          $    11,421,413                    $     12,407,412

Current Liabilities                   $       692,550                    $        645,211
Long-Term Liabilities                       3,870,420                           4,212,557
                                      -----------------                  -----------------
Total Liabilities                     $     4,562,970                    $      4,857,768
                                      -----------------                  -----------------

Net Assets Held for Sale              $     6,858,443                    $      7,549,644
                                      -----------------                  -----------------
Write down of Assets to
realizable value                      $     3,858,443                    $             --
                                      -----------------                  -----------------
</TABLE>

<TABLE>
<S>                                        <C>                 <C>
--------------------------------------------------------------------------------
For the thirteen weeks ended                October 1, 2000    October 3, 1999
--------------------------------------------------------------------------------
Restaurant Revenues                          $   2,637,747      $   3,545,782
Total Restaurant Expenses                        2,826,003          3,634,456
                                           ---------------      -------------

Loss from Discontinued Operations            $    (188,256)     $     (88,674)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
For the thirty-nine weeks ended             October 1, 2000    October 3, 1999
--------------------------------------------------------------------------------
Restaurant Revenues                          $   7,439,508      $   9,439,437
Total Restaurant Expenses                        8,255,721         10,558,894
                                           ---------------      -------------
Loss from Discontinued Operations            $    (816,213)     $  (1,119,457)
--------------------------------------------------------------------------------
</TABLE>



                                       9

<PAGE>   10


NOTE D  -  REVERSE STOCK SPLIT

In September 2000, the Company received a notice from The Nasdaq Stock Market
indicating that the Company's common stock had failed to maintain a minimum bid
price greater than or equal to $1.00 over the preceding thirty consecutive
trading days as required under Marketplace Rule 4310(c)(4). Should the Company's
common stock fail to achieve and maintain a bid price equal to or greater than
$1.00 for a minimum of ten consecutive trading days anytime before December 12,
2000, the Company's common stock will be delisted from the Nasdaq SmallCap
Market. On October 12, 2000, the Company implemented a 10-for-1 reverse stock
split. As of November 1, 2000, the Company had 4,747,052 post-split shares of
common stock, $.01 par value, outstanding. Unless otherwise noted, all
references within this 10-QSB refer to the Company's pre-split common stock
numbers.


NOTE E  -  NOTES PAYABLE

In July 2000, the Company paid the remaining $1,000,000 balance due on a
$3,000,000 revolving line of credit with a financial institution collateralized
by a leasehold mortgage, security agreement and assignment of rents and income
of the Company's Cincinnati restaurant. The Company also converted the remaining
balance of a senior convertible promissory note, $1,003,334, plus accrued
interest of $21,307, into 1,024,642 shares of the Company's common stock.


NOTE F  -  CONVERTIBLE PROMISSORY NOTE PAYABLE

The Company executed a senior convertible note for $2,000,000 in August 1999.
The note had an original maturity date of August 2000, and the Company received
an extension until October 30, 2000, by making a partial payment of $500,000.
The Company has received a letter of intent from the lender with an offer to
re-negotiate the note payable. The new terms would allow for monthly principal
and interest payments of $100,000 begin January 1, 2001 and continuing through
May 2002 at an interest rate of 14%. Under the proposed letter of intent,
approximately $35,000 of interest would accrued in the fourth quarter of 2000
and the future maturities would be $1,031,000 and 469,000 for years 2001 and
2002.


NOTE G  -  CONTINGENCIES

The Company is involved in various legal actions rising in the ordinary course
of business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company's financial
position or the results of its operations.


NOTE H  -  SHAREHOLDERS' EQUITY

Preferred Stock

Series C - In July 1999, the Company issued 2,000 shares of Series C 8%
convertible preferred stock with a stated



                                       10

<PAGE>   11


value of $1,000 per share in a private placement. In addition, the Company
issued warrants for the purchase of 300,000 shares of common stock at $3.00 per
share to the investor. The Series C shares were convertible into the Company's
common stock at a price equal to 65% of the market value at the time of
conversion. During the quarter ended July 2, 2000, the remaining 30 shares of
Series C were converted into 19,032 shares of common stock.

Series D - In August 1999, the Company issued 2,200 shares of Series D 8%
convertible preferred stock with a stated value of $1,000 per share in a private
placement. In addition, the Company issued warrants for the purchase of 300,000
shares of common stock at $3.00 per share to the investor. The Series D shares
were convertible into the Company's common stock at a price equal to 65% of the
market value at the time of conversion. During the quarter ended April 2, 2000,
all 2,200 shares of Series D were converted into 965,647 shares of common stock.

Series E - In October 1999, the Company began issuing shares of Series E
convertible preferred stock with a stated value of $2.00 per share in a private
placement. The Company has completed its issuance and has issued a total of
225,000 Series E shares. For each Series E share issued, a warrant was also
issued for the purchase of a share of common stock at $3.00 per share. Each
Series E share is convertible into one share of common stock by dividing $2.00
by the lesser of (i) $2.00, or (ii) 70 percent of the average market price per
share of our common stock for the ten days preceding the filing of a
registration statement covering the resale of the shares issuable upon
conversion of the Series E Preferred Shares. Series E shares are not entitled to
dividends. During the quarter ended October 1, 2000, 31,817 shares of Series E
were converted into 125,000 shares of common stock.

Series F - In connection with the IZ.com merger in February 2000, 287,408 shares
of Series F convertible preferred stock were issued to the former stockholders
of IZ.com, with an additional 130,508 shares issuable upon the exercise of
IZ.com options assumed by PopMail. The Series F shares are convertible into
shares of the Company's common stock at a rate of 25.66 shares for each share of
Series F preferred stock. The Series F preferred stock (including shares
issuable upon exercise of IZ.com options) will convert into approximately
10,725,000 shares of the Company's common stock and carries a liquidation
preference of $28 million until the Company's market capitalization reaches $100
million or the Series F shareholders convert their shares to common stock.

Series G - In May 2000, the Company raised gross proceeds of $4 million from the
private placement of Series G 10% convertible preferred stock with an aggregate
stated value of $6 million. The purchaser of the Series G stock also received a
warrant to purchase up to 500,000 shares of our common stock at an exercise
price of $2.51 per share for no additional consideration. The Series G stock may
not be converted before October 9, 2000. From October 10, 2000 to November 9,
2000, the conversion price will be equal to 97% of the adjusted market price of
the common stock; from November 10, 2000 to January 7, 2001 the conversion price
will be equal to 94% of the adjusted market price of the common stock; after
January 8, 2001, the conversion price will be equal to 91% of the adjusted
market price of the common stock; and if the common stock is delisted from
Nasdaq, the conversion price will be equal to 75% of the adjusted market price
of the common stock. The number of shares of common stock issuable upon
conversion of the Series G stock is limited to approximately 7.2 million shares.
The Company will redeem for cash, at 105 percent of stated value, any Series G
stock that is not convertible into shares of common stock as a result of the
foregoing limitation. As of October 1, 2000, no Series G have been converted.

Private Placements

During the quarter ended April 2, 2000, the Company completed a private
placement offering of 2,350,000 units priced at $1.00 per unit. Each unit
consisted of one share of the Company's common stock and one five-year warrant
to purchase one share of the Company's common stock with an exercise price of
$2.00.

Also during the quarter ended April 2, 2000, the Company completed a second
private placement offering of 2,666,667 units priced at $2.25 per unit. Each
unit consisted of one share of the Company's common stock and one five-year
warrant to purchase one share of the Company's common stock with an exercise
price of $3.00.

The proceeds from these private placements were used to repay the Company's
obligations to affiliates and all but $1,000,000 of the Company's $6,037,518
notes payable outstanding at January 2, 2000. Such proceeds were also used to
fund the continuing operating needs of the Company.



                                       11

<PAGE>   12


During the quarter ended July 2, 2000, the Company completed a private placement
offering of 1,000,000 shares of common stock at a purchase price of $3.00 per
share to private investors, resulting in net proceeds to the Company of
approximately $2.7 million. At the time of the closing, the investors received
(a) five-year warrants to purchase 300,000 shares of common stock at an exercise
price of $1.00 per share and (b) warrants to purchase additional shares of
common stock (the Adjustable Warrants) at a nominal exercise price
(one-thousandth of a cent per share). The Adjustable Warrants are intended to
allow the investors to receive additional shares of common stock in future
periods to bring the effective price per share of the investment to a percentage
of the market value of the common stock on the date of adjustment. In general,
the Adjustable Warrants (a) become exercisable during certain periods beginning
October, 2000, (b) are exercisable only if the Company's common stock is below
$4.00 per share during the exercise period, (c) and are issuable in an amount
sufficient to adjust the effective purchase price for the investment to a level
equal to 75% of the average market price during the period.

Related Party Transaction

In April 2000, the Company entered into a promissory note receivable of $245,000
with a partnership controlled by a significant shareholder, director and
executive officer of the Company. The principal plus interest of 5.74% is due to
the Company in March 2002. The Partnership has pledged 122,500 shares of the
Company's common stock as security for the note. Proceeds of this note were used
to purchase additional shares of the Company's stock issued in connection with
the ROI acquisition. Accordingly, this note is classified as a reduction of
shareholders' equity in the accompanying financial statements.

On August 24, 2000, the Company purchased a $240,000 demand promissory note, the
maker of whom is a significant shareholder, director and executive officer from
an unaffiliated party, in exchange for 240,000 shares of the Company's common
stock. The demand promissory note, dated February 14, 2000, bears an interest
rate of 6.21% per year, with principal and accrued interest payable the earlier
of (1) the third anniversary of the date of the note, or (2) within 30 days of
written demand for repayment by the lender.

Re-negotiation of Fan Asylum Acquisition

The Company re-negotiated some of the terms pertaining to its acquisition of Fan
Asylum. On June 14, 2000, the Company purchased 100% of the common stock of Fan
Asylum from its sole shareholder ("the Seller") in exchange for up to 3.6
million shares of the Company's common stock ("the Purchase Price Shares"),
valued at $9,000,000 per the agreement, subject to adjustments based on certain
earn out and reset provisions. The Purchase Price Shares were divided into
800,000 fully vested initial shares and 2.8 million earn-out shares. At closing,
the initial shares were delivered into an escrow account for the possible use to
satisfy any indemnification obligations of the Seller. Under the terms of the
acquisition, the earn-out shares were to vest with the Seller according to the
number of artists with which Fan Asylum executes a fan club management agreement
prior to July 14, 2001. Also, the initial shares are subject to a put right
pursuant to which Seller has a one-time right to "put" the initial shares to the
Company during the period between January 2, 2001 and January 31, 2001 at a
price per share equal to the greater of $1.0625, or (ii) the average closing
price of the Company's common stock over the five business days prior to the
notice of exercise of the put. Pursuant to the terms of the acquisition, the
Company has secured its ability to fulfill the put obligation with a $2 million
cash deposit, which is recorded as restricted cash on the accompanying October
1, 2000 balance sheet.

In September 2000, the Company renegotiated the terms of the Fan Asylum
acquisition and agreed to (i) accelerate the time period in which the Seller
could put the initial shares to the Company, (ii) remove the earn-out provisions
as a condition of Seller receiving the earn-out shares, and (iii) immediately
retire a $200,000 debt obligation that was assumed in conjunction with the Fan
Asylum acquisition. In consideration of the forgoing, the Seller agreed to
complete a $400,000 private common stock placement with the Company at $0.46 per
share, resulting in net proceeds to the Company, in October 2000, of
approximately $186,000 after the aforementioned $200,000 retirement of debt was
completed. As a result of the release of the Seller from the earn-out
provisions, the Company's $7 million earn-out liability was released and is
accounted for as additional paid in capital in the accompanying balance sheet as
of October 1, 2000.



                                       12

<PAGE>   13


In conjunction with the Fan Asylum acquisition, the Company had also originally
agreed to grant up to 4 million options to purchase common stock (the "Artist
Options") to the music artists with which Fan Asylum executes fan club
agreements subsequent to June 14, 2000. With the agreement to accelerate the put
of the initial shares, the Company and the Seller have agreed to reduce the
Artist Options from 4 million options down to 500,000 options (before the
10-for-1 reverse stock split). As of October 1, 2000, no Artist Options have
been issued. The Company expects to grant most if not all of the Artist Options
over the next 8 months.


NOTE I  -  BUSINESS SEGMENTS

The Company operates in two reportable segments, Internet marketing services and
restaurant operations. The Internet marketing services segment began in the
third quarter of 1999. Beginning in the third quarter of 2000, the Company's
restaurant operations have been reported as discontinued operations. See Note C
for further discussion of the restaurant segment.


NOTE J  -  SUBSEQUENT EVENTS

IZ.com, Inc.

On October 31, 2000, PopMail announced its intent to explore several divestiture
options for its digital publishing company IZ.com. The Company stated that
IZ.com does not fit its business model and that it will no longer support
business opportunities that are still in development. The Company will be
considering all offers including an offer from the current management team of
IZ.com. Providing suitable terms are negotiated, the Company anticipates it will
accelerate amortization of all remaining goodwill related to IZ.com during the
fourth quarter of fiscal 2000.

Secured Promissory Note

On October 6, 2000, the Company entered into a secured promissory note payable
for $600,000. The Company received net proceeds of $450,000 after discount and
finders fees. The note is payable within 30 days and is collateralized by
specific computer equipment located in Dallas, Texas. In connection with the
loan the Company issued a 200,000 share five-year warrant with an exercise price
of $0.375 to the lender. As of November 13, 2000, the Company is in payment
default and may be required to pay an additional fee of $60,000, plus $3,000 for
each complete day thereafter commencing 10 days after the default. The Company
is re-negotiating the terms of this note, and no assurance can be given that any
reductions will be attained.



                                       13

<PAGE>   14


ITEM 2.
                                POPMAIL.COM, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The following management's discussion and analysis of financial condition and
results of operations should be read in connection with the accompanying
unaudited condensed consolidated financial statements and related notes thereto
included elsewhere in this report, and the audited financial statements and
notes thereto included in the Company's Form 10-KSB for the fiscal year ended
January 2, 2000. (All share numbers are pre-split values and do not take into
account the 10-for-1 reverse stock split.)


OVERVIEW

PopMail.com, inc. ("the Company" or "PopMail") is an online fan club marketing
company, connecting people with their passions. PopMail accomplishes this by
providing official fan clubs and fan club services for recording artists, sports
teams, and clients in the broadcast and entertainment industry. These marketing
services include access to preferred tickets, merchandise, exclusive news, chat,
discussion, permission marketing and vanity web based email, official fan sites
and access to discounted products related to the artist, sport team and/or
personality.

PopMail consists of two divisions, the Internet marketing services division and
the restaurant division.

Our Internet division is in the business of connecting entertainment and media
brands with their fans through the use of e-mail and fan club sites. The
Internet division consists of three companies: PopMail Network, Inc. ("PopMail
Network"), based in Irving, Texas, is a provider of permission and vanity web
based e-mail services to broadcast stations, professional sports teams and other
brand name clients in the media and entertainment industries. Fan Asylum, Inc.
("Fan Asylum"), based in San Francisco, California, is a provider of official
online and offline fan club sites for recording artists in the music industry.
IZ.com, Inc. ("IZ"), based in Bellevue, Washington, is a provider of digital
publishing services, newsletters and technology for high-end brands. See the
accompanying notes to the condensed consolidated financial statements for
further discussion regarding the Company's announcement to divest IZ.com.

The restaurant division develops, owns and operates upscale casual restaurants
with multiple themed dining rooms. The Company has two "Cafe Odyssey"
restaurants, one at the Mall of America in Bloomington, Minnesota, which opened
in June 1998 and one at the Denver Pavilions, in Denver, Colorado, which opened
in March 1999. See the accompanying notes to the condensed consolidated
financial statements for further discussion regarding the Company's announcement
to divest its restaurant division and the classification of the restaurant
division as a discontinued operation in the accompanying financial statements.

The Company closed its first restaurant operation, which was located in
Cincinnati, Ohio, in August 1999. The Company finalized the sale of this
property during the second quarter of 2000. The Company continues to have some
associated expenses for this location in 2000 and such expenses are recorded
with all restaurant expenses as discontinued operations.

Management's primary focus is to place all resources behind its fan club
marketing business, consolidate its Internet platforms across the business and
develop its fan club marketing business by exploring additional revenue sources
and complementary services through marketing initiatives, partnerships and joint
ventures. The Company targets four main vertical markets: music, sports,
broadcast and entertainment. The Company is exploring other markets that are
conducive to fan club marketing. The Company will continue to look for and
explore business acquisitions for the Internet marketing division. However, no
assurance can be given that other partnerships or acquisitions will be completed
and or desired results achieved.

Future revenue and profits, if any, will depend upon various factors, including
the rapidly changing marketing and e-commerce community of the Internet and
general economic conditions. Currently, the Company's primary source of



                                       14
<PAGE>   15


revenue results from preferred ticket and merchandise sales through Fan Asylum
and annual license and hosting fees through its email division in Irving, Texas.
There can be no assurances the Company will successfully implement its expansion
plans of the Internet marketing services, in which case, it will continue to be
dependent on debt and equity financing alternatives. The Company also faces all
of the risks, expenses and difficulties frequently encountered in connection
with the expansion and development of a new and expanding business. With the
growth of the Internet marketing services division, the Company will continue to
hire senior management to operate that division. There can be no assurance of
the Company's capacity to achieve and sustain profitable operations, and without
additional financing (of which there can be no assurance), the Company may not
have sufficient funds to support its operations, retire its indebtedness in the
ordinary course of business and pursue its business plan.

The Company has adopted a 52-53-week year ending on the Sunday nearest December
31 of each year.


RESULTS OF OPERATIONS FOR THE THIRTEEN WEEKS AND THIRTY-NINE WEEKS ENDED
OCTOBER 1, 2000 AND OCTOBER 3, 1999

Net Revenues

Net revenues for the Internet marketing division, which was launched with the
Company's first acquisition on August 19, 1999, were $1,008,831 and $2,910 for
the thirteen weeks ended October 1, 2000 and October 3, 1999. This represents
sales generated primarily by set-up, hosting, and license fees of PopMail
Network, subscription, ticket and retail sales of Fan Asylum, and outsourced
publishing fees of IZ.com. The Company's sales for the Internet marketing
division for the thirty-nine weeks ended October 1, 2000 and October 3, 1999
were $2,194,792 and $2,910.

Our ability to continue our present operations and successfully implement our
expansion plans is contingent upon our ability to increase our revenues and
ultimately attain and sustain profitable operations. Without additional
financing, the cash generated from our current operations will not be adequate
to fund operations and service our indebtedness during 2000 and 2001.


Costs and Expenses

The Company had general, administrative and development expenses for the
thirteen weeks ended October 1, 2000, of $5,247,755 compared to $1,827,570 for
the thirteen weeks ended October 3, 1999, an increase of $3,420,185. The
Company's general, administrative and development expenses for the thirty-nine
weeks ended October 1, 2000, were $12,777,765 compared to $2,788,346 for the
thirty-nine weeks ended October 3, 1999, an increase of $9,989,419. These
increases reflect the results of the acquisitions of popmail.com, inc, ROI
Interactive, LLC, IZ.com and Fan Asylum, and the related additions of the sales,
publishing and development expenses related to those operations. The Company has
had to address the numerous executive and administrative staffing requirements
from its mergers and acquisitions, shareowner relationships and development
costs associated with the build-out of the Internet marketing software. The
Company will be seeking additional senior management personnel as well as
support staff, which will also have an associated impact on future earnings. The
Company expects to continue to incur operating losses throughout 2000.

Goodwill amortization expense for the thirteen weeks ended October 1, 2000, was
$9,788,488 compared to $885,844 for the thirteen weeks ended October 3, 1999, an
increase of $8,902,644. Goodwill amortization expense for the thirty-nine weeks
ended October 1, 2000, was $22,302,813 compared to $885,844 for the thirty-nine
weeks ended October 3, 1999, an increase of $21,416,969. This represents the
excess of the purchase price and related costs over the fair value of the net
assets the Company acquired through its mergers and acquisitions. The Company
amortizes goodwill on a straight-line basis over a three-year period.

The Company's other income and expense consists primarily of interest expense
and financial advisory services. The interest expense for thirteen weeks ended
October 1, 2000 was $280,095 as compared to



                                       15

<PAGE>   16


$372,165 for thirteen weeks ended October 3, 1999, a decrease of $92,070. The
interest expense for the thirty-nine weeks ended October 1, 2000 amounted to
$1,820,731 compared to $759,497 for the thirty-nine weeks ended October 3, 1999,
an increase of $1,061,234. The increase for the thirty-nine week period ended
October 1, 2000 over the complementary period in 1999 relates primarily to the
increased levels of debt outstanding during 2000 and the amortization of
financing fees capitalized in raising debt. Of the $280,095 of interest expense
reported for the thirteen weeks ended October 1, 2000 and the $1,820,731 of
interest expense reported for the thirty-nine week period ended October 1, 2000,
$58,176 and $268,504, respectively, was paid in cash. The Company's continuing
business focus is to concentrate on only those portions of its business that
generate positive cash flow.

The Company's financial advisory services are costs associated with services
provided by third party financial advisors for the thirteen and thirty-nine
weeks ended October 1, 2000, the Company recorded $380,215 and $2,565,359, of
financial advisory service fees. These costs were paid with cash and through the
issuance of new common stock and warrants.

The loss on the sale of assets of $761,707 recorded during the thirty-nine weeks
ended October 1, 2000 represents the loss on the sale of the assets of its
Cincinnati, Ohio restaurant during the second quarter.


Liquidity and Capital Resources

The Company had a working capital deficit of $3,064,433 at October 1, 2000, (net
of any assets held for sale) compared to working capital deficit of $8,696,477
on January 2, 2000, prior to any discontinued operation reclassifications. Cash
and equivalents were $322,514 at October 1, 2000, representing a decrease of
$813,623 from the cash and equivalents of $1,136,137 at January 2, 2000. Our
ability to continue our present operations and successfully implement our
expansion plans is contingent upon our ability to raise additional capital and
increase our revenues and ultimately attain and sustain profitable operations.
Without immediate additional financing, the cash generated from our current
operations will not be adequate to fund operations and service our indebtedness
during the remainder of 2000. There can be no assurance that additional
financing will be available on terms acceptable to the Company or on any terms
whatsoever. In the event we are unable to fund our operations and our business
plan, we will be unable to continue as a going concern.

During the twenty-six week period ended July 2, 2000, the Company completed four
private placements of equity instruments resulting in cash proceeds to the
Company of approximately $10,600,000. The proceeds from these private placements
were primarily used to (a) pay various acquisition related costs, including
amounts owed to affiliates, of approximately $2,500,000, (b) repay approximately
$5,000,000 of notes payable outstanding at January 2, 2000, (c) invest
approximately $2,500,000 in hardware and software related infrastructure, and
(d) fund the continuing operating needs of the Company.

During the quarter ended October 1, 2000, the Company completed the following
financial arrangements:

In July 2000, the Company completed a factoring agreement, in which specific
accounts receivables were assigned to an investor. The Company assigned the
principal sum of $223,000 in exchange for $200,000 in cash. In addition, the
investor received a five-year warrant to purchase 25,000 shares of the Company's
common stock, par value $.01 per share, at an exercise price of $0.75 per share.
This receivable assignment was re-paid in August 2000.

In August 2000, the Company completed a second factoring agreement, in which
specific accounts receivables were assigned to the same investor. The Company
assigned the principal sum of $334,000 in exchange for $250,000 in cash. The
Investor has full recourse towards the Company for the entire principal sum. In
addition, the investor received another five-year warrant to purchase 25,000
shares of the Company's common stock, par value $.01 per share, at an exercise
price of $0.75 per share. This receivable assignment had a balance of
approximately $152,000 still due the investor as of October 1, 2000.

In the thirteen week period ended October 1, 2000, the Company raised cash
proceeds of approximately $1,833,000



                                       16

<PAGE>   17


from the exercise of 2,866,639 warrants. In order to induce the warrant holders
to exercise their warrants, the Company amended their warrants (originally with
exercisable prices generally ranging from $2.00 to $3.00 per share) by
re-pricing the warrant to exercise prices ranging from $0.625 to $0.75 per share
and generally issuing a replacement warrant with an exercise price of $0.625 to
$1.00 per share for each original warrant exercised, provided that the investor
completed the transaction within a specified time frame determined by the
Company. One of the investors immediately exercised 400,000 of the replacement
warrants for additional proceeds of $250,000.

The Company intends to fund the operations of the Internet marketing services
division through equity and debt transactions, such as proceeds available from
the exercise of stock options and warrants, and/or additional equity and debt
financing for the Company or its subsidiaries. However, there can be no
assurance such financing will be available on acceptable terms. If adequate
financing is not available, the Company may consider modifying its operations or
selling selected assets to reduce operating costs, increase efficiencies or
raise cash.


RISK FACTORS

An investment in our common stock is very risky. You may lose the entire amount
of your investment. Prior to making an investment decision, you should carefully
review the accompanying unaudited condensed consolidated financial statements
and related notes included elsewhere in this report, the audited financial
statements and notes included in the Company's Form 10-KSB for the fiscal year
ended January 2, 2000, and consider the following risk factors (all share
amounts are pre-split values and do not account for the 10-for-1 reverse stock
split):

WE HAVE INCURRED LOSSES TO DATE AND WILL NEED ADDITIONAL FINANCING IN ORDER TO
CONTINUE OPERATIONS AND PURSUE OUR BUSINESS PLAN.

We incurred net losses of approximately $43.2 million in the first nine months
of 2000, $24.2 million in 1999, $6.7 million in 1998 and $4.0 million in 1997
and had a working capital deficit of approximately $3.1 million as of October 1,
2000. Our ability to continue our present operations and successfully implement
our expansion plans is contingent upon our ability to increase our revenues and
ultimately attain and sustain profitable operations. Without additional
financing, the cash generated from our current operations will not be adequate
to fund operations and service our indebtedness during 2000. There can be no
assurance that additional financing will be available on terms acceptable to the
Company or on any terms whatsoever. In the event that we are unable to fund our
operations and our business plan, we will be unable to continue as a going
concern.

OUR COMMON STOCK COULD BE DELISTED FROM THE NASDAQ SMALLCAP MARKET, WHICH
DELISTING COULD HINDER YOUR ABILITY TO OBTAIN ACCURATE QUOTATIONS AS TO THE
PRICE OF OUR COMMON STOCK, OR DISPOSE OF OUR COMMON STOCK IN THE SECONDARY
MARKET.

Although our common stock is currently listed on the Nasdaq SmallCap Market, we
cannot guarantee that an active public market for our common stock will continue
to exist. In September 2000, the Company received a notice from The Nasdaq Stock
Market indicating that the Company's common stock had failed to maintain a
minimum bid price greater than or equal to $1.00 over the preceding thirty
consecutive trading days as required under Marketplace Rule 4310(c)(4). Should
the Company's common stock fail to achieve and maintain a bid price equal to or
greater than $1.00 for a minimum of ten consecutive trading days anytime before
December 12, 2000, the Company's common stock will be delisted from the Nasdaq
SmallCap Market. To satisfy this objective, the Company chose to implement a
reverse stock split. In such event, there is a risk that the Company's stock
price will not rise fully in proportion to the reverse split, resulting in a
material loss in market value for the Company's shareholders. In addition, we
have responded to numerous inquiries from Nasdaq expressing concern over various
matters, including but not limited to a "going concern" qualification expressed
by our former independent auditors as of January 3, 1999. Accordingly, our
securities may be delisted from the Nasdaq SmallCap Market or be required to
reapply for listing meeting the Nasdaq initial listing requirements, which are
generally more stringent than the requirements currently governing the Company's
listing. Additional factors giving rise to such delisting could include, but are
not be limited to: (1) a reduction of our net tangible assets to below
$2,000,000, (2) a reduction to one active market maker, (3) a reduction in the
market value of the public float of our securities to less than $1,000,000, (4)
a reduction of the trading price of our Common Stock to less than $1.00 per
share or (5) the discretion of the Nasdaq SmallCap Market.



                                       17

<PAGE>   18


In the event our securities are delisted from the Nasdaq SmallCap Market,
trading, if any, in our common stock would thereafter be conducted in the
over-the-counter markets in the so-called "pink sheets" or the National
Association of Securities Dealer's "Electronic Bulletin Board." Consequently,
the liquidity of our common stock would likely be impaired, not only in the
number of shares which could be bought and sold, but also through delays in the
timing of the transactions, reduction in the coverage of our securities by
security analysts and the news media, and lower prices for our securities than
might otherwise prevail. In addition, our common stock would become subject to
certain rules of the Securities and Exchange Commission relating to "penny
stocks." These rules require broker-dealers to make special suitability
determinations for purchasers other than established customers and certain
institutional investors and to receive the purchasers' prior written consent for
a purchase transaction prior to sale. Consequently, these "penny stock rules"
may adversely affect the ability of broker-dealers to sell our common stock and
may adversely affect your ability to sell shares of our common stock in the
secondary market.

WE ARE DEPENDENT ON THE ONGOING SERVICES OF CERTAIN OF OUR EXECUTIVES, THE LOSS
OF WHICH COULD HAVE A DETRIMENTAL EFFECT ON OUR PROFITABILITY AND THE MARKET
PRICE OF OUR STOCK.

Our plan of business development and our day-to-day operations rely heavily on
the experience of Gary Schneider, our Chief Executive Officer and Stephen Spohn,
our Chief Financial Officer. The loss of any of them could adversely affect the
success of our operations and strategic plans and, consequently, have a
detrimental effect on the market price of our stock.

WE MAY BE UNABLE TO HIRE QUALIFIED EMPLOYEES TO HELP IMPLEMENT AND MANAGE OUR
EXPANSION PLANS, WHICH INABILITY COULD BE DETRIMENTAL TO THE VALUE OF YOUR
INVESTMENT.

Our success will depend in large part upon our ability to supplement our
existing management team. We will need to hire additional corporate level and
management employees to help implement and operate our plans for expansion of
our Internet marketing services division. The demand for individuals with
management skills is high and many other businesses, most of which have greater
name recognition and resources than the Company, compete for their services. Any
inability or delay in obtaining additional key employees could have a material
adverse effect on our expansion plans and, consequently, the market value of our
stock.

DUE TO OUR LIMITED OPERATING HISTORY, YOU MAY FIND IT DIFFICULT TO ASSESS OUR
ABILITY TO OPERATE PROFITABLY.

On September 1, 1999, we completed a merger with popmail.com, inc. ("Old
Popmail"). Old Popmail was a provider of Internet email services to radio
stations across the country. On December 3, 1999, we acquired ROI Interactive,
LLC ("ROI"). ROI is a provider of permission and affinity based e-mail services
to broadcast stations, professional sports teams and other brand name clients in
the media and entertainment industries. On February 9, 2000, we acquired IZ.com
Incorporated ("IZ.com"). IZ.com is a provider of digital publishing services,
newsletters and technology for high-end brands. On June 15, 2000, we acquired
Fan Asylum, Inc. ("Fan Asylum"). Fan Asylum is a provider of official online and
offline fan club sites for recording artists in the music industry.
Consequently, we face the added risks, expenses and difficulties related to
developing and operating a new business enterprise. Given our lack of
significant operating history, investors may have difficulty assessing the many
factors which will determine our ability to generate future profits.

ONE INDIVIDUAL CONTROLS A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AND MAY
INFLUENCE OUR AFFAIRS.

Following our merger with Old Popmail on September 1, 1999, James L. Anderson
was elected to our Board of Directors and served as its Chairman until his
resignation on January 24, 2000. Effective February 1, 2000, Mr. Anderson
resigned from our Board. Based upon a Schedule 13D filed with the Securities and
Exchange Commission



                                       18

<PAGE>   19


on September 13, 1999, Mr. Anderson controlled indirectly or directly, as of
that date, approximately 59.6 percent of our outstanding common stock. As of
October 1, 2000, Mr. Anderson indirectly or directly controlled approximately
21.5 percent of our outstanding common stock. Accordingly, he may have the
ability to determine the election of members of the Board of Directors and
determine the approval of corporate transactions and other matters requiring
shareholder approval. Unless and until Mr. Anderson substantially decreases his
percentage beneficial ownership in our common stock, he will continue to have
significant influence over our affairs.

DUE TO THE LARGE NUMBER OF OUTSTANDING OPTIONS AND WARRANTS, OUR SHAREHOLDERS
FACE A RISK OF SUBSTANTIAL FUTURE DILUTION AND DOWNWARD PRESSURE ON THE TRADING
PRICE OF OUR COMMON STOCK.

As of October 1, 2000, we have a total of 40,653,594 shares of our common stock
reserved for issuance pursuant to our stock options plans, outstanding preferred
stock and common purchase warrants. Most of these shares have either been
registered for resale or are subject to agreements providing for their
registration for resale under certain circumstances. Accordingly, our existing
shareholders face a substantial risk of dilution and the trading price of our
common stock may decrease as these convertible securities are exercised or
converted into shares of common stock and subsequently offered for sale through
the Nasdaq SmallCap Market.

THERE IS A RISK THAT DUE TO THE LIMITATIONS PLACED ON THE CONVERSION OF THE
SERIES G PREFERRED SHARES, THE PREFERRED SHAREHOLDER'S INVESTMENT MAY NOT BE
CONVERTED INTO COMMON STOCK AND WOULD HAVE TO BE REDEEMED IN CASH.

The total number of shares of Common Stock issuable upon conversion of the
Series G Preferred Stock and upon exercise of the Series G Warrant cannot exceed
20 percent of the number of shares of Common Stock of the Company issued and
outstanding on May 2, 2000. In the event the holders of the Series G Preferred
Stock and Warrant are unable to convert preferred shares into common stock
because these limitations have been reached, we would be required to redeem the
Series G Preferred Shares in cash at 105 percent of the stated value plus any
accrued and unpaid dividends. It is possible that in such case we may not have
sufficient cash and cash equivalents necessary to redeem the Series G Preferred
Shares in cash.

WE RELY HEAVILY ON OUR INTELLECTUAL PROPERTY RIGHTS AND OTHER PROPRIETARY
INFORMATION; FAILURE TO PROTECT AND MAINTAIN THESE RIGHTS AND INFORMATION COULD
PREVENT US FROM COMPETING EFFECTIVELY.

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

WE MAY NOT PAY DIVIDENDS ON OUR COMMON STOCK, IN WHICH EVENT YOUR ONLY RETURN ON
INVESTMENT, IF ANY, WILL OCCUR ON THE SALE OF OUR STOCK.

To date, we have not paid any cash dividends on our common stock, and we do not
intend to do so in the foreseeable future. Rather, we intend to use any future
earnings to fund our operations and the growth of our business. Accordingly, the
only return on an investment in our common stock will occur upon its sale.

PURSUANT TO ITS AUTHORITY TO DESIGNATE AND ISSUE SHARES OF OUR STOCK AS IT DEEMS
APPROPRIATE, OUR BOARD OF DIRECTORS MAY ASSIGN RIGHTS AND PRIVILEGES TO
CURRENTLY UNDESIGNATED SHARES WHICH COULD ADVERSELY AFFECT YOUR RIGHTS AS A
COMMON SHAREHOLDER.

Our authorized capital consists of 100,000,000 shares of capital stock. Our
Board of Directors, without any action by



                                       19

<PAGE>   20


the shareholders, may designate and issue shares in such classes or series
(including classes or series of preferred stock) as it deems appropriate and
establish the rights, preferences and privileges of such shares, including
dividends, liquidation and voting rights. As of October 11, 2000, we have
47,470,871 shares of common stock issued and outstanding, 193,183 shares of
Series E Convertible Preferred Stock, 287,408 shares of Series F Convertible
Preferred Stock outstanding and 600,000 shares of Series G 10% Convertible
Preferred Stock. As of October 1, 2000, a further 40,653,594 shares of common
stock have been reserved as follows:

         a maximum of 792,849 shares of common stock reserved for issuance upon
         exercise of the Series E Preferred Shares, 193,183 shares of which are
         currently outstanding;

         a maximum of 7,375,000 shares of common stock reserved for issuance
         upon conversion of Series F Convertible Preferred Stock;

         a maximum of 6,724,282 shares of common stock reserved for issuance in
         connection with the Series G 10% Convertible Preferred Stock and upon
         exercise of certain warrants issued in connection with the Series G
         Preferred Stock;

         3,348,895 shares of common stock issuable upon exercise of options
         granted under the IZ.com Incorporated stock option plan assumed by the
         Company;

         2,600,000 shares issuable upon the exercise of the Class A Warrants
         issued as part of our initial public offering and the partial exercise
         of the underwriter's over-allotment;

         16,062,568 shares issuable upon the exercise of outstanding warrants
         (excluding the warrants issued in connection with the sale of the
         Series G Preferred Stock);

         3,000,000 shares reserved for issuance under our 1997 Stock Option and
         Compensation Plan, of which options reverting to 2,627,660 shares are
         currently outstanding;

         750,000 shares for issuance under our 1998 Director Stock Option Plan,
         of which options relating to 398,333 shares are currently outstanding.

The rights of holders of preferred stock and other classes of common stock that
may be issued could be superior to the rights granted to holders of the Units
issued in our initial public offering. Our Board's ability to designate and
issue such undesignated shares could impede or deter an unsolicited tender offer
or takeover proposal. Further, the issuance of additional shares having
preferential rights could adversely affect the voting power and other rights of
holders of common stock.

MINNESOTA LAW MAY INHIBIT OR DISCOURAGE TAKEOVERS, WHICH COULD REDUCE THE MARKET
VALUE OF OUR STOCK.

As a corporation organized under Minnesota law, we are subject to certain
Minnesota statutes which regulate business combinations and restrict the voting
rights of certain persons acquiring shares of its stock. By impeding a merger,
consolidation, takeover or other business combination involving the Company or
discouraging a potential acquiror from making a tender offer or otherwise
attempting to obtain control of the Company, these regulations could adversely
affect the market value of our stock.

THE LIMITATIONS ON DIRECTOR LIABILITY CONTAINED IN OUR ARTICLES OF INCORPORATION
AND BYLAWS MAY DISCOURAGE SUITS AGAINST DIRECTORS FOR BREACH OF FIDUCIARY DUTY.

As permitted by Minnesota law, our Amended and Restated Articles of
Incorporation provide that members of our Board of Directors are not personally
liable to you or the Company for monetary damages resulting from a breach of
their fiduciary duties. These limitations on director liability may discourage
shareholders from suing directors for breach of fiduciary duty and may reduce
the likelihood of derivative litigation brought against a director by



                                       20

<PAGE>   21


shareholders on the Company's behalf. Furthermore, our Bylaws provide for
mandatory indemnification of directors and officers to the fullest extent
permitted by Minnesota law. All of these provisions limit the extent to which
the threat of legal action against our directors for any breach of their
fiduciary duties will prevent such breach from occurring in the first instance.

PURSUING AND COMPLETING POTENTIAL ACQUISITIONS COULD DIVERT MANAGEMENT ATTENTION
AND FINANCIAL RESOURCES AND MAY NOT PRODUCE THE DESIRED BUSINESS RESULTS.

We do not have specific personnel dedicated solely to pursuing and completing
acquisitions. As a result, if we pursue any acquisition, our management, in
addition to fulfilling their operational responsibilities, could spend
significant time, management resources and financial resources to pursue and
complete the acquisition and integrate the acquired business with our existing
business.

To finance any acquisition, we may use capital stock or cash or a combination of
both. Alternatively, we may borrow money from a bank or other lender. If we use
capital stock, our shareholders may experience dilution. If we use cash or debt
financing, our financial liquidity would be reduced. In addition, acquisitions
may result in nonrecurring charges or the amortization of significant goodwill
that could adversely affect our ability to achieve and maintain profitability.

Despite the investment of these management and financial resources and
completion of due diligence with respect to these efforts, an acquisition may
fail to produce the expected revenues, earnings or business and an acquired
service or technology may not perform as expected for a variety of reasons,
including:

         Difficulties in the assimilation of the operations, technologies,
         products and personnel of the acquired company;

         Risks of entering markets in which we have no or limited prior
         experience;

         Expenses of any undisclosed or potential legal liabilities of the
         acquired company;

         The applicability of rules and regulations that might restrict our
         ability to operate; and

         The potential loss of key employees of the acquired company.

If we make acquisitions in the future and the acquired businesses fail to
perform as expected, our business operating results and financial condition may
be materially adversely affected.

FAILURE TO MANAGE OUR GROWTH MAY ADVERSELY AFFECT OUR BUSINESS.

We have grown rapidly and expect to continue the growth both by hiring new
employees and serving new business and markets. Our growth has placed, and will
continue to place, a significant strain on our management and our operating and
financial systems.

Our personnel, systems, procedures and controls may be inadequate to support our
future operations. In order to accommodate the increased size of our operations,
we will need to hire, train and retain the appropriate personnel to manage our
operations. We will also need to improve our financial and management controls,
reporting systems and operating systems, all of which will require significant
ongoing investments of the efforts of key personnel.

IF WE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY FALL SIGNIFICANTLY.

The market price of publicly traded securities generally reflects, to a large
degree, the expectations of industry analysts and significant investors with
respect to the short and long-term operating results of the issuers. When



                                       21
<PAGE>   22


issuers fail to meet such expectations, the market price of their publicly
traded securities usually decreases, sometimes significantly, and may not
recover. There can be no assurance that we will be able to satisfy the
expectations of market analysts and investors to avoid a precipitous drop in the
market price of our common stock.

Internet Division

WE HAVE ENTERED INTO NEW BUSINESS VENTURES IN AN EVOLVING INDUSTRY IN WHICH
THERE REMAIN UNPROVEN BUSINESS AND REVENUE MODELS.

The Internet, music and e-mail industry is rapidly evolving, extremely
competitive, and the market place for internet-related shares has been very
volatile. Furthermore, the music and e-mail business continues to indicate
changing revenue models in the market place. Consequently, there can be no
assurance that sufficient revenues will be generated to support our current
operations and other capital requirements.

IN LIGHT OF RECENT CONSOLIDATION IN THE BROADCAST INDUSTRY AND RECENT
DEVELOPMENTS IN THE MUSIC INDUSTRY, THE LOSS OF ANY SIGNIFICANT AFFILIATE OR
ARTIST CONTRACTS WOULD NEGATIVELY IMPACT OUR OPERATIONS.

The last few years have brought substantial concentration of power among a few
players in the broadcast industry. Consequently, significant portions of the
industry are controlled by relatively few organizations. We currently have over
400 clients. As consolidation increases, these contracts may be merged or lost
due to the landscape of the industry. In light of such consolidation, however,
the loss of any of these significant affiliation contracts or our inability to
enter into contracts with other clients in the broadcast industry would
negatively impact our operations.

The reduction of artists touring and releasing new recording can significantly
impact the level of activity on the fan club sites, membership and potential
advertising associated with such.

OUR E-MAIL BASED PRODUCTS AND FAN CLUB SERVICES ARE DEPENDENT UPON THE INTERNET.

The success of our services and products will depend in large part upon the
continued development and expansion of the Internet. The Internet has
experienced, and is expected to continue to experience, significant and
geometric growth in the number of users and the amount of traffic. There can be
no assurance that the Internet infrastructure will continue to be able to
support the demands placed on it by this continued growth. In addition, the
Internet could lose its viability due to delays in the development or adoption
of new standards and protocols (for example, the next-generation Internet
Protocol) to handle increased levels of Internet activity, or due to increased
governmental regulation. There can be no assurance that the infrastructure or
complementary services necessary to make the Internet a viable commercial
marketplace will be developed, or, if developed, that the Internet will become a
viable commercial marketplace for services and products such as those we offer.
If the necessary infrastructure or complementary services or facilities are not
developed, or if the Internet does not become a viable commercial marketplace,
our business, results of operations, and financial condition will be materially
adversely affected.

OUR FUTURE SUCCESS WILL DEPEND ON INCREASED ACCEPTANCE OF THE INTERNET AS A
MEDIUM OF COMMERCE.

The market for Internet e-mail, fan club sites, private label newsletters and
other services is relatively new and evolving rapidly. Our future success will
depend, in part, upon our ability to provide services that are accepted by our
existing and future clients as an integral part of their business model in
providing content and information to their fans and viewers. The level of demand
for Internet e-mail, fan club sites, private label newsletters and other
services will depend upon a number of factors, including the following:

         the growth in consumer access to, and acceptance of, new interactive
         technologies such as the Internet;

         the adoption of Internet-based business models;


                                       22
<PAGE>   23


         the development of technologies that facilitate two-way communications
         between companies and target audiences; and

         acquiring members to the brands services.

Significant issues concerning the commercial use of Internet technologies,
including security, reliability, privacy, cost, ease of use and quality of
service, may inhibit the growth of services that use these technologies. Our
future success will depend, in part, on our ability to meet these challenges,
which must be met in a timely and cost-effective manner. We cannot be sure that
we will succeed in effectively meeting these challenges, and our failure to do
so could materially and adversely affect our business.

Industry analysts and others have made many predictions concerning the growth of
the Internet as a business medium. Many of these historical predictions have
overstated the growth of the Internet. These predictions should not be relied
upon as conclusive. The market for our Internet e-mail and fan club services may
not continue to grow, our services may not be adopted and individual personal
computer users in business or at home may not use the Internet or other
interactive media for commerce, interaction and communication. If the market for
Internet e-mail, fan club sites and other services fails to sustain growth, or
develops more slowly than expected, or if our services do not achieve market
acceptance, our business would be materially and adversely affected.

INTERNET STOCKS ARE SUBJECT TO MARKET VOLATILITY.

The stock market in general, and the market prices for Internet-related
companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of such companies. These fluctuations may
adversely affect our stock price.

If Internet usage does not continue to grow or its infrastructure fails, our
business will suffer. If the Internet does not gain increased acceptance for
business-to-consumer electronic commerce, our business will not grow or become
profitable. We cannot be certain that the infrastructure or complementary
services necessary to maintain the Internet as a useful and easy means of
transferring documents and data will continue to develop. The Internet
infrastructure may not support the demands that growth may place on it and the
performance and reliability of the Internet may decline.

INCREASED COMPETITION RESULTING FROM AN INCREASE IN THE NUMBER OF E-MAIL FAN
CLUB AND BRANDED LABEL NEWSLETTERS PROVIDERS MAY HAVE AN ADVERSE EFFECT ON
POPMAIL'S FUTURE BUSINESS OPERATIONS.

Currently there are a growing number of e-mail providers, artist web sites,
newsletters providers and competitors to our business. To the extent we can
execute our plan and are successful within the current target vertical markets
in which we compete (i.e., broadcast, sports, music and entertainment), we
anticipate continued growth of clients and members to our e-mail services,
newsletters and artist fan club sites. Others currently are competing and will
attempt to compete in these Affinity vertical markets, which may have an adverse
affect on our future business operations.

THERE IS A RISK THAT GOVERNMENT REGULATION OF THE INTERNET COULD BECOME MORE
EXTENSIVE.

There are currently few laws or regulations directly applicable to access to or
commerce on the Internet. However, due to the increasing popularity and use of
the Internet, it is possible that a number of laws and regulations may be
adopted with respect to the Internet, covering issues such as user privacy,
pricing, characteristics, and quality of products and service. The
Telecommunications Reform Act of 1996 imposes criminal penalties on anyone who
distributes obscene, indecent, or patently offensive communications on the
Internet. Other nations, including Germany, have taken actions to restrict the
free flow of material deemed to be objectionable on the Internet. The adoption
of any additional laws or regulations may decrease the growth of the Internet,
which could in turn decrease the demand for our services and products, and
increase our cost of doing business or otherwise have an adverse effect on our
business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing



                                       23

<PAGE>   24


laws in various jurisdictions governing issues such as property ownership,
libel, and personal privacy is uncertain and will take years to resolve. Any
such new legislation or regulation could have a material adverse effect on our
business, results of operations, and financial condition.

WE MAY NOT BE ABLE TO GENERATE SUFFICIENT REVENUE IF THE ACCEPTANCE OF ONLINE
ADVERTISING, WHICH IS NEW AND UNPREDICTABLE, DOES NOT DEVELOP AND EXPAND AS WE
ANTICIPATE.

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

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

IF WE DO NOT MAINTAIN AND EXPAND OUR CLIENT AND MEMBER BASE WE MAY NOT BE ABLE
TO COMPETE EFFECTIVELY FOR ADVERTISERS.

Our revenue has been derived primarily from the licensing of our e-mail
services, set up and hosting fees through PopMail Network, creating content
through IZ.com for specific brands and from management fees, ticket fees,
commerce fees and artist travel packages through Fan Asylum. All three companies
are seeking to provide timely and relevant information to their clients
customers, fans and viewers with personalized content and information that is of
most interest to the opt-in member or fan, through targeted e-mail, personalized
newsletters and fan club sites. If we are unable to maintain and expand our
affinity brand member base and add clients to our "affinity brand network,"
advertisers could find our audience less attractive and effective for promoting
their products and services and we could experience difficulty retaining our
existing advertisers and attracting additional advertisers. To date, we have
relied on referral-based marketing activities to attract a portion of our
members and will continue to do so for the foreseeable future. This type of
marketing is largely outside of our control and there can be no assurance that
it will generate rates of growth in our member base comparable to what we have
experienced to date.

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

OUR BUSINESS DEPENDS ON OUR ABILITY TO PROVIDE SERVICES THAT CREATE, DELIVER AND
DISTRIBUTE RELEVANT AND APPEALING CONTENT FROM AND FOR OUR CLIENTS THROUGH OUR
AFFINITY E-MAIL SERVICES, PUBLISHING TOOLS AND FAN CLUB SITES; IF WE ARE NOT
ABLE TO CONTINUE TO DELIVER SUCH CONTENT OR TO PROVIDE SUCH SERVICES, WE MAY BE
NOT ABLE TO MAINTAIN AND EXPAND OUR MEMBER AND FAN BASE, WHICH COULD NEGATIVELY
AFFECT OUR ABILITY TO RETAIN AND ATTRACT THE ADVERTISERS WE NEED TO GENERATE
ADDITIONAL REVENUES.



                                       24
<PAGE>   25


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

IF WE DO NOT RESPOND TO OUR COMPETITION EFFECTIVELY, WE MAY LOSE CURRENT CLIENTS
AND MEMBERS AND FAIL TO ATTRACT NEW ADVERTISERS, REDUCING OUR REVENUES AND
HARMING OUR FINANCIAL RESULTS.

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

We also compete in high profile industries where our e-mail services, publishing
tools and fan club site offerings must meet the demands of our fans and clients.
It is imperative that we continue to make enhancements to the e-mail services,
publishing tool and fan club site offerings if we are to continue growing our
client and member base. Failure to make service and product enhancements could
significantly impact our financial results.

WE DEPEND HEAVILY ON OUR NETWORK INFRASTRUCTURE AND IF THIS FAILS IT COULD
RESULT IN UNANTICIPATED EXPENSES AND PREVENT OUR MEMBERS FROM EFFECTIVELY
UTILIZING OUR SERVICES, WHICH COULD NEGATIVELY IMPACT OUR ABILITY TO ATTRACT AND
RETAIN MEMBERS AND ADVERTISERS.

Our ability to successfully create and deliver our e-mail messages and private
label newsletters and to keep fan club sites current depends in large part on
the capacity, reliability and security of our networking hardware, software and
telecommunications infrastructure. Failures within our network infrastructure
could result in unanticipated expenses to address such failures and could
prevent our members from effectively utilizing our services, which could prevent
us from retaining and attracting members and advertisers. While our technology
platform is considered state of the art, we do not currently have fully
redundant systems or a formal disaster recovery plan in place for all companies.
Our system is susceptible to natural and man-made disasters, including
earthquakes, fires, floods, power loss and vandalism. Further,
telecommunications failures, computer viruses, electronic break-ins or other
similar disruptive problems could adversely affect the operation of our systems.
Our insurance policies may not adequately compensate us for any losses that may
occur due to any damages or interruptions in our systems. Accordingly, we could
be required to make capital expenditures in the event of unanticipated damage.
In addition, our members depend on Internet service providers, or ISPs, for
access to our Web site. Due to the rapid growth of the Internet, ISPs and
Websites have experienced significant system failures and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems. These problems could harm our business by preventing our members from
effectively utilizing our services.



                                       25

<PAGE>   26


OUR FUTURE SUCCESS WILL DEPEND ON INCREASED ACCEPTANCE OF THE INTERNET AS A
MEDIUM OF COMMERCE.

The market for Internet e-mail and other services is relatively new and evolving
rapidly. Our future success will depend, in part, upon our ability to provide
services that are accepted by our existing and future members as an integral
part of their business model. The level of demand for Internet e-mail and other
services will depend upon a number of factors, including the following:

         the growth in consumer access to, and acceptance of, new interactive
         technologies such as the Internet;

         the adoption of Internet-based business models; and

         the development of technologies that facilitate two-way communication
         between companies and target audiences.

Significant issues concerning the commercial use of Internet technologies,
including security, reliability, cost, ease of use and quality of service,
remain unresolved and may inhibit the growth of services that use these
technologies. Our future success will depend, in part, on our ability to meet
these challenges, which must be met in a timely and cost-effective manner. We
cannot be sure that we will succeed in effectively meeting these challenges, and
our failure to do so could materially and adversely affect our business.

Industry analysts and others have made many predictions concerning the growth of
the Internet as a business medium. Many of these historical predictions have
overstated the growth of the Internet. These predictions should not be relied
upon as conclusive. The market for our Internet e-mail services may not develop,
our services may not be adopted and individual personal computer users in
business or at home may not use the Internet or other interactive media for
commerce and communication. If the market for Internet e-mail and other services
fails to develop, or develops more slowly than expected, or if our services do
not achieve market acceptance, our business would be materially and adversely
affected.

WE MAY INCUR LIABILITY FOR THE INVASION OF PRIVACY.

The Federal Trade Commission has investigated businesses that have used
personally identifiable information without permission or in violation of a
stated privacy policy. We have established and communicated to our members a
privacy policy. In the event that we convey personally identifiable information
to our corporate customers without permission or in violation of our stated
privacy policy, we may incur liability for the unlawful invasion of privacy.

Restaurant Division

WE HAVE DEVELOPED A FORMAL PLAN FOR THE DIVESTITURE OF THE RESTAURANT DIVISION
AND HAVE RECLASSIFIED THE DIVISION AS DISCONTINUED OPERATIONS.

There is no guarantee that the Company will be able to complete the sale of the
Restaurants, as contemplated, or upon the terms acceptable to the Company.
Accordingly, the Company is still subject to certain risks associated with the
Restaurant Division.

OUR ABILITY, OR INABILITY, TO RESPOND TO VARIOUS COMPETITIVE FACTORS AFFECTING
THE RESTAURANT INDUSTRY MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

The restaurant industry is highly competitive and is affected by changes in
consumer preferences, as well as by national, regional and local economic
conditions, and demographic trends. Discretionary spending priorities, traffic
patterns, tourist travel, weather conditions, employee availability and the
type, number and location of competing restaurants, among other factors, will
also directly affect the performance of our restaurants. Changes in any of these
factors in the markets where we currently operate our restaurants could
adversely affect the results of our operations. Furthermore, the restaurant
industry in general is highly competitive based on the type, quality and
selection of the food offered, price, service, location and other factors and,
as a result, has a high failure rate. The themed restaurant industry is
relatively young, is particularly dependent on tourism and has seen the
emergence of a number of new competitors. We compete with numerous
well-established competitors, including national, regional and local restaurant
chains, many of which have greater financial, marketing, personnel and other
resources and longer operating histories than us. As a result, we may be unable
to respond to the various competitive factors affecting the restaurant industry.



                                       26

<PAGE>   27


WE HAVE ENTERED INTO NON-CANCELABLE LEASES UNDER WHICH WE ARE OBLIGATED TO MAKE
PAYMENTS FOR TERMS OF 12 TO 15 YEARS.

We have entered into long-term leases relating to the Kenwood, Mall of America
and Denver restaurants. These leases are non-cancelable by us (except in limited
circumstances) and range in term from 12 to 15 years. Although we have closed
the Kenwood restaurant and assigned the related lease to an unrelated third
party who is currently making the required lease payments, we remain the primary
obligor under the lease. If we decide to close any of our existing restaurants,
we may nonetheless be committed to perform our obligations under the applicable
lease, which would include, among other things, payment of the applicable base
rent for the balance of the respective lease term. Such continued obligations
increase our chances of closing a restaurant without receiving an adequate
return on our investment.

AMONG OTHER ECONOMIC FACTORS OVER WHICH WE HAVE NO CONTROL, THE SUCCESS OF OUR
RESTAURANTS WILL DEPEND ON CONSUMER PREFERENCES AND THE PREVAILING LEVEL OF
DISCRETIONARY CONSUMER SPENDING.

The success of our restaurant division depends to a significant degree on a
number of economic conditions over which we have no control, including:

         discretionary consumer spending;

         the overall success of the malls, entertainment centers and other
         venues where Cafe Odyssey restaurants are or will be located;

         economic conditions affecting disposable consumer income; and

         the continued popularity of themed restaurants in general and the Cafe
         Odyssey concept in particular.

Furthermore, most themed restaurants are especially susceptible to shifts in
consumer preferences because they open at or near capacity and frequently
respond to such shifts by experiencing a decline in revenue growth or of actual
revenues. An adverse change in any or all of these conditions would have a
negative effect on our operations and the market value of our common stock.

OUR RESTAURANT DIVISION IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH
COULD HAVE A NEGATIVE EFFECT ON OUR BUSINESS.

The restaurant industry, and to a lesser extent, the retail merchandising
industry, are subject to numerous federal, state, and local government
regulations, including those relating to:

         the preparation and sale of food;
         building and zoning requirements;
         environmental protections;
         minimum wage requirements;
         overtime;
         working and safety conditions;
         the sale of alcoholic beverages;
         sanitation;
         relationships with employees;
         unemployment;
         workers compensation; and
         citizenship requirements.

Any change in the current status of such regulations, including an increase in
employee benefits costs, workers' compensation insurance rates, or other costs
associated with employees, could substantially increase our compliance and labor
costs. Because we pay many of our restaurant-level personnel rates based on
either the federal or the state minimum wage, increases in the minimum wage
would lead to increased labor costs. In addition, our operating results would be
adversely affected in the event we fail to maintain our food and liquor
licenses. Furthermore, restaurant operating costs are affected by increases in
unemployment tax rates, sales taxes and similar costs over which we have no
control.



                                       27

<PAGE>   28


                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

The Company is involved in routine legal actions in the ordinary course of its
business. Although outcomes of any such legal actions cannot be predicted, in
the opinion of management there is no legal proceeding pending against or
involving the Company for which the outcome is likely to have a material adverse
effect upon the financial position or results of operations of the Company.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

The following table lists recent sales of unregistered securities by the
Company:

<TABLE>
<S>              <C>                       <C>                                <C>                  <C>
----------------------------------------------------------------------------------------------------------------------------
                 TITLE AND                                                                         CASH OR
                 DESCRIPTION OF            AMOUNT OF                                               CONSIDERATION
     DATE        SECURITIES                SECURITIES *                       ISSUED TO            RECEIVED
----------------------------------------------------------------------------------------------------------------------------
   6/5/2000      Common Stock              800,000 Shares                     Tim McQuaid          As consideration in
                                                                                                   a merger transaction

   6/13/2000     Common Stock              450,706 Shares                     CraftClick.com       As consideration for
                                                                                                   an investment

   7/19/2000     Warrants to Purchase      Warrants to purchase 50,000        Cam Birge            In consideration for
                 Common Stock              shares at an exercise price of                          financial services
                                           $0.75

   7/26/2000     Warrants to Purchase      Previously issued Warrants to      Maris Kott and       In consideration for
                 Common Stock              purchase 100,000 shares at an      Dara Podber          financial services
                                           exercise price of $1.625 were
                                           repriced to $0.75 per share

   7/26/2000     Warrants to Purchase      Warrants to purchase 300,000       J.P. Carey           In connection with
                 Common Stock              shares at an exercise price of     Securities, Fiji     certain financing
                                           $1.00 repriced to purchase         Capital,             arrangements
                                           200,000 shares at an exercise      Metropolitan
                                           price of $0.75                     Capital Partners,
                                                                              Inc.

   7/28/2000     Warrants to Purchase      Warrants to purchase 25,000        Andrew Green         In connection with
                 Common Stock              shares at an exercise price of                          certain financing
                                           $0.75                                                   arrangements

   8/2/2000      Common Stock              300,000 Shares                     Phil Bane            Pursuant to a
                                                                                                   Restricted Stock
                                                                                                   Purchase Agreement

   8/15/2000     Common Stock              60,000 Shares                      Metropolitan         In consideration for
                                                                              Capital Partners,    financial services
                                                                              Inc.

   8/18/2000     Warrants to Purchase      Warrants to purchase an            Certain Accredited   In connection with
                 Common Stock              aggregate of 2,000,000 shares at   Investors            an agreement to
                                           an exercise price of $0.625                             immediately exercise
                                                                                                   previously
                                                                                                   outstanding warrants

   8/25/2000     Common Stock              240,000 Shares                     Wayne Mills          In consideration of
                                                                                                   purchase of Promissory
                                                                                                   Note of Officer and
                                                                                                   Director of the Company
----------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       28

<PAGE>   29


<TABLE>
<S>              <C>                       <C>                                <C>                  <C>
-------------------------------------------------------------------------------------------------------------------------
                 TITLE AND                                                                         CASH OR
                 DESCRIPTION OF            AMOUNT OF                                               CONSIDERATION
     DATE        SECURITIES                SECURITIES *                       ISSUED TO            RECEIVED
-------------------------------------------------------------------------------------------------------------------------
  08/28/2000     Warrants to Purchase      Warrants to purchase 25,000        Andrew Green         In connection with
                 Common Stock              shares at an exercise price of                          certain financing
                                           $0.75                                                   arrangements

   9/14/2000     Warrants to Purchase      Warrants to purchase 200,000       Apache Bluff Corp.   In consideration for
                 Common Stock              shares at an exercise price of                          financial consulting
                                           $0.50                                                   services

   9/14 and      Warrants to Purchase      Warrants to purchase an            Certain Accredited   In connection with
   9/15/2000     Common Stock              aggregate of 618,626 shares at     Investors            an agreement to
                                           an exercise price of $1.00                              immediately exercise
                                                                                                   previously
                                                                                                   outstanding warrants
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

*All share amounts and exercise prices are pre-split values and do not take
into account the 10-for-1 reverse stock split.




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (A)   EXHIBITS


         4.1   Form of Warrant to Purchase Shares of Common Stock of the
               Company issued to Cam Birge.

         4.2   Form of Warrant to Purchase Shares of Common Stock of the
               Company (R Series).

         4.3   Schedule identifying material details of warrants issued by
               the Company substantially identical to the warrant filed as
               Exhibit 4.2.

         4.4   Form of Warrant to Purchase Shares of Common Stock of the
               Company issued to Apache Bluffs.

         4.5   Form of Warrant to Purchase Shares of Common Stock of the
               Company (RW Series).

         4.6   Schedule identifying material details of warrants issued by
               the Company substantially identical to the warrant filed as
               Exhibit 4.5.

         10.1  Amendment to Stock Purchase Agreement dated as of October 11,
               2000 by and among PopMail.com, inc., Fan Asylum, Inc. and Tim
               McQuaid.

         10.2  Stock Purchase Agreement dated June 7, 2000 by and among
               CraftClick.com, Inc. and PopMail.com, inc.


         27    Financial Data Schedule


         (B)   REPORTS ON FORM 8-K


         On September 20, 2000, the Company filed a Current Report on Form 8-K
         dated September 15, 2000, under Items 5 and 7, announcing that it had
         signed a letter of intent to sell its Cafe Odyssey restaurant division
         to the restaurant division's executive management team.



                                       29

<PAGE>   30


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       POPMAIL.COM, INC.


                                       By: /s/ Stephen J. Spohn
                                           -------------------------------------
                                           Stephen J. Spohn
                                           Chief Financial Officer


Date:    November 14, 2000



                                       30